Most folks in the startup community are familiar with the Lean Startup methodology popularized by Eric Ries. In this post, I will make a case for why most startups should seek to build a Lean Marketing Org.
On the surface, there are few differences between the skills and tasks involved in running a startup marketing team vs. a large marketing organization. Over the course of my 20 year marketing career I have led both types. On the larger side, I managed a 100-person marketing department with a $40 million budget for operations and programs. This team spanned five continents and supported a 1,000-person global field team driving close to $2 billion in annual revenue. It was a big, complex job that most startup CEOs can relate to. At the other end of the spectrum, I have built several marketing functions from the ground-up for several Series A or B stage startups, as well. Most of these teams were very small (typically 2-5 person teams).
At the end of the day, no matter the size of the organization, the tools are the same. The set of tasks are pretty much the same, too. Managing results by leading people toward the expected output - still the same. Leadership through perspiration and inspiration. All of it. The same thing. So, is anything different? Well, yes … plenty actually.
In larger organizations, aligning a highly distributed team is a huge pain in the rear and it is all consuming in terms of energy, emotion, and effort. You are resource rich, which enables you to make sub-optimal programs seem optimal by throwing more money at the problem. It is worth remembering that even getting rid of things in a resource rich environment can incur significant costs. Scaling something that works while making the underlying process more efficient is the ultimate goal. Figuring out what not to do or getting rid of stuff is simply not a priority.
Meanwhile, in startup organizations, you are not aligning anything. Let me repeat that little detail again … you are not aligning anything. If you are trying to align stuff, it is already game over. The name of the game in startup marketing is to GET THINGS STARTED. Every ounce of energy needs to go into getting small stuff started. You are resource poor. You are not trying to figure out how to optimize anything much less scale anything. You are trying to see if something works. Finding something that works in order to replicate it is the goal in startup marketing. Unearth what works using a small sample size and iterate a lots through trial-and-error. Sure, it represents bad unit economics but it is how startup marketing is done.
From a cost perspective, large marketing organizations see the program budget overshadow the people budget as it grows. This occurs in pursuit of efficiency and leverage. Meanwhile, the small startup team spends almost nothing on program budget. All of its money goes to salaries.
But, as the saying goes, a marketing VP without a program budget is called … sales. Thus, even the startup VP/CMO needs a program budget. Otherwise, she will be spending 99 percent of her time making and re-making Powerpoint slides.
How Much Budget Is Enough?
My rule of thumb suggests that at a minimum, 2x to 3x the people budget should go into programs. For example, if your 3-person full-time marketing staff costs $500k per year, your annual programs budget should be in the $1M to $1.5M range (at minimum). And, a majority of it should go into outsourcing execution and demand generation.
If you are interested in learning more about 85 Advisors and how we can help you implement lean marketings principles, contact me at email@example.com.