Valley Nordic S2 E12: Marketing with Andrew Sherrard

We have a very special guest, Andrew Sherrard, on this episode. Andrew is a former Chief Marketing Officer at T-Mobile US where he managed $1B+ in marketing budget and drove $16B in annual revenue. His un-carrier marketing strategy changed how wireless services are sold in the US. Andrew shares his insights on concept testing, positioning, naming, branding, pricing, advertising agencies, and other marketing topics that are useful for startups.

Arne will be back next week.

Correction: Edgewell tried to buy Harry's Razor and not Unilever/P&G. Sorry.

Useful links:

1. Andrew on Twitter

2. Andrew on LinkedIn

3. Andrew's recommended marketing book

4. Un-Carrier strategy

5. Chander's blogposts on marketing 

Transcript

Chander Chawla: 0:01

Hello everyone. Welcome back. This is Chander in Palo Alto, still in shelter in place, but today I'm very excited that I have a special guest who I've known for almost 17 years. I when I joined T Mobile in 2003 and that's Andrew Gerard. Currently he's he'll tell you about the company he's currently running, but he has a very interesting background. He was a captain in the army, then he went to do marketing for a wine company, and I want to know how that was transition. And then he went to the products we are using excessively these days. That's Clorox. And then from there, he went to T Mobile, where in his last role as Chief Commercial Officer. And before that, chief marketing officer, he managed over $1 billion in marketing budget. He was responsible for $16 billion in revenue. And outside of all that I have, you know, I've talked to him a lot. I respect and admire his intellect. I still call him for advice. And you may not remember Andrew. I want to tell the story how he met. So I had joined T Mobile in the hotspot group the Wi Fi, remember it wasn't, yeah, I

Unknown: 1:24

do. Joe sent right, yeah. Peter, something. Peter Thompson, yeah. So,

Chander Chawla: 1:32

you know, we were run like a startup within T Mobile, there wasn't much interaction. The only interaction was through PR. Richard Bradley, Linda, remember, so I think I had been there a few months. And then he asked me, how's it going? And I said, Well, I haven't met many smart people here. And he said, Okay, let me introduce you to somebody. So we went from his office to Andrew's office, and then I agreed with him. Since then he I talked to him, and whenever I talked to Andrew, I learned something new. So thanks Andrew for joining us today and sharing your years of learnings with us in less than an hour.

Andrew Sherrard: 2:15

Well, it's kind words. Yeah, I guess I fooled you both, so that's good.

Chander Chawla: 2:21

Let's do that for our Nordic startup,

Unknown: 2:23

yeah, okay, I'll try and continue the keep the roost going. So no, it's great to be here. Thanks for inviting me, and happy to happy to chat a little bit about it and share whatever I can that might be helpful for your audience. Thanks.

Chander Chawla: 2:35

So since we are in I think in a pandemic, I want to hear your thoughts on, you know, what changes do you see in society are temporary and what might be permanent? Because our life has completely changed. So thoughts on what's temporary and what's permanent or might be permanent?

Unknown: 2:58

Yeah, yeah. I think, I think the the real answer there is, it's right now, we don't know for certain, but my best thinking around it at the moment would would be, first of all, like, wow, we're in a we're a really different spot. We have the world has completely changed, probably more than any time since, you know, for here in the United States, since 911 or kind of other kind of those moments when you're like, after it happens, you're like, Wow, this the whole era has just moved to a to a new one. And I think a couple of things that would be, you know, obviously, we hope everybody anywhere is staying safe, and their family and friends are safe, and our thoughts and prayers and hopes go out to anybody who's affected by it. And for all those medical personnel, when you see this disease from all over the world, and whether it's New York or Italy or wherever else it's, it's pretty sobering. Makes you thankful for just the simple things, I think stuff that will remain the same is to be important to for, just from a business perspective, to be able to deliver a great customer experience and find ways to connect with your customers through your products and services. And then just in terms of life, I think this the there we're going to see this, I believe, come back in the fall again, I think, or in next winter, I don't think this is going to be a couple of mini waves of this re emerging. And I think the new normal here in the United States and probably all over the world, is just a recognition of that these pandemics can happen and that we need to rethink how we prepare for them and what we do when we see them, and how serious it is that we have to how a much deeper appreciation we need to have for how integrated the world actually is today and how fragile our supply chains are, how fragile our i. Um, interconnectedness makes us all dependent on each other, us on China and everyone on each other in a way that I don't think we really appreciated, or it was too far below the surface. And the fact that you know, most of many of the things all of us use every day come from somewhere else in a way that we don't always appreciate, and maybe your your your audience in in the Nordic countries, have a deeper appreciation for that. I know here in the US, I think it's been a it's been eye opening for folks to really understand, like, Wow, all these things that we need that suddenly we don't have, because we've been, you know, really going after this efficiency game of like, let's have lean inventory and not anything on hand, and so let's have the people who produce it makes perfect sense from a capitalist perspective. Let's produce the things we're best at and put those in the in the you know, the laws of comparative advantage have really been optimized, but there's a unseen and probably unappreciated risk and cost to that. When you run into a situation like this, when you can't get stuff from where you usually get it. So I think that new and deeper appreciation for that will remain, and I can only speak for the US, because I haven't. Obviously, lately I've been hanging out in my house a lot, so in here in Seattle. But from that, from our perspective, I believe we'll also see a better appreciation for government and what government can do, and how important it is that that underpinning the foundation is functioning and functioning well,

Chander Chawla: 6:31

yeah, that I think Nordics are actually good at when I worked In Sweden, I was surprised people trust their government?

