In today’s business landscape, startups are notoriously hard to get off the ground – and the numbers back this up.
High startup failure rate is the result of many factors, some structural, some circumstantial.
No market need. Ran out of cash. Not the right team. A mistimed product. Poor marketing…
The list goes on.
Today’s article is about the one I know the best, and one that is often forgotten by early-stage startup founders. Marketing.
Having worked with many entrepreneurs and business leaders in my marketing career, I’ve seen first-hand the common problems they face.
Those problems are either:
- Related to the market research and orientation, also known as Diagnosis – often the lack of it;
- Related to the strategy (segmentation, targeting, and positioning) – again, more often than not, the lack of it.
- Execution related.
When it comes to the first two points, the main problem is that entrepreneurs simply don’t do market research and have no strategy in mind.
And I get it. In the first few months of their ventures, entrepreneurs are too busy dealing with thousands of other issues. Product, operations, hiring, investor relationships and more.
Which is in no way an excuse for killing your business.
So instead of starting your marketing efforts by selecting promotion channels (social media, email, etc), take your time to properly consider everything that comes before.
Or at least look for someone that can advise you on that early on.
This is where today’s guest, Antonio Lorenzon, comes in.
He’s a marketer with over 15 years of experience in marketing. He’s worked in the UK, US, Netherlands and Switzerland in a range of companies from multinational companies to silicon valley startups.
In our conversation, we covered everything you need to know about marketing your early-stage startup.
R: Antonio, there’s no denying your impressive resume.
In this conversation, we’ll be focusing more on marketing for startups.
That being said, having that experience in the corporate world gives you a different perspective that I think will be really useful for this conversation.
Let’s start from the top. Give us your take on what you believe marketing for startups should be all about.
A: Marketing is really what’s visible to the outside audience, and what they perceive from an idea.
To do that you need to create a story, you need to create content for them.
Without that (unless you’re working in a very niche B2B environment) it’s extremely difficult for them to understand the value of your product.
A clear example is Steve Jobs and Apple.
When launching the original iPod, Apple didn’t tell people:
“Here’s is a portable 5GB device for your music”
Because that doesn’t tell a story – it doesn’t resonate with your users.
Instead, when introducing the iPod in 2001, he simply told the audience:
“This amazing little device holds 1,000 songs… and it goes right in my pocket.”
This led to the subsequent ad campaign ending simply with “iPod, 1,000 songs in your pocket.”
The concept of a small, 5GB box doesn’t mean much to many people.
In 2001, however, the idea that you could carry 1,000 songs with you in your pocket was monumental. It was a game-changer.
It can sound like a small change, but it makes all the difference in the perception of anyone looking at the product. That for me is good marketing.
R: I’m glad you mention the importance of perception in marketing, as I have a great example of that.
A few years ago, Joshua Bell (one of the most celebrated violinists of all time) partnered with The Washington Post for a very cool experiment. Joshua has performed in virtually every major orchestra in the world, regularly sells out massive theatres and earns about $1000 a minute. So, kind of a big deal.
In the experiment, Joshua played in a Washington DC Metro station disguised as a street performer.
He pulled out his 1713 handcrafted Stradivarius violin (worth about $3.5M) and started playing.
Can you guess what happened?
He spent 45 minutes playing. Over 1000 people walked by. Only seven stopped. Only seven spent more than one minute looking at the guy. In total, 27 people gave him some money to the tune of $32 and change.
The lesson for entrepreneurs here is clear.
Even with a great product, it’s crucial to focus on exposure and perception.
So this is something I honestly think every founder should know: great products without equally great distribution will inevitably underperform.
With that said, I’d love to hear your thoughts on how founders should look at marketing in the early stages of their projects.
Should they have the skills themselves? Should they look for a marketing savvy co-founder?
A: Let me start my reply with an example.
In 2017, I was travelling to and from London a lot for work. During one of my marketing mentoring sessions at TechItalia Lab, I met three founders leading a promising B2B SaaS startup.
One was the CEO, probably the guy who had the idea first. Then the second, an IT expert who became the CTO. Finally, the third was their best friend. He was younger, full of enthusiasm but with limited experience in sales. They appointed him as CMO.
