Lesson #218: You Don’t Know, What You Don’t Know

A person’s knowledge base is entirely dependent on their personal life experiences.  What did they study in school?  What did they learn in their jobs?  Who are they networked with?  What challenges have they had to solve?  etc.   In your business decision making, you are typically tapping into those past experiences to help guide you.  And, when you don’t know the answer to something you know you need, you are typically smart enough to do a little digging, ask the right questions and track it down.  But, there are two problems with this.

Firstly, notice I said “something you know you need”.  Unfortunately, in most scenarios, there is a wide range of other answers you need, but you just didn’t know it, because your life’s experiences haven’t yet brought them to your attention.  And, secondly, even if you asked the right, all-encompassing questions upfront, people are typically task-oriented, and once they have “checked the box” (in terms of answering those questions), they typically move on to the next task and never revisit those same questions down the road.  Which in today’s rapidly evolving world, can be a huge mistake.

The points here are, you are never stopping learning, and your quest for information should be part of your everyday process . . . not just checking off tasks from your list.  This includes revisiting key questions you have asked in your past, to see if anything is different, today, that can materially impact your business.  And, surrounding yourself by new people who may have something valuable to contribute to the discussion around your business.  This could simply be more networking in your local business community, or finding mentors for your business, preferably with people who have a far broader base of experience than your own.

Let me give a couple real life examples.  I was working with one client that was in the marketing technology space.  They had built a world class solution around one vertical of marketing several years earlier.  But, that was a different time, when enterprise brands were organizing their marketing departments around specific marketing verticals (e.g., digital, stores, catalog).  Today, only a few years later, those same companies are employing omni-channel marketing strategies, breaking down the marketing silos.  So, the company’s product today, although good for its vertical, needs to be completely rethought as it how it fits within designing an omni-channel marketing strategy, seamlessly sharing consumer data between the other verticals.

To further compound matters, this same client had built the core features of their business years earlier.  And, although they were cutting edge at the time, in a space with few competitors, today the market was ripe with new competitors that were nipping at their heels, with solutions that better than my client’s solutions and taking market share away.  The flaw in my client’s logic was the material investment in the product was behind them, and they could move those product investment budgets into other areas of the company.  When the reality is, product development is a never-ending process where the product needs to continue to innovate, each and every year, or it will die.

And, if that wasn’t enough, my client’s customers were shifting what they really wanted out of solutions in this marketing vertical.  It was less about the features and functionality, and more about helping their customers make better data-driven business decisions.  And, this client had nothing to offer its customers in this regard, and needed to quickly catch up.

So, for all you startup CEOs out there, your learning is never done, and your innovation is never over.  Surround yourself by smart people who know a lot more than you do, take off your historical blinders, replace them with a perpetual thirst for new knowledge and start with fresh thinking about your business each and every year.  The key word being THINKING, about what don’t you know about your business that you should.

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

Lesson #217: Millennials Wreaking Havoc on Employers, or Vice Versa??!!

“Quick, help me, the inmates are running the asylum” is what is running through the heads of most business owners with multi-generational employees these days.  That is another way of saying those business owners are struggling with the rapid rise of the Millennials generation in the workforce, and how these younger employees are not behaving the way their predecessors have behaved, and it is creating a wake of chaos in the human resources department.   Let me explain further.

There has been plenty of research done and articles written on the Millennials generation (people born between 1982-2004, which includes employees aged 21-33 today) and their impact in the workforce (summarized in this article).   I never paid much attention to it, until one of my clients was experiencing the impact of the Millennials first hand, and I wanted to share those learnings with you.  And, since Millennials will make up 75% of the workforce by 2030, only 15 years from now, you need to incorporate such learnings into your employee recruiting and retention programs . . . and fast!! 

What Employers Are Seeing

·         Recruiting, Retention & Loyalty.  Many millennials do not see the need to stay at any one employer for more than a year, and worse yet they actually think it benefits their career to move from company to company.  This is the extreme opposite of the Baby Boomer generation, where workers could stay at one company for decades.  This is creating torture for recruiting.  Positions that used to be filled for an average of three years at a time, are now turning over annually, creating 3x as much work for the HR department.  And, companies are not hiring 3x the recruiters to keep up with that additional work, so recruiting is taking much longer, positions are not getting filled fast enough, and work productivity has slowed dramatically in recent years.

