Positioning: The Battle for your Startup

“It’s the first company to build the mental position that has the upper hand, not the first company to make the product. IBM didn’t invent the computer; Sperry-Rand did. But IBM was the first to build the computer position in the prospect’s mind.”
- Al Ries & Jack Trout in Positioning: The Battle for Your Mind.

Just about everything you’ve done in marketing in your early startup stages was a warm-up.

Really. Yes.  

Marketing takes a whole new meaning after you’ve scaled-up to the point where your brand needs to be out there and mean something.

If you have experienced incredible growth as a consumer startup, or if you’re about to reach 100 customers as a SaaS/B2B company, your brand position will become increasingly important in helping you stay successful. But don’t be fooled if marketing probably didn’t play a big role in getting you there, initially.

When all products are great, when all VCs are really good, when all teams are amazing, when customer/user acquisition is working great, what ends-up differentiating the winners from the rest?

Marketing does.

More specifically, companies that understand how to master the art of communicating their position will win. And the best form of communications is positioning.

The Mind is the Battleground

When you’re starting out, you don't need much positioning, because you’re still aspiring to become whoever you want to be (when you grow-up). What you need at the beginning is good enough messaging to get users to try your product. So don’t confuse messaging with positioning.

Positioning starts with your product,
but it is not what you do to a product.

(re-read that statement, and memorize it)

Positioning is what you do to the mind of the prospect. This means that you position the product in the mind of the prospect. It’s like thinking in reverse. Instead of starting with yourself, you start with the mind of the prospect.

Positioning is the first body of thought that comes to grips with the difficult problem of getting heard in our over-communicated society and over-published online web.

In the same way that you believed in the “thin edge of the wedge” to get your product through the trial door, in communication, less is more. You have to sharpen your message to cut into the mind.

Each day, thousands of blog posts, tweets and other social/online messages compete for a share of your mind. So, the mind is the battleground, and positioning is a systematic solution for finding a window in the mind.

How do you get there, why is this important for startups and how do you to start? Here are 8 concepts to help you think about it:

1. Be First
The first rule of positioning is to be first. That’s the easiest way to get into a person’s mind. A harder way to get into a person’s mind is being second. Even harder is when you’re #3, #4,#9 or #12. (I’ll cover that in a subsequent post)

When you occupy the #1 position, you own that position, and it becomes very difficult to dislodge you. Owning is the key word, because when you own something, you’re safer. It’s yours. Taking it away will be costly. (Nonetheless, don’t make the mistake to communicate a position that is impossible to defend because someone else already owns it.)

Back in the 80's & 90's no CIO ever got fired for choosing IBM at large companies, because IBM owned the position of being a safe choice with peace of mind and consistent support. They were always there with you. Fast forward to 2013, and there are some new web companies that are beginning to occupy similar positions in our minds.

For a startup, you can’t go wrong if you chose the Amazon Web Services cloud-hosting environment. Although they could be more expensive in the long term, their deployment and management tools make it very easy to start with. Amazon understood well how to lower the on-boarding barrier, something that startups really appreciate. Although Rackspace is a fine company with great services as well, they are a bit like Avis. Being #2, they have to try a little harder.

2. Blogging is communicating
If you don’t communicate daily, how can you let your ideas cut through the sea of content noise? When you blog, you communicate. This is why those who blog regularly are rewarded by earning the position they re-enforce in the minds of their readers. And the best part about blogging is that any user can take your message and amplify it via other blogs or on social media. That couldn’t be done in advertising literally speaking, i.e. you don’t take a billboard and show it to your friends.

There is chaos already in the communication spaces that we come across, both online and offline. Prior to online, the average consumer would come across one or two newspapers and a handful of magazine articles per day. Now, we are constantly consuming stories, blog posts, articles and social messages perhaps seeing 100+ headlines per day. We end-up clicking on 15-25 of them, and maybe sharing another 5-10.  

3. Understand the meaning of words
Choose your words carefully because words move people, but they can also cause indifference. Not all words have meanings just because the dictionary says so. In marketing, the meanings are in the people using the words.

If you take the analogy of the sugar bowl as the container, and the sugar as the meaning, you fill the words (container) with meaning (sugar). 

