While the startup environment in Boston has vastly improved over the last several years, I continue to hear the sentiment that it’s really tough to build a great consumer startup in Boston. This is expressed by people outside of Boston, but it often comes from those within our community too. There are a couple reasons cited for the challenge of building a consumer company in this city, but I want to focus on one in particular. The narrative I often hear goes something like this:
“Consumer companies are all about great marketing, and Boston doesn’t have enough great consumer marketers.”
Now, for context, there are a number of classic consumer companies headquartered in Boston, including Gillette, New Balance, Keurig, Staples, and a few more. Even Reebok’s global headquarters is located just outside the city. But when you think of hip, innovative new consumer brands, well, you don’t really think of this town. Even ignoring Silicon Valley, places like New York and LA seem to have an edge relative to Boston because of its proximity to media outlets and the prevalence of marketers from big and exciting consumer brands or entertainment companies.
This argument seems to hang together … except that when you actually look at the people leading marketing at many quickly growing consumer startups, you see something very, very surprising.
I asked the former Director of Growth at LivingSocial — who also runs a large startup marketing meetup in New York — to recommend three rising stars in that city. He pointed me towards VPs of marketing from Bonobos and SeatGeek, as well as a woman who previously led marketing for How About We. And in an interesting twist, here were their backgrounds before starting work at these companies:
- BI Analyst at Buddy Media. BA in economics.
- VP Finance and Analytics. Financial analyst for a large company.
- Business Ops. Investment Banking.
None of these folks had any marketing background at all. And all of them have a highly quantitative skillset from a variety of industries like finance, consulting, and other fields. Additionally, all of them were younger than me (mid-20s to early 30s).
In other words, some of the best marketers in modern consumer internet startups are exactly the type of people that Boston has in spades.
What Actually Makes a Great Consumer Internet Marketer?
Clearly, being analytical isn’t all there is to being a great marketer. So I wanted to understand this more deeply. And right inour backyard, two of the fastest growing consumer startups in the past two years actually have very deep roots in an older Boston company – Vistaprint. These companies are DraftKings and ClassPass.
I spent some time with both Janet Holian, the former CMO of Vistaprint, and Jason Robins, co-founder and CEO of DraftKings, to try and figure out what was in the special sauce at Vistaprint that led to such effective internet marketing leaders. Having heard their feedback and synthesizing my other discussions, it boils down to two things.
1. The raw material of analytical people
First is this idea of the “raw material” of insanely analytical people. Early-stage growth and marketing is increasingly about being able to break down a go-to-market strategy to its core components and then rapidly craft experiments, test them efficiently, scale what works, and keep on searching.
Of course, every company talks about being analytical. But as with many things, analytical acumen exhibits a power law. The key is finding people (and sources of talent) that tend to deliver the individuals that are 10X more effective with analytics than their peers. I recall that when I was a management consultant at The Parthenon Group, a pretty analytical place, one of my friends in our associate class was clearly the most analytical one in the bunch. Guess what he’s doing now? Marketing. He joined zulily very early as VP of marketing and has been with the company leading the function ever since.
At Vistaprint, a big part of their analytical DNA came from roots within Capital One. I remember that, when I was in college interviewing for jobs, Capital One was the only company that required all applicants to take a long and rigorous math test to even get an interview. And when you were finally interviewed, most of the discussion was an oral exam of credit card economics and difficult on-the-fly calculations. Both Jason and one of his co-founders came from Capital One prior to Vistaprint because they saw a similar culture and analytical rigor in the team that did not exist at other companies.
2. A very particular culture
The second attribute of this “secret sauce” of top-notch, data-driven consumer marketing is culture. In particular, a culture that promotes:
- A belief in the new
If you think about it, this totally makes sense. Experimentation is critical because an early-stage company often can get early traction on new and less-well-understood channels that may not scale for larger companies. Early stage companies also often will exhaust early channels that work, or are working in channels that are evolving much more quickly. So being able to create experiments is critical.
A culture that accepts risk is also critical because, at the early stages, you are operating with very little data. You don’t really know what your LTV is going to be. You don’t really know how customers are going to respond to your product over time. You have no clue about tons of things. But you need to take calculated risks and eventually be right. You also need to be able to handle it and respond when your calculated risks are totally wrong. This ability to assess risk and be effective in that sort of environment isn’t easy.
Competitiveness is also key because all great new channels get competitive really quickly. Great marketers know how to stay ahead and how to beat their competition as they start to nip at their heels, leveraging all their learning and experimentation having been an early pioneer.
Finally, I found that all of these people and the companies they came from had a belief in the new — a belief in the ability of young, hungry people to out-execute “experts,” coupled with a willingness to get their hands dirty with new channels, platforms, or trends that seemed to be emerging. This is why sometimes you see what looks like an experienced marketer really struggle in a startup — they have lost their ability to embrace the new and unknown and instead have an overly strong bias to do what they know “works” … even if the context has changed.
