109: Startups That Grow “Without Marketing”
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Today we take on a common misleading tactic that startups use thinking it sounds impressive. That is the lie that you built your business with no marketing.
The most common reason for this lie is simple, it smacks of inexperience in the startup world. It also means that you don’t understand what marketing is and how to do it. That’s a bad thing to put out there. On today’s episode we tell you why this tactic doesn’t work and what you should be doing to make a great pitch.
Topics we discussed today:
- The “no marketing lie”
- The real definition of marketing
- The right way to give a pitch
- How to keep track of your marketing
- Why “no marketing” is a mistake
The Startup Chat 045: Founder Self Awareness – The Weight of Your Words
The Startup Chat 065: How to Become More Self-Aware
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Hiten Shah: Absolutely. Hi, this is Hiten Shah.
Steli Efti: And this is Steli Efti.
Hiten Shah: And today on the Startup Chat, we’re going to talk about how many founder startups even after they’ve raised a whole bunch of money still claim that they do know marketing and they’ve gotten all their customers doing no marketing. So, Steli, how do we feel about this?
Steli Efti: We feel that that’s a huge pile of bullshit, right?
Hiten Shah: Nice. Yeah.
Steli Efti: That’s really what it is. And I was just at a startup conference where, you know, every single fucking startup that was pitching at the slight retraction, whatever the hell the numbers were, one way or another, they were basically saying, “And we accomplished all these numbers with no marketing,” which just drove me crazy because it’s just bullshit. What do you mean no marketing? Right?
Hiten Shah: I just—I just typed in marketing. Can I like just—
Steli Efti: Yes.
Hiten Shah: Can I just like go there and just be like “All right, what is marketing here?”
Steli Efti: Yes, please, let’s do that.
Hiten Shah: I’m going to define this thing. It’s going to take probably 10 seconds. The management process through which goods and services move from concept to the customer. It includes a coordination of 4 elements called the 4 P’s of marketing—product, price, place, promotional strategy. And what’s beautiful is—when they say product, they literally have written identification, selection and development of a product. Then it’s determination of its price, then it’s selection of a distribution channel that reach the customer’s place and then it’s development and implementation of a promotional strategy. And I’m going to end that one with an example.
For example, new Apple products are developed to include improved applications and systems, are set at different prices depending on how much capability the customer desires and are sold in places where other Apple products are sold. So they included all the, you know, product, price, place, promotional strategy all in there in that one paragraph all about Apple’s marketing. So, if you are doing anything in a company, you’re probably doing marketing.
Steli Efti: Yeah. How could you—if you’re talking to a—okay. If you build something, right? You build a small app and then you let it just sit on your server and as you give 0 people access to it, there’s no domain, you never tell a single soul on earth about it, I believe that you did no marketing, right? But the moment you tell your mom about it, you’re doing marketing, right? The moment you tell somebody about it, the moment you put it somewhere, the moment it is in your bio on LinkedIn, you’re doing marketing. You might not be spending millions in advertising, but that does not mean you do no marketing. Like in all these cases, people are like, “Well, and we got 10,000 users in the last 3 months with no marketing.” I raise my hands and I go, “How did these 10,000 people hear you exist?” “Well, it was word of mouth.” “Who was the first mouth that worded the words?” There’s an app like this. “Well, you know, we went to a local university and we told a bunch of people.” What the fuck is that? Isn’t that marketing? Right? You just didn’t spend advertising dollars, but just because you don’t advertise doesn’t mean you’re not marketing.
Hiten Shah: Yeah. I mean—yeah. We had a competitor back in the day and like—they had like badges on people’s sites. They were cold-emailing people and they were doing all these things and then I’d go here, oh, so and so founder of that company claims they do no marketing. And then I’m like, “but they have badges, they have a product, they have like emails that are going out that the founder sends to people to use the product. All of that is marketing.”
