Scott Lavelle

Thoughts on marketing, leadership, and industry trends.

Scott Lavelle

Why are marketing teams afraid of process and feedback?

I have been asked this blunt and provocative question numerous times by Product and Engineering leaders. In the Silicon Valley, the process for technical teams has been clearly established. Most often it is agile, with a PM running the show, and sprint planning meetings, daily standups, and retros as key components. You will often hear senior Product and Engineering leaders speaking dreamily about the beauty, effectiveness, and transparency of their process. And wondering aloud why marketing teams don’t seem to have an established process, and why they often seem uncomfortable with the direct feedback that is an inherent part of a sprint retro.

So is this really a problem/opportunity for marketers? You bet it is. In a recent survey of 3,217 marketers by CoSchedule, maker of agile marketing tools, only 37% of marketing teams reported implementing agile processes, yet marketers using agile project management were 252% more likely to report success.1

Marketing process research survey results

McKinsey reported that “even the most digitally savvy marketing organizations, where one typically sees limited room for improvement, have experienced revenue uplift of 20 to 40 percent by implementing agile process.2. Agile also has a clear impact on marketing team velocity. McKinsey also reported that “marketing organizations that formerly took multiple weeks or even months to get a good idea translated into an offer fielded to customers find that after they adopt agile marketing practices, they can do it in less than two weeks.”

Another critical issue is cross-functional credibility. Marketing teams often lose credibility with process and feedback-oriented teams such as Product and Engineering due to their lack of established and rigorous processes. This can harm cross-functional relationships and present barriers to marketing team success such as not getting the Product/Engineering resources required for projects such as website development, landing page optimization, SEO, analytics and BI implementation, site personalization. It also goes without saying that teams that follow a process and have clear goals are happier and more productive. So what’s driving this?

Why marketers shy away from process and feedback

  1. Don’t kill the creativity: Marketing is both art + science, and marketers are concerned too much process will kill the creativity required to do important and harder to quantify things like defining a brand’s purpose, positioning, unique style and voice.
  2. Fear of the unknown: many marketers have had zero experience with agile process, and its particular emphasis on regular direct feedback loops, and team-oriented continuous quality improvement vs. individual achievement.
  3. Confusion over technology: Jira is for Product and Engineering teams, X is for Marketing teams?? There isn’t really a default technology for marketing teams when it comes to process and collaboration. Asana does an excellent job at this, but many marketing teams go without a technology and end up managing their process in spreadsheets and docs.
  4. Ongoing testing vs. building a house: the marketer mindset is based on ongoing campaign testing and iterating on the winners. On the surface, perpetual “test and learn” mode seems antithetical to building a software product with defined components, concrete steps and timing – what agile process was originally designed to do.
  5. Put a positive spin on it: hey, we’re marketers! We’re naturally inclined to present things in the most positive light possible, including campaign tests and results. This can erode credibility with Product and Engineering teams though, who are used to direct and straightforward feedback. Direct, yet constructive feedback is a critical part of the agile process, especially in the sprint retro.
  6. Team size and structure: marketing teams are typically not organized by default with the size and structure that works for agile process. More on this later.
  7. Not for brand or creative efforts: there is an assumption that agile process only works for technical projects and marketing areas like growth and conversion rate optimization (CRO), not creative efforts such as an integrated brand campaign.
  8. High level goals vs. moving one metric: marketing team goals are often fairly high level (e.g., acquire new users), while agile teams typically focus on improving one laser-focused metric (e.g., signup -> activation rate) by a specific and quantifiable amount.

Agile is an amazingly effective and enjoyable process that more marketing teams and sub teams should adopt. So what are the benefits?

