Press and Viral aren't the only two marketing and distribution strategies!

I have been thinking about how my way of thinking about web entrepreneurship has changed since I started (two years ago). One of the biggest changes has been in how I think about marketing and distribution.

When I started this subject was more about luck, but like with most things in doing business as you learn more you realize it is less about luck but positioning and thought, obviously with some serendipity thrown into the equation.

Press is not a sufficient distribution strategy

I don’t think many people have made a successful business just relying on blogs and other media coverage. This might give you your initial 1000 or maybe even 10k users but then how do you get to 1k users a day consistently, or if you really want to be successful at least 3k users a day? That is more than a Techcrunch articles worth of users a day

(side note: TC gives you something like 10k uniques, Digg can give you something like 100k, which is an absolute maximum, but neither of those convert that well.).

Press has many uses;

• it is a nice way of gaining brand recognition,
• it can give some seed users,
• it can be useful for getting investors' attention
  
• it can create opportunities as new people in your industry find out about you.
  

So press is definitely important, but it really can’t be everything, because it does not scale.

Some assumptions

I am making various assumptions and also I am using a specific definition of distribution so I would like to talk about that briefly.

• A lot of my experience and knowledge is in the consumer web. It may not apply directly to b2b plays, or non-tech industries.
• Obviously all of the things I come up with here should be adapted to your particular product and I am sure there are far more creative ways that I am missing.
  

In general I consider the words distribution, marketing, route to market and some other terms pretty similar. They are a general way of describing how you get your product to be used by people and how it will then continue to grow in user/customer base.

So if press is not enough, how do companies get to millions of users?

The main methods I can come up with are as follows (these have some overlaps):

• Word of mouth and social
• SEO
• SEM and Web advertising in general
  
• Viral
  
• Distribution channels
• Distribution partnerships
• Guerrilla marketing
• Niche marketing
  

Some of these are more obvious than others so I will talk about those less.

One could imagine drawing another matrix, which shows how easy these things are to achieve, how effective an important they are and what attributes the product requires to tune for them. I would recommend you do an analysis like that if you are thinking about distribution and marketing your product.

Word of mouth and social

Make something good that people like and they will talk about it. You can tune this better by making something which is easy to talk about. For example people love talking about youtube videos, but if you make a porn website than its harder to get word of mouth traffic. Websites that target niches are easier to achieve these affects in.

You can create word of mouth affects, you can tune for them, but its something fairly obvious I think.

SEO

I think its one of the most important distribution strategy. SEO is Search Engine Optimisation, but I tend to use it in general to denote distribution through organic (non-payed for) search results.

Some ideas are very SEO friendly. Anything where you are creating unique user-generated content works pretty well for SEO, because people will search for it and that is how they will find you.

SEO is strong because if you take a few basic measures, you can for no extra work ensure a consistent level of traffic. The other interesting thing to me about organic search traffic is that often users from search results are most likely to click on well positioned relevant adverts on your website.

I know a lot of start-ups that get most of their traffic through SEO. User Generated Contents and blogs are perfect for SEO, sometimes I think many ideas in Web 2.0 were a direct reaction to Page Rank :).

SEM and Web Advertising in general

SEM or Search Engine Marketing and paid for advertising is interesting.

This only works in certain circumstances but when it does, it is very good because you don’t have to rely on anyone else. Here are a few factors

• If you directly monetize users, and the ROI (Return on Investment) on adertising is more than 1. For example if you make $2 per user and it costs you $1 to acquire that user than you have a scalable business.
• This is also a great way to test out ideas, and possible seed them. You can target a niche and see how many people convert and what they like
• This is very experimental for the right words or targeting at the right kind of site can literally lead to factors of improvement in conversions or ROI.
• If you rely completely on SEM, your position may become untenable as Google would squeeze your margins. This is more of an abstract concept, but in general if this is your strategy you should be diversified.

Update: Joe pointed out in the comments that Affiliate marketing would fit under this section. See cj.com for a website where you can manage affiliate marketing campaigns.

Viral distribution strategies.

This is kind off an old concept now and fairly well talked about. Look at Andrew Chen’s blog for more about viral than you can imagine.

Some quick thoughts on it.

• It is possible to build for viral but it helps to have products which are inherently viral
• You don’t get viral unless you build for it
• Viral strategies become all about tuning and A/B testing. The aim is to get one user to invite more than one user. So you track where your users come from how you can incentivize them to invite someone. Try out different strategies, track their affect.
• Certain environments are very conducive to virality, like Facebook.
• There are many types and many definitions for viral. I guess an overarching one would be that your product is built in such a way that it distributes itself. This is inherently true in applications that become more useful the more users you add to them such as social networks and instant messaging applications.
  

