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Why Weak Marketing Foundations Are Killing Your Business

picture of Dan Kaplan

Dan Kaplan

Marketing Consultant, Exponents

Today I’m talking to Dan Kaplan, a former magazine journalist turned product marketer who is now a marketing consultant with Exponents in Silicon Valley. Dan is fighting for marketing to be great again, for the first time. He has seen many tech startups fail due to weak marketing foundations. Listen in to our very interesting chat about what companies need to do instead in order to succeed.

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We covered:

  • Frustration with anti-marketing bias
  • Changing careers from journalism to marketing
  • Product development as marketing
  • Weak marketing foundations in the tech world
  • Actionable marketing advice and tools for SaaS startups

Full Transcript:

Louis: Bonjour, bonjour! Welcome to everyonehatesmarketers.com. I’m your host, Louis Grenier. everyonehatesmarketers.com is a podcast for digital marketers who are sick of shady, aggressive marketing. I interview no nonsense marketers who are not afraid to cut through the bullshit and say things as they are. During this show, we’ll learn how to get more visitors, more leads, more customers, more long term profits by using good marketing, by treating people the way we like to be treated.

Head over to everyonehatesmarketers.com to subscribe to the email list. We’ll notify you before anybody else of our future guests. You’ll also help us to come up with great questions for the future guests. You’ll also get access to the numbers, in terms of number of listens and downloads of the podcasts. Also quite simply, to have great one to one conversation if you need any help.

I’ve learned something quite interesting recently. I’ve learned that Larry Page, one of the co-founder of Google, once told the room full of marketing hires that their profession is built on their ability to lie. I’ve also heard recently many Silicon Valley bandits saying that marketing is what you do when your product or service sucks.

My guest today in episode number 16 of everyonehatesmarketers.com is Dan Kaplan. He’s fighting for marketing to be great again for the first time. He believes that Silicon Valley has a serious bias against marketing which makes a lot of startups fail. We had a very interesting chat about it. We’re going through the reasons why most startups fail and it’s mainly due to weak marketing foundations and we’re going through what you need to do instead to make sure that your startups succeed.

One word of advice, around halfway through the audio, the quality of Dan’s audio is quite bad for some reason. I couldn’t pinpoint the reason why it was that bad during the recording. We tried our best to fix it but if it’s still too bad for you, then I suppose you could read the transcript on the blog post that we will add soon enough and wait also for the next episode. My apologies for that but we tried our best. As usual, have a listen and let me know what you think.

Hi Dan. Welcome to the show!

Dan: Hey Louis, it’s great to meet you! Glad you have me on.

Louis: You are very welcome. Instead of telling the audience who you are and all of this kind of stuff, I’m going to start straightaway with a question I wanted to ask you for a while. What pisses you off the most? Is it a famous VC that says that marketing is what you do when your product or service sucks, or is it when Larry Page from Google said that the marketing profession is just built on the ability to lie. What’s the one that pisses you of the most? You have to choose one by the way.

Dan: Okay. I don’t have to be cornered into choosing one because to be honest, pissing me off, anger is not really the emotion that arises in me. There is sort of a frustration and sort of an ego driven like, “Hey! That’s what I do! Don’t call it stupid! Don’t demean what I do. Don’t demean my profession.” But that is where you’re tied up in ego and I really try to distance myself from that ego as much as I can in my personal life. I don’t always succeed in that but that is really important to me.

What it really does is it makes me sad because of the consequences, and if I have to pick one, it’s when people say marketing is what you do when your product sucks. It makes me angry first but then when I dig into it, it makes me sad. The reason it makes me sad is that the consequences of that belief waste so much time, money, energy, technical brilliance, creative brilliance. All of this incredible energy that could be deployed for dramatically more impactful things goes to waste when people don’t understand their market, don’t build products that the market wants or build products and target them at the wrong market.

A great example of the latter is Google Glass, which to me, had tremendous potential as an early stage product for utilitarian use cases in medicine and industry and things like that and they decided it was the right idea to go after fashionable use cases, like a high fashion item for consumers and the product died as a result.

Google’s reputation and all the people inside of that who worked on that, saw their time and energy go to waste and the people who championed it, while I don’t have details there, probably took a reputational hit too. That to me is just a tremendous waste when this core concept of augmented reality has transformed the potential and it goes to waste when they either focus on the wrong market or build the wrong features or any of the above sort of things.

To me, that’s really sad. Of course, the ego component where I’m angry when people demean what I do and it makes it harder for me to be successful at what I do but really, it’s about the waste and how much technical ingenuity when there’s so many problems that the world has and can be solved by technology or addressed by technology to see people spending all this money, time and human resources on products that fail because they dismiss marketing or don’t think of marketing early on. It’s really painful to me.

Louis: I’ve discovered you after reading an article you posted about the Silicon Valley bias against marketing, which was fantastic. That’s why I’m talking to you today. That’s why I really wanted to get your view on marketing, on SaaS in particular.

Dan: Sure.

Louis: You founded your first startup more than 10 years ago, then you went on to work with SalesForce, Twilio, Asana, and now, you’re consulting in the heart of Silicon Valley. I think you’re a part of those people who has been part of all of those companies and you can understand the way they are thinking about marketing and therefore, you can understand what’s wrong with the Silicon Valley and their view of marketing.

We’ve talked about all of that in the marketing part of the podcast but first, I’d like to come back before all of the experience in marketing and before your first startup. You might answer this question by the experience you had with those startup but the first question I wanted to ask you is what’s the hardest you’ve ever done?

