“We are going to change the world”. If ever there was a cliche at a technology start-up pitch, this has to be it. Having gone through the roller coaster ride of raising investment, I learned an important lesson. Anyone that asks you how you are going to build a $1 billion dollar business and how you are going to "change the world" needs a wake up call. It is astonishing how many VCs continue to view investments through this lens. Furthermore, it is amazing how entrepreneurs are forced to pander to it. Sure, I understand the traditional VC investing model and that they will make five to ten investments a year and hope that one delivers big. The rest are simply collateral damage that could not scale fast enough to satisfy the VC with a huge exit. Those that deliver big are few and far between and you probably won’t be one of them. But don’t let that stop you from building a great product and business because you can. Don’t waste your precious time and energy trying to back fill a story that shows 100 million customers with your totally creative way to drive revenue (that deep down you know is nonsense). Instead, focus on these four clear objectives and frame your business plan around this. First, build a great founding and operating team. Second, build an amazing product that delivers what it says on the box with early customer feedback to prove it. Simply, make your customers happy. Third, set your sights to break-even and not a day beyond. Finally, ensure you are building a scalable business model and product from day one. If you achieve these objectives you will be in a great position to build a profitable growth business. Remember, it will take one customer at a time to determine your success.
Investment funds like Dave McClure’s 500startups get it. The reality is that a successful exits for most ambitious and innovative companies will come in seven or eight digits and not the ten we find in $1,000,000,000. I assure you, if your product is so big and so groundbreaking, then you are not knocking on doors for investment. It will be other way around. Since no VCs are knocking on your door, don’t waste another minute of your time reaching for the moon. Instead, build your product and prove your customers want it. Do everything in your power to delight them with brilliant design and engineering. Change your customer’s world and the rest will follow. If you do that, you will find the right investors with a realistic world view. You probably won’t change the world, but like the great Steve Jobs said, try to make a dent in it. Good luck, I am pulling for you.
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I have been very lucky to have lived and worked in Silicon Valley, New York, London, Dubai, Mumbai, Singapore, and Hong Kong. The further East I traveled from Silicon Valley, the more traditional the companies and marketing I was exposed to. Startups are innovative by definition. You don’t challenge existing competition and traditional industries without doing something different. But what really impresses me about startups, particularly in Silicon Valley, is their marketing resourcefulness. After all, if you don’t rapidly figure out ways to attract customers and retain them, there is no business. Entrepreneurs quickly learn that great technology does not grow a business, customers do.
The startup is in an almost impossible situation because it is under constant pressure to grow revenues with as little investment as possible. Doing more with less becomes second nature. It’s simple math, without highly efficient marketing ROI (return on investment) it is game over…the end of the road…the nail in the coffin (you get my point).
Most of us are simply too comfortable as marketers. Admit it, if it were your own money you were spending you would probably do a few things differently. The larger our organization, the more complacency and lack of accountability typically exist. We do stupid things such as waste money behind the cloak of building “brand awareness” (which is a fancy term for flushing money down the toilet because it can’t be measured). We opt for larger marketing teams instead of individual accountability. Simply put, we can afford to fail. Here are some lessons we can take from Silicon Valley that I hope will make you a sharper, more nimble, and results oriented marketer.
Optimize Everything in Real Time
The concept of optimization is perhaps the area that I see larger organizations fail to execute more than any other. There are a number of best practices from Silicon Valley that any organization can adopt quickly. As a digital marketer, you are managing a pipeline. You are likely responsible for the customer’s journey from prospect to engaged user. I promise you that this pipeline is full of holes and opportunities to do things better. Startups understand that optimization is not a goal but a neverending journey of improvement. Silicon Valley companies have to measure, learn, and adapt in real time. Most large companies simply do not and continue to do post mortems only after it is too late and the money is spent. If you still track your marketing in an Excel spreadsheet you can do better!
So how do you become a real-time marketer who eats, breathes, and sleeps optimization? With amazing tools! Here are some of my favorite tools that you will find in many Silicon Valley startups because they are cheap, easy, fast, and accurate. MixPanel and KissMetrics for funnel optimization. Optimizely and Visual Website Optimizer for website and campaign A/B testing. Loop 11 and Usabilla for customer usability testing. Snap Engage and Olark for customer feedback & chat. Mailchimp, SendGrid, and Retargeter for email list delivery optimization. Hootsuite and Sprout Social for social media management. Wistia and Vidyard for business video optimization and analytics. Geckoboard and Ducksboard for real-time reporting dashboards.
