Case Studies in DeepTech Marketing
In order to support a presentation to a deeptech startup on the marketing needs for their company, this report begins with how marketing for deeptech differs from regular technology companies. It then describes some challenges and mitigation strategies used to ensure the integration of marketing into the company's vision and processes. Finally, two case studies provide a total of eight marketing strategies used by successful deeptech companies.
Marketing for Deeptech — How It Is Different
- Deeptech companies are assessed differently by most investors and customers. "Metrics make way for value. Revenue makes way for loyalty. Fast growth makes way for patience. The traditional playbook is effectively thrown out on a gamble — just because a smart person had a smart idea."
- Deep tech entrepreneurs with cutting-edge technology face constant difficulties.
- Deeptech is often developed out of research that hasn't necessarily honed in on its target market — or maybe even the need. It starts further out than many companies and requires more and more significant iterations as its target narrows.
- In the meantime, technology enthusiasts, wowed by the amazing tech, will leave the new company with the illusion of need yet will disappear when it comes to unlocking funds.
- An example of this is the data over sound company Chirp. It is an intriguing technology. "Tech enthusiasts from gaming companies, energy providers and even toy makers dreaming up imaginative ways to use the tech — but all in super-specific niche ways that were very cool but not scalable." After traveling down lots of dead ends, the company ultimately found traction with wireless setup protocols. Sonos quickly acquired them.
- Paving new ground is difficult. Deeptech is not taking existing open source code and putting a UI on top. Deeptech requires expert software engineers to put time and space into designing and developing products that will not work the first time.
- "Most iterations will be costly and time-consuming. Sometimes these experts will think they're ready, but they won't be. Sometimes they'll see a customer's needs but not be able to solve them."
- As an example, Hazy is a data company. When they first engaged in the market, they quickly discovered that to sign "bigger contracts with the financial services' industry, they needed to produce flawless synthetic time-series data, something that had never been done before." Founded in 2017, it took them until 2020 to solve the problem. They are now signing contracts with large financial services firms.
- Deeptech doesn't just provide the market with a solution to a known problem. It uses new technologies to build entire markets because the market isn't looking for this product. Often it doesn't even know it needs it.
- Because many potential clients already have developed low-tech workarounds, clients are afraid to change them, even if they are inefficient. Potential clients are innately skeptical of new ideas.
- CXO's are going to want to test and pilot several times before they commit. They're going to need not just marketing but educating at different levels in the organization.
- They may not have a clear line in their budget for a technology that crosses departments, and the sales cycles can be extremely long.
- The approach cannot include just the marketing team. Outreach to potential clients must consist of deep and senior domain expertise. The importance here cannot be underestimated.
- A company called Nozzle.ai helps brands use Amazon more effectively. It has developed a "focused content marketing strategy to own its space and educate customers in this market at scale — shortening sales cycles and bringing motivated customers."
- New technologies often provide opportunities to solve more than one problem. While this may support growth, it's also a distraction.
- "Clients will see entrepreneurs developing on the fly. They'll notice that the product isn't fully built and want the startup to develop it for their super-specific problem. Cash-strapped entrepreneurs may see a need or want to cash in on this offer, even if it risks going against their initial vision and road map, and even if it takes extra time and cash to achieve this new outcome."
- Such distractions are usually red herrings. The deeptech company needs the courage to stick to its original plan. On the flip side, the company cannot be dogmatic, as the process may have inadvertently discovered a better opportunity. Deeptech companies need to be quick at recognizing and seizing opportunities and convincing their stakeholders.
- "These frictions all slow growth. Best laid plans to hit monthly recurring revenue numbers needed to raise the next round are often missed. Bringing a deeptech startup to launch is an ongoing, uphill struggle: every bit of progress requires significant months of painstaking effort."
The Bottom Line in Marketing for Deeptech
- Deep tech companies need to accept that the journey to success will be longer and harder than expected.
- In advising deep tech entrepreneurs, David Grimm, an Investment Director for the UCL Technology Fund., offers the following. "The fit might be a struggle and take longer, but you have something no one else in the world can create, and it can't be done quickly. The build might be hard, but, done right, you're creating a moat around your value."
- He further recommends "a ruthless process of identifying the real problem owners with a budget will create your first valuable reference clients and further your growth."
- Use your marketing team wisely and strategically. "Don't get stuck in innovation teams and R&D departments at large enterprises. Look for corporates with an innovative culture across the organization. Interrogate end-budgets and champions who own the problems you are solving and the right attitude to risk."
- "Focus may be challenging to sustain. But by capitalizing the business properly and marketing to and partnering with VCs that share your passions and understand the unique deeptech pain points, you will have the freedom to make informed choices. That way, you'll need only change direction (on your terms) when you can validate the size of the opportunities."
Growing and Scaling Deeptech Companies
- The challenges of growing deeptech companies are many and varied. Developing a growth strategy that includes marketing milestones at the beginning can mitigate many of these challenges.
- From its inception, a deeptech company needs to prepare for the fact that it can typically take between 8-12 years to see returns versus 3-5 years for most technology companies.
