Thursday, September 29, 2011

101 Startup Lessons--An Entrepreneur's Handbook

What started out as an unknown editorial adventure back in March 2011 (launching the Red Rocket blog), has resulted in my writing 101 Startup Lessons--An Entrepreneur's Handbook for executives of aspiring startups.  This is my small contribution back to the startup ecosystem which has treated me so well over the years.  Keep this list handy, as your future business needs arise.  And, thanks for forwarding this list to your entrepreneurial friends that you think may also benefit from such lessons.

Below are the original 101 Startup Lessons, plus following lessons I have written since then, sorted by major business topic:

STRATEGY

Lesson #1: Drivers of Success for Startups. Do I Have a Good Idea?

Lesson #7: Key Components for Writing a Business Plan

Lesson #11: Considering Incubators or Accelerators for Your Startup

Lesson #12: How to Structure Your Board of Directors or Advisory Board

Lesson #17: Pitfalls to Avoid When Joining Someone Else's Startup

Lesson #19: How to Identify Your Competition

Lesson #37: The Plusses and Minuses of Franchising

Lesson #38: Things to Consider When Buying a Business

Lesson #43: Examples of Barriers to Entry For Your Business

Lesson #45: Find a Business Mentor or Business Coach

Lesson #63: Determining Exit Options for Your Startup

Lesson #64: How to Find Buyers for Your Business

Lesson #65: How to Structure the Sale of Your Business

Lesson #81: Considerations for Global Expansion

Lesson #96: Vertical vs. Horizontal Growth Options

Lesson #100: The Definitive Checklist for Startup Success

Lesson #110:  When to Drive Growth vs. Profits

Lesson #112:  Startup Ideation

Lesson #118:  Market Research for Startups

Lesson #121:  Designing an Omni-Channel Business

Lesson #128:  Try to Kill Your Startup Before You Start

Lesson #145:  Issues to Consider Before Selling to Big Companies

Lesson #149:  Can't Attract Venture Capital?  Buy a Business with Private Equity!

Lesson #151:  How to Start a Business

Lesson #164:  Is Your Startup Building a "Vitamin" or a "Pain Killer"?

Lesson #167:  The Unlucky 13 Reasons Startups Fail

Lesson #168:  Start Thinking Globally Now -- 3.5BN People Are Waiting!!

Lesson #170:  What's More Important?  Your Product or Proof-of-Concept??

Lesson #176: How to Filter Conflicting Advice from Multiple Mentors

Lesson #180:  How Retailers Can Combat Showrooming

GENERAL BUSINESS

Lesson #3: The Importance of Timing & Luck for Your Startup

Lesson #8: Startups Require Flexibility to Optimize Business Model

Lesson #28: Expect the Unexpected -- Always Have a Cushion

Lesson #29: No Matter How Bad it Gets, Persistence Wins

Lesson #31: The Power of a Pivot -- Thinking Out of the Box

Lesson #39: The Art of Negotiation

Lesson #40: Focus! Focus! Focus! Build One Business at a Time.

Lesson #47: The Importance of Networking

Lesson #50: Do What You Love!! Passion Drives Success.

Lesson #71: Launch Fast! Fail Fast!

Lesson #85: Tap Into Your Local Startup Ecosystem

Lesson #86: Perception Often Outshines Reality

Lesson #87: The Art of Decision Making

Lesson #90: Proper Business Etiquette for Startups

Lesson #92: Building Your Personal Brand

Lesson #104:  Manage Expectations & Exceed Them

Lesson #114:  "Driven to Win" vs. "Fear of Failure"

Lesson #122:  Setting Key Milestones for Your Startup

Lesson #135:  Why Big Companies Struggle with Innovation

Lesson #160:  Don't Be Overly Infatuated With Your Own Startup Idea

Lesson #182:  Doing the "Smoke and Mirrors" Dance

MARKETING

Lesson #6: Structuring Strategic Partnerships for Your Startup

Lesson #20: Setting Product & Pricing Strategy for Your Startup

Lesson #21: Setting a Sales & Marketing Plan for Your Startup

Lesson #22: How to Calculate ROI on Your Marketing Spend

Lesson #23: How to Design Effective Advertising Copy & Creatives

Lesson #24: How to Choose a Name for Your Startup

Lesson #44: The Importance of Blogging

Lesson #48: Trade Show Strategies for Startups

Lesson #52: Viral Marketing Via Social Media

Lesson #53: Search Engine Marketing Strategies

Lesson #54: Incorporate Video Into Your Marketing Efforts

Lesson #68: Mobile Apps & Location-Based Services

Lesson #69: The Marketing Power of Free Publicity

Lesson #72: The 10 Basics of Website Design

Lesson #74: Brand Building for Your Startup

Lesson #77: The Basics of Email Marketing

Lesson #79: Determining Customer Lifetime Value

Lesson #88: The Basics of Online Display Ads

Lesson #95: The Basics of Telemarketing

Lesson #99: The Basics of Direct Mail Marketing

Lesson #107: Social Media Analytics & ROI

Lesson #120: Budget for Proof-of-Concept Marketing from Day One

Lesson #131: How to Design a Logo & Tagline

Lesson #137: The Basic Drivers of E-commerce Growth

Lesson #142: The Power of Content Marketing--A Red Rocket Case Study

Lesson #158:  Understand Your Brand Positioning (An Al Jazeera Case Study)

Lesson #162:  The Benefits of Contributing Content to Other Sites (vs. Your Own Blog)

Lesson #169:  Budget for Startup Marketing from Day One

Lesson #171:  The Basics of B2B Marketing

Lesson #174:  Growth Hacking--Marketing for Startups

Lesson #178:  Predictive Social Analytics

Lessons in Marketing: Super Bowl 2012

Lessons in Marketing: Grammy Awards 2013

Chicago's Top Marketing Agencies for Startups

SALES

Lesson #21: Setting a Sales & Marketing Plan for Your Startup

Lesson #25: How to Structure Your Sales Team & Procedures

Lesson #26: Designing Sales Incentives to Motivate Your Sales Team

Lesson #98: Securing a Government Contract

Lesson #127: How to Screen Salesperson Candidates

Lesson #129: "Productize" Your Business for Maximum Efficiency

Lesson #130: Driving Sales Requires Driving Key Metrics

Lesson #141: How to Pitch Business Development Partners

Lesson #143: Upselling, Cross-Selling and Freemium Techniques

Lesson #144: Remove All Friction From Your Sales Process

Lesson #161:  Create an "Everyone Sells" Culture

FINANCE

Lesson #61: Set Up Proper Accounting Controls

Lesson #67: Managing Accounts Payable & Accounts Receivable

Lesson #78: How to Build a Budget

Lesson #105: Run a Sensitivity Analysis on Your Projections

Lesson #108: How to Determine Your Revenue Model

Lesson #113: State Tax Credits & Programs for Startups

Lesson #132: Design a Recurring Revenue Model

Lesson #133: How to Avoid Paying Taxes on Startup Investments

Lesson #136: Save Taxes with "Profits Interests" vs. "Stock Options"

