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Monday, November 20, 2017

Lesson #282: Don’t Start Marketing Until You are Ready!

Posted By: George Deeb - 11/20/2017

I recently wrote about scaling companies , and the importance of having a solid marketing plan in place to support that growth.  But, wh...



I recently wrote about scaling companies, and the importance of having a solid marketing plan in place to support that growth.  But, what I didn’t talk about was when should you turn on that marketing in the first place?  The answer is pretty intuitive—not until you are ready!  But, what does that specifically mean?  Read on.

PRODUCT NEEDS TO BE READY

You don’t have anything to sell until you have a product complete . . . duh!   So, don’t turn on the marketing investment until you feel you have a product that you would be proud of.  A product you are confident won’t break, that has been fully through a quality control process.  A product that will make a good first impression, as you only get one chance to do that.  A minimum viable product is fine, it doesn’t need to have all the bells and whistles in it.  But, the key word there being: viable.  It must be good enough to be of a need to a customer, solving the core of some major pain point in the market.

CUSTOMER SERVICE NEEDS TO BE READY

Once you are actively selling to customers, they may have customer support questions or needs.  Make sure you have a process in place to handle those inbound phone calls and a way to quickly resolve any bugs that are being reported by users.  And, even if something slips through your QA process, make sure your customers know you are apologetic and on top of the issue, reporting back to them once it is fixed, and hopefully to their satisfaction.  The way you handle breaks, is as important as how you handle the sale in the first place.

CUSTOMER RETENTION & INFLUENCER MARKETING NEEDS TO BE READY

Yes, you need to be thinking about retaining new customers, as soon as you get them in the first place.  Did you have a way for them to follow you in social media?  Did you have a way to collect their email address, and opt them into your monthly newsletter (and, is the newsletter template and content calendar ready to go).  Do you have a way for them to become brand ambassadors, and share their happy experience with their friends or colleagues.  You might as well leverage their excitement while it is still fresh in their mind.

GET YOUR MARKETING ECONOMICS TESTED BEFORE GUNS BLAZING

Don’t spend $10,000 on marketing in one month, until you have tested $1,000 in ten places first.  Leverage growth hacking techniques and set clear objectives around calculating your marketing ROI.  Once you have a sense to which marketing techniques are working best, then you double down on those efforts with the vast majority of your spend.  But, the point here:  test, test and test again, until you get your cost of acquisition metrics at a low enough level to drive a healthy profit from the lifetime value of your revenues per customer.

GET AHEAD OF YOUR RECRUITING AND BACK OFFICE NEEDS

Hopefully, your initial marketing efforts will be a success, at which point you are going to want to pour kerosene on the fire, in the form of additional marketing efforts and investment. And, with a growing and bigger company, will come additional people and back office needs that will be needed to effectively manage and operate a business of that growing size.  So, figure out what additional bodies, equipment or space you will need to be successful in the future, and start warming up potential candidates and resources.  So, when you are finally ready to engage them, they are ready to go.

BE SENSITIVE TO THE CATCH 22

This whole post is talking about waiting to start your marketing efforts, until you are ready.  At, the same time, the venture capitalists you are pitching for capital will most likely want your marketing efforts tested and successful, before they will consider investing.  So, in one breath, I am saying “proceed slowly and cautiously”, and in the next breath, I am saying “go as fast as you can, if raising capital is important”, which is most likely the case for most of you.  That is a tight rope you are going to have to walk very carefully—you need the marketing data to attract funds, but not at the expense of upsetting your early adopters.


Hopefully, you now have a better sense to what is required to help prepare your business for a “ready for prime time” initial marketing effort.  It’s much more than simply an effort to acquire new customers.  It is also an effort to retain them, leverage word of mouth, efficiently scale the business and attract investment, all at the same time.  So, it is critical you get your first marketing efforts right!

For future posts, please follow me on Twitter at: @georgedeeb.