A word has no positioning significance until you or someone fills it with meaning. If you add sugar to a leaky bowl, you won’t get anywhere. So, if you try to add meaning to a leaky word, that won’t work. Better to discard the leaky word and use another one.

4. What will you sacrifice?
The other side of the coin for the thin edge of the wedge metaphor is: “what will you sacrifice”? You must be willing to give-up something to establish that unique position. You can’t be all things to all people and still have a powerful position to defend, unless you’re a big company already. Not all companies are Facebook.

Nyquil, the nighttime cold medicine, gave up the daytime market.

5. Position for defensibility
Positioning also has defensive purposes. A company that wants to be long lasting has to develop a position for itself, as a defensive measure. Once you occupy that position in the mind, you become somewhat protected from the inevitable vulnerabilities that come along the way; for example when some of your products are bad or new releases aren't performing as well as expected.

A classical example is Apple who has done an amazing job building their brand at the edge of fantasy and reality. Their extraordinary marketing helped to create a position in our mind where we romance their products and forgive them a lot. When you love someone (or something), you will put up with imperfections and overlook them in favor of the other good stuff. Apple Maps not perfect? No problem, we believe they’ll fix it. Antenna issues? It didn’t affect me, so it’s not an issue. iTunes is clunky and expensive? That’s ok, there is variety instead. You get the idea.

It’s hard to defeat a fantasy.

6. Dissociate your company from your product
A sign of startup maturity is when you can confidently dissociate your product from your company for marketing and sustainability purposes. When you start to talk about what your company stands for, that becomes a powerful driving force for your evolution. In a comments exchange on Fred Wilson’s blog in a post entitled Tenacity and Persistence, I asked Scott Heiferman, CEO and co-founder of Meetup about what Meetup stood for. His response was very telling about the kind of company Meetup is. It turns out that Meetup has a higher cause than collecting $15/month from meeting organizers.

Heiferman said: “We're mission-first: we maximize meetups. I think the world is too broken and would be better if there were a lot more meetups (decentralized resilient local in real-life community/economy vs. centralized+corrupt+cronyism creating disparity & disconnection). Thankfully, our model is aligned with our mission. We'll always create a lot more value than we collect. We're generally conscious of just trying to do the right thing.”

The Meetup higher cause mission is amazing and it’s a very good thing, but it struck me that it was under-marketed or not as sharply communicated.

7. If you’re not #1, try to be the first to occupy #2
If you’re not the first, then you have to be the first to occupy the #2 position. (It’s not that easy, but it can be done)

But first, make sure that you can’t find something to be first in. It’s better to be a big fish in a small pond (and then increase the size of the pond) than to be a small fish in a big pond.

SendGrid took the position of being known for easier and deeper understanding of email integration as a way to enter the email marketing market. They didn’t start by saying they had a better product than MailChimp who was already the leader. SendGrid is now a very strong #2, a very honorable market position.

8. Don’t forget the less viral physical world
Assume for a minute that the online world didn’t exist. And assume for a moment that your virality will run its course.

As long as we live in a physical world, the marketing battle for the mind will need to transfer parts of its focus into the physical world and into non-organic viral methods. For 2 reasons. First, to solidify and protect your position (see point #5 above). Second, in order to attract the next wave of your users/customers who couldn’t be reached via online viral tactics.

Your first 1, 10 or 30 million users may have come from online virality, but you may need to tap your next 9, 90 or 270 million via non-viral methods.

I’m not advocating expensive TV or bus commercials , but there are ways to let your brand become known out there such that it is driving new users for you from offline to online.

Web marketing isn’t the only marketing. (See my chart on the new Marketing Mix)

Don’t stop at viral.

Twitter, Facebook, Zynga and Instagram had incredible viral elements at their core. They are great examples but they are not easily copiable by reverse-engineering how they got there. You need to find your own path and break-away points, but you can be sure that a large part of their growth came from people talking about them in the offline world (via word-of-mouth) and that drove additional online users for them.

The Assault on the Mind

I believe we are seeing a renaissance in the positioning era. Now is the time to think about what kind of assault on the mind your company is going to undertake in order to secure its position.

When you do that, make sure that you create a position in the prospect’s mind that takes into consideration not only your strengths and weaknesses, but also those of your competitors as well.

For startups and grownups, marketing positioning is a key battle.

Go fight it.