Lesson #139: How to Calculate Equity Split Between Founders in Startups

Lesson #146: Pitfalls Around Earnouts (and Why They Rarely Payout)

Lesson #179:  Reduce Customer Churn to Accelerate Revenues

VIDEO: George Deeb Teaches Financial Modeling

FUND RAISING

Lesson #4: How to Raise Capital for Your Startup

Lesson #5: Finding Angel Investors for Your Startup

Lesson #10: How Best to Approach VC's or Angel Investors

Lesson #27: How VC's Define a Backable Management Team

Lesson #32: How to Value Your Startup Business

Lesson #49: How to Get a Loan, or Not!!

Lesson #66: Preparing for a Due Diligence Process

Lesson #97: Securing a Small Business Grant

Lesson #102:  Protect Your Equity & Control Post Financings

Lesson #103:  The Evolving Venture Capital Market

Lesson #109:  Financing With Equity vs. Debt vs. Convertibles

Lesson #111:  Crowdfunding Startups

Lesson #115:  When to Trade Equity for Services

Lesson #116:  Seed Investment Terms & Trends

Lesson #119:  How to Screen Venture Capitalists

Lesson #123:  Crowdfunding Details Starting to Emerge

Lesson #124:  Vesting of Founder's Stock

Lesson #125:  How to Bootstrap Your Startup

Lesson #126:  What Startups Need to Secure a Bank Loan

Lesson #138:  Why VC's Bias Technology Startups

Lesson #140:  How to Build a Bridge to a 10x Return for VC's

Lesson #147:  Avoid "The Death Zone" for Venture Capital

Lesson #148:  How to Research Industry Valuation Multiples

Lesson #149: Can't Attract Venture Capital? Buy a Business with Private Equity!

Lesson #152:  The Importance of a "Clean" Capitalization Table for Investors

Lesson #173:  Corporate Venture Capital Funds, Accelerators & Incubators

Chicago Venture Capital Firms & Angel Networks

VIDEO:  George Deeb Teaches How to Pitch VC's

VIDEO:  George Deeb Teaches Fundraising for Startups

VIDEO:  George Deeb Discusses How VC's Evaluate Startups with Nick Moran

HUMAN RESOURCES

Lesson #2: Building The Right Team for Your Startup

Lesson #9: Spreading Equity to Key Employees & Partners

Lesson #13: Creating the Right Culture for Your Startup

Lesson #14: The Role of a Startup CEO

Lesson #15: Hands-On vs. Hands-Off Management of Startups

Lesson #16: The Plusses & Minuses of Virtual Employees

Lesson #18: The Right Work-Life Balance for a Startup

Lesson #30: When to Hire Employees vs. Contractors vs. Crowdsources

Lesson #34: How Best to Recruit Employees For Your Startup

Lesson #35: How to Read Resumes & Screen Employee Candidates

Lesson #42: Is Working With Family Members a Good Idea?

Lesson #51: No Public Displays of Rejection

Lesson #55: Creating a Healthy Office Environment

Lesson #58: How to Determine Employee Compensation

Lesson #59: Determining Employee Benefits for Your Startup

Lesson #60: Importance of Employee Handbooks

Lesson #75: How to Implement Layoffs

Lesson #76: How to Implement an Employee Change

Lesson #83: Startup Roles & Responsibilities

Lesson #93: Make Your Employees Feel Appreciated

Lesson #106:  Succession Planning

Lesson #127:  How to Screen Salesperson Candidates

Lesson #153:  Healthcare Benefits Decisions for Startups (Post Obamacare)

Lesson #156:  How to Find a Co-Founder for Your Startup

Lesson #157:  Consider Sharing Part-Time Executives Between Startups

Lesson #159:  Never Stop Recruiting (Even If No Current Openings)

Lesson #163:  Should a Startup Offer Employee Benefits

Lesson #165:  The 4 Types of Entrepreneurs. Which Type Are You?

Lesson #166:  Is Entrepreneurship Learned, or Wired Into Your DNA?

Lesson #175:  In-House Teams or Outsourced Services for Startups?

Lesson #181:  Should You Quit Your Full-Time Job Before Launching a Startup?

OPERATIONS & ADMINISTRATION

Lesson #33: The Importance of Customer Service

Lesson #41: Security Considerations for Your Startup

Lesson #56: Frequent Legal Questions of Startups

Lesson #62: Insurance Protection for Startups

Lesson #70: Protect Your Intellectual Property

Lesson #73: Consumer Usability Testing

Lesson #80: Pitfalls to Avoid When "Reeling in the Whale"

Lesson #82: Project Management & Prioritization

Lesson #129:  "Productize" Your Business for Maximum Efficiency

Lesson #134:  Where to Best Locate Your Startup

Lesson #183:  The Top 12 Reasons to Protect Your Trademarks

Customer Service Case Study:  Had Your Identity Stolen?  Hope Thief Didn't Buy Verizon!!

TECHNOLOGY

Lesson #36: Picking the Best Technology for Your Web Startup

Lesson #117:  Legal Considerations When Using Open Source Software

Lesson #150:  Responsive Web Design for Multiple Devices

Lesson #155:  Best E-commerce Platforms for Small Business

Lesson #172:  Don't Finalize Your Tech Development Plan, Until You Involve Marketing

Chicago's Top Web & Mobile Design and Development Agencies

CASE STUDIES

Lesson #84: Lady Gaga--An Entrepreneurial Case Study

Lesson #89: Startup Lessons from Scrabble

Lesson #91: My Entrepreneurial Heroes

Lesson #94: Netflix--A User Experience Meltdown

Lesson #154:  Entrepreneurial Lessons from Breaking Bad

Lesson #177:  Entrepreneurial Lessons from the Game of Monopoly

Lessons in Leadership:  Michigan Football

Lessons in Leadership:  Mount Everest

Lessons in Leadership:  The Race for the South Pole

Lessons in Leadership:  Tim Tebow

Lessons in Leadership:  Joe Paterno

Lessons in Entrepreneurship:  StyleSeek Case Study

Lessons in Entrepreneurship:  Emerson Spartz

Lessons in Entrepreneurship:  My Son's Kindergarten Class

Lessons in Entrepreneurship:  Pebble's $10MM Raise Via Kickstarter

Lessons in Entrepreneurship:  Moneyball (Big Data in Baseball)

