Innovation & Design

The Value of Design to Startups


Design and marketing are way more important than engineering for consumer Internet companies, argues angel investor Dave McClure

Over the past five years I've consulted with and/or invested in about 50 startups. I've gotten to know a lot of entrepreneurs and a fair number of the venture capital and angel investors who are backing these companies, most of which are in the consumer Internet field. And guess what? Probably more than half of the startups, and more than 90% of the investors, have no clue what they are doing when it comes to user experience and online marketing. So what, right? Surely design and marketing aren't that important? Investors don't have to be experts in every field. After all, you don't expect every football coach to be an ex-football player. Well, actually, yes I do. Symphonies of Code

Design and marketing aren't just as important as engineering: They are way more important. Here are the two main reasons why: 1. Addictive User Experience (Design) and Scalable Distribution Methods (Marketing) are the most critical components of success in consumer Internet startups, not Pure Engineering Talent. We have this image of space-age whiz kids such as The Woz [Steve Wozniak], Bill Gates, and Bill Joy, who could disassemble and reassemble a transistor radio, a toaster oven, or a mainframe computer, and who grew up writing symphonies of code and wondrous applications before they even lost their virginity. Those guys were studs. They were god-like, and for their businesses—building computers or advanced software or operating systems—that kind of horsepower matters. It's the same, perhaps, for companies such as Google (GOOG), PayPal, Facebook, or Mozilla. You need a lot of geek to build search engines, or Web browsers, or fraud systems, or serious CAD software, or the movies that Pixar puts together. But how much tech does it take to create most basic input-output forms for consumer Internet software, when so much of the underlying infrastructure has been built into the operating system and browser platform? Visual Imagery and Copywriting

It's actually pretty easy to write a Web-friendly app or Web site these days. But it's still incredibly difficult to create visually appealing interfaces and, beyond that, to design them in ways that are compelling and engaging, drive calls to action, and are measurably adept at getting more customers to use your products. Figuring out game mechanics and activation, designing reinforcement schedules, visual imagery, landing page tests, and copywriting—all this is not trivial. And if you have some success with your design, you still have to chase the scalable, predictable, profitable channels of customer acquisition … otherwise known as marketing. These days, most marketing isn't traditional PR and product placement. It's a very technically intensive discipline filled with SEO, SEM, social platforms, e-mail, widgets, social media, viral marketing, blogging, video, user-generated content, etc., etc. It's a traditional marketing person's worst nightmare—tens if not hundreds of potential marketing channels and campaigns with unknown costs, techniques, and payoff. Yet folks who know what they are doing can build amazing services with awesome native product marketing features that cost little or nothing to drive massive adoption. It certainly doesn't hurt to have code jedis at the helm of your starship, but engineering for consumer Internet startups need only be competent. The real challenge is finding designers and product managers who can build an awesome product experience, and marketers who can figure out effective, scalable, integrated distribution strategies (whether organic or paid, whether technical or creative). Investors With Expertise

2. If investors don't have operational backgrounds in design, development, or marketing from proven consumer Internet companies, you probably don't want their money (or it better be the best damn term sheet on the table). Honestly, if you're taking money from investors, why not try to get the best experience you can along with the 20%-40% equity you're giving up? Why not find people who actually have a shred of intelligence about consumer products and relevant skills, when you're going to be sitting in board meetings with them every month for the next three to five years of your godforsaken, sleepless, work-like-a-dog excuse for a life? Do you really want to be taking product and marketing advice from someone who has spent most of his or her life without ever having designed a Web page, coded a simple program, written a blog post or e-mail, or even have a Facebook or Twitter account they know how to use with any amount of intelligence whatsoever? When you do background research on your investors, see if you can find them online. Do they have a recognizable Web presence? Do they blog, do they twitter? Do they have a profile on LinkedIn, Facebook, Flickr, or YouTube? Do they appear to have experience in the Internet industry, or do they just have an MBA from some big-name school and no relevant operating roles? Seriously, life is too short. Your startup is too important. And your chances at being the next Google, PayPal, or Mint are already tough enough. So here's the deal. Hire people smarter than you. Find a decent designer who understands human psychology and sexuality, game mechanics, SEO, and conversion analytics. Find someone in marketing who understands how to send an e-mail, write a blog post, use search engines, social platforms, and social media, and has done landing page A/B tests. Find investors who have a clue about the products and services they invest in, who use the products, and maybe even write or speak about them frequently. Find people as advisers, mentors, and investors who have the same operational experience you'd hope to hire for your startup. If we all take this to heart, we might just build a few more useful consumer Internet products. This is an edited version of an article that previously ran on DaveMcClure.com.


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