December 11th, 2024
We're starting to understand the effect of AI on how startups approach growth and marketing. Teams are consolidating. Startups are able to grow faster and further with fewer people.
But new opportunities are also emerging, many of which are more desirable than the roles they replace. I see an optimistic world ahead that will be refreshingly easy for the marketing industry to adapt to.
Let's start by contrasting the old and new model.
I have always recommended startup founders follow a similar playbook for their initial growth:
- Build your product
- Establish initial revenue through any means necessary (use your network, run ads, cold email, etc.)
- Once you've validated a channel, hire someone to build and manage it
- Repeat with new channels, and hire a marketing leader
- Scale team and resources accordingly
Eventually this evolves into a classic marketing team structure with a CMO at the top, guiding a wide reaching team with many employees and contributors.
Team growth might look something like this:
- $0-$1M: 1 person
- $1M-$5M: 5 people
- $5M-$20M: 10 people
- $20M+: 20+ people
It's very labor and capitol intensive. Marketing in particular is hard to build and hard to hire for. There is a lot of waste and a lot of failures. The bigger an organization grows, the slower it becomes.
Now, marketing teams are consolidating.
Founders can build a product and use out-of-the-box solutions to get initial revenue and validate the business. Ads can largely be written with decent copy and graphics using AI. Cold email systems can be setup autonomously for the monthly price of a seafood dinner.
When healthy startups do hire a growth person, it's largely out of annoyance rather than necessity. They simply don't want to spend the time setting up and managing these semi-autonomous systems. So they find someone intelligent who can not only scale them, but build and test new ones.
These new early growth hires work directly with the founders and have their hands on the product day to day. Instead of managing a team of people, they manage a collection of AI tools and automation workflows that run the marketing programs. If needed, they hire a person or two to work with them in parallel, depending on the scale and manual requirements of the systems.
Over time the marketing team will look something like this:
- $0-$1M: 1 person
- $1M-$5M: 1 person
- $5M-$20M: 3 people
- $20M+: 4 people
This new model is obviously preferable. Less people means less management, less overhead, and a drastically lower chance of interpersonal problems occurring. Revenue per employee skyrockets and the company is able to build and move faster as an organization. These new "leadership" marketing roles are higher paid, and compensation for the whole team usually scales directly with company revenue.
The obvious question for the marketing industry is what happens to all of the people who would have otherwise been employed in these large teams?
Obviously new AI tech is not just touching the marketing industry. Every day more products and business models are emerging that didn't exist or weren't practical before. It's easier to build a product and start a company than ever before. The world of opportunity is becoming more diverse and numerous to those motivated.
We're going to see more and more companies of different types and sizes. Instead of a bureaucratic marketing team structure, we'll see more people on the ground running largely autonomous systems.
Agencies will play an even bigger role. Startups will effectively outsource these marketing systems to external partners who run them on behalf of the company. Agencies will hire people to run these systems on behalf of their clients. There's greater focus and higher output.
For comfort, I think we can view this shift as analogous to retail sales moving online. Many in-person retail workers inside malls and shops were put out of business as people began to buy all of their goods online. But endless opportunities for employment were created.
People were needed to build and manage websites that could sell goods. Customer service representatives are needed to help customers online, which can now be done from the comfort of home. Businesses can easily set up websites to sell their own goods directly to the customer. Platforms like Amazon provide marketplaces for businesses to easily list and sell their goods, without needing physical retail space.
We now know the move to online was objectively a net positive for commerce. It benefited both companies, consumers and employees.
We are now going through something similar. It's important not to get caught up in the panic of retail workers losing jobs, even if we are one of them. Just as a retail shop worker could have found a more lucrative job working online, we should think about how each of us can take advantage of this shift to dramatically improve our lives.