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CHAPTER 1
The Four-Legged Stool: The Crowded Ocean Formula
SILICON VALLEY MAXIM A START-UP IS A STATE OF MIND.
CROWDED OCEAN SO IS SCHIZOPHRENIA.
WE LAUNCH START-UPS.
Those are the first three words on our website and the essence of what we do. We may position ourselves as a marketing firm, but when you join a company as early as we often do (sometimes before they even have a name), you better bring a lot of general business sense to the table as well.
One of our clients once referred to us as his "VPs of Common Sense." His logic was simple: you've got an experience base that I'll never have, launching more than 40 start-ups and working with such industry luminaries as Larry Ellison (Oracle), Scott McNealy (Sun), Tom Siebel (Siebel Systems), and Marc Benioff (Salesforce). Our job, according to him, started with a negative: make sure he didn't screw things up. Then the job turned positive: use our experience to position the company appropriately, develop the messaging and content to support that positioning, launch the company into the open market, and equip the sales team with the tools and programs to give them the best chance to succeed.
Crowded Ocean, in its own way, is just another start-up. We started with the basics that most founders do: a whiteboard and an open mind. We didn't have an installed base that we needed to preserve or an antiquated technology that we needed to amortize. We just had the goal of building the ultimate marketing agency for start-ups.
Once we focused on our core strategy and market, we articulated our core operating principles, which we not only wanted to offer to our clients, but wanted them to integrate into their own business operations.
"On-Demand" Marketing
This concept can go by multiple names, including "just in time," "kanban" (Japanese for "just in time"), "virtual," and the trendier adjective, "fluid." Regardless of what you call it, it comes down to paying for only what you need, when you need it. It applies to marketing (a major focus of this book), but increasingly to multiple areas of your own start-up operation.
When Tom started at Oracle, he was one of three members of its nascent corporate marketing department, writing all the company's product literature, annual reports, and ads. During his six-year tenure there, as the company skyrocketed, he wound up as senior director of corporate marketing, with a staff of 70 (running ORACLE Magazine, Oracle OpenWorld, seminars, direct marketing, advertising, and so on). In today's world, with a growing distinction between "core," "virtualized," and "commodity" functions, with so many great contractors out there, and so many collaboration technologies allowing contributions from many perspectives and geographies, that department of 70 would probably be between 15 and 25, most of them managers sourcing and collaborating with outside resources.
Why the move to on-demand (or "virtual") resources? A number of factors, really:
• ECONOMIC. This one's obvious. There is no hefty salary, no 30 percent overhead, and lower real estate costs. The slower burn rate alone makes this option very attractive to start-ups.
• AGILITY. Much of today's work is task-oriented or project-oriented. It's much faster to assemble a collection of professional talent for a short period and specific task than hope that your collection of in-house talent has the same "best of breed" skills and original ideas to perform the task at hand.
• FRESH THINKING. In-house talent often grows comfortable and intellectually complacent. Outside talent has to stay on top of its game, learning and integrating the most recent ideas and techniques into their skill set.
In the course of our engagements with start-ups, we generally outsource the development and delivery of the following programs:
• Corporate identity.
• Content writing (white papers, data sheets, case studies, video).
• Public relations.
• Website design and development.
• Event marketing (trade shows, webinars, partner programs).
• Demand generation, automation, and measurement.
• Sales and marketing systems.
• Video production.
• Social media.
What does that translate into, headcount-wise? For your marketing department (in an enterprise start-up), in addition to your CMO (or a virtual VP of marketing like Crowded Ocean) your start-up should have at most one full-time employee: a strong marketing manager who can hire and manage all of the previously listed contract services. As you move into Phase 2 (early sales), you should plan to add a second employee, someone strong in demand generation, web analytics, and sales/marketing automation systems. That's it. The rest should be virtual or on-demand.
This logic applies not only to marketing, but to almost every other discipline within your start-up. There are some obvious areas. No start-up needs a full-time CFO or legal counsel, but in the eight years that Crowded Ocean has been operating, we've seen even the ultimate in-house, full-time positions — coding and sales — moving to on-demand.
Inbound and Outbound Marketing
The marketing brains and co-founders of HubSpot evangelized the concept of "inbound marketing" about a decade ago. Inbound marketing says that in the age of the Internet, you want to invest in targeted content to attract or pull customers to your website and social channels to build your audience with compelling content and offers. In other words, you want to "get found" online and earn your audience through authority, content, and offers.
