Monthly Archives: January 2015

The $0 Marketing Budget Lie

It has become popular recently to brag about burningmoneyhow large your business has become without spending a single dollar on marketing. If true, such a statement paints a powerful story about how your product resonates with customers. If you don’t spend on marketing, they must be finding you and telling their friends about you! Everyone wants that kind of free marketing.

Unfortunately, when you dig deeper it is almost never true. When someone claims they have never spent on marketing, what they typically mean is that they have never spent on paid advertising. They have likely spent on one of the following marketing channels:

  • Referral programs. Companies like Dropbox and Wealthfront will offer you free service upgrades in return for referring other customers. In some cases they will actually pay you cash. In all cases, these incentives are lost revenue and hence a cost of marketing.
  • PR. If you frequently read about a company in the news, they likely have some kind of public relations help. The best PR firms are very expensive and, even though they position themselves as consultants, those news articles come at a steep price.
  • SEO. Getting a high search rank seems like a great alternative to paying for search ads, right? Yes, but it is hard to do when starting from scratch. Many companies hire SEO experts and firms to help boost their organic ranking, which makes that “free” placement less than free.

There are countless more examples which are not paid advertising, but are still marketing spend. In fact, many companies will spend on paid advertising and still claim they have never spent on marketing. The narrative of “no marketing” is so powerful companies will lie to have it.

In reality, there are remarkably few companies that have grown to substantial size without spending anything on marketing. Almost all of them are communications tools like Skype, Hotmail and Snapchat. Truly viral growth is something that is very elusive in the real world.

Marketing is Not Free

The irony is that spending on marketing is a natural part of doing business. Everyone spends on marketing, because if you didn’t your customers would never learn about your product in the first place. There is no reason to be ashamed of it.

Google is a great example. Google is a household brand and if anyone has “word of mouth” working for them, it is Google. Regardless, one of the largest costs Google incurs is its Traffic Acquisition Cost (TAC), which is jargon for paid marketing. Google pays over $3B in TAC every year which includes over $1B to Apple alone. If Google spends that much for their business, why can’t you?

The only danger in using paid marketing channels, including paid advertising, is if you are paying more to acquire users than you make from them (see The Most Important Equation). If a customer is worth $20 to you, why not spend $5 to acquire them? You still make $15 from that customer and can likely grow much more quickly than if you try to grow without spending.

Advertising exists for a reason: Customers need to learn about your product before they can consider using it. If you are starting a new business how will they learn about it? You should pursue any and all channels to get the attention of potential customers, even if that means spending some money.

Don’t be afraid of paid marketing. Instead, be afraid of having no customers.

Image made available via Creative Commons by Flickr user Purple Slog, although there seems to be some confusion over whether he/she had permission to assign that license. 

What Does Your Company Remember?

Your company’s memory is only as old as your most recent hire.

The human brain is an amazing thing. In Angry_elephant_earsaddition to the ability to perform high level reasoning and split second decision making, the average brain can store over 2.5 petabytes of data. In extreme cases there are children who have photographic memories (eidetic memory) and adults who remember every detail about their lives (hypermythesia). You can spend your entire life learning new things and not fill up the memory in your brain.

Groups of people also have a form of collective memory but it is much less impressive. A group remembers things by sharing memories between the members of the group, creating a series of shared memories. Stories, songs, religions and mores are all ways that groups remember things. While there are models of how groups of people remember things together, groups of people change over time making it difficult to understand.

Your company is, of course, a group of people and if you are growing quickly it is most definitely changing. As a group, your company has a memory and that memory is a very important thing. That memory is where your corporate culture lives.

Evolution of Corporate Memory

At the beginning, your company has a perfect memory. You and your co-founders will know everything about the company including why you started the company in the first place. You will know what all of your customers say about you and what problems you had to overcome to keep them happy. You’ll know what worked and what didn’t work along the way.