Monday, November 6, 2017

Lesson #281: Avoid Internally Shuffling People Into Wrong Roles

Posted By: George Deeb - 11/06/2017

The old adage, a “bird in hand is worth two in the bush” may work in some instances in business, but slotting people into employee roles...



The old adage, a “bird in hand is worth two in the bush” may work in some instances in business, but slotting people into employee roles is definitely not one of them.  I can’t tell you how many times I see early stage entrepreneurs slot a person into a role, simply because it is convenient, with them already known and on the team operating in an entirely different role.  Stop this madness!!  Do you want the quickest solution to your hiring needs, or the best solution?  Allow me to further explain.

HAVING RELEVANT EXPERIENCE IS KEY

Would you hire an auto mechanic to pilot an airplane?  Or, a landscaper to build an addition on your house?  Of course not.  So, why then, do so many of you move a technology developer into a marketing role, or an junior level contributor into a senior management role before they are ready, or slot a person in just because they are the quickest or most affordable option?  Building the right team for your startup is the single most important thing you will do, in terms of dictating your odds of success. And, getting the most qualified person in that role, with proven experience in that exact role is the key.

STARTUPS CAN’T AFFORD A LONG LEARNING CURVE

When you are an early stage business, you really can’t afford any mistakes; there simply isn’t the excess capital on hand to absorb those missteps.  As an example, if your marketing person hasn’t proven they know how to grow a user base in a cost effective way, you are most likely paying for their learning curve and for all the mistakes they make in their media buying decisions.  That is like flushing money down the toilet, compared to hiring a proven marketer that knows what they are doing based on years of similar experience.

RECRUITING TIME MAY SLOW YOU DOWN, BUT BEST FOR BUSINESS LONG TERM

Sometimes clients will say, “but we are moving quickly, and this candidate was the quickest option, as we don’t want to lose time recruiting”.  I’ve got news for you:  sometimes it is more important to take a pause, take one step back, in order to best position the business to take ten steps forward.  Nobody likes having to recruit a new role—that is typically a 3-6 month process by the time they are identified, interviewed and onboarded (time typically taken away from someone else’s normal job).  But, once the new person starts working, they are out of the gate running at full speed, like an Olympian sprinter making up whatever distance they need to take the lead.  Compare that to having an inexperienced person working during that same period, but inching along like a turtle in perpetuity.

BEING LIKED DOESN’T MEAN YOU HIRE THEM

I also hear things like, “but he is a really nice guy and good worker, and I wanted to find a place for him”.  Yes, I can see the appeal of that.  It is hard to find people that have the right personality fit or work ethic to fit into your culture.  That said, if there is not an open position for that person in which that person is trained or capable of succeeding, sometimes you need to make the hard decision of finding a different employee that is best qualified to do the job.  The same point I made above, about finding your Olympian sprinter as opposed to a turtle.

A RELEVANT CASE STUDY

I had a client that firmly believed that internally shuffling talent was the best thing for the business.  That could have been related to giving somebody a new promotion opportunity, putting out an immediate fire created by a departed employee, satisfying an employee that wanted to try a new department, rewarding somebody that had been with the company a long time, etc.   Not one of these internal shuffles bore fruit.  And, worse yet, the company’s revenues stagnated for years; they simply could not break through to the next level of their growth.  When you manage with emotions or move too quickly, instead of data-supported experience, you often end up trying to put a “square peg in a circular hole”.  And, by the time you realize it, it is often too late.

CONCLUDING THOUGHTS

I am not saying you should never internally shuffle people.  There are many scenarios it can work out great.  Maybe that is moving a salesperson into a similar business development role, or an accountant into a similar controller role, as examples.  But, when you try to mold “gatherers into hunters” or “artists into intellectuals” or “doers into leaders”, you often end up with a big mess on your hands, and losing a lot of valuable time in the process, versus filling the role the right way from the start.


For future posts, please follow me on Twitter at: @georgedeeb.



Friday, November 3, 2017

How to Build a Startup Ecosystem

Posted By: George Deeb - 11/03/2017

Chicago’s startup ecosystem is exploding . But so are others all across the country and around the world, with varying levels of succe...



