Marketing

Critical Lessons: NFL focuses on a better customer experience – Next Gen marketing on display

Posted by on Jan 17, 2014 in Brian Vellmure, Business, Marketing, Sales | 0 comments

I love the game of football. I’ve referenced parallels and correlations between football and business here and here and here, to name a few.

Two of my primary areas of expertise are the “Digitization of Everything” and “Customer Experience”, so it’s little wonder that yesterday’s announcement that Extreme Networks was going to be providing wi-fi and analytics to all NFL stadiums caught my attention – a perfect synergy between three of my passions.

The NFL’s Dilemma

The NFL faces an interesting dilemma. Popularity is at an all time high, but attendance has been steadily falling for the past several years. How could this be?

The summary answer is that the “experience” of watching from home has begun to rival and in some cases even surpass that of attending a live game.

When I can pay next to nothing incrementally, be in the comfort of my own home, grab a cold beer whenever I want, watch several games simultaneously on my 1,000 inch TV in HD, , why would I pay $150 to go deal with the travel, parking, lines, $15 beers, and $8 hot dogs? During commercial breaks and in between games, I can even knock a couple of tasks off the honey-do list to keep the wife happy.

However, as NFL CIO, Michelle McKenna-Doy, mentioned during yesterday’s announcement, there is nothing that can quite duplicate the experience of being at an NFL game. If you’re a die hard Steeler fan, the camaraderie of cheering along side 65,000 of your best friends at Heinz Field for the day is unmatched. The NFL is betting on creating a new and enhanced experience by connecting attendees to all sorts of in-game entertainment and capability that you can only get while inside the stadium. The New England Patriots GameDay Live app includes access to “game replays, live field cameras, statistics, league scores, restroom wait times, weather, traffic and more.”

Other teams are considering or in the process of rolling out similar applications.

Wrapping an experience around the product

The emergence and growth of Starbucks is a legendary tale. The product (coffee) had been commoditized. But Starbucks created a differentiated and unique experience, and cultivated communities within (traditional) communities. The NFL and other professional sports are being forced to do the same thing. The product (the game) has been commoditized. It’s easily available for next to free from anywhere. But the “experience” is where the teams are trying to differentiate themselves… are NEEDING to differentiate themselves.

I see this when I go to watch a baseball game at Angel Stadium. The Disney influence is apparent. Fireworks, kids games, activities, are all part of the stadium experience. The San Diego Padres have a HUGE giant sandbox in their outfield so that kids can play while their parents watch the game.
g20-20petco20park20beach20panorama.JPG

The possibilities that an integrated digital platform presents are endless. Imagine having access to:

  • Private On field conversations in real time
  • Close up camera angles of the O-Line, D-Line, individual players, coaches
  • Predictions of the next play call based on previous tendencies & analytics
  • Real time polling within the stadium
  • All sorts of interesting gaming derivatives – think fantasy football at a micro scale
  • Prioritized seating, perks, and contests based on “fan value”, not just static ticket prices
  • Augmented reality features of on/off field data in real time
  • And, and, and…

Attention is finite. The NFL, the NBA, the NHL, and Major League Baseball are not only competing against other sports teams. They’re competing against all other forms of entertainment. Not only that, they’re actually competing against all other things that may vie for a few hour block of time.

And they’re not alone. While the dynamics and context are a bit different, this is also your organization’s reality as well. It’s my reality. The government can print more money. But they can’t manufacture more time. Time saving technology doesn’t save time. It just allows us to do more, enabling vendors to race for an increasingly valuable slice of your strictly finite attention.

Extreme Networks CMO evolves marketing for maximum impact in a connected world

A significant subplot to the announcement yesterday was the way that it was done. CMOs and all marketers can learn something from how Vala Afshar of Extreme Networks orchestrated things. The default action from the traditional marketing playbook for this type of an announcement would have been to write up and distribute an excellent press release. Those seeking extra credit may have actually held a press conference, and reached out to media and influencers in the space to try and get some additional covereage. Well, Extreme Networks did that, but they took it a step further and actually created and produced a digital media event.

They invited the CIO of the NFL and an all star cast of NFL executives, while holding the event at NFL headquarters in New York.

ExtremeNFL_Agenda

They invited well respected analyst and Chairman of Constellation Research R “Ray” Wang, and Crawford Del Prete, Executive Vice President of Worldwide Research, IDC to provide insights about the changes happening in the world around us.

They embedded the announcement within the context of a thought leadership webinar and had visitors register to attend online.

In short, they made it worth people’s attention. It garnered significant signups. It then created a cascade of attention. Nearly 1900 tweets and nearly 7 million impressions through the twitter hashtag #EXTRNFL. It actually was the 2nd most popular hashtag on Twitter in the United States during the event. There are plenty of other metrics that I am not privy to, but it likely did the following:

  • Established Extreme Networks as the top of mind provider of In-Stadium wifi and analytics
  • Created shared value with the NFL and their team’s executives
  • Generated a slew of leads via web registrations and social shares
  • Generated a decent amount of mainstream and new media follow up coverage
  • Created a digital asset to be re-used and leveraged in future content marketing initiatives

So, then, here are your takeaways and challenges:

1. How are you re-inventing and enhancing your customer’s experience?
2. How are you leveraging emerging capabilities to evolve and re-invent your marketing?
3. How are you creatively leveraging emerging technology to do each of the above?

