In episode #3, we discuss the difficulties in building a double-sided business model and a trick that’ll give you a fighting chance. We then look at how to hire your first marketing employee for your startup and finally, we discuss shoe brand AllBirds who are nailing their copy, humour and brand positioning right now.

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You can find an automated* transcription of the episode below:

So welcome to episode three of The Fractal Marketing Podcast. In today’s episode, we’re going to talk about double sided or two-sided marketplaces and how to tackle them with your start-up business. We’re then going to talk about what it’s like to hire your first marketing person and what to look for and what you need to provide them and probably more important than anything else how you’re going to measure the success. And then finally I’m going to have a quick look at a new shoe brand that I’ve completely fallen in love with. So the first question comes in from Scott Clark from who says, “The challenge my company has is that we’re trying to build up a two-sided marketplace and the issues we face are businesses are hesitant to sign up as our customer base is low and the customers won’t sign up because there isn’t a large number of businesses to offer things to them. Any tips on how to expedite the growth [and income?] would be grateful.”
Well, Scott, I mean, you’ve touched on probably one of those elements in a start-up business that I think is really common [laughter] and that’s people who try to tackle a two-sided marketplace. And the problem with the two-sided marketplace is that it’s such a desirable thing to try to achieve. If you get a two-sided marketplace working, if you can get an Uber, an Airbnb, eBay, if you get these things working, they’re huge businesses. The problem is, is that this huge business actually becomes really hard to achieve. So it’s like anything. It’s kind of like a long odds horse. It’s like 100 to 1 shot. If it comes in, great. You’ve got 100 times your money back. Chances are the 99 other times the horse runs it doesn’t win. And that’s what you’re tackling here. I’ve personally had a lot of experience with this and a lot of experience not getting it right. So I can talk about my experiences directly because my business that I founded had a very similar proposition. I was trying to reach small-business owners. I was trying to give them a proposition that would work and grow a business at the same time, a two-sided marketplace. So how do you do it?
Look, if you try to grow both sides of the equation, you’ve got a chicken and egg problem. Which came first? So you’re growing that business, and you’re going to struggle. The dilemma you’re facing is absolutely true and there really isn’t a quick fix if you try to grow the business in the organic way you imagine. The strategy I have really come to accept is the only way to really tackle a two-sided business model with any chance of success is actually to try to freeze one side of the model. So when you look at what you’re doing with the business you know where you want to end up. You want to end up with a marketplace where you’ve got buyers and sellers, businesses and customers on both sides of that equation, and they’re growing at the same rate. But we know that’s really difficult to do. So what you need to do is freeze one side. Now, what you’re basically achieving by freezing one side, and I’ll get to sort of how we do that in a little bit, but what you’re trying to do is say, “I’m going to focus all my effort on growing one side of the business.” Now, in practice, of course, if you just grew one side of the business, and if you just focused on consumers, they’re going to come to the business and realise there’s no offers. So to freeze one side of the business you actually have to fake it. I’ve got a half-written blog post on this where I call it, “You’ve got to Wizard of Oz it.” So this is where the wizard hides behind the curtains, and actually, it’s quite fake. What he actually puts forward isn’t the real deal. So how do you go about doing that? How do you freeze one side of your business model? Well, what you do is you basically need to populate– now, in your case where you’re trying to put offers out to consumers, the consumers are really your product, right? Your customer is going to be the business. Your customer is defined as the person who’s going to give you money, and the person who’s going to give you money ultimately is going to be the business. Now, to be able to charge people, you need a product, and the product is going to be the consumers. So when we try to think of which side of your two-sided business model, we want to freeze we want to freeze the business side, right, and grow the customer side. So what we’re going to do there is we’re basically going to fake the offers that are on your business to attract the customers.
So the way we go about doing that is instead of actually going to the businesses and trying to convince that they need to pay you and upload the deals, you actually need to go out and find the deals. You need to find sources of deals that you can collate, publish, and share to consumers that adds enough value that they’ll come to your service. At a point in the future where you’re growing your customer base, you can start to seed in behind the actual paid offers and the real offers. So what does that look like? In your example and looking at your business,, I would be looking at doing something– and this is a phrase we came up with with my business partner when doing Zippy, but the concept of chalkboard deals. These are the deals that small retailers put in their stores. So these aren’t the big sales. These aren’t the vouchers that you can email around. This is the chalkboard deal at the pub. So this is where you look, and they go, “Wednesday night, buy one parmi, get one free. Pints from $5. This is the happy hour.” So putting those chalkboard deals into a place where people are able to find them. This is assuming a whole lot of other parts of the business are working, but what you’re trying to provide is the content that people will ultimately seek.