Unknown: 6:42

Yeah, the institutional trust in Sweden or Norway is much higher than it is here right now. And I think we could learn a lot from creating transparency and trust, and part of that in a crisis, when you really think about what, what is important is it's really being that you trust the information you're getting. And the current environment, unfortunately, is so toxic around the consumption of information, you can always find a reason to not believe what you're being told. Either there's a hidden intention politically, or there's a or there's a you know, unaccounted for truth. And it's so easy to kind of retreat into your echo chamber and not listen to the truth. And I think finding ways to to combat that, and to and also to to find folks in ways in which we can seek and find truth that we believe in is so critical in these times, because that's what people go back to do. They trust and believe society will continue to function in the right way for them, and that's how you that's how you that's why you get hoarding, and that's why you get all kinds of other really difficult and unhealthy behaviors. And, yeah, we got some work to do here to to restore that trust in institutions and in the government.

Chander Chawla: 7:55

Yeah, so when you were in the army, which is a highly trust and highly, you know, I don't know transparent, but people trust each other. You trust the chain of command, and you went from there to working for a winery House transition,

Unknown: 8:14

yeah,

Chander Chawla: 8:16

you know, how was that it was, you know, I don't

Unknown: 8:21

think I recognized how hard the transition was until a few years later, because the trust and esprit de corps inside of the army units that I was in was really high, and so you immediately found a common bond with the folks you had the, you know, certainly the common tribulations and challenges And those things just create a connection in a common mission. That is really it creates a lot of trust and teamwork within the unit. And so I really missed that the first couple years I was in the corporate world, because you don't have that same sense of mission that you know, it's not 24/7 and it's not deployed at a moment's notice to go somewhere. And I think that shift, I didn't recognize it immediately at the time, but later on, I'm like, Oh, wow, the there's not that saying you go home at night and you're not necessarily like in the same way connected with these folks. And so I think finding ways to find that common purpose has been one of the things I've tried to work on as I've gone through my corporate time, for sure at any company, how do we find what a common mission is and then get united behind that?

Chander Chawla: 9:32

So I thought you would be especially helpful to our startups in the Nordic countries, because most of the founders I've met over the years, there are engineers, and they, you know, they're more rational in their thinking, and the rational thinking is, if the product is good, it'll sell itself. So they don't see as much importance of marketing, or they. Don't know. So since you have actually changed an industry, a lot of people may not know this. In the US, most of the wireless service used to be post pay. It's still post pay, but it came with a contract, and so basically you got a free phone or subsidized phone, and then you were locked in with your carrier for two years or so. And Andrew, as CMO at the time with Team T Mobile, he actually changed the entire paradigm. So now most operators don't have a contract. You can basically get out of the payments anytime you want. So he did industry changing things, which is rare. So I think he has the perfect background to share with us how to think about marketing. So as let's start with the beginning. Let's say I'm in Sweden and I'm an engineer. We are we have an idea to do something. How do we do concept testing? How do we how can we test that concept if it's workable or not, or get an idea before we leave our jobs and raise money or invest our own money?

Unknown: 11:14

That's great. That's there's a lot in there. So yeah, you know what changing, the change in industry is, is a fun so first of all, you got to, you got to enjoy and embrace that change. But it's a lot of fun to to have the chance to work with a great team and and do some disruptive things. If you're, if you've got a new idea, though, and you're incubating a new idea, and you're thinking about what it could be, look, I think the idea of a of a brand or a product or marketing, they're kind of, like, to me, very intertwined. So a brand is simply a promise to a customer, as a promise about what that product or service or company is going to offer them. It's a commitment that says, hey, we're going to be for T Mobile. It was, you know, we're going to be the, basically the wireless company, the one in in the United States that actually takes care of their customers, listens to them and does the right thing, and take and and make sure that they're satisfied at the end of the day, we're not going to just sit back and do what is traditionally done in the industry and ignore them and slap a two year contract. Nobody ever asked for a two year contract with a wireless plan. That was a crazy idea, a good idea from a from a return on invested assets, but a horrible idea from a consumer standpoint. So I think the first thing you want to do is I also had a chance, when I was with T Mobile to to work very closely with the team at Google to bring out their first smartphone and their second, second and third smartphone. And so I saw that from the ground up, and help T Mobile create a brand and a smartphone of its own. And look, I think when you're building a product, the first thing you need is is, I firmly believe in that idea of getting a working, you know, you can call a pilot. If it's a service, you can call it a, you know, a quick and dirty kind of beta version. Just get some kind of version of it that you can actually go out and use and experiment with and learn from, and then just keep iterating on it. And on top of that, at first, your first research is always yourself, and then it's friends and family, and then it's today, with the internet and Facebook. There are so many I joke with I have friends in market research, and I'm just like, You guys are out of business. Then Facebook, for so little money and so little effort, you can test any product. So get that demo working. Get the early pilot done, get the early beta, whatever it might be, and get immediate feedback, and just start iterating on the product. I think getting quickly to something that a prototype of some kind that is functional, is that by far the best research you can do, because at the end of the day, brand is not about the marketing campaign or the color of the of the kind of advertised logo, or whatever else. It's all about the experience you have with the product or the service, the actual customer experience that is by far your most important and biggest selling point. Yeah,