Find the position you want to occupy; own it and let it inspire users to keep you in their hearts and minds forever. Let them think of your position before they think about your product.

~ ~ ~ ~ ~ 

Disclaimer and Context: Much of my inspiration for this post is borrowed from the seminal book Positioning: The Battle for Your Mind, by Al Ries and Jack Trout. That book was written in 1981, and it is a marketing classic. I added my own context for startups and companies experiencing hyper-growth, in addition to modernizing some of its concepts to reflect the current online realities. The book’s original direction focused on advertising as the method of communicating a brand’s position in the marketplace. But today, the blog post is arguably the new Ad unit of today’s world which is dominated by online influences. Therefore, much of the basics of these principles (with my adjustments) squarely apply.

Startup Marketing Is for Growth

I've been interested in studying how startups use marketing as an essential lever for growth. So, startup marketing will be the subject of my next few blog posts. 

I recently asked a VC friend who has seen his share of startups why aren't startups generally good at marketing, and he told me this via an email: “The marketing hire is the hardest hire for our companies to make. The failure rate is higher than any other.” 

I asked him why? His response was: “because they are all led by product oriented founders who don't value marketing“. 

And about month ago, when I wrote a post on the pitfalls of native marketing, Brad Feld had an insightful comment, answering a similar question. He said:

“One of the problems with both small and large companies is that their marketing sucks and the marketing leader (CMO or VP Marketing) has a one dimensional view of their role. There are very few real CMOs who have a seat at the executive table, respect of their peers, and the real impact on the strategy of the business. Most end up spending their time doing what you call table stakes as well as thrashing around outside their own areas of competence.”

That’s a hard-hitting reality.

I didn’t ask CEO’s/founders because I know most would not admit their marketing isn’t great. Yet, there isn’t a successful startup that didn’t master some element of marketing in their journey to success. 

• Facebook. Their early marketing was focused on getting developers to write Facebook apps. I recall those local meetings back in 2008 and 2009. 
• DropBox. They mastered effective viral marketing, where each user was incented to invite others and each received value.  
• AirBnB. They were known to have bot-harvested a ton of responses to ads on Craigslist pointing to their listings to bootstrap responses for their early users.

These all seem like marketing stunts or exploits. But they worked, and if you were to ask a marketing professional 10 years ago if these tactics were in the marketing books, you couldn’t find them. 

So my first point is that startup marketing is very different from traditional marketing, in large part because of online/digital marketing, but also due to the fact that traditional marketing mostly focuses on established markets and competitors, whereas startup marketing is about creating demand for your product and acquiring emerging user segments, and that’s not the same as fulfilling demand for an existing need or market. In the same way that a startup is not a small version of a large company (said famously by Steve Blank in 2010), startup marketing is not a scaled-down version of traditional marketing.

Marketing is in Motion

Christopher Colombus didn’t have a plan or a map to reach the New World. He discovered it as he sailed along. A lot about startup marketing is being re-discovered. Some old rules apply, others are adapted, new ones are made-up, and some old ones are being tossed down. The key is in knowing which is which.

Allow me to digress for a minute.

What do I know about marketing? 

Depending on when you knew me first, you may think of me as an entrepreneur, a consultant, an author, or an old Hewlett-Packard marketer. True, my entire career at HP was filled with sales and marketing roles. But from 2006-2008, I headed up Cognizant’s global corporate marketing at a time when the company was growing at 40%, close to a mature startup’s rate. Most recently, in the past four and half years, with Engagio and Eqentia, I was deep in the trenches of startup marketing, as I filled the marketing role among other things. I don’t think we did too badly at marketing because our mindshare was a lot bigger than our marketshare. And in the past 2 months, I was entrenched with the Marketing group at Influitive, a successful B2B SaaS company for advocate marketing. 

So, my experience with marketing is well rounded and hardened with first-hand startup experiences, in addition to having done it across four decades, from the 80's til now. I’ve seen the big, small and medium sized type of marketing, with small, medium or large budgets, working with small, medium or large teams, faced various market positions from being leader to challenger to aspirant, and competed in small, medium and large markets,- both in B2B and B2C settings, and was a doer and a manager. 

Each time, I adapted my role into the new environment, learned the new stuff and un-learned what was old or irrelevant. Most importantly, my experience with startup marketing is very recent and from the inside of the trenches.
#End of digression.