Dan: Wow that’s a good question. The hardest thing I’ve ever done ever. To be honest, I’d say the hardest thing was abandoning journalism and finding my way into a new career that aligned with what I really cared about and believed in. To be honest, that’s still an ongoing journey.

Actually, at the end of 2016, after a really long struggle to align what I thought spiritually, emotionally, and intellectually was really ultimately compelling and valuable to me personally and what I was doing with my life and the type of things I’m putting to the world, finding that alignment has been an ongoing struggle ever since I’ve decided that my career as a magazine journalist was a dead end because of the incredible damage that was coming very soon to the magazine industry in 2005 and 2006.

Back when I was 17 years old, my whole vision for myself was I’m a writer and my job in the world is to help the world – this is obviously a 17-year old talking – understand the truth of what’s happening in the world. That’s a big thing but I really believed at the time that really great writing, thinking, and reporting could help people who make the decisions in the world make better decisions for the world and make individuals make better decisions for themselves. That was when I was 17 years old so I was in a lot of naivety there but I really held onto that belief throughout college.

I was a history major in college. I studied military history. I really thought that I was going to spend my whole life writing long form magazine articles that were 10,000 words long and longer and books about pretty much anything I thought was interesting ranging from technology to culture to politics to whatever.

Two things really hit me hard that changed my perspective. I don’t want to get too into politics here. The first one was the 2004 re-election of George W. Bush. It’s not because I hate republicans or hate George W. Bush. It’s not that at all. It was really that they were two completely diverging realities of people who support him. That election was between George W. Bush for re-election and John Kerry, the democratic candidate.

What I found really disillusioning at that time was that there was a big survey done before that. I don’t remember the name of it exactly. A big poll done by a reputable polling agency that looked at the, I think the title of it was Opposing Realities of Bush and Kerry’s Supporters.

It basically said that on major issues where “the facts” were abundantly clear. There was not really a debate about the truth, about the matter. The perceptions of reality were completely different based on partisanship and to make that concrete, a large majority of Bush supporters believed that the entire world had supported our invasion of Iraq, that we’ve found weapons of mass destruction in Iraq, that Bin Laden and Saddam Hussein had direct connections, etc. All these things that were completely contradicting what was actually true.

When that came out and then Bush went on to win the election, it really made me believe that the truth didn’t really matter, that being a journalist would have no impact on history. Any journalism, no matter how good quality, couldn’t change minds because people’s minds are already made up. That was the first blow.

The second blow was looking at the internet and seeing how, this is the early days, this is before The Huffington Post even came out. But seeing how the internet is going to change the model for journalism and both reduce attention spans and make the business model for the type of journalism I really love to do, which is this really in depth one to three month long reporting before you even write the article to produce a single article, and I just saw the business model for that was going to die.

Making the transition from I’m no longer going to be a journalist, that I’ve been planning on for the last eight years, to now, what do I do, what’s going to actually fulfill me, was a really brittle journey. That was the hardest thing I’ve ever done.

Louis: You’ve taken the decision. What was the first big action you took? What was the first job you took after that?

Dan: This is funny how life works, I was on a plane to a friend’s wedding party in Lake Tahoe, and literally sitting next to me was someone I’d known from college but hadn’t really known. We played basketball together. He was friends with a bunch of my friends but we weren’t really close friends. We ended up staying together and talking about the future of the world and humanity. It turned out that a lot of our ideas about the risks to civilization, and to humanity, and the opportunity to create abundance for the world were really aligned.

He was an engineer. He’d been in engineering school. We decided to start a company together. Literally, I’ve been in journalism and decided to start a company and started on it right there. That company was a total disaster of a failure. I’ve been a journalist. I knew nothing about marketing at the time. I knew a little bit about tech but relatively little compared to what I know now. The idea that from that position would be a good place to start a consumer facing company was probably pretty naive. Sad to say, nobody can do that. We never found the right fit.

We got about 50,000, 60,000 users. But for a consumer facing company, that doesn’t get you anywhere. We ended up shoving that company down after a couple of years. I actually went back into journalism and I went to the early days of [00:12:29], I went to a tech blog. At this time, it was just the who is now the founder and CEO, Marshall, writing himself. Me and this guy Kelvin who went on to write for TechCrunch and now run [00:12:40] were the first two writers, first two non-founding writers.

Eventually, I learned a ton about a lot of different areas of tech, from having a general high level view of what was going on in tech to a ground floor view when venture capitalists and entrepreneurs would take my phone calls. I interviewed Ev Williams in the first six months of Twitter, that kind of thing. That was amazing. It just gave me great access.

It also confirmed for me that the business model of journalism was really not the one that supported the type of writing I want to do. I had to write three to four posts a day. There was no depth. Calling people, interview them, was something I did but it just didn’t make sense to do that and produce the volume. It really confirmed for me that the model that I was afraid was going to happen was happening. The page view driven model based on how many clicks you can get to a headline was going to drive the near future of journalism and I needed to get out of it.

I really did not want to do public relations work. Not because I have anything against PR, I don’t, but because I’ve been on the other side of that fence. I’ve been a journalist and I’ve had my inbox inundated with pitches that weren’t really relevant to me. I didn’t want to be doing any of that stuff. I didn’t know, because everyone I knew who was leaving journalism at the time had gone into public relations work and I wanted to know part of that.