Chander Chawla: 14:18

thanks. So in the startup world, MVP is people talk about a lot that's minimum viable product. Get it out as soon as possible. Iterate. But if you just have to test a concept, like, is there a way to test an idea?

Unknown: 14:33

Oh, sure. I like, I think of Facebook as a perfect platform to do it. You can, you can write down a concept. I mean it. They're they're really basic. You just write, and you can write many versions of these. It's probably a really good, really good exercise just to think about how you'd explain this product to some someone. And you want to start with what I call the accepted consumer beliefs. Goes all the way back to my time at Clorox. So the accepted consumer belief is just whatever the consumer happens to believe. Now. Or not believe now about a product. So it could be, I don't know, I got, like, a, I got some sunglasses sitting on my was actually sunny here in Seattle, so sunglasses, right? So you just can look at it like, oh, you know, consumers think sunglasses are, you know, too expensive, or they can be. They're never really that effective when I'm out in my on my stand up paddleboard, you could, you could make it as big or as small as you want, and you talk about what is a belief that they have currently about the category of the product that you're offering. And then you want to give them a benefit like that that can really resonate with them. So, you know, these sunglasses are the absolute best because they've got polarized lenses that never let you, never make you have to squint anymore, and then you have a reason to believe which is going to give you the product reason that you're going to believe that. So, you know, in that example, you know, these are the best lenses, so I never to squint, because they have this amazing new polarizing technology that lets me see down through the water and and blocks out the glare of the sun or whatever. And you can put it that that's very simple. And you can test that in many different ways, whether just through talking to people about it, or whether you're actually doing as like, basically on Facebook, on social media, and just get people's initial reaction to and you'll start to understand, like, how interested are they in the in the concept, how, you know, how powerful is it to them? And over time, you can add prices to it, and you can start getting a real sense for kind of purchasing tenant interest.

Chander Chawla: 16:34

Yeah, right, thanks. So this is what I wanted people to hear. You know, it's a three step process. It sounds very simple, but it's very helpful, especially if you write it down. You may think in your head you understand it, but when you write it down, share it with people you get, you know, actual usable feedback. So step one is expected consumer belief, what is the benefit your product is offering, and what are the reasons to believe for the

Unknown: 17:01

computers, Dan, I guess I'd say, I love engineers. They're great people, and they don't, don't confuse a a feature with a benefit. So, you know, a feature is of a car is, you know, an amazing suspension. The benefit is the thing that you actually get from it, the smooth ride or the fantastic handling of the car, right? It's not those are often mistaken. And you can make the benefit as you know, grandiose as you want, like, Oh, it'll, it'll bring meaning to your life, right? If you're writing one for a religion, that's probably where you that's probably where you go. Or you can make it as small as you want, just like, oh man, like, I won't cut my hands when I'm peeling the onions every you know, I won't cry anymore when I'm feeling onions. But it can be, they can be big or small, but the most important thing is that they're single minded. And usually those three things, they should only be one sentence, each with a single idea in each of them. A lot of times people pile, and you can see this in lots of, lots of startup websites. So pile in, like, like the kitchen sink, and you have a huge advantage. When you write a concept and you show it to someone, you're already assuming that what, however you choose, to tell them, they're actually going to pay enough attention and read the thing you've written. So those are, like, massive advantages if, if, in that moment, because it's the hardest thing in the world to do is get someone's attention. Get someone's attention. Now if in that moment, you tell them those three sentences, and they're not moved, it's not a winning way to talk about your product. That doesn't mean your product may not be winning, but the way you're you can usually deliver one thing, you know, one idea in a message, one one like, Oh, I really like that. And you can believe that, you know it cleans, you know it'll keep your whites as clean as cleaner than anyone else's. That's because it's got blue crystals. Doesn't matter if blue crystals are really the thing or not. It does matter if people believe it, and it is grounded in some truth. But you can also start to you don't need to get down to the molecular structure of bleach in order to explain to someone why it gets their clothes wider. You can kind of do some work to make it shorthand. So the other thing I'd encourage is be really single minded when you're writing those concepts, and then test them against each other. You could write for any product. You can write easily, three, five or 10, depending on the product. And a lot of times, I think people are struggling well, what's the killer idea or app or summary of this product? And you know, you can do them in video. You can do them on paper wherever, and then get them out and show them to people, friends and family, social media, whatever, and get some response.

