There is always a moment in the life of a startup when the hype and excitement dies down and the product meets the sometimes grim reality of customers and their expectations. It is often the beginning of the end. The reported failure rate for high-growth software startups, for example, is 92% within first three years, according to McKinsey.
There is research by CB Insights on why startups fail. The number-one reason is (surprise!) no customers. They fail when they are not solving a market problem, or indeed a large enough problem that people are willing to pay for the solution. As the motto of the Y Combinator startup accelerator goes, ‘Make something people want’.
So what happens when the CEO and his or her equally unsuccessful investors see that that their ‘baby’ is not the success it was supposed to be, even though they believe that the product is better than anything available. What happens when the ‘unicorn’ they were promised doesn’t materialise? Do you think they just might look for scapegoats? And if so, who do you think takes the blame for the lack of customers? I’ll give you one guess.
As Geoffrey Moore, author of the technology marketing bible Crossing the Chasm, wrote of these disgruntled investors and founders: “Not content to slink off the stage without some revenge, this sullen and resentful crew casts about among themselves to find a scapegoat, and whom do they light upon? With unfailing consistency and unerring accuracy, all fingers point to – the vice president of marketing. It is marketing’s fault!”
When things don’t work out, it’s not because of the CEO and the fact that his or her idea was a turkey in the first place. It’s not the CTO or product management, who made a product that does not work. It’s not the vice-president of sales’ fault, for being unable to sell the dog handed to him. We had great technology, great data, great developers, great expertise, great advisors – so they are not the reason for failure. No, you have to have scapegoats – and its marketing’s fault.
At this stage either a consultant is brought in to ‘sort out marketing’, who proceeds to tell the CEO and investors what they want to hear – more often than not, what you have been saying for a while, but they just got tired of listening to you. Or you just get shown the door, and another marketer is brought in and the cycle of despair continues.
Strategies for survival
Working at a startup is over-rated. There I said it: there is nothing superior about working at startups, despite what you might read. It’s just different. Not special at all, in fact.
But, enough of the buzzkill. Do I think you should say ‘no’ to startups now and forever? Of course not. I am saying know the risks as well as the hype.
As Michelle Goodall, CMO of Guild, tells me: “There are so many reasons to love startups – your personal experience, creativity and connections will be hugely valued by the founders and team if the fit is right. You will have a blast and make incredible lifelong connections and friends – and the giddy feeling of collective success that you’re so close to is like nothing else.”
Like Michelle, I still have connections from startups I worked in years ago. We still exchange war stories over a beer.
Working at a startup is over-rated. There I said it: there is nothing superior about working at startups, despite what you might read.
There is one class of startup that I do think marketers could focus on: the scale-up. A lot of the messy startup phase is finished and there is likely to be a sustainable business model. Scale-ups can be less risky and offer even more opportunity. Yes, you might have micromanaging founders, cashflow issues, chaos and poor communication, long hours, etc, but it’s not like those don’t exist at big companies. Every environment comes with risk.
With this in mind, here are the seven tips that you should take into account when making the leap to a startup:
1. Make sure you have a ‘growth mindset’
Startup founder and former PayPal marketer Matt Lerner says the biggest difference-maker in a startup is a ‘growth mindset’. In school, university and most jobs, you get rewarded for doing lots of work and not making mistakes. In a startup, mistakes are inevitable. It’s more important to choose the right work – focus on things that can have an impact, move quickly and learn from your mistakes.
2. Don’t throw what you learned away
I know from personal experience that a lot of what you learn at a bigger company with lots more history can be really valuable – but you may not be able to apply it directly in a startup or scale-up. Much of what you know is situation-specific; for example, does a particular campaign only work if you’re the market leader?
The trick is knowing what to keep, what to modify, and what to throw away entirely. I recommend that the introduction of proper marketing planning, budgeting and sign-off processes is the most valuable thing you can do.
3. Hard work is hard work no matter where you are
Working at a startup is hard work with long hours. So is working at a turnaround. So is working at a private equity-funded company. So is being a CMO. To be successful anywhere, you are going to have to work hard, despite what the work-life balance folks tell you.
4. Reinvent yourself
Many startups and scale-ups require both brand and digital skills. If you have the former but not the latter, working at a fast-growth company with a digital or ecommerce offering can change your career. This is the road I took. Back in the day, I specifically chose to work in a venture capital-funded ecommerce startup. That experience of 15 or more years ago is still paying off today.
5. Pick winners
While we marketers are not going to be as good at picking winners as venture capitalists, we can ‘follow the money’. Look out for companies in ‘hot’ sectors, such as fintech or food, that have received lots of venture capital funding to expand – and target these firms.
6. You can test and learn
Startups do allow you to try out your ideas, learn your own lessons and experience responsibility, rather than having to follow established practice. Lerner points out that “at a startup, there is no playbook, and your job is to figure out how you’re going to build and grow this business – write the playbook. So that means doing a lot of stuff that won’t work. Success comes from testing smart, failing quickly, and learning from each misstep.”
7. Find something you are interested in
If you are on a mission and do find the product or the ideals behind the startup interesting, then it could be a match in heaven. Startups do reward passion and intensity much more than many big companies. Gone are the days where pure technical founders start a company, develop product and only then seek the ‘sales and marketing help’.
Making the leap
I have made the leap from big brand to startup and back to big brand. This does not mean I am totally right about startups, that you should follow what I did, or even that what I experienced in startups will happen to you.
Most startup advice is full of survivorship bias, confirmation bias and the halo effect. My intention is to create a guide to allow you to go in with your eyes wide-open. You will need to be the judge of where my bias is leaking out.
However, I do believe that we will see the career path that I followed become more normal. The flood of venture capital into a wider range of industries means that, as Robert Cohen of Benson Oak Ventures says, “a successful startup will need marketing experience, from the beginning of the identification of the value proposition and resulting product development, as well as ‘marketing DNA’ within the [user experience or user interface] of the product or service itself”.
In other words, startups are going to need more and more marketing expertise – and that’s good news, as this will increase opportunities and reduce the risk.
Most startup advice is full of survivorship bias, confirmation bias and the halo effect.
One consistent theme that I found when talking to venture capitalists and marketers for this column was that joining a startup is a great way to stay relevant as a marketer in an ever-accelerating digital world.
Toni Wood, CMO of startup uFurnish, has had a long, glittering marketing career at DFS, Costa, Procter & Gamble and Sainsbury’s. She used the notion of reinvention and relevance as part of her decision-making process, which she describes thus: “Joining a startup was an opportunity to reassess where and how I wanted to work – and when faced with a similar role to the one I had left in a PLC, versus something completely new in a startup, I surprised myself by taking the startup.”
She continues: “A key part of the attraction was being able to build a business and a brand from the ground up; further deepen my digital skills by actually doing [the work], not just leading others; and, at a strategic level, build on my C-suite experience by learning from entrepreneurs and investors.”
Like myself, Wood believes that “a startup is definitely not for the faint-hearted”. Goodall, of Guild, also believes it may not be right for everyone – particularly if you like lots of mentorship and guidance: “Instead, you need to be a thinker and a doer, one who has a really rounded set of skills and can make things happen quickly.”
Not as alluring as getting rich enough to building a rocket to go to the moon, but probably more grounded, more realistic – and much easier to achieve.