Startups Need to Think About Brands & Marketers From Day One

Why Fred Wilson Is Wrong About a User-First Approach

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Fred Wilson is a brilliant and accomplished investor. As an outspoken partner at Union Square Ventures, he has established himself as a thought leader in the startup space. Yet, I can't help but disagree with a recent post of his in which he asserts that startups should focus on users first, brands second.

While I understand where he's coming from -- no platform is viable or appealing without a decent user experience -- I think there are several problems with his argument, the first being the examples Wilson gives, the second being the consequence of delaying a marketer-aimed product, and the third being that the premise assumes there needs to be a first and second at all.

Wilson cites Groupon and Buddy Media as examples of the rare cases in which startups see success by going "brand-first." But the question at hand was never an issue to these businesses, as Buddy Media only has a brand offering, and Groupon's business model and user offering is predicated on first signing up merchants to provide deals. The entrepreneurs who founded these companies weren't forced to choose between users or brands -- their ideas and products dictated that route from the onset.

He then looks at examples of "user-first" startups, listing Tumblr, Foursquare, Facebook, and Twitter. Of these, only one has avoided the biggest and most problematic ramification of the user-first approach: failing, half-assed, or non-existent brand products.

As much as I love Twitter, and for all the brands using Facebook, Foursquare is the only one on that list that I would say has succeeded in both consumer and brand spaces, but more on that in a minute.

Let's begin with Tumblr, a niche social-media site with a rabidly loyal and rapidly growing user base, which, according to The Wall Street Journal, is seeking a whopping $800 million dollar valuation, despite having absolutely no revenue model or brand offering. The most successful use of the platform by marketers thus far has been via "reblog contests," yet another gimmicky abuse of social media by brands essentially bribing users to promote their content.

Which brings us to Facebook. What's so upsetting to the social-media marketer in me, is that despite the sheer number of consumers and businesses on the platform, many of whom want to engage with each other, the resulting engagement predominantly comes in one of two, equally ineffective forms.

Stunts and gimmickry in the same vein as Tumblr's re-blog contests run rampant on the platform and take a range of guises, from polls and quizzes to user-generated content competitions, to outright bribery (anyone remember TGI Friday's "Fan Woody" campaign?).

And then there are the ads, which only mimic the same uselessness as the fan pages. Not too long ago, Facebook debuted its latest in a series of ad units that aim to capitalize on the social nature of the platform, formatted in a way that allows brands to pose questions to would-be consumers or fans. Because when I log on to Facebook, the first thing I want do is tell Hallmark how I "make summertime a special occasion." (Without any bribe, no less!)

Of course there are exceptions; there are campaigns that make good use of Facebook's social nature and produce something beneficial to marketers without resorting to giving users free crap. But in my opinion, the biggest opportunities for businesses lie, not in ads or fan pages, but in e-commerce, gaming and content distribution.

Facebook has offered a self-serve ad platform for a while now, yet there is still no easy way for retailers to integrate their e-commerce stores onto Facebook without going through a third party. When Warner Bros. began renting out Batman via its fan page, many speculated that Facebook was entering Netlix and Hulu territory, when in fact it was done by the studio through an app.

Perhaps if Facebook had focused on how it wanted to use the platform at a much earlier point, those would both be developed products, and buying and renting movies on Facebook would be commonplace, with nary an ad in sight.

Wilson's primary concern about the brand-first approach I've suggested above is that it leads to neglect of the user experience.

Per his post, "The biggest problem with a Brands First, Users Second approach is you can get caught up in product development efforts to satisfy the brands and as a result you can't put enough energy into satisfying the users. And if that happens too much, you end up servicing the needs of the brands over the needs of the users and then you are a service business not a platform."

With that in mind, would you prefer a Facebook saturated with ads that ask "What's your Mayhem?" or one in which brands could reward your loyalty by offering you discounts if you purchase from a dedicated f-commerce hub?

What Wilson is missing here is that when the brand product is thought out and well-executed, it doesn't detract from the user-experience, it augments it. When it's an afterthought, we end up with ads, sponsored pages and gimmicks. Or even less than that .

Consider Twitter, it's the quintessential user-first startup. Honestly, I'm shocked it was even mentioned in Fred's post. For all Twitter has done for the media industry and for politics, it still doesn't have a viable business model. Twitter is in the midst of a gradual rollout and experimentation with sponsored searches and tweets, treading carefully as to not upset the user base. Just think about how upset users will be if Twitter goes out of business.

But it's only in these murky waters because it over-attended the user experience in the initial stages of development, and thus failed to see the potential revenue options and business integrations (one of which I outline here). Currently, Twitter has a team of media consultants who work with newsrooms to show them how to best use the service to augment their journalistic efforts. But what are these reporters using? Hootsuite and Tweetdeck, instead of a proprietary platform or dashboard built -- and sold -- by Twitter.

And then there's data, arguably Twitter's biggest asset. But once again, the third parties have it, with Twitter currently outsourcing those efforts to two firms who license the data, package it, sell it off in chunks, and then share the revenue.

What about Foursquare? I agree with Fred that it is the best example of a "user-first" startup, but with a caveat. (A habit I've taken on when challenging people I really have no right to dispute.)

I was on the agency side during the first round of location-based wars. Foursquare, Gowalla, Loopt, BrightKite, were coming out of the woodwork, and I was tasked with identifying social and emerging media trends that held potential for our clients. And that meant connecting with and evaluating these platforms, in search of opportunities.

I can say with certainty that Foursquare surpassed all of its competition with both preparedness and how it envisioned brands using the service. Starting with branded badges, moving to check-in specials, and then relevant content from media brands, the first series of integrations were true to what Foursquare was and enhanced the user experience by provided more value, more incentive to checking in.

Indeed, Foursquare attracted many technophiles and early adopters before brigning brands on board, but how many mainstream consumers would see value in checking in without the incentive provided by brand specials or rewards

Maybe Foursquare focused on building the user experience and attracting consumers first, but it's clear that it was thinking about how to get brands and media involved from day one, and that is the mentality that Silicon Valley needs to adopt.

In fact (warning, shameless plug coming), this is exactly what we're addressing at Digital West next month.

Fred's post has to do with what Union Square Ventures looks for in its investments. While I have no place dictating its policy and strategy, I don't want startups to read that post and then ignore brands.

I think that 's taking a big step backwards.

David Teicher is Ad Age 's social media and event content manager. Follow him on Twitter @Aerocles.
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