Eran Savir of Savyon Ventures on turning a return policy into marketing

Eran Savir 00:31

How are you? Hi Etgar, good morning, and thank you for having me. This is definitely my pleasure, and I've been waiting a long time to host you. I'm really excited to have this conversation with you.

Eran Savir

Sure. I come with a technical background, I used to know how to write code many years ago, I taught myself programming back then, at the age of 10. Fast forward, before I became an investor I was a founder. I founded three startups, two of which were acquired. Then I joined a company in the space of advertising technology and founded and managed [unclear @ 01:22], invested in you and in a few other startups. We had [unclear @ 01:29] with that fund.

01:31 After four years with that fund we launched our second fund, which was a publicly traded company on the Tel Aviv Stock Exchange. That's how we raised money, through an IPO, in the summer of 2021. We completed the deployment of the funds at the end of '22. I was co-founder and CEO of that company, I stepped down and became the chairman, and I launched my third fund.

02:02 We're focusing on investing in AI, digital and commerce, seed stage. In other words, we've been around investing in internet, specifically looking for those who have the potential to be a fast-growing internet company. For our listeners who want to raise money, I'll say personally that I've met with hundreds of investors, some of them have a bigger yield, some have a smaller yield, but I haven't met a lot of people, or a good person, such as you and the team you're working with. I can say this firsthand from the way you worked with me down the road, in the happy days and in the last happy days, and I want to say thank you so much for what you did.

Eran Savir 03:37

I think it very much depends on the stage. My expertise is in the seed stage, that's my sweet spot. I think probably one of the most important things I've seen that works is that first of all, do a lot of experiments. When you start, you don't really know what will work, in fact in most cases you don't really know who your ICP is, so you need to try so many things to see what works.

04:09 You also need to do a lot of small experiments. Start with guerrilla tactics, go through people you're trying to find, the first people you can speak to, like your customers. Marketing sometimes isn't necessarily mass marketing, sometimes it's just one-to-one marketing, and that also helps. In essence: do a lot of experiments and measure. Do a small test, measure, if it works continue, if not switch to something else, or try to find what's not working and reinvent this.

04:40 But you need to be constantly trying. Even if you find things that work, they will not work forever, so you need to keep reinventing this, like every day.

Eran Savir 05:11

That's a good question. I'm looking at internet startups, both B2B and B2C, and I'm actually quite amazed to see founders who don't really know what metrics to look at, and don't actually look at any metrics with regards to marketing. If you ask them what's your revenue, or how many customers do you have, they of course know that number. But if you ask them what's the customer acquisition cost, what's the lifetime value, what's your conversion rate from different channels, they don't know these numbers. That's what surprises me, because for me that's the basics.

05:41 You need to make sure that the column of income is going to be higher than the column of expense. So you need to be on top of these numbers, for starters. Those are, I guess, the most important ones: customer acquisition cost, lifetime value, conversion, conversion from channel.

06:11 When we see the ad platforms, like Facebook, like Google, making a lot of changes to their ad platforms, making it dramatically hard for the media buying side to understand which of the clients is a new client and which is some low-hanging fruit, someone who already saw your ad, we see it with Facebook campaigns, we see it with Google [unclear @ 06:57] campaigns, and it makes a lot of problems for founders, especially the ones who don't have a marketing background, [unclear @ 07:05] to actually come and report you the real metrics.

Eran Savir 07:36

That's a good one. When I look at teams, I divide the world into two different groups, B2B companies and B2C companies. I think for startups, B2C teams need to have a co-founder who knows how to do user acquisition, who's hands-on with marketing, with user acquisition. And I guess in order to be successful, both B2B and B2C teams need to have a founder who knows marketing.

08:14 The first sales will be done by a founder, and the same, in my opinion, the first marketing activities will be done by a founder. That's the person who will think of new ideas, invent, the same as in any other aspect of the startup, you need to invent. I guess you need a founder who knows marketing.

08:44 In most cases, in the early stages of a startup, I'd see a startup that relies on, if we're talking about paid user acquisition, in most cases they'll just be relying on one channel, like a Facebook ad. It's relatively easy for them, it's not scalable of course, it's risky because things can happen, but it's easier for them to manage. It's also easier for me to have a look at.

