Startup Branding: A Practical Guide for Entrepreneurs

By Dharmesh Shah on January 20, 2012

The following is a guest post by Mike Troiano. Mike is a former New York ad man turned venture-funded entrepreneur, now a Principal at Boston-based Holland-Mark. You can follow him on Twitter at @miketrap, and connect with him elsewhere through About Me.

1. What does startup branding really mean for an early-stage company? Is it just picking a name and a logo?

"Brand" is one of those words everybody uses and nobody really understands, so I'll start with a definition.

It's important for entrepreneurs to understand that their "Brand" is the collective emotional response to their product or service. A brand is not a logo, and it's certainly not a URL. Those things are the stimulus, while the brand is the response. It's something out there, in the hearts and minds of the people you hope to sell to.brand

So... Do I think it's important for startups to be thoughtful about the nature of the emotional response that might serve their interests, and try to build a graphic identity designed to elicit that response? Abso-freaking-lutely.

2. Any favorite startup examples that they think are particularly clueful about brand and drawing out the right emotional response?

Sure, a few come time mind right away:

Zipcar a brand we've played a role in since the beginning - isn't about urban lifetstyle, or being green, or collective commerce, really. From day one it's been about Freedom, from both the hassles of car ownership and car rental (Wheels when you want them.) Focus on that emotional value proposition has guided everything from brand identity to vehicle selection at the company, and Zipsters around the world have responded with not just loyalty, but advocacy.

Path 1.0 was a decent execution of an interesting idea, that you could derive more value from a smaller social graph of actual friends than you could from Facebook's comparatively industrial-sized cohort. Problem was, there wasn't anything in the original UI to inspire an emotional response, and the service foundered. While much has been made of the radical turnaround in user experience for v 2.0, for me the result of those improvements is a kind of easy intimacy on the mobile device, something that distinguishes Path from other networks, and is the root of user's newfound enthusiasm for the product.

Instagram is interesting because they got it so right in the product, and so wrong in the messaging. Does anybody really love Instagram because it offers Fast, beautiful photo sharing on the iPhone? Really? I think Instagram helps us notice and share more of what we find beautiful in the world. And I know that promoting it that way would help them grow faster.

3. Speaking of names, how do I pick a great name for my startup? Does it really matter all that much?

I've always thought it matters less than people think.

10% of names are great and that helps a business at the margin, and 10% of names are crap and that hurts a business at the margin. The implication is that 80% of names are not a material driver of brand impact or business success, so sometimes it's just best to get on with it.

For proof of this, there's a great story George Lois once told me, about the first time he heard about a client called "Xerox," in the 60's.

"It sounds like a Chinese laxative," he said. I bet it did to most people, and they did OK.

The point is you can make just about any name mean something to people with great product execution over time. Spend some time getting the tactical fundamentals right - url-friendly, sticky, distinctive, that kind of thing then pick something 3 of your cooler friends think is decent, and move on.

4. What about logos? Can I just hack something together? Use a crowdsourcing service like 99Designs? Or is that a waste of time?

I think logos and the graphical identities of which they are a part matter a lot. They're something the West coast and NY-based guys seem to care about and do way better than Boston-based startups, and that's always bugged me.

Look... in the early going perception is reality for a startup. So is it worth investing a little dough to encourage the perception that you're professionals; that this is a serious and professional undertaking; that you care about design and brand response? I guess there are a few businesses where it isn't. But for the vast majority I'd say it absolutely is, that it's worth investing in a professional identity.

If you're among this vast majority, you want to work toward something smart, not just something pretty. What I mean by that is you want to start by being thoughtful about your brand meaning the emotional response you want your product to elicit as well as any practical ideas or metaphors that will help people understand what you do. Armed with that you should sit down with a reasonably-priced freelance designer to brainstorm some treatments, and keep at it until you hit on something you and others seem to like.

In my experience great design comes from the collaboration between someone with a clear vision for a problem (a thoughtful entrepreneur,) and a professional with the talent and craft to create something great (a real designer.) You just don't get that interaction using the crowdsourcing guys, which is why I think you get what you pay for there.

5. Any tips on where to find a great freelance designer for a startup logo? And, what would you consider reasonably priced?