I started by asking for more info about their roles and responsibilities. They told me they wanted the third friend to be part of the venture but they didn’t know exactly what to offer him.
So they gave him the CMO role – because for them that’s the position that is least likely to kill the business if there’s a mistake.
If the CEO or CFO makes a big mistake, you run out of money, the startup is dead. If the CTO writes crappy code, the product doesn’t work, there’s a huge risk there for the startup.
And people think, ok even if the CMO kind of f***s up we’ll most likely survive.
This is a myth. Just look at any successful startup – or the examples we’ve already given.
“For many startups, success is in the effective communication of the business mission, vision and value proposition.”
And as I’ve already mentioned, marketing is a mindset. So you need to find someone that can communicate your idea in an engaging and actionable way that activates your audience.
Someone who always keeps the audience in mind and designs the stories your startup tells around them.
Find someone who can do that and it will pay off, trust me. I’ve seen it over and over.
When I see a pitch deck I can immediately see if there’s a user-driven mindset behind it.
So my recommendation would be, if you are a founder with a great idea then sure, develop your idea.
But as soon as possible, try to onboard someone that can help you design every piece of communication from an audience perspective.
Put some money in your marketing. Have someone close to you in marketing that can take your idea and tell your audience a story about it.
R: Usually the way I refer to that is it’s really important for anyone taking a new project to the market to fall in love with the problem, not the idea.
Experienced marketer or not, everything becomes easier when you look at things from the user standpoint.
The problem is, most of the time, that you start at the end. You build the product, set the features you think the market wants, then look at competitors to see how they are promoting their services and that’s it.
You end up running Facebook ads or doing content syndication with absolutely no reasoning behind it.
And then it doesn’t work.
So I agree with what you said. Whoever tackles this early on, having someone that understands how to diagnose, strategize and execute is key for a successful launch.
The problem is sometimes, in the early days, you don’t really have that resource available.
So what should an entrepreneur do? Is it safe to outsource this to an agency, should they tackle it themselves?
What’s your takeaway here?
A: I would first recommend reaching out to your network to find someone with some marketing expertise who can mentor you before you look at agencies.
If you find someone there, you don’t necessarily need to hire them. Instead, you can ask them to take the problem you have and turn it into a framework and identify an insight.
Because to turn your idea into a compelling story you don’t just need to know the problem, you need to have an insight into that problem.
You need to tell a story that the audience identifies with to help you prove that your product is needed.
To do that, the best thing to do is to simply talk to potential users. Explain your proposed solution and ask them what they think.
Then take those responses to that marketing person from your network sit down with them and transform that into the users’ insights.
An insight for marketers is like source code for developers – it’s a starting point.
Then, you can decide to take that to an agency if you want. But the important point is you have those foundations.
You have the “why” behind your startup’s existence, you have the problem you want to solve and the insights from your potential users on that solution.
R: So essentially, have someone in your network who can mentor you. Someone who can help you build traction, then go to an agency when you have that traction.
A: Exactly. I would go further to say that when you create an MVP for your product, you should create an MVP of your marketing content alongside it.
And, as a founder, if you have the time and resources to build an MVP, you have the resources to do a marketing MVP.
You can already collect the information and for the key elements to start framing the story for your audience.
R: I like this idea of the “marketing MVP”. Can you give us a more practical example of that from your experience?
A: So usually with the MVP of your product you start by looking at the market to see if this product will work.
But, usually, you don’t take the time to really understand the people in that market. You don’t look at who could be the first time users – the blind prospects of your product.
Out of your audience who are the first 10-20% that would be willing to invest a little bit of time, money and effort to buy your solution.
Element 1: Who is your “who”?
Write down clearly who they are.
Element 2: Where can you find them?
Fish in waters where there are fish.
If your “who” is German, maybe don’t bother fishing in the UK. Sure you might find some German fish in there but you’d be much better off fishing in Germany.
Then when you have enough fish (five, ten, whatever you think is relevant for you) talk to them.
Ask them why they think your product can help them solve their problem.
And, usually, you frame the insight in three steps.
You write down what the common ground is for all of your first-time users.
Then you identify the tension they have in solving that problem.
For example, my problem is I want to turn on my car from far away.
The tension is that, if I turn it on from afar, someone could steal it while I’m walking to it.
“The solution comes from that tension – not the problem itself.”