First Thing First: Pre or Post Product/Market Fit? 

There is a key pivotal phase in the life of a startup. Before Product/Market fit (PMF), and After Product/Market fit. Marc Andreessen explains this very well in this 2007 post, The Only Thing that Matters.

Before Product/Market fit, you’re probably spending time getting noticed in the media and tinkering with marketing. That’s ok. You’re getting warmed-up. Marketing doesn’t really matter that much until you need to grow as soon as you achieve product/market fit.

PMF + Viral Value = Growth
PMF + Viral Value + Marketing = Hyper Growth

Product/Market fit happens when the majority of your customers tell you, not because you have a lot of users necessarily. Reaching Product/Market Fit opens the floodgates to the real possibilities of growth and opens the door to a variety of marketing activities. 

I’ve depicted the evolution of a marketing and growth for startups in the following graph, to elicit comments. I will dissect this particular graph in a later post. I'm not sure it's perfect, so any feedback would help to improve it.

Marketing and Growth are intertwined at the core.

The key point is that marketing is an evolutionary activity. Deciding what marketing levers to pull, and when is a function of the stage you’re at, and variables such as revenues, # of employees and # of users. 

8 Lessons for Startups

Let’s go over key marketing factors at play and some of my learnings from the past four and half years running 2 startups, working at a 3rd, and interacting with several others. I will come back and dive deeper into some of these points and will add some new topics in future posts.

1. Online Marketing is only a starting point
A few years ago, digital marketing was part of the mix. Now, it’s an essential starting point for the new mix. But don’t do just do online, inbound or social marketing. Online metrics will tell you only half of what you need to know. The other half is the context you acquire and what you learn from talking to customers and users. And as long we live in a physical world, you will eventually need to address non-online marketing activities.

2. Viral success is not enough
Many startups start to hit the growth curve because some aspect of their viral exploits are working, and they start adding users like crazy, e.g. 5,000 new sign-ups per day, 10% growth per week, etc… Life is good. You’ve figured out customer acquisition, but that’s not a signal that you don’t need marketing. Having a large number of users or customers actually opens up new possibilities in marketing whereas a small number of users will have a limited viral impact.

3. Marketing starts with customer development 
The more you grow and mature, the more marketing levers you’ll need to use (see the graph Marketing in Motion). That’s why, to Brad’s point above, eventually you’ll need a marketing person that is multi-faceted and not just peaked into online marketing tactics. But that person doesn’t have to come from the outside. They might have grown and evolved with you because customer development might be where they started. In other words, marketing is an extension of successful customer development.

4. Market your customers
As you grow, you’ll start to realize that your users and customers are doing wonderful things with your products. Now, you need to communicate their success with case studies, reviews and testimonials. Find out how your customers are innovating with your products. Uncover how your product has changed or transformed them, and start telling the world about it. Michael Schrage’s e-book “Who do you want your customers to become” is a quick read that helps you understand how your products transform your customers.

5. Market your position
That’s probably the single most important thing that companies miss the boat on. I can count numerous successful startups that have achieved market leadership, yet they don’t know how or haven’t been able to act like a leader. They aren’t marketing their position right. Marketing your market position is different than marketing your product. When you market your position, you need to tell everybody you’re #1. And if you’re not #1, then tell everybody you’re #2. There’s a marketing classic book Positioning: The Battle for Your Mind by Al Ries & Jack Trout. It’s the bible for positioning, and I keep re-reading it every 2-3 years since I first saw it in the mid-80’s. 

6. Marketing is mojo
Magic is the unspoken part of marketing,- the art, the black magic, the surprises, the stunts, the charm and the sex appeal. Once you pass the required analytical skills, a marketer that is not creative is a dead marketer. Go dream-up some unique partnership, sponsorship, product placement, e-book, blockbuster story, viral hook, or something that no one expected. Do something that makes your competitors think: “why didn’t I think of that”, or that makes your VC say: “wow, that’s good marketing”.  

7. Time vs. marketing budget
I constantly hear startup CEO's saying they don’t have a big marketing budget. Fine. But initially, all you need is a time investment in marketing. That could be part of your time, or a part-time person that takes an operational role. There are no excuses for not spending time on marketing especially after you have launched. If you don’t have the budget, budget for the time. 