·         Changing Demands.  Many millennials are driven by: (i) a desire to have a big impact and “change the world” (so they want to work for companies that have a greater purpose than simply driving revenues); (ii) jobs that offer management responsibilities out of the gate (not simply being a cog in the wheel); (iii) managers that can relate to them as people, friends and equals (not a boss and subordinate relationship); and (iv) incentives that are material and more than simply cash (maybe including equity or other meaningful upside).

What Millennials Are Seeing

·         The Complete Opposite of their Parent’s Generation.   This includes: (i) many Millennials not being able to find jobs after college graduation, as the older generation of workers is not retiring as early, and not opening up jobs at the bottom end of the jobs funnel; and, hence, have many Millennials (ii) living with their parents longer, often into their 30’s; and (iii) saddled with tons of college debt costs and no way to pay them down.  Not a great position to be in.

·         Mismanaged Expectations.  Many Millennials have been raised as kids in a culture of “everyone wins a trophy”, regardless of your skills or performance (as early as the little league soccer fields).  And, they are not seeing that same treatment or experience as they enter their adult years, and it is a reality check right in the face.

So, My Recommendation to Millennials

Embrace the fact that you are a part of an economic society of workers, not the center of it.  Where your managers and peers may have years of learnings and experience to share with you.  Life is a two-way street, where give and take, and common courtesy (e.g., two week notice before departure, plan to stay at least a year), should be the norm.  Help educate your employers on what your desires and motivations are, so they can learn.  And, be sensitive to your employer’s needs, and the direct impact your actions have on compounding those painpoints.  And, for goodness sake, if you find a good company with a good manager, stick with them.  There is no rule you need to leave after a year.

And, My Recommendation to Employers

It is time to wake up and smell the coffee.  If you are waiting for the workplace to return back to the “good old days”, forget about it.  Figure out how to better mentor Millennials to your desired behaviors.  Or, better yet, take some mentorship from them, so you can better learn what they are looking for out of their employers, and give it to them.  Give them the challenging roles, with friendly managers and “change the world” goals they are looking for, and good things will happen to your company culture and employee retention in the process.

Millennials and employers need to learn to play nicer together in the same sandbox of employment.  Be sensitive to and respectful of the needs of the other party, and do your best to create an environment and actions that will be well-received by all involved.  Now, start with this “clean slate” fresh perspective, hug and make up and let’s start building something great together.

For all you startups out there, be sure to read my companion piece on how to build the right company culture, right from the start.  And, build your culture around the ever-changing needs of this newest generation of workers.

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

Lesson #216: Provide Multiple “Wins” Throughout the Customer Lifecycle

If loyal, long-term customers are your goal, you need to romance them right from the start, and continue to wow them along the way with unexpected wins along the full customer lifecycle.  At the end of the day, the earlier you understand it is less about you and your business or success, and more about your customer and their business or success, the sooner you are on the way scalable long term growth.

When Pitching

You are setting a tone with your prospects from your initial pitch.  You cannot lead with every message about you or your company, and how great your product or service is.  Clients are busy, and want to get right to the point on how does this matter to my business.  How are you going to drive more revenues for me, or lower my costs or improve my customer experience?  How am I going to achieve an ROI on my investment with you?  And, more importantly, what’s in it for me personally?  How are you going to make me look smart to my boss?  Your entire pitch needs to lead with this “here is how the customer wins” mentality, where customer is defined as both the corporation and the individual contact.

When Selling

I almost didn’t use the word selling in this section.  Because nobody wants to be “sold” anything.  So, using the word “selling” loosely, what wins can you give your prospective customers through the sales process?  Did you just publish interesting market research for their industry that they can benefit from for free?  Did you get them a free ticket to the big industry trade show or other exclusive event, as your guest?  And, let’s not forget the individual contact.  Did you send flowers to them on their birthday?  Or, baby gifts when their kids were born?  Or, golfing at their favorite course?  Or, tickets to a sold out concert, as your guest?  This stuff matters in the relationship building with your customers.