Why the best marketing teams adopt agile process

  1. Inspiring and motivating: focusing on every day continuous quality improvement is tremendously motivating to a team vs. obsessing about an end of quarter KPI. Life is a journey, not a destination. It is exciting for a team to feel like they are on a journey towards excellence together.
  2. Fast = fun: a team focus on reducing barriers to speed, iterating quickly is a fun and exciting way to work. Productive teams are happy teams. Nobody wants to be on a slug team.
  3. Built in process improvement: no matter what, every two weeks the team will discuss ideas for process improvement at the sprint retro. A team could go on for months without doing that otherwise.
  4. Knowledge sharing: team knowledge often clusters in groups of 1-2 people, and doesn’t get shared broadly beyond these “camps”. Agile leads to more innovation because knowledge sharing across the whole team is an inherent part of the process
  5. Laser focus: agile teams focus on solving one important and specific problem vs. goals that are more broad or high level
  6. Spirit of collaboration: agile is 100% focused on team achievement and accountability vs. individual. This is very refreshing and it leads to a greater spirit of team collaboration.
  7. Credibility with other teams: by implementing agile process, marketing teams can earn more respect and more resources from other teams such as Product, Engineering, and Data Science.
  8. Credibility with senior leadership: exec teams are impressed by marketing teams that implement agile process given it leads to transparent reporting against specific measurable goals and KPIs
  9. Repeatable process: agile breaks down a big quarterly goal (e.g., improve retargeting) into specific chunks of effort, which feels less intimidating to teams and easier to digest.

Hopefully you’re convinced, and now you’re wondering, “how do I implement agile process for my marketing team?!” There isn’t a one-size-fits-all approach given the variety of team sizes, goals, and resources. That said, there are some clear best practices that will help you define a winning process for your team.

