Category Archives: Start Up


I was introduced to a great video around motivation by Brad Feld’s blog.  If you haven’t watched it, it’s worth 10 minutes of your time.  Much of what Brad and the video highlights is very relevant.  The primary idea was debunking the notion that pay and performance are linearly correlated.  While true in mechanical tasks, the research demonstrates that for anything requiring cognitive engagement, if pay gets de-coupled from purpose, outcomes are markedly inferior in spite of higher reward.  The talk is riveting, and I thought I’d offer a few suggestions based on what I’ve seen from our best executives.

First, create a purpose!  Many companies I meet with mistakenly assume it is so self-obvious that it is never made explicit.  And yet deciding those few words can make all the difference in the world.  Once articulated, the great thing that happens is those words can then be printed and shared over and over across a Company.  It allows purpose to be infectious and align an organization.  “Is everything I am doing consistent with our purpose?”  When everyone thinks with a higher goal in mind, it helps create a consistency of outcome.  Companies like Zappos are a great example of this.

Second, make sure you define a purpose in an aspirational way, not functional.  Purpose to me is not something that gets achieved, it’s a direction.  For example, it’s not “we want to build the best online marketing software” but “we want change the way people discover and interact online”.   Instead of “we will be the leader in online multi-player games” but “we want to revolutionize the experience, distribution and delivery of games to online audiences”.  Admittedly I spent 15 seconds thinking of these examples, but the idea is stay away from purpose that does not appeal to a fundamental emotion or create a cause of action.  The term BHAG comes to mind.

Third, find ways to reinforce the purpose and make accomplishment tangible.  Our best companies create exposure and reinforcing loops to show how individuals and the company support the mission.  Developers get introduced to customers who rave about how a new feature has shaved an hour off of their day.  Metrics are aggregated that frame how their engagement and excitement compares to other things out there.  Spontaneous community activities are highlighted and ‘shout-outs’ to individuals go company wide.  Beyond incentive compensation, people need feedback on a regular basis that they are indeed contributing to and achieving purpose.

Our best companies and leaders have a sense beyond themselves.  They create ideals that people line up to get behind.  When people believe, they will go through walls to create outcomes.  And when everyone is willing to break through walls, usually you break through mountains.  This is hard to do and requires focus to make happen, but remember even life is not that interesting without PURPOSE!


Love & Flux in a Time of Seed

I was at a panel earlier this week, when a question was asked from the audience.  “Are we in a seed bubble?”

Well, between the rise of super angels, the proliferation in micro-cap funds, and a shift in some LP interest towards the seed stage or emerging managers with small funds, it does not take a lot before we see significant changes in the available capital for seed.  Combine that with how capital efficient companies are, and you get seed stage activity at a level that did not exist before.  Admittedly, the fact that these companies can achieve material traction with much less money is a driver for the phenomenon.  But divide more dollars in the asset class by fewer dollars required per company and the output is many more companies.

What happens to those seed companies?  Typically, if a company does a good job executing on their seed round, by being capital efficient, they can quickly raise a Series A round of capital.  Some don’t need it, but generally in an era of easy “me-too”, expanding to all markets in parallel or staffing up quickly to feature differentiate usually necessitates venture capital.  The problem is that the venture industry at a macro level is in a not so healthy state.  LPs are having their own macro difficulties, and investments in the asset class are coming down materially.  Many funds from the prior climate are actively reducing fund sizes, by choice or otherwise.  And we in venture believe this actually is a good trend (at least those of us performing!).   

What does this all mean?  Combine the increasing number of seed companies with decreasing venture capital dollars, and you potentially have a tough situation.  Not every seed company that does “well” will have the opportunity to be fully capitalized.  There are only so many times a seed investor can tell a VC “no, no, THIS is really a hot deal”.  And so the bar will go up dramatically.  This is a good thing in that much better companies will get funded beyond the seed.  And in many respects the bar for a Series A deal these days will start to resemble a Series B deal.   But it also means lots of failure.