Try checking the portfolio sites, like Carbonmade. Find someone whose work you admire, then call them to talk about your project. Look for someone with whom you have chemistry, who can bring ideas to the table and not just pictures. And take theiry're advice when they offer it they do this for a living.

Expect to pay $50-75/hour, and to be glad you did.

6. How do I decide what category my startup falls into? Is it better to find an existing category, or blaze the trail of a new one?

The short answer is, it depends, but on balance it's better to pick a category that already exists.

From a marketing communications standpoint, a category is a frame of reference for the buyer. If you think of it that way the value of one becomes clear, as does the time, hassle, and expense of creating your own.

That's not to say that sometimes it doesn't make sense to create a new category, and I've used HubSpot as an example of a company for which it was necessary. For entrepreneurs enamored of that idea, I often follow my HubSpot observation with the question, "So how's your book coming?" That question is usually met by a blank stare, but the truth is that level of commitment to IP is what it's going to take to create a category.

If the opportunity cost of doing that is too much for you, just hold your nose, pick a category, and focus on communicating your distinction within that category in a way that resonates with your target.

7. How much does good branding matter when trying to raise capital? Is smart money really fooled by that kind of this? Will I look foolish for having invested in brandinged in one?

I'll say it again: Perception is reality for an early-stage startup. One can argue  that the world would be a better place if this were not so, if Excel drove more decisions than PowerPoint. But that argument is a waste of time, my friends.

VCs invest in the companies that win over their hearts and their minds, usually in that order. If you're trying to raise money it's important to remember this, and to invest the time and energy you need to court a little loving, and not just a good first look scorecard.

And the same is certainly true for customers, so sooner or later you're going to need to spruce up a bit and look like a brand they want to be a part of. Why not start now?

Topics: guest marketing
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7 Lessons On Startup Funding From a Research Scientist

By Dharmesh Shah on January 16, 2012

The following is a guest post by Ty Danco. Ty is an angel investor and startup mentor. Read more of his thoughts at tydanco.com.

My wife isn't in business, but she is wise in the way of funding. Just as I have experience on both sides of the funding table (as an entrepreneur and as an angel), so does she. As a research scientist, she gets her own grants and also reviews grants from others. While she doesn't talk in startup lingo (pivots, minimum viable product, etc.), she has taught me that many of the issues we face as entrepreneurs have a corollary in science. Here's what I've learned from her.science lab

1. Always seek funding from the best people, even when you have easier alternatives.

Before the bootstrappers hang me, I didn't say that you have to raise a lot of money or that you should be working fat. But consider this story: my wife was slaving away writing one particular National Institutes of Health (NIH) grant knowing that the funding rate was ~5%. Why not look for a less competitive foundation to underwrite it instead, I asked. I figured that this could save her time and trouble, and that she could proceed with her experiments that much faster.

That's not how it works, she replied. That's like self-publishing a paper instead of getting it peer-reviewed. If she couldn't convince sophisticated research centers to part with their dwindling cash, she continued, obviously the project wasn't good enough. If it's not good enough to get other people to write a check, it's not good enough to be spending time on. Startup corollaryjust as a paper published in an inferior journal has less impact than the same paper in a good one, when you go for funding, get it from great people. If you have to take dumb money, you're doing it wrong.

Personal application: I'm temporarily self-funding my new startup, FX Aligned, but I'm pitching it to the best East Coast VCs who understand the space. The same logic appliesif I can't convince people who see 1,000 deals that my idea is worth funding, it isn't worth doing.

2. Proposals are always stronger once edited.

Nothing beats peer review, especially from people with deep expertise.

My chat with one VC surprised me. He thought our initial target market was too small. And upon reflection, he was right. At the same time, I was talking to another VC, and I explained to him that we intended to go after that smaller market first, get established, and then work closely with our alpha clients to find solutions to their real pain points. He quoted his senior partner, whose rule was if a new startup is counting on a two-part process to make money, don't fund it. This is exactly the tough love I needed to hear, and it saved me months to time I would have lost if I had self-funded and drunk my own Kool-Aid. We didn't need to do a two-step dance to discover the real market opportunity.

3. If the specific aims of your experiment (company) undergo too many major changes, that's a sign that you haven't thought through the issues yet, and it's too early.