Tips on how to implement agile process for your team

  1. Start with why: have a clear sense of why agile makes sense for your team and what the specific goals are. Each sprint team should be tightly focused on one specific goal that ladders up to the high level goals of the company. An example of a sprint team’s concrete and specific goal might be: “improve self-serve funnel conversion rate by 20%”
  2. Get your data right: the relevant data your sprint team needs to be successful must be organized, comprehensive, accurate enough, and easily accessible via your analytics software or BI tool
  3. Get your technology right: the right marketing technology infrastructure needs to be in place and functioning well. For example, if your sprint team needs to optimize a funnel based on product events and interactions, they will likely need a Customer Data Platform (CDP) or data warehouse that couples product events data with user level data that can be used to send marketing messages via email, push, SMS
  4. Get your buy-in right: get the buy-in you need for implementing an agile approach at the exec or senior leadership level. Remember, senior leaders don’t like surprises. So even if you produce some compelling result later based on the agile process you launched, senior leaders will be upset that they were never informed of or approved the approach
  5. Get your team right: the type of people you want on an agile sprint team are unusually talented, curious, collaborative, aggressive, cross-functionally savvy, and experienced
  6. Not too big, not too small: the ideal size is 8-12 people. The Jeff Bezos formula at Amazon for an ideal size is a “two pizza” team
  7. Reduce other responsibilities: Ideally, the agile group is a dedicated team with no other every-day responsibilities. This can be unrealistic, especially at a COVID-19 impacted startup with constrained resources. But try to reduce the sprint team’s other duties
  8. Colocate: seems like a distant memory in the COVID era, but ideally, colocate the agile team together in dedicated space. Agile teams need to work together closely, whiteboard constantly
  9. Get your roles right: typically, an agile team consists of some mix of the following roles:
    • Product Manager (PM), Delivery Manager, or Scrum Master
    • Growth marketer/paid media lead
    • Copywriter
    • Designer (marketing, product, or UX designer)
    • Front end developer (engineer)
    • SEO lead (depending on project)
    • Analyst
    • Agency lead (if applicable)
    • Legal/risk/compliance lead (if applicable)
  10. Host an effective kickoff meeting: the key to the kickoff meeting is defining the ground rules and setting clear expectations for the team. Here is a list of rules and expectations to get you started:
    • Deep and continuous collaboration is required
    • Speed – we’re going to move fast. Period.
    • Avoidance of BAU (“business as usual”) – we’re going to come up with new approaches to solving old problems
    • Embracing the unexpected – the spirit of test & learn is that nobody knows exactly what the right solution is. Our initial hypothesis may be wrong.
    • Striving for simplicity – smart people often overthink problems. Occam’s razor states that the simplest explanation is most likely the right one.
    • Data trumps opinions – we’re going to prove our hypothesis by testing it and getting a statistically significant result, not rely on our personal opinions and biases
    • Accountability – the emphasis of agile is on team accountability, i.e. we win or lose as one. Also, direct feedback saves time.
    • Customer centric – we will put the customer at the center of all decisions. Jeff Bezos talks about this a lot. Amazon has been pretty successful as a company, to put it mildly. 🙂
  11. Constant and comprehensive analysis: start off with a comprehensive analysis of the problem area. Example, if you team’s goal is to increase the self-serve signup to activation rate, conduct an analysis that brings to light the biggest friction points or steepest points of conversion rate drop-off in the funnel from A->B. Then have a regular process for opportunity sizing new A/B tests, analyzing tests in progress, and results of completed tests. New test ideas should be prioritized based on the following criteria: 1) Potential business impact 2) Ease of implementation. The backlog grooming meeting is typically used for this purpose. To go over test findings, decide on how to scale winners, and kill off those that are not working.
  12. Daily standups: the daily standup meeting is one of the most important parts of agile process, so it is essential that all team members attend. Other meetings besides the standup, sprint planning, and sprint retro should be limited as much as possible. Here are a few tips:
    • 15 minutes max – everyone needs to be concise
    • Remain standing – even when working remotely!
    • Go around the room, and each person will answer these three simple questions:
      • What did you accomplish yesterday?
      • What are you going to work on today?
      • What is getting in your way – blockers?
    • Keep your project management tool visible during the meeting
    • The meeting SHOULD NOT be a 1:1 chat between the PM and each team member. It should be 100% collaborative
    • Routine time of day, ideally morning, but just be consistent
  13. Sprint retro meeting: the sprint retro meeting will typically be the most uncomfortable part of the process at first for marketers who are not experience with agile. The reason for this is that the most important part of the meeting is to bring to light things that didn’t work well during the sprint, and talk about potential process improvement ideas. As noted above, marketers aren’t typically as accustomed to regular and direct feedback compared to product folks and engineers. That said, as marketers get comfortable with this focus on continuous process improvement, they will often realize how this is actually the best part of the agile process, and the element that truly sets it apart from alternative approaches. Here are the basic components of a sprint retro:
    • Emotional word – each team member first chooses a word with an emotional connotation to describe how their sprint went, and then explains why they chose that word
    • Sprint goals recap – the PM lists out each person’s specific list of goals for the sprint that just wrapped up
    • Goals vs. accomplished – the PM asks each person to state whether a goal was 1) completely accomplished 2) partially accomplished or 3) not accomplished at all
    • What went well? General collaborative discussion of things that went well during the sprint
    • What didn’t go well? The key is to avoid personal attacks and accusations. The right focus is on honestly discussing things that didn’t go well and taking team accountability.
    • Process improvement ideas – for the items that didn’t go well, potential ideas for process improvements going forward. Note that the ideas could be related to technology, tools, data, communication, team behavior, strategies, tactics.
    • Acknowledgements – anyone can personally thank another team member for something they did to make the sprint successful. Some sprint teams chose an “MVP” and give that person something to hold onto until the next sprint (e.g., a crown).
    • The PM then resets priorities based on the results in the prior sprint and continues to work down the backlog of opportunities for the next sprint
Marketing process - agile sprint board

Hopefully you now have some insights into why marketing teams tend to shy away from process and feedback, why the best marketing teams adopt agile process in some fashion, and how to implement agile process for your team.

Note that I didn’t touch on the various team configurations given that resources vary wildly from a 1 person startup marketing team to an 80+ person marketing team at a large company. One options is to turn your entire marketing team into an agile team. This is often not practical given the nature of the work and BAU responsibilities. Another option is to permanently install one or more marketers on a cross-functional agile team. This is an ideal scenario, but potentially not realistic given headcount constraints. Another option is to temporarily reduce the BAU responsibilities for one or more marketers, and have them drop into a sprint when it makes sense (depending on the focus), and then drop out. A final option that is not ideal, but better than nothing, is to have a senior marketing leader participate in at least the sprint pre-planning and retro meetings to provide strategic POV and direction.