When Negotiating

I previously wrote about the art of negotiation from your company’s perspective.  But, frankly, it is more important to master the art of negotiation from your customer’s perspective.  Everybody wants to feel like they “won” a negotiation, especially the finance or procurement departments of large enterprise clients whose sole job is to save the company money.  So, build that into your negotiation tactics.  Know procurement wants to “turn the screws”, and leave that cushion in your original proposals, so they can get their “win” and look smart to their bosses.

When Fulfilling

Making sure you deliver the experience they are expecting is the bare minimum, so they are not caught off guard by unexpected issues that could get them in trouble internally.  But, beyond that, what are you going to deliver them that they had no idea was coming?  What free upgrade to the higher version of your software?  Or, some free luggage to go with their vacation travel purchase?  Or, a free analysis of the data in the system they weren’t expecting?  You get the point.  It is all about creating “wow” factor.

The more pleasant surprises and customer wins you can bring you customers, the better will be their customer experience, the more likely they will be inclined to spread positive word of mouth and referrals, the easier it will be to get them as your brand ambassador reference, and most importantly, the easier it will be to get them renew their relationship with you over the years.  It is hard enough to acquire customers, so make sure you have your action plan in place to retain them.  And, customer wins along the way will help pave that road for you.

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

Lesson #215: Stop Cherry Coating Your True Opinion

Too often in business, people want to be nice, avoid conflict or not upset their boss or co-workers by stating their true opinions.  All that does is create problems for all involved.  You get frustrated that the business is not going in the direction you think is most logical.  And, the listener is provided an opinion from you, which they think you are supportive of, that is potentially the wrong direction for the business and not truly what you feel is the right thing to do.  Hence, keeping the listener headed in the wrong direction.   In business, and particularly in startups where you cannot afford to waste time or resources heading down the wrong direction, there is only one mandate to live by:  always call it like you see it, regardless your role or title.

A CASE STUDY

I was recently at a client planning session.  Before the meeting, the COO and CFO were confiding in me that they felt the CEO was heading in the wrong direction, and they wanted the business to make a material pivot to keep the company from wasting any further resources going down a “snake hole”.  But, when the time came during the meeting for them to communicate that belief to their CEO, they refused to state that opinion.  And, worse yet, they succumbed to the “my way or the highway” personality of the CEO, and verbally told him they were in agreement with the CEO’s direction (despite their true feelings to the contrary).  In the meantime, the team is getting burned out and is losing confidence in their leader, and the CEO has no idea that employee dissatisfaction is monopolizing the talk around the water cooler, and has employees looking for the door.  What a mess!!

So, I have no problem stating my true opinion.  I decided I would raise the topic with the CEO, on behalf of the COO and CFO, but with the message coming from me, not them.  And, guess what?  The CEO didn’t lop off my head.  He listened thoughtfully, and it stimulated a healthy conversation on how best to fix the business.  Had I not been there to deliver the message, the business would still be staring over the edge of the abyss.  This is not about kudos to me for saving the day; this is about the lack of kudos to the COO and CFO  that lacked the strength of stating their true opinion to their CEO, regardless of not wanting to upset him or triggering off his explosive personality. 

GUIDANCE FOR MANAGERS

When you are managing a team of employees, you owe it to them to be honest with them.  If you don’t clearly communicate they are not doing a good job, they won’t know how to improve.  If you don’t clearly communicate you disagree with their ideas, you are losing out on an opportunity to help mentor them into your desired direction.

GUIDANCE FOR EMPLOYEES

On the flipside, as an employee, it is not healthy to think one thing and say or do another.  Your boss didn’t hire you to keep your good ideas to yourself, even if those ideas are in direct contradiction to the current beliefs of the team.  You can’t be so worried about upsetting your boss (or worse yet, losing your job), by putting your true opinion on the table.  The upside is, your good ideas will resonate and get adopted.  The worst case, they disagree with you and you move on.  And, if management continually shoots down your ideas, maybe that is a signal that is not the right company for you (or vice versa).

ALWAYS BE NICE ABOUT IT

Nowhere in this post am I recommending you be mean, rude or disrespectful when delivering your opinion.  All I am saying is, always say what you truly are thinking, for maximum satisfaction and optimal business results for all.

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

The Best Medicine For Your Business? A Fresh Set of Eyes.