No scientific grant ever makes it from start to finish without changes. Similarly, no VC or angel should be so nave to think that business models turn out perfectly on the first try. However, when a fundamental concept keeps shifting as the idea evolves, there is a problem.

My new company has gone through one major change as we search for product-market fit. However, our edit did not change the core concepts. Our pivot came as we realized that our solution for our original market would, with some minor systems tweaks, serve not only our target market of public pension funds, but now solve an industry-wide problem faced by all institutional managers buying and selling foreign securities. The aim — giving our clients a means to quickly, cheaply, and more efficiently transact foreign exchange without getting ripped-off remains the same, but now the same basic company has a far bigger potential market.

If your concept is not robust at its core, no iteration will help. Before you pivot, ask if the underlying ideas are still valid. If they are, take your time and get the change right.

4. Don't keep it secret.

Scientific grants and paper submissions are kept confidential during the review process to allow for brutally honest feedback, but generally that's the only time of secrecy. The point of science is to advance knowledge, which is done through sharing. Even before a paper is published, preliminary results typically are presented publicly at conferences and ideas are exchanged before the lengthy process of publication. These public discussions can bring in new collaborators, just as startup events can introduce co-founders to each other. Don't hide, network!

Initially I was reticent to talk to angels too much. While my angel friends were good at giving me feedback on presentation matters, none I knew had expertise in fintech, which is where my new company fits in. So I initially wasn't getting a lot of strong commentary. Thanks goes out to James Geshwiler of CommonAngels, however. While he didn't have expertise in my field, he sent me to two angels who did. One of those two angels is now on my Advisory Board, and the other is giving me solid advice on a technical matter that is critical to the company, but outside of my own expertise. What's the result? A lot less risk in our prospects. And besides, as Dharmesh says, stealth mode is for fighter jets — not startups. Read “The Real Reasons Startups Don't Talk

The more you discuss your idea, the luckier you'll get. Never miss a chance to pitch your idea, but then keep your ears open, especially for the chance contacts that can turn out to be key.

5. It's easy to get funding in trendy areas, but focus more on impact.

I've tagged along to dinners with my wife's scientific colleagues, and once heard a story about zebras grazing. Those zebras that want to play it safe in the middle of the pack can get by, but the juiciest grass — and the greatest danger of being eaten is out on the edges. While it's tempting to go where the funding is, science is about more than just getting another grant.

Find a problem worth solving, not just something convenient for funding. And hopefully, that will be something different. The world doesn't need yet another daily deals aggregator.

By the way, no one should go through the rollercoaster that is startup life unless they are a) certifiably crazy, or b) intending to go big. (See Don Dodge on Google Dreaming BIG.) If you're pitching something, make sure it has potential to change the world.

6. Don't even think about pitching a project without preliminary data.

Scientific grants rarely get funded without substantial preliminary data. It's not just about feasibility, i.e., showing that the method can work; in addition, enough data needs to be submitted to statistically demonstrate the likelihood of the project's success.

This one is a little harder in my case, because it will take a few months to crank out a minimum viable product. However, that doesn't mean we can't test out the markets. We're talking with as many institutional investor customers as we can to get their input on what they need.

This is just customer development 101, a la Steve Blank. For startups, customer data is the best data.

7. The first funding is the hardest.

In science, like in startups, the experienced team always has it much easier rounding up backers. That's just the way it is.

That's one reason why I suggest that people who want to start their own companies begin by working for some rocketship company first. Your own startup becomes more bankable because you'll slowly be absorbing experience that will stand you in good stead in your own future startup. Whoever writes a check wants to see a return on that money, be it in science or in startups. You increase your chances of funding success when you de-risk your venture, especially when a team (or lab) has had time to gel previously.

Thankfully, the team at our new company has had success together before. And that, probably more than anything else, makes it easier this time around. Not that this stuff is ever easy

And a bonus, once you have that funding:

Always be running little experiments on the side. Especially those that can surprise you. For more on this, read Eric Ries' book, The Lean Startup. And while you're doing those experiments, make sure that they are sufficiently well-designed to give you answers.

Any other funding lessons from the lab I missed? Please leave a comment.

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