So, you’re a founder and a CEO with no or little experience in marketing who needs to hire a CMO, VP or Head of Marketing.
You know you want to grow revenue fast but you might be skeptical about marketing. How can you ensure that whoever you bring on board is going to help you build a rocket ship?
As with any key hire, the impact on the company success is hard to overstate. An “A” player will help the company achieve and exceed its goals. An “A player” will also build and continually develop a team of “A+” players. They, in turn, will help you fill key marketing leadership roles from inside.
A lot of smart and experienced people tried addressing this topic. I think I can bring unique perspective coming from marketing myself.
Twitter’s investigation of Russian interference in the US election. Twitter removed Russian government-linked accounts and emailed 678K people in the US who followed, retweeted or liked a tweet from these accounts during the election period. I’m glad social media companies start to accept more responsibility for how their platforms are used and abused.
Intercom on Marketing (ebook). A good intro to marketing and, in particular, product marketing that will be interesting to those who are relatively inexperienced.
How to Design Marketing Campaigns. Basics of marketing segmentation, messaging hierarchy, and campaign management – this article will be useful to those who’re new to marketing or looking for a refresher.
“What’s next in growth?” (video) talk by Andrew Chen who leads the rider growth at Uber. Andrew recommends you ignore “growth hacks” and focus on fundamentals that worked for decades. E.g. user referrals, shareable content, and using discounts to jumpstart demand for new products.
If I asked you these questions right now, would you be able to answer them?
What does your company do?
What product does your company sell and how is it different from the competition?
Whom is this product for?
Seriously, stop reading right now and try to answer these questions aloud or in your head.
Can you answer these questions in 1-3 sentences and in a clear way that wouldn’t invite follow-up questions from an average customer?
Can everyone in your organization?
What is a Value Proposition?
A value proposition is simply a way to connect a product offering with customer needs in a clear way. It should resonate with customers and would motivate them to try or buy your product. Essentially, the value proposition is synonymous with unique selling proposition and product positioning.
In order to find its product-market fit, startups need to come up with value proposition statements for its products. At first, you start with a hypothesis or a guess if you will.
This hypothesis then needs to be validated with customers and refined as the product evolves and as the company acquires more knowledge about the market and customers.
A validated value proposition statement is the ultimate outcome of finding the product-market fit. This statement should encapsulate key insights you’ve gathered about customers, as well as unique product strengths.
Do You Need One?
If you don’t have one, you’re shooting in the dark. If you have one but it’s not validated, you might be deluding yourself.
Here are some practical benefits of developing a value proposition:
You probably heard people use marketing as a derogatory term.
Admit it, you probably did too.
You can probably think of many examples when marketing wasn’t practiced ethically. It’s true that one doesn’t need to go far to find them. Spam emails that lack “unsubscribe” buttons, misleading packaging, annoying pop-up or video ads that you cannot skip.
Marketing can go wrong for all the same reasons business can go wrong: misaligned incentives, short-term focus, and tunnel vision.
But business is not inherently and inevitably net-negative to society – quite the contrary. So isn’t marketing.
The thing is not all marketing is created equal. It’s just that some people in marketing make wrong decisions. Just like some engineers ignore safety standards, some doctors overprescribe medications, and some businesses pollute the environment.
Essentially, marketing is simply helping organizations serve more customers.
More specifically, marketing is about finding the right customers who actually need your product, using their feedback to make the product better, and consistently communicating useful information through the right channels and at scale.
With this in mind, I decided to outline a few high-level principles of ethical marketing.
Principles of Ethical Marketing
Create value before capturing value.
Long-term over short-term optimization.
Customer feedback over company politics.
Educate customers instead of misleading them.
Build products that people want instead of selling the ones you have.
Target customers who can benefit from the product instead of targeting everyone.
Measure NPS, retention, virality, and product usage in addition ROI, revenue, and growth metrics.
Consider the impact of marketing decisions on employees, other companies, society, government, and environment.
This is an issue of my monthly newsletter. Main topics: technology, startups, business growth, and marketing. See other issues on my blog or subscribe. ~Max
Technology and Startups
Ten-year Futures – a presentation by A16z. New technologies enable new use cases. Seeing them, as well as non-obvious “second order” effects, is key. E.g. mobile enabled Instagram, Instacart, and ride-sharing.
Decrypting Crypto – another presentation by A16z. Bitcoin is a combination of three old technologies: hashcash, public key cryptography, and distributed ledger. Value of cryptocurrencies goes beyond the traditional store of value and medium of exchange. E.g. tokens can help bootstrap new protocol-level innovation and incentivize developers, customers, and investors to contribute.
AlphaGo Zero masters the game of Go from scratch. The ML algorithm learned the game without any pre-existing understanding of rules or strategies. Building a general or at least a-little-bit-less-narrow AI appears to be a big priority for DeepMind. Perhaps this can count as a small step in this direction?