As soon as you hire your first employee, your corporate memory becomes imperfect. The new employee will not remember all of the things you learned before they joined. Even if you document everything, they will never internalize everything you have lived every day.

Then you hire another employee, and then another. Pretty soon there is a mix of employees, each with different levels of knowledge and memories about why the company was started, what worked in the past and what didn’t.

Additionally, these employees make more mistakes and learn new things. The knowledge that makes up your company starts to grow in many directions at once and everyone contributes to it. Pretty soon, even as the founder, there are things about your company that you do not know.

Planning to Forget

Since your company memory is destined to be imperfect, you have to plan to forget. From the very beginning, you should identify the things that you cannot forget and focus on making them part of your corporate memory. You make them part of the corporate memory by writing them down and constantly repeating them as part of how you do business. Some examples:

  • Remembering your vision. Print out your vision in large font and post it on the wall. Preferably somewhere everyone sees it everyday (near the door or on the fridge). Bring it up during all-company meetings and discuss it during the interview process. Eventually, everyone at your company should be familiar with the vision and be able to discuss it.
  • Remembering mistakes. It is fine to make a mistake once, but not twice. Write down the mistakes you made and how to avoid them. Make it part of your processes so that people understand why you do things the way you do instead of taking it for granted. Remove any stigma associated with mistakes by making them part of everyday discussions.
  • Remember decisions. In the face of rapid changes, you might make dozens of decisions everyday. Make sure there is clear follow up to look at the results of major decisions, or else you will have no way to learn from it. Often, it’s best that the follow up comes from someone other than the decision maker so the memory is shared.

Most of all, never assume the members of your team know everything that you know. As the founder, your job is to identify the most important things your employees need to know and make sure they know them.

Sometimes You Want to Forget

It is not a bad thing that your company will have an imperfect memory. Adults with hypermythesia describe it as a debilitating disorder since the sheer information overload prevents you from seeking out and learning new things. If you remembered everything, you would lose the creative spark of revisiting old problems and finding better solutions.

For example, you want to forget the short cuts you made in the early days just to get by. As your company grows, short cuts won’t scale and you need to revisit them to build sustainable processes and strategies. Employees that don’t know how or why you solved a problem in the past will be in a great position to find better solutions, without the constraints of history.

Memory, either human or corporate, is a fickle thing. It helps us avoid mistakes we’ve made and move forward faster and faster as we learn. Plan for the memory of your company and make sure that it never holds you back.

Image made available via Creative Commons by Flickr user Mister-E.

Guest Post: Deathmatch Motivation

The following is a Guest Post by Mike Rollins, Lead in the Developer Relations group at Yahoo! (formerly Flurry) and the host of the Techmoonshine Podcast

Management styles are as varied as the number of managers out there.  There are quite literally millions.  Each style has some strength, and each has some flaw, but some are much stronger than others.

I have at one time or another been managed by Sean Byrnes.  I was not the only one managed by him and in fact I was never managed directly by him.  But I have had the pleasure (and sometimes terror) of interacting with him as a manager.

I have also spoken with many of his direct reports.  Quite a few of them are my personal friends whom I respect greatly.  We have all spoken at length about Sean’s management style and we all agree it is singularly effective and utterly terrifying…  But not for the reasons you’d think.

Sean is not prone to yelling, tantrums, fist-shaking, flights of utter fancy or inarticulate demands that bear no resemblance to reality.  In fact, Sean has always, at least in my seeing, been even, measured, rational and erudite.  Never has a word come out of his mouth that is not followed up by very sound reasoning that is utterly convincing.

So, why would that be terrifying?

You see, Sean makes you deathmatch against yourself.

“Pardon?”  You say.  “How does one deathmatch against themselves?”

Well, typically, when Sean starts an interaction with you, he says something along the lines of, “There is a problem, and I know how we should handle it, but I want to hear how you will handle it first.  You have 24 hours.”

