I recently watched Note by Note, a really stellar documentary on the making of Steinway pianos. Steinway is one of the only brands in the world to still make their pianos 100% by hand. Their craftsmen are very passionate, interestingly diverse, and extremely skilled. The movie is as much about the workers and their individual stories as it is about pianos. One of the piano makers said something that stuck out to me:
When you work with your hands, you know a mistake. You can just feel it sitting right there and you can fix it.
The quote doesn't seem that complex at first, but as you continue to ponder the remark, it will hit you on deeper and deeper levels. Being able to truly feel mistakes and fix them as we go along is a rather unique situation available to only a select group of professions. Craftsmen, programmers, and chefs, to name a few, are able to receive instance (dis)gratification by quickly feeling or testing the solution their working on to see if it's up to snuff.
However, there's a far larger group of professions that don't have the advantage of instantaneous feedback. This fraternity includes people like architects, journalists, and...marketers. I'm obviously in that last classification and this frustration with going forward blindly for days, weeks, and months at a time has been even more recently evident for me as our company markets our first product, HiFi CMS.
We've worked on marketing plans, made advertising buys, and put strategic initiatives into motion, but there's really no way to know if these things will ultimately be successes or failures until they've had a time to run their course. Marketers aren't able to add a piece of code to the app, test it, get a bug report, attempt a fix, and repeat. We add in the line of code and unless it blows up the whole damn machine, there's no way to know its success or failure for a bit of time.
However, even with the inability to feel mistakes as you go, marketers do have certain tools in their tool chest to feel around mistakes, trying not to fall victim to them. Here are a few tactics our team has tried lately to get an inkling of where an imperfection might pop up and attempt to circumnavigate it.
- Always be testing. While you can't upfront run a test to see if a certain program will be a failure or not, in absolute terms, you can be continually testing along the way to look for relevant successes and optimize for that. As an example, you may not be able to answer if it's worth spending a lot of resources to make a kickass product screencast video. That's a hard question to answer, you can A/B test your site layout to optimize placing that video wherever it'll get the most views, thus making the most of your either prophetic or idiotic investment. (Note: we *love* Optimizely for A/B testing.)
- Watch competitors. One of the best ways to avoid mistakes is to observe what your established competitors do in the space. If they all send out weekly email newsletters, then it probably makes sense for you to do the same. Your competitors have been doing this for awhile and certainly made plenty of mistakes in the past -- you have to assume they learned from them and they're doing certain things and ignoring others for a reason. That's not to say you should always 100% emulate your competitors, they may miss or ignore some things you know are great strategies (blogging is a popular one), but you should use them as a baseline for your activities and avoidances.
- Get feedback at every step. Similar to always testing, you should also always prod users, prospects, friends, and others for feedback. Thoughts from a small minority should never 100% shape your direction and will never tell you if you're going to fail or not, but it will give you some solid foundations from which to tweak messaging, change an ad buy, or launch new initiatives. By getting feedback, you'll get others to buy in and get a timely response if you ever do make a truly ghastly decision or gamble.
Those three are just a start of things to do and still don't solve the biggest issue, which is that all could be for naught if you've started down the wrong path anyway. What are some other ways to minimize room for error as a marketer or another professional who can't feel mistakes as they're going?
Mint.com recently had a successful exit to Intuit for $170 million. While some, such as Jason Fried, have argued over whether the exit was a good decision or a premature one, I don’t think we can pass judgment without knowing a significant amount of confidential details (i.e., profitability, user growth, revenue growth, VC pressure, etc.).
So, this post is operating under the (perhaps naïve) assumption that any exit where the founders make a ton of money and keep their product intact is a successful one.
