Why Silicon Valley’s Hit Rate is So Low: A Marketing Strategy is NOT a Business Strategy

Are you sure your startup is a swan if only you say so? (photo courtesy of Unsplash)

If you’ve spent any quality time in Silicon Valley you’ve noted that despite the many vocal complaints that you hear about the number of MBAs running around the place, the actual ratio of propeller heads to business folk is probably 30 to 1. In a country that pitifully doesn’t value STEM as much as it needs to, our relatively small number of technical graduates are in super demand and if we could print H1Bs in Silicon Valley we would. As in any scenario like this where demand dramatically outstrips supply, it goes to their technical heads. Every widget is beautiful, every line of code is technically superior — the work of a self-proclaimed genius. If you look at the results though, clearly even if this were true, it is no reliable predictor of success. Despite good genes, in a business context, often the baby is just ugly. Depending on what happens next though, your baby can blossom into a swan or remain an ugly duckling. Your swan can also revert to an ugly duckling through arrogance or neglect.

So often you find technologists striving for Betamax superiority on some feature that nobody gives a rat’s ass about. Products with technically superior features mean nothing to people who will never use them, but yet the technically gifted will try nonetheless to convince people that they do, or worse yet, assume that they do. A non-Silicon Valley example I encountered this last weekend was that I found out my wife’s VW has heated side mirrors. The car is 13 years old. I have driven it monthly for 13 years and didn’t know it had that feature. Clearly this technical superiority was not a selling point for me. There are so many examples here in Silicon Valley that we just become numb to it: Netscape the better browser, Excite @Home, the better search engine, TiVo, the better television experience, PalmPilot, the better personal organizer, GoPro, the superior action camera. Better does not equal product — market fit.

Under this halo of “superiority” is where the trouble begins. When technical superiority gets conflated with market need, these same folks think the reason their beautiful baby isn’t selling is because not enough people know about it. If I had a dollar for every time someone said “if we were just in that deal,” I’d be sipping from a coconut far away from a computer. This “build it, put up a billboard, and they will come” mentality is just rife here. It boils down to an arrogance where everyone thinks they are Steve Jobs and their beautiful invention will turn into billions if “you just get the word out.” The marketing plan, in this case, is the business plan. This never works and is a critical reason why 90% of startups fail.

Didn’t have a power switch, turned on randomly, overheated frequently. Flopped.

What many technologists fail to understand is that businesses run by business people are interested in outcomes not technology. If it doesn’t help me build or do something better, faster, or cheaper its shiny case or crazy clock speed are useless to me. Market domination begins with a business plan that includes how you will differentiate, how you will shift the conversation to you by changing the offering, how you will create alliances and business partners, how your unique advantages produce and allow for the capture of more business value, how you will crystalize this value story, how you will use your uniqueness to outflank the competition, how you will reduce your cost to serve, and how you will sustain your lead over time. If you do none of this and simply think that you just need to get the word out, you will most likely join the 90% of startups that never get the chance to meet late stage investors.

A marketing plan is NOT a business plan. Rather, it amplifies a good business plan. If your business advantages are sound, can be quantified, and can be explained, a good marketing plan will help a company simplify those messages, train others to convey them, get them to the right people, measure their reaction, and quantify their interest. It will also help you become associated with those differentiating capabilities and values so that you stand out.

If you’ve had one or more false starts with “marketing,” it is likely that the above is news to you and hopefully helpful. If I had one wish for Silicon Valley, it would be that our myriad of smart people designing cool things and software always start out by asking themselves how they will win in the market. Hint: it is not Marketing. It is a sound business strategy to deliver new or better business value more affordably than other alternatives and sustain this value over time as customer needs mature. No, create a plausible business plan and then let’s talk.

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