I didn’t know what there was. I didn’t know anything about product marketing. I didn’t know what other opportunities there were for people who knew how to write and tell stories but didn’t want to do PR. That transition also was very rough. Like I said, it was a multi transition from I’m not doing journalism to here, I’m actually doing what I’m meant to be doing.

The first marketing job I got was in SalesForce. That was my first exposure to what great marketing was, what marketing was in general. To get that job, I spent about a year and a half reading everything I could about—this is right when HubSpot was getting started so I learned everything about what they were doing, inbound marketing, I read a ton of copywriting material. But I still didn’t know much about product marketing and when I got my first job at SalesForce, the way I got it was I looked at their website for products.

The job was for their new Product Chatter, which was a Yammer competitor, which I think still exists. It’s a part of SalesForce itself. Both of their websites, I basically made a presentation that explained what was wrong with the website from the copy and design perspective and then I literally made, mocked up my own version of a website. Here’s what I would do differently. Mock the whole thing up, made the a four paged website, even did a fake video testimonial where I interviewed a friend who pretended to be a Chatter customer. Interviewed him about the pains users experienced before Chatter and the results he was getting once he used Chatter and sent that all to SalesForce. That got me my interview and then eventually, my job at SalesForce.

Louis: I think that’s a good insight, first of all, if any of the listeners of the show who are actually looking for a job, is to go beyond just posting your CV and your letter and a few words, but actually going all the way to how can I make them want me. How can I add value and make them just, there’s no choice but to hire me? I think that’s a great one.

                    You’ve mentioned, you’ve been through a lot because I think as a person, I don’t know you personally just yet but I can feel that you’re a contrarian in a sense that you don’t like necessarily the mainstream views and you like to question it at least. Not only you question it, but you also like to take decisions and actions against it once you’ve settled on a view. It’s just something I admire as well.

                    Outside of those two events that summarize your career and why you’re here today, is there any particular event that made you who you are today?

Dan: You mean personally, not professionally?

Louis: Why are you such a contrarian like me? Why do you think you like to question everything?

Dan: That’s a very interesting question. That is a big existential question. If I had to say, the biggest thing, it would probably be the influence of my own father. He went to college to be a physicist. He was a Jewish kid from The Bronx. This is like The Bronx from the 50’s, 60’s, working class Jewish kid. As he likes to say now, his family came in and “ran the neighborhood.” This was like a middle class Irish neighborhood that the Irish families had moved out of, sort of Hell’s Kitchen in New York in the 30’s and 40’s and moved to this, not exactly suburban, but a more peaceful, quiet neighborhood that was very different from the gang ridden violence of Hell’s Kitchen. Along come this unwatched masses of Eastern European Jewish and their children into this neighborhood in the 50’s and 60’s. His family ruined the neighborhood as far as the middle class are concerned.

                    He has these remarkable street smarts combined with his ferocious analytical mind that comes from—he’s not a mathematician but he’s got enough of a crowning in mathematician, he was able to get an undergraduate scholarship to Columbia to be a physics major. I think his sophomore year, junior year, he was doing these page long equations and realized that he didn’t have the talent, the fundamental mathematical talent to be an extraordinary physicist. For him, anything less than extraordinary wouldn’t be good enough.

                    He can be a decent physicist but not an extraordinary physicist. He couldn’t be in the top 5 to 10 physicists in the world. He literally dropped out of school. He lost the scholarship. He failed out of his classes. I think it took a year or two to come back, but then came back and did a philosophy major. This was the time that there are a few schools of philosophy taking hold in the Liberal Arts departments of major universities. This is sort of the postmodern deconstructionist philosophies. Mostly originating from France and that. Then there is sort of the analytic philosophy that comes from a more classical tradition and updates from the modern world. Those are very diametrically approached philosophies in my view.

                    He came from the analytic view, which is very much to the point, way beyond what I’ve ever been able to accomplish in terms of how to think about things and even want to. His view is like every single sentence, word, and construction of an idea is view and training and approach to thinking has been to dissect it to the absolute core to see if it holds up to philosophical rigor. He brings sort of the mathematical mind to the study of philosophy. His view is like is this true and what are all the counterexamples that would make it not true?

Louis: It’s like first principles, right?

Dan: First principles, right. He wouldn’t call it that but yeah. First principles would be very important to him. It can be very maddening if you try to explore a complicated philosophical problem from that perspective. The trolley problem, which has sort of comeback into view with the self driving car question, how does the self driving car face an accident, can avoid, decide which accident to drive into. Does it drive into the pedestrians on the street that only kills one person or is it crash into the cars and maybe kill three people.

                    That’s this big question and people think they have gamed through it, but when they actually dive into it, if you ask analytical philosophers to answer it, that is a very frustrating question for anyone who takes analytical philosophy seriously. That extraordinarily rigorous approach to dissecting ideas for whether or not they hold up the scrutiny, I was raised in that environment and it can be extremely challenging and frustrating as a child especially as adolescent male or female with their own views about the world, which probably have no grounding in reality, just perception to have a father whose training and view on life is that everything has to be dissected for credibility or not to have that kind of voice, to have a voice at all in that environment.

                    But I did learn from that how basically none of us know anything. The more we think we know, the less we actually know. That is something that he drills into my head my whole life. My view on believing things is that I differ from him a little bit in that I’m more passionate, emotional about these things but my views are almost always strongly felt but loosely held. I am always looking for reasons that what I believe is false. Also, that categorizes my knowledge. I think one of the exercises that we as a culture and people in general don’t do enough is to categorize their knowledge. Is this a fact, is this a theory, or is it a complete fantasy?