A lot more can be said I am sure, this is one of the most interesting strategies. As strategies are used more they become less effective, so you have to be cleverer in how you go viral and probably create more value than previously required but its very clearly still possible.

Distribution channels

This is very interesting. Some technologies and applications have good distribution channels in place that they don’t have to do any extra work. Some examples of channels that have developed recently.

• Facebook Applications pages.
• IPhone App Store
• Mozilla recommended addons
• Yahoo directories – an oldy.
  

If you catch distribution channels very early on or with the right product than the highly targeted traffic they receive can create snowball affect that give you very fast and effective distribution.

Distribution partnerships

In the distribution channel section I was thinking about channels that are inherently available to you for whatever reason. Distribution partnerships however are harder to get but they can give you a lot of power. What distribution partnership makes sense for your product depends strongly on what you are doing. The biggest and most obvious distribution partnership that lead to success was Google’s partnership with Yahoo!, that gave shit loads of traffic to Google.

There are a lot of other partnerships some of which are paid for, some are just mutually useful or strategic. Some more examples

• Default Google search in Firefox.
• The Times newspaper in Starbucks
• AT&T in Apple Stores and vice versa
• Clickpass with all of its great partners :)
  

VCs tend to like ideas that can be use distribution partnerships to get scale. If they can see a story where they can apply $x millions of and use their contacts to get a distribution deal done and generate a company instantly worth $20x million than it’s a no-brainer.

Guerrilla marketing

I used to be more excited by this. Not that interesting any more. I think its hard to scale doing quirky things. I am sure there are some examples of very effective guerrilla marketing to achieve a seed userbase. 37Signals did a good article on some things that did, which might be classified are guerrilla marketing.

If you are creative it is possible to come up with a lot of these. I think it is very dependent on the industry you are in and I am sure it does not work for everything.

Niche marketing

Niche marketing is not a strategy like the others, it is more like a paradigm that you may use in conjunction with the above. Lets say you are a video website and your target market is every Internet user in the US; that is a 120 million people. If you are a start-up you may have a hard time getting in front of 120 million people. So what you do is segment the users and find niches that would be far more reachable, while keeping your product basically the same. So in the case of the video website you may decide to target sports, or even better football in the bay area. Now you have come down a very easy to target market segment.

This is similar to the way that Facebook expanded from University to University starting with the Ivy League, which is obviously a great place to start from.

Conclusion

As an web entrepreneur, you generally don’t have the luxury of a big budget and often throwing money at the issue does not necessarily give the best result.

That was not everything. I am sure I am missing some strategies. In general most people achieve success using only one or two of these strategies. Also your idea/product will definitely lend itself heavily to a strategy, so it is worth understand and experimenting with different strategies to get the best results.

Cash cows: large markets and opportunities

I feel like I often discover things, which seem obvious and perhaps I have always known them but something suddenly re-crystallizes them in my mind.

One such realization was that when a business, especially technology business, reaches maturity, they often have only one or two cash cows. These continue to bring them large profits every year with very little real innovation. Some obvious examples:

Google – Adsense on search engine traffic
Microsoft – Windows and Office
Ebay – auctions
Experian – credit reporting

I guess this fact should be fairly obvious, but it does lead to a couple of interesting things. Firstly these guys will not do anything new that might rock their cash cow revenue stream. This means that they are often not as innovative as startups even with their much greater resources. Also they collect so much money that it is relatively easy for them to just buy new startup that prove a point in their space or threatens their cash cow.

This is a short post. I feel like the whole cash-cow analysis could go a lot further. I would personally love to come up with a way of attacking a large, non-innovative companies cash cow.

One way of attacking cash cows is by using new trends and advancing technology to find an exposing weakness. For example Office could be attacked by the emergence of more advanced browsers, standards and broadband infrastructure through creating web office. This kind of trend based disruption has probably mean the main downfall of cash cows (this is mostly my definition of disruptive products but I know people have other definitions as well).

The entrepreneurial ladder

One of the benefits of getting out of the normal career is that you are no longer being constantly judged on stupid criteria, like what grades you got, how many years of experience you have in blah, etc etc. I once had an interview where they asked me in 5 different ways about my team working experience, does that really give them that much insight?

When I first became an entrepreneur, I thought that would be the end of being judged, from now on I was to make my own destiny, and that has been true to some extent. But you find that here there is a different ladder to climb. Being an entrepreneur is a lot to do with selling yourself, whether it is to investors, clients or potential hires, you have to impress them to succeed. The difference is that the levels are different. Here is the ladder how I perceive it, from the bottom up.