Chicago’s startup ecosystem is exploding. But so are others all across the country and around the world, with varying levels of success. I wanted to talk about the mix of ingredients that are needed to make a startup ecosystem thrive over time, so leaders in your local communities can have a blueprint to follow to propel your local startup ecosystem, and hopefully, your own success in the process.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.


Monday, October 30, 2017

Lesson #280: Tell a Story When Marketing Your Company

Posted By: George Deeb - 10/30/2017

I recently met John Replogle, one of the most successful entrepreneurs and consumer marketers I have ever met, which says a lot, given m...



I recently met John Replogle, one of the most successful entrepreneurs and consumer marketers I have ever met, which says a lot, given my rolodex filled with many rock-star entrepreneurs.  In that meeting, I asked him, with the sea of competition in your space (largely using the same ingredients), how do you break out from the clutter.  His answer was short and sweet, it's all about "telling the right story".  Let's learn more.

ABOUT JOHN REPLOGLE

John has held CEO, President or GM roles roles at some of the biggest consumer brands, including Guinness (Diageo), Unilever, Burt's Bees and Seventh Generation.  What caught my attention was the fact he was able to sell two different companies for huge valuations in a short period of time.  He sold Burt's Bees to Clorox for $925MM in 2007, and he sold Seventh Generation to Unilever for around $650MM in 2016.  He currently is a venture investor and advisor at One Better Ventures in Raleigh, who specializes in helping growth-stage companies in the consumer products space.  Their portfolio includes many companies that are off to the races, including Leesa, the online mattress startup, who has built up over $100MM in revenues in less than three years.  So, when John talks consumer marketing, you should listen!

THE BURT'S BEES STORY

Burt's Bees is the natural skin care business, doing around $250MM in revenue.  When you go to their website and click on their "About Us Page", nowhere do you see the word skin care anywhere on the page.  It leads with their founder, Burt Shavitz, a bee keeper who learned the benefits of bees wax as a lip balm.  It speaks the the company's purpose: the greater good for the company's customers, employees and environment, from the products through the packaging (simple, natural, responsible).  They speak to key benefits of the product, like being nutrient rich, born out of "nature as a laboratory", using "whole formulas" and "ethical and sustainable standards".  It's as if Burt himself is still personally making you their products out of nature's back yard. 

THE SEVENTH GENERATION STORY

Seventh Generation is the natural household cleaners business, also doing around $250MM in revenue.  When you go to their website and click on their "About Us Page", again nothing about the cleaners themselves.  It is all about their "mission" to make a difference and save the planet.  They talk about building communities, transforming commerce, nurturing nature, their philanthropic foundation and reporting on corporate consciousness.  Yes, you buy their product, and the planet lives to see another day!

WHAT THIS MEANS TO YOU

I have previously written about focusing on the "why", not the "what", when selling your products.  That post was trying to get you to speak less about your "features and functionalities", and more about how your product is going to help your customers drive more revenues, lower costs or improve their customer experience (which is what they really care about).

But, this post is taking it to the next level.  Now, we are speaking to creating a personality for your company itself, as consumers love a good story almost more than they care about the product itself (especially when those products are commodities).  Burt's Bees is not a manufacturer of skin care (a dime a dozen when said that way), it is nature's laboratory founded in a bee hive.  Seventh Generation is not a manufacturer of cleaning supplies, it is a steward for the making the planet a better place to live.

So, take out the "About Us" page from all your own websites.  Start scratching out anything that speaks to the "what" your business does.  Replace it with the "why" you matter to your customers, with the personality and positioning within the world of what your company aspires to be.  All while building a community around that passion point, to help you spread the word.  By better telling your corporate story, one that resonates with customers and differentiates you from competitors, hopefully massive sales will soon follow.

Thanks, John, for the inspiration here!


For future posts, please follow me on Twitter at: @georgedeeb.