Tacotron 2 is a new text-to-speech technology by Google that is (almost?) indistinguishable from a human voice. If Google manages to make it less computationally demanding and ship it as part of the Android OS, all kinds of interesting use cases will be made possible. I personally will listen to more of my Pocket articles in audio.
Magic Leap is launching its SDK, shipping in 2018. AR/VR is already quite a saturated market. It’s not entirely clear yet how hyped Magic Leap technology will compare to Microsoft HoloLens, as well as to VR headsets: HTC Vive and Oculus Rift.
Managing a business is a little bit like flying an airplane. Keep your eyes on the speed, altitude, drag, and fuel and you’ll get to your destination fast. Try flying blind and you’ll crash and burn.
Who Should Read This
Startup founders, marketing managers, and growth hackers who are new to the growth game. Anyone who’d like to understand basic business metrics tech startups use. Here is why you might care:
You’d like to grow your business faster and understand the highest-leverage areas to focus on
You’d like to evaluate performance of your marketing
You’re raising a new round and want to be ready for the questions VCs are going to ask
So, let’s dive right in.
What We’ll Cover
Last time we focused on user growth. We looked into acquisition, retention, and virality metrics, as well as interactions among these three. Today, we’ll assess the dollar impact one user has on our business. To do it, we’ll learn to calculate and use another metric: customer lifetime value.
Customer Lifetime Value (CLV) = dollar value a company can earn from serving one customer.
In case you’ve missed the new (well, 1.5 months old) 2017 KPCB Internet Trends report, here it is. As always, it’s a fascinating 355-slide deck of charts and graphs that cover everything from advertising to macroeconomics.
Here are some less than obvious insights I noted. What did you find interesting?
Ads vary significantly in how much they annoy customers: mobile pop-ups are the worst
Unexpected popularity of weird YouTube channels, e.g. people who record themselves unboxing stuff
Delivery / On-Demand Economy
Trending up across the board: from Amazon to Doordash
Amazon eating the world with Amazon Basics brand
Gaming and VR
Gamer’s average age: 35
More weird entertainment: the # of people watching other people play games keeps growing
Games have higher engagement in minutes/day than Facebook (per active user)
VR and gamification of the real world: Stanford Football, Peloton and all kinds of mobile apps
Virtual world simulations: Improbable
Continued growth of the subscription model and personalization: Spotify and Netflix dominate
Interfaces become more humane as reflected in growing designer/developer ratios
On-demand bike sharing
AliPay + WeChat
60% of most valued companies started by 1st or 2nd generation immigrants
50% of most valued companies started by 1st generation immigrants
Enjoying reading Antonio‘s Chaos Monkeys now. The book is a rather honest account of launching and working at tech startups in the Valley.
Here is a quote on math behind Facebook growth, for example:
“The reality is that Facebook has been so successful, it’s actually running out of humans on the planet. Ponder the numbers: there are about three billion people on the Internet, where the latter is broadly defined as any sort of networked data, texts, browser, social media, whatever. Of these people, six hundred million are Chinese, and therefore effectively unreachable by Facebook. In Russia, thanks to Vkontakte and other copycat social networks, Facebook’s share of the country’s ninety million Internet users is also small, though it may yet win that fight.
That leaves about 2.35 billion people ripe for the Facebook plucking. While Facebook seems ubiquitous to the plugged-in, chattering classes, its usage is not universal among even entrenched Internet users. In the United States, for example, by far the company’s most established and sticky market, only three-quarters of Internet users are actively on FB. That ratio of FB to Internet user is worse in other countries, so even full FB saturation in a given market doesn’t imply total Facebook adoption. Let’s (very) optimistically assume full US-level penetration for any market. Without China and Russia, and taking a 25 percent haircut of people who’ll never join or stay (as is the case in the United States), that leaves around 1.8 billion potential Facebook users globally. That’s it. In the first quarter of 2015, Facebook announced it had 1.44 billion users. Based on its public 2014 numbers, FB is growing at around 13 percent a year, and that pace is slowing. Even assuming it maintains that growth into 2016, that means it’s got one year of user growth left in it, and then that’s it: Facebook has run out of humans on the Internet.
The company can solve this by either making more humans (hard even for Facebook), or connecting what humans there are left on the planet. This is why Internet.org exists, a vaguely public-spirited, and somewhat controversial, campaign by Facebook to wire all of India with free Internet, with regions like Brazil and Africa soon to follow. In early 2014 Facebook acquired a British aerospace firm, Ascenta, which specialized in solar-powered unmanned aerial vehicles. Facebook plans on flying a Wi-Fi-enabled air force of such craft over the developing world, giving them Internet. Just picture ultralight carbon-fiber aircraft buzzing over African savannas constantly, while locals check their Facebook feeds as they watch over their herds.”