Don’t feel intimidated. Simply map your customer’s journey from prospect to active user and test and apply only the tools that truly help you engage, convert, and retain customers better than you can today. We used a free online tool called Gliffy to map our customer journey. Remember, it’s a journey without a finish line. If you are still not convinced, just do the simple math and look at what a 10 percent improvement in your click-through rate, conversion rate, or retention rate will do for your company’s revenues and bottom line.
Think Like a CEO
A CEO measures success not by advertising awards or vanity metrics in Google Analytics but by profits. Profits, after all, are (or should be) the ultimate measure of success of any commercial operation. CEOs think in terms of ROI. Can I generate more income over time from the investments I make today versus the cost? As marketers, we love vanity metrics like site visits or page views. The CEO understands these are signals but far from a measurement of success. Silicon Valley CEOs are often the CEO, CTO, CMO, CFO, and COO of their business until they are able to prove growth. You will see venture capitalists shudder at the thought of hiring a VP of Marketing until they can see proof people actually want the product the startup is selling. So with limited time and money, these CEOs are incredibly resourceful. Not only will you see them hustle to generate sales from inbound marketing, but they are always thinking about returns and not simply “signals.” As a marketer, you manage one of the largest variable costs of your business. The sooner you can show your CEO real financial impact and not signals, then the more she is likely to throw more budget in your direction.
“Fail fast” is a term coined in Silicon Valley. It means that companies need to determine if there is a product market fit as quickly as possible. If not, don’t continue to drain money and resources. Simply accept it as a failure and either adjust or change direction all together. I think we can apply this same thinking to marketing. In this day and age you can track virtually all of your marketing efforts. It should not take you long to figure out if your creative, value proposition, or user experience is broken. There is no excuse not to pull the plug and try again. I see so many people let poorly performing marketing drag on far too long when the data has clearly demonstrated failure. I have said it before, but I have told my own marketing team that I expect 70 percent of their experiments to fail but I do also expect them to spot the 30 percent that are working and to invest more to scale them up fast. Failure is not an easy pill to swallow (especially in Asia) but it is a necessity to achieve success. Learn, adapt, and implement. Like the Silicon Valley startup you must fail fast and change course to survive and thrive.
Silicon Valley is a small stretch form of land on either side of Highway 101 from San Francisco to San Jose. Asia is slightly bigger. It’s not the size of the dog in the fight, but the size of the fight in the dog. And Silicon Valley has more fight in it than anywhere on the planet. We have a lot to learn.
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Let’s be honest, we spend a disproportionate amount of our time on the campaign. It’s where the “big idea” is revealed to the world. It’s your brand’s chance to be in the spotlight. Campaigns, after all, drive customers.
Campaigns drive prospects. Where you need to get serious is in the less glamorous world of lead conversion because this is where customers are born.
As digital marketers we have to abide by the simple rule of test, learn, optimize, and try again. A healthy risk of bravery and risk taking also helps. If you want to get the best results out of your online marketing you simply cannot be afraid to fail. I tell my marketing team today that I don’t care if 70 percent of their experiments don’t work as long as they can spot the 30 percent that do work and scale them. They also know the metric of most importance to me is the lead conversion rate. CTR, visits, page views…blah blah blah. Getting prospects on your site is easy but converting them is where the skill comes in.
It is this topic of lead conversion optimization where the geek within me is unleashed and I am happiest. Following is some practical advice based on 10 years of consumer Internet marketing experience (and many mistakes). I spent US$50 million of my previous company’s marketing budget across 15 geographies and this is what I learned.
Don’t Be Lazy and Mismatch Your Message
How many times have you seen companies deliver one message through email, banners, or ad words and when you click through you hit a landing page that has nothing to do with the promise? How frustrating. If I see an ad for a magic pill that will make me lose 20kg overnight, I am a lost opportunity if they try and sell me their new exercise machine. Match your messages! For those savvier, you can now dynamically update your headline with the copy from your SEM and display advertising.
In order to draw prospects to your message, you have to remove the clutter. The more white space and less copy you have on your landing page the better. Remember, you want to draw your prospects’ eyes to your headline’s call to action. Remove links that risk your prospect getting lost in your website. Keep your lead form as short as possible (you don’t have to ask 100 meaningless questions including the color of their dog). Use human tone, short and punchy copy, and minimal images (avoid generic stock images at all costs as you lose authenticity). For inspiration, look at www.square.com and www.disqus.com as model examples of effective use of simplicity.
Build Trust Into Your Landing Page
Test, Test, Test
I cannot recommend the power of trial and error enough. Run A/B testing constantly to ensure your conversion efforts are always maximized. The reality is our intuition as marketers is usually wrong so challenge and validate it with real data. This is not an exercise in statistics but more a test of consumer psychology. There are many cheap and easy tools available that will give you the insight you need to optimize your conversion rates. Why is testing important? Let’s assume your average customer generates US$100 revenue per year and your prospect to customer conversion rate is 10 percent. You have the power to effectively double your company’s revenue by increasing that conversion rate from 10 percent to 20 percent (I promise its achievable). Of course, you can achieve the same revenue results by doubling the prospects you drive to your site and maintaining your 10 percent conversion rate but that takes 100 percent more marketing cost (which your boss won’t like) while optimization is free!