If the business proposition that you’ve got actually has a good chance of succeeding, then in theory, if you put all that content out there people will use it, and you’ll be able to sell them. Now, what we’re going to discover by doing this is if people aren’t actually interested in what you’re sending through, like if they’re not interested in the offers you put up there without charging, well, you know that the business model actually isn’t going to work, which is a good thing, right? We haven’t gone too far in. We’ve only sort of spent half the money would have building one-half of the business model. On the other side, if you discover that people are using it, and you control that audience, the consumers, you can build up a critical mass. And whatever that happens to be– so I would highly, highly recommend that you just focus on one city. I live in Brisbane. Brisbane’s a great city because Brisbane is effectively 10% of the Australian consuming population. So whatever you do in Brisbane you can 10X when you expand from there. But you’re based in Sydney, Sydney being the biggest city, so you’ve got good concentration and a good population to go after. So I would just focus on that one area. Even if you can break it down into a suburb, break it down to an area. If you can get that critical mass, and you can get it, then you can realise you can replicate this model. So what we’re doing there is we’re nicehing down geographically. So we’re not trying to do every chalkboard deal across all of Australia. In fact, we’re not even probably going to try to do every chalkboard deal just in Sydney. What we’re going to do is pick a little area that we can narrow down geographically so we can tightly control what we’re doing and then– be another smart way to approach it would be to actually niche, in particular, areas.
So I used the examples of pubs before. I mean, you could just do pub based chalk deals. Obviously, you could expand that into restaurants, and hairdressers, and all other retailers, but we know that pubs use chalkboards so this concept holds true. Because what you’re trying to do is prove your model in the smallest market possible so you get over that critical mass issue as quick as possible. You’re faking the deals by loading it in. Look, you can go to Airtasker and just pay people to walk around taking pictures of chalkboard deals for you, pay them a bounty for each one, shoot that off to a style Philipines contractor base that’ll be relatively cheap to process that information and push it out there. At least you’re going to be able to test whether your model works. All that being said, it is a really, really hard business to get working, but if you pull it off then you’re in a great place. So where do we end up? Ultimately, you’re trying to freeze one side of your two-sided business model. You’re trying to freeze the side where you’re going to make your money because you’ve got to build up your product. Your product is the other side. So the people who aren’t paying you or your product, so these would be the consumers walking around using your app and your website, you fake the business side of it because you know eventually you can get the consumers and you’ve got their eyeballs. When you control that audience that’s the audience you’re going to be able to monetize with the retailers and you can start charging them. What I would recommend if you get to that stage try to filter these offers in over the top. So do it a bit like, I don’t know, Google search engine listings. You’ve got your organic, your natural listings, the ones that Google says through no payment this is the best result I can serve up, and then put the paid ads on top of that, and that’s really what you’re going to ultimately get to and you’ll start to make money. And the goal would be for you that ultimately the bulk of your listings are controlled by the retailers and that a large slice of those are paying for premium positioning, but it’s going to take time to grow that up. So I hope that answers your question, Scott. Like I said, I’ve got a lot of experience in it. I didn’t necessarily get it right and you will not be the first or the last person to double side a business model that’s not able to get that equation exactly right. But hopefully, if you freeze one side it’s going to work for you. So the next question in comes from Ryan Stewart who’s the CEO and founder at [Capisce]. So Capisce is a semantic keyword indexing tool, natural language algorithm tool. It’s an amazing thing, but ultimately what it does and the way that I imagine it working is you know those net promoter scores, the NPS scores you get?  If you think about the second question that runs behind that, that’s where you ask why you gave the score. What Capisce does is help businesses actually understand why people then use that score. So it’s great that you’ve got an NPS average score of nine, but why did you get it, and that’s what these guys do. But getting to Ryan’s question, which is what should a B2B SaaS company be on the lookout for their first marketing hire? What’s the most appropriate way to measure the performance of that hire and what does the CEO need to provide that hire with everything she needs to succeed? Lots of questions there. I probably won’t tackle all of them in a great amount of detail just because I think we’ll be here for the full half hour just on those three questions. But, okay. So getting to the first part, what should a B2B SaaS company be on the lookout for their first marketing hire? Well, I actually am of the opinion that your first person you want probably isn’t a full-time hire. I think what you really want is contractors to start with and specialists, and probably the first person you want to hire is the seasoned professional, the consultant, the person who’s got 15, 20 years experience under their belt that’s seen a lot, they understand most of the different techniques, and more importantly, they’ve probably worked for a couple of startups, so they’re coming in hardened, they’re coming into your business with experience, and therefore you’ve got a good chance of not having to learn what’s happening. Now, you don’t want that person as a full-time hire. That person is going to be expensive. This person has worked for two or three startups that have actually succeeded. It’s going to cost you anything from 160 to $260,000, roughly speaking, to hire that person. Not the kind of money you really want to