1. Never done any company.
2. No companies but worked for a startup (the more successful the better)
3. Done some small projects
4. Started first company
5, Started a company and have funding.
6.1. Started a company and have well respected investors (first tier VCs being the best).
6.2. Started second company (without the first exiting successfully)
7. Had a successful relatively small exit ($1m plus) or could have took such an exit but are happy making good revenue at that company
8. Had a successful company with a reasonably large exit ($10m plus)
9. IPO!

Obviously those add up and I put two 6s because it would depend on what funding your first company had etc. A lot of gray area but that is roughly how the ladder goes.

Here is something that Kieran said: you can climb ladder by networking and being at all the right events and conferences. But eventually if you go to too many of them you start falling down the ladder because people perceive you don't have anything better to do :).

Another point is that perception matters a lot, some people will value what University you went to and whats jobs you have had. Others will care about how well you are known on the Internet. But you can very much go from zero to the top of the ladder very quickly, which is what makes this exciting. Unlike the career ladder you don't need to have 5 years experience before you are considered for a promotion.

I am aiming for 3 IPOs just so I can be almost unchallenged at the top of my ladder, not for the money at all ;-).

Clickpass launches! Launch story, feelings and post-analysis

So, this week has been completely crazy. Clickpass launched, which was really exciting and things have been going well. We were covered in Techcrunch.com:

http://www.techcrunch.com/2008/03/11/clickpass-could-change-the-way-you-surf-the-web/

With a great and positive review. Since then we had some really positive feedback both on the techcrunch comments, across the net and directly to us. Some of the best ones.

*Finally* someone has produced a credible way of implementing OpenID that is simple and straight-forward. This is revolutionary, and I wish them all the very best. – David Weston, tc comment

This is great - finally only one password to remember! We need more sites to take part. Good luck! – Nick Faull, tc comment

Its also been exciting watching the chatter on twitter. My favourites from:

I tried to use Clickpass. It's so simple and I like this concept. - roomrag

http://www.clickpass.com is the nicest OpenID provider yet. al3x

Doesn't happen often but I was blown away by a new startup called ClickPass. Think One-Click OpenID! – Paisano

Actually Paisano is now my favourite Clickpass user, he also blogged about us saying

I truly believe they are on to something big here.
I believe this is something everyone is going to use in the near-future. Why not get on board now?

Paisano, if you see this, thanks for your support and we hope we can live up to and beyond your expectations.

The day of the launch was pretty crazy. I woke at 7am in anticipation and for preperation. Plaxo integration was not yet finished and we were planning to launch at 9am. I found a hack around the issue at about 8:40, and then about 10 minutes later, Peter called me and said that the Techcrunch article was live, but the site was still behind a password! So I had to work frantically to disable that and role out the open version. Then 10 minutes later with only a little further testing Plaxo went live, and everything worked!

In terms of numbers, it’s a bit early to really gather much from the number but we had more than a thousand signups just in the first day! When I compare that to revmap (my previous startup, which didn't go anywhere), its like a different world. At the end of the day we do all this work and if no one uses it, it’s a bit of a let down, and I have been there and it was a good learning experience. But when people get it and use it and talk about it that’s a very fulfilling feeling.

Clearly we have lots to do, I feel like there is more work to do now then there was before we launched! But at least the path is very clear, we need more sites, we need to make installation so easy that its trivial, we need to look at our stats and what our users say to figure out how we can improve the experience and we need to add OpenID 2.0 support, and etc etc… Okay well the list is clear but it’s not short.

Anyway, its exciting. So what I learnt:

• Doesn’t matter how long you spend before launching there will always be loads of work to do

• It feels good when people use your stuff and like it

• I like replying to user feedback, its fun. I like having conversations with users.

• Friends made over time help in all sorts of subtle ways. That one is vague but I won’t explain further.

• Its more obvious what work you should do after launching.

• Its fun, but I knew it would be :)

Trends, gaps and trends

I used to think that focus on spotting trends and following them was shallow, or at least I didn't really get the point. I felt that you could just intuit innovative products and that trend followers would always be behind. However, overtime I have come to appreciate the value of trend watching and what one can gain from it.

I realised this recently when I listened to Joi Ito's talk at Le Web 3. This was probably the best talk I have ever heard. I have embedded a video of it below and I highly, highly recommend you watch it. If it does not affect your way of thinking then watch it again :P.

Joi talks about trends in multiplayer gaming (MMO), as well as gaps in the market where he feels innovation could happen. Mainly between gaps in innovation between traditional media, the web and gaming technology. Its very interesting.

