Why A New Startup Shouldn’t Have a Marketing Budget

As my partners at Foundry Group know, every time I hear the word “marketing” I throw up a little in my mouth. I hate traditional marketing and have always resisted it early in the life of a new company.

Fred Wilson has a phenomenal blog post up this morning titled Marketing. Among other things he demonstrates his mastery of marketing by sending me an email this morning pointing me to the post and saying that he’s channeling me knowing that it’ll likely inspire me to blog something about it and link to his post, increasing the chance that he’ll be the first Google result for the search “Marketing” (he’s already #6 for marketing VC).

When I think off all of the companies in our portfolio that are growing like crazy, they all spend money on marketing. However, it’s driven by an obsessive focus on the customer and the product, rather than a “marketing budget” or “marketing initiative.” And phrases like “social media marketing” and “marketing spend” rarely surface in discussions, and when they do I vomit a little in my mouth.

Of course marketing is a key part of the success of these companies. However, it’s wired into the DNA of the business, not an extra thing that is attached on, like it used to be in the 1980’s and 1990’s as “marketing”, “PR”, “marcomm”, etc. were a key part of every startup plan.

I’m currently in a world of conservation of words as I drive to finish the draft of “VC Financings: How To Be Smarter Than Your Lawyer and VC” due to Wiley on Monday at 5:59am so I’m going to stop now, go brush my teeth again, and remind you to go read Fred’s post on Marketing right now.

  • http://reecepacheco.com reecepacheco

    Fred’s points are great, but there’s some confusion in the community about the terminology: marketing vs. advertising etc.

    I think – like you say here – that it boils down to “brand” and the company needs to have their DNA deeply integrated into every facet of the product.

    • http://www.feld.com bfeld

      That’s exactly the point I was trying to make – thanks for pulling it
      out of my early morning blathering!

    • http://www.feld.com bfeld

      That’s exactly the point I was trying to make – thanks for pulling it
      out of my early morning blathering!

      • http://reecepacheco.com reecepacheco

        haha… happy to help.

      • http://reecepacheco.com reecepacheco

        haha… happy to help.

      • http://reecepacheco.com reecepacheco

        haha… happy to help.

    • http://www.feld.com bfeld

      That’s exactly the point I was trying to make – thanks for pulling it
      out of my early morning blathering!

  • http://www.durablestartup.com Denis

    Brad, marketing is all interactions with potential & current customers (be it customer development interviews, a company blog, or attending conferences). A marketing budget is simply lets the company feel comfortable when people spend their work hours on these activities. Seth Godin made a very good point in the comments to Fred’s post – Fred equated marketing to advertising, and the latter is just one type of marketing tools.

    • http://www.feld.com bfeld

      I think there is an endless debate about this. I like to be extreme at
      the very beginning. Realize that I’m talking about DAY 1 of the
      business, not necessarily day 366.

    • http://www.feld.com bfeld

      I think there is an endless debate about this. I like to be extreme at
      the very beginning. Realize that I’m talking about DAY 1 of the
      business, not necessarily day 366.

      • http://www.durablestartup.com Denis

        Well, Day 1 (or even until there is a working prototype) is definitely no time for promotional marketing activities. However, research marketing activities (such as customer development) are absolutely appropriate to the extent of being mandatory on Day 1.

      • http://www.durablestartup.com Denis

        Well, Day 1 (or even until there is a working prototype) is definitely no time for promotional marketing activities. However, research marketing activities (such as customer development) are absolutely appropriate to the extent of being mandatory on Day 1.

      • http://www.durablestartup.com Denis

        Well, Day 1 (or even until there is a working prototype) is definitely no time for promotional marketing activities. However, research marketing activities (such as customer development) are absolutely appropriate to the extent of being mandatory on Day 1.

    • http://www.feld.com bfeld

      I think there is an endless debate about this. I like to be extreme at
      the very beginning. Realize that I’m talking about DAY 1 of the
      business, not necessarily day 366.

  • http://www.activetheoryinc.com Alex Gourley

    In my RSS reader, right below your post, there was a big ad for Square.