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Why Most of Your Assumptions About Phone Calls are Wrong

Posted by on Jan 15, 2014 in Both Sides Of The Table, Business, Marketing | 0 comments

If you follow the tech media you would be subject to a lot of narrative biases that are completely off base – and this includes the value of email and phone calls.

_Hello __ _  First Phone Call by Dx VxN - Downloaded from 500px

 

Facts:

  • Tech news keeps proclaiming “phone calls are dead,” which is useful except that the data suggests the exact opposite. Calls are changing but not dying.
  • All the data actually suggests with the growth of mobile, inbound sales calls will double from 30 billion to 60 billion in 3 years (source: Kelsey)
  • In fact 61% of all mobile searches where a customer contacts a business it is via a phone call (source: Google). Much more data in the full post.
  • It’s why the first company I ever invested in as a VC – Invoca – just announced a $20 million funding by Accel Partners. They have grown at a 200% CAGR over the past 4 years
  • This 1-minute video shows exactly what Invoca does

THE FULL STORY

I’m sure you’ve heard the meme that “email is dead” – if fact if you Google it you’ll find a long list of articles that will mislead you.

Some quick data that I pulled from EmailisNotDead.com (mid 2012)

  • There are 2.9 billion email accounts. This figure is predicted to reach 3.8 billion by 2014
  • The three largest webmail services had over 1 billion global users at the end of 2011
  • 62% of adult US Internet users check or send email on a daily basis
  • 94% of all online adults use email. 73% of those aged 12-17 do so
  • Social media users are over 60% more likely to check email at least four times a day than those who don’t use social media

Of course that website isn’t completely up to date but it’s a great resource for seeing the overall picture. But my specific point is that while everybody is busy telling you that “kids don’t use email” or “email is dead” I have actual data from portfolio company CEO’s showing the efficacy of email as a communication and marketing channel.

The key is understanding the nuance. Of course unsolicited spam has very low open rates and is filtered by the major providers. But bacn (email you have subscribed to) can have incredibly high open rates. It’s precisely why Twitter now sends you regular emails telling you who has followed you, what your most popular Tweets are, new users suggestions, etc. It’s why opt-in marketing databases can be so incredibly valuable for companies like Gilt Groupe, One King’s Lane and AdoreMe.

And while it’s true that young people are massive text messengers and increasingly using “messaging apps” – as they graduate and join the workforce I assure you they will use email. Yes, email is changing and I personally use it less frequently as I gravitate towards texting, DMing, FB messaging and even just @Tweeting people. But it still is a major force and it ain’t going away. Only naive people believe that but for inexperienced entrepreneurs you can be fooled into the narrative by the press who sometimes write stories without the actual data.

PHONE CALLS

Enter phone calls.

What we’ve heard even more than email is dead is that people don’t make phone calls anymore. In a way it feels intuitive to us – the readers of this blog – because we’re the tech crowd. We love to streamline and text people.

But let me start with some data. In the US alone there are 30 billion inbound sales calls every year. Just. Sales. Calls. Inbound. That number is projected to GROW to 70 billion by 2016 (Source: BIA Kelsey).

Huh? But phone calls are dead? People don’t want to speak to customer service reps. I don’t want to speak to customer service reps!!

Right! Right?

Not so fast. As the mobile ecosystem has grown the industrialized world is now carrying a mini computer in their pocket that is connected to a cellular network. The reduction in screen size has made the economic model of Internet advertising totally inefficient. If you thought people didn’t look at banner ads before, you can imagine how little they look at them on their smart phones.

It’s why I wrote this article about Invoca (formerly RingRevenue) that the most obvious mobile Internet ad unit is, in fact, a phone call.

Google knows it. They now have massive efforts to sign up local merchants and are sending direct mail (yes, erm, physical mail isn’t deal either!) espousing the ease and benefits of signing up with Google AdWords to … you guessed it …. drive inbound phone calls. Restaurants, barber shops, gyms – people still want to call. Not everybody. Not all the time. But that’s still the world we’ll live in for the foreseeable future as these smart phones are now in the hands of the “normals.”

The most obvious phone call ad unit is what we call a “considered purchase,” which is high price, complex and requires lots of information or lots of choice. Home alarms. Insurance. Cars. Home gym equipment. Higher education. Real Estate.

SOME INTERESTING DATA

1. 77% of online shoppers want live assistance available with their purchases so it’s not surprising that 52% of shoppers re-evaluate or abandon shopping carts because of the lack of live assistance. (source: Harris Interactive IM Shopping Poll (August 2009))

That alone is pretty compelling.