Steli Efti: Yeah. All of that is marketing. And to me—so there is two components to this, right? There’s one component which is the “you don’t understand what marketing is,” right? Or your definition of marketing is skewed and it’s so narrow and it only touches paid advertising, but obviously that’s not the only one marketing. But the other component of it is excuses, like it’s—you’re giving me—because a lot of time these people were—either they were saying it to excuse the number because they knew secretly it’s not that impressive or when it was slightly impressive or it was actually a good number, they were saying it to make the number more impressive. “Oh, we got $100,000 even with no marketing. Think about what we could do with marketing.” But it’s—I mean it’s bullshit either way, but it’s an interesting difference between the two where people would give—would say all these things that were—another thing people would say, not just the marketing excuse, but they would also say things like, “Well, we accomplished X, Y and Z and we built all these products and we did all these part-time,” or “Most of the team was part-time because we’re just raising money.” And to me, I mean, yes, this is kind of—it can be interesting information but in many cases, who gives a fuck? It’s just excuses. I just want to know what have you accomplished and I don’t need to know that you’ve accomplished this with this little money or with people that might have had full-time jobs or—we accomplish this while all are being family— you know, while all having families and small babies. I mean, who cares? At the end of the day, from an investor’s perspective or from a traction point of view, all I care about is what have you accomplished and how and what’s happening next and I don’t want to hear your excuses especially I don’t want to hear your bullshit framing of “we did no marketing” or “we got all this press with no PR” or—like all these—these are basically startup lies, things they say but are not really true.
Hiten Shah: Let’s talk about why people say them.
Steli Efti: All right. So—
Hiten Shah: Like why do you say it? Are you trying to say that you don’t spend any money to get your customers? Like—why do you think these startups are saying it?
Steli Efti: I think they’re saying it for different reasons, but I think sometimes they’re saying it because they feel insecure that you will judge them that this number is not good enough. So in order to protect themselves from that, they say, “Yeah, yeah, yeah. This number might look small, Hiten, but it is impressive because we did it with no marketing, so don’t judge me.” That’s one reason I believe. The other reason why they do it is because they want to tell you, “Well, if—” you know, especially in the context of fundraising, “we did all this with no marketing, which means, dude, think about it, if we only did marketing, we would be so much bigger. Give me money. If we raise money, we’re going to be so much bigger.”
Hiten Shah: You know, this is—yeah, I love this. This is just not going to work for people if they keep thinking like this because one of my phenomenal things at least in terms of raising money right now is that you need to actually be able to talk about what does your future look like and how you’re going to get that. And so if you say you haven’t done any marketing, right? And you hold to that and then you get your slides around like what the future looks like, no one is going to believe you because you haven’t done any market. So when you start saying, “Oh, we’re going to start doing marketing now,” imagine what’s going to happen like I don’t want to imagine what’s going to happen. You should have already been doing it and we should already know what’s going to happen when we give you money and you spend it on marketing. So, it’s essentially a fundamental disservice to your business if you keep thinking you’re not doing marketing when you’re doing all these activities that many of us would constitute as marketing. Also, if you’re not doing any marketing, you really think like that that when I ask you, when you ask me, you know, whether you want to grow and then I ask you what’s working, you could just say marketing stuff. You’re going to say “Oh, we cold-emailed. We do this.” I’m like, “Yeah, let’s go do more of it,” you know, this is one of our suggestions, right? And it’s almost idiotic if you think about it. It’s like you’re saying you don’t do any marketing but every business does marketing. Every startup also does marketing. How the hell are you going to say you don’t do any marketing then expect people to give you money?
