Article after article, study after study, each offer Buzzfeed style insight to why startups fail. It’s such a popular and frequently recurring tweet that I’ve started chewing on WHY the question of why keeps coming up. As founders, perhaps we’re asking the wrong question and shouldn’t be seeking to know why but rather how (or, how come) so that we might avoid failure.
It’s Incubator/Accelerator launch season in Austin, TX so thanks to Mass Challenge, DivInc, and the recent Founder Institute Austin application opening, I’ve met and chatted with some 20 startup teams in the last 48 hours.
Now, I’m an ardent proponent of data and search engines. With my past in Search, I always point out to founders that they shouldn’t think of Google as SEO; they should simply appreciate that when anyone hears of you or your startup for the first time, they’re going to look you up – are you there?
Not meeting someone actively seeking your business is as substantial a missed opportunity as not having Analytics in place. Why on earth would you start any business without measuring and knowing what’s going on??
I start most of my meetings with startups by asking to see their Web Analytics.
I get your pitch, it sounds neat, good luck! Show me your data (I can learn more about what’s going on in 3 minutes there than in an hour talking with you).
Many have nothing place. The majority haven’t set it up in any way that it’s meaningful.
“Okay… who’s in charge of developing your market?” I always ask next. “How do you know what you should be doing??”
The reply that ALWAYS makes my heart sink… “oh we’re testing some Facebook ads but we’re not ready to do any marketing.”
Not one of my recent 20 meetings had anyone experienced in charge of Marketing.
This recent experience reminded me of an analysis Chandni Shah Motwani did a few years ago for Chubby Brain.
It astounds me to no end that founders think marketing is what’s done to promote a business; that it’s only applicable when ready to sell to customers.
5 of the teams were doing Facebook ads and had no Analytics in place. WTF?!? Someone help me grasp why we have so many companies doing this and who’s advising them so poorly?? Is it that founders don’t know what it means to be marketing? Is it that since they don’t know how to manage Facebook or AdWords, the last thing they should be doing is testing it through trial and error when hundreds of thousands of people do that stuff in their sleep? Are investors telling startups to fly blindly till they stumble into what works? Are we being advised these days to just build build build and customers will come??
Marketing. NOT Advertising and Promotion. Marketing.
How do Startups Fail? They don’t understand or are they aren’t prioritizing what Marketing actually is and should be doing.
Not sure what I mean by that, or don’t believe me?
Take a look at Paul Graham’s assessment.
#s – 2, 3, 4, 5, 7, 8, 9, 10, 11, 12, 13, 14, and 15 are all MARKET related issues. Marketing.
This is HOW startups fail!
Here’s the study Carnegie Mellon’s Chandni Motwani did for Chubby Brain
Reasons 1, 2, 4… Marketing.
And one could argue that since 1, 2, and 4 are Marketing related, #3 (not the right team) is in fact because that team didn’t prioritize, understand, or include Marketing.
Go down the list though, 1, 2, , 4, 5, 6, 7, 8, 9, 10, 11, 16, 17, and 20. Marketing.
20 of my most recent startup encounters have no one dealing with that.
Let’s do it again, here’s Statista
#1 No Market Need.
1, 2, 4, 5, 6, 7, 8 (actually says “poor marketing” LOL), 9, 10, 13, 15, 20
Now, let me do some big data, AI, analysis of those three perspectives. Let’s tease out the recurring themes in a rough rank order:
- No Market and Ignoring Customers – Paul Graham refers to it as Obstinancy; the market should be telling you want to do, not your blind certainty
- Wrong Team – What’s on your team?
- Bad Location / Wrong Platform – Developers will note that this is a decision of Node vs. Ruby and to an extent, it is. It’s also whether or not you should be based in Austin or Chicago, part of that Incubator, on iOS or Android, promoting on Facebook or Snapchat…
- Marginal Niche / Derivative Idea / Out competed – Do you know all of your competitors and partners?? Who’s job is it to know them?
- Slowness in Launching / Launching Too Early / Product Mis-Timed / Bad Time to Start – Is there any way to determine that other than studying the market? Is your launch AND roadmap attuned to what’s going on in the market?
- Having No Specific User in Mind
- Raising Too Little Money / Spending Too Much Money / Ran out of Cash – how do you think you determine the money it will take and from where that money will come?
- Pricing / Cost issues – How would you know?
- Don’t Use Network – which is what?
- Failed Pivot
- Hiring Bad Programmers
- Raising Too Much Money – Manageable by doing what?
- Poor Investor Management / Team/Investor disharmony
- Sacrificing Users to Profits
- Burn Out / Lose Focus / Half Hearted Effort / Fights between Founders… which is motivated by what?
- Not Wanting to Get Your Hands Dirty
- Legal Challenges
Granted, my ordering of a mashup of what’s in there but I think you might concur with the ranking and note that my questions are all associated with Market-based issues. That’s the work of Marketing.
Please appreciate that MOST people have no idea what marketing actually is and way too many advisors, incubators, and investors are guiding founders to think that marketing is what’s done to promote a product, when it’s ready. Let me bottom line something for you too – WAY too many “Marketers” have no idea what they’re doing and that’s not me picking on peers – that’s an issue with the way we’ve created job titles and roles in society. Someone who kicks ass at doing Facebook Ads is not doing Marketing – they’re doing online advertising. Someone who does “Content Marketing” isn’t really doing marketing, they’re developing content to promote something.
These mentality is f*-ing up the economy.
Promotion is one of the Ps of marketing and when you’re actually doing Marketing and not just Promotion, it includes all the other Ps in the foundation of the role: Pricing, Placement, Product, People, etc.
Founders that start anything without having first and foremost been marketing (studying the market, knowing competitors, uncovering from where funding might come), are shooting an arrow at a target while blind and drunk.
Marketing is the work of determining what to do, when, where, how, and for whom. BASED on the market.
A great economist once noted that, “Marketing is the work of making Sales superfluous.” Not irrelevant mind you! Just unnecessary. His point was that if you have to do Sales (to anyone: customers, partners, investors… are you having to seek out and push yourself into investors? that’s selling to them) then you Marketing hasn’t closed the gaps in the business to make that unnecessary.
- CEO brings the vision, resources and team, and potential
- CTO (or related role if not tech) delivers the solution
- CMO studies and develops the market
No market = no business. No business, you fail.
This post was written by Paul O'Brien (CEO of MediaTech Ventures, and Director of the Austin Founder Institute), and was originally published on SEOBrien.com.
Paul O'Brien is a longtime Silicon Valley technology and startup veteran, known as SEO’Brien online for an extensive past in the search industry. O'Brien is a seasoned marketer with an early career at Yahoo! and HP. He led the early growth of startups such as Outright.com (Acquired by GoDaddy), Zvents (Acquired by eBay’s Stubhub), and MicroVentures (Venture Capital). Today, O'Brien works in Venture Capital Economic Development, serving the investment and venture capital economies. He has a passion for media innovation, and seeded and runs MediaTech Ventures, a media industry venture development group.