2. 61% of mobile searches in which a customer contacted a vendor, a phone call was generated. Sixty. One. Percent. I suppose I could have skipped the whole rest of the blog post and just posted that. Why? The quote comes from Google. And while this data is from mid-2011 I can assure you that data is not going down. More recent data I’ve seen suggests it’s now near 70%.

3. Call centers provide conversion rates of 10x to 20x that of online shopping and also 1.5x to 2x the average order value.  When you listen to Tony Hsieh talk about his Zappos customer reps in “Delivering Happiness” you get a sense of the effectiveness of call center relationships.

It’s no accident that 1 out of every 25 employees in America work in call centers.

The broader market knows businesses want calls and people want to make them. We’ve just been biased by our narrower view from “people like us” and the tech press who are in our same demographic. If you don’t understand this you’re potentially operating your business at a disadvantage.

The best evidence is just how much higher these merchants will pay for qualified leads. Here are some representative rates that we’re seeing by category

Invoca Lead Data4. 63% of all consumers looking to buy financial services now research online but only 33% actually buy online. Considered purchase. (Source: Credit Union Times)

5. When you put a phone number in an online ad two unexpected factors go up

  • 12% higher click-through rates on the online ad
  • 15 higher conversion of online lead forms

Simply, customers trust businesses that are available by phone. Even if they don’t want to always call you.

THE ANNOYING THING

The first investment I ever made as a VC was in a company now called Invoca. If you want to understand the power of how they’re built inbound call management into a SaaS category where they’re the market leader watch this one minute video. Go on. I’ll wait.

Yet when we went out to fund raise this year after 4 years of a 200% revenue CAGR (compounded annual growth rate) the first firm that we spoke with said,

“We love what you do and we love SaaS. You’re data looks fantastic. But we can’t get over the fact that phone calls are dying.”

Are you  kidding me? You’re a VC with access to your own portfolio company data which should show you that email, phones and direct mail are alive and well (albeit changing) and you have public market data by Google, Kelsey and others showing the trend on mobile is INCREASING and you’re going to fall pray to the narrative of the tech press?

Luckily most investors were more savvy. We quickly found ourselves with multiple VC firms wanting to invest and I’m super proud to announce that we have just announced a $20 million round of funding to continue to grow the business into the enterprise class leader that I know we can become.

I have long admired the telecoms prowess of Rich Wong at Accel and of course know of the legendary reputation of Jim Breyer (who has the best Twitter handle of any VC I know). But through this process our team got to work with Ryan Sweeney, the lead of Accel’s growth practice (who won me over by announcing he was an Eagles fan) and newest growth partner Kobie Fuller.

So even though I swore we wouldn’t do it, we cut off the process early when we realized how aligned our team was with Accel and how much the team felt Accel could help with our growth.

It’s funny but recently I was at the CornerstoneOnDemand conference in Santa Monica. My friend Byron Deter of Bessemer was on stage and was saying, “local [LA] investors are great in the earliest stages of a business when you need local, hands-on support. But when it’s time to scale you need to bring in a bigger firm that has global resources and relationships that can’t be matched by smaller funds with less resources and staff.”

I think when Byron said that he kind of feared that he might slightly be offending some local VCs. I found myself nodding in complete agreement. It’s why I spend time early with great partners like Byron who have deep SaaS skills and global practices because as you scale a business you need different skills, different resources, more & different relationship. So I send Byron any SaaS investment I do at the earliest stage where I know we’ve nailed product / market fit.

You’re company needs to evolve as you grow. You can’t act like a seed-round company when after you raise your $5 million A round. And you can’t act like a B-round company when you raise $20 million in growth capital. Companies need to evolve and so do boards. I wrote a post recently about how we’ve evolved the board at Invoca by adding experience industry veterans and tried to offer some advice on how to think about this for your company.

I couldn’t announce at the time that we had also added Accel but now I can. And I look forward to how the combination of our great management team and industry board members added to Accel can go own to build a valuable part of the enterprise ecosystem.

And proving to all of you that …

People still want to make calls!

Photo Credit: from 500px

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Understanding the Underbelly of Online Marketing and Why You’ll Lose if You Don’t

Posted by on Jan 12, 2014 in Both Sides Of The Table, Business, Marketing | 0 comments

Yesterday I wrote a post about “growth hacking” and why I thought it was wrong that people were hating on the term unnecessarily. It’s worth a quick read.

soft underbelly

My argument is pretty simple. If you’re a technology startup you need to excel at product, of course. But being best-in-class at online marketing is also a sine qua non to standout from your peer group.

The starting point of product IS marketing, which is what a lot of young entrepreneurs that never studied business don’t realize. It’s building a product that is substantially differentiated, and, as Bill Gross, one of the most prolific tech entrepreneurs of our era says, “It needs to be 10x better than the competition” (because if you shoot for that then in competitive markets you might achieve 3x. Link has a summary of his argument plus a great video).

