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Unfortunately you can't guarantee results with advertising. However, you can mitigate some risks by taking an iterative approach and testing things before doing

by jsonne 11y ago

Unfortunately you can't guarantee results with advertising. However, you can mitigate some risks by taking an iterative approach and testing things before doing a large integrated campaign. You can save a lot of headache by running some targeted facebook ads to see if they resonate with your audience before buying up a bunch of tv or radio points.

funkyy 11y ago
You can, it is just more expensive. You can launch CPA campaign for example. It gives you guaranteed to some extent results.
cperciva 11y ago
Unfortunately you can't guarantee results with advertising. Right, which is why you should never commit 90%+ of your available cash to an advertising campaign, but should instead spend a smaller amount and wait to see if you get results before you spend more.
alexqgb 11y ago
The point wasn't whether or not the $200m ad spend was well advised or well managed. It was included in this scenario as a stand-in for any number of ways that a company could burn through a lot of cash without achieving a sustainable, defensible product / market fit, let alone solid traction. If you're focusing on what the fictional company did with the money, as opposed to the very real terms under which it acquired the money, you may want to re-read the piece.
- cperciva 11y ago
  [the $200m ad spend] was included in this scenario as a stand-in for any number of ways that a company could burn through a lot of cash Right, and my point applies regardless of the way that the company burnt through $200M: If you burn through that much cash without results, you don't deserve to walk away from the company with anything. If you're focusing on what the fictional company did with the money, as opposed to the very real terms under which it acquired the money, you may want to re-read the piece. I read the piece. I disagree with it. I see nothing wrong with the amounts invested or the preferences, and something very wrong with the fact that $200M was wasted.
  - alexqgb 11y ago
    Ah, well that's a very different concern. And yes, I agree with you entirely. The idea that a company could secure an investment this large before producing a solid product with a clear path to market is...problematic. And so is the idea that the "founder" of this lunatic non-entity is entitled to anything. The lesson about terms aside, this entire scenario seems like an analysis of moral hazard. But speaking of massive ad buys, I can't remember which VC noted that start-ups feeling the need to go this route tend to flame out far harder and faster than those that are savvier about their whole approach to marketing (i.e., those who treat marketing as an intelligence-gathering operation, and feed the results of their analysis to competent sales teams).
  - nostrademons 11y ago
    You don't really disagree with the piece - the author would agree with you that the $200M was wasted. The point the author was making is that the terms of Hooli's "investment" basically forced them to waste the money, since the investment wouldn't have happened had they not spent it on ineffective advertising using Hooli's own platform. It was that investment that gave Pied Piper its $1B valuation, hence "valuation isn't everything". You're probably thinking "I'd never be so dumb as to take an investment with those terms", and you're right: you wouldn't be. You also don't own a billion-dollar company. I would bet that somewhere in Silicon Valley, there is a unicorn whose valuation is based on a deal with similarly bad terms, and it will blow up in their face in a couple years, and then we'll all marvel at how stupid someone can be who ran a billion dollar company. I read the article as a cautionary tale for founders who see "billion-dollar company" and get stars in their eyes. You are not the target market for it; you already understand the point it is making (though perhaps not that it is making that point). There are many other dumbasses in Silicon Valley - I can see a couple in this comment thread - who do not.

by jsonne 11y ago

funkyy 11y ago

You can, it is just more expensive. You can launch CPA campaign for example. It gives you guaranteed to some extent results.

cperciva 11y ago

Unfortunately you can't guarantee results with advertising. Right, which is why you should never commit 90%+ of your available cash to an advertising campaign, but should instead spend a smaller amount and wait to see if you get results before you spend more.

alexqgb 11y ago

The point wasn't whether or not the $200m ad spend was well advised or well managed. It was included in this scenario as a stand-in for any number of ways that a company could burn through a lot of cash without achieving a sustainable, defensible product / market fit, let alone solid traction. If you're focusing on what the fictional company did with the money, as opposed to the very real terms under which it acquired the money, you may want to re-read the piece.

cperciva 11y ago
[the $200m ad spend] was included in this scenario as a stand-in for any number of ways that a company could burn through a lot of cash Right, and my point applies regardless of the way that the company burnt through $200M: If you burn through that much cash without results, you don't deserve to walk away from the company with anything. If you're focusing on what the fictional company did with the money, as opposed to the very real terms under which it acquired the money, you may want to re-read the piece. I read the piece. I disagree with it. I see nothing wrong with the amounts invested or the preferences, and something very wrong with the fact that $200M was wasted.
- alexqgb 11y ago
  Ah, well that's a very different concern. And yes, I agree with you entirely. The idea that a company could secure an investment this large before producing a solid product with a clear path to market is...problematic. And so is the idea that the "founder" of this lunatic non-entity is entitled to anything. The lesson about terms aside, this entire scenario seems like an analysis of moral hazard. But speaking of massive ad buys, I can't remember which VC noted that start-ups feeling the need to go this route tend to flame out far harder and faster than those that are savvier about their whole approach to marketing (i.e., those who treat marketing as an intelligence-gathering operation, and feed the results of their analysis to competent sales teams).
- nostrademons 11y ago
  You don't really disagree with the piece - the author would agree with you that the $200M was wasted. The point the author was making is that the terms of Hooli's "investment" basically forced them to waste the money, since the investment wouldn't have happened had they not spent it on ineffective advertising using Hooli's own platform. It was that investment that gave Pied Piper its $1B valuation, hence "valuation isn't everything". You're probably thinking "I'd never be so dumb as to take an investment with those terms", and you're right: you wouldn't be. You also don't own a billion-dollar company. I would bet that somewhere in Silicon Valley, there is a unicorn whose valuation is based on a deal with similarly bad terms, and it will blow up in their face in a couple years, and then we'll all marvel at how stupid someone can be who ran a billion dollar company. I read the article as a cautionary tale for founders who see "billion-dollar company" and get stars in their eyes. You are not the target market for it; you already understand the point it is making (though perhaps not that it is making that point). There are many other dumbasses in Silicon Valley - I can see a couple in this comment thread - who do not.