Monday, April 2, 2012

Marketing Lessons From the Little Guys

Marketing Lessons From the ‘Little Guys’

Big businesses need to lighten up, get creative and take a few cues from small business owners.

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Today's Editor's Picks

It's usually assumed that when it comes to marketing, small businesses can always learn from their larger counterparts, right? Chances are, the big guys have survived their fair share of marketing campaigns, whether good, bad or downright ugly. Factor in an ample marketing budget and a well-paid marketing team and they're probably light years ahead of smaller businesses. But is that really the case? I beg to differ.

Corporations tend to keep a closer eye on their bottom line, which means they're far less likely to take risks or test out new ideas. Conversely, the folks in charge could also decide to gobble up every last penny in the budget knowing if they don't use it now, it might not be there next year. But what if those dollars came out of their own checking accounts? They'd certainly think twice before spending it now, wouldn't they?

Most small business owners experience pangs of guilt after opening up their pocketbooks. I know I did when I first launched my e-mail marketing company,VerticalResponse. It seemed like every dollar spent on advertising was one less dollar going toward buying new supplies or technology, hiring employees or even clearing their paychecks. It's a pretty tough pill to swallow. Because every dollar is so important, small businesses want to see results for everything they spend, and they want to see them quick.

That's why small businesses must be super creative when it comes to acquiring customers. Here are some things that I think small businesses are doing good that larger companies might learn a thing or two from.

Grassroots Marketing

Remember the days of good ol'-fashioned face-to-face networking? Ever see anyone from a huge corporation at a local Chamber of Commerce function? Small business owners frequent these gatherings and network like there's no tomorrow, because a lot times this is their only opportunity to get out of their store or office to meet like-minded people. The San Francisco Chamber, for example, holds after-hours events where local business owners meet, exchange ideas, establish leads and stay in touch however they can. Bigger companies should follow suit by designating community coordinators who can get to know owners by name and attach real, human and hopefully smilling faces to corporate logos.

Social Networking

Small businesses excel at building genuine connections, engaging existing customers and leveraging their networks to secure new prospects. Take San Francisco-based pet boarding facility Pet Camp. They keep in touch with e-mail marketing and include lots of easy-to-share content. They take photos of their campers and post them to theirFacebook page (often with hilarious captions), so proud moms and dads can check in on their four-legged family member while away. Of course, larger companies do encourage social media participation - as long as employees follow their gazillion-page social media rulebook. Now I'm not saying social media should be a free-for-all, but companies of all sizes can benefit from having a personality and some flexibility when it comes to social media.

Over-Delivering

In order to set themselves apart from competitors, "mom-and-pop" operations realize a few extra touches make all the difference in the world. I once bought a pair of shoes from a seller on eBay. The package not only arrived in pristine condition, but came with a free shoehorn, leather protection and hand cream. Talk about making the most of your packaging real estate. When was the last time you were treated to a freebie by Amazon?

Being Human

Small businesses do a great job at showing what happens behind the scenes, which helps establish a stronger and more genuine connection with customers. Sonoma, Calif.-based winery Longboard Vineyards encourages readers to learn about Oded the owner, his passion for wine-making and his loyal Longboardians while browsing photos of the lush grounds and their trips to Costa Rica and San Diego. What an great way to immerse people in the company culture.

Lightening Up

Many entrepreneurs start their own businesses for the chance to do what they truly enjoy, not to make it to the top of the corporate ladder. Customers sense this the moment they enter their stores or visit their websites. Vermont's Magic Hat Brew Company injects fun into everything they do, whether it's telling folks about upcoming events or where to buy beer. My own company once shot a rap video to increase awareness of what we do and years later, it's still getting views.

I challenge big businesses to lighten up, get creative and take a few cues from small business owners. Urge your CMOs to pretend they're spending their own money and you'll be surprised at what they come up with to battle the competition and the "little guys." But watch out, we're sure to put up a fight!

Sunday, April 1, 2012

Confessions of an EX-Manager

Confessions of an Ex-Manager

Sure, there were successes along the way. But there were also mistakes--lots of them. An ex-manager reflects on his rookie days.

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Before I started writing full-time in 2001, I was a corporate manager for a large consumer electronics retailer. I had a large staff, mostly writers and designers plus a few business analysts. Now nearing the 10-year anniversary of my exit from the corporate world, I’ve decided to look back and evaluate how I did as a manager.

In some ways, the passion and drive I have to succeed helped me get to a fairly high-ranking position, just one level away from the vice president of a then 50,000-plus employee company. At the same time, I realize now that my disposition and skills were no match for the vagaries of corporate life. Here are a few lessons I learned.