Chander Chawla: 19:38

And these days, it's much easier. You know, in 2003 you you had to rely on your agencies or focus groups or friends family. Now you do AB testing,

Unknown: 19:49

all small intercept studies at Clorox we did in the late 90s, all kinds of things. Yeah,

Chander Chawla: 19:53

great. And another thing I want to get your feedback on is, yeah. I've seen lot of startups spend so much time in finding a name for the startup or the product. In an early stages, product and company names are usually saying, how important is that?

Unknown: 20:15

You know, I think a great name is is obviously helpful. I don't think it's a huge I don't think it's gonna, I don't think it's gonna, I don't think Airbnb became the leading provider of, you know, temporary, you know, kind of hotel alternatives, places to stay around the world because they have a cool name. They do have a cool name, we'll give them that. But that's not the reason they're awesome. And so I think it's, you know, an important task, but not a game breaking one. It's certainly not going to make your company successful, and I don't think it'll break it either, and there's a lot of easier ways to do it. Usually people struggle with names because they actually haven't thought about how to position their product. And if you a couple of ideas, you know, if you want to dig into this, still, the classic that I refer everyone to is positioning the battle for your mind, written in like the 60s. It's just a little thin book talks about how you position a product, but you can think about it for a brand or a company. And I think today, you know Jim stankels done a lot of stuff where he's talked about starting with the purpose of the company. If you're starting at the company level, not the product level, I think getting a clear purpose, especially today, is really important, especially if founders are passionate about it, and then working that into what it is your company stands for. And you know, again, a brand can usually stand for one thing, one thing. And the mistake is people try and stand for 10 or 15 and then a if you want to get into the brain, anything, a good book that I use for that is called, Hello, my name is and it's just a really simple short but it the precursor is you need to know what your product is, what is key point of difference is, and what it's you know, which is usually also what your reason to believe would be, and what that benefit is, and what the market, target market you're going after is. And you want to think about those things, because then you can do the market sizing, all the things all the consultants will do, but then you want to be able to articulate it really crisply and simply. Then if you have those things well thought out, the name will come and it. The choice of a name is, again, about strategy. All things are usually strategy, and strategy is simply about choice. So if you're going to come up with a really crazy name like zoom, that actually doesn't mean anything, but over time, it can mean a lot if you put a lot of energy and time into differentiating it and making it stand for your video conference solution. So that can be a lot of time. It can be a lot of product. Can be a lot of users, a lot of press, a lot of advertising, all those things can create unique and ownable name. Or, you know, you can just do video chat and people get it right away, but it won't be as distinguishing. So again, where do you want to put your energy in time? And if you pick a really unique and unusual or name with no definition that you have to create definition for, then you're going to end up having to invest something lot of resources to making it stand out. So I think it's that usually is a is a more difficult path, and probably not the best use of resources in an early stage company. I would

Chander Chawla: 23:30

think if you get successful, if the product is good, you position it well, then as a result, that whatever name you choose becomes, you know, get the meaning,

Unknown: 23:43

yeah, well, but, or, or you could just start with a name that people understand its meaning to

Chander Chawla: 23:50

begin with. Yeah, of course, it less energy, yeah. So it's kind

Unknown: 23:55

of on that continuum between descriptive and, you know, symbolic. And where where on that line do you want to pick? And the choice should be driven out of a strategic thought of what it is you're trying to achieve with the name and where you want to invest resources, because you can only invest resources so many places, and you want to put all that you have against the things that are going to be the make the most difference, and the name may be one of those, if marketing is a key component, like Casper didn't mean, you know, mattresses, they made it mean mattresses with a lot of expensive advertising, yeah, yeah,

Chander Chawla: 24:32

yeah. It also depends on how much money you have. It does indeed, yeah. Okay. Next I have is pricing, which I see lot of founders struggle with, because especially when something's new, you don't know how much people will pay for it, or if you're competing with the Giants generally, you know you have three or four models. That most startups use. One is advertising based. Another is premium. You give away the basic like zoom, most of it is consumer. Then there's enterprise level pricing, or the SaaS model you pay monthly, or the four that you just buy. So how do you think about pricing? Or is there a framework people can follow when they're pricing their product?

Unknown: 25:30

Yeah, again, I think it starts with your overall because I think you actually articulated what I would think of as different business models there for how you're going to, in this case, take a software service and go to market. And when I think about pricing again, to me, it starts with what's the overall objective of the company, and what is the target market that we're going after, and within that target market, what are the opportunities that we're attacking? And then from that falls a pricing strategy that says, All right, we're going after, you know, the high end of the market, because we believe it's underserved. And actually there's a bunch of B to B customers in the mid market that aren't getting the service they want. And so we're going to close that gap, and then a pricing strategy and structure will be really driven by your overall company strategy, what substitutes there are in the marketplace. So for your service, most of the time there are substitutes. Sometimes, if you're actually making a market, that's pretty rare, but sometimes you can do it and and so then you're looking at what the alternatives are for the other things. So if you're in whatever business you happen to be in, you're going to look at where do I price relative to those substitutes, and why do I command that price? And it could be because I'm more convenient. I have a better go to market solution. I have better customer support. It could be any number of attributes, and then underneath out of that will follow your pricing strategy that will give you the kind of return you need to satisfy your, you know, shareholders, key stakeholders, however you want to think about your investors. And it may be a multi year strategy too, right? It might be, we're gonna, we're gonna, you know, the classic, we're gonna get big fast, we're gonna give away the product, and then we're gonna slowly price into that, well, that that could work for, for for some people. But it could also be that you're like, No, we're going to do the SaaS business model, and we're going to hit our costs, and we're going to assume, once we get to this scale, then we'll be really profitable if we get over 10,000 accounts, or whatever the number might be. So I think pricing strategy falls out of overall business strategy and the pricing strategy itself. I think here, there's usually a couple of key assumptions in any business model that drive economic success, and so I would spend a lot of time just because it's on a spreadsheet doesn't make it true, even if a really smart PhD has put it in there for you. So I would spend a fair amount of time thinking about what I know about those assumptions and how I can validate or invalidate or learn more about what those assumptions are, and I would start to pressure test my business model and my pricing strategy against competitive response new entrants and, you know, and my own resource limitations.

