VCs, Angels, and Beta Pages: They’re wrong

There is a curse afflicting the startup world right now. It’s insidious, it’s harmful, and – as a potential customer – I’m fed up of running into these brick walls of customer-hatred. Each time it happens, yet another startup generates massive harm for itself, and I’d like to see this madness STOP.

(by “startup world” I mean: West-coast USA-style startups – i.e. Silicon Valley VC’s and Angels, the startups they back, the people seeking money from there, and any startup that follows their way of thinking. I do *not* mean – for instance – old-style Europe startups, who haven’t even grasped the idea of a pre-funded “beta” release yet. This post probably will sound new and scary to some of them. For everyone else, this is already standard practice)

EDIT: I forgot (!) to add: when it works, for the startups that use it sparingly, and for the *minority* that are well-suited to it, it works fine. But the current trend is for *everyone* to try it – and that’s where the failure lies. “When all you have is a hammer…”

What are we talking about?

Startups today are advised to build a micro-website with just 1-3 pages that gathers people’s email addresses and does nothing else. This is supposed to show “traction” (in the number of emails captured) and “early lead generation” (by creating a pre-made mailing list of potential customers you can later approach), as well as “idea/product feedback from potential customers” (soliciting opinions from these people by emailing them and trying-out your ideas on a fresh audience – BEFORE spending the money to make the product).

I can’t remember where I first saw this, but its been promoted by a number of major VC’s on their blogs and tweets, and it’s generally seen as a sign that a startup is hip and modern and knows its shit. From memory, it’s been popularized too by things like Y Combinator, Seedcamp, etc – the places that up-and-coming startups go to learn “how to be better at being a startup”.

The importance of courting Early Adopters

First para of wikipedia’s summary on what is an Early Adopter?

Typically this will be a customer who, in addition to using the vendor’s product or technology, will also provide considerable and candid feedback to help the vendor refine its future product releases, as well as the associated means of distribution, service, and support.

Why do we care about these people? Because we certainly do care; we care very much. Startups pore vast amounts of energy into wooing this crowd.

In this context, there’s several valuable uses of these people (

  1. They’re customers: they’ll pay us
  2. They’re “easy sell”: by their nature, and their needs, they’ll buy the product with only a small amount of urging
  3. They’re trendstters: they will do considerable amounts of marketing *on our behalf*, unasked-for, and unpaid
  4. They’re vocal on feedback: they give us huge amounts of valuable insight into what’s good and bad about our product, and what we could/should/mustn’t change about it. Ditto for pricing. Ditto for marketing. Everything, really – they’re like the world’s most friendly and hard-working investor, giving the most honest feedback about the company’s products every single day

Three things on that list shine brightly, and are where old-style startups haven’t caught up yet: these people massively reduce the startup’s SALES and MARKETING costs. A small, lean startup doesn’t yet have the cash to hire a sales team. Nor a marketing team. Also, the founders usually don’t *quite* know what it is they’re selling, or how best to describe it.

These early adopters make SALES EASY, they do FREE MARKETING, and they ADVISE ON WRITING A BETTER SALES MESSAGE. Wow. Awesome!

When Early Adopters Turn Bad

Let’s look at the *second* para of Wikipedia’s description:

The relationship is synergistic, with the customer having early (and sometimes unique, or at least uniquely early) access to an advantageous new product or technology.

i.e. for all that FREE juicy goodness your Early Adopters are giving you, you’re expected (usually: required) to give back, in spades. Usually what you give back is worth more in cash than what you receive – but it’s all about timing. The cash “cost” to you is due in the future, in the long-term product discounts, etc. Whereas the cash “benefit” to you is accrued in the present, in the form of increased sales *today*. And cashflow is the thin that tends to kill startups, so this is hugely valuable for you.

And – unfortunately – these “beta” websites tend to completely ignore the “give back” part of the relationship.