Lessons in Entrepreneurship:  Skylanders (Upselling on Steroids)

Lessons in Entrepreneurship:  Rocket Internet (Copy Catting)

Business Lessons from NBC's "The Sound of Music Live"

OTHER

Lesson #46: 23 Motivational Quotes for Entrepreneurs

Lesson #57: Required Reading for Startup Entrepreneurs

Lesson #101: The Plusses & Minuses of Entrepreneurship

Howard Tullman's Acceptance Speech at Chicago Entrepreneurship Hall of Fame

Lessons From the Lost Decade: Alternative Investing

Nostradeebus:  Predictions for the Next Decade

Key Digital Investment Themes in 2012

Chicago's Best Lawyers for Startups

Best Startups of 2012

Best Startups of 2013

Digital Trends for 2013

Great Stories of Survival--Motivational Reading for Startup Entrepreneurs

[VIDEO]  George Deeb Presents "The Birth of the Startup Excubator" at Techweek Chicago 2014

CONTRIBUTED ARTICLES ON OTHER SITES

The End of Startup Incubators?  Enter the Era of Startup "Excubators". (in Startup Beat)

A Blueprint for Startups--Try To Kill It Before It Starts (in Startup Beat)

New York or Chicago for Startups? MentorMob Compares Both. (in Forbes)

Comparing 'Shark Tank' To Venture Capital Reality (in Forbes)

Out With MBA's--In With Masters in Entrepreneurship (in Forbes)

Why Too Many Startups Run Out of Money Too Fast (in Entrepreneur)

Chicago's Startup Scene Is On Fire (in Forbes)

Make Sure to Research Before Choosing Crowdfunding (in Wall Street Journal)

Top Digital Trends for 2014 (in Forbes)

Comparing Startup Ecosystems:  The Midwest vs. Silicon Valley (in Forbes)

My Commencement Address to 2014 Graduates (in Forbes)

6 Tips for Keeping Your Store Relevant to Online Shoppers (in Entrepreneur)

Age is Just a Number When It Comes To Entrepreneurial Success (in Entrepreneur)

GUEST POSTS

How to Think About Startup Models & Strategies (by Guy Turner)

The New Reality of Venture Capital (by Joe Dwyer)


For future posts, please follow me at:  www.twitter.com/georgedeeb

Wednesday, September 28, 2011

Lessons #71 thru #101: A Recapped Index of Startup Advice by Topic

Here is an index of all startup lessons from our blog to date, for your quick reference by topic. Please forward to anybody that you think may be interested.

Click Here for an Index of Lessons #1 thru #35

Click Here for an Index of Lessons #36 thru #70

Lesson #71: Launch Fast! Fail Fast!

Lesson #72: The 10 Basics of Website Design

Lesson #73: Consumer Usability Testing

Lesson #74: Brand Building for Your Startup

Lesson #75: How to Implement Layoffs

Lesson #76: How to Implement an Employee Change

Lesson #77: The Basics of Email Marketing

Lesson #78: How to Build a Budget

Lesson #79: Determining Customer Lifetime Value

Lesson #80: Pitfalls to Avoid When "Reeling in the Whale"

Lesson #81: Considerations for Global Expansion

Lesson #82: Project Management & Prioritization

Lesson #83: Startup Roles & Responsibilities

Lesson #84: Lady Gaga--An Entrepreneurial Case Study

Lesson #85: Tap Into Your Local Startup Ecosystem

Lesson #86: Perception Often Outshines Reality

Lesson #87: The Art of Decision Making

Lesson #88: The Basics of Online Display Ads

Lesson #89: Startup Lessons from Scrabble

Lesson #90: Proper Business Etiquette for Startups

Lesson #91: My Entrepreneurial Heroes

Lesson #92: Building Your Personal Brand

Lesson #93: Make Your Employees Feel Appreciated

Lesson #94: Netflix--A User Experience Meltdown

Lesson #95: The Basics of Telemarketing

Lesson #96: Vertical vs. Horizontal Growth Options

Lesson #97: Securing a Small Business Grant

Lesson #98: Securing a Government Contract

Lesson #99: The Basics of Direct Mail Marketing

Lesson #100: The Definitive Checklist for Startup Success

Lesson #101: The Plusses & Minuses of Entrepreneurship

Click Here for an Index of all Lessons #1 thru #101


Hope you found these lessons helpful.  Keep them handy as a useful startup handbook as your various business needs arise.  And, thanks for sharing them with your entrepreneurial friends.

For future posts, please follow me at: www.twitter.com/georgedeeb

Lesson #101: Plusses & Minuses of Entrepreneurship


I finally made it to my goal of writing 101 Startup Lessons, with this being my last lesson of this series designed as a handbook for entrepreneurs.  But, instead of a tactical lesson as my swan song, I thought I would speak more from the heart on the emotional plusses and minuses of entrepreneurship, and long term implications of starting your own business.

THE PLUSSES

Being Your Own Boss.  Once you get the taste of being your own boss, it is very difficult to ever go back to being a "cog in the wheel" within a big corporate environment.  Nowhere else can you get the thrill of making senior level decisions across a wide range of business topics (e.g., strategy, finance, marketing, technology, operations).  The buck stops with you (literally!), and the success or failure of your business falls squarely on your shoulders, based on the decisions made by you and your team.  That may sound a little daunting, at first.  But, trust me, it is very exciting.

The Speed of Doing Business.  Startups move at "light speed" compared to the procedural, political and bureaucratic morass of big corporations.  If you want to do something as a startup executive, you make a quick decision within the snap of a finger, without multiple layers of approvals and procedures.  This can make for a really exciting environment, watching the twists, turns and outcomes from your actions in "real time".

The Feeling of Accomplishment.  Launching and building a successful startup is the equivalent of having and raising a baby.  And, when your startup achieves its desired outcome and long term success (just like seeing your baby grow into a well-mannered and respected college graduate), it truly creates a real feeling of accomplishment, looking back and saying "hey, I did that!".  Nobody really appreciates how hard it is to turn a "piece of paper idea" into a thriving business, unless you actually have done it yourself.  So, don't be afraid to pat yourself on the back, for taking the hard road and a job very well done.

THE MINUSES

Living Like a Pauper.  Let's face it, it is not easy plowing all your hard-earned savings into a risky startup, not getting paid in the early months of getting the business off the ground and not being sure where your next paycheck is coming from.  Unfortunately, unless you are wealthy from other means, launching a startup with hopes of a long term payback, often comes with the strings of living very frugally until the business gets its "sea legs" beneath it.  If you need the comfort and security of bi-weekly paychecks to cover your bills or lifestyle, don't get involved in the early stages of a startup.