Steli Efti: Yeah. I mean it’s just crazy. With the expectation, “Oh, we’ve accomplished all this with no paid advertising.” So? “And now when we raise money, we’re going to use that money to spend it on paid advertising.” That I think in inexperienced mind sounds like a really logical like “this is why it’s going to be 10 times bigger because we never spent on advertising and now we’re going to spend on advertising.” To somebody who has experience, this sounds like a really bad idea because you’re saying “we have 0 proof that paid advertising works. We have 0 experience in doing paid advertising and now we want all your money to waste it to figure out if it works and how to make it work.” Well, that doesn’t sound that appealing. Why did you just spend $500 or $10 a month learning something about paid advertising, proving that I can work on small scale and then tell me, “Give me 100k so I can now repeat what I’ve already done at bigger scale and see if it works at scale as well.”
Hiten Shah: Yeah, that’s correct. It’s almost absurd I mean to think that you’re not doing marketing when like the way you have to describe the growth to your business has everything to do with how you’re going to spend money on marketing or spend effort and time on marketing. So, I think—you know, it’s like—let’s say there are some people out there that have, you know, before hearing this really believe they weren’t doing any marketing. Well, what should we be telling them? Is it just as simple as recognizing you’re doing marketing? Recognize that marketing is any effort you’re using to get a customer regardless of if you’re working on your product or actually doing, you know, marketing?
Hiten Shah: I like it. So, take a step back and actually think about these things as their marketing and kind of scale it. Yeah, I really like that. You know, I think it can sound like we’re being haters about people who think they’re not doing any marketing. I think we’re just trying to be realists, right? And trying to say that like if you’re putting effort like—it constitutes like trying to get customers or users or sales, you know, or whatever, you’re doing some form of marketing. Saying you’re not doing marketing doesn’t do you a service like you might think it does. It doesn’t make you seem like a better startup because you say you don’t do marketing. In fact, in this day and age, at this point, it probably makes you look a lot worse by saying that you haven’t done any marketing yet. You know what’s funny? I even still hear this like one in every seminary pitches, I’m surprised that even here in the Bay Area and stuff and I’m surprised that— I’m not surprised that you hear it more outside of your—people have really been taught for some reason that this marketing stuff is no good or that they shouldn’t—you know, that it’s just not something that they should say they’re doing. These days when I look at a startup pitch and they actually have early assumptions or LTB economics customer acquisition cost, it makes me much happier. As long as these numbers aren’t full-on bullshit, then the reason is this because they actually spent the effort to go figure out what are the different ways they can acquire customers and how does that work, like does it—is it profitable? Does it make money? Right? Is there a better way to get customers? And it’s almost like you’re leaving out more than, you know, half your business if you don’t talk about marketing.
Steli Efti: Yeah. And I think—this comes back to the value of self-awareness, right? So one part of what you said is about like people doing their homework and truly understanding how to run a startup and the other part of it is being self-aware and we had an episode, it’s episode 45 which is founder self-awareness and then we had an episode on—Episode 65 on how to become more self-aware where we talk about how valuable it is to be self-aware but also how this translates to startup teams and you even saying and I’ve now picked this up as well one judge—one strong judging criteria on deciding if a startup team is strong or not is do they have strong self-awareness because if they do, they will pick up on their mistakes or their weaknesses early on and they will change them and overcome them, so that’s kind of one of the strongest trademarks of a killer team. And when you are presenting in front of investors or anybody else and you want to impress them, impress them with self-awareness. Impress them with having done your homework. Impress them by being honest and being intellectually rigorous in your search for truth. Don’t try to impress them with bullshit or excuses, right? And insecurities because that’s surely not going to work, at least not with investors or anybody that’s really worth that money. If you can bullshit somebody into getting excited about your business because you’re telling them you’ve done no marketing and got 10,000 users, that person’s money or help will do you no good because they’re very inexperienced themselves as well, at least in what you’re doing. So, yeah, just be—I think being able to present and be honest and go, “This is the number. We think the number can be bigger and here’s what we think we’re going to do to make it bigger. Here’s how we got to this number and here’s how we want to get to the next number.” That’s a much more honest pitch and more confident pitch than saying, “This is what our number is and, yeah, don’t think about it. We have done this with no marketing and now we’re going to start doing marketing and we think we’re going to do a lot more.” That just shows a gross lack of self-awareness and it’s either you’re trying to trick me or you don’t know what you’re doing. Both these things are not going to be a good start for a relationship.