The start of marketing is figuring out a market need and a way to solve that need better than anybody else. Everything we were taught pre-Internet is still relevant. We short-handed this marketing mix as “the four P’s” – product, price, promotion and place (distribution) – this was devised in 1960 and while a little bit dated is still a useful framework.

Product is simply about defining a physical good or service that would be valued by consumers of the product more than existing alternatives based on functionality, quality and/or price. While many tech startups do this intuitively (say, SnapChat thinking it would be much better if our photos out partying disappeared) it still happens. I wish more startups were rigorous in defining market needs and competitive differentiate versus throwing spaghetti at the wall and seeing what sticks but it seems as an industry we’re breeding the culture of the latter.

People who have been hating on the term “growth hacking” have an argument that boils down to, “We were doing this before. You’ve created a new term to describe WHAT WE WERE ALREADY DOING! Go away, we were here first.” It reminds me of hipsters who like rock bands until they become discovered by the mass market and they accuse the band of “selling out” which basically means we’re cool only if we exist in small numbers. Or the Goths in high school who defined themselves as “non conformist” for all having jet black hair and dressing the exactly same as each other but differently than the mass. Irony, a concept lost on them.

The same people who hate the term “growth hacking” would have hated the 4 P’s because like any “method” it is often short-handing more complicated processes in favor of driving a broader group of people to understand concepts. Simplification drives adoption to a much broader base. By simplifying you get some people who short-hand and never learn the details and therefore half-ass the implementation. This will fail. But you also vastly expand the universe of those who will discover the topic and want to do a deep dive, learn more and then spread the idea to others. It’s why super smart people shouldn’t hate on the idea of simplifying if it provides a tool for the masses. Rebelling is simply a form of snobbery.

Online marketing uses techniques for driving promotion and place. SEO / SEM are promotional techniques for marketing through the Google distribution channel, which have yielded huge benefits to many companies – Yelp being a prime example. But relying upon SEO / SEM too much and not building a product and brand that is valued in its own right leaves you reliant upon that channel partner to not change the rules of marketing through their channel. Thus you end up with Demand Media that booms until Google algorithm changes (Panda) changes send it off a cliff along with many other companies overly reliant upon one “place” and one “promotional” method.

Look at Viddy & SocialCam. They had a viral promotional technique that encouraged your friends to download their app to watch a video they posted and a channel (Facebook) that was trying to grow its video audience. That channel giveth and then taketh away so you had millions of users who had not grown accustomed to the feature set of Viddy and thus didn’t stick around. With slower growth and slight product tweaks over time my guess is that Viddy would have been an amazing success story due to a very talented product team. But it wasn’t to be.

Equally I wonder today about the viral video companies overly reliant upon one method (incredibly well written titles that border on linkbait) that are promoted through primarily through the Facebook channel. I think companies like Upworthy can build really compelling businesses in the future – but I’m willing to bet serious cash (Mitt Romney style) that it won’t be by sticking to the playbook that has worked tremendously well to date. Others copy the method and the channel grows weary of that tactic and begins to change the rules.

Enter growth hacking. You nail one promotional method in one place and ride the growth but are in constant testing mode for how your feature set needs to get better at driving continued use of your product and viral adoption across multiple channels while searching for your next pocket of growth.

So What is This Underbelly of Which You Speak?

While traditional methods (PR, advertising, events, seminars) and online methods (SEO, SEM, social, referral marketing) are well understood by most companies there are many methods that are less well publicized. I have watched so many companies go through massive growth and see the commentary in the press wondering how they’re doing it and then finding out from the inside that there is some slightly nefarious technique being employed.

People who have tons of online marketing skills will be saying “duh,” while people who hate anything they don’t perceive as totally moralistic and above board will be cringing, but the reality is that if you are not informed of these “gray hat” techniques you are likely competing against people who know and employ them well – and are probably kicking your ass.

I normally tell companies with whom I work, “In online marketing you’ll likely need to skate right up to the line of acceptability without crossing it in order to grow at exponential rates. You’ll cross it from time-to-time, get checked, and quickly realize you were on the wrong side of the line. Mea culpa and get right back into line. If you’re nowhere near the line of acceptability you’re playing in the wrong rink.”

Here are some examples:

1. When I first started blogging Digg was still at its peak. My articles never appeared on Digg so I didn’t focus on it at all. But I wanted to understand it better. So I tried posting there and got no love. So I called a close friend of mine that seemed to understand how all of this “gray hat” marketing techniques seems to work. He told me that there were a core group of inner Digg users who could control what got on the front page. What? How? Well, there were algorithms that determined what went on the front page that included things like the rank of the submitter and the number of upvotes that it received in the first period of time (I don’t know how long it was).

Of course once submitted you could send out links to your friends and ask them to upvote your content and that would help. But the inner Digg users were all on IM together and when they posted they would instant message their Digg circle and ask for upvotes. Of course reciprocity matters so they would all leap into action.

Why would people go to such lengths? Driving huge audiences can be worth millions of dollars, that’s why. So in those years where you were simply submitting articles to Digg there were a cabal working together that would undermine you. And you thought the Internet was a meritocracy where the best ideas win?