    • http://www.feld.com bfeld

      Awesome. Glad they are spending the cash advertising in my blog since
      I get some of their ad spend. And I love irony.

    • http://www.feld.com bfeld

      Awesome. Glad they are spending the cash advertising in my blog since
      I get some of their ad spend. And I love irony.

    • http://www.feld.com bfeld

      Awesome. Glad they are spending the cash advertising in my blog since
      I get some of their ad spend. And I love irony.

  • http://blog.calbucci.com/ Marcelo Calbucci

    Hey Brad, I have a different take on this. Although I mostly agree with you and Fred, I think startup is about experimentation, and marketing is a way to experiment.

    Read my post here:
    http://www.seattle20.com/blog/Marketing-might-not-be-what-you-are-thinking-Rebuttal-to-Fred-Wilson.aspx

    • http://www.feld.com bfeld

      Love it – great add to the discussion.

    • http://www.feld.com bfeld

      Love it – great add to the discussion.

    • http://www.feld.com bfeld

      Love it – great add to the discussion.

  • Anonymous

    For part of the marketing budget at mediumbluescarves we’ll be sending you some gum.

    • http://www.feld.com bfeld

      I’ll take it!

      • Anonymous

        Hah! Gum’s on the way! Someday,, I shall bring something proper for you at the Foundry Group,, till then,, gum.
        (but that’s the only marketing we do,, ever!)

    • http://www.feld.com bfeld

      I’ll take it!

    • http://www.feld.com bfeld

      I’ll take it!

  • BobB

    Whenever I hear the term “throw up a little in my mouth,” especially twice in the same 5 paragraph article, I wonder about the creative writing skills of the author. Surely someone in marketing could come up with something less trite.

    • http://20minus.com Thanasis Polychronakis

      If your startup can’t make it on it’s own merit, all the money in the world and all the cocktail parties in the world aint gonna save it…

      Knowing that, and hearing people bubbling about marketing expenses for their new startup only makes you feel wanting to throw up… So adding “a little in my mouth” understates the feelings…

    • http://20minus.com Thanasis Polychronakis

      If your startup can’t make it on it’s own merit, all the money in the world and all the cocktail parties in the world aint gonna save it…

      Knowing that, and hearing people bubbling about marketing expenses for their new startup only makes you feel wanting to throw up… So adding “a little in my mouth” understates the feelings…

    • http://20minus.com Thanasis Polychronakis

      If your startup can’t make it on it’s own merit, all the money in the world and all the cocktail parties in the world aint gonna save it…

      Knowing that, and hearing people bubbling about marketing expenses for their new startup only makes you feel wanting to throw up… So adding “a little in my mouth” understates the feelings…

    • http://www.feld.com bfeld

      I’m just really obsessed with throwing up in my mouth.

    • http://www.feld.com bfeld

      I’m just really obsessed with throwing up in my mouth.

    • http://www.feld.com bfeld

      I’m just really obsessed with throwing up in my mouth.

  • http://www.24pagebooks.com MartinEdic

    I was a little disconcerted about both your’s and Fred’s mixed message regarding marketing- you have companies that aggressively market yet marketing makes you sick. What both of you are dealing with is a sea change in the nature of marketing. Marketing is entirely about reputation these days and, as such, it needs to be in the DNA of a company- literally everyone must be constantly working to protect and enhance the company’s reputation. This means marketing isn’t separated from any of the business activities.
    The stories and plans that make you gag are marketing initiatives driven by marketers who don’t understand this sea change (including virtually all PR firms, sorry folks). They still want to push out a brand message instead of understanding that reputations build brands.
    For me, as a founder and a long term marketing guy, this is a great change!

    • http://www.feld.com bfeld

      I agree that it’s a great change. I’ve been joking about marketing for many years – Ben Casnocha captured it well with his comment above that I’m “anti-bad-marketing.”

    • http://www.feld.com bfeld

      I agree that it’s a great change. I’ve been joking about marketing for many years – Ben Casnocha captured it well with his comment above that I’m “anti-bad-marketing.”

    • http://www.feld.com bfeld

      I agree that it’s a great change. I’ve been joking about marketing for many years – Ben Casnocha captured it well with his comment above that I’m “anti-bad-marketing.”