High Stress Level.  Obviously, with weak cash flow and other business constraints, comes constant worry and stress.  Launching a startup was a big gamble: (i) you quit your comfortable job; (ii) you put all your savings (and those of your friends and family) at risk; and (iii) you will end up with nothing but life lessons learned and a "black eye" with your investors if the business goes under.  That is a big burden to carry around each day.  So, if you are not good when dealing with stressful situations, a startup is not right for you.

Impact on Your Resume.  Before being an entrepreneur, I was a big-bracket investment banker to Fortune 500 executives.  Nobody told me after 12 years of being an entrepreneur, that big company recruiters would label me an "early stage guy", making it very difficult to break into any business generating in-excess of $100MM of revenues.  Don't get me wrong, I love being involved in startups.  But, I would at least like to control my own career destiny, if I ever desire to try my hand at being a CEO of a bigger business.  The longer you are involved with startups, the more difficult it will be at turning back from a lifelong career in early stage companies.


Being an entrepreneur is not right for everyone.  Make sure you have a real appetite for the risks at hand, a real passion for your product and an unbridled confidence in your ability of building a great business, before jumping in.  But, once you do make the leap, hang on for one of the wildest rides of your life!!  As starting and growing your own business really is one of the most-rewarding life experiences you can have.

I hope you have enjoyed these life-learned lessons.  Make sure to keep these 101 Startup Lessons handy, and reference them as business challenges arise.  And, be sure to share them with your entrepreneurial friends who may also find them useful for building their own businesses. 

It has been a real pleasure having you share this editorial adventure with me. 

For future posts, please follow me at:  www.twitter.com/georgedeeb

Tuesday, September 27, 2011

Lesson #100: The Definitive Checklist for Startup Success

Over the last six months, I have shared many lessons with you on how best to build your startup.  Below is a checklist of the most important "must-haves" for any successful startup:

___  A good business idea--"secret sauce" solution to real world problem  (Lesson #1, Lesson #112)
___  A well-thought out business plan and recurring revenue model (Lesson #7, Lesson #78, Lesson #108 and Lesson #132)
___  A large and growing industry, where a big business can be built (Lesson #118)
___  A firm handle on current and future competition (Lesson #19)
___  Defensible barriers to market entry (Lesson #43)
___  An experienced board of directors or advisors (Lesson #12 and Lesson #45)
___  A deep network of colleagues in your startup ecosystem (Lesson #47 and Lesson #85)
___  A motivating and credible CEO (Lesson #14)
___  An experienced and backable start-up team  (Lesson #2, Lesson #27 and Lesson #83)
___  Appropriately compensated employees (Lesson #58 and Lesson #59)
___  Equity in hands of key managers (Lesson #9)
___  An entrepreneurial office culture (Lesson #13)
___  A healthy office environment with work-life balance (Lesson #18 and Lesson #55)
___  A religious focus on putting your customer first (Lesson #33)
___  The right product and pricing strategy (Lesson #20)
___  A profitable and tested "go to market" sales and marketing plan (Lesson #21)
___  Infectious enthusiasm and passion for business (Lesson #50)
___  A clear management focus on what you are building (Lesson #40)
___  Speed to market and knowing when to cut losses (Lesson #71)
___  Disciplined decision making skills (Lesson #87)
___  Flexibility to fine-tune model and navigate challenges (Lesson #8 and Lesson #31)
___  Persistence in goods times and bad (Lesson #29)
___  The right mix of intangibles that investors are looking for (Lesson #86)
___  Market timing and luck (Lesson #3)

And, more specifically, do not approach professional venture investors until you have acheived:

___  A good mix of the "must-haves" above
___  A sufficient proof of concept based on key milestones (e.g., revenues or visitor traction) (Lesson #122, Lesson #128)
___  Your planned go-to-market strategy tested and profitable (Lesson #120)
___  Meaningful customers under contract who would be solid references
___  A sizable pipeline of customers in the works
___  Key industry partnerships with brand-name marketing partners
___  Clarity you fit the types of investments your target investor makes
___  A fine-tuned elevator pitch, to get their attention
___  A credible "road map" for investor to realize 10x returns within 5 years (Lesson #140)
___  Realistic thoughts on potential exit options and buyers
___  A realistic expectation on valuation to attract capital (Lesson #32)
___  Clear handle on how much money you need, including cushion to last 18 months
___  Logical use of proceeds invested in future growth (not past debts)
___  A debt/equity investment structure that works for the investor (Lesson #109 and Lesson #116)

For this second list, please re-read Lesson #4--How to Raise Capital for Your Startup and Lesson #10--How Best to Approach VC's or Angel Investors.  And, be sure to watch this video presentation I made on How to Pitch Venture Investors.

So, keep this startup checklist handy.  If you check-off most of the items on the above list, you should be "off to the races" in building a winning business that should attract smart venture investors for your business.  Wishing you the world of success (and luck) in your entrepreneurial adventure.

For future posts, please follow me at:  www.twitter.com/georgedeeb

Monday, September 26, 2011

Lesson #99: The Basics of Direct Mail Marketing


With the invention of email and mobile marketing, I assumed the direct mail marketing business would slowly die on the vine, given the heavy expense of producing and mailing the marketing materials. That may ultimately become its fate, as younger users, who prefer electronic media, get older. But, today, particularly for an older demographic, direct mail is still heavily used, particularly by catalog retailers, tour operators and vendors of local services. Today's lesson will summarize the basics of direct mail marketing.

The key things that drive the success of a direct mail campaign are: (i) the cost to produce and mail the piece; (ii) the type/quality/customization of the marketing piece; (iii) the quality/targeting of the mailing list; (iv) the quality of the offer; and (v) proper conversion tracking on the backend. I will address each of these points below.

The cost of the marketing piece has six components: (a) the cost of the list; (b) the cost of design; (c) the cost of printing; (d) the cost of shipping; (e) the size of the mailing; and (f) the cost of the offer, if any. If you are mailing your inhouse mailing list, there is no cost of mailing to your own names. But, if you are renting a mailing list from the major services like Experian, or dropping to a targeted media partner's list like Forbes Magazine, there are typically fees of $25-$50 per 1,000 names pulled to access such list (which can certainly add up the more names you pull). The cost of design will be cheaper by using your on-staff creative designer than using an agency, which can cost 15% more for the hourly time invested in the piece. Design costs can certainly add up depending on whether you are dropping a one-side post card or a 100 page catalog.