                    As we’ve seen in the last election in the United States, fact, fantasy, and theory don’t really seem to mean anything to a lot of people. Things that are blatant fantasies get categorized as facts and things that are theory that may or may not be true get categorized as fantasies or facts. No one has been able to categorize to the knowledge and I really believe that’s important to actually getting towards the truth.

                    It’s not that I reject all mainstream wisdom. It’s that I believe it’s really important to question it because people hold onto things that aren’t true for a whole variety of reason. Some are self interested, some are ego protection, and some are just that they don’t know better and that can be very destructive when enough people believe things that are crazy or just wrong.

Louis: You see, that’s why I’m asking this question. Because I knew you had a good answer to that. We’re going to blame your father to be that contrarian.

Dan: Yeah, basically it’s my father’s fault.

Louis: Obviously, it’s always your parents’ fault. Let’s move on to marketing more in particular. What I like to do today is really to try to give the listeners some actionable tips, really genuinely some stuff they could take away today and implement in their business to increase leads, increase sales, and help their business grow. First of all, quickly, what’s your definition of marketing? How would you define it briefly?

Dan: One of the big reasons that this bias against marketing exists, I think, is that the definition of marketing is so poorly understood and not agreed upon by anybody, generally. When Sam Altman of Y Combinator says that we tell our founders to avoid marketing for as long as possible and then goes on to talk about how PR is not going to get great business for you, he’s basically conflating marketing and PR.

                    When Fred Wilson writes that post saying marketing is what you do when your products sucks and then talks about customer acquisition, how that post was inspired by talk to a founder to set aside money, we use raising funds for a customer acquisition budget and he said everyone needs a marketing budget. He said do marketing. He’s conflating marketing and customer acquisition and marketing and advertising.

                    Those are very different things. To me, public relations, PR, getting the press to write about you, talk about you is a tactic or a component of marketing but it is far from the whole thing. To me, marketing is a fundamental thing and there’s a whole lot of disciplines in marketing. For me, my definition of marketing, what I think the most important version of marketing is understanding in as much depth as possible the fundamental needs, desires, goals, problems, and challenges of the people in the market you’re trying to address and really having an understanding about it.

                    Obviously, that’s the foundation of it, understanding who the people, the needs and motivations of the people you’re trying to sell to and market to and then creating both a product and a series of assets to turn that latent market demand, channel it into a demand for a specific product or service. It’s sort of a long way of saying building something that the market wants is one of the foundations of great marketing.

Louis: I’d love to disagree with you but I agree with you. That’s how I define it as well. I usually say marketing is about understanding people. Once you understand people, then you have the right foundation to do right. I completely agree. What happens in Silicon Valley at the minute and even in the world in general, it’s not only in Silicon Valley and in the tech world, but it’s a lot of issue in the tech world in particular, is that people devalue marketing. We mentioned a few examples.

                    What you’re saying in your article as well is that tech companies are not really great at marketing anyway because of this bias. Can you give me one or two examples?

Dan: Of people who aren’t great at marketing?

Louis: Mhm. Of companies that were a complete failure. You talked about Google Glass, which I think is marketing failure. What other products, services, or companies that come to mind?

Dan: I don’t want to call people out too much for bombing their companies. I think that would not serve me well to just call people out for totally failing but I think there are plenty examples of products and I put them in my post that are created by companies that are great companies and have our staff with extraordinarily bright people that despite that still created products that the market didn’t want or marketed them badly even if the market did want them.

I put a point for a lot of them in the post. For the big company in the big company world, you have Facebook Home, which was this huge ambition that Facebook had to basically A, either build a phone itself, not really build a phone but use HCC to sort of build a Facebook branded phone, which was a brilliant piece of strategy in some ways be installed as a layer on top of Android but basically added Facebook as one of the core features of Android.

In some ways, that’s a brilliant strategy. Building a phone, it’s really expensive, it’s really risky. The likelihood of getting worldwide penetration with a single branded phone or even a range of branded phones when Android already is dominating. The market share story is unlikely to succeed. But the idea that so many people love Facebook, so many people use Facebook, and Facebook can actually install itself as a core part of the operating system through the App Store, was a brilliant piece of strategy.

        The problem is nobody wanted what they actually built. Installing Facebook so it’s like a launcher on your phone and put little chatheads for messaging on your phone, it turns out the people don’t want that. When Facebook announced this product, they’re like, “This is the next version of Facebook.” And then a year later, it’s basically gone. That’s a good example of this huge ambition, all this energy and time is being used trying to figure out how to attack Android and then when they did, it was a flop.

Louis: What could have they done differently to avoid this flop?

Dan: That’s a hard question because their ambitions were so big. They wanted to basically run around Google’s control of the Android platform and install themselves between basically Google and the user. Doing that is a massive challenge. It’s a question if they could’ve even succeeded at all because in my mind, as much as I use Facebook and rely on Facebook for a lot of things, their brand is a problem for a lot of people. It’s a good question.

                    I haven’t seen anyone succeed at what they were trying to do. In Asia, there’s a few companies that have created pretty popular launchers that sort of takeover the home screen and let you launch your apps in unique ways but none of them has really gained mainstream penetration.

                    The question of what they could’ve done is a challenging one. But knowing that they could’ve done research before they launched Home, to discover if this was something that people would’ve wanted and then decided if they should’ve launched it or not. Actually, had they built the right product is a bigger question that I don’t really know the answer to in their case.