Previously, a brand would reach out to try find customers through traditional outbound or push-based investments like paid media (advertising), PR, and direct mail. Start-ups today invest marketing dollars in targeted content offered on specific sites, social channels, and online forums to be discovered in search and "earned media." The term "inbound marketing" is now so ubiquitous that it has its own Wikipedia entry and has spawned its own industry of books, presentations, and seminars. Inbound marketing is the marketing engine that lowers the cost of customer acquisition, but it is an engine that must be fueled with an investment in outbound marketing to prime the pump, so to speak, a process that can take months.
Success in inbound marketing also implies an emphasis on measurement that was heretofore unavailable in the pre-Internet, outbound-marketing era. By using marketing automation system software like HubSpot, Marketo, and Pardot, coupled with a disciplined inbound marketing approach, start-ups can measure where their customers are coming from, what content is most effective at attracting customers and, therefore, how to tune and maximize every marketing dollar spent to attract and convert them.
Sales-Based Marketing
Since our founding, Crowded Ocean has been associated with "sales-based marketing." The concept is simple, but controversial. The role of marketing comes down to three words: make sales easier. If it doesn't generate new sales, shorten the sales cycle, or make repeat sales easier, don't do it.
We've written about it; we do workshops about it — for us, it's just common sense. But for many marketing professionals, it's controversial because it sounds as if we are making marketing and marketers subservient to sales. We're not: marketing is a true equal of sales in any start-up in which we work.
But the term is off-putting to many, especially marketers. There are any number of CMOs or VPs of marketing who reject this concept. They believe that: a) they know — better than the sales team — what the market does or doesn't need, and b) raising the role of sales, in their mind, diminishes the importance of marketing, which is a killer in this world of big egos and big budgets.
Let's be clear. There are certain companies (Coke, Nike, and Quiksilver come immediately to mind) that are truly marketing-centric. The differences between my sugar water and yours, between my shoes and yours, between my surf shorts and yours, rarely come down to functionality and technology; they come down to marketing. In those cases, sales-based marketing doesn't make sense. But for most companies today, sales-based marketing should be the norm.
This is especially true in the area of start-ups, which exist because of real-life problems that a company or consumer is having or because of a unique application that users will flock to. This means marketing can't work in a self-imposed vacuum; it has to go down the hall to the product team and translate what they've created to a skeptical market. And it needs to go out in the field with the sales guys and see and hear how target users react to the product. Then it needs to incorporate all of this into their positioning and messaging.
The next step in sales-based marketing is testing the message. Let's say that, in the course of establishing the initial positioning of the company and product, we establish three different options to explain how the product works: a bicycle, a car, and a boat. After much discussion, with the sales and product departments weighing in heavily, we decide on "car" and devise presentations and sales materials in support of this position.
Now it's time to test our new positioning (before we do any of the heavy investments of time and money in critical marketing deliverables like PR, a website, and demand generation programs). We meet with a number of potential customers and get their feedback. And we listen hard.
It's the same thing with early positioning of your product. You have to have confidence in your decision ("car"), but you have to be flexible and humble: the market knows better than you what it needs and wants. So the first time a customer says, "You're not a car — you're more like a bicycle," consider the feedback, but stay the course. If sales, based on this one meeting, wants to rip up the PowerPoint presentation and start again, tell them they're overreacting. If the sales team gets the same reaction the second time, listen harder; but it's still too early to change course. However, if the sales team reports that they hear it for a third time, scrap the car and get to work on the bicycle strategy.
Now that you've been out selling the product for a bit, it's time to define your sales cycle. Not some generic cycle — your sales cycle.
The key is to still hold sales accountable for revenue generation, but to also involve your entire start-up team by showing them where there are holes (or stalls) in the cycle, so that the appropriate department (marketing, product, or support) can take the appropriate action. If the issue is lack of market awareness, you might heavy up on PR, analyst relations, thought leadership, search engine marketing, and social media. If it's a problem of early trials not turning into volume sales, we work out incentive programs for the pioneers within a company. If the product is a complex sale, we might pilot a try-before-you-buy program, where some customer success people work as coaches for key clients.
Your company-specific sales cycle graphic will change as you grow — and it's sales' job to keep it up to date and the company informed. Your marketing strategy and spending will adjust accordingly. You can put PR on a maintenance budget and heavy-up on lead generation. You can build out case studies and ROI tools — anything that validates your early claims and assures customers they're not taking a major risk. Then (you'll be sick of reading this phrase throughout the book) "measure everything." Learn what's working, where new business is coming from, and how to make your sales cycle as short and efficient as possible.