Printing costs can wildly vary based on where you have the piece printed and how big the piece is. One of the cheapest places for printing is South Korea, even after including the overseas shipping costs. So, depending on the size of your run, consider both domestic and overseas options, via the assistance of printing management companies. And, the per piece printing costs can vary from $0.10 per peice for simple postcards to $2.00 per piece for fancy catalogs (understanding per unit prices will be lower for higher volume runs than lower volume runs). A typical test run would not be less than 5,000-10,000 pieces, since the conversion rate on direct mail is only like 0.2%, on average. Dropping any fewer pieces is unlikely to deliver any conversions. And, on the high end, mailings can get into the millions depending on your budget and the size of your target market (e.g,. marketing toothbrushes that appeal to 100% of market; or Kenya safaris that appeal to 10% of market).

In addition, variables like four-color printing on thick page stock, will cost more than black and white postcards on thin page stock, so plan accordingly in your budgets. But, don't cheap out here. You are trying to break through the clutter of junk mail going to the mail box that most likely gets tossed unnoticed (hence the low conversion rates). So, an eye-popping creative will get their attention better than a bland creative. And, where possible, digital printers now have the flexibility to customize the printing to the recipient level. They can swap-in a person's name into the creative, or swap-in a man's photo for male recipients vs. woman's photo for female recipients. So, ask about these customization options with your printers.

And, don't forget, you are going to have to pay the U.S. Postal Service to get these pieces to the homes of your target recipients. Postage rates can vary significantly (from $0.15 to $2.00) based on the size of the piece, and whether or not they are pre-sorted. So, don't forget to include the postage costs in your budgeting process, and use a mailing service to assist you here with the pre-sorting process to help lower your postage costs.

Given the huge expense of direct mail, I am always a fan of doing more with less with your creatives. Dropping a postcard with a 50%-off offer, with more details available on the website, is more cost effective than dropping a multi-page piece detailing the offer by mail. Think of it as using the piece to get recipients to "self select" themselves into wanting to learn more. Tour operators are pros at this. They don't use 100 page catalogs for new customer acquisitions, given the heavy expense. Instead, they send a post card asking the recipient to profile themselves in terms of their desired trips and activities. And, then, they drop targeted catalogs to such recipients after they get their postcards replies back.

More important than anything is making sure your mailing is targeted to users that are actually interested in your products. As an example, at iExplore we had a lot more luck direct mailing the National Geographic list, than we had direct mailing the Gourmet Magazine list, even though they both served similar high-end demographics. And, as another example, if you are selling a new computer networking product, that is going to get a much higher response from CTO's than CEO's, and better yet, a list of systems network adminstrators would perform better yet. And, as another example, if you are a Nursery School looking for new students for your school in Winnetka, IL, limit your direct mailings to zip code 60093, the most logical direct marketing area (DMA) to pull students from. You can do sophisticated PRISM analyses to help you identify which zip codes are most appropriate to market your product or services (e.g., which zip codes have the highest average income). The better the targeting, the better your ROI. Period.

And, don't forget, mailing lists go stale at a rate of 20% per year with people moving to new addresses. So, make sure you are dropping to a freshly updated list to make sure your mailing gets to your desired recipient. I would avoid any lists older than one year old.

The quality of the offer is also important. And, what you think may be exciting to consumers, may not be. So, do a few small tests with variable offers to see which one performs best, before dropping to a much broader list. But, in all cases, I am a huge fan of: (a) some special offer; and (b) a deadline to redeem such offer, to create a sense of urgency. So, at iExplore, we would not send a generic "learn more about iExplore" mailing. We would send a specific and meaningful offer like, "save $1,000 on any new booking made within 30 days" (which can materially increase the cost of the overall direct mailing including the other costs above, so make sure you have enough margin to work with here to cover all costs, including the offer).

And, if you are a catalog marketer. Think of each quarter page of your catalog as a unique piece of real estate. You want to slot merchandise in each quarter page that converts at the same high level. If you have any slow sellers, swap them out for higher producers. Each inch of real estate matters in optimization the ROI from your expensive direct mail efforts.

And, underlying all of this is proper conversion tracking on the backend. There is a reason all catalogers ask you to read them the six digit tracking code in the pink box on the back of the catalog. They want to know what piece you are calling from, and see if the buyer is the same person the catalog was sent to, or if a new person not on the original list is calling, who borrowed the catalog from a friend. But, most importantly, they are adding up all the sales/profits from the direct mail piece, to compare it to their total costs of the piece for calculating the ROI from that initiative. Then, they are able to fine tune and tweak future pieces with the learnings therefrom. The best direct mailers are the ones that have done it for years and have optimized accordingly with each iteration (e.g., so not necessary the best tactic for startups with limited budgets).

Direct mail is a very big topic that deserves more space than allocated in this short lesson. But, frankly, as a startup, your marketing dollars may be more efficiently spent in other areas (e.g., search engine marketing, emailings, social media). So, make sure you have fully exhausted your higher ROI tactics before getting into the expensive world of direct mail.

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Friday, September 23, 2011

Lesson #98: Securing a Government Contract

The U.S. government is the largest buyer of products and services in the world.  In 2009, the federal government set aside $422BN to spend with small businesses.  But, only $96BN (22%) was actually awarded to small businesses (the rest going to large corporations), given the lack of properly registered and qualified small businesses to work with.  So, if your product or service can be sold into the government channel, it only makes sense to properly register your business to do work with the government.  Especially, given how large government contracts can be, in terms of driving material revenues for your business.

In order to qualify as a small business to do work with the government, you need to: (i) have done at least $25,000 in annual revenues in the last two years; (ii) not employ any W2 government workers; and (iii) not source any of your products or services outside of the U.S., unless such countries are listed on the approved U.S. trade partners list. 

If you qualify, then you need to file a U.S. Federal Contractor Registration (CRR) and negotiate preferred, 5-year government pricing with the U.S. General Services Administration to get on its GSA schedule.  The government typically does not work with any vendor that is not on a GSA schedule.  And, unless you pay up to expedite the process, it can take months or years to get through the entire approval process.  So, the sooner you start, the better.  You can learn more about the GSA approval process from this useful tutorial from Contracting Services Group, a third party consulting firm that can assist you through the process.  There is also useful government contracting information on the Small Business Association website.  For CRR registration consulting assistance, check out US Federal Contract Registration.

Once you are approved, you will be added to the GSA Advantage website, an easily searchable database of all GSA approved vendors, that government employees use to find vendors by product or service.

But, you don't want to be reactively waiting around for government leads to come in.  Given the heavy competition to get these contracts, you need to proactively go after these government leads.  One place to look for such government contract leads is at the Federal Buying Opportunities website, which has a database of over 40,000 active federal contracts, easily searchable by product or service.  There are also independent websites, like B2Gmarket.com, Bloomberg Government and GovDirections.com, that may be helpful to you here.