Hiten Shah: Yeah, of course not. Yeah. How should we end this?
Steli Efti: I don’t know. This is a tricky one, but I think—so I think that the no marketing one had two interesting components. One was the “some people just don’t get what marketing is or how to think about that,” but the bigger theme I believe is the “I’m trying to make up excuses for the number being too small or I’m trying to create fake vision of how I’m going to make the number much bigger by saying that this number is so small because we haven’t done anything and now we’re going to start doing things.” I think that’s the bigger problem or bigger—
Hiten Shah: So they’re almost—they’re almost saying they did no marketing to explain a lack of effort in marketing?
Steli Efti: Either that—
Hiten Shah: Or compensate for what they perceive as a lack of effort.
Steli Efti: Yes. Either that or they’re saying no marketing because they’re trying to make you buy into that what they’re trying to accomplish next is very realistic although it’s such a massive step because, “yeah, we want to get to a million users. We only got 10,000, but we’ve got those with no marketing.” So that kind of—that’s like the “don’t get hung up on the numbers not making sense are being too big of a step because the first number we accomplished with no effort. So now that we’re going to put effort into this, the big number is going to be easy to accomplish.” I think that those are the two—it’s like excusing of being insecure or trying to bullshit you into believing that the spread of what they’re trying to accomplish and what they have accomplished is not so big.
Hiten Shah: Right.
Steli Efti: And I think that—I mean at the core part of it is what I just said which is like if you try to bullshit me, there’s two reactions to that. Either I’m going to pick it up and I’m going to notice it and that’s the end of our relationship or I’m not going to notice it and then you should be scared about the beginning of our relationship, right? I mean do you really want to be in business with people you easily bullshit? What does that say about their intelligence, their experience and the value they’re going to create for you and working with you?
Hiten Shah: Right.
Steli Efti: So I think that is addressing that group. The group that is insecure about their number and the group that wants to explain and excuse that the number is not bigger, I just think those guys just need to learn to get over themselves and shut the fuck up and realize nobody fucking cares. Just nobody cares. You show up there—I mean nobody cares. You wouldn’t say, “We got to 10,000 users all while I was going through a divorce with my wife” or “all while I had this big disease” or “all while I went through a life crisis so I was depressed” or “all while—” All these things and we all deal with issues. There’s always reasons for things not being the way we’d like them to be. I don’t want to hear them. I don’t have the time for it and I think if we all as humans want to excuse ourselves sometimes when we feel we’re not enough or we feel insecure about whatever we’re presenting. But I think it’s a need and an urge that needs to be killed and you need to realize especially as a startup when you present in front of customers or investors, nobody cares, “just tell me what the numbers are, how you got them and what you’re going to do next” and don’t give into the need or the urge to excuse yourself because you’re insecure about things.
Hiten Shah: Yeah. We got to end it on that. It’s really good.
Steli Efti: All righty. This was an interesting one. Well, we are going to hear from everybody very soon. I’m excited to hear about—I’m actually curious to see if people—if anybody that’s listening to this episode, let’s just end it on this final note.
Hiten Shah: Yeah.
Steli Efti: You’ve listened to us and you remember recently saying we did all of this with no marketing or we did all of this by doing it just part-time or we did all of this although we just did this in this small market and now we’re going to try this in this big market, do me a favor and reach out to us and let us know if you identified with the reasons that we explained to why we believe you did that and how to act despite that or if you think it’s a different—you had a different thought process behind utilizing that explanation or presenting your startup and your traction that way. I’m just curious to see if there’s more to this that we haven’t even picked up yet.
Hiten Shah: Yeah. Love to hear from the audience about this.
Steli Efti: All right. That’s it from us. We’ll hear you guys very soon.