Thoughts on brand, strategic marketing, startups and venture funding

. As first stage meetings go, that went well. All the heads are nodding in the right direction as my friend Bob Johnson would say. It’s always interesting to get another point of view, especially when it’s from someone so savvy and well respected in the industry. Next steps are to meet with more experts and see if they can poke holes in the concept. It feels good
to be doing this again.

Well. Here we go again. If this meeting goes like the ones we had for our last startup we can expect crashing demos, late arrivals by partners, grillings by junior partners and some expensive bottled water. I always love these meetings. We’ll let you know how it turns out. Stay tuned

I decided to break up this advice into pieces- it’s a lot to take in and I want to be sure I’m not short-changing you on the experiences we had during our first start-up adventure. Here’s number eight on the list:

Pick your own lawyers and be sure they understand you, your product and your various business and exit strategies. We had some existing relationships with a brilliant law group that really understood what it takes to get a fledgling technology business off the ground.  They quickly understood the product, the potential audiences and the exit strategies we had in mind. They even gave us a leash on legal fees so we could get the company incorporated and begin patent filings right away without any outside investment. They were true partners who worked with us to build something special- we were lucky to have them onboard.

Having this kind of partner helped us in a couple of ways:

1. The obvious way it helped was that we had world-class, delayed payment, legal advice as we worked our way through the process of building a business.

2. We were fundamentally attached to their brand as we entered negotiations and discussions with investment groups and potential partners. This gave us added credibility right at the beginning of our relationships [where we most needed it].

3. We were introduced to other businesses and leaders in the start-up community through our law partners- this was always helpful and enlightening.

So, if you can find a reputable law group who has experience with start-ups, who understands your market and is willing to help out- go for it- it made a significant difference for us early on.

Being gluttons for punishment and unable to pass up a decent adrenaline rush, we’re about to begin our second start-up adventure.

The last one was very interesting, we actually built a terrific little service that ended up being absorbed into one of our competitors. Compared to some other dotcom bust stories, ours ended pretty well, we had the best partners anyone could hope for, we were able to secure some financing, we basically met anyone who was anyone on Sandhill Road, and we had a laugh with only one big fight as I remember [and that was with the engineer which hardly counts]. Most of all, everyone who helped us got paid what they were owed.

One of the big benefits was that we got to learn from the great [and not so great] people we met along the way.

Here’s some of the most important [and most obvious when we look back] things we learned early on:

1. Not all money is equal, if you’re really looking for investment, you want investors who are well respected and will stand up for you when you go back for your next round of funding. Beware of angel investors, especially the ones who have never been involved in a technology start up.

2. Try not to go for investment money. Bootstrap it the best you can and get as many customers using it as you can, even if you have to just break-even for a while.

3. If you do go for, and are fortunate enough to secure investment money. Read, read again and re-read the various term sheets you’ll be getting from your investment partners, funny how those things tend to change and shift if you don’t keep an eye on things.

4. So you read the terms sheet a few times and it stayed pretty much the same as you agreed. Even though you now have money in the bank, don’t spend it, forgo the flavored oxygen machine in the coffee room. Even though your investors may urge you to go spend money quickly, we learned that getting too leveraged too early means your investors have the opportunity to re-write a deal. And you’re more likely to take it because you’re strapped for cash [again].

5. Hope is not a strategy. Be clear and honest about what you have. Be clear and honest with yourself and others about who your competition is. Be clear and honest about your product’s shortcomings. Be clear and honest. Successful VC’s are very smart, they know the industry, they’ll do significant due diligence and they’ll weevil out the many reasons why they shouldn’t invest in your product. they’ll find whatever it is you don’t want them to find. So be honest.

6. Know when to stop. If you’re the kind of entrepreneurs we are, you take this stuff extremely seriously. You work all hours, you talk it up and talk it up. You brainstorm and make it the very best it can be. You are committed and won’t take no for an answer. That’s great until it becomes clear to everyone around you [except you] that your idea or product or service doesn’t have any legs. Be honest with yourself early on. Make agreements with your partners early on that if it’s terminal, you’ll let it die.

7. When a  VC say’s “Well, I don’t know, it looks risky” never reply “That’s why they call it VENTURE funding”. You’ll be asked to leave.

In summary, make sure your investors are the right kind, be disciplined in your spending, find a good law group and most of all be clear, open and honest. Good luck, we’ll see you in Monte Carlo.

