Hustle

I spent yesterday morning at the DreamIt Ventures demo day and had a few takeaways.

First, I was reminded that good accelerators are a near-perfect vehicle for early stage companies to get a punch of exposure to investors, and also get the added benefit of refining their stories down to a concise package. I’m optimistic that a number of the companies that presented will raise some runway. Platforms like Angel list and Circle Up are also great ways to introduce your company to investors, but they’re probably better at helping you round out a round than raise the first slug.

Second, I was reminded while watching these companies present of the age-old concept of hustle. Fred Wilson wrote a great story a few years back about the Airbnb founders selling Obama-Os to fund their early days at the company. At YouCast, one of our founders had an uncanny ability to get us in front of anyone we needed, from Marc Andreessen to 50 Cent (both of whom worked with us).

Having hustle is not about being sales-y, or being good at bullshitting people.

I see hustle as an intuitive understanding that access is universal, and an understanding that there aren’t as many rules to the game as you might perceive from the outside. Second, hustle means being incredibly productive with a pathetically small amount of resources.  I saw a few companies presenting yesterday that had great hustle, and I’ve met with entrepreneurs that show it right away. It can’t replace a great market, amazing product team or great operational execution, but I’ve been consistently impressed with how far a startup can go with one great hustler on the team.

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Analytics Won’t Get You To Product Market Fit

all-you-need-to-know-about-big-data

In the new world of big data, everyone in the startup community seems obsessed with collecting data and making data-driven decisions. For the most part, this is a healthy obsession. New analytics platforms like KISS, Mixpanel and Localytics are providing great tools for product managers and marketers to better understand what’s happening inside their apps and web products.

We’ve also developed great processes for defining success from a metrics standpoint.  Aside from K-factor for viral apps and standard retention metrics for paid services, we have frameworks like Dave McClure’s Startupp Metrics For Pirates that help any startup with customers think about their product-market fit goals from an analytical view.

These innovations have been net positive for business building, but they can also enable a bigger problem:  they allow entrepreneurs to analyze  metrics as a replacement for talking to real customers.  in truth, it’s way easier to look at a Mixpanel screen than it is to talk to a person about your product. First, no one wants to face judgement directly, they’d much prefer to have it distilled into a bad retention metric. Second, talking to users is noisy – it’s really hard to pull actionable insights from a handful of conversations.

Analytics can provide us a window, but they don’t give us a narrative for how people think about our products, how they think about competing products, or even what they think of our value proposition (assuming they even know what our value proposition is).  The narrative around a given product will inevitably be the leading indicator of success or failure, but analytics will only give us a sliver of insight around it.

Depending on your product type (consumer and enterprise startups should handle this problem differently), there are a few tactics you can employ to get more narrative-based feedback on your product.  None of these will cost you much more than time, but they can save you months of incorrectly deploying your resources.

1. Follow Michael Margalis’ Quick and Dirty Consumer Research. Michael is a partner at Google Ventures’ Design Lab.  In this video, he offers a wealth of information about how to find and interview users. The video is 90 minutes and every single minute is worth watching. I cannot recommend this video enough for the discovery phase of your product development.

2. Have Users Test Competitive Products. If you want to build a great product, see where people are getting tripped up with your competitors’ products. The best part about this is that you don’t have to build anything to test competitors’ products.  Aside from identifying UX / UI opportunities, you’ll quickly understand how users feel about products in your category, and how they fit them into their lives. Most technology products are used to satisfy a need – understanding how people  think about their needs and solutions is as important as any metric in your analytics dashboard.

3. Talk To Your Existing Users.  There are two primary ways to get in front of your existing users –  phone calls and email surveys. I’ve found that both are great for different goals. Survey’s tend to get you ‘crowd-sourced’ style data points, general sentiment towards your product (e.g. satisfaction scores, net promoter scores, etc.). They can also help influence your product roadmap.  Interviews are better for the narrative questions – how do your users think about your product, when do they use it and what need(s) does it satisfy?

Segmentation and CRM

I recently had an experience with customer service at Apple that reminded me of lessons I’ve learned on segmenting customers.

My iPhone broke after a few months of use; the home button stopped responding. The last three months in my life have been hectic, so I just worked around the problem for a while.  By the time I got around to going to the Apple store, my warrantee had expired about a month earlier and the sales manager told me it would be $150 to replace it.

At the risk of sounding like a jerk, I spend a ton of money on Apple products. Between work and my personal computing, we have three Macbook Pros, two iPads, two iPods, two iPhones, a Mac monitor and a bunch of peripherals like keyboards, music, in-app purchases, etc. I’ve also been buying Mac products since the late 90s.  As I attempted to negotiate with the genius bar manager, I gave him the inventory list of Apple products that we have, to which he replied “well, we treat everyone the same”.

Really?!?

This is money left on the table in my opinion.  Every non-commodity supplier, not just service companies, should leverage some type of customer relationship management technology and/or processes to ensure that they don’t treat all of their customers the same.

