Jan 17 2009

Pounding the Pavement and Getting Over the Fear of Sales

Tom

Part of my goal is to do an almost diary-like coverage of me doing the startup.  Until February, I’ll still be part time on the biz and full time on my developer job.  I did, however, get a taste of what’s to come last week.

When John and I decided to do 360|iDev, we figured we should go to Macworld for a day.  We agreed to do a show and then 3 days later, Apple announced it was pulling out of Macworld.  We saw this as a great opportunity to talk to sponsors and developers to let them know that there’s a new show in town: ours.  John and I reg’d for the expo and John bought his ticket for Cali.  Now we needed a plan.  What would we do at the show?

John and I do one offline marketing campaign per 360|Flex.  We print up a bunch of oversized postcards and mail them out to Flex User Group Managers.  They hand out the fliers and we give them a free pass or two to raffle in exchange for them hyping the event.  It works out great for us and for the UGs as well. Then that’s it for marketing. We never really go anywhere to promote our show.  We never really pound the pavement so to speak.  We’re blessed to have a community that loves us, so word of mouth pretty much takes over from there. With 360|iDev, we realize that wasn’t going to happen.

When we did 360|Flex Europe, we assumed our US brand would carry over and we’d have to do little work.  We were wrong.  It hurt to be wrong, but we learned a valuable lesson: Don’t think you’re brand is as recognizable as Mickey Mouse.  Success in one market does not in any way, shape or form guarantee success in another market.

Therefore, for 360|iDev, we realized we’d have to do more.  We put in our order for our traditional oversized postcards for attendees, but our Daneen, our marketing gal, got smart.  She pointed out that it would be better to print the sponsor cards in a matching fashion vs a ghetto inkjet print job done at home.  With these two pieces of collateral, this time we’d have to hit the streets and find people to give them too.  Find people who would not only attend the show, but also possibly speak or sponsor.

Last Thursday, John and I walked into the Moscone Center with a handful of general info cards and sponsor cards.  We were walking towards the main expo hall.  Along the way, we passed tables full of attendees awaiting to get into the expo hall.  Initially, we walked right by them.  LOL  Like I said, John and I are new to this in-person sales stuff.  :)  It hit me, “Crap, we need to be giving these people the attendee fliers.”  I make John pull over, grab the fliers and turned to the people.

Now, the people were oblivious to me.  I was just another goob in a conference shirt (a 360|Flex polo) standing with fliers looking in their general direction.  I probably looked no different than any other Apple Fanboy standing around.  Inside though, was a whole different story.  I so desperately wanted to turn to John and say, “Here’s the fliers.  Go give ’em out!”  It was that initial fear of rejection we all have regardless of what the task is.  The butterflies were a fluttering and the sweat glands were in the process of dumping all moisture they had in reserve.  I’m sure if I stood there much longer and doted on it, I would’ve not done anything.  I would’ve talked myself out of doing what we came to do: “These people probably aren’t even iPhone developers.  They wouldn’t want one of my fliers. I bet some might even get mad for me spamming them in person!”

After a few moments of inner arguing and turmoil, I said, “Oh shut up and suck it up will ya.  There’s work to do.”  With that I stepped to the nearest table and started handing out fliers.  I worked my way around to all the tables near the main expo hall.  There was maybe 40 of them spread about.  I walked up and dropped a handful of attendee fliers on the table.  I gave a smile to those that looked up at me.  You know what, not one person gave a bad vibe.  Quite a few actually said, “Thank you” as I put the fliers there.  “Thank you” is usually reserved for when you do something nice for a person, not when you’re trying to sell them something I thought.  Thing is though, if they are an iPhone developer or want to be one, they’d need some help getting their A-game on.  This conference of ours will help them do that.

I think that’s the aspect of sales I need to take more to heart.  Sales isn’t about being the sleazy used car salesman portrayed in movies.  Sales is all about attitude, which should one of helping.  John and I aren’t criminals taking people’s money and returning nothing in return.  In fact, we’re the opposite.  We take a lot less money than our competitors and we give as much, if not more, value than them in return.  We’re a value and we here to help our customers.  It is our duty as a business to make them aware of what we offer and how it can help them.  They, in turn, can then decide whether they see value in that offering.

After handing out the fliers to those on the tables, it become readily apparent to John and I that we grossly underestimated the amount of fliers we’d need.  Luckily, we had another 2800 back in John’s hotel room.  LOL  It was very cool to walk around and seeing people carrying/reading our postcards.  It gave a little more pep to our step as we hit the expo hall.