Here’s the problem: if you piss-off the visitors to that micro-site, you generate *disproportionately* large hatred of your company, your team, and your product. Just as an Early Adopter is inclined to tell everyone how wonderful your product is (even though it doesn’t work yet, and they’ve only got a partial version) … they’ll equally tell everyone how terrible your product is (even though it’s not finished, and they’ve only got partial info).

These people don’t conveniently sit around waiting to SERVE YOUR STARTUP … no, they’re people with reputations of their own, with thoughts and feelings. That’s what makes them so valuable – other people trust and listen to them. And that means they’re expected/required to report the bad along with the good. Upset them at your peril.

What does a potential customer want?

When they come to your website, an Early Adopter has a rough pyramid of needs. The more convinced they are of your product – OR the more it seems to fit a problem they already know they have – the further down this list they’ll go:

  1. information
  2. a demo
  3. a service/product
  4. purchase-form

…and they’re impatient, by nature. If you convince them with your first sentence that your product is even ATTEMPTING to fix a problem that’s causing them major pain right now, they may well *immediately* run to your “pricing” link, straight from the home page.

Incidentally … in that case, here is a person TRYING TO GIVE YOU MONEY. You don’t always want their money – it might come with too many strings attached – but, generally, you probably do. You certainly want to consider it, not cut-them off mid-stride and tell them to piss off and leave you alone (which is what a lot of sites do).

It takes two to trade

But lets go back to the most basic need: information.

Someone comes to your site. Why?

You can bet that – no matter what else – they want Information. Who you are, what you’re selling, why is it useful … might they want to use/buy it for themselves?

And here is where most of these beta sites today do a full-frontal face-plant straight onto the tarmac.

Here’s what most sites do:

  1. I won’t let you see the site until you fill in a form
  2. Give me your email address
  3. I’ll show you a webpage telling you nothing, but vaguely promising to contact you “at some time in the future”
  4. The rest of my site is completely empty

This reminds me of The Pirate Code, courtesy Disney:

  1. Take what you can
  2. Give nothing in return

“Synergistic”, says Wikipedia: i.e. a trade, an equivalence: you rub my back, I rub yours.

Only … with these startups, it’s all about TAKING the customer’s info, and then sending them away empty-handed. No wonder a lot of visitors come away with a vague sense of having just been scammed – this is exactly how most con-artists work!

Why? Why, for the love of all that is good?

Not every startup is created equal; if the founder of Twitter, or Facebook, or Google, or … etc … choose to start a new startup now, with a new product, then you can be sure thousands of people will beat a path to their door just on spec of who the founder is. They don’t know what it will be, but they know they want in – if only for the bragging rights to say “First!”.

To a lesser extent, there are startups whose product approaches a need so great, and so tightly defined, and so cutting-edge … that customers will again come beating down the door IRRESPECTIVE of any sense of rationality or sense.

But, for most startups, that’s not the case.

For most startups, if you throw up a “gathering email addresses TRUST ME I’M NOT A PORN-IN-YOUR-INBOX SITE REALLY”, it’s not so simple.

For most starutps, who then use that landing page as *the main funnel for all outside contact*, this is a disaster.

For instance, last week I met a startup co-founder who gave me his business card. Only it wasn’t his card – when I followed the web-address, it proved to direct straight to the funnel for gathering email addresses. Ironically, the site didn’t even have contact info. The founders had linked to their twitter profiles.

(and the main founder had then back-linked his Twitter profile to this funnel site! Way to go, idiot: now there’s literally no way of contacting you directly. I have to @reply you on Twitter and “hope” that you will be gracious enough to a) bother to check your @-replies (since Twitter doesn’t inform you automatically) and b) avoid irritating my own followers with meaningless private messages I had to send to you in public)

2 Replies to “VCs, Angels, and Beta Pages: They’re wrong”

  1. Spot on. And did I detect a Freudian typo near the start?

    “…a sign that a startup is hip and modern and knows it’s shit”

    Quite.

  2. @Tom

    ROFLMAO … that is a truly awesome typo. I’ll happily take credit for my subconscious’s brilliance there.

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