8. Marketing is about iterations
As a startup, you know all about iterations. Marketing is no different as you focus on figuring out how to get your products or services in front of more users, day in and day out. So, you can apply the same iterative and experimental techniques as you do for your product. Try something and measure it. Then either discard it, tweak it, ride it or double-up on it. 

Marketing is the growth lever

The hardest part of marketing for a startup is to take it seriously, to commit to learning it, and spending time on it. If you're a young startup CEO/founder who has come from the product or engineering ranks, you probably don't know what you don't know about marketing (sorry...not meant as an insult, but based on my interactions). So the biggest challenge is to admit it and quietly learn more about it.

You don't have to figure everything out at the beginning. And beware that what has worked for others doesn’t necessarily work for you, because you don’t really know what their starting position or objectives were. Your marketing mojo must be unique and original to achieve maximum impact. 

After Product/Market fit, you still need to reach the point where your marketing spend is in line with your revenues, whether you're driven by an Average Revenue per User (ARPU) or Monthly Recurring Revenue (MRR) metric. Take your top line budget, or projected revenues and assume you'll spend 5-10% of it on marketing. Be aggressive with marketing, and let it lead your revenue, not lag it initially, because it's a lever of growth.

As a marketer or a CEO, your goal is to spread the product around and become a big company, right? So, if you want marketing to become a big lever of growth for your startup, then start giving it a bigger piece of your mind.

The Misinformation Gap for Startups

There is too much information out there.

An abundance of information always creates a poverty of attention and a deficit in good decision-making.

When it comes to startups advice, there is no shortage of information because it’s everywhere on blogs, from VC’s, entrepreneurs, consultants, and wannabes.

Everyone is dispensing advice just because they can publish it on the Internet. The result is we get saturated and it becomes difficult to pick good from bad advice. 

Take Advice at Your Own Peril

Taking online advice is a bit like using cooking recipes. Have you wondered why some recipes work perfectly well, and other fail miserably? 

Some reasons include: 

• The recipes weren’t properly tested
• The author leaves out critical information, like what’s between each step, preparation tips or a specific technique 
• There is no discussion from users that tried it and who can offer insights that the author left out

There are lots of analogies between startups taking advice and someone following a recipe. The difference is that failing a recipe won’t cost you much as you can easily find the one that works for you and re-do it. But in a startup, bad advice will cost you time, money and sometimes might be disastrous enough that you may not recover from it. 

Of course, there is a lot of good information out there, but there is also a lot of bad information. So, how can you tell which is the right information? 

In a perfect world, you’d like to make decisions based on perfect information, but if the information you use is not perfect, not correct, or misleading, then your decisions will lead to bad or insignificant outcomes because the path you chose was wrong. 

Here are 3 factors to consider when consuming openly available information.

1. Does it Apply?

If you’re a startup, the field you’re operating in is full of uncertainty, ambiguity, risk, and un-chartered territories. This means you are very likely to encounter imperfect information. 

In many cases, it will look like perfect information because it may have come in the form of advice from someone you know or heard of. But that doesn’t make the information perfect. Your particular situation always includes factors that affect the applicability of that advice to your particular case. 

Everyone has an opinion, but that opinion may not apply to you. 

2. Incomplete Information or Categorical?

Imperfect information is OK, but you need to know that ahead of time so you can iterate around it, instead of using it as is. 

If certainty brings perfect information, uncertainty breeds a lot of incomplete or insignificant information. If you are startup, your goal is to ride uncertainty by edging towards repeatable and predictable information, tuck it in, and move to the next thing.

For example, a common mistake startups make is to follow what the majority of their users tell them. But the majority of your customers are going to give you a blind spot because you’ve already tainted them with your vision. However, there is a minority of customers that will tell you insightful things that may not agree with the majority. Sometimes, listening to them may be more helpful than catering exclusively to the majority of users who are satisfied with the status quo. 

3. Where is the Discussion?

We know there’s plenty of incomplete information out there and far too many voices that are shouting it. But what completes incomplete information or helps you determine its applicability for your situation is a healthy discussion on it. 

Look for posts or articles that generate a healthy dose of comments around the main topic. A quality discussion complements, expands on, or critiques the advice given because it gets you closer to seeing a full picture.

I look forward to seeing less misinformation and more quality, perhaps curated information.