Rachel Carrell, CEO and founder of nanny share business Koru Kids, says that hiring - particularly the inflexion points you need to bring on different expertise - has been a really big topic in the one-year-old company’s growth to six staff and getting 2,000 families on the platform.
“Inevitably, when people start out it's always the founder doing everything all the time and the person doing it often doesn’t have the exact expertise,” she says.
Carrell prioritised marketing experience for her first hire, even though it’s essentially a platform business and they didn’t have in-house development expertise.
Marketing to prove a concept
For Carrell and other startups, marketing is fundamental because it enables them to win the first customers that will prove their theory on why the business will create value - are we building something that people want to pay for? - and whether the cost of acquiring those customers is tenable.
Carrell looked for investors to support product development almost immediately after their soft launch, but it was still crucial they had won an early customer base to prove the assumption that people who hadn’t met would share nannies (assuming Koru takes care of vetting them etc.).
Similarly, The Great Escape Game took on its first marketing hire, Aaron Giles, within a month of opening. Two years later, the real-life themed puzzle game is about to open a third site, having grown to a team of thirty staff and had over 80,000 players through their doors. Founder Hannah Duraid says the decision was led by “rapid growth, lack of time and big ambitions”.
Dealing with fluctuating demand
Founders normally think about hiring when they’re having to turn down opportunities or are unable to build a business because they are spending too much time on day-to-day operations. And as Ellie Ellie’s founder, who bootstrapped a business to 26 employees, told BusinessZone recently, “when you’re doing a really bad job on loads of things”.
Marketing plays a key role in dictating the level of demand in other areas of the business, such as customer services and fulfilment. For Koru, marketing campaigns such as their launch in January, which saw them get as many sign-ups as the previous six months combined, dictated the following hires.
The success and failure of all early-stage companies is; ‘can I acquire and retain customers?'
“In July we got our first paying customer and in September Rebecca came on board. In November we hired someone in customer services because we were totally overwhelmed and that was all we were doing.
“We launched publicly in January. We got about 1,000 sign ups before January and about 1,000 sign-ups in January. The three of us were totally snowed under. We had to hire again. It’s been a matter of we do a bit of marketing, we get swamped, we hire someone. We’re now at six people,” says Carrell.
Experimenting with marketing channels
It’s useful to start by asking potential customers what social networks, publications and other channels they interact with. Then it’s a case of experimenting to establish what works and where there may be new opportunities. In terms of social media, a lot of this can be done at a relatively low barrier to entry in terms of cost.
Koru Kids focuses on Facebook, email and PR, all of which has been done in-house so far. Carrell recommends implementing a 70-30 rule when it comes to trialling new marketing channels; spend 70% of the time on the channels you know work and 30% on experimentation. The latter of which might fall slightly as the business becomes more established.
It doesn’t always work either. Carrell recalls being on holiday in Northumberland and clicking ‘like’ on an unnamed social network a thousand times in an evening. In another test, she used Hootsuite to post a childcare fact every day: “I thought people would RT them and it would get momentum. It led to absolutely nothing, I thought they were interesting, but no one else did.”
When marketing channels do work, it’s possible for them to tap out even early on, with customer acquisition costs rising rapidly once a certain threshold has been reached.
“Let’s say you know Facebook and Pinterest work for you. You should max out those two, once you know something’s working. However, any channel will only take you so far,” explains Carrell. “Google PPC is a classic one where you can spend a little and get a great result, but the more you spend the more the value for money tails off; if you keep squeezing, the last bit of juice will be really expensive. To grow you need to be able to find more channels.”
What should you look for in the first marketing hire?
The Great Escape Game’s job advert speaks to the business’ unique values; “ENTHUSIASTIC? ENERGETIC? CLINICALLY INSANE?” screams the strap line (see below).
It’s one thing to ensure new staff members have the right values - in this case, they’re ready to promote a business with an Alcatraz room that echoes with “crazed voices” - but what about the qualities and experience?
In a frank interview late last year TrueStart Coffee founder Helena Hills described how they brought on two junior marketing hires early on due to a period of rapid growth; “we went along the lines of inexperienced, but moldable.” Hills spent more time training the new employees than their jobs roles were saving and, although they were able to learn a lot, they both eventually had to leave the business.
The desire to balance experience and cost is a common debate for first hires. However, the limited financial runway startups have and scarcity of the founders’ time mean it’s often important to hire someone who has a decent level of experience.
In The Great Escape’s case they wanted “someone who is rather quirky,” but Duraid stresses: “We needed a marketing team that could hit the ground running and had some form of experience, so they could jump straight into our adventure.”
Koru’s Carrell also hired an experienced marketer (their VP of marketing was previously head of ecommerce at LloydsPharmacy).
What happens next?
There’s clearly an argument for early investments in marketing expertise. That said, founders’ involvement in the marketing function doesn’t stop there.
Marketing expert Sean Ellis helped build Dropbox and Eventbrite, as well selling his own million-dollar marketing analytics business. Asked for his top advice for founders in a recent This Much I Know podcast, Ellis warned founders should ensure they have a direct link to the marketing process when they do bring in expertise (listen to the episode below).
“Another piece of advice is about founders that think they can go out and hire someone to figure it out for them. The success and failure of all early-stage companies is; ‘can I acquire and retain customers?’
“The upside of figuring that out is held by the founders of the business. They took founders’ risk to start it and they get founders’ reward if they figure it out. But they can’t expect not to be super hands on. It’s hard to hire a marketer that’s really talented enough to go through the pain of figuring it out without super-aligned hand-holding with the CEO,” says Ellis.
About Christopher Goodfellow
Journalist and editor with nine years' experience covering small businesses and entrepreneurship (ChrisGoodfellow.net). Follow his personal twitter account @CPGoodfellow and his events business @Box2Media. He has written for a wide range of publications in the UK, Ireland and Canada, including The Financial Times, The Guardian, The Independent and Vice magazine.