Entrepreneur Office Hours - Issue #11
Building startups outside Silicon Valley, evaluating your marketing strategy, and asking good questions
In the entrepreneurial world, there seems to be a never ending debate around whether it’s better to build startups in Silicon Valley or outside of Silicon Valley. Or… as I like to call it… Hollywood for Nerds.
The truth, of course, is that there’s no right or wrong answer. But where you build your company will impact how you should build your company, and that’s a big theme in my content this week.
But it’s not all philosophical. Lots of practical advice today, too, including how to sell and how to market on a shoestring budget.
If you’ve got questions, remember to find me on Twitter or LinkedIn. You can also send your questions by replying to this email. And, as always, if you’ve found anything in this issue useful, please consider forwarding it to a friend.
Thinking of Building a Startup Outside Silicon Valley? Make Sure You’ve Got a Good Defense!
If you’re hoping to compete against Silicon Valley startups without being in the Valley, you should know how to pick a fight you can win. That begins by placing yourself in a position to be able to defend your market.
Chris Evans - The Founder Who Gave the Web Targeted Advertising
It might surprise you to learn that sophisticated advertising technologies were developed relatively late after websites like AltaVista and GeoCities were already becoming hugely popular. The man who -- for better or worse -- helped change all that was Chris Evans, founder of Accipiter, one of the Web's first ad serving platforms. Hear his story on the newest episode of Web Masters:
…or just search “Web Masters” wherever you listen to your favorite podcasts.
How to Market and Sell a New Product on a Shoestring Budget
Startups may not have lots of money, but that doesn't mean they shouldn't focus on marketing and sales. Here's how to get started marketing and selling a new product, even on a shoestring budget.
The Secret Weapon of Salespeople Every Entrepreneur Should Steal
Everyone assumes great salespeople are great conversationalists. But that’s not necessarily true. Instead, great salespeople are really good at doing this one thing.
Office Hours Q&A
I’m using Facebook ads to see if people are interested enough in solving the problem my startup is targeting to click through to the landing page. And then the landing page tests whether they are interested enough in the solution to give us their email address. I’m nervous that lack of experience with social media marketing will muddy the waters of the test. I wonder if I am getting low click-through because I just don’t have good copy or if people aren’t clicking through because I should shelve this idea. How do you get around this when you’re doing preliminary tests?
First, I want to draw the attention of anyone reading to how great a question this is. Specifically, it’s a great question because it’s focused on proving market demand and proving access to demand, which shows this person is building her startup in the proper order.
Based on her question, if she can’t find a way to generate good click-through rates and email addresses -- which is certainly a possibility -- then at least she’s limited her losses because she hasn’t wasted time developing a product that she was never able to sell.
For the sake of comparison, imagine if this question was basically the same, but she was struggling to drive people to a product rather than a landing page. If that were the case, and she still never found a way to generate good click-through rates and signups, then not only did she spend time/resources/money trying to get users, she would have also spent time/resources/money building a product that was never used. In other words, by focusing on marketing at the beginning rather than product development, she’s minimized her potential losses. That’s fantastic. Every entrepreneur should be asking themselves the same question: how do I minimize my potential losses?
With that caveat out of the way, let’s focus on the big question here because it’s one I get often, which is basically: how do I know whether my idea stinks or if I’m just bad at marketing?
The answer, unfortunately, is you never know for sure. However, you ultimately make a decision about whether or not to continue based on two things: 1) the trajectory of your marketing experiment results; and, 2) your own personal priorities/goals.
The latter of the two items above is, I hope, self explanatory. As an entrepreneur, you have to constantly weigh the costs you’re incurring with what you believe are the ultimate potential benefits of the venture. Once you feel like the costs are too high, that’s when you quit. There’s no right or wrong point. It’s a very personal decision.
Since I can’t give you a specific answer about the second item, let’s focus on the first: assessing the trajectory of your marketing experiment results.
Marketing experiments are, by definition… well… experimental. That means we should never expect our marketing experiments to work on the first try. They almost never will. And, even if they do work on the first try, we can’t know they’ve worked because, on the first try, we don’t have any data to use for comparison. For example, if you get an amazing 10% click-through rate on your first Facebook ad, since it’s only the first ad you’ve run, you can’t know if some other version of the ad would have gotten a 15% click-through rate without trying other versions.
This issue underpins the marketing concept known as A/B testing. A/B testing means never testing a marketing strategy in isolation. Always test it in relation to something else so you have a point of reference to help assess success.
In terms of Facebook ads, this means running two ads side-by-side to the same target audience with the same budget and for the same amount of time. After the test, compare the data and see which ad performed better.
Once you’ve finished that test, take your better-performing ad and run it against a new ad and, again, compare results at the end of the test.
During this process, one of two things will happen. You’ll either (a) keep getting better and better ads; or (b) one ad will keep winning over and over and over again, which will indicate you’ve found the optimal ad.
By the way, A/B testing isn’t limited to ads. You can A/B test entire marketing strategies. For example, compare Facebook ads with Google ads. Or compare paid advertising with content marketing. And so on. As you can see, the purpose of A/B testing isn’t to promote one kind of marketing strategy over another. The purpose of A/B testing is to provide some context or point of comparison on which to make judgments.
There’s a lot more nuance to A/B testing than what I’ve described here, but hopefully this information at least sets you on the right track. From here, it’s time to do what entrepreneurs (should) do best: research! Pull up Google, type in “How do I run A/B tests?” and start reading.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!