I've been an employee with three start-ups and the founder of one - Fisher Vista, LLC (HRmarketer).
For the start-ups where I was an employee:
As for Fisher Vista, LLC (HRmarketer), in a few months we'll celebrate ten years of business.
- The first, with the patient backing of Johnson & Johnson, became a successful global biotech company.
- The second one flourishes today as one of the largest privately held employee benefit firms in the USA.
- The final one burnt through over $10 million of OPM (other people's - venture capital - money) in two years then crashed and faded away.
What have I learned from my experiences?
No two start-ups are alike and there is no cookbook to building a successful business. You're on your own kid. But I do like to share my Three Truths of starting a business:
Being an employee or the founder of a new business can be exhilarating. What's not to like about exhausting hours, depressing troughs, stress, fear and anxiety? (I'm kidding - sort of). It's all about the journey and I wouldn't trade it for anything.
- Whatever amount of money you think is needed to start the business – double it.
- Whatever amount of time you think you’ll spend running the business - double it.
- Whatever amount of money you think you'll make from the business during the first several years – half it.
But being a marketing agency for a start-up - now that's hard work.
In our soon-to-be ten years of business, HRmarketer has worked with hundreds of HR software and services companies - and some have been start-ups. And the start-ups are the most challenging companies to do marketing for.
OK - so I'm exaggerating. And yes, we've worked with some absolutely wonderful start-ups who prosper today.
- Unrealistic goals. I appreciate the enthusiasm but a goal of wanting to "put Monster out of business" is a little, well, silly. The problem is that when the goal is not realized in the first year it ends up being the marketing agency's problem.
- Unrealistic sales cycle expectations: Underestimated sales cycles are one of the most common reasons for failed businesses. Why is this a problem for the marketing agency? Because when those "leads" the agency generated on Friday don't close over the weekend marketing tends to get blamed for delivering lousy leads.
- Dysfunction: Finally (and this is the hardest part of working with start-ups), the marketing agency is forced to ride the emotional roller coaster of the entrepreneur. When things go well you're the best. On a bad day you become the whipping post. Through osmosis you are forced into the irrational and dysfunctional world of a start-up. At the end of the ride, you may need therapy.
But those are the minority. For what it is worth, the worst offenders seem to be in recruitment services/technology. Nothing against recruitment companies. We work with a lot of you and there is no doubt the sector is one of the most forward thinking and innovative in the HR marketplace. It's just where we find the most offenders. The marketplace that serves recruitment is much less standardized (and regulated) than benefits, training, HR compliance, etc and thus open to more new ideas and innovative products. It is an area ripe for lots of start-ups. Entry barriers are low and recruiting is highly dynamic and many argue inefficient. And of course the Internet supports sourcing, selection, job placement, etc... so with the rise of the Internet, we saw the rise in recruitment technologies.
Anyway. I have come to the conclusion that more often than not, marketing agencies don't need start-ups any more than start-ups need marketing agencies.
If you are a start-up, allow me to tell you something that most marketing firms won't tell you:
Think twice before spending a lot of money on marketing.
Too many start-ups invest too much money in marketing way too soon.
When this happens, the start-up ends up with leads they don't have the ability (or the time - e.g., cash flow) to nurture/close, a drained bank account and a host of other related problems and frustrations.
So think hard before entering into a long term marketing agency marriage - wait until you are a little more stable.
That doesn't mean spend nothing on marketing. Just don't over-invest in lead generation and PR. How about an initial webinar based on a content piece (e.g., white paper) to solicit some early leads that you can use as the basis of some focussed conversations to test/validate your ideas and learn about your buyers. I would also invest in a quality search-optimized web site (the investment that keeps on giving) and messaging - you really need to have a compelling value proposition.
And remember those Three Truths.
Post by HRmarketer CEO Mark Willaman. Join Mark on LinkedIn and Twitter.
Labels: marketing, startups