Marketing Courage - Building A New Product Takes Guts
Building a new product - you need to have the Marketing Courage to make it happen
Since the 280 Group works with a lot of startups (and also with larger companies that are trying to get breakthrough products off the ground) we'll oftentimes get to be there when the tough go-to-narket decisions get made. This article sums up a phenomenon that we see far too often.
Being in Silicon Valley there are many technical and product visionaries. I talk to people every day that are betting their homes, their short-term livelihood, their quality of life and sometimes even their families (though they don't realize this at the time) on developing a product that they believe in.
Building a product takes guts. Even if you are a bootstrapper or you've hit it big in a previous job, you are still paying a large price in terms of opportunity cost and ego if you crash and burn. I applaud the engineers and entrepreneurs who have the courage to build products and take this risk. It is not a trivial decision to move forward - I know because I've helped build a few companies from scratch and have been there at the go/no go development point.
If you are involved with one of these companies, whether as an employee or investor, figuring out the answer to the next question early may save you an incredible amount of worry, concern and anxiety later. That question is: "Will this company have the Marketing Courage when the rubber hits the road?" What do I mean by this?
Well, oftentimes clients will bring us in when they are 3-6 months away from launching a product to help them plan how they are going to reach customers and make sales. Or they'll bring us in shortly after the product has been released and they can't figure out why sales have not begun to take off. These companies will have spent tens or hundreds of thousands (sometimes even millions) of dollars, and months or years developing their product. They have a huge sunk cost that has been incurred to get to market. They'll ask the 280 Group to create a marketing plan to reach their target market as cost effectively as possible so that they can generate qualified leads and make sales.
Their attitude is usually that "we'll be so smart about Marketing (like we were with development) that we will get things going without any real investment, and then we can fund future efforts from the initial sales." But when the rubber hits the road and the company has to invest significant time, resources and money to get sales going, oftentimes the courage they had to build the product turns into denial about what it really takes to build as business.
One company that we worked with had spent $3M doing a management buyout and bringing a new product to market, with the hope of turning the company around and generating $8-$10M in sales. When we proposed a ridiculously low Marketing budget of $50k (with some VERY creative leveraged marketing ideas) it took them 8 weeks of internal debate to finally decide that they weren't quite sure enough about the product and market to spend the money.
Another company that we worked with that had spent $800k to develop their initial product insisted that the only thing they needed to spend any marketing money on was their website. And even this they had an in-house engineer create, ending up making an impression on their customers that would never have had a chance of selling anything. We suggested at least upgrading the site and implementing some search engine optimization so that they would have a chance of getting some qualified traffic, but they opted to wait and see. Last we checked their site had a Google ranking of One, which was probably higher than their revenues.
What's the lesson here?
Start your marketing and go to market planning very early - like before you make the commitment to build the product. Get real about what it will cost you, and get a seasoned marketing person involved to help you create a ballpark estimate. Take that estimate and double it as your working figure. Sure, you might be able to come up with the next completely viral product that requires no marketing, but these are few and far between.
When you are making the decision to invest in, join or start a company that is going to build the next great thing, ask yourself "When we have built the product, used up more funding than we dreamed to do so, and are ready to really try to get the revenue engine going, will we have the Marketing Courage to make it happen?". If the honest answer is no, don't do it.
About the Author
Brian Lawley is the CEO and founder of the 280 Group (www.280group.com), and has shipped more than fifty successful products. He is the former President of the Silicon Valley Product Management Association, won the 2008 AIPMM award for Excellence in Thought Leadership for Product Management and is the author of the best-selling books, Expert Product Management and The Phenomenal Product Manager.