Chander Chawla: 28:16

Yeah, so you're right. I was describing different business models, but the pricing varies by each business model.

Unknown: 28:23

Sure it does. It does.

Chander Chawla: 28:25

So is there like a, you know, hack or a trick? Let's say I have a product for which there's direct competition, and I have to the other product is, let's say 2999 a month, and I come out with, I think I have a superior product. Can I, like, you don't, can I charge 6070, or you test, or are there, like, you know, hacks, you've seen that, okay, up to 30% more,

Unknown: 28:55

yeah, yeah. I think work. Look, I think you need to decide when you're if you're if you're talking about product launch. Now, first of all, I think your biggest problem is creating getting the most scarce resources, consumer or or purchasers attention. And so I think you need to be pretty realistic about how hard that is to get. Even for a massive brand like a T Mobile or a Clorox, it's hard to get people's attention. So if your only tools are your online distribution and your in your social media following those kind of things, I think you need to think a lot about how you launch the product in order to create the greatest impact and get the most attention. And that is an important part of your pricing strategy, because your launch of your pricing, a lot of people think of it as permanent. It's actually only, it's only it's only that way until you decide to change it, as long as you haven't made some kind of commitments. Because, you know, and maybe with that current cohort of customers, it's permanent. But if you're if you're starting off small and building, you can always make adjustments. So I think instead of guessing about the one, one general principle is, instead of guessing about the assumptions that you have and spending endless hours debating them, steer with facts. Go in there and actually experience the market and decide and figure out what actually works and try some different things. But I wouldn't discount the value of really stunning price to attract and get that attention, to get yourself going and get some momentum behind it. And then I would look to understand the sensitivity of the key facts, and how that are the key assumptions, and how those are going to influence my returns and my market acceptance, and, you know, my rate of growth. And I would, I would look very, I think again, just like the MVP idea, get to market and actually, then experiment and stay with facts, and you can always change the price. You're not making a forever decision. Yeah,

Chander Chawla: 31:07

when you launch something, a new product. And there I've seen multiple examples where some people start with one and some people start with, let's say, three versions of the product with different prices to see what works. You have a preference. You see one better suited rather worth it, yeah. I

Unknown: 31:30

mean, it obviously depends on your goal, but I think, I think if you're talking about again, thinking about your community, I would think you're going to be much better off starting with a single thing, so you can be focused on it, and then creating some variation, either logically by some kind of geographies, or as you get feedback, and put your best thing out there and lean in behind that. And as you get feedback, or either from customers or the marketplace, however you get it, and you recognize that, Hey, we should try something else. I would, I would go for some variation off of that, and then, and then experiment again. That can lead you quickly to proliferating quite a bit. And I think you always want to be pruning back and focusing on, usually, you know, most of your volume in all the business I've ever run comes from a few key elements, and it's always attractive to get this incremental growth. It's usually pretty illusory. Actually, at the end of the day, getting making the big thing bigger is usually a lot better, a lot more effective way than trying to, like, eke out extra points of growth with some new niche kind of product, because it never gets the attention or focus that it deserves anyway, and it's a niche product because of this product doing better at the really core thing usually creates a lot more momentum.

Chander Chawla: 32:53

So I so I am seeing this, you know, in the last, you know, 20 years, especially for entrepreneurs or startups, marketing has become much more important, even if you're a tech person or tech startup, because of the cost of customer acquisition. What's that? So you have, you know, in old days, you could launch the product, but product the attention was not as difficult to get if you had a good product, but now there's just so much out there. The cost of customer acquisition is where I see lot of startups fail because they may have a, you know, positive lifetime value, but they don't get to the scale where they can get to a positive CLV, right in that like, how are in general, how have you seen marketing change in last 20 years, from Gallo Winery to now?

