Go spend your money

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anies and startups that consider themselves “lean.” They’re proud that, in their pitch decks, the cost of marketing equals zero, or something close. Their marketing plan is; “the product will sell itself on social media,” or some such drivel.Having such a singular focus on saving the money you’ve raised has always engendered a question for me; investors have given you their money not for you to save it, but to build something of value. If driving value is what you’re optimizing for, then is reducing your burn rate really the best strategy? Maybe, sometimes, and wouldn’t a focus on getting a minimum viable product to market as quickly as possible be a better survival strategy?You certainly could save the entire marketing budget, and…one of the prime lessons Silicon Valley has (mostly) learned in the past 25 years, it’s that the “if we build it they will come” strategy only worked in Field of Dreams.Of course you try to get the most out of every dollar you spend, be fiduciary and not extravagant; however, there are times and places where it makes sense to spend because it pays off so well. One of the best of them is communicating with your market, both inbound (product ma

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rketing) and outbound (awareness building and lead gen). Marketing even takes two of the slots in Shafqat’s list of what he sees a company needs to spend on. As he says, “Being cheap doesn’t necessarily mean you’re getting good value.”And, I would add, it doesn’t mean you’re doing a great job of serving your customers, either.Some of the other places he sees as good places to invest are an office manager and CFO, getting a nice office (he finds it motivating). He notes that brand building and these collateral upgrades “were all pivotal to our maturation as a business.”Don’t sell yourself short and don’t save your way to failure. Find those key areas where costs are investments and garner positive payback. If it’s delivering a positive return, it’s a good thing. And, having a great brand that is well presented has gotten many a company to success, through good times and bad.A quick bit of data: At the beginning of the depression both Post and Kellog were about the same size. During the depression, Kellog kept spending resources on marketing. Who’s on top today?Go spend your money and go make something we’ll all be proud of.</article></body>

It’s possible to save your way to failure

After years in business, I have seen this repeatedly. A start-up gets funded, or a more mature company is doing well, yet they still maintain the paucity mindset that has them avoid spending money. They want to save on everything, from office furniture to (of course) marketing. But, the truth is that you can save your way to failure. Shafqat Islam, the founder of NewsCred, talks about how important it is to use your funding in a way that will foster your success.

And the success of your investors.

I’ve seen it most commonly in technology companies and startups that consider themselves “lean.” They’re proud that, in their pitch decks, the cost of marketing equals zero, or something close. Their marketing plan is; “the product will sell itself on social media,” or some such drivel.

Having such a singular focus on saving the money you’ve raised has always engendered a question for me; investors have given you their money not for you to save it, but to build something of value. If driving value is what you’re optimizing for, then is reducing your burn rate really the best strategy? Maybe, sometimes, and wouldn’t a focus on getting a minimum viable product to market as quickly as possible be a better survival strategy?

You certainly could save the entire marketing budget, and…one of the prime lessons Silicon Valley has (mostly) learned in the past 25 years, it’s that the “if we build it they will come” strategy only worked in Field of Dreams.

Of course you try to get the most out of every dollar you spend, be fiduciary and not extravagant; however, there are times and places where it makes sense to spend because it pays off so well. One of the best of them is communicating with your market, both inbound (product marketing) and outbound (awareness building and lead gen). Marketing even takes two of the slots in Shafqat’s list of what he sees a company needs to spend on. As he says, “Being cheap doesn’t necessarily mean you’re getting good value.”

And, I would add, it doesn’t mean you’re doing a great job of serving your customers, either.

Some of the other places he sees as good places to invest are an office manager and CFO, getting a nice office (he finds it motivating). He notes that brand building and these collateral upgrades “were all pivotal to our maturation as a business.”

Don’t sell yourself short and don’t save your way to failure. Find those key areas where costs are investments and garner positive payback. If it’s delivering a positive return, it’s a good thing. And, having a great brand that is well presented has gotten many a company to success, through good times and bad.

A quick bit of data: At the beginning of the depression both Post and Kellog were about the same size. During the depression, Kellog kept spending resources on marketing. Who’s on top today?

Go spend your money and go make something we’ll all be proud of.