be spending as a start-up. What you do want is 5 to 10 hours a month from that person to put you in the right direction. The terms of actually the first marketing hire is that you want a generalist. You want somebody who has got a wide, broad skill set because this person is going to be expected to do a lot. You want them to work under the guidance of consultant, that senior person, to give them direction, but you want this person to have broad shoulders. So if you think about the way– you can visualise– and podcast is not a great medium for me to get you to visualise [laughter], but if you can imagine skill sets, [inaudible] within a traditional digital agency somebody’s skill set up to a certain seniority level is very narrow and very deep. So what I mean by that is– when I first started doing digital marketing I did SEO, and I had very deep knowledge. Like, that was all the experience I had. I hadn’t done any other marketing. I was doing a marketing degree, but that’s not experience. That’s just regurgitating information out of a textbook. You can tell I’m probably not a fan of marketing degrees. But that’s deep and it’s narrow knowledge and that’s not what you want as a start-up. What you want as a start-up is somebody who’s more wide at the shoulders, so at the top end. So if you imagine the deep, narrow person being kind of like a very skinny rectangle and that represents their skill set– so it’s very deep and it’s not too wide. You then have the Jack of all trades, and the Jack of all trades is that rectangle turned on its side, so very wide. Done a lot of different things but they don’t have great depth of knowledge. What you really want is somebody that’s shaped more like a triangle, so quite thin experience on the outsides of the breadth but they’ve got the breadth, they’ve seen some things. So they’ve been involved with small companies, so that means that person might not have done PR but they’ve seen [inaudible] PR. That person might not have done copyrighting but they’ve seen copyrighting or they’ve been involved in touching it. So they haven’t been locked away from different departments and different experiences, but they have been engaged in that, but they will have deep knowledge in some of the disciplines. Not as much as the complete expert in SEO, but that expert in SEO is going to be hired by the big companies and the big agencies who want the best person for a job. You don’t need that as a start-up. What you need is somebody who has a good depth of [inaudible] experience, and they’re not the best, but they can kind of move around. And the reason you want them to move around is because you’re going to need them to do multiple jobs, and you’re also going to change what you think is working for the marketing. So where do I get to with that in terms of skills? You probably want them to have a good knowledge of SEO. You’re definitely going to want them to have some page search experience. Probably the most important area is going to be their social skills, not just the organic, but also the way they do Facebook and paid advertising. So you want them to be strong across Facebook. You’re definitely going to want them to be across LinkedIn, especially if you’re talking in a B2B company. You’re going to want them to understand data. You’re going to want them to understand CRM systems. You’re going to want them to understand [inaudible] anything from Salesforce to Hotspot – probably a bunch of other tools – because they’re ultimately going to recommend what they prefer working with. And then you’re really going to want them to get content and retargeting. And I’ve covered that on previous podcasts, but content retargeting, B2B, and the [inaudible] is absolutely crucial. And if I was going to pick an area for them to be an expert in it’s going to be around content and retargeting, and that retargeting is probably going to be centred around social networks. So how do you measure the performance? Well, look, you’re a start-up business. You’re metrics aren’t locked in stone. We’re looking for incremental gains here, so we’re looking for soft KPIs, things that are going to lead us to– sort of give us a [inaudible] we’re going in the right direction. We’re looking to move closer towards break-even and profitable and scalable marketing [inaudible]  you’re not going to get there straight away. Definitely, if it’s your first hire, this person’s probably not going to be seeing you enough to carry you the entire way through. They’re going to need a lot of support, particularly from you as a founder and anyone else who’s involved with that product in sales, in engineering, in all the other elements of your business. But setting some KPIs, soft KPIs, that we’re pretty confident are going to be leading indicators to successful business outcomes, that’s probably going to be the best thing. I’d really focus on looking at your funnel, looking at the way you’ve got your business set up, so how you’re tracking from impressions the size of the audience, the definition, who you’re engaging with, and how that funnel’s building. And just all the way through, look at what the conversion rate through the steps are and just always set yourself a goal and take a real growth hack mentality, which is to say, “Let’s come up with an idea, a thesis to what we expect is going to happen, what success is going to look like, set a short timeframe, run something, test it, measure the results, and then iterate from that point.” So lots of those small tests. If you can set up the support framework– and I guess this is more your third question. If you can put the network around them, so the programmers, the product people, the salespeople, to support what they’re doing, and you all collaboratively work together to reduce each of the conversion points on that sales funnel, you’re probably going to get some success out of it. What you don’t want to be doing is leaving that person on their own and say, “Well, good luck. Do some [SEO?] and come back when it’s working.” That’s never going to work for you. So look, I’ve lightly touched on each of those things. I think the most important part is to get that triangle-shaped skillset. So broad, experience most things, but a couple of areas of in-depth knowledge. And try to make that in-depth knowledge for B to B around LinkedIn social content and retargeting. If you can focus on that, all the other experiences will be beneficial. I think you’ll be in a pretty good place.