Unknown: 33:55

Oh, my God, it's transformed completely, obviously, because back then there was no internet. I remember I remember looking at a Netscape browser when I was still at Gala, going like, what is this thing? So look, I think the accountability and the, you know, kind of the ability to to, obviously, all of digital has transformed it, and the ability the accountability of digital that is now slowly making its way into television and many other mediums. And the ability to slice the market down and to find different interest groups at such a granular level that you could never do before, that is amazing. And the amount of content out there has gone up so dramatically as well. That's why I say consumers attention is the single most valuable thing. That's why the attention based economy is like the is the is the thing that Facebook and Google and everyone else is is kind of pursuing if you're in the advertising business. And the reason the information that Google has, or Facebook has is so valuable is because it it can tell you where to find. People's attentions and affinities and those kind of things. It's also dangerous, because it ends up making you more more extreme and more into your own echo chamber. So that's been well documented, but that like, that's that's a that's a social reality. I think we all need to grapple with more than probably we have, but those changes have been completely transformative, and because there's so much more content, it's actually, even though there are so many more effective ways to reach customers, it's even harder to do now than it was before, that everything's been splintered like the highest rated show on TV today isn't even, you know, I think, I think I read somewhere like 18 or 16 out of 20 of the most watched TV shows the past year in the US were NFL football games. So like, that's the only thing that grabs an audience in any kind of scale way before compared to the old days of the network. So with a splintered audience, finding your niche and attention is is, is a bigger task. You got to you gotta be very mindful of your earned media footprint, your social media footprint, and your and you're paid. And then you gotta track really, in a really thoughtful and and disciplined way, where your spend goes and what the return is from that spend. And that's the only way to which is why referrals and word of mouth, or if your local business doing, doing reviews, those are so incredibly important in this day and age, because that that distinguishes you in a way that Yellow Pages never did. So I think it's, yeah, I think and your product has to be good enough to get recommendations. The other reality is, I think a lot of products are entering crowded marketplaces and solving relatively small problems, and that's just a recipe for difficult or they're doing it in such a way that it can easily be replicated and not really creating, you know, some real moats around their around their business model,

Chander Chawla: 37:05

yeah, so it's, you know, when the D to C startups direct to consumer, like the razor blade company Harry's, when they came out, and I thought it's, you know, great idea, because Now you have internet e commerce, but their customer acquisition cost is so high and dependent on social media influencers that the commission that was going to the retailer is now basically, you know, going into your customer acquisition cost, yeah, you do have an advantage. That's the feedback loop. You get direct feedback from the consumers, which, if you tell to big box retail, you don't get that. That's right. So what's the given that? How can startups minimize their customer acquisition cost in addition to what you said already, measure everything hang

Unknown: 38:01

on once again. I gotta, I gotta handle the stay at home issue, one sec.

Chander Chawla: 38:08

So while Andrew is dealing with stay at home issue, I think the

Unknown: 38:19

even, even podcasts after are bowing to the pandemic for my daughter, no, so

Chander Chawla: 38:29

you're gonna say, like, very understanding people. They're super nice.

Unknown: 38:33

Oh, that's good. I'm glad. Well, I'm, you know, I'm 25% Norwegian too. So sweetest. So, you know, I got, I got a little Nordic blood in me, all here in the US. But so what your question was around, like, what's the answer to some of the

Chander Chawla: 38:47

is there a way for the startups to minimize customer acquisition cost? Because I think lot of success now depends on who is able to do that, to get the scale to have, you know, achieve big enough audience to create a profitable business. Initially, you need to spend money like now you saw the Department of Justice is blocking, I think j&j or Unilever buying the shaving company. I forget which one, which I thought was, you know, interesting. Yeah, that's fascinating. So the government is kind of seeing that as a, I don't know what, but that's, I think, separate discussion. But for startups, how do you see, is there a way, you know, what can we do that you can come ahead of others in terms of customer acquisition costs, because that I see has become the differentiator. Whoever has the lower customer acquisition cost in early stages gets to get bigger.

Unknown: 39:56

Yeah, that's a great question. It's really i. Um, and there's no silver bullet on this one or a single answer. I think it's being really clear about who your target is, and having really solid attribution modeling and statistics of who's who's responding and how are they responding, and then doubling down on that in order to create that flywheel effect, where you get more of those folks who are interested in your product. And depending on, I mean, it's such a broad category startup, right? So depending on where you're at, I think you can find opportunities to do a fair amount of a fair amount of kind of work to get trial that that is more effective, maybe, than just straight up acquisition. So one of the simplest things I would actually advocate for is develop a product and a business model that is much lower cost than you think, because I think your customer acquisition costs if you're going straight just doing pure digital and going on to Facebook or Google, and it's a fairly crowded field. If you're successful, what will happen is your bigger competitors will just bit up the price, and so just naturally, well, it's not even like they're being, you know, kind of, you know, trying to skewer your business idea. Just that's what will happen, because they want to hit their volume. To hit their volumes too. So I think one, one specific thing you can do is make a much lower cost product that needs that has lower cost of acquisition, acquisition. The other thing is, make an amazing product, because the single best way to to kind of get people to experience a new product is through free sampling, and find that as a tool, I would, I would start to look at other ways to generate trial that are lower cost than just going right at Facebook and Google. I think there's a lot of opportunities in three events and experiences. And, you know, the current pandemic notwithstanding, that you can still use to generate that could actually be cheaper to do it in a more traditional way back in the real world, not on the digital world, than it would be to, you know, go to millions of people and get a sliver of them to pay attention and, you know, handle and so what's, what's a version of your product that you can give away for free and get people excited about,

Chander Chawla: 42:23

yeah, and we see that, you know, like Dropbox and Zoom, zoom went from 10 million users to 200 million users in like a month.

