Paying Startup Marketing with Sweat Equity – Interview with an Investor

Small Business & Entrepreneurship

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  • Paying Startup Marketing with Sweat Equity – Interview with an Investor ALMOST EVERY STARTUP STRUGGLES WITH THE COST OF AWARENESS AND INFLUENCER MAR- KETING. Unfortunately, they have no other option than to find the money to do it, since without awareness and influencer marketing potential investors, customers and even employees will not even know their name. Just meeting, calling or emailing potentially important people for your startup is just too slow a process – at least that is what all startup owners I know have told me. The idea of a startup could be excellent, but it is difficult to make it grow if too few people know about it. On the other side, startups with great awareness and influencer marketing, for example through media attention, will grow big. Take a look at any very successful start-up and you will see that they have received a lot of awareness in their early stages. Some have received free media attention, some have hired skillful and expensive PR-companies and some just bought a lot of advertising. Awareness and influencer marketing will also help you find investors and convince them that your startup can really grow big. ”Go Big or Go Home” seems to be the slogan of every investor and it is
  • much easier to convince investors about a startup they know and that already has paying custom- ers. Therefore, awareness and influencer marketing is something start-ups needs to do when they have the least amount money to do so. LUCKILY, THERE IS AN ALTERNATIVE I heard that there is an alternative way to pay for awareness and influencer marketing – a sweat equity. The idea sounded interesting, so I did a bit of research about it. LinkedIn had some sweat equity marketing investors, but almost all of them lacked the most im- portant component – awareness and influencer marketing. I felt that a startup really needs a lot of awareness and influencer marketing at the start; marketing professionals themselves are not that expensive. After some research, I was able to find a sweat equity marketing investor who also delivers quite a massive amount of awareness and influencer marketing. He even agreed to do an interview with me. Unfortunately, I am not a journalist by profession, so my questions are based on what interests me about the sweat equity investment. I have thought about founding a startup myself, so I hope that my questions are relevant to other startups as well. So here we go: WHAT IS YOUR NAME AND WHAT IS YOUR BACKGROUND? My name is Christian Dillstrom and I started coding from the age of 10 and now, 36 years later, I still code every day because I like to know what I am talking about. I have founded and run three global startups as well as analyzed and consulted over 300. I have also worked at an advertising agency for three years, where I won six national advertising awards in a single year. My first startup was bought by a consortium of mobile phone manufacturers just after 4 years. My second startup was a boutique social media agency for global brands and it has over 500 people working for it today. My third startup is a global growth hacking agency and its services are used in 130 countries. Besides startups and advertising, I have been working with Fortune500s, as well as the finance sec- tor, and with game and gambling companies. Every month, 18 million business people read my Growth Hacking articles at SlideShare. Click here to read them.
  • SO, WHAT DO YOU DO? I invest in smart startups which have great need for awareness and influencer marketing, but are unable to pay for it. WHY A SWEAT EQUITY INVESTMENT? Simply because when the startups really need a massive amount of awareness and influencer mar- keting they usually do not have money to pay for it. Very classic egg-and-chicken problem. Startups with a lot of awareness are most likely to be successful. I think that a lot of brilliant startups fail because they do not have the funds to do enough awareness and influencer market- ing. I have met and analyzed over 300 startups globally since 1998, so I got a pretty good idea of what works, what doesn’t and what needs to be changed. Therefore, I dare to make sweat investments in start-ups. WHY NOT JUST INVEST MONEY? Simply because I invest things that are crucial for the success of the startup. I have never heard that office tables and chairs, coffee maker or even office space would have crucially affected the startup's success. Unfortunately, those are the things many early stage startups spend they’re funding on. By making sure that my investment helps startups in the most crucial aspect for its success, I know that I can truly help it grow. WHAT KIND OF STARTUPS DO YOU INVEST IN? Those that sell to businesses or organizations or people that are in their 16's or older. For ethical reasons, I do not do marketing for those that are not old enough to form their own opinions about marketing messaging. Of course, a startup has to sell legal products and market to buyers that can legally buy them.