1. Don’t manage by walking around

Many entrepreneurs I know suggest the old walk around the office to chit-chat with employees. It helps fuel discussions, they say, and helps you learn about your staff and their day-to-day challenges. I spent too much time applying this principle. I learned that, by walking around, I was communicating to my staff that I had nothing else to do. It was too easy for them to interpret my casual management style as a kind of introverted overlord. There are better, more intentional ways to get to know your employees than this free-form method.

2. Relationships always wins out

I made plenty of mistakes with my staff, but the one that sticks out the most was how I tended to avoid building relationships. I was too busy managing and not focused enough on understanding what was going on in the life of my employees. I tended to treat them as a means to an end. The best managers have invested time in meeting employees for lunch, hanging out after work, and even helping them out in situations that arise—say, offering to help them move into a new apartment. I rarely met employees outside of work.

3. It’s okay to avoid the conflict creator

I grew up in a home that avoided conflict at all costs, so I overcompensated for this upbringing by addressing conflict at every turn. I’d discuss solutions to a work conflict for hours at a time, analyzing the core issues and coaching the employee on how to reach a resolution. Unfortunately, what I failed to realize at the time was that some employees will never resolve a conflict. In fact, some tend to enjoy conflicts and want everyone else to be a part of them too. If I rejoined the corporate workforce today, I’d look for signs for these conflict creators and avoid being dragged into every petty problem.

4. You don’t get paid for sleepless nights

I was always told that managers get paid more for the sleepless nights. In reality, the entire staff holds the responsibility for projects—it is a shared effort. Every employee has to deal with the stress of completing projects, and everyone has a certain level of responsibility. The concept of a distant manager holding all of the burden implies that you’re not part of the team, that you have not delegated responsibilities effectively, and you have not communicated the goals of a project.

OK, those are my lessons learned. What are yours?

Thursday, March 29, 2012

Ways to make your start-up business stand out

OUGH ENTREPRENEURSHIP | Jon Burgstone and Bill Murphy, Jr.

Mar 29, 2012

4 Sure Ways to Make Your Start-up Stand Out

Here's how to be seen as a one-of-a-kind true original. Even if you're not.

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Today's Editor's Picks

Here's a dirty little secret about entrepreneurship: Almost everything has been done before—and if it hasn't, and you come up with an awesome, unique new venture idea, chances are you'll quickly find me-too competitors nipping at your heels.

Classically, you'd like to be able to come out far ahead against the five-forces benchmarks set up by Michael Porter: barriers to entry, limited competition, a growing industry, and a positive balance of power in terms of your relationships with your customers and your suppliers.

But the truth is that these forces don't usually line up, and yet as an entrepreneur you have to push forward and create advantages anyway—or else wind down and find something else to do.

So, if your service or product is in danger of becoming a commodity, what can you do to give yourself a leg up?

We caught up with Andrew Laffoon and Aryk Grosz, cofounders of the online custom photo book company, Mixbook, to ask them how they've built strategies to compete with larger companies in the same space. They've gone from an idea that Grosz developed with over a Quiznos sandwich to an 85-employee company with more than five million customer projects in the space of five years.

Here are the highlights of our discsussion:

1. Think. Then be ready to think different.

The earliest version of Mixbook was pitched to high school officials who, presumably, would buy it and allow hstudents to create collaborative yearbooks. But when Laffoon, 29, and Grosz 27, demonstrated what they'd come up with to one of their first potential customers, he pushed back hard—not because he didn't like the idea, he said, but because it would work too well and put him out of a job.

"I kid you not. His jaw dropped," Laffoon recalled. "Then he turned [and said], 'I will never, never, ever allow this in my school. Do you realize how many jobs are created by the yearbook industry? I have a mortgage!'"

Back at the drawing board, Mixbook's cofounders revamped their product, thinking of bigger markets—a creative, collaborate means to work on any kind of book—where users could share their work for free if they wanted to.

"We thought of bigger markets, that you could collaborate on any kind of book—baby, wedding, family reunions," Laffoon said. "We realized we had to go make money so we spent the last five years trying to learn how to do that."

2. See the white space.

Even though some of their competitors had lots of financing and marketing power—Snapfish is owned by HP, for example, and Kodak had a 100-year head start in the photography business—Laffoon said they realized the total addressable market was big enough that they could still have a shot at being a player.

