The question was asked, “what is the right split for spending on marketing vs development?”.  The answer as you might imagine is “it depends”.  Anybody that would give you a straight answer to a question like that is someone I wouldn’t want to be receiving advice from.

Of course, there are some industry averages for companies in specific industries, but we’re talking about a start up here.  Averages are just that, averages.  What a start up needs to spend in marketing depends a great deal on the type of company it is, the rate of growth desired, the level of competition in the market, the readiness of the product for specific market segments and many other things.

Most of the companies I deal with fathom themselves to be technology companies.  But while they think of themselves as technology companies, they really aren’t.  They really tend to be dealing in software systems.  You might think they are ’software companies’ then.  But they really tend not to be that either.  They really are companies that are providing services delivered online where software is a major tool for delivering the service.  These are companies like photo services, education, and social networking.  I have specific warnings for companies like this.  Be careful not to over-rely on the software at the exclusion of sales, marketing and other disciplines.

I was in a start up venture where we completed a great social networking service.  Our runway was getting short and we were having trouble bringing in a second round of financing.  We tightened the belt and cut back in all areas, which was prudent.  But we kept a substantial software develpment capability.  In retrospect this may have been a mistake.  The product was solid and it performed all the critical functions customers were interested in.  We, perhaps, should have dropped software development to a skeleton and focused our resources at driving revenue.

I think we didn’t do that because we fundamentally thought of ourselves as a software company.  So, if you are a ’software company’, I caution you to not get caught in this wrong headed thinking.  Constantly evaluate where your money is going, what your goals are, and where to deploy your money for maximum results.  Don’t be afraid to gut a function if that is what you need to create success.