The People v. Budget

How early stage startups should allocate their marketing budget between people, programs, and tools — and why most get it wrong

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.

Why marketing investment matters more than most early stage founders think

The founders who get it usually say things like: "I want prospects to be more educated before they talk to sales." "I want us to look bigger than we are." "When marketing generates the leads, deals close faster. I want more of that."

That's what 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.

How much should an early stage startup spend on marketing?

There's no single right number — it depends on your growth ambitions, your competitive environment, and how much runway you have. But benchmarks 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% hypergrowth companies investing upward of 300% in year one.

High-growth (250–384% of revenue): The territory of AI-native startups and companies entering crowded, fast-moving markets where brand awareness is a race. These companies are often venture-backed with the runway to operate at a planned loss.

Median growth (80–120% of revenue): Where most venture-backed early stage B2B startups should be thinking. You're spending aggressively enough to build pipeline and test channels, but not burning capital without a learning plan.

Conservative growth (20–50% of revenue): Bootstrapped companies, startups in lower-competition markets, or founders still validating product-market fit. There's nothing wrong with this tier — but be honest with yourself about whether you're being strategic or just scared to spend.

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

• Align marketing spend to your overall GTM strategy first
• Determine what skills are needed to execute the strategy
• Identify what should be powered by people versus tools or partners
• Build in 20% for experimentation and opportunity

Five marketing budget mistakes early stage founders make

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.

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.

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.

Ignoring what competitors spend. Look at how similar companies in your space invest in marketing.

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. 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.

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.