Thursday, February 16, 2017
Help Red Rocket Improve Its Product OfferingPosted By: George Deeb - 2/16/2017
We are trying to improve upon Red Rocket's product offering, and we need the input of our users. Please read to the end of this post, to better understand our history and desires, and let us know your thoughts. Much appreciated!!
HOW RED ROCKET GOT STARTED
Red Rocket was founded in 2010 after George Deeb sold his last company, MediaRecall, where he was CEO. The intent was to see what interesting companies called looking for help, for George to find a good one to invest in and become CEO again. The intent was never to build a business. But, as George began writing this blog in 2011, traffic started to grow with the inbound traffic from Google, now approaching 1,000,000 reads over the last six years (which we are proud of--as many entrepreneurs are finding the content really helpful to growing their businesses).
In Red Rocket's early days, the positioning was all around being a "startup consultant". That got the phones ringing for sure, with 100-200 companies calling a year. But, in terms of quality, the leads were pretty low-quality--only 10% of the companies calling had an interesting business, team or idea that were "venture ready for prime-time". They were mostly starving startups who couldn't afford cash consulting services and weren't exciting enough for us to want to work for equity.
THE EXPERIMENT WITH ENSEMBLE
So, if startups were only willing to pay cash for certain expenses (e.g., technology development, digital marketing), we thought we would create a solution which bundled a package of those services together into one-stop shop for startups. Red Rocket and four other specialist agencies in Chicago launched Ensemble in 2013 to do exactly that, bringing an innovative "startup excubator" model to market. This "digital services suite" included startup strategy, fund raising, web development, public relations, search marketing and social media marketing, powered by an all-star team of expert agencies in each of those fields. Everything a "do-it-for-me entrepreneur" would need to succeed in one phone call.
The reaction was very positive, as we had a lot of publicity and 100 calls in our first month. There was clear demand. But, again, the problem was the startups didn't have any cash to work with. And, even with us offering a 40% discount on the bundled service, that wasn't good enough. Startups wanted to pay us zero dollars, and instead, give us a big equity stake in their business. But, that model didn't work for the partners of Ensemble, who had lots of employees to pay. And, we didn't want to raise a venture fund to give the startups the capital they needed to afford the services. So, Ensemble got shelved and put on the back burner.
REPOSITIONING AND PRODUCTIZATION
The next effort we made was to de-emphasize startup related services, to try and attract more later stage businesses with capital to spend. We took most of the "startup consulting" words off the website, and replaced it with "growth consulting" (for companies of all sizes). Our tagline changed from "venture consulting and capital" to "growth strategy, team and capital". And, we created a one-stop shop for growth--(i) growth strategy; (ii) growth execution from outsourced CMOs; and (iii) access to growth capital through partner VC and PE firms. We also added in other services like business coaching, M&A advisory and corporate innovation, trying to throw out a wider net of products, appealing to bigger companies.
That certainly helped. The volume of leads from zero revenue startups materially declined, and we started to get more calls from more later stage companies in the $5-$20MM revenue range, which typically were large enough to afford paid services. But, it didn't knock our doors down. And, of the three legged stool of services we offer, fund raising was still the largest driver of leads. And, frankly, fundraising is the most mundane aspect of our business, and we only like to do it when we think it is a "layup" to getting to the finish line, which isn't all that often. We would much rather focus on the strategy and marketing execution work, which were like needles in the haystack of leads coming in. And, even with paid Google marketing support, the phones were not calling as much as we wanted.
WHERE WE NEED YOUR HELP
Following our own advice, we need a fresh set of eyes to help us assess our offering from a buyer's perspective. Are Red Rocket's services even ones you want? What services should we be offering that we are not offering today, preferably from a recurring revenue perspective over time? As an example, a one-off consulting project (e.g., a business plan), is less exciting than a long-term service you need (e.g., an outsourced CMO or business coach to help you grow you business over the years). The outsourced or part-time CFO companies seems to prosper pretty well, but we are surprised the demand for outsourced or part-time CMOs hasn't caught on, in comparison, given how important sales and marketing is to driving revenues. And, what would you be willing to pay for any of the services you are recommending?
We have invested hundreds of hours of work into maintaining the Red Rocket blog, giving the content away for free, as our contribution to the entrepreneurial ecosystem. But, we need to figure out how to scale the business with a winning product offering and revenue model. Especially, since we don't think putting up a subscription-based pay wall in front of the blog content is the right thing to do.
So, to all of you loyal Red Rocket users that have benefited from our free how-to lessons over the years, now it is your turn to advise us. Why are you not buying our current services from us? What products or services do you think we should offer, that we are not offering today? Do you know any later stage companies that can benefit from our current service offering, and are you willing to make introductions for us? Depending on the answers we get here, we are also looking for interesting growth-stage companies to buy (over $500K in profits) to get more deeply involved with long-term management--is that something worth talking about together, either for your business or others you know?
Anyway, thanks for putting your thinking caps on, and providing us your feedback in the comments section below. Or, if you prefer to privately send them, use the email contact form at the the bottom of this page. Much appreciated!!
For future posts, please follow Red Rocket on Twitter at: @RedRocketVC.