Most venture capitalists have about the same level of marketing experience. But while my mother has the ear of an editor who covers the industry, she doesn't hold sway over creative or media decisions. If she did, she too might confuse visibility with branding and pour billions of dollars down the drain.
To understand why so much dot-com advertising is flat-out bad, look no further than the Sand Hill Road Gang, pistol-hot venture capitalists who giddily find themselves with the power to execute their armchair advertising opinions. It's as if a beer-guzzling football fan was suddenly transported to the 50-yard line and could decide whether to run or pass.
It's not hard to imagine these financial types luxuriating in their front-line role in the new economy, boasting to friends of their pop-culture influence ("You know that weirdmoney.com ad where the guy dresses up like a donkey and leaps out a window to his death? My idea.").
These same people eagerly sign off on marketing budgets that -- like an Internet company's stock-market valuation -- have no relation to revenues or ROI but are pegged entirely to potential.
The degree to which venture capitalists are micromanaging creative and media planning was wonderfully articulated in a Wall Street Journal cover story last week in which one VC boasted of using her nanny as a focus group.
The generous view of the dot-com debacle has well-intentioned people making misguided marketing decisions because they don't know a thing about branding. The more cynical take, as voiced to me by one agency chairman, is that venture capitalists don't care a whit about building brands. Their only goal, he says, is to build awareness in advance of an IPO. Then they can get their money out and move on.
Rich LeFurgy shares the more generous view, which is not surprising since he's a VC. But LeFurgy, a partner in Walden VC and chairman of the Internet Advertising Bureau, is a rare beast: a venture capitalist with a marketing background. He, too, winces when PhDs with no marketing training make navel-gazing ad decisions.
"Venture capitalists are guilty of overindexing on television as a quick fix to build brands," LeFurgy says. "Three to four years ago, dot-com companies' eyes glazed over when the word brand came up. Now they get the importance of the brand, but they don't know how to do it. They think it's about awareness, and television is really good at generating mass awareness.
"Venture capitalists are on a real-time learning curve in figuring out how to build these businesses," he adds. "Most of them are technology companies with an e-commerce model but no marketing function built into the management team."
LeFurgy says Madison Ave. is also to blame. "Agencies share an equal burden in not understanding the dot-com business, and they have been blinded by the money thrown at them," he says. "Traditional agencies haven't been very good counsel to the dot-com companies who have asked for quick hits to build awareness."
By way of example, he cites the make-or-break approach to fourth quarter '99 dot-com advertising. "The fourth quarter should have been seen as the beginning of building a brand, not the moment in time in which the brand is built."
Because of his own marketing expertise, LeFurgy has no qualms about fooling around in the marketing processes. "I help the company develop the ad message and pick the agency. I get involved in all those decisions."
VCs without marketing experience, though, should stand down, LeFurgy says. "They should be sure the company has the right level of marketing experience and then let the company do it. They're fundamentally good at finance and should leave marketing to the marketing experts."
My mom agrees.