Where Should You Spend Your First $10k on Marketing? 7 Tips from Steven Dupree

This is my fourth in a series of posts on talks I heard at the Weapons of Mass Distribution conference hosted by 500 Startups in San Francisco on Nov 4, 2016.

So, you’re a young new startup ready to take over the world. Except you don’t have many customers, and you’re short on cash. What are the first steps you should take to get your growth chart headed up and to the right?

Steven Dupree, entrepreneur in residence at Trinity Ventures (and former VP of marketing at SoFi), gave seven guidelines for how you might want to spend your first $10k on marketing.

Invest in “zero cost” channels

Young, thrifty startups should consider front-loading “zero cost” acquisition channels such as SEO, content, and social. Such channels cost nothing and can garner new customers for free. However, Steven cautioned that startups should understand the true cost of such “zero cost” channels — they cost your team focus and bandwidth—and it can take months to see a strong return on investment from these activities.

Pull through active seekers

The universe consists of two groups of people: those you need to pull in (they’ve already self-identified their interest in some way), and those you need to push information to, educating them before they become aware of the problem you’re solving. It’s much more cost effective to acquire customers who have a need for and are actively seeking your product or service, so focus on pulling in these active seekers.

Copy your competitors

Who is the 800-pound gorilla in your industry? People generally discount their competitors as inferior, but there’s usually a reason they do things the way they do. Study them closely, learn from them, and copy what works (only do it even better). Also learn from what they’re not doing. Are you competitors not investing in a particular channel? There could be a reason!

Harass your early adopters

Learn everything you can from your first hundred customers — their insights are more valuable than your own intuitions. Glean everything you can from them to surface ideas for things to tests or new growth channels to pursue. A couple ways to go about that include having multiple people in your company interview and/or read survey feedback, as well as track “How did you hear about us?” responses.

Test on the cheap

Start with paid channels that allow you to run small, inexpensive tests. Watch them carefully and then scale, tweak, or kill new channels based on which ones are providing a return on investment. Keep experimenting with both incremental tests (tweaks leading to a local optimum) and transformational tests (big, breakthrough ideas).

Mitigate business hurdles

Your potential customers are like track and field athletes — they have to jump a number of hurdles to make it to the finish line and become a customer. Identify what those hurdles are, and realize that your conversion rate is a combination of the success rate for each of those hurdles. Prioritize tests that can mitigate at least one hurdle.

Learn from failure

Learn from what doesn’t work, but don’t get discouraged. Failed tests yield knowledge which can be used on future tests and eventually lead to a breakthrough. Failure is ok; the worst thing is to do nothing. Also, recognize that tests with greater upside (transformation tests) tend to have higher probability of failure than incremental tests. Keep calm and carry on!

Other talks from Weapons of Mass Distribution