Unknown: 42:34

I know my my first boss at Gallo is now the CMO at Dropbox. No way. Yeah, she's staying busy.

Chander Chawla: 42:42

Wow. Okay, so what you know you have been doing marketing for over two decades, is there, when you think of common mistakes people make, what comes to mind, what I have seen is it seems very accessible to people, just like the stock market. People think its stock market is, you know, buy low, sell high. What's so difficult, people who don't know enough, same thing. Marketing seems accessible to people. Oh, what's so difficult? You have a product, you put an add on, and people buy a product. And I've

Unknown: 43:20

seen that, yeah, you get, you get you get more advice as a CMO from every one of your peers than anybody else. So for sure, everybody knows how to watch an ad and tell you what's good or bad about it. Yeah, I think, like we should saying every client gets the advertising they deserve when you think about an ad agency. And agency. And I think that's true. Every company gets the marketing they deserve. I think generally, bad marketing comes from bad strategy and bad thinking. So you need to be as maniacal and focused on creating a really clear target and a clear a single minded concept that you can articulate in a couple of sentences that says what your product does and why they should buy it, and then have a great strategy for getting that message out there, and be really disciplined in measuring it. But the strategy, the tactics, have changed tremendously, but the basic idea of what you're doing in marketing hasn't changed at all. All you're doing is selling to millions of people, you can't or 1000s or hundreds. You can't do that. You I just did it one to one, and I sold you on an idea and I had a position. Now I do it through all these other mediums, but the actual idea behind it you still requires a great positioning, a really single minded focus, a single idea for what is amazing about this product or brand, and then bring that to life in hundreds of different ways. You know, PG still does it masterfully. If you look at, if you actually, they're very and they've been selling the same thing, which is cleaning supplies and household, you know, grooming products for over a century, right? And they, you. Still look at it as fresh, and it's on point, and it's still really well done, because they remember like there's a strategy behind us. Here's who we're going after, here's what they think about our product. Here's what our product does for them. Here's why they should believe it is a great reason to buy right now and then double down on your successes and don't waver ever from that single minded focus positioning strategy. Most people get it wrong because they switch too quickly, or they and they don't have a strategy. They have a series of tactics that sound cool, that's not marketing, that's just wasting money.

Chander Chawla: 45:37

How do you figure the correct positioning for a product. Is there a method or framework people can follow to figure out the positioning?

Unknown: 45:46

Yeah. Again, just goes back to who your target market is. What are the current beliefs and insights and problems in that, in that market that you're solving? What what you know, I like the I like the methods that Clayton Christensen used, like, what's the job they're trying to do? What's a job to be done? What's the actual thing that the consumers try to achieve? Now, once I know that, and a lot of times, even in market research, that's totally missed, comes a lot of times from just talking to all the users ethnographies, just getting out there yourself and and experiencing using the category obsessively yourself, and then talking to everybody about what works and what doesn't, and then distilling out of a couple of, like, three or four or five key insights, and say, Okay, this is the one we're going to solve. And any maybe you saw more than that, but maybe, but you should only talk about a couple of them for what it stands for. So you want to pick something fairly big and fairly enduring, because if you know, oh, now we got lemon flavored instead of, you know, all the other 16 flavors. Yeah, that's not a big that's not a very big idea. So I think that that's how I would go about it. If our in the startup world is I would live and breathe a thing, and live and breathe with the customers, and have a ton of consumer, consumer empathy. And I think you get that empathy by actually using the product as they would,

Chander Chawla: 47:04

yeah, yeah. So a lot of the startups, you know, when they start getting successful, they go from C to Series A, and they start, like, start spending serious money on marketing, let's say, above million dollars. And that's the first time they're dealing with an ad agency. When I dealt with them first time, it was a learning experience. What? What suggestions do you have for people who are dealing with agencies? First time,