  • http://twitter.com/emptywindow Eric Adler

    BF – You write “how to BE smarter than your lawyer and VC”
    Wiley is showing the title “how to LOOK smarter than your lawyer and VC”

    Interesting.

    I’ll give it a read either way (Full disclosure – I am a lawyer).

    • http://www.feld.com bfeld

      I know – we are trying to get the official title changed. The existing title that’s up on the Wiley site was the proposed title but we’ve changed it. It just hasn’t rippled through their system.

    • http://www.feld.com bfeld

      I know – we are trying to get the official title changed. The existing title that’s up on the Wiley site was the proposed title but we’ve changed it. It just hasn’t rippled through their system.

    • http://www.feld.com bfeld

      I know – we are trying to get the official title changed. The existing title that’s up on the Wiley site was the proposed title but we’ve changed it. It just hasn’t rippled through their system.

  • http://ben.casnocha.com Ben Casnocha

    I just threw some thoughts up on this: http://ben.casnocha.com/2011/02/good-marketing-is-good-bad-marketing-is-bad.html

    Fred Wilson blogged about marketing: “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).”

    Brad Feld piled on with a post titled: Why a Start-Up Shouldn’t Have a Marketing Budget. Brad says when he hears the word “marketing” he vomits in his mouth a little.

    But, Brad’s not anti marketing. He’s anti bad marketing. He actually says every one of his start-ups spends money on marketing. It’s just that the marketing efforts are “wired into the DNA” of the product and company.

    And Fred, after dismissing the importance of “marketing,” endorses a bunch of activities from his portfolio company that could easily be called marketing.

    The word “marketing” encompasses a bunch of good activities and a bunch of bad activities; a bunch of useful philosophies and un-useful philosophies. The question is which specific marketing activities and philosophies are productive and useful and which are a waste of time and money.

    And that depends on the specific company, product, industry. We can all agree throwing $10k to a social media consultant to “promote” a product on The Twitter is a waste. But usually it’s more complicated. For example, Fred noted he was referring only to consumer internet companies and not enterprise SaaS companies. That’s a crucial distinction. Another example: manning a booth at an expensive trade show like CES may be a good marketing expense for Orbotix, but not a good marketing expense for other companies.

    Marketing is neither good nor bad, neither a waste nor a necessity. It’s both; it depends. This sounds obvious, and maybe it is, but it seems worth keeping in mind when reading broad-brush posts like the one Fred wrote this morning.

  • http://www.ronen82.com Ronen Mendezitsky

    Harsh words, I must say. I can agree that many startups may not really know how to properly manage their marketing efforts, and I can agree that startups might spend the marketing budget they set aside in the wrong places and in the wrong ways due to lack of experience, but I can’t agree on putting the kibosh on a marketing budget all together. Fred said on his post about marketing that even Zynga didn’t have a budget set aside for marketing when they were starting out, but not every startup can rely on the good graces of Facebook users these days with such a plenty of startup services and apps all around, trying to become the next Zynga. Just like in anything, it always comes down to who does it first and who does it right and I believe that you need to have both when it comes to marketing. Moreover, not putting a marketing as a cornerstone in your business may cause a company to get stuck on trying to satisfy a smaller customer bases’ needs and dreams and getting stuck in a loop of product releases instead of trying to push the product to more people. It is possible to market yourself through free sources such as facebook, or even to use your connection (if you have ‘em) with the press, both online and off, but not everyone has these assets, so they pretty much will need a marketing budget.

  • Clinton D Skakun

    Interesting angle, as a start-up owner I have to say also, I don’t give a shit about marketing budgets or the whole social media paradigm. My first thought is always, “let’s get the damn thing out there so we can serve people, reveal flaws in our service and improve, then get it out there some more.”

    I’m not going to sit here an nit pick every word you used to write this blog post, I agree totally that focus needs to be on the right things. Most entrepreneurs need to just do whatever it takes instead of sit around, be creative, analyze everything, and bore the hell out of the whole process. I’m sick of all the inane buzz words, and not hearing enough about getting it done. Your post is spot on.