So, now that you better understand the government contracting process, you can hopefully tap into this huge market.

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Thursday, September 22, 2011

Lesson #97: Securing a Small Business Grant


Grants can often be an effective vehicle to finance your business, just as venture capital can be. And, the upside of a grant is, oftentimes, it does not need to be repaid or come with any long term hooks, like investors bring. That said, grants are not easy to secure. So, if you can get one, more power to you. Today's lesson will summarize a few basics around securing a small business grant.

Grants are basically funds distributed by governments, corporations, foundations, universities or trusts to fund some specific project that is important to their cause. According to Wikipedia, there are over 88,000 grants issued each year, totaling over $40BN in size (a sizable chunk of money). These monies are usually granted to non-for-profit businesses to use in their specific research or development, that relates to the desired cause. But, sometimes, grants can be made to for-profit businesses where interests are aligned. So, for example, if a startup biotech business is working on a new cure for cancer, they could get a grant from the American Cancer Society to help accelerate their efforts. Or, as another example, let's say the Elvis Presley Foundation is trying to preserve rare old video footage of Elvis Presley, they could make a grant to a video preservation company.

As I mentioned, grants are not easy to secure, given the high level of competition looking for the same monies. But, if you: (i) know where to look for available grants, (ii) engage the services of a professional grant writer, and (iii) submit a proposal in the correct format, you have as good a chance as anybody to secure such funds. I wouldn't invest a ton of time here, given the low odds of closure, but it is definitely worth a little high level research to see if there are any low-hanging-fruit opportunities which you can easily pursue.

In terms of finding grants, there really isn't one centralized place that spans all the various entities that have grants available. So, it will require a lot of digging via Google, using the word "grant" and the relevant keywords for your industry. As in the examples above, that could include searches like "cancer research grants" or "video preservation grants". That said, the federal government has done a nice job of centralizing all federal government grants at Grants.gov. There, you can easily search over 1,000 annual grants offered from 26 different federal government agencies, across a wide range of categories (including small business grant opportunities). So, I would start your search there.

The next step could be to engage the services of a professional grant writer, who has expertise or relationships in the space and knows the "tricks of the trade." There is a good tutorial on how to hire a grant writer on the American Grant Writers Association website. And, there are many professional grant writers and grant researching companies that I found from a "grant writer" keyword search at Google. So, research a few, to see who has expertise within your industry or the organization you are trying to approach. Expect to pay $50-$100 per hour for the assistance of a service like this.

You can also try to write the grant proposal yourself, to save some money. The elements of a good grant proposal can be found on this grant writing page on Wikipedia. So, follow the standard format, and make sure you address all the detailed requirements that are being asked for by the granting organization.

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Wednesday, September 21, 2011

Lesson #96: Vertical vs. Horizontal Growth Options


For most startups, I give them the clear message to focus on building one business at a time, like we learned back in Lesson #40.  But, what happens when you are huge success in that business and need to look for additional growth options?  Those decisions typically revolve around vertical vs. horizontal growth strategies.  Vertical growth is getting deeper in your current line of business.  Horizontal growth is getting into new product areas that are not directly associated with your current line of business.  We are going to discuss assessing these options, and a few variations to this theme, below.

VERTICAL GROWTH--DOMESTIC

I am going to use iExplore as the example company looking at options to grow its business throughout this lesson.  iExplore was a tour operator for adventure travel in 100 countries, serving an affluent demographic.  Domestic vertical growth options for iExplore could include things like: (i) launching high-end tours in additional countries; (ii) launching a line of more affordable trips to appeal to the middle-market; or (iii) launching a line of tours that are less "active" (e.g., hiking, biking, diving) and more "experiential" (e.g., culinary, wildlife watching, expedition cruise).  In each of these examples, iExplore's growth is around their core business of running adventure tours.  This is usually the first place startups will look for growth, in their core business.  The only things to be sensitive about here are things like: (i) will any changes to your product or price impact your current brand positioning (e.g., less expensive trips could tarnish a high-end brand name); and (ii) is there really enough demand for the new products under consideration (e.g., do enough people really want to travel to South Sudan to justify building a tour?).

VERTICAL GROWTH--INTERNATIONAL

International vertical growth options for iExplore would mean taking its core trips today and marketing them to people who live in countries outside of their U.S. home.  There would be many things to consider here: (i) is there a demand for your product overseas (e.g., do people in Europe buy adventure travel, or do they prefer cruises); and (ii) what will you need to do to localize the product (e.g., designing tours with native language tour guides, brochures, websites, call centers, etc.).  Please re-read Lesson #81 for Considerations for Global Expansion for more detailed thoughts here, as you assess your options around international growth.

SEMI-VERTICAL GROWTH

Continuing on with iExplore's growth options, maybe they have tapped out all their growth options in their core adventure travel category.  In a category I call semi-vertical growth, iExplore may want to remain being a seller of travel as its core business, but is considering: (i) vertical integration within adventure travel; or (ii) new travel verticals altogether.  Vertical integration would be iExplore wanting to acquire its on-site suppliers, hotels or sub-contractors that it uses to fulfill its tour service, to get a higher margin or to better control their inventory position.  The problem with this route is running a hotel is very different than running a tour operator marketing business, with a huge capital expense for acquiring and maintaining properties, staffing the hotel and keeping it at full occupancy.  As for new travel verticals, iExplore may want to start selling cruises, spas, lodges, vacation rentals, ski trips, golfing vacations or other travel categories beyond adventure travel.  The question here:  is there demand for such verticals from iExplore's existing customers (lowest hanging fruit for marketing such new services), and how will getting into those businesses impact its brand positioning (e.g., adventure travelers wouldn't be caught dead on a Carnival cruise ship).

HORIZONTAL GROWTH--ENDEMIC

I split horizontal growth into two categories, endemic to your industry and non-endemic to your industry.  Endemic horizontal growth for iExplore, would be extending their travel brand into new travel related businesses.  That could include:  (i) launching a line of iExplore branded tour books; (ii) launching an iExplore travel show on Discovery Channel; or (iii) starting an iExplore branded travel insurance company.  All of these businesses require completely different skills than being a tour operator (e.g., book publishing, TV programming, insurance underwriting), but all can easily be sold to the same iExplore demographics and customers (e.g., buy a trip and we'll sell you the travel insurance, read our books while on your trip, watch our TV programming while not on vacation).  Just make sure you have the appropriate management skills required for each of these distinct businesses, before drifting too far from your core strengths.

