“I believe that marketing is what you do when your product or service suck”

Fred Wilson, Union Square Ventures

AVC Blog

When Fred Wilson posted this quote on his blog in 2011 I was taken back a bit.  I had been in enterprise software marketing for almost 15 years at the time having served as a VP Product Management, VP Marketing, and even as a CMO.  Fred’s words, however harsh, rang a bit true to my ears. I had worked with a number of licensed software products and SaaS solutions over the years and admittedly none of them were what one would call market leading.  I had lived by the saying that mediocre technology coupled with a great marketing and sales team could beat a great technology and a shitty marketing and sales team every time.

In 2019 I finally got past my tweet level understanding of Fred’s quote and read Fred’s entire blog post as well as the ‘bug report’ follow up post he did the next day.  I finally took the advice I had given my kids for years – don’t believe everything you read on the Internet and actually check out the sources yourself.  Here are some excerpts that put Fred’s comments about marketing into perspective:

“I believe that marketing is what you do when your product or service sucks or when you make so much profit on every marginal customer that it would be crazy to not spend a bit of that profit acquiring more of them (coke, zynga, bud, viagra).”

“In my talk at Harvard Business School, I said “Early in a startup, product decisions should be hunch driven. Later on, product decisions should be data driven”. I’ve seen that line tweeted a thousand times since then. Clearly people like that rule.  Here’s another.”

Early in a startup you need to acquire your customers for free. Later on, you can spend on customer acquisition.

So if you need to acquire customers for free early in a startup, how do you do that? There is no one right answer, it depends a lot on who your customer is and how hard the sell will be (consumer/enterprise and free/paid). I’m not an expert on enterprise focused SAAS businesses. I am not going to address that part of the market here.”

He further clarified things in his “bug report’ post the following day:

“The second important bug is that my advice holds mostly for the kinds of companies we seek to invest in. I did a decent job of explaining that in the post but I could have done a better job of it. We seek to invest in large networks of engaged users on the wired and mobile web. This largely means big breakout companies in the free consumer web. It does not mean ecommerce, saas, enterprise, or plumbers (as one commenter pointed out).”

It turns out that Fred wasn’t really talking about me or my craft of enterprise software marketing after all.  Still his quote makes quite a sound bite and brings a lot of chuckles when I give presentations.

Fred did offer some advice that has served the test of time and is relevant to not only the consumer/free part of the web but to the enterprise space as well. 

“Zynga has spent millions on customer acquisition and continues to do so. But in the beginning, when Zynga was three or four people and they launched Texas Hold’em on the brand new Facebook Platform, they didn’t spend any marketing dollars. That was the beauty of that time and that plan. The Facebook Platform was free distribution. Zynga rode that free distribution to millions of users, profits, and additional games. Only then did they start marketing.”

The concepts Fred talks about can be readily applied in the enterprise space for new products or releases.  Fred listed six things companies should consider.  Almost all of these activities are no cost.  They also can provide valuable signaling information.  Does this idea or solution actually work and have value?

1) Twitter – so many entrepreneurs have asked me “how did you start a company before Twitter?” Twitter is that free distribution that Zynga got on the Facebook Platform.

2) Social hooks – Your product/service must be social. It must encourage your users to invite others to try it out. Hooks into Facebook and Twitter are obvious. Email invites are another obvious feature. The product should allow people to express themselves in it.

3) Find entry points – MySpace launched in the holywood crowd that were friends of Tom and Chris. Twitter launched in the SF tech community that were friends of Ev and Biz and Jack. Tumblr launched in the “roll your own blog” avant garde community that David was part of. Quora launched in the Facebook alumni community. Facebook launched on Ivy League campuses. You get the idea. Find an obvious group of like minded people who know each other and launch into that community.

4) Events – Find live events to launch at. SXSW is famous for breakouts. Twitter and Foursquare are the two most talked about examples. I worry that SXSW has become so big and so many companies are planning to breakout there now, that it can’t happen anymore.

5) PR – Do not hire a PR firm to do your free marketing for you. This is a core capability you must own. You can and may want to hire a PR firm to supplement your efforts, but that’s a different story. The best companies know how to become the story and work it.

6) Search – It is not first on the list for a reason. I don’t think search driven businesses are interesting. Live by SEO, die by SEO. Don’t be a google bitch.

7) Developers – I’ve said many times that developers are the new power users. Twitter is the iconic example. By launching with an almost totally open plaform and a dead simple API, Twitter got thousands of developers to build products that had “Twitter inside.” Those developers and their products pulled Twitter into the market. Soundcloud is another great example.

8) Build a great product – I’ll end with a return to where I started. Marketing is for companies who have sucky products. If you build something that is amazing (think Flipboard or Instagram or Instapaper) people will adopt it because it is amazing. And you won’t have to do much marketing, at least at the start.

While I was initially a little offended by Fred’s remarks, I have come to appreciate them for what they are.  I believe that they can be leveraged in the enterprise market as well as the consumer SaaS space.  Sometimes an old dog like me can learn a new trick.