Monday, October 23, 2017

Lesson #279: Ali Express, The Amazon Killer You Never Heard Of

Posted By: George Deeb - 10/23/2017

Back in Lesson #251, I talked about the U.S. based ecommerce companies being at risk to Chinese manufacturers selling direct on Amazon ...



Back in Lesson #251, I talked about the U.S. based ecommerce companies being at risk to Chinese manufacturers selling direct on Amazon.  I wanted to provide a little more color on this topic, as I think I found the business that may actually be able to disintermediate Amazon itself!!

First a quick history on the evolution of ecommerce entrepreneurs, and their marketing and fulfillment platform of choice, over the years.

Phase 1:   Sell on your own site, market yourself and fulfill yourself.  That meant the ecommerce company needed to invest all the marketing dollars (and risk thereto), all the warehouse investment (and risk thereto) and all the inventory investment (and risk thereto).  Only big, well funded companies could make that work.

Phase 2:   Sell on Amazon, marketed by Amazon, fulfilled Amazon.  This meant the ecommerce company no longer has to worry about marketing risk (tapping into Amazon's huge website traffic) or warehousing risk (tapping into Amazon's huge distribution network).  They simply had to take inventory risk of funding their working capital investment and eating whatever inventory didn't sell.

Phase 3:  The newest generation of ecommerce entrepreneurs are bypassing Amazon altogether, since they take such a large fee for their marketing and fulfillment services.  Instead, they are marketing on Facebook/ YouTube/ Pinterest/ Instagram (keeping the marketing risk), sending traffic to their own "plug and play" Shopify website (which can easily be set up in a day at very little cost), with all orders fulfilled by "plug and play" Ali Express, a division of China-based Alibaba (who drop ship one-off orders directly to U.S. consumers from their Chinese warehouses.  So, here, the ecommerce company keeps the marketing risk (because it has uncovered profitable "impulse buy" or "financial arbitrage" marketing techniques through the social media sites), but no longer needs to pay Amazon a big fee for warehousing and distribution, and better yet, no longer needs to take any working capital or inventory risk, since Ali Express sells you inventory one item at a time, after it is already sold.  This is like lowering your startup costs and risks by 80%, and opening up a sea of entrepreneurs trying to figure out this model.  This is where the market is today.

Potential Phase 4.  If I were Alibaba, I would figure out how to launch an Amazon killer that aggregates U.S. consumers (no marketing risk for ecommerce entrepreneurs, like Amazon) and fulfills orders by Ali Express (no warehousing risk, like Amazon, but with the added benefit of no inventory risk, unlike Amazon).  With a little marketing effort in the U.S., maybe Ali Express becomes that solution, as nothing prevents U.S. consumers from buying direct on that site today.  That is the next evolution of where I think the market will go, and could end up being an Amazon killer in the process.

Now we know why Amazon is so focused on adding international suppliers to their site--to get prices down to international wholesale levels to stay competitive with Alibaba.  But, that still leaves Amazon saddled with their huge warehousing and distribution investment in the U.S., which Alibaba does not have.  Which explains why Amazon is so focused on same day shipping, as their core competitive advantage vs. Alibaba and all others, appealing to the U.S. consumers' desire for immediate gratification.  But, if consumers are willing to wait 2-3 weeks for their ecommerce orders to arrive from China, they may be able to save material monies, as prices on Amazon will end up higher than Ali Express when the dust settles, to cover their warehousing and distribution investment.

Food for thought, for all you ecommerce entrepreneurs out there.  It has never been easier to launch an ecommerce business.  Amazon made it easy with their Fulfilled By Amazon solutions and Ali Express has made it even easier, drop shipping direct to U.S. consumers from China, without you needing an inventory or working capital investment.  Time will tell how Alibaba ultimately plays the U.S. consumer market, potentially taking your start up investment down, closer to zero, as long as marketing arbitrage opportunities exist on the social media networks where you can get an immediate payback on impulse-buy oriented products.  Maybe Alibaba and Facebook should partner with each other here, taking Amazon off its mighty perch?

