I’ve met my fair share of venture capitalists — and entrepreneurs seeking their funding and support:
One online startup I know went through 25-30MSEK (2,6-3,1MEUR) in less than two years without generating any revenue whatsoever. The VCs wanted a ‘unicorn investment’, the entrepreneur wanted a yacht. But as for most venture-backed online startups, in the end, it just didn’t work out for anyone.
One online startup I used to know went through 25-30MSEK (2,6-3,1MEUR) in less than two years without generating any revenue whatsoever. The VCs wanted a ‘unicorn investment’, the entrepreneur wanted a yacht. But as for most venture-backed online startups, in the end, it just didn’t work out for anyone.
Lots of interesting marketing practices (growth hacking, viral loop design, ramping up, quant marketing, etc.) comes out of the online startup space, and these companies are often regarded as the ‘marketing elite’ today. But there’s a much more quiet revolution going on simultaneously, a revolution where marketing freelancers are becoming a class in their own right — all the while traditional advertising- and PR agencies, who used to attract the best of the best, struggle.
What makes this new breed of online creatives so interesting is what motivates them — and it’s not wanting to buy a yacht or to lead a life in luxury. So if not wealth then, what is it that drives these people?
How Online Startups Are Pushing Marketing Forward
The startup scene moves fast. Mantras like “always in beta”, “ship, ship, ship” and “fail fast, fail often” are sure signs of venture-backed startups; investors want to see their bets grow exponentially, pushing these startups to evolve quickly. There’s always someone, somewhere, with who can put more muscle behind a similar idea and grab that first mover advantage.
As these wheels keep spinning faster and faster, creative marketing is bound to happen. The carousel is self-sustaining because it attracts creative people who seek riskier and more stimulating challenges. And this isn’t just true for the founders; this is valid for those who seeks employment with these startups as well. If the startup closes down, marketing- or PR-graduate can suddenly boast 2-3 years of international “CMO-experience” when applying for the second job of their career.
For young marketers, or marketing professionals having grown tired of corporate environments, this, of course, seems exciting. Since these startups can’t compete with paid media such as advertising, they need to be smarter and leverage the social web in a way that adds fuel to all types of online PR practices.
Most young entrepreneurs were able to go without a salary for 6-12 months while at the same time investing in the startup — all the while living in (or in proximity of) a big city. If you put in a significant stake, you might just hope for a substantial reward. So it’s no wonder these entrepreneurs often dreams of leading a wealthy, luxurious life. Many entrepreneurs dream of becoming VCs themselves, thus closing the circle.
And why not? They’re born digital, they’re obsessive about growth through viral loops, they iterate their UIX frantically and most importantly — they think big. They’re a by-product of an eco-system that turns visionary and creative people into bone-crushing hustlers.
But will we be able to put our fate in these startups?
A Scary Thought About The Job Market
It’s no secret that the economy is hurting in many places around the Western world. We’re still recovering from the mess caused by those banks who ‘created’ money by lending it to people with weak prospects of being able to pay their loans back — especially if the overall economy crashes — which is what then happened in many developed countries the last decade. As I’m writing this, the whole nation of Greece is on the brink of total bankruptcy.
Here’s a scary thought:
What if the numbers still are better than the actual reality? Some experts claim that these figures are affected by the corporate restructuring. In other words, companies are protecting their assets and their margins by laying people off (without replacing them). With the rise of artificial intelligence technologies lurking around the corner, the next automation wave will seek to replace not the working class with labour, but the middle class with software and algorithms, resulting in even more unemployment.
Online startups won’t be able to sustain the population regarding job creation. The classic example is Instagram, who got acquired by Facebook for 1 billion USD in stocks and cash1. At the time, Instagram had 13 employees. Google, Facebook, Amazon, Apple and WordPress does employ their fair share of people, but they’re not at the scale when comparing with traditional companies with comparable turnovers.
Businesses, in general, are increasingly more short-lived as well2. Even if you wanted to, it’s not that easy to find an employer to be loyal to the rest of your life. Because you’ll, most likely outlive them all! From a political standpoint, I believe that we will have to start looking into communal salaries and shorter work days.
Therefore, I don’t think the new breed of online companies will sustain the global workforce — not by a long-shot. And I also believe that there will be, as a result of this evolution, increased demand for talented specialists, skilled and flexible individuals who are passionate about acquiring broad knowledge and hone their skills within a particular area.
But didn’t we used to find many of these talented individuals working for advertising- or PR agencies?
Example 1: Freelance Dream Teams
Say someone hires yours truly, a freelancer3. Together with the client, we lay out the strategy and come up with an action plan. In this particular case, we need both a front-end- and a back-end developer, a specialist online copywriter and a web designer plus an outreach specialist and someone who to run paid promotions. To top it off, we need a technologist that can coordinate our use of available tools, networks and software.