Think about it from the Apple example:

A number of iPhone users purchase a single Apple product which is subsidized by a carrier.   A  lot of those customers will move to Android for their next phone.  Not all of them, but a bunch.  A one time iPhone consumer will gross $600 in revenue for Apple: $200 from the customer and $400 from AT&T. Apple runs a 26% profit margin, so for a one time apple purchaser, Apple will pull $126 in total profits from that customer, then say goodbye.

Assuming that I continue on my current Apple purchasing trajectory, I would probably get a new laptop every three years, a new phone every two, and a new tablet device every few years (let’s say four).  I’ll hopefully be around for a few more product cycles, but just taking the next 20 years that’s about six laptops that we can  round to $2,000 each, ten phones at $600 each and five tablets at about $600.

Assuming that prices don’t rise for 20 years (woohoo!), and using a discount rate of 8% (good luck finding 8% returns anywhere), then my present value in profits to Apple is about $3,000.  

Device
Laptop  $14,000
Phone  $6,000
Tablet  $3,000
Total Revenue  $23,000
Total Profit (26%)  $5,980
Discount Rate 8%
Present Value of me, in profits, to Apple  $2,942

 

 

I’m consistently perplexed as to why companies work so hard to treat everyone the same, especially when they have so much data to work with from existing customers’ purchase behaviors. I made this discount model in two minutes using excel.  Apple has all of this data and is the biggest tech company in the world, but doesn’t bother to do anything with it.

I unwrapped my first Android phone today. It wasn’t an effort to spite Apple, and the reality is that I’ll continue to purchase a bunch of Apple products. With that said, it’s surprising to me that Apple and lots of other companies don’t make better decisions with the ocean of data that they have on their customers.  I believe there are big opportunities for companies that leverage customer data in smart ways and learn to extract full lifetime value.

Creative vs. Data: An Autumn Smackdown

Mad Men

Digital marketing strategy is changing the way consumer brands and enterprises have to think about content.  That’s been true for some time, but there are two main reasons why ‘this time it’s different’:

  1. Like never before, data on the internet is so widely available with every activity, the desire to leverage it is (or should be) natural.  IBM released a study last week after interviewing over 1,700 CMOs globally.  The number one headache identified for their future?  The explosion of data that’s occurring in their worlds (incidentally, social media was number 2).  Over 70% of CMOs reported being underprepared to manage the data.  That’s a staggering percentage…
  2. Media consumption habits have changed so drastically that the volume of content a brand must create in order stay relevant in real-time conversations has gone up exponentially, but the relationship between creative spend and measurable ROI has decreased.  In other words, everyone needs a higher volume of less expensive content than they used to.

My instincts and training, and the above data points, scream that using data is infinitely smarter in the long-run than using hunches to produce content.

The contrarian point, though, has its merits. For one, we’ve been using qualitative insights to sell things for centuries.  So what’s wrong with good content ‘just being good’? After all, doesn’t the insistence of data in everything we do take some of the magic out of the equation?  The most eye-catching  ideas I’ve seen come out of creative agencies were less about data and more about bright shiny objects.

I’ve been teetering lately between the idea of ‘creative’ content development versus data driven decision-making.   I don’t believe these are mutually exclusive, and the best future content creators will leverage data to create content, but there are some differences. Having spent some time on this, here’s what I’ve come to learn over time:

  1. Bright shiny objects close deals.  Everyone wants ideas, a new hotness. Content experts with a high EQ and an intuitive understanding of  emotional pull have a tendency to win when it comes to meetings. There are a lot of biases in the way we present ideas that lend themselves to the ‘PRETTY-PICTURE-BOOH-MATH’ approach to marketing.  The first is that we’re still presenting creative concepts with meetings that we give titles like tissue sessions. Imagine walking into a pitch with a tissue covered board and unveiling a spreadsheet, then talking about segmentation.  Snoozer.
  2. Data keeps business relationships alive.  After the party,  when the bright shiny object wears off,  marketers are always struggling to grasp ROI.  As I was writing this, I stumbled across this article on Moneyball for the Consumer Web that talks about how Rent the Runway employed data to determine the 19 variables that are important to their customers, including color, designer name, dress length, time of year, occasion/purpose, age of renter, body type, neckline, model wearing dress, price.  Now, let’s pretend you need to manage a Facebook Page for Rent the Runway, or write a blog,  or create content to get into other bloggers’ hands to help spread the word.  Do you think that having those 19 variables would be helpful in developing your content calendar?  I would imagine that one could write a few articles on each variable and build a post per week that would be relevant and keep the content flowing (and relavant).
So, from a marketing agency perspective, both elements are important, but I would venture to guess that we spend a disproportionate amount of money on bright-shiny objects, and not quite enough on the data side of our businesses.  I expect this to change drastically in the near future.

The Noise Before Defeat

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
– Sun Tzu

I’m taking a competitive strategy course right  now, which has raised my awareness of being strategic in my thinking and actions.  I think everyone who considers themselves “hard working” tend to do a lot in a day, and to be very productive, but knowing if you’re doing the “right” things can be a difficult question to answer.  I believe that this challenge applies to marketing efforts, as well.