But they definitely could’ve reached out to their user base on Android, to some segments of them and interviewed them and done a lot more in depth work on what the biggest frustrations with the existing Android operating system were when it comes to the social interactions, when it comes to access to social features and messaging and built something that really addressed those problems. I don’t know what those problems are so I can’t say what the product they should’ve built.

Louis: That’s what I was expecting from an answer perspective, is that sometimes, when you started a product in mind and want to push that to your audience, you make the risk of not matching this product with the most painful problems and the most painful needs that those people have. I think this is probably what happened there.

                    You’re right in saying that you don’t want to criticize companies. This wasn’t really what I was expecting. It’s really give us an example of good companies who failed because of weak marketing foundations.

                    Moving onto another thing you’ve said in your article, you’re basically saying that from a survey that was made by maybe the Y Combinator or another organism that around 40% of the fatal issues that startups have that lead to their failure are based on weak marketing foundations, which is an interesting start. What best practices in the field of marketing you think are just plain wrong and companies have to stop doing?

Dan: Let’s pull back a little bit. The surveying question was actually a survey. It was a research done by a company called CB Insights, which basically is a research company that tries to get as much intelligence as they can on private companies that don’t release their financials and looks for as many other metrics as they can to understand the big trends and successes or not of private companies without public reporting.

What they did was they analyzed about 101 blog posts written by founders of companies that have completely failed, startups that have completely failed. That’s the thing that people like to do, is use their own medium these days, their own blogs sometimes, they’d write what we did wrong, why our product failed, why our startup failed and what we’d do differently next time. They took 101 of those products and analyzed them.

From that, they extracted the recurring themes and ranked them and created a list of the top 20. The top 20 were mutually exclusive. One theme could show up three times in an article and they’d include that in the list. Among that, none of those were actually citing weak marketing foundations, there’s only one. It was like the fourth, the fifth said bad marketing. But when you look at the list of the reasons startup failed, the number one was that no market need. We built a product and the market didn’t want it.

To me, that is basically saying we didn’t actually do marketing at all well. We didn’t know what the market wanted before we built a product. We built a product before we knew what the market wanted. That, to me, is the ultimate marketing failure, is building a product that no one wants. Among the many other reasons that were cited, they either were directly a realist from that fundamental issue of we don’t understand the market, we don’t even know what the market wants, we don’t know what the market values, one of them was pricing issues and profitability issues, another one was a business model issue, we might’ve have built a product that got traction but there was no way to monetize it. Those are all things that tie directly to the question of fundamental marketing foundations.

To me, marketing foundation is not also, by the way, just building something people want, that is the foundation of it, one of the foundations, but it’s also building something people want, that you can make a business out of because you can make a service that gives people free cars. That’s not really possible but let’s just say hypothetically, you could give people bunch of free stuff and it costs you a ton of money to deliver it but if there’s no ever way to generate a profit on it, your business is gonna collapse.

You saw a lot of that happen in 2016 and 2015 when these companies were basically selling $20, customers were paying them $20 for $40 worth of services or $10 for $20 worth of services. What venture capitalists like to call unit economics were never going to add up. That’s part of it too. Making sure that your business model, the thing you’re building, even if people want it, will actually be a sustainable business at a price point that sustains you. That’s connected to marketing in not as direct ways but in very gist and relevant ways.

Louis: But this point, I think, is still linked to the first one, which is if you don’t identify painful enough problems or painful enough needs, therefore, people are not gonna be willing to pay for it enough to sustain a business. If you find out that some people have problems or needs but they’re not that painful, then yeah, it’s very difficult to make a business out of it. But I think the more painful it is, the easier it is to build a business around it.

Dan: A good example of that, from a recent failure, there’s a couple of home cleaning companies, one of them failed after raising $40 million of capital or so. The hypothesis was that the existing home cleaning services were too expensive and too slow and all this and they basically need on demand marketplace for getting your house cleaned. It turns out that A, the average person isn’t willing to pay that much to get their house cleaned, and B, they don’t do it that often.

Even if it’d be nice to have a cleaner house more regularly, and I definitely feel like I wouldn’t mind if someone came to my house once or twice a month to clean up because it takes time, that I’d rather not spend, mopping and sweeping and vacuuming. But it’s not such a painful problem that I’m gonna spend $100 a month on it unless I feel like that is not as issue for me.

Louis: It’s nice to have. Exactly as you said, you mentioned it without maybe realizing but you said you wouldn’t mind but I wouldn’t mind is not a painful thing. It’s not like I need it so much. I can’t live without this service. There’s something I want to touch on before actually going to the step by step because I know you dug up a methodology that could help companies to do marketing better and grow better. We’ll go through that in the next few minutes.

Going back a little bit into this bias, I think what’s interesting about the origin of this bias against marketing is all the Madmen Philosophy, selling at the expense of customers, as explained in the article. You’re selling cigarettes or selling alcohol, alcohol is a drug that is much more dangerous than weed or the drugs that are still illegal in a lot of places. Pharma companies have raised another example to me that marketers are employed in those businesses to sell stuff at the expense of customers for sure because it’s not good for you.

Dan: It depends on what it is.

Louis: Cigarettes.

Dan: Cigarette is a good example.

Louis: You’re making a good point, which is those type of industries, industries outside of tech are willing to pay marketers way more and offer bigger benefit and don’t have that much of a bias than tech, which is an interesting point. When you see Madmen Philosophy, this is, I think, still why a lot of tech leaders are thinking of marketing. They still see us in suits and trying to sell something that doesn’t exist to somebody who doesn’t need it.