You’ll notice that only BMW moved, and although it did so in a dramatic way, it’s still on the map. My perception of the quality wasn’t the only change. My view of the authenticity of the brand changed too. I now think that BMW’s “best car in the world” statement doesn’t hold water. In fact it’s a bit of a joke. But, as I say, I’m still a sucker for the brand, and I clearly still am in the “buying field”.

Now let’s look at another emotional aspect of the brand; at least, from my point of view. It’s the issue of style. In other words, how do I feel when I hand the keys to a valet parking attendant?

When I first bought my BMW I lived in Los Angeles, and I guess that explains why I’m a sucker for expensive cars. Driving my nice shiny, black BMW to a parking attendant to have the customary half-inch of rubber removed from my tires was a feeling of beauty. Even though there was $250,000 Bentleys and Ferraris squeezed into the entrance area so the attendants could get their $25 tips without walking too far, I felt great. My brand new $50,000 BMW looked the part and when I made an astronomical payment the following day, I still had the residual glow.

But imagine the change as soon as the lemon problems started rear their ugly heads. I’d swing into the valet area and purposely keep the engine running because I never knew when my slab of Teutonic neurosis would decide to blow a fuse or a sensor and either quit and refuse to start or run so erratically it sounded like the rumba. When that happened, everyone in the lot would look at me as though I had given birth to a beautiful child but refused to feed and clothe it. Those superior parking valets would say, “You really should get it serviced”, and the other people waiting in line for their shiny love objects would look at me as though they were contemplating calling the authorities.

Needless to say, my feelings were hurt, and in turn my feelings of brand loyalty were bruised. After all, my ailing child whom I tried to succor had made me feel evil as well as betrayed.

So let’s look at the change in my perceptions of pride before the car started

embarrassing me, and then after:

Before:

And after:

The fact that the brand promise of reliability was just a figment of my imagination left me with a feeling that I had made a bad error in judgment. This in turn made me feel that the purchase was a thing of shame. After all, for the same money I could have bought a Mercedes and even though it was a flashy alternative, it would have been a smart decision. All the Mercedes that screeched up to us at the valet lot were at least working and their owners didn’t appear as child abusers.

While all this trauma was going on, in the background was my wife who way back thought the purchase was silly and a signal that at 47 my adolescence was still in full swing. I’ll admit, her apparent but subtle “I told you so”, and her reference to “The Lemon” didn’t help a lot.  But in truth she was justified, and so it was difficult to take umbrage. Her view of the brand was somewhat different to mine:

As you can see, there are no other cars on the map, as none of the luxury list would have been acceptable. But that’s not really the point. The real issue is that whereas while I was purchasing the car the advertising and overall branding had made me form a strong feeling that the car was excellent value, an investment and a great way to impress clients, she had never been aware of these impressions of the brand. Why hadn’t she created the same mind image as me?

The answer is that she just doesn’t see the branding BMW promise the same way as I do. It doesn’t seem to resonate with her the way it does with many of us. Why is that? I believe that it isn’t the BMW brand promise that missed the mark with her. I believe it’s the entire luxury car segment that doesn’t talk to her.

Does that mean that a brand only works with an individual if they fit the overall market?

That’s it exactly.

Imagine that your mind is a gigantic tinker toy that’s made of millions of small slices that all sit next to each other. These slices, or Mind Wedges have a specific topic tied to them, together with all the topic’s attributes. The wedges all sit next to each other and have similar or associated topics. So, in this illustration, the Luxury Automobile wedge sits sits closely against the luxury SUV wedge. Wedges hold a myriad of information: images, feelings, facts, memories, impressions, and more. In fact, everything you know and feel about a topic.

However, not every mind has the same wedges. Some wedges are missing because the person is not aware of the segment, usually because it doesn’t exist for them. For example, there’s a ton of people out there who have heard the word “Twitter”, but don’t have a clue what it is. In that instance, they may have filed it in the “Things on the internet that are very difficult to understand” wedge, or they may just not recall it.

If a target purchaser has a wedge that you can fit next to you’re in great shape and have an opportunity to gain awareness and retention for your brand quickly and with less investment.

Mind Wedges: a way to drive brands.

