Brian you are bringing up one of the most frustrating experiences I have with startups. I've worked with or advised dozens and the pattern is ALWAYS the same: Startups that consider Marketing an investment succeed. Those that consider marketing a cost and merely a means of acquiring customers fail.
I've seen it time and time again. Most founders fail to realize that Marketing is anything more than advertising and customer adoption. Those that fail to raise capital have failed to do the market
validation, research, and marketing that results in a meaningful opportunity. Those that fail to compete have no sense for their market
, competitors, and industry. Those that fail to grow and satisfy customers have no insight to their problems nor preferred solution. Marketing.
Frankly, I believe this is the single reason that our startup economy has so significantly changed in the last 10 years. From disruptions and innovations to apps and Lean startups validating customers and yielding for investors $50MM exits.
Peter Drucker, famed economist of the '70s and '80s for those that don't know, said of business
“Because the purpose of business is to create a customer,” said Drucker, “the business enterprise has two-and only two-basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”
Somewhere along the way, founders have been taught that talking to a few people, validating an idea, and getting a few paying customers is all it takes. That a CEO and CTO comprise the founding team.
I find myself in Austin, TX today, by some measures, the hottest startup market in the world. And yet, we struggle to attract Venture Capital here. We have by any measure, a disproportional number of startups per capital relative to the amount of funding available to them. Simply: we have more potential opportunity than anywhere in the world as too little investment is servicing that demand. Yet few are asking WHY -> Why is it that we have so many startups but so little support from investors??
When I left Silicon Valley, about 6 years ago, for Austin, I experienced what I think is the reason: Marketing. In California, the ideal founding team (essentially) is 3 people
: founder, CTO, CMO. Now, I realize, most of us are familiar with companies having two founders and practically speaking, there generally are. My point is more philosophical - that there, your focus as a startup is vision/strategy/resource (CEO), build (CTO), strategy/demand (CMO). I had a prolific career there as startups just don't try raising capital without an experienced marketing executive on the core team.
Austin is a Sales based economy. Our technology, historically speaking, has been hardware and enterprise: B2B. The consumer and internet oriented culture that developed Silicon Valley by way of Marketers didn't develop in Austin and thus, today, the advisors, incubators, and indeed even investors (since it's the only experience they
have) are teaching entrepreneurs that you validate, build, sell, fund. No where does marketing exist as anything more than an employee tasked with sourcing leads and customers.
Why do startups fail? Why do startup cultures fail to develop industries and sophisticated venture capital communities? Because they fail to appreciate Drucker's wisdom and instead believe that only the innovation
matters - businesses are built without the distinguishing characteristic that results in revolutions, instead merely being small businesses with a product, sure, perhaps an innovative product, but not what that's capable of delivering what most investors are seeking: distinction.