I could, of course, recommend an agency. Or, I could bring in a ‘dream team’ of freelancers. Because 4 out of every 5 of the most skilled marketing- and digital specialists I know are freelancers today — or working in small 2-3 person setups. More importantly; they’re NOT working in agencies the way they used to.
The client will then get people on board who understands business (because they’re running their company, albeit in micro-scale), who are accountable (because they need to eat), self-motivated individuals at the very top of their game. And afterwards the client never find themselves with a hangover and a 12-month retainer deal; instead, they’re free to assemble a team with just the right skills the next time as well.
Example 2: Lifestyle Business Owners
Just because you know and understand online marketing, you don’t necessarily have to be selling your services as a marketer. Instead, you could grow a one-person startup by leveraging your online marketing talents in selling information products. These businesses are “lifestyle businesses”.
“I make a decent amount. I can go for an hour-long walk and not worry I have to get back and make money. Next week, I’m going away for four days to a music festival. The next week, I’ll be away for four days for a bachelor party. The next two weeks I’ll be in Sweden. That would not be possible if I brought in VCs. I don’t feel I need a $5 million house, fancy cars, or fancy watches. I don’t begrudge anyone who wants that lifestyle. Traveling is the main thing I focus on.”
Whit the help of online services, it becomes easier for a single person to make twice the money with half the work, compared with working for a monthly salary. And these people aren’t keen on bringing on employees because they know this will result in they becoming managers instead of being immersed in their passion. And, according to this Forbes article, the phenomenon is growing:
“According to new statistics released by the U.S. Census Bureau, there were 30,174 “nonemployer” firms that brought in $1 million to $2,499,999 in 2013. That’s up from 29,494 in 2012 and 26,744 in 2011.”
Motivation: A Better Life — Not A Wealthier Lifestyle
It used to be that people who started companies wanted to grow their business, to drive a scalable business with ever-growing profits at that. But these specialists just seeks the freedom to do what they are meant to be doing.
And this is what makes this trend of highly talented freelancers and lifestyle business owners so disruptive:
These 10,000 hour specialists are seeking creative freedom, not monetary wealth. They can be compared with surfers, skateboarders, and other lifestyle-type professionals; friendship, fun and experimentation are way more important than competing with each other.
And whether they freelance or build lifestyle businesses, they are becoming the new online marketing elite and as such, a force in marketing.
How To Leverage The New Marketing Elite
My advice for — venture capitalists:
Your entrepreneur will need help from the best to ship an extraordinary product, and to ship it fast. Product/market fit won’t happen through recruiting graduates or bringing onboard self-proclaimed “one-stop-shop agencies” with massive overhead costs and long-term contracts. The entrepreneur will need a network of best-in-class freelancers who are highly motivated, not by shared risk-taking or the promise of wealth, but by creative freedom and resources to facilitate that freedom.
My advice for — VC-backed entrepreneurs:
There’s a phase of growing through hiring people. But when developing your product or service, ask yourself if you need cheap in-house labour at this stage? Tapping into a network of experienced and organized freelancers will pour more resources into your actual product/service, which will get you to market fit faster, and you won’t bloat your startup in a phase (that’s supposed to be lean and focused).
My advice for — job market politicians:
‘Startup unicorns’ sure make for great case studies and central start-up hubs are highly stimulating for any area. But as far as jobs go, there’s a much greater promise in stimulating the growth of an individually independent workforce. This is not just true for marketing; we’ll probably start to see this trend in more and more industries. And the chances are that Generation Z (born 1997-2011, between 2-18 years today) won’t be looking for wealth primarily, but rather be seekers of meaningful experiences in their professional lives.
My advice for — corporate CMOs:
Many CMOs are already bringing inexperienced freelancers instead of signing up with agencies. However, these freelancers are often still treated as agencies; the key to long-term success is to put your freelance team “in the same room”. Freelancers tend to have more of “a surfer mentality” where they don’t see each other as competitors, but rather as comrades searching for the perfect project.
My advice for — freelancing talents:
It’s okay not to want to grow a big business. It’s okay not wanting to become a wealthy jet-setter. Most of all: It’s okay to make enough money to get by doing what you love — and have time to focus on other things than just work. Just make sure to team up with other like-minded and equally talented freelancers. The quality of your output will attract all the business you’ll need to sustain your lifestyle.
My advice for — marketing agency owners:
Don’t be alarmed, there will always be room for large agencies. But no matter how large you grow your business, you’ll never be able to provide companies with exactly the skills they need. To make your clients happy, you’ll have to be able to work together with freelance talent. But don’t think it will be up to the freelancers to impress you — it’ll be the other way around!
- Business Insider: Meet the 13 lucky employees and nine investors behind $1 billion Instagram
- Management guru Peter Drucker has written at length on this topic. HBR.org has a great starting point in Why read Peter Drucker?
- I recently wrote a post on my morning routine as a freelancer.
- I can also recommend their blog, The Sparkline, and their podcast, The Fizzle Show.