Overall, I hope you’re convinced that you should try agile process in some fashion and ready to give it a shot! I have seen marketers on teams I have led go from being completely uncomfortable with the process, to understanding how incredibly effective, efficient, and fun it is, and asking why it didn’t get implemented sooner.

What’s Next for Tech Startups in the COVID-19 Era?

As of this writing, 30M people in the U.S. are unemployed, a global pandemic has killed 784K people worldwide, and the murder of George Floyd has led to a global uprising of protests and activism directed at ending police violence against black people. So it would be fair to ask, “why should I care what happens to technology startups?”

To put it simply, startups have been the primary driver of job growth in the new economy. Over the past decade since the last recession, private companies in the U.S. less than one year old added an average of +1.6M jobs per year to the economy, while companies more than one year old lost an average of 634K jobs per year 1:

Startups fail, and the economy is expected to be volatile, but it is safe to assume that new ventures are going to be a vital factor in job creation over the next decade. That said, the types of startups that get funded, the number of deals and amount of funding, and the role of the various stakeholders (VCs, founders, boards, the government) will likely undergo significant changes in immediate and long term future.

Here are 9 predictions for what to expect in the post COVID-19 era:

1. Decline in new funding, funding amounts, valuations

Not surprisingly, there has already been a decline in new venture capital (VC) funding for global startups. San Francisco-based analytics firm Startup Genome’s latest report on global startup funding indicates that funding has fallen by close to 20% since December 2019. China has had the largest impact, with funding falling by 50% in January and February compared to the rest of the world. Note that series A+ deals were already down YoY in 2019 compared to 2018 and 2017, which may add to the “funding crisis”.

Year-Over-Year Change in Series A+ Venture Capital Funding Deals
Source: Startup Genome

Startup funding amounts (i.e., deal size) and valuations are expected to decline as well. And new funding is likely to be more focused on mid to later stage “winners” that are attractively repriced (i.e., valuation haircut). The reasons for this are pretty clear:

  1. Uncertain timing of COVID-19 recovery – large scale efforts are underway, but nobody can predict the exact timing 0f when a vaccine and/or reliable treatment will be available
  2. Rising cost of capital – as risk and uncertainty increases, borrowing costs will be higher and leverage ratios will increase
  3. Significant decline in demand – since the beginning of the crisis 74% of startups have seen their revenue decline and 16% have seen their revenue drop by more than 80% according to an April survey by Startup Genome on the Impact of COVID-192
Change in revenue for global startups since the beginning of COVID-19
Source: Startup Genome

2. Broad effect, with larger impact on B2B

Not surprisingly, COVID-19 has had a broad impact on startups given the economic shutdown and general uncertainty. Startup Genome’s survey indicated that three out of four startups operate in industries severely affected by the COVID-19 crisis. The impact has been greater for B2B large enterprise and SMEs versus B2C.

COVID-19 impact on industries by customer type
Source: Startup Genome

On a positive note, one out of ten startups have experienced revenue growth, with 12% of startups experiencing over 10% revenue growth since the beginning of the crisis. B2C startups are three times more likely to be in industries experiencing revenue growth vs. B2B startups. This seems to be a factor of people staying home, and shifting their spending patterns to online purchasing, which favors tech startups vs. traditional companies. Also, the B2B results may indicate that enterprise companies have significantly cut spending on “big ticket” items like enterprise software subscriptions.

3. Certain industries hit hard, with a long recovery

This one is a no-brainer, but certain industries such as travel and entertainment have been hit particularly hard, and will experience a long recovery. Even after an effective vaccine is available, it will likely take some time for people to feel comfortable getting on an airplane or being part of a large crowd at a concert. After 9/11, it took nearly 3 years, until July 2004, for the airline industry to match and finally surpass pre 9/11 levels according to U.S. Bureau of Transportation statistics.