Here’s a simple but helpful example of a fictional brand that illustrates the concept:
Imagine again that you sell running shoes. Your shoes are cleverly designed to give better traction, the shoes are lighter, allowing muscle energy to be used in motion, not carrying weight, and they are aerodynamic, allowing the runner to reach greater speed with less wind resistance. Yours is a new brand and so you need to get visibility. Once you describe the shoes as “Running Shoes” you force yourself to drive your wedge next to Nike, Adidas and Reebok; all major players and tough competitors with many styles of shoes and incredible brand awareness and loyalty. Positioning your shoes against these formidable competitors’ products means slower pace of adoption, increased marketing costs and a tougher time entering the sports shoe distribution channel.

So don’t.  Don’t allow your potential customers to see your shoes as Nike rip-offs. Don’t let yourself look like just another sports shoe manufacturer.

Instead, drive your wedge next to Ferrari. Yes, Ferrari. You shoes are: “The Ferrari of Running Shoes”.

To most people, Ferrari says this:

[Fast – Stylish – Exotic – Elite – Expensive]
In fact, exactly what your shoes are designed to be.

All the money and work that was put in to brand Ferrari is now yours for free. The statement: The Ferrari of Running Shoes says it all, because most people’s Ferrari Mind Wedge holds all the attributes you want to impart.  Now, the skeptics out there will say that their Ferrari Mind Wedge also holds:

[Overpriced – Unreliable – Likely to break – Expensive to maintain].

They are right. But take any major brand and you can find its negative side. For example, let’s take a well regarded, staple brand; Heinz Ketchup.

[Rich – Tasty – High Quality]
And…
[80% Sugar – Bright red food coloring – Junk food companion]

Well, nobody’s perfect.

Understanding what we mean by brand can be better understood if you’re willing to take a reasonably good look at ourselves and how we live in our world.

We, as a society of people, are aggregates of promises we think we should keep, values we want to express and beliefs we want others to have about us.  Whether it’s answering to the name we were given as children, to sending our kids to the “right” school, to being seen to exercise the values we’re given in church or wearing the right kind of clothes and shoes.

How we think we should act, what we think we should wear, magazines or books we think we should read and be seen [or not seen] to read, people we think we should be associated with, cars we think we should be driving- these all combine to create the promise we think we need to keep in order to function and thrive in the world we want to be included within.

A commitment to a life “style” is truly a life’s work, for the member of the Atlanta, Georgia elite, it’s a membership to the country club, an investment in the right golf clubs, be seen to be driving the right car, wearing the right clothes and a careful awareness about the affectation one presents.

For the Baltimore gang member it’s the correct T Shirt made by the correct manufacturer, the right baggy pants, listening to the right music [at the right volume] by the right artist and again of course, projecting the correct affect.

For the monk, it’s the right combination of very little indeed.

All these things are wedges. Wedges we add to other wedges handed down to us, wedges we put next to wedges given to us by advertisers and product merchandisers- wedges we carefully compare to, and measure against, the wedges of others.

The car I drive, the clothes I wear to work out in, the places I choose to eat, the schools I am able to send my children to, the friends I associate myself with, the kind of person I marry, my religious and political affiliations or non-affiliations. All these things add to the Brand of Me. All these things begin to tell the story of me to the outside world. All these things make a promise to the world around me, they promise that I am like-minded, safe to engage, that I belong here with you.

Where I live [Northern California], is a place steeped in the brand of the 60’s. Where the connection to material things is not nearly as important as the connection to not-of-this-material-world things like spirituality, self-awareness, our planet and all things natural and organic. Where I live, we understand the importance of non-attachment to worldly things. Where I live is inherently tied to the brand of Northern California.

Sounds lovely doesn’t it?

And it is. However, the thing about disassociation from the material world is that it’s bloody expensive and you have to associate yourself with a a lot of stuff to let the world know the path you’re on. Showing the world my unflinching attachment to the brand of non-attachment, to the brand of Northern California, involves me shopping at organic health food stores, buying organically made clothing [of very specific brands], and going to meditation centers where I “retreat”from the world for a few days. I drive a smaller car to show I understand the responsibility of being a person connected to our planet. To communicate our attachment to this brand, we hold varied [but interestingly, extremely similar] sets of political beliefs that help us feel comfortable here. We are ferocious recyclers. We compost.

Now I hope you’re not hearing this as a complaint. It’s really not. I choose to live here. This is a wonderful place and I feel like I fit in.

What’s interesting is how, to feel as comfortable here as I do, I have assembled specific sets of beliefs, products and languages around the attachment to this particular brand.