This is not any problem.  Sean does not bring you the small things.  He trusts and expects you to deal with the small things.  You are, after all, a completely competent, rational person.  Sean would never have hired you if that were not so.  Sean would never bring you a small thing.

No, Sean only makes these statements when the world is burning.

There is one time that sticks out in my mind.  My boss, a man I also call an extremely close friend, was on vacation and  I was his backup.  Now, as is typical when your boss walks out the door, someone sets the world on fire.

The conflict was that one team which we worked with was not best pleased with one of our team’s performance.  To make matters worse, they were intent on delaying a feature that we saw was critical to the continued success of the product.  The two were not distinctly related, but both would have been disastrous.

So, it was with some horror that I answered a call at 11 PM from Sean.  I’m pretty sure there was a quaver in my voice when I answered the phone and said, as casually as possible, “Hey Sean, I assume that since you’re calling me there is some very dire issue.”

Sean, in a good-natured how-do-you-do said, “Why yes, there is!  And since you are your boss’ second-in-command, it falls to you to solve it.  I will call you back in a day.  Just know that this is pretty big, and the solution you choose will set the course for your organization for the foreseeable future.”

We went on to discuss the problem at great length.  Never was it discussed that anyone else would handle it, it was just assumed that I was the one.  Sean stated his complete belief in my ability to solve it and we hung up the phone.

In 24 hours, I was at the bottom of both problems and I had formulated a plan of action.  True to his word, Sean called back at 11 PM and asked what my solution was.  I delivered my report, followed by my plan of action, and was then tasked with executing it.

Sean was right, it altered the course of our organization.  I horse-traded, I politicked and I architected, but I came up with something that worked.  I set a few folks on courses that were alterations to their immediate futures and some are still on those courses.  My boss would have done things differently.  He stated as such.  But he acknowledged that it was a fitting solution and that it would work.

That decision, to this day, gives me confidence.  I did something I had never done before.  It turns out that I was very well suited to the task.  And that’s why Sean brought it to me.  He believed in me even when I was quaking in my boots.

There are other times I’ve heard spoken of when Sean would bring something of this nature to other individuals.  They would ponder and then deliver their pronouncement.  Sean is well known for responding “See, that’s not a bad idea, but I would look at it this way…”  Then go on to outline a wholly more fitting solution, but without a hint of ridicule or disappointment.  After all, Sean assumes you did your best, and he sees it as his job to make you better.

And that’s why it’s a death-match against yourself.

  • You respect your leader.
  • You know that your leader believes in you.
  • He won’t bring you the small things, he expects that you’ve already handled them.
  • He trusts you.
  • You do not want to violate that trust.
  • You want to demonstrate that you can rise to the occasion.

The only possible option for any sane individual in this circumstance is to do their absolute, dead-level best. You are forced to compete against yourself to be the best you can be.

And it reinforces itself.  As you tackle and make decisions, you gain confidence.  As you are gently corrected to better choices, you gain wisdom.  Confidence and wisdom are two incredibly valuable tools in any inter-personal relationship, and that is what managing is all about.

Of course, this management style is not perfect.  There is a very real side-effect to this style, one which is unsettling.  You see, any question can be construed as a possible death-match.

This is particularly bad when dealing with Sean.  Sean has a… unique sense of humor.  One that is very, very ironic and often relies on rhetorical questions.  And so, you might find yourself one day with your heart racing as Sean asks a very simple question of “Why would anyone do something like that?”, all the while looking at you knowingly.

Suddenly, your heart is racing, your palms get a bit damp.  “Is this it, is this another one?”  Because, let’s be honest, the last one exhausted you.  By its very nature, it pushed you to your limits.  “Is now the time I do it again?!?!”

But, any flaws aside, making your people death-match themselves is an incredibly awesome way to motivate and grow your team and invest in their futures.  We never compete so fully, or with such passion, as when we compete with ourselves.  The winner is always you in that scenario.