Underbelly.

2. I was talking with a colleague once about how videos go viral. Of course there are “normal” techniques such as having a great thumbnail and link text (both of which should be a/b tested, growth hacking style) and by driving traffic from referral video producers. Of course you can build social sharing tools like Upworthy that make it easier for people to share if they like your video.

But my contact told me that many viral videos start through close networks on Reddit where a degree of formal and informal collaboration of individuals takes place. Of course websites like Reddit and HackerNews try to weed out such behavior. My understanding is that this is why HackerNews makes it hard to create links to articles posted there and I’ve been told both sites have algorithms that favor people upvoting from the “new story homepage” versus direct-click links to the story where there are invariably people who are intentionally trying to drive viral adoption.

If you have NO network of promotion for your story? Good luck. You might write a piece now and then that catches fire but there is nothing repeatable that would be useful for a business.

3. How do people drive SEO growth? This industry is so mature now that the cat-and-mouse game between companies and Google has gotten sophisticated. But of course it wasn’t always so and many online companies gamed the system by paying third-party firms to build link networks of websites set up by hand in low-cost countries to drive up the PageRank of websites. And people employed professional firms to pay money to websites to publish “news stories” that were written by the agency with links back to your site.

Of course we all just recently saw this play out publicly with RapGenius (if you didn’t follow it, the original story is here), which pissed off a lot of people who felt that RapGenius “crossed the line.” Me? I just figured they went a bit too far and were the latest hard-charging company trying to be supremely competitive and made a bad decision on where the line was. The got back on the right side of the line, offered a mea culpa, and are back on Google, this time under a more watchful eye. So they’ll have to look for other competitive advantages for distribution. You can’t play by the exact same rules as everybody else and expect exponential growth.

Underbelly.

4. In the earliest days of widgets many companies realized that by pushing their functionality out to widgets carried on 3rd party sites that pointed back at their website they could drive better PageRank. Hack. And the first people to do this garnered much benefit.

5. If you publish a book, how do you get on the NY Times best seller list? Simply write a great book? Sometimes. But can you be rich and simply buy enough books to be on the list? Of course not entirely or overtly. If large volumes are purchased from a small number of locations I’m told the NY Times discounts this. So there are consultants who have armies of contractors around the country who can go and buy small batches of your book at many locations – all for a fee. So, yes, you can buy a best seller. And you thought systems like these were all fair?

Why would somebody do this? The fees generated from speaking engagements and consulting can be worth several times the investment of getting your book on a best seller list.

6. What about mobile? I’m sure many of you know the techniques that mobile app companies use to get onto the iOS top chart list. Having a high position can make a huge difference to “organic” downloads. So you start by submitting an app and hoping for Apple to recommend you. That gets you 45,000 or so downloads in today’s crowded ecosystem. But then savvy app companies of course know that they have to buy their way into a higher position (people call this “supporting your app store position” so they use incentivized download systems like ChartBoost to do the trick or they spend money on promoting through Facebook Mobile to drive installs. Even if they get a large number of FB downloads that don’t covert, their overall market position improvement may warrant this spend. It’s just like my book example.

Where does it get even grayer? Well for a long time every major mobile app company you know was likely using a consulting firm to drive more downloads at critical periods and this often meant that firm would employ Chinese shops that specialized in driving downloads of users who were never likely to be your target customers simply to get higher rankings in the app store. When Apple learned of this they frowned heavily on it. When they had enough of TapJoy driving downloads through CPI (cost per install) they shut down this component of their service.

Checked.

But many people benefitted. Path has been criticized for uploading address books to the cloud and then using your address book to market to your users. Every company I know was doing this. Path got its hand slapped. Checked. Move on.

7. Ever use an online messaging service like Kik, MessageMe or such? Notice how they often leave you with a number in your tray as though you have new messages only to find out it was just new users who had joined and they were trying to drive you back to use their service? Hack. But it works. For a period of time. Until the norm passes. But these are great products and thus a lot of people stuck around at Kik to continue using it. I’m sure most of you remember getting an alleged new message on Voxer. There was a period of time when I thought everybody I knew was using walkie-talkies to communicate and then later discovered none of them were really using it.

So …

Look …

The entire system is rigged by professionals. You know that deep down. Money is involved and lots of it. We all use the Internet and our mobile phones everyday and it seems open and fair. In business nothing is truly open and fair. They are as open and fair as they can be and it’s up to you to build killer products where people flock to you because they love your features. But you also need to compete to win eyeballs and users playing by the same rules as your fiercest foes.

And if you’re not willing to skate up to the line of acceptability you’re playing with one hand tied behind your back.

Photo Credit: John De Neilsen on 500px

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Why The Haters are Wrong About Growth Hacking

Posted by on Jan 11, 2014 in Both Sides Of The Table, Business, Marketing, Sales | 0 comments

There’s an article making the rounds in tech circles titled “Growth Hacking is Bull” written by Muhammad Saleem. I’d like to make the case that the article is wrong.