  • Clinton D Skakun

    Interesting angle, as a start-up owner I have to say also, I don’t give a shit about marketing budgets or the whole social media paradigm. My first thought is always, “let’s get the damn thing out there so we can serve people, reveal flaws in our service and improve, then get it out there some more.”

    I’m not going to sit here an nit pick every word you used to write this blog post, I agree totally that focus needs to be on the right things. Most entrepreneurs need to just do whatever it takes instead of sit around, be creative, analyze everything, and bore the hell out of the whole process. I’m sick of all the inane buzz words, and not hearing enough about getting it done. Your post is spot on.

  • Clinton D Skakun

    Interesting angle, as a start-up owner I have to say also, I don’t give a shit about marketing budgets or the whole social media paradigm. My first thought is always, “let’s get the damn thing out there so we can serve people, reveal flaws in our service and improve, then get it out there some more.”

    I’m not going to sit here an nit pick every word you used to write this blog post, I agree totally that focus needs to be on the right things. Most entrepreneurs need to just do whatever it takes instead of sit around, be creative, analyze everything, and bore the hell out of the whole process. I’m sick of all the inane buzz words, and not hearing enough about getting it done. Your post is spot on.

  • GeoffB

    I completely agree with the spirit of what you’re saying. I’m actually working on a budget now for a bridge round. How do I say “I need to spend money on our company website.” and “I need to spend money to attend XYZ tradeshows” in that budget without making you puke?

  • GeoffB

    I completely agree with the spirit of what you’re saying. I’m actually working on a budget now for a bridge round. How do I say “I need to spend money on our company website.” and “I need to spend money to attend XYZ tradeshows” in that budget without making you puke?

    • http://www.feld.com bfeld

      Since I don’t know your business, it’s hard to answer directly. However, if you are raising a bridge round you’ve probably been in operation for a while so this won’t bother me. Just put a marketing line in your budget. FYI – I probably won’t look at your financial model anyway so just don’t include the detail on a slide in your presentation and I’ll be happy.

    • http://www.feld.com bfeld

      Since I don’t know your business, it’s hard to answer directly. However, if you are raising a bridge round you’ve probably been in operation for a while so this won’t bother me. Just put a marketing line in your budget. FYI – I probably won’t look at your financial model anyway so just don’t include the detail on a slide in your presentation and I’ll be happy.

    • http://www.feld.com bfeld

      Since I don’t know your business, it’s hard to answer directly. However, if you are raising a bridge round you’ve probably been in operation for a while so this won’t bother me. Just put a marketing line in your budget. FYI – I probably won’t look at your financial model anyway so just don’t include the detail on a slide in your presentation and I’ll be happy.

  • GeoffB

    I completely agree with the spirit of what you’re saying. I’m actually working on a budget now for a bridge round. How do I say “I need to spend money on our company website.” and “I need to spend money to attend XYZ tradeshows” in that budget without making you puke?

  • http://www.fluxresearch.com Clyde Smith

    Every time I hear the phrase “throw up a little in my mouth” I want to “throw up a little in my mouth.”

    I respect you and Fred Wilson quite a bit but you both are advocating marketing and you both seem really kind of prissy about the specific terms and how the money is described in the budget. It’s weird.

    Nevertheless, I appreciated Fred’s marketing tips and I’m sure company founders appreciate knowing which terms and descriptions are ok to use in their proposals to you guys and which aren’t.

    And that’s a good thing!

    Business Planning: Marketing Tips from Fred Wilson, A VC
    http://www.fluxresearch.com/2011/02/business-planning-marketing-tips-from-fred-wilson-a-vc.html

  • http://www.fluxresearch.com Clyde Smith

    Every time I hear the phrase “throw up a little in my mouth” I want to “throw up a little in my mouth.”

    I respect you and Fred Wilson quite a bit but you both are advocating marketing and you both seem really kind of prissy about the specific terms and how the money is described in the budget. It’s weird.

    Nevertheless, I appreciated Fred’s marketing tips and I’m sure company founders appreciate knowing which terms and descriptions are ok to use in their proposals to you guys and which aren’t.

