In this edition of Software Business Crash Course, I'm going to present a cautionary tale.
Many people who work outside the sales and marketing professions tend to conflate the two disciplines. While sales and marketing professionals share the same ultimate goal -- revenue for their organization -- the two professions are actually quite different.
Sales is the easier one to understand. Sales folks call on prospects, negotiate deals, follow up to make sure needs have been met, and ultimately ring the bell that brings cash into the company.
Marketing is about creating an environment conducive to making sales. Marketing professionals define products, explore communities to identify needs, determine pricing and competitive positioning, design packaging, choose features, develop advertising, and reach out to the press to get coverage of their offerings.
To oversimplify a bit, sales people are all about the customer. Marketing people are all about the offering. And this is where marketing folks tend to go off the tracks when it comes to starting companies.
As a young, 20-something engineering-driven founder, a refugee from the product marketing ranks, it came as quite a surprise how much time I had to devote to sales. I learned quickly and spent 20 years honing my people, managerial, and sales skills, but those early first four years were quite the wake-up call. But I learned. I learned to dial for dollars, ship products, deliver services, and support my family and employees for a couple of decades.
Not everyone learns. If you're currently in marketing, let this article be your wake-up call.
I can't tell you how many marketing professionals I've met who have started (and failed at) creating companies. The core mistake these folks made is spending too much time on product and not nearly enough time on customer. In fact, at least a dozen marketing pros I know went all the way to production -- and then failed to try selling a single unit!
I'll give you three examples. The names have been changed to protect the insolent.
Henry, VP marketing at a telecommunications vendor
Henry started a mail-order clothing goods business. He had a valid hook at the time: He had done a deal with offshore vendors to mix and match clothing elements so customers could order his category of clothing and get a semi-custom fit for an off-the-rack price.
Henry field tested the order and production process, and bought about 100 articles of clothing. He hired models and did photo shoots. He had a blast doing the product shoots and designing the catalog. He described it as some of the most fun he ever had.
Quality was good, prospective customer response was excellent, and turnaround from the offshore vendors was quick enough. He rented a list of buyers of complimentary products and printed up 100,000 color catalogs.
He spent a tremendous amount of his own money to get this far. But when it came time to actually mail the catalogs, he got cold feet. He was afraid the mailings might not pan out, and didn't want to spend the money on postage. Those moldy catalogs are still in his garage and a quarter of a million dollars of Henry's own money went down the drain.
Jeff, product marketing director for a software company
Jeff bought a domain name. It was a very common word, a single domain name. I'm not going to tell you the domain name he bought, but it was like "camping.com". You could hang a tremendous amount of opportunity on a domain like that.
Jeff spent roughly $50,000 to purchase the domain. That's it. He's had it for 10 years. He hasn't even put up a simple Google ads page on the domain to collect random traffic clicks. $50,000 and he did nothing with the asset. To this day, he won't even list it for resale.
His current plan: Leave it to his kids as part of their inheritance. He's 55 now, and he's willing to let that asset devalue for another 20+ years before even letting his kids do anything with it.
I am not making this stuff up.
Terry, marketing VP for a software company
Terry was my boss when I worked for a software company in my early 20s. She was very into a particularly popular card game and had acquired the rights to what was widely considered the best training methodology for serious players. She wanted to turn that methodology into a software product.
She approached me to write the code. She offered to split the proceeds, but I had this little tickle on the back of my neck. I was willing to do the work, but I wanted to be paid real money. We compromised. She bought me a brand-new $6,000 top-of-the-line development machine and when I finished the coding, the machine would be mine to keep. It was a fair deal: I wanted the machine and she wanted the product.
While I was coding, Terry had a great time putting together the packaging. She worked with vendors and designers (this was before software app stores, when software was sold in boxes). She signed up the companies that would duplicate the disks and assemble the packages.
I finished the product a month or so early (I didn't have a life back then). We tested it with a lot of the card clubs in the area and it was both a solid product and a hit in terms of member interest.
A few years later, I bumped into Terry and asked her how the product had sold. She told me that after the truck showed up and delivered the cases of product to her garage, she kind of lost interest and didn't feel like making sales calls. She gave a few copies away to some friends, but never even tried to sell a single unit.
I'm glad I wasn't dumb enough to split the proceeds. Half of zero is zero. On the other hand, I got to keep the killer machine Terry bought me as compensation for my work. It saw heavy use for about four years, so the deal was good for me. I'm guessing those cartons filled half of her garage for a decade or more. Heck, they might still be there.
Avoid these traps
When you're creating the products, you're all excited about the features and how you can do it "your way". When you sell a product, you often get pushback from prospects and customers who want things done differently.
When you're working on packaging and photography, and writing up a self-congratulatory press release, it's all about the celebration of you and your creativity. When you're making cold calls, it's all about getting the door slammed in your face.
To a lot of people, creating and designing products is fun. Selling those products is scary.
But here's the thing. If all you're doing is building and stockpiling your work, you're a hobbyist, a crafter, a maker for the sake of making. All can be emotionally and intellectually rewarding.
But you're not in business until you sell products to customers, get paid, and do it again, over and over again.
Whenever I'm approached about someone starting a company, I look at their background. If the founder is an engineer, I think about the fact that the founder may be able to create a breakthrough product and even if she can't sell it, there's a good chance there will be something tangible to sell.
If the founder is a successful sales person, I'm even more interested. Sales people are right at the cusp of the core of the reason for the company: Selling stuff. New products flow by at a never-ending rate, but finding someone who has the discipline to manage a sales funnel, make the 40 or 50 cold calls a day to fill it, and the personality to be on the front lines day in and day out can be rare.
But if the founder is a marketing person, I'm always cautious. This is often a person who is great at describing and specifying products, but can't make them himself. This is often a person who loves to promote products, but is usually a scared little child when it comes to knocking on a closed door.
If you are a marketing person and you want to start a company, think about what I've told you. Your best bet is to team up with a star engineer and a pavement-eating sales performer. Then, you can spend all your time deciding which trade shows to attend, how to structure your website, and what trademarks to register.
Look, marketing folks have a very important place in startups: They make things look professional, and they provide a level of focus and clarity to the offerings of the company. But if you're going to start your own company, don't fall into the trap of cherishing the sound of your own voice or the brilliance of your designs.
If you decide to go all the way to product and offering like the cautionary tales I described above, more than anything else I can tell you, this is the best advice: Sell your stuff.
Unless you sell the stuff you make (and do it over and over again), you're just a pack-rat, a hoarder, a sad story, a lesson for future generations. You're not an entrepreneur.