09:17 By default I don't think I need to log into their platforms and look at their numbers in Facebook or in Google, but I'll ask later, at the later stage, in due diligence, to look at the numbers in an Excel, and then things need to make sense. In most cases I will not look at the campaign level: is this campaign profitable, did you stop it on time, did you put the pixel in the right place, that's not my goal. As an investor I need to pick people who know how to run this, I'm just joining. I'm not, I shouldn't be, the expert in the team with regards to how to do marketing, they need to be. Of course I have some knowledge and experience, but at the end of the day every startup is a little different.

Eran Savir 10:25

I think many, often times, you'll see that people are doing different marketing activities, and they don't mark them, even in the way they look at the different activities they do, they don't mark them as marketing activities. As a result, they don't track and measure the relevance to the business goal and the effect on the KPIs.

10:50 For example, every social post a founder does is a marketing activity, both on your personal profile and on the company's profile. Every time you go on stage, every meetup you go to, as an audience member, of course as a speaker, every webinar, everything you do is a marketing activity. You need to ask yourself: why am I doing this, what am I trying to achieve, and did I manage to achieve it?

11:20 I think it's obvious that when you run a campaign on Google and spend money, you will measure and track and try to see the performance. But in many other activities, in fact most of the money we spend in the early days, and most of the time we spend in the early days on marketing, isn't tracked and isn't measured. That's a waste of time and money, and most founders don't act in correlation with the KPIs that need to be met.

12:22 So you need to ask yourself, every time you do something, why are you doing it. We have so many things to do as founders, and not enough time, so every time you do something you need to ask yourself why am I doing this, and what KPI or goal is this serving, and then afterwards come back and see if I managed to achieve this. This will help you avoid wasting time and money, and also improve for next time.

Eran Savir 12:56

One of my portfolio companies, it's a company in the space of D2C eCommerce, called Underoutfit. Super successful, growing super fast, an amazing team. We all kind of grew up with a perception that marketing is everything, that the winner is going to be the team who has the best marketing efforts and activities, and product is second or third.

13:28 I spoke about this with Felix Leshno, the founder of Underoutfit, very personally, I really like and respect him, super experienced. We both shared the same initial thought, that marketing is king, and if you do great marketing you will win. Then we realized, based on their experience, that marketing is also having a great product, and that comes from a different kind of work.

14:09 There's a saying, build a great product and they will come. But I guess it's a combination, you can't just rely on your marketing and have a shitty product, and you can't rely on your product and have shitty marketing. It needs to go hand in hand.

14:31 For example, one of the things they did at Underoutfit was, they kind of reinvented the return policy, which is both marketing and product. Their product is underwear for women in the US, bras, fitters and things like that. Buy it online, get it delivered to your home, try it at home, use it, wash it, reuse it, for up to six months. Six months. And then if you don't like it, return it.

15:16 I guess it's a combination, and that created, by the way, an amazing buzz, an amazing stickiness, and it became very viral, because it's so outstanding to have that kind of return. It's just a return policy, but it's like a marketing campaign that says: we trust our product so much, we know that even after six months you will not want to return it, you will want to keep it and continue buying more product.

15:52 So the combination of having something real, the real story, the real marketing, and a product integrated with that, and also being able to properly market it, tell the story, explain that we're so confident about our product that this is our marketing: buy it, use it, keep on using it. For me that was a surprise, it changed things, it changed the way we looked at the world.

16:34 Before that experiment, both me and the founders, I guess, that was a surprise, and this is something I took with me, that there needs to be a combination of things, and of course the love of luck and hard work. Once again: measure. How did they get to six months on the return policy? How did they get to these things? Try and measure, get feedback, improve, and measure again, and try again.

Eran Savir 17:19

I think we all know, as founders, that when you start a startup, the initial idea goes through a few pivots. The average is 2.5 pivots per successful startup. Some startups do more. We think about a pivot as this major thing that happens: okay, we tried to build a car, it didn't work, let's sell shoes instead. No. The pivot is sometimes incremental, in most cases it's incremental, and it involves so many activities that need to be done, that often come from the market. And the market equals marketing.

18:12 You start by imagining who your ICP is, if hopefully you've done that research beforehand, and then you realize it doesn't work, other customers don't get it, because you don't tell the story right, or because they have no problem, they don't really care. Whatever it is, you need to pivot. Sometimes it's a small pivot, sometimes it's a major pivot, often it's an ongoing cycle.

18:47 I think only if you look at it in retrospect, at your startups, as an investor, do you see that this is a constant process. You could say this is version one, 1.1, 1.2, at a certain point it became version two, and then you can say you pivoted from one to two. But it's more of an incremental, ongoing work that needs to be done, and I guess most people don't really realize that they're constantly doing this, which is a good thing. You need to constantly be aware of the activities you're doing, and tune and retune all your activities, specifically with regards to marketing. It's super important, or else it kind of gets to [unclear @ 19:46].