The expo would be a completely different beast.  Dropping the card on the tables involved a smile and fast movement.  In the expo hall, we’d need to sell the show.  Luckily, I had John with me.  I’m not quite sure how people start a business on their own. I’d be too scared to do most of the crap that’s needed.  John and I though, if nothing else, genuinely enjoy each others company.  We started out a bit timid.  As the day wore on though, we realized everyone was very positive about the show.  This lifted our spirits and helped us keep going after 6 hours of walkin around.  We did have two sour pusses: 1 – “What’s in it for me?” attitude from a marketing gal no less.  (I feel sorry for that company) and 1 – “Uh yeah, thanks.” as he folded up the flier to trash it.  The high points came when we approached vendors/dev shops and they already had our postcard from outside! w00t!!

By the end of the day, I was exhausted and exhilarated.  We talked to a ton of people and got the word out about 360|iDev.  It’s shaping up to be a great conference.  It was also a great preview of what’s to come for me.  Hitting a deadline for your FT job is a nice feeling, but nothing compares to working your butt off all day to support your own business.  If you haven’t tried it yet, you gotta do it.  I’m just sorta bummed I can’t do it again until the end of the month!


Jan 5 2009

Cuil – a case of what not to do.

John

For those that have already forgotten, yeah that’s like everyone, Cuil launched in July 2008.

No one cared.

Cuil launched, and didn’t work, results sucked, the site went down, etc. As launches go, it was a dud.

Being stealth in general, is LAME, IMHO. No idea is that revolutionary, and hello! Cuil was a search engine! Stealth just raises the bar high, higher than you probably want. How about you embrace the web, stop being so secretive? Get the community behind you?

Techcrunch has a good write up on Cuil’s loserness.

From time to time Tom and I have thought to keep something underwraps, save it up for a big announcement, etc. It always blows up in our faces, without fail. Some one will call us out “I was going to blog about your event, but you had no sponsors up” or something like that, when in fact we had sponsors, but were waiting to announce on a certain day, whoops!

This is short and it’s my take, but don’t be stealth, and don’t be lame, and don’t rely on hype to define your value. Be worthwhile, and be something people will want to use. Don’t be a 33mil money trap, “Google killer”, don’t be an anything killer! Just be. Be good, be a venture that meets a need, not a venture looking for a problem.

Buh bye Cuil, it was an uneventful life, and you’ll be remembered… ok well you won’t, but thanks for all the fish.


Dec 26 2008

What should a startup focus on: profits or expansion?

admin

This post is in response to a recent article on Businessweek, entitled “A Wrench in Silicon Valley’s Wealth Machine“.  It’s our first panel style post where we ask our startup contributors to give their views on a certain topic.  Let’s hope it works out. :)

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John’s Thoughts:

VC’s seem to be largely morons and most startups seem to be the perfect match.

Only a startup would exist and not have a plan to make money. Only a VC would give money (large, large sums of money) to a startup that would “Make money in the future”, if everything goes according to plan.

That’s not to say startups have to be profitable or even bringing in money when they start, but Digg is what? 2? 3 years old? And not making money still.

From Businessweek

Jay Adelson, Digg’s chief executive, says it’s clear the environment has changed for all startups. With venture money harder to come by, entrepreneurs have to concentrate on building their businesses. He says Digg is dialing back some expansion plans and trying to reach profitability as soon as possible. “All I care about is making sure the business foundation is solid,” Adelson says.

Really? Now the focus is on profitability? Now that they’re being seen for what they are? Just another over hyped startup with no clue how to make a dime, hoping that profitability will find them on its own.

What really amazes me is that all the Digg fanboys and gamers of the system singing Digg’s praise etc. are simply filling Digg’s DB with data that they [Digg] intends to sell. Sell for a retardedly over valuated price of 300m! Holy crap! Smooth move guys, give your meta data and attention to Digg so they can hope to sell it. NICE!

One reason may be that Digg’s public profile is much larger than its financial might. Last year the company lost $2.8 million on $4.8 million in revenue, according to Digg financial statements reviewed by BusinessWeek. In the first three quarters of 2008, Digg lost $4 million on $6.4 million in revenue. Adelson declined to comment on the figures.

Those better be some damn good Christmas parties, and some 70 and 80’s style whoring and coke snorting, I’m talking Studio 54 here. Lost 4 million? On what? It’s a site that people give content too, they don’t pay for it! Oh wait, Diggnation probably isn’t cheap to produce, that explains it.

As some one who runs a business completely in boot strap mode, it’s insane to imagine how some of these businesses can exist. Tom and I started ’08 owing 15k on our line of credit and were contemplating closing up shop rather than continue moving into debt. Startups seem to have mastered the art of spending money that isn’t theirs in exchange for retarded amounts of their company and probably a sizable chunk of soul.

Is it worth it guys? You couldn’t have done with out millions of someone else’s money?

