Sales & Marketing

Tips from the Start-up CEO’s Marketing Manual

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Editor’s note: A Silicon Valley “legend” recently stated that running a start-up “is like eating glass.” Guy Smith, chief consultant for Silicon Strategies Marketing and a content contributor to SandHill.com for several years, is out to change that picture for start-up CEOs with the insights in his recently published book, “Start-up CEO’s Marketing Manual.”

SandHill.com: Is your book mainly all new information, or is it an aggregation of some of your prior writing?

Guy Smith: It’s both. A while back I had started lecturing both inside of corporations and also at all-day events on what is strategic marketing and what founders or start-up CEOs need to pay attention to in order to make sure that they don’t drop the ball anywhere along the way.

My website only gives brief mentions about these topics. This book is a deeper dive. It comes out of my CEO Marketing Boot Camp where we do a quick tour de force of the major aspects of marketing strategy and make sure that a start-up CEO can’t be fooled. We teach them what needs to be accomplished even if they delegate it to somebody else. This book will help ensure they get these things accomplished before they burn through all their venture capital.

SandHill.com: Do you think that it’s across the board that start-up CEOs don’t know this information, or is it a preponderance in technology companies?

Guy Smith: I think it’s particularly acute in the technology business. Most founders are techies first and foremost. What happens is during their work for other organizations they occasionally spot a hole in the market and they identify the fundamental little things that early adopters need. But that’s not marketing. That’s called tripping over an opportunity.

In order to successfully go out to market, they have to understand the definition of their market, how they segment it and divide it up into small groups, and they need to really understand the motivations of the early majority market. They also need to know how to communicate that effectively. A marketing strategy has all these different components and most techie founders don’t know any of them. That, I think, has been responsible for the ever-filling dead pool in Silicon Valley.

Peter Drucker, the management guru of the 20th century, said that business is all innovation and marketing; everything else is administrative work. In Silicon Valley we’re not lacking for innovation, but we are lacking leaders who understand the relevance of marketing.

SandHill.com: In dealing with your clients over the years, what have you found is the first pitfall that start-up CEOs run into as far as marketing?

Guy Smith: The first place they trip over is what I call the “founder’s myopia.” The founder starts to build a product for early adopters. As we all know, early adopters are people who have an urgent, pressing need for a very specific solution. What happens is that a lot of founders keep focusing on those early adopters, the place where they got their first revenues, and keep enhancing the product for this very small number of people.

But they never go out and do the broad market research to figure out how they can take this product and expand it into something that pleases millions instead of just a few.

The second place where they tend to fail is in articulating their value proposition. You can hit almost any tech start-up’s website, and it will take you a good five minutes just to figure out what they do, much less why it’s valuable.

Being unable to distill everything they know about the product and everything they know about the customers into tight value propositions and communicate them succinctly is a constant failure point with tech start-ups.

SandHill.com: I think that not knowing how to articulate the value proposition is across the board and not just with start-ups. Do you agree?

Guy Smith: It can be across the board, but firms that grow and are healthy have at least some minor ability to distill their value propositions ever more tightly.

That being said, I consulted last year on a new product launch from a well-known multinational conglomerate that brings in about $24 billion a year. It was obvious to me that their internal staff did not know how to distill the value proposition.

Most people, and most techies in particular, don’t understand what value is. I’ll be giving a talk at Silicon Valley Forum in early November on what is value, how do you identify it and how do you get it down to five words or less.

One of the problems that Apple has caused with a lot of start-up entrepreneurs is that Apple made marketing look like magic. But deep inside the bowels of Apple, there is a lot of scientific marketing going on.

SandHill.com: What is the most common mistake start-ups make after they’ve started their initial marketing effort and their company is growing and they need to market for a broader audience?

Guy Smith: They mistakenly believe that the broader market is the same as their early adopter market. Early success will lead people into the false belief that they have found the magic formula when, indeed, they’ve only found the magic formula for a small part of the population.

Geoffrey Moore and the folks at the Chasm Group very precisely developed the chasm theory demonstrating that the people who buy a product in the earliest stages are not the same people who buy it later on. You have to take that early success and turn it into some real research, which then allows you to know the complete whole product that the early majority really wants.

