Silicon Valley, Disrupt Thyself
Two founders of a stealth startup reached out to me on LinkedIn recently asking for 30 minutes to provide feedback on their idea. They were struggling with product market fit and seeking perspective from seasoned marketers.
In chatting with them, I was impressed with three things:
Unlike many entrepreneurs who wait to test their assumptions, these founders were doing research before they spent a lot of their investors’ money
They were responsive and grateful for my detailed critique
They had no idea what they were doing
Essentially these entrepreneurs were trying to solve a problem — with AI, of course — that didn’t exist in the first place. Their web widget I believe, and they came to agree, would have made webpage navigation more confusing instead of less.
“They lacked even a glimmer of a minimum viable product.”
The burning question is this: How did they get funded? Apart from possessing Silicon Valley’s preferred gender, skin tone, and elite educational credentials, it was hard to see how this duo had attracted dollars from its nameplate investors.
They were smart and earnest young fellows, but they lacked even the glimmer of a minimum viable product. More worrisome is that they didn’t seem to have the capacity to even imagine what might be useful to an average human visiting a website, which any of 8 billion marketers on Earth (made-up number) could easily take an educated guess at.
VCs expect to make money on roughly one out of 10 investments (NOT a made-up number), and I’ll bet this helps explain why the success rate is so low: Very few VCs have marketing expertise so they discount its value. A natural result is misplaced bets and unrealized business potential.
Anecdotally, I find that many – although certainly not all – in the Valley think of marketing as a thin veneer of words and design, slapped on the product as it ships. In fact, marketing gives the customer a seat at the table during product design, helping tune both product and messaging to customer needs and delivering creative assets only in later stages.
In a nutshell, marketing is only as important as your customer.
Okay! Time for audience questions.
“But don’t the engineers need to get the product right before we talk to prospects?”
Of course you need to be certain that the product is viable. But who’s to say what the “right” product is if not the folks who will use it?
2. “How can we do research when we didn’t build time or budget into our plan?”
First off, you should have – and your VCs / board should have helped you with that.
Secondly, with market research, you can get prospects’ feedback at the concept stage – before developing a product with low market potential. You might need to pivot, but you’ll be pivoting much faster — increasing your likelihood of being among the 10 percent of startups who make it. This is especially true given that basic research can be ridiculously quick and affordable.
“Silicon Valley’s overall success doesn’t mean it ain’t broke.”
Another anecdote: I recently worked with a serial entrepreneur who wanted my help repositioning his company due to a misfire on the target audience.
He’d burned through most of his Series A funds developing a product based on what seemed like strong market potential. Very late in the game, he learned that the audience his product was designed to help had no purchase authority and that the people who controlled the purse strings had zero interest in supporting the first group.
So he was spending his last A-round pennies retooling towards this new audience although a quick round of market research one year earlier could have saved him all of that struggle.
This man is a highly educated, very successful entrepreneur and investor who has been in the business for decades. When I mentioned that, for his other startups, we could conduct research earlier in the process to identify the key purchase dynamics, he waved off the idea.
This is how the Valley does business all too often: Investing huge amounts of time doing things they’re comfortable doing while claiming there isn’t time or money to talk to the customer prospects who are ultimately going to make or break their success.
Maybe this complaint seems silly given the Valley’s status is a history-defining powerhouse of innovation and capital generation. I have all the respect in the world for that (and for its impact on my property values – thanks!) But at the same time, that doesn’t mean it ain’t broke.
This is capitalism with a literal capital C leaving money and efficiency on the table simply because it’s used to doing things a certain way. Venture is thrilled to disrupt other industries, but the benign tweak that I’m suggesting seems too “risky” for most. Of course, VCs’ management fees blunt the impact of unsuccessful portfolio companies. But the startups themselves enjoy no such cushion.
Silicon Valley, here’s an idea worth funding: Disrupt thyself. #sos #sendmarketing
