When is that a thing? I can imagine that those scenarios exist, for example you make a product that isn't nearly as good as a product that every savvy user already knows about (1and1mywebsite for example), but what is a common example?
This is very routine when you make games for mobile.
Every successful game company for mobile had lots of investment in marketing.
This also applies for non-mobile too actually, Activision for example famously spends more money in marketing than development, Modern Warfare 2 for example had a marketing budget of 250 million.
Because of awful mobile "discoverability" you need marketing, there is no other way, you just need it, people WON'T EVER find you unless they see a ad, someone refers the thing to them, or they see front page in the store (and when this happen, you already is doing well...)
EDIT about viral: My company in particular makes games for children, we cannot rely on anything that looks remotely anti-ethical... All our competitors (both with success and failures) rely mostly on marketing while they don't have a brand.
about Marketing expenses: The need for money, is mostly to test what works, and what does not, with some things is easy and every small company (including us) already do, that is test campaigns in AdMob, AppBrain and so on, the problem is the next "tier" is with companies that charge 20K USD upfront for their basic services... We all know that you need to hire them, but for obvious reasons everyone is secretive about WHO you hire, ensuring a sort of barrier of entry, where newcomers must waste money around until they find the company that really deliver.
And finally, organic growth and small marketing works, and the amount of users do climb, the problem it is not fast enough to cover fixed costs for a LOOOONG time, way longer than the runway.
Tim is, in this blog, forcing you to REALLY define need, and I think "tons of marketing dollars for initial launch" is not a need, ever. What you need is to prove that, when they find the game, they'll download and pay for it. Invest $100 in marketing, and see what your ROI is. If it's high enough, somebody with half a brain would put up the money to amp up the spend.
I do not agree that these "need" massive marketing, but it does depend on the scale. The only game I worked with delivering has over 20,000 downloads and absolutely no marketing, because there are a ton of blogs that write about iPhone games. It's not a very good game, and it has absolutely 0 viral mechanics, or else I'd posit we'd have more.
We were lucky, to be fair, but I disagree that a "startup" that is making a game "needs" massive marketing dollars. It seems like you "need" viral mechanics, press, devoted fans, or an incremental ad spending campaign where you constantly re-invest the money you have.