That got me thinking.

Firstly my thoughts: Startups are generally most successful when they are innovating something at the edge of a trend. So for example, trying to do a startup in car technology right now would be very hard. You might have something innovative to do there but most of the easy innovations are already taken and you would need lots of money to make and market something significantly better than what exists. Compare this to a 100 years ago ( I don't know anything about car history :) ), a 100 years ago it was possible for an enthusiast to really understand cars and push the technology of the age and even make a very successful company out of it. Even then I am sure it would have taken a lot of money and infrastructure to start a car business, but the cost of starting up a website is much smaller, and the only thing holding one back is a team, creativity and time.

I see innovation on the web like thousands of little ants attacking every single aspect of the web sugar hive. Some get through and make it big, some die in the fight, some make it big and then die from obesity, but generally its all so young that its still there for the taking.

Even within the bigger trend of life moving more online there are many many micro-trends. I think a powerful one that is now springing up, and one that Clickpass is part of, is the distribution of developer work to third parties. This is happening at every level in the stack from Amazon Web Services taking away the need for managing static file storage, and server clouds, to the various javascript and web frameworks and the usage of platforms, like Facebook. Essentially you have to do less to build a fully featured web consumer product and you can do it for cheaper than ever before and make it scale to your needs. I think that's a great and interesting trend, which should lead to further and fast innovation.

There are of course trends happening outside the web that lead to some interesting opportunities. Take for example the trend in the UK for healthier, higher quality groceries. This lead to the rapid rise of Innocent fruit smoothies, which probably at most other times in UK history would have been a complete flop.

So coming back to the web, since I know slightly more about that. Some other interesting trends.

- Virtual Goods. I love these. If you think about it we are all very familiar with virtual goods, music is a virtual good and so are movies. They are packaged up with materials that cost money but essentially we are used to buying virtual goods. So it should not be that surprising that people are actually willing to pay people to buy a powerful sword in a game or to send virtual gifts to people. But having said that I still find it amazing and equally amazing how much money is being made here.

People spend over $1.5 billion on virtual items every year. Pets, coins, avatars, and bling (from tc)

That to me is just astounding, and so out of my world. In some ways I feel that all things with zero marginal costs tend towards becoming free and ad-supported, but maybe I am wrong.

- Mobile. Here is something that for some reason has never really interested me. I think its because the experience is not fulfilling enough compared to the Internet. But it should be fairly obvious that a lot of innovation is happening on the mobile web. There are a lot of mobile web users in the world, with many people in Africa and Asia only experiencing the Internet on there mobile phones. That's pretty crazy.

- China in general. Enough said. Interesting trends. Most Internet users than all of the US shortly (or maybe its already happened).

I am sure there are a lot of other trends. But hopefully I have conveyed to some extent the value of watching your trends. And you should watch this video if you haven't yet ;-)

Me on Intruders.tv!

I have been meaning to blog about this for ages but you know how busy things can get. I met Vincent, one of the founders of http://intruders.tv towards the end of my time with revmap.com. He did an interview of me and I really liked his attitude and have kept in touch with him since.

When I was going to move to San Francisco, I told him he should get a Valley correspondent, and he asked me whether I would be interested in doing it. I love doing new things and especially things that would make me uncomfortable and expand my horizons, so I jumped at the chance. This has meant that I have had to find interesting people and ask them some interesting questions (isn't life hard :-) ).

About 5 of my interviews are up at the moment at http://us.intruders.tv, but my favourite so far is still my first one, with the founders of Graffiti, the Facebook Application. I am good friends with them and find there story, spirit and drive very inspirational. Here is is below if you missed it:

The Fun of Launch

There are a few things in life that really excite me, actually a lot of things excite me in life but when it comes to being an entrepreneur the 3 main ones are

• having novel ideas,
  
• making something interesting and
  
• launching. Its just so exciting and fun when things I care about launch!

Since Clickpass is yet to launch I have to just get excited about my friends' websites launching. Recently Disqus launched, and since they are my flat-mates I am really excited about their product and how well received it has been. I have incorporated them below, lets see if it works.

Fuzzwich launched a while ago. I was really excited for them as well. Here is a Fuzzwich mini-vid for your pleasure:


Thats pretty awesome. I love those guys. Some other recent launches:

Anywhere.fm - They had like a million songs in a week!
Versionate
Songkick
Draftmix - Is gambling wrong? I don't know.. but I can't wait till these guys are making millions
Bountii
Adpinion
Idiomag - Well it was more of a relaunch but that website is sweet
Academia.edu

I better get back to the very long list of things I have to do today. Have a nice day :)