For future posts, please follow me on Twitter at: @georgedeeb.



Tuesday, October 17, 2017

Lesson #278: Entrepreneurs Mellow & Mature With Age

Posted By: George Deeb - 10/17/2017

I've been an entrepreneur for most of my life. I started an odd-jobs business in high school, founded a collectible comic-book busin...



I've been an entrepreneur for most of my life. I started an odd-jobs business in high school, founded a collectible comic-book business in college and launched my first venture capital backed startup -- an adventure-travel company -- in my 20's.  And, my entrepreneurial endeavors continue today. I'm in my late 40s, running Red Rocket, looking for companies to buy and advising hundreds of early-stage businesses. 

Given this winding road of past experience, my approach to managing businesses today is very different than when I was younger. The experience I now bring to the table has materially mellowed me as a leader. But, I didn't have that background or that perspective when I was younger.

EXPERIENCE COLLECTS WISDOM

I'm no longer a freshly minted CEO trying to figure it all out and making a lot of mistakes in the process. Decades of battle scars have sharpened my business thinking. With that hard-earned experience, I've accumulated years of learning. Not much thrown my way today is new. Chances are, I've already seen some version of it in the past. I simply dust off the old playbook and adjust from there, without having to think about the challenge as a first-time obstacle.

WISDOM DRIVES CONFIDENCE

Business decisions are like anything in life: The more you've done it, the more comfortable you get. With that comfort comes a sense of confidence that you're headed in the right direction. First-time entrepreneurs often lack that insight and second-guess their paths. Tom Brady didn’t become the greatest Super Bowl-winning quarterback overnight. It took years of practice, memorizing playbooks and logging game-time experience. Those combined effects propelled him to success, and he's now one of the most confident quarterbacks in the game. Entrepreneurship is no different.

CONFIDENCE LEADS TO EFFICIENCY

The better you know your subject matter, the more efficiently you can execute your plan. I don’t necessarily need to stay up all hours of the night trying to figure out how to do something. I can make decisions faster now, and I know how to best invest my time. I don't get bogged down in the weeds. I've discovered what actions lead to the maximum ROI on my time, research and energy.

EFFICIENCY THRIVES ON DATA

In the old days, I'd get all excited about the features and functionalities of the product or service I was building. Today, the product doesn’t matter so much. I'm more focused on the economics around that product or service. What is my average ticket? Gross margin? Repeat sale rate? Churn rate? Cost of Customer Acquisition? Lifetime revenues? Return on marketing investment? Without solid business economics, the rest is just noise. I've become increasingly data-driven in my decision-making. I'm always looking for the profitable levers that I can pull to help scale a business.

DRIVEN BY A WICKED SMART TEAM

Age has taught me I'm not in this battle by myself. Surrounding myself with the smartest people I know will also make me a more effective leader and executive. I'd go so far as saying I hope my direct reports are a lot smarter than me -- and no, that doesn't intimidate me. So many young entrepreneurs need to feel as if they're the smartest person in any room. I empower my team members to do their jobs, and then I get out of their way. I don't need to micromanage every one of their decisions as I did when I was younger.

WHO KNOWS NOT TO PANIC

Most important, I no longer panic when things start to go wrong. Many first-timers sound the alarm early and often. That's doubly unfortunate because panic typically creates unnecessary chaos and stress right when an organization needs to be its most focused on solving the problem at hand. Take a breath. It all will work out in the end.

IN SUMMARY

Here's my message to all the first-time entrepreneurs: gather up experience (directly or through mentors) to help bolster your confidence and help make you a more efficient, data-driven decision-maker who's comfortable leading a team of wicked-smart and empowered executives. And for goodness sake, don’t panic when things start to go wrong. There's always a logical fix.  If you follow this guidance, you can stop pulling your hair out in the wee hours of the night. Instead, you'll get that time back and can transition to living a well-balanced life -- all while watching your bank account grow along with your thriving business.

For future posts, please follow me on Twitter at: @georgedeeb.



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