Committed by Daniel Kuras - Downloaded from 500px

I’d strongly encourage you to read it. I actually really enjoyed many of the points Muhammad made about marketing in general and I found myself nodding through the entirety of the article except for it’s core premise.

He believes that the term “growth hacking” is misleading and potentially dangerous and in stead endorses good old fashioned online marketing techniques. Avoid the spin, stay heads down and deliver the goods.

I believe growth hacking is about all of this. Plus. It’s about looking out for and catching the next major marketing wave before others have grokked it.  Here’s why …

What is Muhammad’s Argument?

In essence Muhammad thinks the “growth hacking” is a charlatan term for online marketing that consists of a bunch of everyday tasks that all online businesses should be doing: SEO, SEM, Content Marketing, Social Media, Referral Marketing, etc.

His quip to suggest this is all a slight-of-hand, trickery dreamed up by marketing bullshitters is quite clever if misguided

“How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn’t make it a leg.”

I laughed as I did at much of his rant. He even used some terminology near and dear to my heart

“Growth hacking perpetuates this myth that you can magically achieve hockey-stick growth by using short-term “hacks.” “

I have always encouraged teams to think about growth as daily blocking-and-tackling rather than a dark art. Please read my post on this, “Why You Should Stop Trying to Catch Lightning in a Bottle.

So while I agree with Muhammad that online marketing needs to be a holistic program that is integrated with the entirety of your business and that it’s not one specific “hack” that brings you to success from some super-genius nerd locked in a closet who knows some dark-art magic growth formula, I think he’s misguided to rail against the entirety of the “growth hacker” mentality.

In short his argument seems to boil down to, “Look at me and my peers. We’ve been doing this online marketing stuff for years and we know what we’re doing. Please don’t try to invent some new marketing term for what we do and pretend you’re smart. We were here first.”

[Not following me on Twitter? Please do so here for future blog posts.]

Where Does the Term Growth Hacking Come From?

The father of “Growth Hacking” appears to be Sean Ellis who wrote this widely read post, “Find a Growth Hacker for your Startup.” Sean is somebody widely respected in Silicon Valley (although he now lives in SoCal) for having helped many early-stage companies go through major growth periods by quantitatively testing features with audiences to help diagnose what led to growth.  His early experience was at LogMeIn and then he went on to help Xobni, DropBox, LookOut and EventBrite to name a few companies I’m sure you’ve heard of.

In his maiden post on the topic he wrote,

“After product-market fit and an efficient conversion process, the next critical step is finding scalable, repeatable and sustainable ways to grow the business.  If you can’t do this, nothing else really matters.

So rather than hiring a VP Marketing [to establish a strategic marketing plan, build and manage the marketing team, manage outside vendors, etc.] I recommend hiring or appointing a growth hacker.”

He advocates for people who test all channels, use quantitative methods and commit to growth as one’s “true north.”

Sean later went on to found the community GrowthHackers.com amongst other businesses. If you read the comments section of Muhammad’s original post you can see Sean’s response to his post.

Why do I Like the term Growth Hacking?

So why exactly do I like the term Growth Hacking and what it engenders?

For starters it brings a mindset to startups that not all of them have innately.  What Muhammad takes for granted is that every company that starts out immediately knows what he has learned over many years – that marketing is a long, hard slog of continually investing in repeatable, testable channels.

And if there is a term for that which helps entrepreneurs stay focused on these good and true objectives then I’m all for it. It’s slightly easier than telling every first-time entrepreneur to make sure to have a banner on the wall that reads, “remember to do your SEO, SEM, content marketing, social media, referral marketing strategies on a daily basis and with quantitative rigor.”

Whenever I work with early-stage teams I have discussions about the meat & potatoes of online marketing. We go through case studies like how Mint.com & Magento drove large audiences through great content marketing strategies. I tell people that they need to blog about their industry to drive customers and not blog to their egos to drive their peer group to their blogs.

We spend a lot of time trying to get people focused on building products that have viral components and why that has to be measured and constantly tested. We review the old tried and true strategies from the days of Hotmail putting a tagline with a link at the bottom of every email to the more modern cases of Airbnb driving traffic through Craigslist, Zynga through Facebook and DropBox through incentivizing referral marketing behaviors.

But I still believe Sean Ellis was right. Growth hacking is a mentality that a company needs to be committed to. I have seen many teams pour tons of money, time and effort into PR strategies without thinking about how product tweaks could drive more consumption, more retention and more referrals.

What I mostly see are companies trying yesterday’s playbook trying to drive extra-ordinary performance today. This. Doesn’t. Work.

Why?

For me growth hacking is not only about the meat & potatoes stuff but about continually testing new channels for growth. See the Internet and now the mobile ecosystems are one, big competitive playground where globally some of the smartest minds are focused on how to make money by driving user growth better, faster and cheaper than others.

