Jason M. Lemkin argues that cutting marketing spend broadly in 2023 is short-sighted. Companies chasing quarterly revenue miss the pipeline they'll need when markets recover, repeating mistakes from past downturns. Founders have to choose between extending runway and starving future sales.
How are you seeing marketing spends impacted across the board? And are you concerned about that? I am running the media company that I do.
I'm concerned about it. You know, we work. I have a. I have a limit, limited visibility through my portfolio of like 25 larger investments. But we have 200 sponsors for Saster.
Right.
And you have quite a few. Look, it's, it's exactly what this is. One thing where Twitter has it, right. Okay. Which is that marketing has become myopic. Marketing is focused on this quarter. Right. What can I spend to get more revenue this quarter? I'm under pressure from my board. My revenues are down in some cases and my. And my burn rate has to last longer. So the CEO is only approving these, these marketing expenses that create revenue immediately. And they do exist out there. Right. But the problem is it's. It's such a small part of marketing that. That pays off. The only part that really pays off is like, like funnel assist, like taking someone that's almost ready to buy and then they hear about, they hear about someone on 20 VC and that magic moment gets them to buy the next week, like, but nothing else. And so we're cutting too much in marketing. And I'll tell you what I think we should be doing. We're cutting too much and it's going to hurt everybody. Not this week or even this quarter, but it's going to hurt. Everyone's going to not going to have enough pipeline at the end of the year when I think things will be better I think things will be better for startups at the end of this year. And I think we will all be hurting for pipeline. And I think we're all making the mistake we made in each of the last downturns. I mean, Mark Benioff in his book wrote his biggest mistake in the last downturns was cutting sales. And what did he just do? Cut sales. So he's making them. He's making the same mistake three times. And if Mark can't help himself, I guess I can't blame any founders. But we're all going to come out of this with not enough sales capacity and not enough pipeline. It's just going to happen.
So I'm a seed founder, seed, slash, Series A. Yeah. I'm being told by everyone, you got to cut burn, you got to extend Runway. But then I'm also hearing you saying your pipeline is going to be short at the end of the year and actually. So what do I do, Jason?
Well, the answer, it's actually pretty simple. It's Going back to basics, which is be data driven. If you have a sales and marketing leader, right, or whoever it is, give them a budget. It's just that simple. Okay, you have. I have $1 million to spend this year in marketing, and I have an incremental half million in sales. You make the decision, right? You make the decision and spend that 1 million the best you can. Cutting the marketing budget to zero. Wrong answer. Right. Let them optimize what they can do with a million and trust in your team. I think we can't solve everything. We do. Most of us have to extend Runway right now, right? We have to. We have to extend it. But I think we're overcutting in marketing by not empowering people to have budgets. And we're doing the same in sales. Just tell them, look, you have this much to spend this year, this quarter, this month, and then trusting your team to make the best hires. Layoffs don't really solve anything. They're just little. They're little snacks, right? They make little incremental changes. But layoffs don't create growth on their own, right? So say great, okay? Even if you did a layoff or 10 or 20%, you're still going to have budget for this year. Hey, head of sales. You get 20 hires. You get 20 hires and you go decide who those 20 are going to be. You hit your number, right? Same with marketing. And I don't see enough of this trusting the adults on your team with a number. And I don't see enough, I don't see strong enough ops and finance support helping them do that. Because we don't all know how to do that intuitively, right? We need some help from budgeting and planning to manage it. Many VPs need help.