Unknown: 47:35

I think it's it's similar again. Every every client gets the advertising they deserve. So it's similar. You want to be really clear about what your objectives are. You want to you want to give them a really good briefing. Just like, if you're working with a great UX or design agency, or, you know, you're outsourcing some of your software development, you want to be really crisp and sharp on like, here's what we're trying to achieve. These are business goals. In order to achieve these business school, you know, we want to grow our customers from half a million to 1 million, whatever the goal might be. And then you want to be clear about what marketing objective you think. In order to do that, we think we need to raise the awareness of our product from, you know, point 5% to 4% or whatever it might be within this target market. And here's the background on this target market and what they do and how they use the product. Here's the here's so here's who we're going after, here's what we can say in order and communicate about our product, because it's all about communications. Now, what can we say, you know, or show or demonstrate about our product? That will change that metric I'm trying to move. Am I trying to, you know? And it could be. It could be, I'm nurturing people down through the funnel of of the shopping and purchase experience. It could be that, boy, a lot of people heard of us, but they don't really know who we are, whatever, whatever the thing may be. And then what you're going to do is you're going to look at that target audience and how you can influence them in a number of different ways, either earn social or paid advertising, and you're going to figure out how you deliver that message most effectively, because a media plan is simply it is simply a vehicle that allows you to say, Hey, I'm going to reach these customers at this time with this message. So you want right time, right audience, right person, right message, but doing that well and consistently over time, and then you're going to turn it and then you you need to give we got a launch coming up. It's going to be here. And the best advice, the best challenge that creative team likes at an agency, because you're probably interfacing with the account team, but the account team wants that clear, you know, clear direction. The creative team wants that clear briefing of who the customer is and why your products great and what problem it solves. And they want to, you want to put them in a really, really well understood box, here's the problem, and then let them use their creative juices and design chops and everything. Anything else they might have at their disposal to solve this problem inside the box, that's the that's where they create greatness. And you want to challenge them do great work. You want to be the kind of partner with the agency that is that they want to work with, because inside an agency, they have 10 or 20 or maybe 100 or maybe 1000 clients. You want to be the client that they want to work on. So think about how you appeal to them, just like with any other key stakeholder and partner, you know, vendor that you have over time. So you want to be consistent, you want to give them good feedback, you want to be responsive, and you want to you want their best people to work on your stuff. Because the reason how an agency works is they hire all these really talented and amazing folks who can direct and think and imagine whole new ways to bring your product to life in a fun and interesting way. And they rotate between clients, and though they'll be on yours, but they also work on two or three others because they like the idea of having all kinds of different challenges and problems to solve, and so you want to be the one that they want to work with. Maybe it's because your products amazing, but it's also because they enjoy working with you. It's a people business, so they got to want to work with you. So get get their absolute best people to work on your stuff. That's what I always that's what I always wanted. I always wanted my agency to put what I wanted not just them to put their best people in it. I wanted their best people to want to work

Chander Chawla: 51:26

with me, right? Okay, final question, which is more my personal curiosity I have seen since I moved here to Silicon Valley. You know, classical marketing has been, you know, four piece of marketing, product, price, place, promotion. I see in the tech world, at least in the valley, product is completely out of marketing, like the chief product. How do you think about that as a marketing executive?

Unknown: 51:57

Well, I don't like to work on I don't like to work as a marketer when I don't have a lot of influence or shared responsibility for the product. So I guess my short answer is, I don't. So that's one of the reasons I haven't been with a you know, unless I write great software, can run great software teams, Google isn't the place for me, probably, or Facebook for that matter. They're amazing companies. They do fantastic things, and they've organized around a more product management kind of product central mentality. For me, I like to have a lot more influence and and I enjoy the process of developing and thinking through how you create a product for people that creates tons of satisfaction and recommendations, I think for a lot of folks, though, you know, for more for other marketers, they thrive on, um, on being able to create amazing communications and and bring experiences to life. I have seen like teams that I've run have, you know, event marketing, experience marketing that I never would have thought was possible, and it was a product in and of itself that created an experience for, you know, customers, or potential customers or influencers, and you're like, Wow, this was, this was we just, we had a run a show, and we created this content, and it was totally branded, and it was amazing. So there's all kinds of different ways you can do that, but, and then I think for those markers, they probably think of their messages to the product itself. I think everybody wants to create a product, yeah, yes, that was fun.

Chander Chawla: 53:29

The same way I want both. Or the classic, yeah. What? How is it like running reliable storage after, you know, managing billion dollars in budget and now reliable storage relative, yeah,

Unknown: 53:43

yeah. It's it's fun. It's totally different. It's back in my hometown.

Chander Chawla: 53:47

Share with people what it

Unknown: 53:49

is, yeah, yeah. So let me so I work back at a company my parents founded 40 years ago in a small town I grew up in called paulsbo, which has been visited by the King of Norway. So there you go. It's my Nordic connection. It's a Norwegian fishing village outside of west of Seattle, and it's a self storage company. So we have seven locations and about 3600 customers. And it's been a lot of fun. It's a little less intense and hectic. And the people there are great. We have 20 employees, and right now I'm just focused on keeping them safe and keeping them paid, which I take very seriously. We're big we do a lot in the community and donate a lot of stuff to local food banks, and those kind of things. Are gonna keep doing that, and it's been enjoyable, but just a whole different, complete shift from the huge corporate world, and one I've enjoyed, and you won't be surprised to know that even as I've been there just for these and we my wife ran it before I left, because my parents had to stop doing it. And so then now I've kind of, I've taken over. It's been my turn to do it, and as I've, as I've looked at it, I'm like, oh my goodness, there's been zero innovation. In this category is actually a pretty big category of business across the US. There's 50,000 of them across the US, which is stunning. And I'm like, oh, there's a huge opportunity for innovation. So that's what I'm noodling around myself, a few of these ideas so

Chander Chawla: 55:14

cool. Well, I wish you the very best, and thank you very much for taking the time and sharing your insights, and I'm looking forward to the feedback from our audience about Yeah, me too. Yeah. Thank you very much. Thank you.

Unknown: 55:30

Thank you for having me on Twitter and have an awesome day and stay safe and go wash your hands. Okay.

Chander Chawla: 55:35

Thanks. You too. Andrew, bye.