Over the years, I have had many clients with problems in their business that they didn’t know how to solve. They would invite me in to take a look to see if I could solve their problem. And, sure enough, a very easy solution to the problem presents itself in quick order. Not because I am smarter than them. But, because I came in with no pre-conceived ideas or past experience with the company, and simply came in with a fresh set of eyes and logical business sense.

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

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

14 Ways to Bootstrap Finance Your Startup

Sourcing capital for your startup is never easy, especially when you are pre-product completion and before the proof-of-concept the traditional venture investors are looking for. Often, the only way to get your business from a piece of paper concept to a venture-backable business is to bootstrap your efforts, via whatever means necessary.  Below is a summary of the some of the most-used bootstrapping techniques.

Read the rest of this post in The Next Web, which I guest authored this week.

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

[NEWS] The @RedRocketVC Blog Just Passed 500,000 Reads!!

We just logged in to write our next blog post and were pleasantly surprised when we got an alert that the Red Rocket Blog just passed the 500,000 reads mark!!  We are so excited our reader base continues to grow and keeps coming back, month after month, for our growing list of lessons in enterpreneurship.  Thank you so much for your continued readership, and helping us spread the word to your entrepreneurial colleagues.

For future posts, please follow us on Twitter at: @RedRocketVC.

Why You Need to Think About Your Business Daily

People's knowledge base is entirely dependent on their personal life experience. What did they study in school? Learn in their jobs? Whom do they network with? What challenges have they had to solve? In your business decision-making, you are also tapping into those past experiences to help guide you. And, when you don’t know the answers, you are hopefully smart enough to do a little digging, ask the right questions and track down what you know you need. But, there are two problems with this.

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

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

Lesson #214: The Basics of Programmatic Advertising

With all the rapid changes happening in the digital advertising space, especially around the exploding growth of computer-driven programmatic advertising, I needed a crash course to get up to speed.  I was fortunate to stumble on this ABC's of Programmatic Advertising whitepaper from Marin Software, a leading demand-side advertising platform deeply rooted in the programmatic space.  It was a pretty eye-opening read on how far online advertising has evolved over the recent years, and I wanted to share my learnings with all of you.

What is Programmatic Advertising?

Programmatic advertising is exactly what is sounds like.  It is automated buying and selling of digital advertising through centralized computer-driven ad exchanges and related databases and management platforms.  It is designed to largely replace the old-school human powered aspects to buying and selling advertising through agencies and ad networks, with the goal of driving more efficiency and transparency to both advertisers and publishers.  The advertisements can run the full gamut, including digital display, video, mobile, social or other ad creatives and placements.  According to Business Insider, in the last several years, programmatic advertising has quickly grown to a $15BN industry today.  This represents over 53% of all digital advertising in 2015, and is forecasted to grow to 65% by 2020.  So, you bettter learn this stuff, as it is taking over, and fast!

Who are the Key Players in the Programmatic Ecosystem?

I thought the above graphic did a really nice job of laying out all the pieces of the programmatic advertising puzzle.  At the center of the ecosystem are the ad exchanges (like DoubleClick, App Nexus, Rubicon, PubMatic, OpenX, Mopub, Smaato and AdTech).  These are platforms where advertisers can set up ad campaigns to buy impressions and publishers can offer up inventory to be sold.  This computer-driven system replaces the need for human driven ad networks or sales teams.

Wrapping around the ad exchanges are three key players: (i) the data management platforms, or DMPs (like Adobe, X Plus One, Blue Kai, Aggregate Knowledge Knotice, Core Audience and nPario), who collect and store all the internet user data in one central database; (ii) the Demand Side Platforms, or DSPs (like DoubleClick, MediaMath, DataXu, Rocketfuel, App Nexus and Marin Software), who enable marketers to bid on and buy ads from ad exchanges, including all campaign analytics; and (iii) the Supply Side Platforms, or SSPs (like OpenX, PubMatic, Rubicon Project, App Nexus, and Right Media), who enable publishers to offer inventry for sale through the ad exchanges, including all revenue analytics.  In addition, the huge sites like Google, Yahoo, AOL, Microsoft and Facebook have set up their own programmatic ecosystems, as well.

Why Does Programmatic Matter?

Well, to advertisers, it is typically are far more cost-effective, quick and easy way to plan and place media buys.  Why use humans to research and negotiate with the sales teams of hundreds of publishers, to pay expensive, high rate ad placements.  Programmatic buys typically end up at a fraction of the cost (details below), and all with an unbelievable level of consumer targeting capabilities that were historically unavailable (also detailed below).

