If there's one thing we've basically figured out in the digital world, it's marketing. There's no more well tread aspect of building an online business than marketing. We've got more channels, tools, and analytics to tell you weather or not it's working than you can shake a stick at.
It's table stakes. You spend some dollars to get more dollars out. It's not complicated.
That's why I care much more about engagement--do people like what you built, versus whether or not more people used it today than they did yesterday. Plus, the startup world is littered with companies that grew exponentially without becoming successful--Fab, Turntable, Dailybooth, etc.
If people engage regularly with your product, but you can't get more people to use it, you've got a marketing problem. Marketing problems, for the most part, are solvable by a very distinct set of best practices. You've just got to figure out why the current set of people like it, and find more of them. Now, maybe there just aren't that many people out there, but for the most part I see a lot of low hanging fruit ways that marketing could improve.
On the other hand, if people are coming, but they're not engaging, you've got a product problem. Sometimes, it's easily fixible. Other times, you're just so way off on product/market fit that you've fallen into "bad idea" territory, and there's really no timetable for fixing a bad idea.
On top of that, there's another problem that startups have more trouble figuring out than marketing--scaling. What do you do when you actually start getting people in the door? How does your sales support staff change? Where's the first bottleneck? Does the experience in your marketplace suffer at all because you've got an influx of too many sellers, or buyers?
In a seed round, I think it's safer to prove engagement and the ability to create a scalable process, than to load up on customers. This way, you know that you've got enough in place not to fall apart when you do grow.
That being said, I'm tired of companies saying "And we haven't spent any money on marketing." The fact that marketing is a commodity, to me, means that this is a box you should have already tested in some way. If it's not 100% obvious why someone would use your product or how they could be marketed to, not doing any market testing is like saying "I ran the marathon with one shoe!"
Why would you do that, let alone why would you be proud of it? If anything, it just confuses an investor. Do you not know how to market this company? Are the channels for acquisition unclear? No one says you have to spend tons of money on this, but to spend zero seems bewildering.
You could spend it on Google ads, Facebook, PR, content marketing, referral programs... really, anything. While marketing isn't a secret magic sauce that will turn your startup successful, it's certainly going to tell you a lot about whether your product resonates.
You need some minimum amount of people coming through the door to tell whether you've got something.
So let's recap this meandering Monday morning post:
Early on, engagement is better than growth.
People have figured out how to do marketing--you should go learn what everyone else knows.
It's a basic part of running a business, so don't skip it entirely either.