HORIZONTAL GROWTH--NON-ENDEMIC

Non-endemic horizontal growth for iExplore, would largely revolve around turning iExplore into a "lifestyle" brand, and selling those iExplore travel customers, everything else they need for their high-end lifestyle.  For an affluent lifestyle, that could include selling iExplore customers opportunities around fashion, automobiles, boats, homes, restaurants, event tickets, etc.  As you can imagine, the skills for selling fashion is pretty far removed from the skills for selling adventure tours.  So, I would highly advise tapping out all other logical growth options, before taking it this far.

Hopefully, you have a better sense to the various vertical or horizontal growth options you can consider for your business.  I have roughly put them in the order I would prioritize such efforts.  That said, sometimes markets will let you take your time and grow them in a sequential process.  And, other times you don't have that luxury.  As an example, look how quickly Google evolved from a search engine, to also being an email, calendar, social networking, news, maps, web browsing, content, mobile, etc. business in their attempt to take over anything and everything internet related.  But, that took a lot of venture capital and management bench strength to pull off growth like that.  And, not all of us have that luxury.  So, don't bite off more than you can easily digest.

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Tuesday, September 20, 2011

Lesson #95: The Basics of Telemarketing

Depending on the nature of your business, telemarketing can be a useful tool to cost-effectively drive targeted leads and sales for your business.  There are two types of telemarketing strategies, outbound and inbound, that we will cover in this lesson.

OUTBOUND TELEMARKETING

Outbound telemarketing is often referred to as "cold calling".  This tactic is most used by B2B businesses looking to sell their product or services, B2C companies that are selling home-based services or other organizations looking to raise funds or awareness for their cause (e.g., donate your clothes, support our candidate, police fundraiser).  I much prefer cold calling for B2B, as that is the expected normal way of doing business in the industry.  For B2C companies, traditional marketing is a much better way to reach a lot of people faster.  However, for local service companies (e.g., window washers, landscapers, chimney sweeps, cable TV upgrades), that can logically open a dialog with a target (e.g., doing work next door for your neighbor, did work for you before), cold calling (or in this case warm calling), can be a very effective tool.  But, just be sensitive to how much consumers hate receiving unexpected cold calls to their homes from businesses they don't know or for services they have no interest, so research accordingly and craft your pitch around those hurdles.

A successful outbound telemarketing campaign is determined by: (i) quality of the list; (ii) the pitch; (iii) the process; and (iv) the conversions.  For quality, you want to make sure you are calling on people that are actually interested in your product or service, and preferably the decision maker who can pull the trigger on the order.  So, for example, maybe that is using a service like Hoovers or D&B, to pull a list of phone numbers of nationwide CFO's for small and medium sized businesses that may be interested in learning more about your state-of-the-art financial software system.  Or, in another example, you can work with AT&T to pull a list of phone numbers in the 60093 zip code, a ritzy Chicago suburb, to market your handyman services business.

In terms of the pitch, the more relevant it is to the listener, and the more trusted you come across to the listener, the better it will be for your efforts.  So, for example, mentioning mutual colleagues or references can go a long way to warming up the client to listen more closely.  Intros like "I was referred to your by John Doe, one of your CFO colleagues" or "I am doing work next door for Mrs. Smith" starts to build trust of you already doing business for people they know and trust.  The other key part of the pitch is getting it out as quickly and sweetly as you can, in one sentence, not one paragraph.  Just as if you were pitching a VC, the listener has a very short attention span and is trying to get you off the phone as quickly as possible.  So, an opening pitch like "we are an award-winning insurance agency that can save you 80% on your healthcare costs using your current providers" will get their attention.

As for the process, where you can, avoid wasting the time of your best salespeople on cold calling.  Use an administrative sales assistant to carry the heavy workload of "dialing for dollars" in mass, as an "appointment setter" for your key salesperson to swoop in can close the hot lead.  But, in many startups, for budgetary constraints, you may have no other choice than having your salesperson do their own cold calling.   There are also many professional appointment setting services you can use here, but I find their costs are typically 2x-3x the cost of you hiring your own admin and doing the calls yourself.

Finally, in terms of tracking expected conversions, here are the historical metrics I have experienced, which you can use as a benchmark.  You will need to make 100 phone calls to get 5-10 serious leads, and of those leads, you can expect around 20% to close.  Obviously, these metrics may vary based on the appeal of your core service and the price point of such service.  But, as you can see, on average, it takes a lot of work to get the sale (1 sale in 50 tries), so make sure you are covering the labor and phone costs of your cold calling, with a large enough margin from your service.  For example, if the labor for 50 calls at three minutes each costs $40 and the phone bill for those 50 calls cost $10, make sure your gross margin from successful sales is at least double the $50 investment.  The economics get wildly better from cold calling, the more expensive your product.  But, that also requires a much more educated/expensive sales person and a longer lead time to close the sale.


INBOUND TELEMARKETING

Inbound telemarketing is built around supporting a 1-800 number in your marketing materials and on your website.  It is much easier to close an inbound sales lead, since the clients have pre-selected themselves as initially interested in what they have read about your product or service.  So, unlike cold calling, you should typically have a receptive listener on the other end of the phone.

A successful inbound telemarketing campaign is determined by: (i) the pitch; (ii) the process; and (iii) the conversions.   For the pitch, it is listening to the needs of the consumer, and giving them the exact thing they are looking for and reasons why they need to buy that product from you.  So, for example, in a competitive space like travel, with a high $5,000 luxury price point like we had at iExplore, we would differentiate ourselves with competitive advantages like: (a) building your dream itinerary to spec--you pick the dates/sites; (b) privately guided trips without the "herd" of other travelers; (c) exclusive professionally-trained naturalist guides; (d) five star hotels at three star prices; (e) unique experiences only available at iExplore; and (f) a list of happy past traveler references. You get the point and can tailor this strategy for your business.

Equally important as the pitch, is the creative opportunity to upsell the client, to increase your average ticket and drive a higher ROI from the sale.  So, continuing with the iExplore example, this could include things like: (i) while you are all the way in South Africa, it is a quick extension to take in "must see" Victoria Falls while you are there; or (ii) while at Machu Picchu, I would recommend you paying a little bit more for the Sanctuary Lodge, it is the only hotel right at the ruins site and you will have the ruins entirely to yourself after the busloads of tourists leave.
 
As for the process, most inbound call centers are organized around key product specialties.  So, for example, when you call Comcast, dial one for cable TV, dial two for internet and dial three for phone, is sending you to different product experts on the back end, most qualified to answer those questions.  Continuing with iExplore, we organized our inbound sales team based on geographies of the world (e.g., Africa sales to Marlyn, Europe sales to Rosemary).  So, figure out how to most-efficientaly organize your inbound sales efforts and make sure the team is highly trained in educating, closing and upselling clients.