On a positive note, Millennials and Gen Z have transformed the economy to focus more on experiences, so the recovery time for the travel and entertainment industries may be shorter if these generations lead the return to pre-COVID demand and behaviors. According to a study conducted by Expedia and the Center for Generational Kinetics, 74 percent of Americans now prioritize experiences over products or things, largely due to the influence of Millennials and Gen Z.

4. Survival mode – cutting costs, reducing cash burn rate

According to CB Insights, 29% of startups fail because they run out of cash. The industry standard for ideal cash runway to maintain between fundraising rounds to is 12-18 months. Of course, this is in “normal” times. It would have been hard for startups to predict and prepare for a global pandemic of this magnitude.

The situation is urgent. According to Startup Genome’s April Survey, an astonishing 41% of startups are currently in the “red zone”, i.e., they have three months or less of cash runway left.

Startup Genome survey - Months of cash runway
Source: Startup Genome

So not surprisingly, most startups are scrambling to cut costs and preserve cash. According to the Startup Genome survey, two thirds of startups have reduced their expenses with 42% cutting costs by more than 20%. Despite cost cutting efforts, it seems clear that many startups are going to need urgent investment or aid from the government to survive.

5. VCs and boards will be more involved than ever

Board members have “fiduciary duties”, meaning, as stewards of public trust, board members must always act for the good of the organization, rather than for the benefit of themselves. They need to exercise reasonable care in all decision making, without placing the organization under unnecessary risk.

Fiduciary duties mean that board members have a duty to reduce the risk of the various stakeholders, which in the post COVID-19 era, likely means a more active role in cutting costs, preserving cash, and ensuring the survival of the company. Tech startups have already had significant layoffs, and the role of VCs and boards in these difficult decisions can’t be underestimated.

The dream of relatively hands off investment appears to be on hold for now. For example, it seems less likely that a startup founder will be able to bring on a new investor as a “board observer” versus a full board member with voting rights.

6. Governments will intervene and bail out startups

Given that startups fuel the majority of new job growth (see above), global governments will intervene and take a more active role in supporting or bailing out startups than they ever have before.

This is already happening. The U.K. government launched a $1.6 billion rescue package for tech start-ups hit by the coronavirus outbreak in April. The rescue package includes an innovative co-investment model that other countries may choose to adopt. In this £500 million “Future Fund” for high-growth start-ups, loans will automatically convert to equity in a start-up’s next funding round, or at the end of the loan if the debt hasn’t been repaid. The government will commit an initial £250 million, while the private sector is expected to make up the other half.

In the U.S., some startups have already taken advantage of Small Business Administration (SBA) programs like the Paycheck Protection Program (PPP), a loan program that startups can apply for to avoid layoffs that provides protection for up to $10M in payroll. There has been quite a bit of discussion around the ethical and moral dilemma of a VC-funded Silicon Valley startup taking government loans that could have been used by a neighborhood coffee shop or florist.

7. A shorter path to profitability

Amazon launched on July 16, 1995 and finally announced a modest $5M profit on January 30, 2002. The gold standard approach for startups has been hyper growth mode, or investing in top line revenue growth for as long as possible before worrying about profitability.

Before COVID-19 hit, the startup world was already shaken by the bottom falling out on large-scale pre-IPO darlings such as WeWork and Lyft. At one point WeWork ran up a $47B valuation, but was losing $219,000 per hour. Lyft’s IPO was initially priced at $72 per share. Its stock has recovered slightly since a sharp post-COVID decline in March, but the current price of $28.14 a share is less than half of its IPO price, indicating that Wall Street is skeptical of Lyft’s path to profitability and long term prospects. Lyft’s net losses were $398M in Q1 2020.

Lyft stock trend since IPO
Source: Google Finance LYFT stock quote 8.19.20

It seems clear that post COVID-19, VCs will invest in ideas that have stronger unit economics, stronger and more defensible business models, and the possibility of a true “moat” including brand, favorable cost structure or an unfair advantage such as IP-protected technology. How much shorter will a startup’s expected path to profitability need to be? That remains to be seen, but it seems unlikely that VCs will be lining up to invest in a startup like WeWork that is not even close to turning a profit after 10 years of existence.