The final step is identifying that solution and writing it down.
- Identify your “who”
- Fish where the fish are
- Ask those people why they think your solution is the right one for them
Then, combine those elements to create a foundation of why your product exists and (more importantly) why people buy it.
Then you can start to look at how you communicate that and optimise the story for your launch.
R: It’s like when I started here at Altar. I spent my first month speaking to every single client who’s ever walked through the door.
I did that to understand what the frictions were. Because their problem is clear – they don’t have anyone to develop their software. But the friction (or tension) could be much bigger.
A prime example of this friction is that they’re scared of outsourcing because they’ve read so many horror stories.
Suddenly the problem becomes a lot more intricate. It becomes a lot more emotional. And you need to address that, otherwise, there’s no amount of trust builders that will save you.
So we’ve established that when starting a new project you should have a mentor/advisor who has the marketing knowledge to help you.
While I agree that you should find that person, as I mentioned already, the reality is you often won’t.
Moreover, they won’t have the capital to find help from a quality marketing agency, so many founders will end up going at it alone.
For those that do, when should they start promoting the product and communicating with the market?
A: Founder’s think an MVP is the first step of their journey. It’s not, it’s one of the steps. It’s one asset for your startup.
Your journey actually starts when you have the idea. And, if you believe your idea is powerful, you want to start to see traction in your audience.
You don’t have to wait for the MVP to be ready to start talking about that. You can start to create some buzz, some demand around your MVP while you’re working on it.
You can try to understand how your audience is reacting to the story you’re telling. Moreover, you can apply that feedback to your MVP to improve it before it’s even launched!
After all, your MVP is just one execution of your idea. And that execution could change many times in the future.
Also, if you can’t get some buzz around your idea then your MVP probably won’t work anyway.
When I was working in Silicon Valley with Beaconforce I’ll never forget something a VC told me:
“If you believe your MVP is pretty good then you’ve already spent too much time on it.”
You should be putting something tangible in the hands of your audience as quickly as possible. And while you’re building that tangible thing, you should already be gaining an audience alongside that.
That same VC told me that he had, more than once, invested in a company before their MVP was ready because there was already an audience behind them.
An audience who felt that the MVP was going to solve their exact tension, friction and pain points.
If you’re not embarrassed by the first version of your product, you’ve launched too late.”
Reid Hoffman, Co-Founder of LinkedIn
R: I have an example to share.
It’s about Rand Fishkin’s latest venture, SparkToro.
Most of our readers will know Rand as the legendary founder of Moz, an SEO company he built with his mum back in 2004.
They grew Moz to +$50m in annual revenue.
In 2018, right after leaving Moz, he started SparkToro. It took his co-founder something like 10 months to put together their MVP.
They spent the rest of 2019 beta testing with more and more people playing with the tool. They gathered feedback, improved UI/UX, onboarding, etc.
All the while, Rand was building this huge mailing list.
He was doing a lot of public speaking and content marketing, getting people aware of the company and the problem they were trying to solve.
Long story short, over the course of 18 months, they built a beta version, put it in the hands of beta testers, improved it, and built a waiting list of close to 20k people.
Only time will tell whether or not it will be a success, but there’s no arguing that he was in a brilliant position to start.
He also applied some other interesting marketing techniques from a storytelling standpoint, like finding a common enemy (Google) in his strategic narrative.
But that’s a whole other topic.
Another thing we can talk about is how important it is to understand how different early adopters are from the customers that will come once the product is well-established.
Getting your first 10 users is vastly different from getting the first 100 to 1000.
These people won’t buy the solution. They will buy the vision of the product and what it’ll look like years down the line.
So they need to buy into the founder. And that’s one of the biggest reasons why having that story about why is so crucial.
I’d love to hear some of your thoughts on how to get early adopters.
A: I’ll give you a process I’ve been successful with.
Before you have the MVP you need to be able to answer three questions.
- Why are you bringing the solution to the table?
- Why now?
- Why will your idea help me solve my problem?
These should be answered before you even think about building an MVP or writing a line of code.
These are the three things early adopters look for. The answers will spark their interest.
“Early adopters aren’t looking for a fancy MVP. The audience for a well-developed MVP is already the early majority.”