If you are early in a platform (Zynga to Facebook, AngryBirds to iOS, Maker Studios to YouTube) you catch a major marketing wave where acquiring customers and growing revenue is exponential. At that period of time you have a huge marketing advantage due to insights in performance in that channel and your growth allows you to continue to invest at rates that new entrants cannot because they don’t have your scale. Success begets success.

This is precisely why the best online marketers I’ve ever met will never tell you their secrets and what is performing well for them. They’ll gladly tell you last year’s playbook. See the minute that others figure out that you’re acquiring customers for 37 cents / user while over on Facebook they’re paying 1.75 they’ll flock to your channel with marketing budgets and tech prowess. The more the supply of dollars spent in your channel the higher the cost-to-acquire new customers.

Traders call this “arb” (arbitrage) and anyone who knows anything about arb knows that it only lasts for short periods of time until others discover the game and you must go in search of your next cost-effective channel.

It’s why some companies are testing whether building applications on KIK might lead to better customers acquisition. It’s why when there is a big push by a vendor like Microsoft to get into the mobile ecosystem there are always a few companies building early apps hoping to catch that next major wave.

Just as documented in this awesome film “Riding Giants,” when Jeff Clark first discovered Mavericks (one of the most famous and dangerous surfing spots in the world) he surfed it for years without telling anybody. When you find your wave you ride it alone for as long as you can until others discover it.

If your startup isn’t committed to growth hacking you’ll never find extra-ordinary growth. You can catch ordinary waves like everybody else and pay the same prices, compete for the same limited user groups and slug it out for attention. Well, you have to do that, too.

Me? I endorse the growth hacking culture on teams. Assigning technically savvy marketers to not only help find new growth channels for the business but to be deeply embedded into the design of your product, testing features, usage, referrals and retention. If this isn’t part of your culture on your product & marketing teams I can assure you it is on one of your competitors.

So please read Muhammad’s post because it drives home many of the important online marketing lessons everybody needs to remember. But ignore his rant and hack on.

Photo Credit: Daniel Kuras from 500px

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The Perils of Founder Fighting

Posted by on Jan 4, 2014 in Both Sides Of The Table, Business, Leadership, Marketing, Motivation, Sales | 0 comments

Yesterday I wrote a post about “the politics of startups” in which I asserted that all companies have politics, which in its purest sense is just about understanding human psychology.

larry bird dr j

I think as a tech industry we have bred a culture that places more emphasis on product excellence than managing human behavior. Of course it makes no sense to have great people management and a crappy product. But I would posit that in order to sustainably build great products in an intensely competitive industry with skills shortages – people management is one of the most critical soft skills organizations need.

I think it’s what Sheryl brought to Facebook when the young Mark Zuckerberg lacked in terms of his age, maturity and probably his lack of inherent people management skills by that phase of his life. The lack of team cohesion and respect for individuals has probably been one of the biggest weaknesses of Zynga – at least from nearly EVERY employee I’ve ever talked to who worked there.

Yet talk with people at Twitter these days and many seem to feel like they are part of a movement – and that doesn’t just come due to product success.

Nowhere is the politics more difficult than with co-founders, which is why for years I’ve spoken publicly about “the co-founder mythology.”

Of course we all go into businesses expecting to be aligned with our co-founders but over time life changes. One founder has more risk tolerance and the other wants to be conservative. One wants to build a company that will be around in 10 years – financial outcome be damned! – while the other might want a quick sale and pocket some bucks while the tech market is hot.

Those are the easy cases.

I have observed from close range many more difficult factors:

  • A co-founder who go through long periods of drinking excessive alcohol
  • A co-founder who started by working hard but gets sucked into the tech party circuit and has more interest in socialize than building cool shit
  • One who wants to commercialize his product and start charging while the other prefers to not charge
  • One founder who gets more attention from a company’s success while one feels slighted and becomes jealous and resentful

At the risk of sounding like a broken record, it’s why I believe executive coaches are so important for startups who have the financial resources to afford them.

I learned these lessons at a very young age and they etched permanently into my psyche. Anybody who follows this blog knows that my mom was the most influential person on my entrepreneurial career. At a young age I watched her open a bakery, which in the early 80′s was ahead of its time in serving croissants, gourmet coffee and high-end, homemade cakes, cheesecakes and french pastries for our small town of Sacramento, California (Carmichael, if you know the area).

She started it with a partner, 50-50. They were close friends, lived down the road and members of our synagogue. We were roughly the same age as their kids and hung out a bit.

And then for whatever reason they had different outlooks about the future of the business and with a 50-50 partnership had very limited ability to deal with the issues you all face:

  • Who should stay and who should go?
  • What should the financial settlement be for the founder leaves be? Cash now? Equity for the future?
  • What mechanisms exist for mediating if you can’t come to a consensus on these issues?
  • If you are the person staying how resentful will you become working your arse off for equity that your co-founder who leaves will get value from
  • etc.

And it is all the harder because if you’ve invested 3-5 years in a business already and can’t agree how to separate you could literally throw out years of hard work on venture where the future is insolvable. I see it all the time.