- The reason is that "to progress from running lab-based experiments to prototyping products, deeptech startups require time and support at a very early stage. But typically, significant resources are "hard to come by without a prototype already developed and proven, which puts many entrepreneurs in a catch-22 situation."
- Early-stage deeptechs will need to market for support to various sources along the way: academia, government, specialist investors, and corporates. Understanding when each of these stakeholders should be approached is crucial to building a marketing strategy.
Filling the Pipeline
- Diffblue, "a deeptech company that saves developers time by automating the writing of code," spun out of Oxford University in 2016. A year later, the company raised, through Goldman Sachs, the largest AI Series A funding in Europe.
- "The first thing you look for in a deeptech investor is somebody who really understands the space you are in and the problem you are trying to solve," says CEO Mathew Lodge. "Goldman Sachs invested in us as they understand our challenge, and they have been great at introducing us to their customers to help us build our pipeline."
Experienced Business Problem Solvers
- Deeptech companies want to develop a solid and supportive Board with members who have great operational experience that can "help company executives think through different challenges and problems."
- For example, Diffblue's Chair Jane Silber is the former CEO of the open-source company Canonical and is a positive resource.
Solving Customers' Problems
- As deeptech companies begin to grow, it becomes less about focusing on the tech and more about solving their customers' problems. For example, having to support multiple operating systems used by its customer base is not a" hard computer science problem, but it is difficult and challenging."
Internal Scaling Challenges
- The tech site also needs to be ready to support scalability. Cardiff-based AMPLYFI is a deeptech company whose "Insights Automation Platform uses machine learning to help organizations generate revenue from their research." It has seen its scaling challenge transition in recent years from the marketing department and "creating interest" to the production department and "scaling delivery."
- The Head of Marketing at AMPLYFI stated that "The most recent jump in scaling up has been embedding our capabilities in a range of intuitive applications. This has enabled us to operate in a more scalable, market-driven and self-service manner — driving costs down and return on investment up for our customers."
- A successful marketing campaign will ultimately lead to a need for speedy production and implementation. Companies that have not planned for this transition may quickly lose their market.
- Tel Aviv-headquartered Optimove is one of the largest SaaS startups in marketing automation, or, as it is also known, precision marketing. Founded in 2009, they now have a staff of 250+, have $20 million in funding, and support over 500 brands from 3 locations around the world.
- The verticals they support include retail, ecommerce, gaming, travel and hospitality, and entertainment. They help brands grow their business by using the data from existing customers to understand retention and monetization.
- Its core offerings include the ability to lengthen the customer life cycle and add creative value to its core offerings.
Challenges and How Marketing was Used
- Although it was founded in 2009, Optimove did not have a website until December 2012. The first site shows that the company was unsure of its focus. The marketing was geared to gaming sites and was relatively unsophisticated.
- In the 2016 website, it shows the customer base has expanded to include retail and fintech.
- By 2020, the amount of information available to potential customers had expanded to provide education in almost every major area marketing professionals could need.
- A decision on Marketing Channels was also a challenge as Optimove allocated scarce resources. By 2010 Optimove had a Facebook page and by 2012, it was using a Twitter account.
- In December 2011, Optimove was featured in a Master Customer Churn Prediction and Prevention course using ML. This inclusion gave Optimove academic credibility while automatically targeting markets who were interested in learning new strategies.
- According to TechCrunch, one of the best strategies for building a marketing team in a deeptech company is to use partnerships.
- The timing for this is critical. Once the company shows signs of producing a repeatable income, a marketing prospect should be created.
- "Specifically, it precedes a big Series A round, after a short Series A round or when a business partner has expressed interest in larger, longer-term contracts. Instead of the typical title of Marketing Director or Revenue Director, deep tech startups refer to this person as a Sales Director or Director of Partnerships."
- Optimove pursued this strategy successfully. As of May 2021, Optimove has 41 technology partners listed on its website, including Salesforce, Shopify, and Amaya, a company that is present in all major gaming markets in the world.
Currency in the Profession
- The profession that Optimove supports has created new analytical models. A recent addition to the marketing toolbook has been the mapping of the customer journey.
- Optimove's website describes how its customers can use their new product, called Customer Journey Marketing Plan, to define and manage an infinite number of customer journeys.
Optimove pursued four major marketing strategies to grow the company. These are:
- Managing an expansion of focus from gaming to retail and more,
- Using multiple marketing channels, including but not limited to social media and academic channels,
- Technology partnerships with companies with complementary products where the synergy between the two products can be marketed, and
- Marketing their ability to remain current in the profession.
- Boston Dynamics is an example of a deeptech startup that took a long time to become marketable.
- Founded in 1992 and spun out of an MIT Leg Lab, the company has spent almost 30 years developing functional robots available for sale for commercial, industrial, enterprise, and university research use.
- Boston Dynamics is one of the current global leaders in "developing and deploying highly mobile robots capable of tackling the toughest robotics challenges."
- They create and sell "high-performance robots equipped with perception, navigation and intelligence by combining the principles of dynamic control with sophisticated mechanical designs, cutting-edge electronics, and next-generation software."