The early adopters are curious as to why you had the idea, why now is the time to build it and why it’s going to be the best solution for them.
Again, once you’ve answered these three questions, you can start building a community and gaining customer insights.
This means, when you do build your MVP, you’ve already started refining your value proposition based on user feedback.
Take, for example, my platform Business Telling. We started in 2015 and the first thing we did was answer these questions:
I was bringing the solution to the table because I had some experience that I could apply to smaller organisations.
I was doing it at that specific time because I noticed there were a lot of people leaving multinational companies to build startups. They had access to VCs because of their network, but those conversations weren’t moving past the early stage.
My idea could solve the problem because I tested it. I took my experience and applied it to four of five startups and in 15 minutes I can give them three key tips to help them move forward.
So I started to develop the idea and further evaluate it. Five years later and we’ve helped more than 100 projects.
R: I like where we’re going. So what comes next once you’ve answered those 3 questions?
A: I tend to divide that into proximity marketing and blowing their mind.
Proximity marketing for a startup is small actions that you can do in your circle of influence; your LinkedIn network, alumni channels, etc. Try to tap into your networks with relevant people in your industry.
Start testing with them. Hopefully, a few will show interest to the point that they would buy it. Then you can use them to optimise your MVP and then you can go online to reach the broader market – through social media or a landing page, email list, etc.
Having a handful of connections who’re interested in your story is 10x more valuable than having a website from day zero.
As entrepreneurs, we’ve all needed so much help to get to where we are, that we understand and most of us are still calling people looking for help!
So when you call entrepreneurs and say: Hey, can I get 20 minutes? I want to bounce an idea off you.
The answer is: Yeah. Okay.
Every single time.
Wade Eyerly, Serial Entrepreneur & Founder
Think of it as starting your first job.
You send your CV around, you put it on LinkedIn and it’s difficult because you don’t know anyone.
When you’ve worked in an industry for a while and you decide you want a change, it’s suddenly easier because you know people.
It’s the same as your idea. Putting it out into the world cold is a lot harder than if you have a handful of people behind you helping you.
Spend time talking to people who have the problem you’re trying to solve. Physically knocking on doors if you have to.
R: I agree, having a strong network and the ability to ask for people’s help is one of the most important assets for founders.
Not only to get early adopters but with anything really. If you go to an investor and ask for advice on how to do things, later you’ll see them in a much better position to actually invest in you if you follow that advice.
And this concept of “Three Whys” gives you a framework to tell your story in a relevant way.
Then taking those three Whys and tapping into the tribes you already have access to instead of spending thousands of dollars on cold outreach makes total sense.
Something else I see often is founders building social media pages or a website that is void of any relevant arguments.
They don’t have trust builders. There are no testimonials, no projects, no paying clients.
They focus on looking like a competitor that has been in the field for 20 years as opposed to a real person trying to solve a real problem. It doesn’t add up. And it doesn’t work.
Let’s change gears, Antonio. My next question is related to pricing.
What ground rules should entrepreneurs follow when it comes to setting up their price points and strategy? (obviously bearing in mind that different business models require different strategies)
A: Pricing is an important aspect. It becomes part of your story. For example, if you believe your solution, your product, is a premium solution, then you need to price it accordingly.
Take Apple as an example of this. Premium solution – premium price tag.
That being said, you also have to take into account the landscape around you. After all, you have to make sense next to the competition.
So you have the perceived value of what you’re building, what’s in the market and of course the costs of production.
But you also have to take into account the switching cost for your client.
Most likely, your users are already solving their problems with an existing solution. It’s going to cost them effort, and a little bit of risk, to switch to your product or service.
“When you first create your price – you have to take into account the effort it will cost people to switch to your product”
Often companies will create a penetration price, that’s lower to make up for that – but still enough for you to make something on it.
Another method is scheming price. This is where the market has never seen this before and it’s a completely new market.
Then, one that comes to mind specifically with tech startups, is complementary pricing. You get the service for free but then you have add-on prices – those “in-app purchases” that you see often, especially with online games.
Just keep in mind that pricing is part of your story as much as it’s a way to make sure you cover your costs and make a profit.
If I told you 30 years ago that one day there will be a computer company that will give you the same functionality as other computer companies. But they’re slightly cooler, so they charge you more money.
