VCs Are Marketing Geniuses

VCs like to think that they are marketing geniuses. We really do. We meddle more in the marketing of our portfolio companies than any other area. If you have a chance to sit in on a startup board meeting, you can see this in action. The CFO gives a finance update and a few cursory questions are asked. The VP of Engineering talks about development and board members sit around the table nodding appreciatively. Then the VP of Marketing gets up and suddenly everyone around the table has a point of view. Poor VPs of Marketing. Their role at board meetings is to be diplomats and pretend that we investors are marketing geniuses. Frankly, the reason investors have so many opinions about marketing is that we can fake it far more convincingly than in other areas of the operations -- faking it when it comes to scalability issues, or which technical standard to endorse, or revenue recognition for term licenses, etc. is a lot harder. But show us a proposed product name, web page layout or advertising slogan and we are full of suggestions.

That being said, I have been thinking a lot about marketing recently. I recognize that I have undermined my own credibility on the subject already. But that's never stopped me before. I recently gave a talk at FOO Camp that was entitled "Building a Better Virus: Viral Marketing and Epidemiology," or as Christine Herron renamed it in her write-up of the talk, "David Hornik Learns About Marketing from Syphilis." Christine does a great job of capturing the major themes of the talk. I've spent almost the last decade watching great marketers figure out how to leverage the Internet to generate buzz, traffic and sales. And from what I've seen, the term "viral marketing" was aptly named. The lessons from online marketing are the same as those we learn from influenza, herpes, ebola, AIDS, etc. -- great ideas stay with you, spread like wildfire, become a part of your daily routine, are fun, and are tough to shed. In short, great ideas are "infectious."

The best marketing often springs out of the characteristics of the product or service being promoted. In some instances, those viral characteristics have been designed into the product itself. For example, the viral nature of Evite or Tickle or LinkedIn were carefully calculated to maximize their infectiousness. Other times, however, a product or service becomes viral by virtue of how it is used or talked about. Such serendipitous marketing can take the form of really great word of mouth (the power of Walt Mossberg, Slashdot, Boing Boing, TechCrunch, Digg, Reddit). Or it may take the form of some unexpected use of a product or service that does a particularly good job of highlighting its usefulness (YouTube got great early exposure -- and still does -- as a result of the wildly viral content made available on the platform).

I recently experienced a great example of fortuitous marketing springing from the strength of a product itself. I'm an investor in a company called Splunk that has created a search engine for the data center -- it takes log files from throughout your enterprise (app server, web server, router, database, etc.), correlates those logs and allows you to search across them. In an effort to make it as simple as possible for end users to try out their software, Splunk created a service that hosts the Splunk software in the cloud -- you can import your own data set into the Splunk server and give the software a try. Various data sets had been imported (voip, email, etc.) into the Splunk service without much fanfare, but when someone imported the leaked AOL Search Data into the service it got a pile of attention. Suddenly it was possible to navigate the AOL data by search term, by user ID, by time sequence, etc. What was otherwise pretty impenetrable data became searchable and navigable and, as a result, the Splunk service got the company a whole lot of marketing bang for the buck. While the Splunk team appreciated the marketing value of making the service available for a test drive, they did not think to use the AOL Data as a sample data set. But once a user had imported the AOL data, it did a great job of getting attention and highlighting the power of the software. Now that's great marketing. (Herein ends the infomercial.)

What has become clear to me over the years is that great marketing is not purely about science. It is not purely about art. It is not purely about intuition. It is a powerful combination of art, science and a little bit of luck (perhaps driven by intuition). I have incredible respect for marketers who can combine both disciplines with a little bit of intuition to deliver results. Despite my natural VC tendencies to meddle in marketing's affairs, I will do my best to stay out of the way of the professional marketers. They are the geniuses, not I.

Comments

[Dave]

nice piece.

as an occasional VP Marketing, i'd agree -- everyone seems to have an opinion ;)

however in addition to the art part, i think there's quite a bit of science to the practice these days, at least as far as internet startups go.

here are several areas i think about that relate to marketing:
- user lifecycle / conversion funnel (science)
- email marketing (mostly science)
- website marketing (mostly science)
- SEO (science)
- SEM (science)
- referral / affiliate programs (science)
- widgets & plug-ins (mostly science)
- feature education / product mktg (mostly science)
- site user experience (mostly art)
- biz dev / channel (some art, some science)
- viral / feature (some science, some art)
- viral / word-of-mouth (mostly art)
- videos / photos / media (art)
- community / forums / blogs (mostly art)
- social bookmarking (mostly art)
- PR (some science, mostly art)
- contests (art)
...

and of course my favorite:
- getting your VC to blog about you (art ;)

truly genius to write a blog post admitting you're not a genius.

- dave

[Lance Weatherby]

Marketing is like sex. Everybody thinks they are good at it and wants to do it.

[dshen]

I feel for marketing people. In my previous discipline, design, EVERYBODY is a designer and EVERYBODY has an opinion on how the design of a product should be. Design is something everybody can relate to and everybody can touch. Like for art, every person has their own opinion of what works and what doesn't, and what looks good and what does not. So try to get into a design review of a product. Scary for the designer. Everybody has an opinion and often the meeting devolves into a mess...

I think things would work better if we just let experts do what they are supposed to do, designers and marketers alike. And if they stink, fire them and hire new and better ones.

[Elliot Essman]

Marketing is a unique discipline in that it requires a combination of art and science. The art comes first: knowing what to look for, knowing when to recognize value that appears on its own. The science is the middle of the sandwich, the rigor that business requires in order to transcend wishful thinking. Ultimately, however, a final dose of art (or call it "guts") is required to justify combining money with perceived opportunity.

[Tom Hayes]

I define marketing as giving the customer exactly what he/she wants. VC savants have a sixth sense for this, or I've found, they are not long for this world. Give yourself some credit.

[mikesimo]

These guys at Harvard actually illustrate the expectation gap between VCs and entrepreneurs.
http://founderresearch.blogspot.com/2006/10/investorentrepreneur-value-expectation.html

Note the gap that has the VCs thinking they're helping with marketing vs. the company saying the VC is meddling too much in marketing and not doing nearly enough to bring in customers and partners!

I've seen that movie before...

[GraemeThickins]

This reminds me of what would be a great piece of advice on this topic for company founders or their marketing veeps (and I've been one of the latter). I got this pearl from some wise old marketing guy early in my career, when I working in for a large IT vendor. It actually applied to lawyers -- who can be notorious nit-picking, meddling pains-in-the ass when it comes to marketing. But I think it could be equally brilliant to use on VCs who insist on giving their unsolicited marketing advice. Here it is:

When seeking approval from lawyers (or VCs) for your marketing plan, ad copy, news release, whatever, tell them to have a red pen and blue pen. Ask them to mark their legal (or business/financial/investor) comments in red, and their editorial (or marketing) comments in blue.

Then simply ignore the blue, and you're good to go.

regards,
Graeme

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[Marcus Bradley]

To complement your original idea, technology is changing how marketing is done. Tools now exist that give internet marketers the ability to determine which advertising is working and which is not in real time.

Scientific testing can be applied to websites to determine which user actions generate form submissions, inbound phone calls, and ECommerce sales. Other metrics can determine which actions cause users to abandon the shopping cart, or leave the site because of distractions.

The most sophisticated marketing provides information specific to the behaviors. Here is a link that explains more about marketing to behaviors. http://www.funnelscience.com/research-information/internet-marketing-buying-behaviors/

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