Wednesday, January 22, 2014

Free Your Teams from Bureaucracy

I describe "bureaucracy" as any system that doesn't add value and as a result wastes and sometimes enslaves people's time. The word itself is overly complicated to spell and therefore use. It's actually a perfect name for itself. Unfortunately there's a lot of it in the World. One of my personal missions in life is to help eliminate as much of it as possible. Why? Because we are here for a short time, and who wants to waste it on stuff that doesn't make a difference?

In business, here's what it looks like. Two of my companies' support teams were documenting every customer support request. Sometimes in several systems. Using up 70% of their time. Leaving only 30% of their time to actually help customers. As we weren't able to respond to customers fast enough, we kept hiring more people, which required even more systems to keep track of everything and all the people we were hiring. We lost track of the end goal... happy well-served customers.

At RegOnline, we discovered we could eliminate the need for support if we just simplified the systems our customers interacted with... clearer wording, hide advanced options, better self-service online help. We then simplified the tracking systems our support team dealt with to free up their time. The result... less confusion, less busy work, more free time and value for everyone. The best part was how much easier we made it for customers.

This month at SurveyGizmo, SnapEngage, and PosterBrain we added something new to discuss at our weekly all-company meetings... "What are the most common questions our prospects and customers have asked us in the past week?" We started doing this because we realized that our weekly meetings were focusing on US (revenue, customer count, expenses, profit) and not enough on our CUSTOMERS.

At PosterBrain today, the most common questions customers asked in the past week were.... How will my picture look?, Where are you located/shipping from?, Do you dry mount?, etc.. I suggested rather than making people contact us to get those answers, how about we put a FAQ on our homepage? Our customer service superstar laughed and said "Then what will I do with all my time?!" :-) I said how about those outreach emails you've been wanting to make for weeks to attract new customers!

Thursday, December 12, 2013

Let Your Customers Fund Your Software Startup

“Anything that won’t sell, I don’t want to invent.
Its sale is proof of utility, and utility is success.”

- Thomas Edison

I've seen hundreds of entrepreneurs spend more of their valuable time raising money than they do focusing on the true reality of what customers REALLY want to pay for. No matter how much funding goes into an organization, it's not a truly sustainable business until the revenues from it's customers cover all the expenses of the business. The only way I know of generating sustainable revenue FROM customers is to generate real value FOR them. Customer proof is the ultimate product proof.

Which is why I decided to get behind a new crowd-funding/pre-tailing site for software startups called Ramen. Where the "crowd" FUNDING the software are the potential users OF the software... they help fund (no equity involved) the software they would want and use. I love the idea of getting real customers to fund our businesses.

Thank you Niel & Ryan for making Ramen an option for startups! Which by the way, they are crowd-funding their own startup with their own potential customers (it's kind of like Being John Malkovich). I'm doing a matching sponsorship, so if you have a software idea that you'd like to test your CUSTOMER traction on as you build/design it and would like their help, well then help back Ramen too!... ANNOUNCING PROJECT MATCHING SPONSORS IN RAMEN TO THE TUNE OF $5000

1/22/14 PS - In full disclosure, Niel and Ryan choose to do an angel round prior to launching. Stay tuned for their follow-on "customer-funding" round.

Monday, December 9, 2013

Successful Turnarounds


I've been fascinated by business turnarounds since college... take an ailing company that's losing money and turn it into a profitable, sustainable company. I've been fortunate to help a few companies turn around and also love hearing other's stories. They all share these themes:
  • Revenue is flat or declining
  • Expenses exceed revenues
  • Additional capital is either non-existent or extremely expensive
  • Management and employees are scared or checking out
The key steps to turnarounds are:
1. Cut everything that isn't producing revenue/real value for the customer - until expenses are below revenues, including: expensive executive management, excessive product development, unprofitable biz dev or sales teams, product lines, office space, discounting, unprofitable marketing and advertising, commissions, ceremonial account managers, employee perks, charitable contributions, etc.

2. Focus intensely on the real value/products that customers want to buy by eliminating distracting non-core products and services

3. Renegotiate debt/payables to pay-out over time. Show an ongoing commitment to lenders and vendors by paying something every month. But, don't pay more than what the company can reasonably afford.

4. Go Open Book with employees and management. Show everyone exactly where the company was, is, and will be. Let them be a part of the turnaround. Meet weekly to review progress.

5. Bootstrap exciting new products that customers really want (Ford Mustang revival, Apple Ipod)

6. Enjoy the profitable fruits of having a leaner organization that delivers more value to customers.

Turnarounds are really hard for most to envision/lead because it takes a fairly rare leader who can see through to where the waste is in the organization (i.e. not delivering value to the customer), has the courage to actually trim to the core, the ability to instill confidence and ownership in those remaining, and the awareness to listen and drive the leaner organization to what their market/customers really want next.