Remember, the job of optimization is never complete.
Convert! Convert! Convert!
There is absolutely no question that entrepreneurism is red hot around the globe. It is a perfect storm of a retracting corporate job market, the extraordinarily low cost of technology to start a venture, an explosion of private capital chasing startups and technology success stories permeating through popular culture. Looks at the valuations of Instagram, Facebook, LinkedIn….so who wouldn’t give a startup a punt?
Over the course of the past few years we have witnessed a material shift in focus from both venture capital and entrepreneurs to Asia. Cities such as Beijing, Shanghai, Hong Kong, Singapore and Jakarta are producing more startups than ever before. Investors and entrepreneurs alike are seduced by the sheer size of the opportunity which is generally measured by the number of potential customers. Are these customers willing or capable of paying for your service? Ah, a minor detail so often brushed under the carpet.
China has been particularly interesting to watch as e-commerce, group buying, travel, gaming, mobile and social have been flooded with new ventures. The problem I see in China, which is not so different to what we experienced in Silicon Valley in the 90s, is that ventures are launching without clear business models. Success once again is being defined by numbers of users rather than real revenues and profits which is unhealthy. The Silicon Valley venture capital model has been to launch, scale users quickly and figure out monetizing in the future. That is all good for a well funded venture with time as an asset but does not apply to 99% of new startups. When companies the size of Twitter are still trying to figure out how to make money then the rest of should take notice.
My plea to any new startup in Asia is not to fall into the trap of equating numbers of users with success. I would take the path of building a business with 1,000 customers and profitability over 1,000,000 customers and a great press release. Vanity metrics are worthless and do nothing more than stroke ones ego. Build a product or service which has real value and is something your customers will pay for. Your ability to build a business with real revenues, profits and loyal customers is a true sign of success. While you may not make it on TechCrunch for achieving this, the company that boasts 1,000,000 users but burns $1,000,000 USD a month is no role model. You don’t have to follow the ridiculous Silicon Valley mantra of “changing the world” or chase a $1 billion IPO. Simply focus on building a great product that customers will pay for and take care of them.
Perhaps David Heinermeier Hansson of 37 Signals says it best. If you have 3 minutes please watch this video.
Simplicity is the product of great design. It removes friction and gives us what we want, when we want it. Complexity is the product of bureaucracy, complacency or a lack of creativity (or all of the above).
Starting a new company has been a liberating experience. The goal of simplicity for our customers and operations drives everything I do. The product design for our customers, our technology architecture, our internal processes and our office….all designed to be simple and usable.
How many examples of Hong Kong companies can you point to that make your life easier? By and large, these companies are infected with complexity. The customer does not come first, the bureaucracy comes first. The bureaucracy feeds bad design and that leaves us all unhappy.
The answer is simple. Simplify.
The amount of chatter around “mobile strategy” is giving me a piercing headache that I can not shake. The only remedy is to write. So here I go.
Mobile is not a strategy. It’s simply another screen on which your business must function. Is there a titanic shift from time spent on the PC to mobile screen? Yes. Are there business models well suited to mobility? Yes. Is developing for the mobile screen a fundamentally critical channel for any business that wants a future? Yes.
Are you a mobile company? I hope your answer is no. Just because you have led with mobile you can’t stop there. If you want to build a formidable business for the long term then you need a ubiquity strategy, not a mobile strategy. What happens when Apple TV starts competing with your iPad app in the living room? What happens when Google Glasses become common place on the street? What happens when the automobile dashboard becomes truly connected? Do you then need a “TV strategy”, a “glasses strategy” or an “automobile strategy”?
Sounds stupid right? What you need is ubiquity. You need to seamlessly be everywhere your customers are. I of course may be wrong (I usually am) but I believe the future is in responsive web design, HTML5, the open web, and seeing the world through your customers’ eyes, whatever screen those eyes may be looking at.
Believe me, the future is much bigger than your mobile app. If you are not thinking ahead, you will lose. Is mobile a good starting point? Of course it is. Mobile has tremendous advantages such as cost, speed to market and distribution. But please don’t fall into the trap of talking about your “mobile strategy”. Strategy by definition is about the future of your business. Instead think of mobile as just another screen on which you engage your customers. Your strategy deserves to be bigger than a 4-inch piece of glass.
Image Credit: Gizmodo.com