Whole-Brain Marketing
Business, as seen through the left-brain/right-brain lens, (left brain = logic and analysis; right brain = creativity and imagination) is a determinedly left-brain discipline. Sales is make your numbers and you're golden; miss them and you're gone. Product is make the product according to "spec" and on time, and you get a bonus. Miss it often enough and you're working the drive-through lane at Carl's Jr.
For most of its history, marketing has inhabited the sparsely populated right-brain sector of business, describing itself as "more art than science." When asked to justify our spending in such areas as PR, advertising, and direct marketing, we point to recent coverage and hoped that no one would ask if any of that coverage led to a sale. It's the same thing with advertising.
Historically, marketing has always been the least appreciated part of most businesses. (Those who can, do; those who can't, teach. And those who can't do either, go into marketing.) Although no one in management is bold or stupid enough to suggest that the company do no marketing at all — after all, how else was the market going to notice you initially and learn more about you with time — there is always the lurking suspicion that marketing is run by lemmings, that they only do what other companies are doing and are only doing it because the other companies are doing it.
All of that changed in the past two decades because of two developments: the Internet and sales/marketing automation systems. Now, marketing is "Metrics R Us." With the right tools in place, data-driven digital marketing experts can report stats from site traffic (weekly, daily, hourly) to time on site to downloads, signups, shares, and follows — all of which is valuable market feedback about what content is resonating with your target buyers, what channels are producing traffic, and so on.
As virtually every click is now captured and traceable, the data is there to move marketing from the right-brain parking lot into the left-brain side of the business, along with sales, accounting, and product development.
Now, with the rapid adoption of inbound marketing, which focuses on your company being found, the technology that made sense of all those clicks and connections are marketing automation systems, an outgrowth of customer-relationship-management or eBusiness software. Originally, companies like Siebel Systems and Salesforce led the way on the sales front, with Marketo, Eloqua, and HubSpot (and more) complementing them on the marketing side. Marketers could now tell not only when you first visited their site, but where you had come from, how long you stayed, what else you clicked on while visiting, and so on.
To be successful these days, you need to employ both halves of your marketing brain. Although the Internet and marketing automation systems have created a new level of visibility and accountability, you still need the original thinking and creativity to create those programs you want to measure. So our counsel to our clients is to adopt a pattern similar to military marching: left-right-left. Start with the analytics for your market to determine who's looking for what you have to offer and then use this data to guide your creative thinking (for campaigns, PR positioning, sales promos, etc.). Then use your left-brain tools to track the efficiencies of these programs.
Then do it all over again.
CHAPTER 2
Repeat After Us: "I Am Not Steve Jobs"
SILICON VALLEY MANTRA, THERE WAS ONLY ONE STEVE JOBS.
CROWDED OCEAN THANK GOD.
STEVE JOBS IS THE WORST THING TO HAPPEN to start-ups and their CEOs. Let us explain.
Aspiring baseball players may try to emulate Willie Mays when they're kids, trying basket catches and running out from under their caps. But they give it up once the game goes live, catching the ball with two hands. Rock wannabes may try Jimi Hendrix's guitar pyrotechnics once, but after they char their eyebrows and chip their teeth, they go back to a more traditional style. Yet startup CEOs seem determined to model Steve Jobs, from his temper tantrums to obsession with detail.
Big mistake.
Neither of us ever met Mr. Jobs (or "Steve," as everyone in tech who never met him seems determined to call him, like "Cher" or "Elton"), and we hold him in the highest esteem for the impact he had on the high-tech industry and continues to have on our daily lives. Our problem is not so much with Steve Jobs the individual, but Steve Jobs the icon. If Jobs' infamous early managerial peccadillos had remained within the walls of Apple or his house, there would be no need for this chapter. But for the majority of our clients — almost all of them first-time CEOs — his accomplishments not only excuse his professional and personal misconduct, they validate it. This leads them to emulate it, sometimes in little ways, sometimes extravagantly.
In taking on a new client, we test early for warning signs of "Jobs-itis." And if we notice our CEOs starting to adopt, then justify, any of the following behaviors, we bring out the rolled-up newspaper and snap them on the snout until they quit channeling their inner asshole:
• BOORISH BEHAVIOR. Charismatic and demanding, Jobs had no sense of the line between "personal" and "professional," and so he ignored or crossed over it repeatedly, with seemingly no regard for the personal havoc he was wreaking. Early Apple employees — at least those not under cones of silence — still talk of the scars these encounters left, 30 years later.
(Continues…)
Excerpted from "The Ultimate Start-Up Guide"
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Copyright © 2017 Tom Hogan and Carol Broadbent.
Excerpted by permission of Red Wheel/Weiser, LLC.
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