"Our entire competitive set owns less than 5% of the addressable market. Even awareness of the category is low as a whole. So we thought there was a huge opportunity despite the competitive set," he said.

3. Move as fast as only you can.

As a startup, you have one pretty uniform advantage over established competitors: speed—speed in hiring new employees, making adjustments to your product, responding to customer concerns, and even acquiring competitors.

"Acquisitions are an easy one," Laffoon said. "In recent deals, in all of them there were at least three other offers. The reason we won was definitely not because we had the most attractive terms. It's because we move extremely fast. We go from talking about a deal to a term sheet in four hours."

4. Be really, really, really persistent.

Accept at the outset that you'll probably have to knock on hundreds of doors before you'll find the ones that open. Everybody says no: Employees won't join your company. Advisers will want you to change your plan. Customers won't buy your product. But if you can take that rejection as a gift—an opportunity to learn, improve and persist—it can lead to an advantage.

"We were told 'no' by venture capitalists over 50 times before we closed our Series A round," Laffon said. "They told us to change our business model, to change our technology, to switch markets, even to switch to a “video advertising” startup. Ultimately, our persistence paid off."

(Laffoon and Grosz are alumni of the Center for Entrepreneurship and Technology at the University of California, Berkeley, of which the coauthor of this column, Jon Burgstone, is the Founding Faculty Chair.)

Tuesday, March 27, 2012

5 Destinations where your dollar goes further

5 Destinations Where the Dollar Goes Further

By Farnoosh Torabi | Yahoo! Finance – 12 hours ago

Is your passport collecting dust? Want to go on a trip but worried about stretching your dollars? Well, what if I told you there are a number of exciting destinations beyond our borders where the greenback is as good as gold?

Mark Orwoll, International Editor at Travel + Leisure magazine, says, depending on where you go, the US dollar can offer a ton of bang for every converted buck.

Here are five countries the dollar goes further.

Belize
The local currency in this Central American paradise is pegged two-to-one to the U.S. dollar and the conversion won’t disappoint. A full culinary experience in a mid-price restaurant costs less than 20 dollars per person. And you can find lodging here for as little as $50 a night.

“Belize is so affordable that it’s fast becoming a retirement hotspot. In some circumstances you could live there tax-free and ultimately live in the country for less than $25,000 year,” says Orwoll.Argentina
Head on further south and the U.S. dollar will be met with similar VIP treatment in Argentina. It’s capital Buenos Aires is known as the Paris of South America and luxury-seeking travels can find 4-star hotels for less than $75 a night.

Food in Argentina can be very affordable too. Orwoll recommends heading to Cafayete, a popular town in Argentina's wine region, and you'll find a place there called La Casa de Empanadas where they make more than a dozen varieties of empanadas off the city's main square. “Two people can have dinner there for just $17,” says Orwoll.

Taiwan
Another country where the dollar goes farther is Taiwan. While hotel prices across Asia have jumped by an average 4 percent year-over-year, rooms in Taipei, the capital of Taiwan, have fallen 10 percent. The Regent Taipei, one of the top hotels in the city, goes for roughly $250 per night. And you can book a 4-star hotel for as little as $100-$125.

“Tips are generally not expected in Taiwan, either,” says Orwoll. “At better hotels, you might give the bellhop a dollar per bag, but otherwise, taxi drivers don't expect tips, and restaurants add a small service fee in lieu of a tip, so that's a nice way to save some money.”

Greece
While the economy is going through a rough patch, tourism remains strong in Greece. In Athens, hotel rates have dropped 15 percent since last year. For example, at the Westin Athens Astir Palace Beach Resort, the Taste of Athens Package costs less than $200 a night. It comes with daily breakfast, free tickets to ancient sites, and free shuttle service to and from the hotel.

Poland
Poland could be Europe’s best-kept budgeting secret. The country has some of the cheapest five-star hotels in the world and travel rates are expected to fall 20 percent this summer after the Euro Cup soccer finals.

And we’d love to hear from you. What are your travel plans this year, and how do you plan to save?

Hair Vs Greed at facebook: Great article

Fear vs. Greed at Facebook

Mark Zuckerberg and his executive team have been extremely successful at retaining equity in their company. But how well do most other founders do?

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Mark Zuckerberg Facebook

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Even as Facebook prepares to go public, Mark Zuckerberg, the founder and CEO, still owns 28% of his company. As a whole, Zuckerberg, his co-founders, and his former and present employees, own about 55% of Facebook. How did they do this?