For entrepreneurs, a few things to think about.  First, think about the composition of your seed round.  Take the time to build the best network around you for information flow.  Create a good mix.  Make sure you have a strong group that can be your advocate and can give you credible advice about how to navigate the market.  Second, work actively with your seed investors to define real value creating metrics and what ‘clears the bar’.  It used to be 100K uniques was interesting, then it was 500K, six months from now it might be much higher.  Having institutional money as part of that syndicate can be helpful as we are actively in the transaction flow of real companies graduating from the seed to A and beyond.  Third, make sure you have the capital to achieve those objectives.  Don’t just take $1MM because that’s what is “typical”.  Map your capital to milestones in a disciplined manner.  This is not for investors, it’s to make sure you can grow your company seamlessly, keeping fundraising tasks to a minimum, and emerge owning a huge chunk of your business!

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Don’t Ignore the Obvious

My partner Larry Lenihan recently passed me a great article in Wired on the neurocognitive basis on which people absorb and discard information.  The author used the famous case of two scientists who built very sensitive radios to map the emptiness of space, and kept hearing a persistent noise.  They spent years tuning their radio telescope, clearning pigeon poop off the dish, blamed it on nuclear fallout.  Eventually and reluctantly, they accepted their equipment could be right and sought an explanation from more diverse sources.  They wound up winning the Nobel prize in physics in 1978 for discovering the cosmic “noise” associated with the Big Bang. 

 There were lots of lessons to be taken away for all participants of a startup.  Much of it involves overcoming one’s own personal biases to get to real insight.  Some examples: 

  • Seek diverse opinions early on an idea, rather than hoarding it for fear of being stolen.  The constructive dialogue process generally sharpens, not dulls.
  • When hiring, focus on the references (particularly ones not provided by the candidate) and listen to what they have to say.  Don’t fall in love with a candidate in advance and use that bias to filter out the lukewarm language.  It usually means there’s more behind it they are not saying. 
  • Continually test and seek feedback.  Try to ask for the check as early as possible, because that is when you learn whether the market truly values what you implicitly believe is valuable and are spending resources building. 
  • In fundraising, don’t ignore the “nos”.  Many may not get it, but there could be good lessons learned in other situations that one should be mindful of and avoid.
  • When stuck on solving an issue, try to bring in completely fresh perspectives that aren’t stuck in the weeds.  They can look from the outside, borrowing concepts from other disciplines even in the technology space.

 Overcoming mental blind spots has become a hot new area around improving “Executive Function”.   The more we are aware of the bias, open to hearing issues, and resolving in light of them, the better the businesses we build will be.

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Practical Tips from FirstMark Capital’s Online Marketing Summit

I did a post a few days ago around the high level themes from our Online Marketing Summit called “Stop Selling, Start Giving”.  There were enough very practical tactics that emerged from the event that I thought I would share some below.


  • The best time to think about SEO is when building a new site.  When using any good CMS system, such as Drupal or Joomla, be sure to use their SEO plug-in modules.  It will make it very tough to not have SEO on the site. 
  • Links are very important, particularly ratio of inbound links to outbound links.  Also, the deeper and more specific you can have links to the site (rather than just all to the homepage) that will improve the SEO of the site and pages.  Make sure your content is structured in such a way that incents people to point to deeper pages.
  • SEO is a process involving content creation, engineering head count, links, technology, and budget.  Create commitment to SEO in the organization.  Hiring one person cannot change an organization or generate real SEO value.  Consider allocating 10% of engineering time to SEO work.  The best practitioners have everyone in the organization focused and thinking about it.
  • Resources:,


  • Before you spend your budget on an SEM campaign, be sure to take 10% of it FIRST and do a test run.  You can save yourself some major embarassment in case something was not set right and to further tweak. 
  • Be very careful using BroadMatch – you could spend money in a heartbeat on terms that are not related to your product or service.
  • Keyword research is critical.  Lots of tools out there can help, but also thinking about negative keywords, plural vs singular, etc, are all ways to create variation. 
  • Resources:  Clickable’s free guide SEM best practices and tips


  • Create a community and empower it to set directions – a censored community is not one at all.  Manage but “with a light touch”.   Allow users to moderate content.
  • Recognition is key for community growth – tiered structures, badges, experts, rewards (virtual or physical) are great ways to accomplish this.
  • Transparency is critical – if you have an issue, publicly engage the community and tell them what is going on.  Building trust is paramount to a vibrant community.
  • Measure the community –  post activities, engagement, session lengths, etc.   The numbers will tell you if your community is active and thriving.  If it’s not working, find out why!  It’s usually something you did.


