Your strategy is good, but the comparison of the "1990's" approach to your suggested approach indicates that step 7: success is a given. All business startups are a risky venture. The possibility of not being very successful at all is very high.
I agree the evolutionary approach works well for web-driven startups like the current crop of Web 2.0 companies. The software is fairly simple (developed in months not years) and the service can often be given away free or cheap in a beta stage.
The evo model doesn't work well at all for many other startups e.g. if you are developing enterprise software with long sales cycles and demanding customers, or a more complex product or service (e.g. a piece of hardware like the Slingbox, a service like Netflix or a business based around a licensing model like Dolby). A customer driven product is essential, but in many non-Web companies you simply cannot expect to sell a product that isn't ready for the market.
You may also find your VC's very uncomfortable with a less structured approach.
My background is in the world of business development and marketing. Basically grew a company called MindSpring, launched EarthLink's mobile wireless business, and helped grow a company called CipherTrust that was purchased by Secure Computing for $274 million.
In three words "creep don't leap" is the best marketing approach. Make something somebody loves and they will tell their friends about it. Marketing is much more about product then advertising or pr.
Dharmesh, I like all your points; especially #7 ;-) but my question, especially in my own context is: how can you best do #5? Get feedback implies comvincing a decent number of users to try out your site/app - how are you doing that? Starting a blog is an idea but how do you get folks to read *that*? Please don't think I am trying to be a wise guy - I'd really like to know.
Raghu: This is a fair question. Tactically, what I've found to work is:
1. Contact folks you know would likely be interested (often these are people from a prior life that you know).
2. Leave comments on related blogs that contribute to the conversation (and have a link back to your content that is relevant)
3. Consider spending some some modest dollars on something like Google AdWords to get targeted traffic back to your site.
Unfortunately, there is no easy answer to this. In my experience, as long as you are not making the "hard sell" and genuinely looking for advice/feedback, things go a little easier. People can smell a sales pitch from a mile away.
Dharmesh - Completely agree with you here. Also, I think that in small web 2.0 startups, the pendulum has swung too far to the "we'll build what we need and not features based on customer input" side. If you are building in stealth mode, there is no way the features are based on user input.
With our new product, I'm taking the approach you recommend here - combined with a narrow customer target (sales team collaboration) - so that I can implement features important to the people that will be buying the app. I am blogging about it each step of the way and posted scope outlines and screen sketches before starting coding. I've found that the rapid, ongoing feedback cycle is a great thing.
I plan on using the evolutionary approach. I just finished a FastTrac www.fasttrac.org)
class. In my "investor presentation", I had "low" numbers for marketing because I plan on using the approach you describe above. Even though I plan to do B2B for financial services, I don't think I need to go the "traditional" route. Thanks for the info.
I am in agreement with the evolutionary approach. It's exactly what I am doing now. I am almost to #4 right now. I started to blog about my upcoming product about a month ago. We have a couple of features that are about to go public beta, and I will probably get laughed at at first. But the criticism will be good. Also, I am going to do this with no marketing; pure organic.
I totally agree, I released the first version of my current product after just two weeks of work, I've got excellent feedback from people using it and kept improving it based on user's requests.
I'm convinced that in most cases starting very small and continually improving is much better then the alternative.
I agree with the approach .. but just a point ........
#3 and #6 need a lot of discretion, especially, if you want to retain the first movers advantage.
ofcourse it depends on the scenario.. we use a similar approach as mentioned by Dharmesh.. but careful discretion is something totally important through the process of iteration and bootstrapping in our case even though we are looking for feedback at every step.
can be tricky.
Like everyone else posting comments, I completely agree with going iteratively. I've always put an emphasis on trying to generate a mountain of buzz in the beginning, but I'm learning that it's not the most ideal. Especially when you don't have the cash to burn on a marketing plan.
Sometimes the feedback is tough to hear and sometimes you get annoyed with what people have to say, but in the end once you've sorted through and got to the valuable feedback you'll find some nuggets of information for you to work with to make a better product.
As one of the founders of a bootstrapped startup, I would say you have just covered the launch of a company/product. In either of the cases there are probably other steps between 6 and 7.
Very good post - and the second scenario is truly where 90% of tech entrepreneurs should devote their efforts.
My question is what to do in regards to competition. Let's say you've already launched phase I of your product, listened to your customer, and found a few killer apps that will put you leaps and bounds above your competition. In this position, we've opted for total secrecy until it launches (small lead time of 6-8 weeks). We figure it's best to totally catch the competition off gaurd, and bloggers will pick up on the changes automatically upon launch.
What do you guys think of this strategy?
I agree that the Darwinian approach is preferable, and to a certain degree safer. But, I do think the Big Bang approach is useful when you're creating a competing product.
Say you have figured out what a competitor is doing, and why they aren't succeeding on a mass scale, building your app in stealth-mode to exploit that problem may bring a more successful launch than if you told everyone about the product pre-launch and allowed your competitor to catch up.
Isn't this approach applicable for web startups? Or to good extent to Software startups. I understand this blog is dedicated to Software startups only. But things like "getting feedback" and "updating product" are not easy in other domain (eg. semiconductor). And we have to work in stealth mode only. And then use "Big Bang" theory.
Dan makes a similar point.. basically, we are facing this issue.
but, u gotta hide the tech details.. till the point u really have a strong indication from a potential buyer that he will actually buy your product. Even after such a strong indication is sent by the potential buyer, there is never a guarantee.. u might end up revealing your algorithm/tech details and they will put their hands up and then go ahead and develop it themselves.... and ofcourse, they dont even have to sell it to anyone.