  • WHAT DO YOU OFFER STARTUPS? My main offering is quite a massive amount of awareness and influencer marketing, since that is what makes any start-up grow fast and reach all the people they need to reach. I will also give online and telephone consulting about business, marketing and sales. If required, I can also give on-site consulting. I am also going to help with the board of the startup. These are the crucial things that will make or break startups and therefore I am helping them with those bare necessities. To be honest, it is in my best interest to make a startup successful or I will lose my investment. WHAT DOES THE CONSULTING INCLUDE? As mentioned, I have founded and run three global startups of my own and analyzed and helped over 300 startups since 1998, so I have quite a clear vision of how to make a startup successful. My experience of business, growth hacking, marketing and IT is quite extensive, ranging from startups and advertising agencies to Fortune500 companies. Consulting is always part of the deal since I obviously want to do my best to make a startup suc- cessful and secure my investment. WILL YOU BE A MEMBER OF THE STARTUP'S BOARD? Yes, if required. The board plans and decides on the strategy of the startup, while the CEO and the other personnel will just execute that strategy. Unless you get the strategy right, the rest seldom matters. HOW MUCH WILL YOUR INVESTMENT COST THE STARTUP? A minimum of 5% of equity and if there are different series of shares, I want my shares from the series with the most votes. After all, I really want the startup to grow big to return my investment. The amount of equity I want obviously depends on the amount of work I estimate I need to do in order to make the startup successful.
  • Naturally, all contracts will always have the condition that I have to deliver the promised amount of awareness and influencer marketing for the contract to be enforced. WHERE CAN THE STARTUP BE LOCATED? Anywhere in the world, given that I have operated globally since 2001. Most of the communication today happens online, and telephones still work OK. Of course, I have no problem being on-site when required. HOW FAST CAN YOU MAKE INVESTMENT DECISIONS? If a startup has all the documentation ready and they present their case clearly, I make decisions within 5 business days. After all, it is my experience that startups who need my help, need it quickly. Unfortunately, usu- ally either the documentation or the case is not clear at the start of our discussions. DO YOU OFTEN DECLINE TO INVEST AND WHY? Unfortunately, yes. I get a lot of proposals because my investment makes any startup fly. I have never even heard of anyone else that offers such a huge amount of awareness and influencer marketing as a sweat eq- uity. I really have to believe that I can help a startup become successful in the long term. The massive awareness and influencer marketing I offer makes pretty much any startup fly, but unless business is done properly it will not run in the long-term. The biggest challenge is the team. That is why friends as founders is not always a good idea, since a business needs to be handled by the persons who can really do it. The next challenge is an unrealistic sales plan and marketing campaign. Conversion is usually much lower in reality than in dreams. Unfortunately, invoices and salaries need to be paid in the real world. The third major challenge is a lack of clarity and a strong focus. Although a startup needs to have extremely flexible thinking to get all the pieces of the puzzle in place, there needs to be a point when there is a single clear goal and a plan to achieve it.
  • HOW QUICKLY CAN A STARTUP EXPECT AWARENESS AND INFLUENCER MARKETING TO START? Within a business day after we have a signed contract and the startup has fulfilled their part of the contract. Again, the startup usually has an acute need for our service and we try to prepare for the start of the awareness and influencer campaign while we negotiate our contract. ARE YOU AVAILABLE FOR DIRECTOR OR CEO POSITIONS? If that is really needed for a startup, then yes, but of course on an interim or temporary basis until a permanent person is found. People in startups work under high pressure and sometimes that gives rise to personality clashes. Of course, I do what needs to done to make a startup successful and protect my investment; just like any good investor would. ANY ADVICE FOR A STARTUP APPLYING FOR A SWEAT EQUITY? Take it very seriously, prepare your documentation and get your story straight. After all, it doesn’t take much effort to send money to your account, but it demands a lot to commit to do the manual work needed to make your startup a success. Like billionaire, startup investor and globally known business shark Mark Cuban says: “Sweat Equity is the most valuable equity there is.” BACKGROUND Christian Dillstrom is a global growth hacker who has growth-hacked more than 10 percent of For- tune 500 companies over the last seven years. Mr. Dillstrom is responsible for over 100 marketing and sales innovations. Over 350 million of his marketing solutions are currently active on the Inter- net. Every month, 18 million business people read his Growth Hacking articles at Slideshare. Click here to read them. Mr. Dillstrom has founded and managed three global startups and has evaluated and consulted with over 300 startups around the globe since 1999. To get in touch with Christian Dillstrom, book a free teleconference with him, please click here.