  • Email is NOT for acquisition, it is for retention! 
  • The FROM and SUBJECT alone determine if someone opens – the questions they are asking are “DO I KNOW YOU?” AND “DO I CARE?” respectively.  Answer those questions well.
  • Build your lists organically by providing VALUE to users such that they want the information rather than a marketing message.  Use things like questions that your customer service receives as material for future newsletters.  You dont need dozens of articles – a few targeted ones that serve a purpose and give value to customers is better.
  • Create links back to specific pages on your site so you can track activity and users interests. 
  • Make sure you have a sign-up form on ALL pages of your site.  Customize the thank you note when someone does sign up – show genuine appreciation for signing up.
  • Most people have images off in their email clients – dont have a huge picture at the top or users will see a big X instead of a message in their preview screen.
  • Testing is key – treat email just like PPC.
  • Use the word “Feedback” instead of “Survey” – people are much more willing to provide feedback than take a survey.  One improves their life, another takes time from their life.

Marketing Automation

  • If you can read the “Digital Body Language” of how customers are interacting with your site, content, and marketing activities, you can calculate how likely they are to buy and where they are in sales cycle.
  • Lead scoring is critical to understand when marketing activities transition to sales type of activities.
  • Separating FIT of buyer from ENGAGEMENT of a user is critical.  A key decision maker doing a few things online and a summer intern doing a lot online should not have the same lead score.  A CEO doing A LOT is the ideal.  Segment those rigidly and pass on to sales things at the closest intersection to improve MQL close rates.

Integrated Marketing Approach – Case Study of Omniture

  • Marketing commits to generating 35-80% of sales accepted leads, and in closing 35-40% of deals in a quarter.  If you do not know what number you are responsible for, you are not strategic.
  • Dont do live webinars – record and push it out there – allow your customers to sign on when they can, fast forward to what they want, and interact as they wish.
  • It’s hard to find online marketing savvy folks.  If you cant find someone smart, hire an inexperienced, smart person and send him/her to get certifications:  DMA, AdWords, etc.  Make sure they have gone through the formal trainings – well worth the investment, and smart people without legacy biases will get this system.
  • Map your marketing process to a sales process – someone looking deep on product page is much further in a funnel than someone downloading whitepapers.   Know that and automate.
  • Sample mix of budget:  25% Site and Content, SEO 15%, SEM 15%, Email 20%, 3rd Party Emails 10%, Display Ads 5%, Newsletters 3%, Tradeshows 7%.

John Deighton’s definition of Interactive Marketing:  “The ability to address the customer, remember what the customer says and address the customer again in a way that illustrates that we remember what the customer has told us.”

Any other suggestions, please post below!!

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Stop Selling, Start Giving

FirstMark Capital yesterday hosted an Online Marketing Summit for our portfolio companies and friends in the community.  The goal was to bring together the latest thinking across a variety of functions (SEO, SEM, Email, Community, Social, Automation, and others) and to improve the overall fluency of our companies regardless of their field.  If I were to summarize everything I learned at the event, it was to “Stop Selling, Start Giving”.

The Internet has democratized customers’ abilities to learn about new products, instantly provide feedback, and share their experiences with others.  The traditional model where sales controlled the product message to buyers, carefully built relationships, and used those relationships to close deals has been permanently broken.  One way marketing strategies can now be easily sidestepped by a user that self-selects how to use products and research decisions on his or her own.  As a result, marketing’s role has changed to find buyers when they are ready to make a decision based on their OWN actions.  Steven Woods from Eloqua calls it “Digital Body Language”.  By reading the Digital Body Language, sales can step in at an appropriate and desired moment to facilitate the close of a deal at the right moment of intent.

What does it mean to “Stop Selling, Start Giving”?  By that, you should try to begin the dialogue with a customer with a value proposition and an insight that addresses a problem they have.  If they don’t have a problem, they don’t need your solution.  If they do, actively help them understand the PROBLEM better, not your PRODUCT better.  One tactic could be a whitepaper, another could be giving away your product for free initially, another could be hosting a community forum where experts comment on industry issues.  In addition, by actively participating in the customer pain and facilitating their dialogue, you gain a precious opportunity to subtly influence and learn from the dialogue.  Transparency exists whether you want it or not – embrace it!