8. A shift back to self-serve first model startups

Technology enabled services has been a major trend of VC investment for the past few years. The basic idea is to empower service providers with software and automation to make them more operationally efficient and allow them to serve more customers. Part of the promise has been to unlock heavily regulated industries such as healthcare and legal services.

Before COVID-19 hit, tech-enabled services startups were already having mixed results. Legal automation and a16z portfolio company Atrium shut down on March 3rd, laying off all 100 employees and returning some of its $75M in funding to investors.

I believe there will be a more conservative approach to the types of startups that get funded for the immediate future. VCs will shy away from the higher cost structure and unit economics of “tech enabled services” startups. SaaS products that are built for a self-serve first approach will be favored. Let’s not forget that some of the most successful tech companies of all time were built self-serve first. For example, Google’s primary revenue-generating product AdWords (now Google Ads) was built as a self-serve first product that was easily accessible to SMBs. Google later added Sales and even enterprise Sales, but the product was built for easy signup -> onboarding -> activation (build your first campaign, input a daily budget, and launch).

9. Healthcare, collaboration, delivery will get funded

No brainer, startups in a few specific industries and/or types of products will more easily get funded in the post COVID-19 era. Healthcare startups, especially those that enable telemedicine or other remote services will make for easy investments. The incredible growth that Teledoc Health saw before COVID-19, and surge since the pandemic hit, is an example to investors. Teledoc Health is trading at $217 per share today, up +1,042% from its initial IPO price per share of $19 in 2015.

Teledoc Health stock price trend since IPO
Source: Google Finance TDOC stock quote 8.19.20

Zoom has become a verb since COVID-19 hit, the ultimate sign of broad technology adoption. There is likely still room for a host of new products and innovations in remote SaaS products for collaboration, e.g., MURAL is a collaborative digital whiteboard product that has caught on. And it seems likely that even after life gets back to “normal”, more people will use delivery services like DoorDash and Instacart given that they had a positive experience and adopted the behavior during COVID-19 lockdown. Investors will fund startups that provide tech-enabled delivery services when the unit economics make sense and the approach is innovative.

Conclusion

Startups matter. You should care about what happens to startups as a result of COVID-19 because startups are the primary driver of job creation in the global economy. In the U.S. alone, companies less than one year old added an average of +1.6M jobs per year to the economy since 2011.

So what’s next? Let’s not sugar coat it, there is quite a bit of bad news. Global startups have already seen a decline in new funding, funding amounts, and valuations. Startups in certain industries (e.g., Travel and Entertainment) and B2B startups have been hit the hardest. Many startups are in “survival mode”, urgently cutting costs, reducing cash burn rate to try to make it to the other side. VCs and board members will be more hands on than ever before, which some founders may not like.

That said, there is also good news that will help startup founders see the light at the end of the tunnel, and even find opportunity in the crisis. Many B2C startups have actually seen revenue growth during the crisis. Governments have stepped in to support tech startups more than ever during the crisis, e.g., the U.K. government’s $1.6B rescue package. 74% of Americans now prioritize experiences over products or things due to the influence of Millenials and Gen Z, so the demand for travel and other experiences may come back faster than it did after previous crises like 9/11.

While the COVID-19 crisis will likely place more scrutiny on a potential startup’s path to profitability, investors will love more practical self-serve first business models that have favorable unit economics and LTV:CAC ratios versus those with a sales-assisted marketing process. And there are likely many more opportunities for startup founders to innovate in specific areas such as healthcare and telemedicine, collaboration tools, and tech-enabled delivery services.

Many of life’s failures are people who did not realize how close they were to success when they gave up.

Thomas Edison

I believe that startups growth = curiosity + persistence. The ability of startup founders and teams to persevere is going to be pushed to the limit following COVID-19. The call is out to everyone in the tech startups community: How are you going to rise to the challenge? How will you find clever work-arounds to urgent problems? You just might find opportunities to not only survive, but thrive and build companies that can help the world emerge from this crisis better off than before.

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