Fear vs. Greed

Each time founders seek capital they face what my colleague Bill Sahlman refers to as the fear versus greed tradeoff. On the one hand, founders fear that they will be forced to shut down their startup if they run out of money, which leads them to rush to raise new capital. On the other hand, they are also understandably greedy about maintaining a high equity stake, by minimizing their dilution. (Dilution is the progressive shrinking of each executive’s equity percentage as the startup raises each round of financing.) When founders delay raising each round, they are typically hoping to achieve certain milestones that will raise the startup’s valuation. That will reduce the percentage of stock they will have to cede to their financiers, and thus reduce their dilution.

In every round of financing, Zuckerberg and his Facebook team have impressively minimized their dilution. Our CompStudy data, which allows us to compare Facebook’s equity dilution against that of some 2,500 technology startups, shows how successful the team has been. To estimate how much the founders and other insiders owned after each of the startup’s first three rounds of financing, we used the two major factors that affect dilution: the capital raised by the startup and the pre-money valuation it received.

As shown in Figure 9.5 of my book, The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup, the averages for technology startups are as follows:

First round: Raise $3 million, with a pre-money valuation of $5 million.
Second round: Raise $5.5 million, with a valuation of $10 million.
Third round: Raise $7 million, with a valuation of $15 million.

We then compared those numbers to Facebook’s numbers for its first three rounds:

First round: Raise $500,000, with a pre-money valuation of about $5 million.
Second round: Raise $12.7 million, with a valuation of about $100 million.
Third round: Raise $27.5 million raised, valuation of about $525 million.

The resulting difference between the dilution experienced by the Facebook team versus that of the average technology startup is striking across all three rounds, as shown below.

After his first round of financing, Zuckerberg and the other Facebook insiders still owned about 91% of the equity. Insiders in the typical startup own only 63% after round one. As each round progressed, Zuckerberg widened the dilution gap, to the point where after the third round of financing, 77% of Facebook’s equity was owned by insiders, compared to only 27% in the typical startup.

One of a Kind

We then analyzed nearly 2,000 technology companies that submitted data to our CompStudy survey from 2008 through 2011, focusing on the software startups that had raised three or more rounds of financing. When they had finished raising their third rounds, in not a single startup did the founders still own 77%:

Minimizing dilution can come with a stiff price. Zuckerberg and his team faced tremendous fear-vs.-greed pressures. At the time of Facebook’s founding, the pressures to quickly raise a lot of money were heightened by the prominence of its major social-networking competitor, MySpace, which had a head start and was better funded. In the first of Zuckerberg’s decisions to resist the call to grow his company quickly (which would have necessitated raising a lot of capital), he consciously limited the site first to Harvard, then to a hand-picked group of schools, and then to a steadily widening net of potential users. Yet at the point where the typical startup with a pre-money valuation of $5 million is raising $3 million (and thus relinquishing 38.5% of the company to outsiders), Zuckerberg raised only $500,000, retaining a far higher percentage of his startup for himself and his team. In the quest to minimize dilution and maximize control, Facebook skated to the edge of the “fear” cliff multiple times in their early days.

An Underappreciated Dilutor: Founders’ Equity Splits

In truth, Zuckerberg was minimizing his dilution even before the first round of outside financing. A founder’s first real dilution – and often the most powerful – occurs when equity is split with cofounders. Compared to raising a typical round of outside financing, a founder is more diluted by adopting a 50/50 co-founding split instead of founding solo, or even taking 70% and giving a co-founder 30% (as Zuckerberg did, regretted, and sought to change).

By co-founding, a founder is betting that the value added by a co-founder will justify the relinquished equity. Throughout one’s entrepreneurial journey, there is a tension between amassing resources and wealth versus retaining control of the startup. I call this tension the “Rich vs. King” tradeoff– a topic to be explored in a future column.

Monday, March 26, 2012

Twitter opens up small business ad program

Twitter Opens Up Small Business Ad Program

10,000 small business merchants take their ads to Twitter this week.

Twitter and American Express opened up its advertising incentive program to small businesses Monday—a plan that the companies first announced earlier this month. Ten thousand American Express small business merchants were invited to run ad campaigns on Twitter alongside worldwide corporations like Starbucks and others, saysTechCrunch. Twitter is hoping to offer the program to more businesses in the coming weeks.

With access to Twitter’s Promoted Products, small businesses can opt to pay for promoted tweets and trending topics, embed promotions into user’s timelines, and even target a specific area of users (throughout the U.S. and worldwide). With Promoted Tweets going mobile, the program is a great advertising tool for your small business. Sign up here.—Maeghan Ouimet