By the act of giving, you’ll begin to engage a prospective customer in a series of activities.  Each of those activities can be measured online and used to decode where a customer is in their buying process.  Are they just exploring the web site?  What sections?  Have they downloaded a couple of specific whitepapers?  Now moved to using the product?  Asked for some help?  These data points can be mapped to a buying cycle where you can appropriately insert yourself to a sales activity.  Done well, you can tie all of these data into one continguous funnel that starts with first contact at the top and closes with a sale.  But it all starts by giving, not selling!

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Zappos & Amazon – Happy News For All

I had been asked a few times over the last week about my thoughts on the Zappos transaction.  I think this is a great story for innovation and startups.  Zappos started in a space many believed you could not transact online: selling shoes without people trying them on… Of course, as the world has grown increasingly comfortable transacting on the Web, that changed pretty quickly and Zappos took off.   With their focus on customer service and company culture (can watch a video by Tony Hsieh on that here), they were able to build sustaining brand advantage.

Ultimately, I think Zappos could have gone public, but Amazon stepped in and paid over 20x+ reported EBITDA of Zappos.  That’s a serious multiple, healthier than the public markets now.  And of course, in an online business at this scale there are significant capex cost, so I’m sure if you looked at cash flow, you get an even bigger premium.  Zappos built a dominant brand in a category, and Amazon stepped up and paid a premium to get the company.  To me, that’s a textbook entrepreneurial story.  I think you will continue to find next generation e-retailing companies thrive, but with an innovative new spin.  Gilt just raised money at a reported $400MM valuation, and had multiple bidders competing to get in.  There are a whole generation of companies pushing the ‘mass customization’ or ‘personalization’ theme, and doing well.  It’s all about finding a novel approach, attacking it quickly, and building scale at a brand level before someone can catch up.

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Marketing is the New Sales

Many have written about the rise of highly capital efficient companies, the growth of SaaS, the penetration of technology into the SMB community, and the new requirement to deliver value to customers at the time of purchase.   Each of these strategies has radically altered the sales process.  No longer are armies of sales people sitting in customers’ offices or spending endless hours over dinner trying to forge relationships they can lean on in the sales process.  Instead, customers are “pulling” solutions they are interested in, trying them out for free early on, and selecting products that meet their needs.  If the best way to do sales is to have customers “declare” their interest, then one needs an exceptionally broad funnel to ensure productive sales activity.

As a result, marketing in this new era is undergoing a rapid transformation.  Marketing is no longer about softer concepts like brand building and trade shows; no longer simply providing the appropriate message and collateral for the sales organization; no longer sitting with industry analysts, hoping for positive coverage.  Instead, it has become a much more active, tactical, and quantitative function.  Done right, it becomes a highly integrated and critical part of the overall funnel. 

The next generation of marketing leaders will be fluent in online acquisition channels and implementing a real time, transparent, measurable system.  The areas of spend are highly fragmented: SEO, SEM, Email Marketing, Affiliate, Social Media, Community, Video, and on and on, balanced with the traditional channels of PR, magazine and trade shows.  Quantifying cost per lead, customer acquisition costs, conversion rates, and value per customer across each of these channels requires significant discipline.  Architecting follow up in a highly automated manner and driving to increasing levels of qualification becomes key.  Webinars, emails, and free trials are scalable ways to move potential customers along and require minimal touch.  Site activity, logins, and usage inform how much deeper customers are getting. 

The challenge is that many of these channels have only been around for a few years at most.  At FirstMark Capital, we are trying to support our CMOs make the transition by sharing the nuggets of best practices across our portfolio.  Luckily, via companies like Clickable, Conductor, and others, we have some of the leaders in these areas within the portfolio.  We are also organizing an annual Online Marketing Bootcamp for our portfolio companies and friends of the firm to augment organic knowledge with leading experts in the field. 

If you are one of these types of CMOs, we’d love to hear from you.  We have lots of places you can be used!  🙂

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