Don’t Forget Marketing
Tom Stein’s article [“Anything But Tech”] mentioned that in consumer deals the, “great idea is only 1% of the equation; the other 99% is execution.” Today, marketing is a key execution element.
VC firms should take a more active role in guiding their assets for better return by pushing for better marketing practices. My view, as a marketer, is that marketing is one of the most misunderstood and misused elements of a growing company (not to mention larger ones). Typically it’s a “take a flyer” approach vs. a systematic way to create demand, drive sales and build a brand. When was the last time you heard a marketer announce that he/she delivered 40% sales and marketing return to the gross margin or produced a profitable cost-per-acquisition number?
These days it seems advertising is considered marketing. But real marketing is something different. Peter Drucker described it best in the 1950s: “Marketing is … not a specialized activity at all. It encompasses the entire business. It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view. Concern and responsibility must therefore permeate all areas of the enterprise.”
So, if marketing is about the whole company, then wouldn’t VCs want to better understand it? Typically VC firms have in-house expertise in finance, accounting and some operations. But the nature of marketing has changed with the advent of technology and more channels. Cost structures are different and it’s harder to break through the clutter-a key for a growing company. VCs should recognize that technology has allowed marketing to, once again, “permeate all areas of the enterprise.” Consumer companies in every stage could use marketing guidance and advice.
Perhaps with more money in VC funds than ever before and more existing assets challenged to show return on investment for shareholders, VC funds should look to take a more active role in driving their companies to success through better marketing practices. Who has more to gain … or lose?