19:47 Talking about companies, the more mature companies, founders already have their marketing team, they hire a VP marketing, a head of growth, head of demand gen, everyone has a different name. Before I started this podcast I talked with many people, to go through a discovery process for myself, and we saw that there are lots of founders struggling with managing those teams. From your perspective, you've seen dozens of mature startups, some are good and some are not, what is the one mistake founders make when they're managing their marketing team?

20:23 I guess micromanagement of your team is probably the biggest problem. It's better to have someone who knows marketing, but when you delegate, you need to set goals, you need to set KPIs, you need to set the vision, but the experiments need to be done by the team. So if you have a team, let them work, and don't micromanage them, because there are so many things to do as a founder, and one of them is not to stop and stop [unclear @ 21:08] their [progress] on time.

21:12 I guess the goal, as a founder, for marketing is to be the visionary, to remove obstacles from the way, to let them experiment, allow them to make mistakes, because that's the way you learn new things, and by mistake you can find something that works even better, but not micromanagement. I guess that's a general comment, as a manager, or someone who's managed people, but I guess it's also a thing of personal character. I think it's always better to give people your vision, and the way you see things, and let them play, let them have their time and their opportunity to fail, and of course to win.

Eran Savir 22:20

Becoming successful with your startup is very, very difficult. In most cases you fail. In fact, even if at the end of the journey you were a successful founder, most of your experience has been an experience of failure. When you raise funds, most investors will say no. When you approach customers, I guess at least at the beginning, many customers will say no. Customers will churn. Customers, you give them a free trial, they will not want to convert to paying. You have so many challenges, and in most cases it's an experience of failure.

23:07 But perseverance is super important, just keep on going. People don't really know that, it's easy to look at the newspapers and see the headlines of those smiling, super successful founders, but even those successful founders, most of their experience is a failure experience. You just need to make sure you look at the successes and don't count the failures against yourself. You need to be aware of the failures and learn from them, but don't let it weaken you.

Eran Savir 23:58

That's a good question. I actually remember my first meeting with a startup as an investor. Just as a quick reminder, I was a founder three times, and advised multiple teams along the way, tens if not hundreds of teams. However, as an investor you look at everything a bit differently, and today I look at things a little more in a structured way.

24:33 As an investor, we all help each other, advise each other, give tips to each other. As an investor, specifically as a professional investor, meaning as a fund, you need to think about this in a more structured manner. Always start with: let's spend some time talking about the problem. For us, as founders, we kind of fall in love: yes, let's do this, let's do that. Often times, in meetings, people haven't spent time articulating the problem, and that is so important, because you need to make sure that this problem is painful enough, that enough people have it.

25:24 If you identify the problem, it's easier for you to communicate the solution, to find your customers, to speak their language. So today, this is what they do, this is also my best advice to everyone: just make sure you understand the problem very, very well, before you build the solution.

25:50 There, that goes a long way for the startup, and of course for your investors. The best decks would start with a very good explanation, a short explanation of the problem, and often times that would make the difference for me.

Eran Savir 26:19

I guess one of the most challenging things, or maybe the question, is: how, as a founder, do you balance between the short-term activities or tasks you need to do, and the long-term things you need to achieve? How do you actually do that?

26:42 I actually learned that only on my third startup, I'd say I mastered it, but I only paid attention to it then. That goes back to my previous answer: you need to articulate the problem, then you'd understand the solution, then you need to define where you're heading. There needs to be some sort of a lighthouse that you're heading in that direction, and then everything you do needs to be taking you in that direction.

27:20 You need to do a combination of things, you can do just tactical things, however you cannot do just strategic things. I used to end every day asking myself: what did I do today to take me one or two steps forward, or did I go one, two or three steps forward today, in one direction, and how did I do that, so that I can improve for tomorrow. I actually did that every day, at the end of every day, and I think that's a challenge every founder needs to be aware of. You need to allocate your time accordingly.

28:05 I guess it changes over time. Sometimes you spend more time on strategy and less on tactics, and vice versa. When you prepare for a conference, you spend more time on tactics, but when you plan which conferences you should go to, you should ask yourself why you're going to conferences at all. That's more of a strategy question.

Eran Savir

Thank you, Etgar, it was very fun. Bye, bye-bye.