As for why the publishers should care: they may no longer need expensive human sales teams selling out their ad inventory.  But, more importantly, given how far lower the CPM ad sales rates are in the programmatic vs. human world, they need to pay particular attention to how far their overall ad revenues may fall by launching programmatic solutions.  My guess is, at some point, they won't have a choice, and all publishers will need to be in programmatic, in one way or another.

Where Does the Consumer Data Come From?

There are three major types of consumer data sources, used in targeting ads to consumers. First party customer data is the cleanest, directly captured by consumers (e.g., their name, address, demographics), from that specific publisher.  Second party data is similar to first party data, in that the data was directly captured from consumers, but is being sold by a third party that did not actually capture the direct data themselves.  The benefit of second party data is the greater reach than first-party data, as it can been aggregated from numerous sources.  And, third party data is anonymized data, captured by companies that that were never involved in any original transaction or engagement with a customer, but can append certain data from third party sources or use sophisticated algorithms to determine key classifiers (e.g., demographics, interests, affinities, behaviors, intent to purchase).

How Does the Targeting Work?

There are so many different ways to target your advertising to very specific customer groups.  You can target based on audience (e.g, demographics), behaviors (e.g., actions taken), context (e.g., subject matter of content they are reading), intent (e.g., keyword searches or products viewed), location (e.g., based on GPS on their phones) and beacons (e.g., in-the-aisle in stores).  Targeting can also be set to identify "look-alikes" to known users, to help increase the reach of your efforts (e.g., if my customers like sports, target other sports fans).  Targeting can also be specifically set to hit one consumer across each of their multiple devices, to hit them with multiple impressions on each of their computers, phones, tablets, televisions, etc. when such specific device information is known.  Key point, anything that can help signal customer intent, typically helps increase conversions and ROIs around those products.

How Does Retargeting Work?

In addition to finding new customers, you can also remarket to past customers or users, to pull them back with additional ad impressions served to them while they are on other websites within the network of publishers in the ad exchanges.  You can remarket to them based on one of the following triggers: (i) if they visited your web site; (ii) viewed certain product or content pages on the web; (iii) if they opened or clicked your email; (iv) based on your CRM data; and (v) based on keyword searches in the search engines.

How Is the Ad Inventory Sold?

Ad inventory can either be sold on a reserved basis (guaranteed to run) or an unreserved basis (if the excess inventory is there to fulfill your request).  And, the pricing can either be fixed (set rates, impressions, budgets) or auction-based (the price will be set at that of the highest bidder).  The real-time bidding model is commonly referred to as RTB in the industry.  According to Marin, only 8% of programmatic was reserved inventory/fixed price buys in 2014. But, that is forecasted to grow to 42% in 2016.

How Much Does it Cost?

Ads are sold either on a CPM (cost per 1,000 impressions), CPC (cost per click), CPA (cost per action) or CTC (click through conversion) basis.  But, assume most programmatic is typically sold on a CPM basis.  CPMs can range wildly based on the quality of the list and the level of targeting.  The higher quality the list or the more specific you want to target, the higher the price.  Prices also vary by industry, by devic, by format and by placement on the page.  But, on average, assume CPMs in the $0.50 to $2 CPM range via programmatic.  Which is material savings vs. the $10 or higher CPMs that are typically in the human-driven, non-programmatic world.  So, programmatic can help you stretch your limited ad budgets 10-20x farther.  Which is music to the ears of most small businesses with limited marketing budgets.

I hope this crash course helped you get a better understanding of the programmatic advertising ecosystem and the wide world of options you have to explore there.  Good luck!

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

Startup Financing Options--Equity vs. Debt vs. Convertibles

Entrepreneurs are not always aware of the various financing structures that may be available to them when raising new capital to finance their growth. Even if they are, they are not always sure what fair terms look like when receiving term sheets from investors.  This article explores the plusses and minuses of equity vs. convertible debt vs. venture debt. Please note that there are many subtleties to each of the securities discussed below and this does not address all of them, but is meant to give a very broad overview.

Read the rest of this post in The Next Web, which I guest authored this week.

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