VC Paradox

What does it take to get your cake and eat it too?

The other day on Seth's Blog a post on "Hunters vs. Farmers" hinted at the dilemma venture capitalists have with companies.  In short:

Only hunters can bag the deal + raise money; only farmers can nurture it into a cash crop.

For start-ups it isn't hunting and it isn't farming; its both.   Hunting is a short-term, transactional process - I don't care what the next deal is, as long as I get it.  Farming on the other hand is a planned, sustained activity over a number of seasons.  The grounds suitable for hunting are rarely the same as those good for farming.   It is very difficult for a company to both, but that is exactly what a successful start-up has to do. 

There must be some mix that reflects the rapid evolution or mutation of a company from concept to sustainable business.  Call it hurming or fanting or something else entirely (I skipped the temptation to use farting).  This is why start-ups require a team, not just an individual, that is both harmonious and distinct. 

Social Media, Strategy and Moon Shots

How do these ideas relate?

In a recent tweet I made the statement: 

The question isn't "What is our social media strategy?" but "How does social media help implement our strategy?"

It seems to have touched a nerve with an "amen" and a couple of RTs; so now I have to explain myself.  

The above questions apply to any media since the word social is simply a qualifier for a type of media.   Do we get worked up about 'what's our billboard strategy?' just because everybody is out driving around?   Nope.  And, since social media are tools for facilitating sharing (more on my thoughts defining social media here) having a strategy for a tool is viewing everything from the hammer or drill's point of view.   

As a business we need to achieve an objective defined in clear, measurable terms.   The best objective I can think of is: 

"I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth."  President Kennedy - May, 1961

Clear. Unambiguous. Measurable.

Strategy is not how we will achieve an objective; it is why will achieve one.  

Business strategy is often framed in two questions:  Where will we play? and Why will we win? Neither of which focus on the how; that comes later.   Positioning, differentiation, and alignment all help to frame the answers to those questions into a cohesive reason why the objective will be met.   In fact, strategy could often be replaced with the phrase 'reason for success.'   The moon shot was successful because people, industries, the military, and the government all came together for this mission.   That was the strategy: cooperation and collaboration on a humongous scale. 

In a more down-to-earth and contemporary problem, consider the marketing of Master's degrees - a very competitive market (have clients in this world.)   If the objective is to be a ranked program then there needs to be a reason for the outcome.  "Quality", "reputation", and "scores" are assessments or metrics that back up the reason.   An example of strategy for a well-funded research university might be 'commercialize our research into a series of successful start-ups.'  Now that's a differentiated strategy. 

Just how you pull off a strategy is all about tactics.  

Only when we know why we may be successful should we look at the portfolio of tools and figure out which ones to use.   Given expansive goals and strategies sometimes we have to make up the tools to do the job.  In 1961 we didn't have the rockets (or even the knowledge) to achieve the objective.  We created the tools.   It was not 'what is our Redstone strategy' it was 'how will the Redstone rocket help implement the strategy?'      The Redstone rocket provided a platform for man's entry into space - it was a first step. 

Like all media, social media has its strengths and weaknesses; it is appropriate for some objectives and strategies but not others.   If the strategy will benefit from collaboration and sharing then social media would be appropriate.   If the strategy requires stealth and big bang then it would not be appropriate.   Since these elements were so much a part of the success of the moon race it probably would have been considered by the program director.

So, if social media where around in 1961 - how would it help create a sense of community and purpose in order to put a man on the moon? 

Venture Capitalists and the CMO

Who's the most important member of the team?

There has been a lot written about the success or failure of a start-up resting on the shoulders of the CEO.  While the buck stops there, where does it start?

For technology companies the marketing function represents the conduit for moving from start-up to business.  As commented on "Cool is not a Strategy"  it is a long way from cool to cash.  Since venture funding goes to firms that have proven that there already 'is something' the real challenge becomes translating early adoption into a sustainable growth model.   Since marketers are paid to change history (new products, markets and segments) they are responsible for the road map of getting from here to there.    This means crafting a vision of the customers' world, even if they themselves can't, and leading the development of a series of incremental steps to get there.    

In a recent WSJ article on strategic planning the point was made that plans needed to be much more flexible and adaptable because we can "no longer count on a 'reasonable set of assumptions'".   Who better than the CMO of a young company to take on the responsibility of understanding the shifting sands?  She is out there every day; she can sense opportunity and respond.  

So when the venture capitalist asks about your team start first with the CMO.  Don't have one? Get one even if you have to rent one for a while.   This is too important to leave to the intern.  

Cool is Not a Strategy

Why should cool be banned?

Last week I sat through several presentations by start-ups; technical companies working in very different areas.   One phrase in the pitches stuck out like a sore thumb:  'this is cool'.   While cool relates to passion and can sustain a lot of late hours of development, it does not necessarily relate to a sustainable business.  Ok, Apple may have proven that wrong at the perceptual level -  but they are the exception and certainly didn't start that way. 

Customers rarely buy because something is cool, they buy because they suffer a pain.  It is this transition from garage geek to a business that requires a heavy dose of marketing.   It is our job as marketers to align the solution to the need and make the pain go away.   

There are numerous ways to present a start-up, often rooted in financials, market sizing, and barriers to entry.  What I really want to hear in that first minute from entrepreneurs and innovators is:  "Here is the pain that really pissed me off."   Now if enough people suffer the same thing and they can solve it in a cool way, so much the better.  

Presenting Social Media as a Bike

How do I explain social media?

A while ago I wrote a post trying to explain social media using an analogy of bicycles.   Since this concept has found its way into meetings I summarized it in presentation form and posted it on slideshare.   Here it is for those interested in another take:

Social Media is a Red Bike

View more presentations from Anthony Power.