As the founder of a startup you have legal issues to work through, the development of a roadmap for your company, addressing your customers' problems - or maybe finding some customers (that's a biggie!) - raising capital, and ultimately making the world a better place, right?...
It's hard to know what to focus on first.
When I listen to founders pitch their company to investors for early round funding, I hear a lot of them state that one of the areas they plan to focus on is their marketing efforts. This likely comes about because of that Catch-22 issue most startups face when looking to raise capital:
"A VC wants to invest in me only if I can prove I have Traction, but how can I build any Traction if I don't get their funding?!"
It seems most founders believe the answer to this Catch-22 is Marketing. The thought is, "If I get more people aware of my product/service, then they'll sign up or buy and I'll be able to prove Traction and raise capital." So they spend the money on AdWords and Facebook Retargeting, or elaborate SEO or marketing gurus, to see how it goes.
As a marketing professional it pains me to say this, but marketing is not always the answer to this Catch-22.
A far better use of a founder's time and money, before spending it on marketing, is to ensure that they have a strong product. Too often I see companies launch into marketing efforts before their customers really care about, or need, the product or service they built. The end result is wasted cash on promotion of a product that no one will buy - and with cash so crucial in the startup phase, this misstep can be deadly.
That is why establishing Product-Market Fit is much more important at this point in your company's growth stage - and you'll know it when you have it.
If you want more background on Product-Market Fit I suggest you watch this video, or read this article, as they go into more detail on this topic then I do here:
But essentially, Product-Market Fit is:
"Being in a good market with a product that can satisfy that market"
- Marc Andreesen
When people understand and use your product enough to recognize it’s value that’s a huge win. But when they begin to share their positive experience with others, when you can replicate the experience with every new user who your existing users tell, then you have product market fit on your hands. And when this occurs something magical happens. All of a sudden your customers become your salespeople. Evergreen.
You'll know you have Product-Market Fit when these things happen:
Your customers are inclined to spread the word about your product to their peers
You have high engagement rates (aka "stickiness"), or low churn rates
You start to see reduced lead times & shorter sales cycles as customers become eager to try your product
Your customers are willing to sign on at a higher price point. They're not just willing to pay for it, they're willing to pay more than the cheapest option
If these things aren't happening yet for your business, then - before doing any marketing - I recommend you talk to your customers (or friends and family if you don't have customers yet), get their feedback, incorporate their feedback, ask them to review the product again - and repeat the process until you have a solid product that addresses a real problem. You may have to pivot your business several times over until you get true Product-Market Fit, but that is part of the journey and will be worth it in the end.
Only once you've established good organic growth and virality, is it time for you to focus on marketing.
Once you have Product-Market Fit, then you can scale your message about how great your product is and get more people to sign on, which they'll be more likely to do now that you have a solid product. Go ahead and spend the money on Facebook ads and video campaigns, banners at conference events, and guerrilla marketing - whatever works best for your company.
But don't spend time and money on marketing before you build a loyal base of customers who are willing to advocate on your behalf.
You need Product-Market Fit before focusing on Product-Marketing Fit.
I guess, to go back to the beginning of this post, my real answer to the Catch-22 issue that all startups face, "how do I prove Traction without getting investor funding", is to prove that you have Product-Market Fit. No matter how small your current customer list is, even if you don't have a product yet, you can still show Product-Market Fit by stating your plans for addressing a specific problem in a specific market and why your team is the one to solve it. Share customer feedback that shows your product's strong retention rate or how your customers don't want to, or can't, function without it.
Proving this to potential investors in a pitch is far more impactful than telling them that you plan to use their funds to focus on Marketing.
Upcoming Virtual Accelerator Launch: “More Than a Pitch Deck”
We are launching a new online program that will help guide entrepreneurs step-by-step through the best methods for building a fundamentally sound company; a company that a VC would want to invest in.
Sign up to learn more about what's included in the virtual accelerator program, plus details on the bonus material you'll receive: SIGN UP HERE