“Constant Contact advertises on XM radio, so we should as well. After all, they have almost 1,000,000 customers.”
“Gary Vaynerchuk does Daily Vee, so I’ll hire a camera guy to follow me around and document everything I do.”
“Slack ran a full page ad in the New York Times and look at all the press they got from it — we should do that too!”
What’s the problem with these 3 statements? It’s that you’re seeing the end result without the surrounding context.
Yes, Constant Contact advertises on XM Radio. But they understand their LTV (life time value), started with small test campaigns and scaled up their radio spend carefully over a few years. They also spent the previous 10 years building a great brand in their market.
Yes, Gary has a full-time videographer. But he started with crappy low-res videos back in the Wine Library days and parlayed that into Vayner Media, which does $100M in revenue per year. So he can afford the salary of his videographer without blinking and without having it directly attributable to revenue growth.
Yes, Slack ran a full page ad in the New York Times. But they were already doing tens (hundreds?) of millions in ARR, had raised a boat load of money and Stewart has a huge profile, so it made sense for them.
The biggest thing that trips up most founders is trying to apply advice from one stage of growth to another — and then wondering why it didn’t work for them like it did for [insert company name].
Here’s the lesson: what works for a company doing $50M in revenue doesn’t work for a company doing $500K in revenue.
Simple example — you copy a marketing tactic that your much bigger competitor uses. It works for them and flops for you. Why? They’ve spent 5 years building a brand, have raised a boat load of money and understand their unit economics. You’re just getting started and don’t have that data about your market yet.
Or here’s another example — you hire a VP of Marketing when you really just need someone who can actually be hands on and do the work, because you read a bunch of articles by investors who gushed about a few of their portfolio companies taking off as soon as they hired VPs of Marketing.
The difference? Those portfolio companies have raised 10x more than you and had marketing budgets 50x what you have right now.
So how can you figure out which advice is stage-appropriate and which advice you should ignore? Here are some clarifying questions to help:
- Did the company implement this strategy/tactic when they were around the same size you are now?
- Were the dynamics of their market similar to yours when they implemented this strategy/tactic?
- Do you have the same talent and resources as they did when they implemented this strategy/tactic?
I spend a lot of time with incredibly smart entrepreneurs who are much more successful than me, but I still have to filter their advice for stage-appropriateness. I’ll always smile, nod and tell them their ideas are great.
But if it’s not stage-appropriate for where my company is today, then I’ll file it away for later and move on, regardless of how “sexy” their advice sounds at the time.
It’s a good idea to do the same thing.
|About Mitchell Harper
Mitch is a 7x company founder, advisor and investor. He is best known as the co-founder of BigCommerce. His companies have generated over $200,000,000 in total revenue and he is currently building an online education company and a SaaS company.