I find it thrilling to uncover value and add life to old things, unlike most of my entrepreneur friends who get more excited about starting things from scratch.

Two turnaround books/stories that I LOVE are: The Second Coming of Steve Jobs (turnaround of Apple) and American Icon (turnaround of Ford)

Monday, December 2, 2013

Minimum Viable Partnerships

Over the years I have seen over a hundred sales/reseller/biz dev partnerships come and go. Some were seemingly huge, with big brands behind them. Most were small-to-medium. But ALL felt like very promising ways to grow the business. I've spent and watched gobs of money and energy on customizing our products, taking valuable time away from core products, and even hiring extra folks to staff the waves of new customers that would soon come.

Some examples:
Adding a product link on every page of a partner's site with millions of visitors a month. 
Partnering with an event directory site that listed hundreds of thousands of events that could send event organizers to our event registration software.
Partnering with the largest seller of college newspaper advertising to resell our college advertising product
Partnering with the largest financial services company in the world to offer an easier way for their business customers to collect from their customers
Partnering with a huge consumer publishing site with millions of visitors to run a contest to use the product.  

"If you build it, they will come" kept ringing in my ears... stealing millions of dollars of resources away from my core product and towards this vision of a more fruitful EASIER future via these partnerships. 

Not ONE out of one hundred of these partnerships can I point to and say it produced a positive return on resources invested. But I still hold hope, year after year, partnership after partnership, as I wait for the one. We can't give up hope, because partnerships are too much fun and there ARE plenty of examples out there where they have made the company a huge success. Like Microsoft & IBM, Apple & AT&T, in the early days. 

So what to do? A little partnership-worn and hopefully wiser, I NOW say let's walk before we run. What's the minimum viable partnership (MVP) we can test to see if teaming up actually produces any fruit for us? How quickly can we test the power of our relationship and how that translates with our customers. 

For example I recently heard about one startup looking to partner with another, even trade some equity, because they both imagined that the partnership of millions of emails of one partner would be a perfect fit for launching the other startup. I suggested that before spending days together charting out a master deal why don't they email a small subset of the group to see what kind of impact they might be able to extrapolate. When they approached the partner about it, it turned out they only had 20,000 permissible emails, not millions. Certainly not worthy of spending days talking more about it or trading equity. 

Two of the most common push-backs I hear from potential partners on MVPartnerships are when partners want white-labeling, customizations, integrations, complicated rev-share agreements, and sometimes real capital before getting started. While it's not optimal, most partnerships can be tested without having to have those. By putting an emphasis on doing a quick test to see if there's any real demand/value, and THEN we'll ALL know better how to design the partnership going forward.  It usually puts them at ease, reduces the upfront workload,  and more importantly causes everyone to be more realistic by testing our field-of-dreams assumptions first. Saves lots of money, resources, and broken hearts that way. 

Friday, August 2, 2013

Small Giants

I had the pleasure recently of spending a couple hours with Bo Burlingham, the former editor of Inc. Magazine and author of Small Giants (amongst several other great books). This book shows how some very unique and successful companies have found something much more fulfilling in being great rather than big. It's a wonderful collection of stories about a handful of entrepreneurs who created meaningful companies that deeply care about their customers and employees.

One of my favorite stories is about Danny Myers, the New York restauranteur... "He doesn't deny the importance of traditional customer service, but he regards it as a set of technical skills. In a restaurant, he says, service involves such practices as taking the order promptly; having food arrive while while it's still hot; and yes, cleaning up quickly when a tray of water glasses spills. You can teach people to do all of those things, and do them well. Enlightened hospitality on the other hand, is an emotional skill involving the ability to make customers feel that you're on their side. That's the mantra of Meyer's restaurant staff: Let them know you're on their side." Danny wrote a great book, Setting the Table, that I talked about in this post.

In a World where most of us entrepreneurs are motivated by a more-is-more mentality, I always find it invigorating to hear stories about folks who are going for something different. Some deeper connection. Great read for those entrepreneurs who are building for life rather than building to flip.

Bo is finishing up a book about having graceful exists. Which addresses what life-long entrepreneurs are doing to exit their companies so what they created can be preserved/sustained.  Some do it too soon, thinking they would like retirement, others don't hand it off to the wrong new owners, and many figure out elegant ESOP options. Regardless, I love the thinking... beyond the life of the entrepreneur.

In fact, Bo taught me a new word and a new way of thinking as a result. In Europe there are still companies that have stayed in the same family for hundreds of years. Bo says its because of "primogeniture", which is the passing of businesses to the first born (usually son) in each family. I find it fascinating that it has worked so well in preserving companies.