In just a few short years, Mint grew from just an idea in Aaron Patzer’s head to a product being used by 850,000 people. This dramatic growth and subsequent acquisition didn’t just happen by luck, and there are several lessons to be gleaned from the success of Mint:
1. Don’t be scared to challenge an established player. Mint launched as a boot strapped venture by Aaron Patzer. He saw an opportunity in that all other personal financial software was cumbersome and not necessarily targeted at younger users. Rather than just complain to friends and be afraid to challenge multi-billion dollar competitors like Intuit and Microsoft, he sacked it up and decided he could do it better than them. We always hear of the fabled garage startup putting an established player out of business, but most entrepreneurs still remain frightened of challenging these big companies. Mint proved you with the right idea, you can out swagger even the most mighty of competition.
2. Elegance in an app matters. One of the first comments made about Mint by new users is almost always the beauty and intuitiveness of the app. The company understood that their product, no matter how many cool features were packed in, would be rather useless to customers if it wasn’t extremely usable. They when went the extra mile and added a shine of elegance on top of the intuitiveness. In addition to this strategy making the app fun to use, it also helped capture college-aged users (a prized demographic) who are used to working on the web and appreciate extra attention to detail in their software (see: Apple).
3. Think of ways to break the “usual” business model. Mint is a free service. So, it must be supported with revenue from banner/text ads, right? I mean, that’s the way free things work: Google, Facebook, Myspace, NYTimes.com, etc. Is there another option? Mint didn’t fall into the trap of just mindlessly following its predecessors (albeit very, very successful predecessors), but came up with a model unique to its offering. Mint made its money by analyzing a user’s financial situation and habits, and then recommending relevant products or offers. This is different than a freemium model (see Evernote or DropBox) and the typical advertising relationship, but that didn’t prevent Mint from giving it a shot and ultimately succeeding with it.
4. Free can work. While my company certainly believes in charging for our products and services, I fully understand that many start-ups haven’t been charging lately. While I, like many others, have an issue with this general approach, I can’t deny that it can work in certain situations. If your product or service can gain users at a such an accelerated rate that you can make money because of them rather than from them, then go for it. However, don’t hold on for too long, thinking that the big jump in users is just around the corner while you spend all of your cash. It’s better to start charging early than too late.
5. It’s ok to exit. I think I’ve made it clear in this article that I think it’s more than ok to make an exit, if the terms make sense. Much of an exit decision goes far beyond just compensation and places a lot of emphasis on other aspects of the deal, such as product future, ongoing commitment to purchaser, and more. Mint was able to keep its product and free subscription model in place, while also doubling its user-base with Quickbooks’ 1.4 million users moving over to Mint. I’m sure CEO Aaron Patzer would not have exited without assurances that the product and business he built would remain intact and that he was also excited about the idea of growing his product in such a large way.
6. Take your time. Mint was launched in 2006 and took several rounds of funding. It was originally bootstrapped by Patzer and he hired slowly before getting his first round of funding. Not every successful exit is some blowup success over night. These things take time and taking time is the way to build the best company possible. I remember when we first launched NMC, we thought we’d have an easy exit that would make us filthy rich within the first five months of the company – while we did have an opportunity to sell that quickly, it wasn’t the right deal and by understanding the importance of taking our time and not rushing, we’ve been able to build a much more valuable and enjoyable company.
7. Word of mouth can get it done. Mint outgrew its large, public competitor at such a staggering pace that it would seem that they were investing all of their money in marketing. However, the company had a rather miniscule marketing budget, spending only around $50,000 on search engine ads. Everything else was done through inbound marketing, word of mouth, and hard work. The company kept an updated and very helpful blog (this very cool graphic is actually how I first found the company: Visualizing Uncle Sam’s Debt), attracted fans on Facebook, and provided useful information on Twitter. I know I helped in this effort, as after I started using Mint, I instantly added it to my Facebook favorite links and emailed it out to about two dozen of my friends.
As you can probably tell from this post, I think presents a pretty inspirational story as a startup and marketing machine. However, unlike people like Fried, I don’t think their acquisition means that the story has ended, but that its simply entering a new chapter.
Are there other lessons to be learned from Mint? What other startups are putting these lessons to use? Have you?