Marketing drives sales, sales bring revenue, revenue can be used for expansion. Besides, $100,000 - $300,000 is really not a lot of money for a profitable company with $20 million in venture capital and $1 million in sales in the last month.
They say that they are having a tough time getting their product approved to sell in Europe due to regulations. I am willing to bet that given a few hundred thousand dollars, I could get almost any food product approved to sell almost anywhere. Presumably, that would provide a much larger boost to sales than video game marketing.
If they were already selling in Asia, I can see how video game marketing might be the most beneficial strategy due to popularity…but, again, given a few hundred thousand dollars, selling to the majority of the world’s population (Asia) would likely be a better strategy.
Opening up to new markets is almost always the best strategy to growth. Large scale marketing efforts are something you resign yourself to once you are done with expansion.
Here’s what Rob Rhinehart said about expanding to Europe in his recent Reddit AMA:
It doesn’t sound like money is the issue. Or, at least, I don’t understand how throwing (another) $1 million at the problem would make regulatory approval go any faster. How would money speed things up?
$5.3 trillion is spent every year in the United States on food, and $111 billion in Canada. A negligible fraction of 1% of that is Soylent. Soylent has a lot of potential growth left in North America; it’s not as if the market is already saturated with Soylent. Marketing is a way for Soylent to reach more North American consumers. Marketing isn’t necessarily “something you resign yourself to once you are done with expansion.” Marketing is an important part of almost any business, and often right from the beginning.
Marketing to the current North American market and expanding to new markets are two paths to growth that Rosa Labs is pursuing simultaneously. It’s only an either/or scenario if spending money on North America-focused marketing is taking money away from the effort to expand to Europe and Asia. As far as I know, it isn’t.
And as for e-sports marketing specifically, e-sports is dominated by China and South Korea, but e-sports is still a really big phenomenon in North America. ESPN says that “North America and Europe now claim 28 million eSports fans and the number is growing by 21 percent a year.” North America makes up roughly 30% of the population of North America and Europe. If 30% of those fans are in North America, that’s 8.4 million. That may be a small number if you’re selling iPhones, but it’s a big number if you’re selling Soylent.
Yes, and Soylent has one or two new markets already. One is Canada, and the other is called the United States. But maybe it isn’t fair to call the US a new market. In view of its size, let’s call it 50 new markets!
I have a feeling Europe isn’t as easy a target as I first imagined. Good competition is already in place, and they are hard at work copying and enhancing the ideas invented by Soylent.
I am not so sure that direct attack is the right approach to Europe for Soylent.
Grease a few palms?
I’ve tried Joylent. Personally I didn’t think it was any good. Are there any better European pseudo-Soylents? I kinda think it will be easy for Rosa Labs to come in and offer a more delicious alternative to what people are already drinking, with a smoother texture and more credibility vis-à-vis nutritional science.
It makes perfect sense for Soylent to target gamers.
Gamers = teenage to college aged males.
Soylent target market = college aged males.
College aged males in existing markets could add thousands if not tens of thousands of subscribers.
Opening up markets not yet reached by Soylent could add hundreds of thousands, if not millions of subscribers.
I haven’t tried any non-Rosa Labs soylents; I’m just going by reports I’ve seen on this site and reviews I’ve seen linked to from this site.
The idea that spending less on marketing would somehow accelerate regulatory approval in Europe is specious at best.
However, the actual idea that spending more on regulatory approval in any region would accelerate approval in that region seems sound.
Not to me. What is the mechanism of action there? I admit that I am wholly ignorant of this process, but wouldn’t any fees be nominal, or at least have known costs? Is there really some way to pay someone to make the process go faster?
I am not sure what the cost of administration to gain regulatory approval to sell in a region is. Likely, it costs different amounts for different regions.
Some possible costs might include:
Filling out Paperwork
Transportation for Company Representatives
Testing of Food Products to assess components
Making sure people don’t get sick from your product through testing
Bloodwork or other testing of individuals
Distribution or Shipping costs
These are just off the top of my head. Like I said, I have no idea what all it takes to gain access to sell in regions of the world and how those costs are broken down. Obviously there are costs associated with it or companies would not find it a barrier to do so. I don’t think there is any question about this. I am not sure why you are questioning that there are costs associated with expanding into new regions: This seems self evident to me.
Is this a common practice in Europe? I heard stories years ago about how rampant corruption was in Russia, but I didn’t think western Europe was that bad. I can’t imagine bribing officials is common in the UK or France, for instance, but perhaps I am naïve.
Yes, but it doesn’t seem like a problem where spending X*2 rather than X amount of money will get you approved twice as fast. Or if it is, no one has explained how with any credibility. The problem was not posed as a monetary problem, but as an approval/regulation problem. It’s not like Rosa Labs doesn’t likely have quite a lot of cash available. If it was as simple as writing a few checks, I think it would be done by now.
I am not sure. Like I said, that was just a list of possible costs. I have no idea what the actual costs are. I have heard of bribing being prevalent in Russia and Asia, but again, I have no firsthand knowledge. I just know that there are costs associated with expansion. This seems self-evident to me.
I didn’t break it down into X*2 or anything. I just am making the assertion that expanding into new areas of the globe costs money. I think said money would gain more customers through expansion than through advertising at such an early stage.
This is just my opinion, and I could very well be wrong. It just seems like given the choice between advertising to a country where you already sell and expanding into a new country (region, whatever), the latter would provide more sales. Rosa Labs has chosen to expand slowly into other regions to the chagrin of potential customers and the reasoning given was that they did not want to expand too quickly and outstrip their ability to provide for these customers. If that is truly the case, then the large amount of money being spent on advertising should be going to increasing capacity or other ways to expand.
Simply put, it is my view that money spent on expansion provides more and happier customers than the same amount of money spent on advertisement. I very well could be wrong.
I did some Googling and found the Corruption Perceptions Index, which seems pretty awesome:
High numbers (blue) indicate less perception of corruption, whereas lower numbers (red) indicate higher perception of corruption.
I don’t suppose it’s feasible to track actual corruption, since it doesn’t exactly happen in the open. It looks like perceived corruption is higher in Europe as a whole compared to the US and Canada. A lot of the world seems pretty awful, actually.
I don’t think anyone ever disputed that.
I guess the underlying assumption I disagree with is that Rosa Labs only has the money to do one or the other. That doesn’t seem likely to me at all, but I could be wrong.
Just FYI: The standard corporate budget for a company to spend on marketing is 5-7% of gross sales. (Although, some companies spend higher or lower than that amount.)
I am not sure what gross sales are for Soylent, although we have attempted some estimations for 2.0 in another thread.
Also, a marketing budget encompasses many things, such as salaries for those in a marketing department including social media personnel, the production of media such as video, website content, sponsorship, and advertisements.
The amounts mentioned for sponsorship could fit into an advertising budget given the sales that Soylent is likely to attain, if they choose to use resources in that manner and felt like the advertising through those means were more effective than other options they may have.
Unfortunately, Chess doesn’t get watched millions of people fairly regularly.
League has pulled in millions of concurrent viewers and Hearthstone is a growing(?) esports market that gets at least hundreds of thousands of viewers. Being able to reach that many Highly Targeted potential customers with such a small amount of money is ridiculous bang for their buck.
There are different kinds of visibility, and people watching games is just one. Chess is part of world culture. You will see references to chess every day if you watch closely – I know, since I used to write a feature called Chess Metaphor Watch about them.
I imagine that chess is referred to by billions of people every day.
I’m willing to bet that too! Someone give me a few hundred thousand dollars and I’ll totally show you.