The People v. Budget

In a criminal justice system, marketing budget offenses are considered especially heinous. These are their stories. Dum dum.

Yeah, I watch a ridiculous amount of Law & Order.

Here's the offense I see most often: founders treat marketing headcount as the marketing budget. Staff salaries consume 80, 90, sometimes 100% of what's allocated, and almost nothing is left for the actual work those people are supposed to do. It's like hiring a chef and giving them no kitchen, no ingredients, and no equipment. Then wondering why dinner isn't ready.

If you're an early stage startup trying to figure out how to build a marketing budget that actually drives growth, this is the framework I use with every client.

Why marketing investment matters more than most early stage founders think

I get excited when I hear founders say things like:

• "I want prospects to be more educated before they talk to sales."
• "I want us to look bigger than we are."
• "I want people to see good activity coming from us."
• "When marketing generates the leads, deals close faster. I want more of that."

Because that's what good marketing does. It communicates the right message to the right people at the right time, building credibility, generating pipeline, and making your sales motion more efficient. Despite what you'll hear on LinkedIn, AI-powered outbound and mass email blasts don't replace it. People still want to see that you're legit. They want to feel something when they engage with your brand.

Marketing can enable early stage sales by creating lead magnets that draw in potential customers. Sales needs that book of accounts to work and marketing can absolutely provide it. Too often, founders think marketing is simply air cover. A signal to the world that "Hey, we're alive and busy!" without valuing how it can actually generate pipeline.

When you invest in marketing early on, you can expedite the growth path of your business.

How much should an early stage startup spend on marketing?

Ten years ago, you might have gotten away with investing more in people than in how they deployed a budget. Not anymore.

There's no single right number for a marketing budget. It depends on your growth ambitions, your competitive environment, and how much runway you have to work with. But I have a few benchmarks to help. In a 2017 analysis of publicly traded software companies, venture capitalist Tomasz Tunguz found that the median company at $5–10M in revenue spent about 90% of revenue on sales and marketing — and modeled top 5% hyper-growth companies investing upward of 300% in year one. Here's how I think about the three tiers:

• ‍High-growth (250–384% of revenue): This is the territory of AI-native startups and companies entering crowded, fast-moving markets where brand awareness is a race. If you don't establish mindshare before a competitor does, you will never catch up. These companies are often venture-backed with the runway to operate at a planned loss. And they spend like it.‍
• Median growth (80–120% of revenue): This is where most venture-backed early stage B2B startups should be thinking. You're spending aggressively enough to build pipeline and test channels, but you're not burning capital without a learning plan.‍
• Conservative growth (20–50% of revenue): Bootstrapped companies, startups in lower-competition markets, or founders who are still validating product-market fit before investing heavily in go-to-market. There's nothing wrong with this tier. But be honest with yourself about whether you're being strategic and conservative or just scared to spend.

I know some of you just opened another tab.

But ask yourself honestly: how is someone going to buy your product if they've never heard of it? And how are you going to know which channel generates the best awareness and pipeline if you haven't tried any of them? When you're early and you don't yet know what your best GTM strategy is, you're going to need to try a few on like sweaters. Those try-ons cost money. Be ready to spend and be ready to pivot to what's working and cut what isn't.

How to allocate your marketing budget across people, programs, and tools

Once you've identified your total budget, here's how I advise early stage startups on where to put it:

Assess your overall GTM strategy first. This is the right moment to assess how marketing and sales work together. Should marketing enable sales? Should it generate the majority of leads? The answer depends on your product, your price point, and what's worked for analogous products in similar markets.

Determine what skills are needed to execute the strategy. If you need field events, think about what kind of field marketers to hire and how to staff that over the next one to two years. Don't hire generalists and hope they figure it out.

Identify what should be powered by people versus tools or partners. Field marketers need venues, travel-friendly tech, and swag. Demand marketers need ad budgets and marketing automation. Get input from the people you hire. They'll have strong opinions about what they need to do their jobs well.

Build in 20% for experimentation and opportunity. Something will come up that you didn't plan for like a trade show worth attending, a new idea from your team, a partnership that opens a new channel. Allocate for it in advance so you're not scrambling when it happens.

Five marketing budget mistakes early stage founders make

1. ‍Staffing up before establishing strategy. Hiring a full marketing team before you know your GTM motion means you're paying people to figure out what direction to go. Get the strategy right first, then hire to execute it.‍
2. Treating headcount as the whole budget. People are a percentage of your marketing budget, not the entirety of it. If staff makes up more than 80% of your marketing spend, something is structurally wrong.‍
3. Underfunding programs while overfunding salaries. A marketer with no budget to run campaigns, attend events, or test paid channels is a marketer who can't do their job.‍
4. Ignoring what competitors spend. Look at how similar companies in your space invest in marketing. A well-funded Series C competitor likely started much leaner. Their early-stage spend is the more useful benchmark.

Waiting until you have more revenue to invest. Marketing is what generates revenue. Waiting until revenue grows to invest in marketing is circular logic that keeps early stage startups stuck.

The verdict

Marketing is often served leftovers. Not even the good ones. I'm talking about the soggy green bean casserole that should have been thrown away two days after Thanksgiving.

Most founders aren't trying to underfund marketing. They're just navigating a lot of competing priorities and not always sure where to put the money. Here's the short version of what I'd tell any early stage founder:

• If you have aggressive growth goals, invest in marketing like you invest in your product.
• People make up a percentage of your marketing budget, not the whole thing.
• Allocate what you can, build in room for experimentation, and get advice from someone who's been there.

I've been the first marketer in a business 3 times over. I've seen the mistakes. Hired more people when I had no budget left to run the campaign. Hired conservatively when we needed to be more aggressive. I've recommended marketing budgets and ran teams that made great use of them.

The field of marketing has grown enormously, and without strong guidance from people who've done this a time or two, it's genuinely hard to know which direction to take. If you have questions about how much to spend and on what, I'm here to help.

Court adjourned.