    And that’s a good thing!

    Business Planning: Marketing Tips from Fred Wilson, A VC
    http://www.fluxresearch.com/2011/02/business-planning-marketing-tips-from-fred-wilson-a-vc.html

    • http://www.feld.com bfeld

      I’ll have to come up with another phrase. How about “crawl under a desk”?

      • http://www.fluxresearch.com Clyde Smith

        Works for me!

      • http://www.fluxresearch.com Clyde Smith

        Works for me!

      • http://www.fluxresearch.com Clyde Smith

        Works for me!

    • http://www.feld.com bfeld

      I’ll have to come up with another phrase. How about “crawl under a desk”?

    • http://www.feld.com bfeld

      I’ll have to come up with another phrase. How about “crawl under a desk”?

  • http://www.fluxresearch.com Clyde Smith

    Every time I hear the phrase “throw up a little in my mouth” I want to “throw up a little in my mouth.”

    I respect you and Fred Wilson quite a bit but you both are advocating marketing and you both seem really kind of prissy about the specific terms and how the money is described in the budget. It’s weird.

    Nevertheless, I appreciated Fred’s marketing tips and I’m sure company founders appreciate knowing which terms and descriptions are ok to use in their proposals to you guys and which aren’t.

    And that’s a good thing!

    Business Planning: Marketing Tips from Fred Wilson, A VC
    http://www.fluxresearch.com/2011/02/business-planning-marketing-tips-from-fred-wilson-a-vc.html

  • http://www.nektra.com Sebastian Wain

    But, the same reasoning can be applied to Sales, Software Development, or a Doctor. It’s difficult to find talent in every field. Marketing is more dangerous just because it has a big budget.

  • http://www.nektra.com Sebastian Wain

    But, the same reasoning can be applied to Sales, Software Development, or a Doctor. It’s difficult to find talent in every field. Marketing is more dangerous just because it has a big budget.

  • http://www.nektra.com Sebastian Wain

    But, the same reasoning can be applied to Sales, Software Development, or a Doctor. It’s difficult to find talent in every field. Marketing is more dangerous just because it has a big budget.

  • http://arnoldwaldstein.com awaldstein

    Reading over your post, I realize that you’ve articulated this more crisply and succinctly than I did yesterday in my comments on Fred’s blog:

    “When social or viral is part of the product fabric itself, marketing as part of the product design is a great answer.”

    Working with early stage companies is somewhat more clear on marketing than with turnarounds or mid size ones where they have to deal with a lot of legacy populations and structure.

    I just found this post. Great stuff.

  • http://arnoldwaldstein.com awaldstein

    Reading over your post, I realize that you’ve articulated this more crisply and succinctly than I did yesterday in my comments on Fred’s blog:

    “When social or viral is part of the product fabric itself, marketing as part of the product design is a great answer.”

    Working with early stage companies is somewhat more clear on marketing than with turnarounds or mid size ones where they have to deal with a lot of legacy populations and structure.

    I just found this post. Great stuff.

  • http://hirethoughts.blogspot.com Donna Brewington White

    You’ve nailed something. “[Marketing] is wired into the DNA of the business, not an extra thing that is attached on…”

    I think that’s the problem in many of the cases where there has been a marketing fail — marketing has been an add-on or something after-the-fact. My understanding of marketing is that it is meant to be strategic — which means that it needs to align closely with strategic business objectives and that marketing considerations have to actually be part of shaping those objectives. I’m not talking promotion or advertising — which is often what marketing gets reduced to.

    Even though I’m pretty spent after the exciting weekend over at AVC on this topic, I’m glad to have found this short post that puts it all into perspective.

  • http://www.nelking.com nelking

    Yep. Marketing is no longer is a stand alone function it’s systemic. VP of Marketing as a title is dead. Clients of mine have embraced Growth instead of Marketing activities. Growth means results.

  • Anonymous

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  • Anonymous

    Online marketing in some ways are expensive specially if your just a start up entrepreneurs. There are some ways to minimized online marketing cost by learning techniques from experts. Discover the “5 Business Prosperity Secrets” http://www.businessprosperitysecrets.com/