There’s actually this image, I don’t know if you’ve seen this small cartoon where somebody throws a brick into somebody’s window with a note on it that says, “Do you need window repair? Call us now.” That’s an interesting point.

Dan: To your point, cigarettes are a complicated one because that has a lot of legacy that goes back. People actually didn’t want cigarettes for a while but it is also the case that at various times in cigarette trajectory, they were facing scrutiny that their cigarettes cause cancer, that they were bad for health. A good example of this was the creation of the Marlboro Man in the 50’s, I think it’s the 50’s or 60’s. This was when the first wave of scares about the connection between smoking cigarettes and lung cancer and health were coming up.

                      The solution the cigarette companies came up with were filtered cigarettes. Filtered cigarettes were basically perceived as something that women smoke. They have been marketed aggressively to women. It’s something more delicate than a raw, unfiltered cigarette in the 20’s and 30’s and 40’s. In the 50’s, as the health issues were ramping up, the cigarette companies realized that they could promote cigarettes as a healthier, safer alternative to raw, unfiltered cigarettes.

                      But they spent so much time marketing unfiltered cigarettes to women, there is this perception that filtered cigarettes were feminine and for women. The solution to that was the Marlboro Man which at first, the Marlboro Man became that iconic cowboy but originally, it was actually a whole campaign of people who were “manly men.” There was John Glenn, Chuck Yeager or people that the average working staff guy dreams about being. Like these test pilots, these astronauts and these cowboys and these movie stars. [00:37:59] was one of the Marlboro Men.

                      Associating filtered cigarettes with manliness, the other Marlboro Man campaign was… and there’s no evidence. There’s actually evidence that filtered cigarettes don’t reduce the impacts of health, of tobacco. In some cases, they actually make it worse because you smoke more to get the same nicotine. They’re basically creating this image of manliness and of cool and a desired trait of the 50’s and 60’s man and aligning it with the idea that smoking filtered cigarette is a good idea.

                      The consequences to people’s health and lives and the entire system as a whole in terms of healthcare cost is extraordinary. The idea that the marketing profession is built on an ability to lie, which is what [00:38:47] allegedly told a group of marketers is not completely unfounded. But to counter that, I think it was called hockings but I might be wrong but that might actually have been [00:38:56] or one of those guys.

                      In the 30’s and 40’s, 20’s and 30’s, Americans, in general, did not brush their teeth and dental hygiene was an emerging problem especially considering the rise of industrial food and white bread and things like that. People’s teeth were falling out and gum diseases was a raging problem. People’s breath was terrible and their mouths were disgusting. The initial attempt to get them to brush their teeth were a total failure. Along comes one of the world’s best direct response direct marketer.

                      I don’t remember if it was Claude Hawkins or one of his peers but he basically created the campaign to align teeth brushing with better smelling breath, better sociability, more success in life. Not overnight but over the next 5 to 10 years, teeth brushing in America became a standard behavior and say what you will about the toxins around fluoride and all that stuff. It is unquestionably true that Americans’ dental hygiene and health dramatically changed after that campaign.

                      The point is that marketing is one of those dual use technologies, to use the term back from invasion of Iraq under Bush, it’s one of those things that can be used for good or it can be used for evil and it all depends on the context to determine which side it gets used for.

Louis: The difference is the dark side of marketing and the light side of marketing. As you said before, yes, people needed cigarettes, they had the need for it because nicotine is highly addictive. The second question, I think, marketers need to ask themselves when they are about to go to work for a company is to ask whether the solution is harmful as well, whether the solution is actually something that’s gonna cause harm to people. I think this is what marketers should ask themselves because at the end of the day, we are here just once, on Earth. Let’s make a good impact, not spend our time marketing a product that we know is not good for people.

                      Let’s move onto the step by step thing and the methodology you’ve developed. We are in the light side of marketing, we are here to help people understand the key problems they have and to find the right solution for those problems. How do you go about helping a tech company in particular, to align their team, to launch great products and to create growth that lasts for a long time? Step one, what do you do?

Dan: A lot of it is contingent, a lot of the actual steps are contingent on the stage of the market and the stage of the product itself. Let’s just pull a concrete example. Let’s say you have achieved basic product market fit. You have a product. It has some traction. You’re not starting from scratch here, you’re not either building a new product from the beginning and deciding what to build. You actually have a product. It has users or customers, we’re talking about SaaS here so they’re paying and they’re not churning after three months.

                      You have some initial fit, let’s say 10 paying customers or 100 paying customers depending on the price point that there is a market for your product and that that product is delivering value. Let’s just take that as an example. There’s a lot of different things you do if you don’t have a product market fit yet and you don’t know what to build to get there.

                      Let’s just start with the assumption that you have some traction and you really want to know what features and products to build next to. Spam that traction, how to market it more effectively, get more customers, convert more people on your website, convert more of those people who converted to leads and the sales, etcetera, let’s just take that as an example as a baseline.

                      By the way, there are a lot of SaaS companies that have gotten to this point without investing heavily in their marketing copywriting content or whatever. But once you are ready to turn on the gas, once you’re ready to take that initial traction and turn it into something big, the first step is to really understand customers, buyers, and users. It also depends on your model, are you selling big enterprise with sales teams or are you selling premium.