The converstion metrics are much better in inbound call centers than outbound call centers.  So, expect 10-20% of the inbound calls to close (5-10 of 50 is 5x-10x better than the outbound telemarketing metrics we discussed above).  And, once again this will vary based on your price point and the ease and availability of competitive products.

Underlying all of the above is the necessity for great salespeople that will ultimately make or break your telemarketing efforts.  So, make sure you are hiring the best talent you can afford, with experience in your industry, that you can highly train and incentivize to succeed.  Be sure to re-read Lesson #25 on how best to structure your sales team and Lesson #26 on how best to incentivize your sales team.

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Monday, September 19, 2011

Lesson #94: Netflix--A User Experience Meltdown


This morning, I received an announcement from Reed Hastings, the CEO of Netflix that they were splitting their business into two divisions, Netflix for streaming movies and a newly created Qwikster for DVD movies by mail, including a long apology for not communicating better with their customers regarding the rationale around key decisions.  Hastings obviously didn't practice what he just preached, as Netflix obviously didn't first test the potential impact of such action with their users (as we learned to do back in Lesson #73).  The consumer reaction, including my own, has been pretty negative based on today's posts on the Netflix Users' Blog.  So, based on this, I thought Netflix would make an interesting case study on what to do (or more importantly, what not to do) from a user experience perspective.

But, first, a little history about Netflix's mounting woes over the last few months: (i) they announced a separation of their DVD services from their streaming services (which resulted in me paying 25% more than before for both services); (ii) they lost their major content deal with Starz, one of their only premium providers of high-quality current movies in their offering;  (iii) their forecasted users for this year are 1MM less (5% less)  than they estimated they would be at the beginning of the year, based on these actions; (iv) their stock price has cut in half (from around $300 per share to $150 per share), as a result of the above; and (v) now, we have this splitting of the business into two divisions, which is going to require users to maintain activity, ratings and queues at two separate websites, one for online streaming activity and the other for offline DVD rentals.  I just don't think consumers will ultimately play that game, and Qwikster (or Netflix's DVD rental business) will most likely suffer a "Qwik" death.  This is probably Netflix's long term goal anyway, but what a very strange business decision for Netflix to make given the company still has the majority of its customers still using the DVD rental services today.

So, what has Netflix done to its consumers in the last couple months: (i) they are making them pay 25% more for bundled online and offline services (or forcing them to pick one or the other); (ii) they are losing current high-quality movie titles, which is particularly evident on the streaming side of their business which they desire to promote long term; and (iii) now, they are forcing customers to maintain two different websites, instead of one, which is a big ask of 12MM people (the 50% of their total business which desires both online and offline services).  Obviously, consumers are not responding well to these actions, given the 1MM lower members than estimated this year.  And, the financial markets haven't responded well, with the 50% decline in Netflix's stock price in the last few months. 

So, how did Reed Hastings get himself and Netflix into such a mess?  The answer is really quite simple:  they put their business goals in front of their customer goals.  And, sometimes you need to do that if your underlying business economics are flawed, like Netflix's were  (e.g., the need for a price increase to cover the cost of licensing the content--which would have been fine if communicated that way as a better option than going out of business).  But, this most recent move may ultimately get the whole house of cards to fall in on itself, when and if 50% of Netflix's customers decide to unsubscribe from all or part of the service.  Let me explain further.

At the end of the day, what are the challenges with Netflix's business: (i) it is much more expensive to fulfill mailing DVDs to home, than simply streaming them over the internet; (ii) high quality current content is very expensive to license from the major film studios, especially within the first 28 days of the home release; (iii) the studios get a lot less revenues from DVD rentals, than they do from cable on-demand or internet streaming (e.g., former simply requires Netflix to buy DVDs, and the latter charges Netflix on a per-subcriber basis for the service); and (iv) the markets are very bearish on the DVD business long-term, and Netflix doesn't want that albatross around its neck in the financial markets (in business practice or in name).  So, when you look at Netflix's business this way, it is very easy to see how Netflix has ended up where it did.

I have been a huge fan of Reed Hastings, who has lead meteoric growth at Netflix and a real change in the way consumers watch movies (including the demise of former retail titans like Blockbuster).  And, I have been a loyal Netflix customer for years, despite the ups and downs of their business.  But, this most recent move does not sit well with me, hence the post. 

I sure hope they figure out a winning long term business model, one that puts the customer first with (i) high quality current movies; (ii) that I can watch within the first 28 days of home release; (iii) via online streaming (or offline, if needed); and (iv) at a price that makes sense to Netflix's business (and is affordable to me).  Because, I am sure the major studios are trying to figure out how to offer this service directly themselves (to cut Netflix as middleman out of the way), or in partnership with the major cable companies via on-demand services.  But, the last thing I want to do is be forced to re-rate 1,691 movies watched on a different service, so they know what movies I have seen and which ones I haven't seen, in order to get their recommendation engines correctly working  (where Netflix is the pro and clear first mover).

So, the key lesson here:  put your customers' user experience first when making key business decisions.  You should always be aspiring to give your customers more and more (and make your user experience easier and easier) over time, not less and less (and harder and harder).

I am curious what you think. Add your thoughts in the comments section.

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Friday, September 16, 2011

Lesson #93: Make Your Employees Feel Appreciated

Too often in startups, we are so busy executing on our visions that we forget to lift up our head, take a breath and celebrate our successes with our staff.  The more your reward your employees for desired results (or just because you want to be nice), the more appreciated they will feel, and the more invested they will be in your mutual success. 

Below are a few examples are employee rewards that have had success with in my past:

1.  Gift certificate to the sales team leader each month, to the store of their choice

2.  Employee features in the company newsletter and "shout-outs" at weekly team meetings

3.  Celebrate all birthdays with a cake; celebrate all holidays with a party

4.  "Lunch with CEO" program for one-on-one time, regardless of position within the company

5.  Monthly all-staff event (e.g,. bowling night, happy hour, ball game)

6.  Early office departures and mandatory time off around big holiday weekends

7.  Employee discounts on the products or services you sell (e.g., "at cost")

8. Open door policy--to walk in with any idea they have, or problem needing solving

9.  Free company-paid trip a year for each of the travel agents I had at iExplore--they liked the trip, and I liked the fact they would better sell the destination when they came home

10.  Get to know your employees--what do they like, what drives them--and and wrap incentives around such personalized interests

This list could go on and on.  The point here is:  employees are not simply cogs in the wheel of the day-to-day grind.  They are people with interests, emotions, and desires and they deserve the appropriate respect and recognition for a job well done.  And, the more you invest in your team, the higher return they will invest back into the company.

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