I spent a good part of my twenties trying to master the art of productivity, which I define as accomplishing a certain number of tasks within a given timeframe.   Time management is a big pice of this puzzle, and it took  me a long time to really understand it comprehensively.  Little things like predicting the amount of time it will take to finish any given task has really helped me “chunk” out a day into a series of manageable tasks.

The next step, I feel, is making sure that I do what’s important, as opposed to what’s urgent.  This is a skill that I’ve been trying to acquire over the past two years.  Right now I’m writing a blog post,  is that really the most effective use of my time?  This is where I believe strategy can be applied with great success;  it can help us decide which actions to take,  and it can help us define what a successful outcome to any solution is.  By definition, “being strategic” can boil down to answering a few basic questions and relegating tasks and task management to your core goals and objectives:

  • Goals can be defined as open ended, “more is always better” statements about what you want.  “Become the largest seller of product XYZ”,  or “Be the number 1 software firm in the world”
  • Objectives are similar to  goals,  but are quantifiable and typically have a time dimension. Objectives might be “achieve 20% CAGR in 2011”, or “capture an additional 5% of market share”.
  • Strategy gets into the “how” you will achieve an objective or a goal.  This is where most of the work comes  into play,  and where you need to spend a lot of time looking at your available resources to decide where you can win,  and which battles you need to forgo. “We’re going to build an application that addresses the needs of this target market in 2011,  then build from that base over the next three years”
  • Tactics are the action items that break down the strategy into small, manageable pieces.  These are the the battles.  “buy  SEM and display media, build and market a Facebook Page with a goal of XX,XXX Fans by May 1st”

The elegant benefit of doing all of this upfront strategy development is that it promotes productivity to effectiveness.  To-do lists should be comprised of items that support the strategy, the strategy supports the objective and the objective supports the goal.   Assuming that your strategic thinking is sound,  your tactical actions will all increase your effectiveness at reaching your goals.

Twitter Ad Networks: Paid-Earned Media

A Friend of mine sent me a link to 140 Proof, an ad network that serves up sponsored ads in Twitter and asked me for my onion on the network. I’m not going to link out to the network, but I would like to talk about my thoughts on this approach as a business model.

I went on the site to find out a bit more information on the company. It was interesting to click on either the “Publishers” or “Advertisers” links on the site, because they both attempted to access and update my Twitter account. I find this unusual behavior for a company who is trying to sell me ad inventory on Twitter, while simultaneously asking to borrow mine without offering any value first. Anyway, here was the email I replied with:

Hi!

Quick response:
* I don’t know anything about this specific agency, but I’ve spoken to others
* I’ve never run a paid media campaign in Twitter
* I find these networks somewhat objectionable and annoying because it’s interference marketing with very little value (I may change my opinion on this, but Twitter is so self-promotional as it is that it seems ridiculous to purchase tweets). With that said, it’s certainly gaining popularity.
* A colleague of mine purchased this type of media for {a client} and reported that it didn’t perform.

If you want to purchase this type of media, make sure it can be performance-based (number of clicks or registrations- not CPM) and understand that you will not be able to target it very well.

That about sums up my opinion of buying earned media. This type of advertising strikes me as being no different from advertorials, and brands wishing to establish relationships and drive beyond a click should be careful when purchasing media like this. Duping someone into clicking on your ad is not advertising.

Social Traffic Referrals

by Christian Brucculeri

I was reading Fred Wilson’s awesome blog the other day and I was inspired but what he said at the #140 conference:

“social media, led by Facebook and Twitter, will surpass Google in driving traffic to many websites sometime in the next year.”

I believe this will happen as well.   I believe we’re searching a little less than we used to.  Granted, when we want specific information (on a health topic, or for shopping) nothing can stop steamroller that is Google (no, not even you, BING), but when I’m just cruising along through my day,  I want to listen to my friends.

I do believe that Twitter is fast becoming a central traffic driver, as that’s essentially all I use the technology for anymore.  While I do enjoy the occasional status update from a friend, I’m more interested in the content people want to drive me to .  Even as I write these words it scares the crap out of me.  Why do I want to be part of someone’s organic search optimization attempts?  I’m not your sponsored search keyword, PPC victim-  so why do I want to click on your links?  Simple: I asked you if I could.

Every time I see a new Bit.ly link I want to see what’s behind it.  I want to see it because you’re my friend, or I find you interesting, or your a publisher I trust.    I know we might have just met, but I’m ready to click on you to see where you’ll take me,  because I believe you thought about it before you put that link up.  I honsetly trust that you stopped before hitting “update”  and thought “Shit, am i being annoying right now?  No, this is cool…let’s roll”.  This is light-years beyond an auction for a keyword, or a brand name buried in a BS blog entitled something like “getyoursiteoptimizized.net.au”.  So please, send me links in your tweets-  I’m interested…