If we are talking of selling to competitors itselves, then again the same problems exist. The moment the competitors get the core technical details, thats it... They will build it inhouse and sell it a lot easily because they are already in the same business and most probably have an established reputation... something which start-ups do not have....
Any comments? suggestions?
I remember the crazy days of the late 1990s. There were VC funded startups paying monthly retainers of $5000 to $15,000 to PR firms. naturally, they all went under a few months later.
Agreed. And when you say "iterate, iterate, iterate" that doesn't just mean the feature set. You may need to iterate your pricing, positioning, value proposition, and overall business model.
This strategy is explained and supported in more detail in Geoffrey Moore's "Crossing the Chasm".
I agree with most of the above. I'll take real user feedback over 10 people who were bribed with $75 and pizza anyday. Traditional market research works great when it takes a lot of effort to build/launch ($$$ ad campaigns, rejiggering manufacturing lines, etc.). In the Web world, your best research is getting something out the door.
Here are some more of my thoughts on launching products:
I agree with what you guys are saying. However, once you pre-market to customers, get beta users, and build, test and launch product 1.0, you will need a solid marketing plan in order to gain mass appeal of the product. The build it and they will come methodology simply doesn't work today in a world of cluttered in-boxes and hundreds of new software products. The software needs to be marketed to a core user demographic who has the largest pain-point met by the software product. If this is done correctly, you will have an avid customer base who will promote your product to other customers who may see ancillary applications for the product. You will be surprised how certain customers see different value in your product, often an unintended consequence of what you designed it for...
Just came across this post and needed to respond. Hope the thread isn't stale yet.
To answer one of Dharmesh's questions in his original post: I am a high-tech marketing professional of many years' experience -- and no, I am not offended or threatened by the organic-growth strategy. In fact, I have spent a fair amount of time during my career fighting the traditional big-company view of marketing.
Why am I not threatened? Organic growth with huge reliance on beta user feedback is not the antithesis of a marketing plan -- it IS a marketing plan! We're not talking here about whether one should have a marketing plan, we're just saying that for certain kinds of products, and in the post-dot-com age, the traditional Madison Avenue big-bucks marketing plan won't work.
In the thread above, Raghu pointed out (and Dharmesh confirmed in his response) that the organic approach is not necessarily EASIER. It is not immediately obvious how to engage potential beta users in an organic strategy. That's what you need a good marketing VP (or consultant) for... to figure this out. But it need not be an expensive process. And you sure don't want a Madison Avenue type in that role!
Great post! I like to relate this idea with agile software development. Iterate in small increments and course correct as early as possible. The best (and most successful) software projects I've worked on have this agile mindset both in the development of the product and the business. You can't solve all of the problems at once, and ultimately your customer should be prioritizing the resolution of pain points for you. Hopefully, if you execute the right way, your customers will remain loyal as a vital part of the product's development. Customers that are heard and responded to = happy customers.
Hi there. Agree 100%. I would also think that the first strategy of investing a lot of money now is becoming less and less popular not only among millions of bloggers and start-upers, but also among the companies that have the investment potential. I started by company last year and I had a lot of money to invest, but I chose to invest in people, training and not in product launch. We are outsourcing all of the development, therefore we need to have a strong marketing team. Then they are brainstorming how to make it more efficient that just purchasing a lot of marketing :)
This ia great POST! I agree with the latter approach. However, the term Marketing (by definition) includes Sales activities.
What are some thoughts as to launching a Sales campaign. Many blogs discuss the pain of owner selling and then attempting to attract Sales People to start prospecting and driving leads.
Many times they ask about the success of comission only sales people or outsourced services to accomplish this.
I would like to get thoughts about how the marketing plan addresses The First Sales Hire - Out Source or Employee Hire.
OK, I’ll join the rest of the stragglers with my comments. I’ve used a Darwinian Evolution approach to launch two startups that eventually filed for IPOs. It is definitely the right approach to get a startup out of the gate, regardless if you are VC funded or bootstrapping. However, eventually you need to accelerate beyond organic growth and start to invest in high growth drivers. If you’ve done your job right during the iterative stage, you’ll have a very efficient acquisition funnel, strong value proposition and a product that delivers on the promise of your value proposition. This makes it much easier to fund profitable marketing campaigns. With the right tracking system in place, you will be able to identify strong ROI campaigns and cut the losers. The only expensive campaigns are those with a negative ROI. My marketing budget at startups has grown to millions of dollars per month, all of which generates a tracked positive return (except for a small testing budget that is generally below 20% of the total). At this point PR is often a great investment, though admittedly less trackable. In a past company trend analysis and surveys indicated that the $20,000+/month spent on PR generated by far our best ROI. I’ve recently joined another early stage VC funded startup and will conserve as much funds as possible as I kick off the evolutionary launch process. Still, in order for it to reach its full potential, we will eventually need to shift into a much more aggressive spending mode.
Not sure I totally agree. I've never done the VC thing, but I've been a part of businesses that did just fine organically for a VERY VERY long time. I think that most of the time people get inpatient or want higher returns. There is the competitive threat. But this does not mean that you can't plod along for a very long time.
I have a question about the advice you gave to Raghu:
Leave comments on related blogs that contribute to the conversation (and have a link back to your content that is relevant)
Isn't this frowned upon or considered spam?