In my mom’s case she lost a friend permanently that made it awkward in our social interactions in the small Jewish community in Sacramento. I really never pried into the details of why they had a falling out, how they solved it and what the consequences were but as a kid my observation was that it wasn’t pleasant.

I have seen it first-hand in my VC career many, many times.

And, yes, it is politics at its purest.

I worked with two co-founders years ago who knew each other well. When they started their company of course they had to pick one to be CEO and the other to have a different title. In this case it was Chief Product Officer. But they were “the two amigos” and agreed to kind of run everything together.

That worked for two years but then the tensions began. The company hadn’t performed well financially and need to make changes. It either needed to get more aggressive in pricing, pivot to a new business or business model or raise more capital (and take the dilution) in order to have more time to figure things out.

The pressure and the years mounted and I could see strain in the relationship. We sat down the three of us.

It came out in our group discussions that the CPO resented the CEO. He felt that any time there were tech events, tech conferences or press it was always the CEO who got to attend and got his name in the press when it was supposed to a partnership. He felt the CEO was willing to “sell his soul” for revenue and wanted things to be more pure.

The CEO felt that the CPO had gotten lazy and unconfident. He wanted more ability to push the product & engineering teams harder – he was, after all, the CEO. But their co-founder status didn’t really allow it. He felt he was on the hook for company performance without the control he needed to deliver it.

We discussed it as a group. Sort of “marriage counseling for founders” and agreed remedies. I was very impressed with their maturity in being able to talk out loud and openly about their feelings and why they felt they weren’t working well together.

One founder wanted to keep their salaries very low to show solidarity with investors knowing that the business wasn’t working – the other fight financially strapped and didn’t want to make the sacrifice. There were cultural challenges across the board.

They created a new product idea that they thought could get them out of their economic funk. The idea came from the CPO and they both agreed that it would be good for the company and for their relationship. The CPO could be more of the “visible success” of the company if it worked and could feel like he made more of a difference.

They launched. Like most launches they had some success but it wasn’t conclusive.

It’s the norm and why I tell people, “Stop Trying to Catch Lightning in a Bottle.

CPO gave up on the product and wanted to shut it down. CEO thought, “This is just the first hurdle! If you give up after this you’re not an entrepreneur. It was a good idea – we should see it through!”

This set up the straw that broke the camel’s back.

We sat down for the third or fourth time for resolution. It was clear that this was irreconcilable – someone had do go. They both were willing to leave or willing to stay. We hashed out a compromise agreement economically and the CPO left. Again, I was blown away with their maturity in dealing with this and separated as peacefully as c0-founders can.

The CPO went on to found his own company and the CEO went on to grow this business into a success that is now doing North of $25 million in annualized sales.

Of course I’m sure they both look at the past and wish they would have made different choices. The CEO worked his arse off for years created value that would be captured by the now-elsewhere CPO. The CPO probably wished he could have stayed and run the original company which was more successful than his new company.

Regardless, the situation worked out for both in the end. This is the exception, not the rule.

If you struggle through similar issues – which means nearly all of you – please consider how and when to bring in help, to embrace mediation. It’s hard to be open with your co-founders without somebody helping to broker the conversation. In many cases it’s easier if this person isn’t a board member or VC unless you have an extremely close or trusting relationship with them. You want to be able to be open without your board members losing confidence in your future.

Sweeping the issues under the rug and they will fester and pop out down the road when you have invested even more time, money and energy in your businesses.

Elie Seidman wrote in the comments section of my blog post on politics at startups

My father said to me early in life: “definition of politics – two people in a room”

That really resonated with me. Meaning – politics starts with your co-founder. Make sure you continually pay attention to this most important of human relationships in your business. Nurture it. Challenge it. And mediate when you must.

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Focus on what’s most important

Posted by on Jan 4, 2014 in Lead On Purpose, Marketing, Sales | 0 comments

You get results based on the things you focus on most intently.

Most people are driven to increase their performance and expand their abilities. They understand the need to work hard in areas for which they have great passion.

Regardless of how many things you want to accomplish, you must focus on the most important and let other things — which in the right context may be very good things — go by the wayside. Tom Peters sheds an interesting perspective on focus with the following quote:

Leaders focus on the soft stuff — people, values, character, commitment, a cause. All of that was supposed to be too (indefinable) to count in business. Yet it’s the stuff that real leaders take care of first. That’s why leadership is an art, not a science.

Focus on what you want to achieve. The results will speak for themselves.


The Product Management Perspective: Product management takes complete focus. Recently a friend told me his company’s CEO decided that their engineering managers would also be responsible for product requirements and roadmaps. Their (few) ‘product managers’ will only focus on marketing their products.

It’s never easy to predict how things will turn out in the future, but if I were a betting man I would NOT bet on this move. They will lose focus on what the product means to the market/people who use it. For a product to succeed, you need to have someone—a product manager—completely focused on its success.

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