- They currently have three mobile robots for sale — Spot®, Stretch™, and Atlas® — as well as Pick™, a machine learning vision solution for warehouse automation that is being piloted.
- The images below show the simplicity and ease of access of the company's marketing material.
Challenges and How Marketing was Used
- Boston Dynamics' challenge was how to build a robot that could do things people can do better than people can do them. As an entirely new technology, the company needed access to a multitude of knowledge bases in anatomy, engineering, cognition experts, and psychologists.
- This access was made possible by partnering with the Center for Brains, Minds, and Machines at MIT. This partnership gives their internal team access to an academic brain trust with medical backgrounds from Harvard, Electrical Engineering from Howard University, the Brain, Behavior and Cognition Doctoral Programs at the City University of New York, Psychologists from UMass Boston, corporate thought leaders at Google, GE, IBM and Microsoft research and International connections in Israel, Italy and Germany.
- Publishing this information gave the company the credibility it needed to go to market.
Using the Press
- Boston Dynamics has an active media relations program and produces press releases an average of once a month. Topics range from new products to new hires to financial news to new functionality in existing products.
- One of the more interesting examples that show the company's sophistication in using the press was the company's response to some negative publicity that arose in late April 2021.
- The NYPD purchased one of the companies Spot Robots, painted it blue, and called it Digidog, planning to use it to defuse "hazardous situations."
- It very quickly "became the subject of widespread outcry, including harsh criticism from Representative Jamaal Bowman, who chastened the department for using taxpayer money to buy yet another surveillance tool."
- Entitled "NYPD Puts Down Robot Dog", the article also published the picture below with the title "He's headed to a farm upstate."
- Playing to the eternal sports rivalry between Boston and New York, Boston Dynamics reached out to the Boston Herald, a hometown newspaper, which published an editorial called "Don't Judge a Robot Dog by its Chips."
- After reporting that "After footage of Digidog walking nimbly beside police in response to a home invasion in the Bronx went public, critics decried it as a dystopian harbinger, a sign of an over militarized police."
- Stating that they had a soft spot for the robot after seeing this video and with tongue firmly in cheek, the paper stated, "Here's hoping Spot can shake his reputation as a portent of an impending robot takeover."
Telling A Story
- Deeptech startups are typically created by teams with heavy research or engineering background. This composition can mean that the "team tends to underestimate the need for and importance of branding and marketing."
- If a company has a great brand and story to share with the world, it should get people excited about the vision and attract more customers and partners.
- This will help create a high brand value which "can also justify a higher price for your product, leading to better margins — and better margins make many other things easier, especially when production volumes are still low."
- Boston Dynamics has "well-thought-out storylines and clean visuals, making them great examples of industrial deep tech brands who are able to communicate the value and capabilities of their tech to their end-users. What's more, Boston Dynamics' marketing videos are exceptionally memorable in the industrial deep tech space."
- Boston Dynamic begins with some of its earlier work which gets the customer not only engaged in the idea but makes clear the technological improvements the company has made. This can give the consumer confidence in the company's ability to manage R&D.
- Their site is full of videos that tell a story — as well as entertain its audiences.
- In December 2020, the company released a video with the description, "Our whole crew got together to celebrate the start of what we hope will be a happier year: Happy New Year from all of us at Boston Dynamics." As of May 10, the video has 31,419,084 views and 161,190 Comments.
- This "What our Robots Can Do" video, complete with a Boston accent, has 8,070,547 views and 8,449 comments.
- The following press release from April 23, 2020, shows the value of having a flexible product, plugging into customers' and society's needs.
- "Starting in early March, Boston Dynamics started receiving inquiries from hospitals asking if our robots could help minimize their staff's exposure to COVID-19. One of the hospitals that we spoke to shared that, within a week, a sixth of their staff had contracted COVID-19 and that they were looking into using robots to take more of their staff out of range of the novel virus.
- Based on these conversations, as well as the global shortage of critical personal protective equipment (PPE), we have spent the past several weeks trying to better understand hospital requirements to develop a mobile robotics solution with our robot, Spot. The result is a legged robot application that can be deployed to support frontline staff responding to the pandemic in ad hoc environments such as triage tents and parking lots.
- Today marks the second week of Spot's presence at a local Boston facility, Brigham and Women's Hospital, where the medical team uses the robot as a mobile telemedicine platform, allowing healthcare providers to remotely triage patients. We're listening to their feedback on how Spot can do more but are encouraged by reports that using the robot has helped their nursing staff minimize time exposed to potentially contagious patients."
- They then open-sourced all of their work to allow other mobile robotics platforms to leverage the same hardware and software stack that Boston Dynamic developed to help frontline healthcare workers.
- Boston Dynamics used the following marketing strategies to move its company forward:
- Deep partnerships in academia, the corporate world, and internationally to assist in the development and problem solving,
- Sophisticated use of the press in dealing with potentially harmful coverage,
- Engaging their customer base by telling stories that grab their attention, using YouTube so the customer can easily watch a video multiple times and share it with others, and
- Demonstrating social responsibility.