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Spending Like Its 1999: Startup Burns $50k of VC Money on Crazy Contest

Posted by Dharmesh Shah on July 29, 2008 in marketing 10 Comments

You remember 1999, right?  It was the day of the sock puppet and crazy, CRAZY marketing strategies.  By the way, before going too much further, I will confess that I actually bought pets.com shares back in the hey day.  Why?  Because everyone was doing it, and my wife and I thought the commercials was creative and funny.  Granted, my "due diligence" bar was lower back then, but I'd understand if many of my colleagues would revoke my angel investor license just for that.

But I digress.  Today's article is about new ways startups are using to try and attract attention and -- wait for it -- eyeballs!  A software company in Cambridge, MA is running a "viral marketing contest" whereby they are giving away a total of $50,000 for bloggers, videographers (basically anyone with a video camera) and others into the "new, new marketing". 

Here's the article: 

Insanely Brilliant or Just Insane?  The HubSpot $50,000 Viral Marketing Contest

Now normally, I'd be having a jolly old time making fun of this startup with references back to every lame attempt at "marketing" we saw out of dot-com startups back in 1999.  There's just one problem.  It's my startup that's doing the crazy stuff!  Yep, that's right, my startup HubSpot, which recently raised $12 million in venture funding is giving away $50,000 of that in a viral marketing contest. 

I figured once people get wind of this, many of my friends, colleagues and bloggers are going to send me emails saying, "Dharmesh, what the hell?".  Actually, I might get an email from an investor or too as well, because we haven't run this by them yet.  I figured I'd try and pre-emptively answer some of the inevitable questions.

1.  Why do it?  Well, it's kind of simple.  We've been having great success with attracting leads (and closing customers) through our blog and other online channels.  Some of our most successful marketing efforts have been blog articles that went viral on social media sites like digg and reddit.  Last week, we tried to do a rough economic analysis and estimated the value to us of leads generated from these successful pieces.  It was high.  So, there's opportunity here.  Plus, we don't like spending too much money on AdWords.  It pains us.

2.  Why not just do it ourselves?  Well, frankly, because developing viral content that spreads like wildfire is a tricky business.  We have a team of great folks writing content all the time for our blog (including me), and sometimes we hit it out of the park.  But our guess is that there are folks much more talented than us that are capable of producing remarkable content (as Seth Godin would say).  We figured it's worth a shot trying to draw those people out.

3.  If it works, it could work big.  We're at a stage now where experimentation is reasonably cheap.  Instead of getting stuck in the rut of turn this dial a bit, flip this switch a bit, and crank out the customers -- we'd like to look for some non-linear growth opportunities. 

Oh, and if you're a VC reading this (particularly one of our VCs), we're doing the same thing in marketing that you do when looking for investments:  Pick projects that have potentially huge impact, even if they are a bit whacky and high-risk.  If we do a dozen of these crazy projects, if just one wins, we're golden!  Champagne and chocolate-covered strawberries for everyone! 

So, what are your thoughts?  Is this genius or desperation?  Would love to hear your comments.