I’ve talked with a number of marketing-focused tech startups about whether or not they feel ad agencies are a useful path to customers. In these conversations there’s strong consensus among freshly-funded companies that they can go it alone, and strong consensus from companies that have burned through their funding that they need help. I have seen several high-powered startup founders humbled by the massive effort and investment required to build relationships with Fortune 500 Chief Marketing Officers. The consensus seems to be: if you have 5 years and tens of millions of dollars to burn, then carve your own path and develop relationships from scratch. I once attended a small workshop run by the founder of Badoo, one of the largest dating sites internationally; it was called How to Get Your First Million Users. The message: don’t try to build your own user base without some help, you absolutely need channel partners.
When you’re starting a business, it’s important to understand that channels can be disrupted, but they exist for a reason– they were created because it is insanely hard to develop and control relationships. Trying to create a product and create a value chain at the same time is like starting two companies simultaneously; so make a conscious decision to create a product first, and you can create a value chain later on when you already have millions in the bank.
Even most of the “overnight success” tech companies in the consumer space knew this. As you try to create a Viral Loop, remember that YouTube rode on the back of MySpace and PayPal rode on the back of eBay, so there’s no shame in riding on the back of agencies until you can stand on your own.
Most successful startup product companies first injected themselves into a value network, rather than trying to create a new one.