                      Let’s just say the enterprise sale or the more structured sale. Who are the people that are coming back to your product everyday or all the time and have stuck around for the longest? The first step is to identify those people and hopefully you have installed some analytics or Intercom or whatever that enables you to create a segment of the people who are coming back everyday and have been around for three to six months or whatever. Creating a segment of those people using your analytics tool, it could be Mixpanel or it could be Intercom or whatever and talk to them, actually, get in touch with them.

                      Ideally, get outside of the building and go face to face if you can and actually have a sit down conversation with them and ask them a set of questions that are designed to extract why they bought your product, what problems they were experiencing before and what tangible, concrete, ideally metrics driven results have they received as a result of using your product regularly everyday for the last three or six months, what has fundamentally changed and then go deeper than that.

                      The first level is the business impacted that your product has created, then you wanna understand how that product became adopted inside the organization. If it’s a product that requires multiple people’s buy in to either use or create, how did it spread from that first person who decided this was a good idea to the rest of the company? If it’s a premium product, service, that’s a much more organic process of the sales team, this customer success and all that stuff. Really understanding who those people are and the process that made your product successful in their organization and documented it thoroughly is the first step. Why you got traction, why you succeeded.

                      These face to face conversations, have each one [00:45:02] is a good place, is a good start, just the face to face stuff. More broadly, there’s a bigger tactic which is if your market is big enough, if you have 5,000 to 10,000 adjustable customers, actually surveying that market. Creating a survey that is designed to understand both the demographics of that market, the demographics and psychographics of that market and most importantly, the language they use to describe their number one biggest challenge in regards to X.

                      I got this methodology from a guy named Ryan Levesque, who is a very successful information product marketer who created something called the Ask Method. He wrote a book about it and he also has a course that teaches people how to instrument it. The Ask Method is basically a way of creating what he calls buckets and this is true. Most companies, especially SaaS companies, aren’t selling to exactly one type of person. There might be four or five different problems or types of people that they address. Being able to communicate to those people in different ways is incredibly important.

                      To make this concrete, Clearbit is a good example of this. Clearbit is an API for enriching email addresses with a lot more information. If you have a premium product, you can call their API. If someone just gives you the email address, Clearbit will help you add their full name, their company, their title, all that information that Clearbit has through his API. You can do that, literally, in API call.

                      The problem, of course, is that product is valuable to sales people, is valuable to marketing people, not just the developers who can communicate with an API. Clearbit has this three or four different types of customers that might get value from their product and the messages that are gonna resonate with the developer who can write to an API, a marketer who wants to get more intelligence on their leads, and a salesperson who wants to close more deals are very different.

                      The way Clearbit solves this is they use their own tool. Instead of having an eight part form to ask for name, title, and all that, all they ask for is your email address and they use their own tool and an email marketing tool called Customer.io or Vero, it’s one of those two. As soon as someone fills out their email address, Clearbit automatically enriches their data and then sends them an onboarding campaign based on their job title and role and company size. Every word of that onboarding email campaign, most of the words in that onboarding email campaign are specifically tailored to address the specific audience that signed up.

For a nontechnical marketer who signs up, they talk about the ability to upload a spreadsheet and get it enriched immediately or they talk about their Google sheets plugin that doesn’t require any technical sophistication to use. If it’s a developer, they talk about the API and all that kind of things.

                      To reduce that much more distinctly, doing whatever it takes, that could be a combination of surveys and customer interviews and ideally both, to understand in as much depth as possible the environment, the needs, the challenges of the people in your market and writing stuff, literally the copy on your website, the copy on your email campaigns, the blog posts you choose to write, that help them solve their problems is a major thing to do and their very specific problems because one big mistake, especially early stage SaaS companies make, is they think companies buy products and yes, this is sort of true. There is a buying [00:48:32], especially the higher price points.

                      The fact is that those companies are made up of real human beings and those real human beings have goals, problems, challenges, needs, secret needs they don’t talk about and the more you can address all of that stuff on an individual level, the more effective everything you do is going to be, everything from the features you develop to the marketing cloud you produce.

Louis: Step one, identify your best customer. Step two, identify their problems, their most painful problems and what problems are being solved by your product and step three, customize your funnel so much that every single buyer persona or avatar, as another podcast guest was using as a word, built every funnel for each of them basically and so their specific needs.

Dan: That could be a lot of work. I like how you distilled that very distinctly. Your most successful customer, that’s when you already have customers. If you’re trying to move into a new market, it’s a similar process but you’re not using your own customer base, you’re reaching out to your network or you’re creating a lead magnet, a piece of content that you’re giving away to a different email address and following that when they sign up instead of a thank you page saying, “Now go to your inbox and click this subscription link to accept your subscription.” You ask them to fill out a survey.

                      That survey contains one open ended question, which is when it comes to X, where X is the big challenge you solve, the big challenge you solve, what is the number one biggest problem you’re facing right now? That’s an open ended question and you want them to fill that out, and then the rest are demographic or psychographic questions; what is your gender, if that matters to your product. What is your title? What is your company and your revenue or whatever, whatever that will help you align those open ended questions with demographic answers.

Louis: I think that’s a very interesting point, your open ended question with open ended answer. If you do not ask questions that are open ended to customers or potential customers, what you are probably doing is you probably create bias. If you give them four options to answer into what is your biggest problem, you run the risk of having none of those four choices being a good answer but people will just select one because it’s good enough.