The other problem is one of articulating the value to the early majority. Early adopters know what they want. They will hunt it out, seek it, sit down and listen to long presentations, and muddle through whatever the founder misarticulates in order to describe the product. And they’ll become intimately involved with tweaking the early product into what the early adopters want.

But the early majority doesn’t do that. They don’t hunt and they don’t dig with early-adopter fervor. They’re not going to waste time wading through inarticulated value propositions.

SandHill.com: Is your book equally valuable to an entrepreneur who hasn’t launched a company yet but is thinking about it?

Guy Smith: I think it is.  It’s valuable for them because as they begin to think about the product, they have to think about the market. If they don’t do those things simultaneously, they will probably fail.

I’ll give you a great example. I met a fellow at an event who was basically coming up with an in-home server. It was going to be like the family hub, a place where the family calendars would be kept and music would be shared, etc. I asked him, “Why would anyone buy this, put it in their home and have to maintain it themselves when somebody could take what you do and put it in the cloud and offer it as a service with absolutely no muss, fuss or fretting on the part of the user?”

He had thought about the market and the solution, but he hadn’t thought about competitive factors. So he hadn’t really thought about the market all the way through. And he was quite literally getting ready to bet his oldest child’s college fund on it.

SandHill.com: There are a lot of books on the market that claim to help start-up CEOs and a lot of books about marketing. How does your book differentiate from those?

Guy Smith: We found the intersection of the two. The start-up CEOs cannot and should not become marketing gurus. It’s way too big and complex a subject for them. But they do have to understand marketing at the 30,000-foot level. They have to understand all the components, understand the mechanics of how to get it done and have enough examples so that it becomes obvious how they must approach it and lead others through it.

There was not a book in the marketplace that addressed this particular need of the leader of a new company trying to drive a product to market but who is completely ignorant on one-half of the process — the non-innovation part — necessary to get the product to the market.

There are a lot of books out there on marketing, but they’re written for guys like me, people who are in the marketing trades and who want to become more guru-like in their status. These are not only more detailed and more complex, but they also tend to be more niche in nature. They’re not completely useless to the start-up CEO, but they certainly require much more reading than founders want to do and go into much more detail than they need.

So this is the right book for a very specific audience and it’s told at the appropriate level for their education.

SandHill.com: Will the information in your book also help founders who are pitching investors?

Guy Smith: I am telling angel investors and VCs that they should hand this book to two types of people. They should hand it to their portfolio CEOs just as a safety-cap measure to make sure their investment is better protected by the founder or CEO being educated about marketing strategy.

They should also recommend it to the people they reject. I have sat with VCs at pitch panels listening to start-ups pimp their products. I’ve watched so many of them just turn away rejected and given only the smallest critique of what they did wrong.

I want VCs and angels to recommend this book even to people that they reject and say, “You’ve got some parts of a solution but you’re not ready. You’ve got a lot of errors in your assumptions about the market. Read this book. It will help you get ready for the next time you pitch this.”

SandHill.com: Is it written in a self-help format with checklists and other such aids?

Guy Smith: The book educates at a high level what marketing strategy is, why it’s important, and then gives case study examples where necessary to illustrate why something works and certain possible approaches to doing it. I’ve included both good and bad case studies, examples of tech companies that did something that was pretty smart and some where they stuck their toe into the pile. And there’s a checklist at the end of each chapter. The information is applicable for selling in both B2B and B2C markets.

People can invest an afternoon in reading this book — it’s fairly short — and it will help them prevent a massive loss of time and money and also the embarrassment of standing up at a VC pitch panel and having the venture capitalists laugh at their presentation.

Guy Smith is the chief consultant for Silicon Strategies Marketing and the author of “Start-up CEO’s Marketing Manual.” Guy has led marketing strategy for a variety of technology companies vending high-availability backup software, wireless middleware, enterprise software, infrastructure software, mobile applications, server virtualization, secure remote access, risk management applications, application development tools and several open source ventures. Before turning to marketing, Guy was a technologist for NASA, McDonnell Douglas, Circuit City Corporate Headquarters and other organizations.

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