So, What’s the Deal with Boston Consumer?
Given that the intellectual raw material in Boston does exist, what’s the deal with consumer tech in Boston? Why is it so poor, as the popular refrain goes?
A couple observations:
First, contrary to public opinion, consumer tech in Boston is having a pretty remarkable resurgence.
At the late stage, Wayfair’s recent IPO and continued rapid growth is a great example of exceptional, homegrown talent. At the scaling stage, companies like DraftKings are showing that you can go head to head with other well-funded competitors from other more consumer-first ecosystems and win. Companies like The Grommet are showing the ability for some Boston based companies to rationally build a great business in competitive spaces where other shiny objects have come and gone. And at the very early stages, we are seeing a true surge of really exciting new consumer ideas coming to life in Boston, including some of our own portfolio companies (Bridj, Scratch, Peach, Dunwello and others) and others elsewhere in the city (including Drizly, Smack High, and more).
Despite this resurgence, however, there are some cultural barriers making it more challenging to build a consumer businesses in Boston.
The barriers I see are:
- Too much bias towards experience (on paper)
- Too much skepticism (which leads to)
- Not enough experimentation (which leads to)
- Less pure creativity
- And, finally, a lack of confidence, which sucks the heart out of a company or idea
On experience: As this post discusses, experience can be overrated, at least on the early-stage marketing side of a consumer business. The best recent consumer success in Boston (Wayfair) bucks this trend by hiring tons of people with great raw horsepower but relatively little experience in a broad range of roles. More companies should follow suit and more young talent should believe that they can make a real impact in an early stage company with some aggressiveness and focused learning. Initiatives like the Startup Institute, which started in Boston and has expanded globally, is making a big difference here — but there are hundreds of resources out there that need can be used or need to be created.
On skepticism: The most important thing for any raw startup is building something people want. And it’s hard to figure out what people want if you aren’t engrossed in culture or are not an early adopter. Often, it’s hard to figure out whether or why something works without actually trying it and having others also using brand new products and services. Strangely though, I find that Boston is less of an early-adopter type of town than Silicon Valley or New York. When I visit my friends in SF (who don’t actually work in tech), I find them using products much earlier and much more seamlessly than even my tech-oriented friends in Boston. Proximity to the breadth of startups certainly helps in the Valley, and in New York, the media-centricity of that culture helps with information dissemination. But I think there is also a bit of New England skepticism that exacerbates this gap and makes it harder than it should be to keep an open mind. Chance favors the prepared mind, and in startups, the best way to prepare one’s mind is to expose it to many inputs and to learn from those inputs. Skepticism hurts this.
Let me close with some thoughts on confidence.
All startups require a huge amount of confidence from the founders, team members, and investors to be successful. But consumer companies often require even more. The path to product-market-fit is often less obvious than for other companies, and I find that there are more unpredictable pitfalls along the way to building a consumer company of great scale.
These companies are also very public. This is great when things are on the way up, but it can be devastating on the way down. Everyone knows Fab’s fast rise-and-fall story, but few people talk about B2B companies that raised tons of money and then ultimately failed.
On top of this, the cultural challenges I mentioned above make it even more difficult to push through. It’s harder to convince investors, harder to bring on team members, harder to stay true to the heart of why the company even exists. So I notice a lot of consumer businesses that are driven to do very practical, incremental things, and as a result, lose a bit of their soul. They monetize too early, or aren’t ambitious enough around user experience, or shift from consumer to more rational B2B opportunities in the same market too quickly. It’s hard to fault us for this, but it gets in the way.
How Does This Evolve? And What Are We Doing About It?
I really believe that we have the ingredients to build great consumer companies in this town. Some of these cultural barriers get in the way, but they are not insurmountable. The fact that some amazing companies have emerged successfully (while others continue to create an even more promising, full pipeline, should give us a huge amount of confidence that it is possible. Founders and investors need to believe this is true. We need to find problems that matter to us deeply, believe that we can find magically wonderful solutions, and trust in the talent and power of this community to make these companies win in massively competitive markets.
Editor’s note: To put action to words, NextView recently organized the first-ever Boston Consumer Tech Summit on July 21st. You can read a recap here. Speakers included Steve Kaufer (CEO, TripAdvisor), Niraj Shah (CEO, Wayfair), Paul Liberman (COO, DraftKings), Matt Zisow (CEO, Scratch), Nick Rellas (CEO, Drizly), Bijan Sabet (Partner, Spark Capital), Meghan Joyce (East Coast GM, Uber), Brian Kalma (Design Chief, Blade), and Lesley Mottla (SVP of Product and Experience, M. Gemi). Over 300 senior leaders and practitioners in consumer tech were in attendance. Rather than run to either extreme response to “Boston sucks at consumer” (either ignoring it to defend ourselves or admitting defeat to move elsewhere), we used this as the first step in bringing together the community to be productive about this, with more steps to come.