                      We are a big fan of open ended answers, questions as well, and we use almost only open ended questions unless we ask for demographic information. That leads to a lot of value regarding the way people talk about your product in their own words, about their key problems and the way they explain them. Generally, it fuels your marketing much more than basic market research by Googling stuff and trying to discover problems this way.

Dan: These things all depend on the face of your market. If you’re entering an existing market, it’s one thing, where you can actually do some Google keyword research as your people are searching for because that demand already exists. But if you’re in a new market where people don’t even know that they needed the solution. They have the problem but they don’t know the solution yet, they might not even know the problem they have but they do have the problem, then Google searches aren’t going to tell you anything. The only way to really learn anything is to both talk to people and observe them.

                      There’s a woman named Aimee Hoyt who takes anthropological perspective on customer development as opposed to lean marketing and startup methodology, which is really about interviewing customers, building reliable products. She talks about observing people in their natural habitat, basically going to someone’s office and watching them, shadowing them for a day, asking questions as it is but mostly being an initial observer and watching what they do because what they do and what they say they do can be very different things.

Louis: As soon as you said that, I was starting to picture David Ettenberg, this marketer in his natural habitat. That’s an interesting methodology. I think at the end of the day, if you boil down marketing to the first principles that we discussed before, it’s usually the same methodology, start with the customer, start with the people and the rest should follow more easily than if you don’t focus on them first. What do you think marketers should learn today that will help them in the next 5 or 10 years?

Dan: The discipline of marketing is getting more complicated, not less, the array of technologies and tools and services to use, how much you’re learning is starting to come into it, having some basic technical writing. I don’t write code. I can mess with HTML and CSS but I don’t mess with any actual Python or that stuff. Being able to understand some of the technical concepts a little bit is valuable, being able to communicate a little bit with developers. You don’t have to be able to write code to be a great marketer. That can be valuable.

                      There’s a course out there called Become a Tech Marketer for people that have that inclination, that wanna learn how to write SQL Queries and write algorithms and write scraping algorithms, things like that, that could be very valuable on the growth tactical side of things, the people who wanna refocus on the demand gen and growth, some of those more to automate a lot of that stuff, technical skills can be very valuable on the product marketing and content marketing side, being able to tell stories, to understand human psychology, and really be able to ask the right question and listen.

                      Listening is honestly a really undervalued and underused skill in the world where me, me, me is very important and I am guilty of that as much as anyone. I’ve had to work really hard on not talking over people and actually listening to what they’re saying, giving them a chance to talk and also just being really receptive to what they say. That’s been a year long process for me coming from the conversation with my father as a kid, listening and turning what you hear into valuable insights. Some of it is big data stuff, some of it is literally the hands on qualitative stuff where you talk to people.

                      One of the big things, this is where listening comes in and I hinted this earlier, is being able to understand people’s secret desires. They’re the top line stuff which is, for a marketer, I want more leads. I want more sales. I want more customers. I want my sites to convert better. Solving those problems and speaking to that stuff is great, but getting below that to understand really why they want those things, why does X marketing person at Y company want a tool that will help them make it easier for them to get more customers?

                      That can be very individual but just to give an example, the whole story there, that if you just look at the metrics and the KPI stuff, you will miss. This marketer grew up in a poor family is extremely worried about their financial security and their job stability and there’s this deep innate fear that if they don’t do a good job, they’re going to be on the chopping block. If they’re on the chopping block and they lose their job, their finances are gonna be bad and they and their children are going to end up in the same place as they were when they were kids. Those are the deep seated fear.

                      If you understand that fear and go below that, like I need to convert more people on my website, that if I don’t convert more people on my website, I’m not a valuable part of my company. If I’m not a valuable part of my company, I’m either going to get fired or not advance in my career. Advancing my career is very important to me because financial security and control are really important to me, all those things. If you don’t understand the five and six levels beneath the rational answers, the marketing you’ll do and the products you’ll build will not be as fundamentally necessary. This is where the good side of marketing comes.

                      You don’t wanna take that knowledge and use it to manipulate people, you wanna take that knowledge and use it to help people. That means that on the content side, producing content about being a great marketer, working with your team, making marketing as an essential part of the organization, advocating for a growth program, a conversion and optimization program, how to manage those soft skills and advocate further the value of the stuff you’re doing. The things that really address, help people achieve their most fundamental goals for themselves, that is what I consider good, light side marketing.

Louis: Dan, you’ve been absolutely awesome. You said so much good stuff in this episode. I think people will have to listen to it a few times and take notes. But anyway, most of the key points will be in the notes in the episodes. Where can listeners connect with you, find more about you, read more about your views on marketing?

Dan: Right now, my website for SaaS marketers is called threadling.com. I have a blog there. I’m updating it occasionally and I also offer a video that I’m redoing right now about a framework I’ve developed called the Foundational Story Framework. That is about developing a lot of this insight that I talked about on this call, the key motivations of your audience, of your market or your different markets, the top line motivations, the under the secret motivations, and turning that intelligence and that understanding about who your most excited, responsive customers will be and what motivates them into a series of three stories that you use to align your team, build products that your customer really wants, prioritize your features and products really well, and then communicate about them, and grow them really sustainably.

                      There’s three different stories that you use to do all of those things. Getting those stories right is the first step of that, the second step is rolling it out, and the third step is testing and optimizing all of it.

Louis: We’ll definitely share this video as well on the episode’s notes so people can check it out. Dan, thank you so much once again for your time.

Dan: Thank you, Louis. It was great.

Louis: I’ll talk to you soon. Bye.

Dan: Thanks.

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