More than that, they’re going to give you a sticker with that computer. And you’re going to stick it to your car or your suitcase. So not only are you going to pay a premium, but you’re also going to advertise for them.
If Apple didn’t exist, and I told you that, you would turn round to me and say “Antonio, mate, I don’t think you know how marketing works.”
“People do not buy goods and services. They buy relations, stories and magic.” – Seth Godin
So pricing and brand are linked and they become the last part of your marketing strategy and story.
R: Clear. Let’s move to the marketing team. Sticking with the same hypothetical roadmap, our founder has now made it through the MVP stage, it went well and now he’s seeing traction.
It’s time to make that first marketing hire – what should a founder be looking for?
A: You’re looking for a co-founder with expertise in marketing – that’s absolutely crucial.
Now, out of these people with expertise in marketing, you need to have someone that is passionate about the solution you’re bringing to the market.
If there is no passion, you shouldn’t be bringing them in. Period.
You need to find someone who has a passion for your solution and feels that they can bring real value to your startup and create a story behind your product.
And, of course, you need to reward them for that – whether that’s through salary or equity or a mix. And you need to be comfortable putting the time, effort and money into them.
They need to be committed, humble, open and passionate about what you’re bringing to the market.
R: That makes a lot of sense because this person will be responsible for growing your marketing team.
Their influence will impact the overall culture of the department and, therefore, your startup. It’s essential you dedicate the time to make the proper decision.
Let’s say that our founder has found someone. How should they go about managing the marketing team moving forward?
Should they simply share and discuss their goals and how marketing can help and leave all else to their marketing lead? Should they allocate time to still be involved in important decisions (like hiring vs outsourcing certain aspects of the work as an example)?
What do you think works best?
A: In the beginning, the founder can have a say.
But if you have found the right CMO or Marketing Co-Founder they should be able to do their thing. Even decisions like outsourcing.
And talking about outsourcing, there’s another common pitfall there.
Sometimes I see companies overspending because they want an event manager or social media manager, etc. It’s unnecessary.
Hire the right decision-makers and outsource the execution.
Hire enough people that your content is simple enough to be understood by your audience.
I often think of Mark Twain when I talk about this. He once said:
“I didn’t have time to write you a short letter, so I wrote you a long one.”
The same is true for your content.
Complexity is the enemy, It needs to be simple and easily understood.
When you have a team that can remove the complexity from the content you’re creating, don’t stretch any further.
And I want to add something else here. People often won’t outsource or go to freelancers because they’re worried someone will steal their idea.
Don’t be like them.
Adopt the mindset of being open to share your idea with third parties and make sure you find a marketer who shares the mindset.
Because then you can outsource execution more efficiently and not get caught up in hiring an internal team that will break the bank.
R: I had a really interesting chat about that the other day.
I was interviewing Wade Eyerly, an entrepreneur from the US that built an airline and pretty much invented subscription-based flying.
He likened a business idea to a newborn baby.
When you first look at your baby you see every future, all the things they could be, a soccer star, brain surgeon, whatever it may be.
And because you love your baby you put all your energy into giving it the opportunity to be all those things.
And sure you’ve seen a lot of other people’s babies. They’re cute, but I bet you’ve never thought to yourself “I hope I get to raise that one.”
The point is, it’s the same with your business idea. You can share it and take some time to think about it because no one will steal it.
At the end of the day, nobody else wants to raise your baby because all the work is yet to be done. And the work is where the money is made!
Anyway, we’re almost wrapping up, Antonio. What marketing resources do you recommend for entrepreneurs?
These books will help you develop the right mindset.
Seth Godin also has a great podcast, and some great books as well. I would recommend This Is Marketing for example.
R: A lot of interesting resources there, Antonio. Thank you.
Now, where can our readers find more about you and what your company, BusinessTelling?
For anyone looking to learn more about BusinessTelling, they can head over to our website. There, they can check out resources we’ve created to help entrepreneurs create and share their business stories.
You can also find the full course I offer there. It’s designed to teach entrepreneurs effective business storytelling.
Thank You, Antonio…
… For taking the time out of your busy schedule to sit down with us.
As we can see from this conversation, building a Grade A solution is only half the battle.
The other half is showing customers that your solution is valuable to them.