So lastly on today’s podcast, I just wanted to talk about a shoe brand that I’ve come across in the last couple of weeks and completely fallen in love with. And I’ve fallen in love with it not just as a consumer of the product, but I’ve fallen in love with the way these guys have managed to launch a shoe brand. There are some industries that are just hard to crack. You don’t want to try to get into the flavoured sparkling water business up against Coke. You don’t necessarily want to try to launch a car, even an airline. There’s certain industries where it’s just hard work. And shoes is one of those industries. You don’t turn up in the shoe industry and just succeed. But this one company is just making incredible progress, and that company’s name is Allbirds. So that’s A-L-L-B-I-R-D-S. And I hadn’t heard of this company. I was put onto it by somebody in the coworking space who sat across to me and just said to me, “You’ve got to get these shoes. These are the most comfortable shoes.” And whenever you get those kind of product recommendations, you know that there’s a brand that’s onto something. This is where a brand’s gotten to that stage where they’re going viral. People are talking about it. They’ve got promoters. So this is if you knew what their net promoter score, I’m sure these guys are sitting at 9.5.
What what do I love about Allbirds? I think for me is that they seem to be really clear on their why. They’ve got a really clear mission. They’ve got a really strong brand personality, and they’re carrying that into an audience. So they’re really breaking into this young, young-of-mind. They’re probably tapping into the start-up industry. But also, they’ve got a very sort of left-leaning sort of environmentally friendly, sort of poke fun at themselves kind of style brand. And the area where I think they’ve just recently launched a new range, and I love the way they launched it on Twitter because it was almost like they had gone and paid the creative agency to do the photoshoot. And they’d done the classic shots, the classic photoshoots. And then they, to use a very Australian expression, sort of took the piss out of themselves, where they almost make fun of the models and their sort of solemn look and the way that they’re conducting themselves. And yet it’s their ad. So I can highly recommend having a look at the Allbirds Twitter account and just having a look at the copywriting. Take a look at their website. Take a look at some of their emails that they’re sending out. Whoever is doing the copywriting at Allbirds is an absolute genius. They’ve got their brand nailed. The copy is funny and witty. And if you read through the copy, at all points, you get a real idea that they’re still selling the features. They’re still selling the benefits of their shoes. They’re light. They’re environmentally considerate. They’ve got wool. They’ve got eucalyptus shoes. I mean, it’s a very unique proposition. It’s very different. And it’s not cheap. And you’ve got to ship it from– I think to Australia, I had to get mine from San Francisco. But they’re just this amazing thing.
And what’s great about them is when you see somebody else that has Allbirds, there’s a weird connection. So walking through sort of Brisbane City, and I just saw another person with Allbirds, and they recognized mine. And you’re in that I’m in a niche little club. We’re early adopters. We’ve got into this. We’re importing our shoes. Are they the best for walking around? Probably not. They’re kind of like– the woollen ones are kind of like Ugg boots. But there’s something about it. There’s something about the message, the brand, the positioning that makes you go, “I just believe in the company. I believe in the people behind it. There’s something that you’re doing that I just like and I align to that.” It’s not going to be for everybody. But have a look. Have a look at the way they’ve done their stock photography– not their stock photography. It’s all very much bespoke. But have a look at the way the photography is being done. It’s top quality, but at the same time, it’s just on-message, and they’re carving out a spot in the market just by being a little bit different. And I think it’s a good example of how getting something completely on-brand, understanding who your customer is, really being clear on what your brand personality is. What’s your voice? What’s your tone? What’s the image you want to portray? If you get it right, you can even break down an industry like the shoe industry, which is really hard to get after.
So take a look. I will add links to the two companies we have discussed today who put questions in, and of course, to Allbirds. Highly recommend checking out Allbirds. I am eyeing off the eucalyptus tree climbing shoes. I think that’s what I need for the Australian summer. But I’ll send that through. And as always, please shoot through questions at, and look forward to speaking to you all again next week

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