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Tom’s Thoughts:

I wouldn’t say all VCs are morons, just the dumb ones.  :)  Perhaps that should read the greedy ones.  I understand VCs provide more than just capital.  Take a look at eBay.  It was successful, but Pierre realized that he didn’t have the knowledge needed to take the company to the next level.  VC investment helped him get Meg.  Then there are visionairies that have expensive visions but the visions have profits in mind ala Bezos.  Amazon took what, 4 years to reach profitability?  But Bezos had the system worked out in his head to reach profitability.  Heck, at least it was a goal for those 4 years.

Article Snippet 1: With venture money harder to come by, entrepreneurs have to concentrate on building their businesses.

Now, that could just be poor writing on the author vs something dumb Jay Adelson said, but that line just blows me away.  What the heck kind of statement is that?  What entrepreneur doesn’t concentrate on building a business?  And what kind of people give that entrepreneur millions of dollars?

I’ll be honest.  I thought about approaching investors to help us grow 360|Conferences in the early days.  However, I realized we had no street cred. We had never ran a conference before, much less a conference business.  Even now, John and I are contemplating approaching angel investors, but I still tell John, “We’re profitable, but I don’t think anyone will care.  We’re not trying to take on the world and we’re definitely not sexy.”  John and I have spent a lot of time making our business what it is.  Sure it’s been tough, but we went from no money investment on either of our parts to making some money in less than 2 years, part-time.  People think we put on the best conference they’ve ever been to and are shocked to find out it’s just John and I doing the biz, part time.

The reason I think we make money and why people love our events is because from day one, we’ve always concentrated on building our business.  John asked during year 1 of our biz,  “Why didn’t you quit this idea like you did many others in the past?”  My answer came swift and still rings true to this day, “Someone trusted me with their hard earned money and it is my duty to live up to that trust by providing them the very best service.”  The only way you can provide a great service is by building your business.

Article Snippet 2: [Adelson] says Digg is dialing back some expansion plans and trying to reach profitability as soon as possible. “All I care about is making sure the business foundation is solid.”

Here’s where millions of someone else’s dollars makes you delusional.  Whereas Digg is now gonna focus on profitability vs expansion, John and I have been focused on profitabilty and are now looking at expansion.  I didn’t go to business school, so maybe that’s why I’m lost.  But don’t you usually test an idea out first to make sure it makes money?  Then once you’re profitable, you move on to expansion?  Like I’ve always told John, “Our profit model depends on x number of attendees per show.  If we don’t get those numbers, that means people don’t like our show.  We either need to change to get those numbers or leave the biz as our ideas obviously are all wrong.”  Now x is not in the millions or billions, we’re talkin roughly a few hundred.  But if there is no profit in sight, then you may have a good idea, but you surely don’t have a good business.

Article Snippet 3: In the first three quarters of 2008, Digg lost $4 million on $6.4 million in revenue.

Now, I won’t make accusations about what Digg did with that money.   John could be right, but I’m sure there’s some costs we’re just not seeing.  Some people accused us of throwing an “orgy” when we spent $90K on food, but after you realize a 6 oz soda costs $4.  You can see how fast things add up.  One thing companies should do is be more transparent.

I’m not saying throw your quickbooks file on the net. (Yes, I know they don’t use Quickboooks, just work with me will ya.)  But lay out what gets spent where.  Show people what you’re doing with the money.  If nothing else, your customers will tell you what your spending too much on.  Though I’m not sure that would work for Digg.  They have users and not customers, i.e. no one pays them to do a service.  Maybe that’s the problem then.

Can you be defined as a business if you don’t have customers?  Or more importantly can you be called a business if you don’t focus on profits?

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Andrew’s Thoughts:

My preference in starting a new business would be the conservative approach.  Save up money from a standard W2 job until you have a nice emergency fund before going for it.  Focus on those projects that get you to profitability the quickest.  Anytime you take money that you haven’t earned whether from a bank or from a VC, you’re giving up some control of how your business runs.  Unless the idea is truly revolutionary and needs to explode quickly, I’d stay away from taking VC or bank funds and doing it the old-fashioned way.  Having excess VC funds around is just plain distracting and a false sense of security.  It doesn’t make sense to have all those parties if you haven’t earned a dime.  Having a tight budget early on also forces you to find unique and cheaper ways of doing things.  One example would be a VC-funded startup throwing servers at a scalability problem whereas a self-funded startup would be forced to re-factor and optimize their code for maximum scalability.

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Jeffry’s Thoughts:

Are VCs Morons?  I don’t think so, but I do get the impression they only expect 1 in 10 of their ventures to be succesful; kind of like the traditional record company model.  That 1 success makes up for the 9 failures many times over.  With that in mind, I may consider factors other than the business plan when investing in companies such as enthusiasm and adaptability of the owners.

Cash flow is king, especially in a down economy.  Generating profit should always be a much higher focus than expansion.  Build your profit model right into the business from the start.  Think it through before you start coding or building the service.  Controlled growth is the best way to build.

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Ben’s Thoughts:

I have to say, I think this is a trick question. Let’s look at it this way, “What should a baby focus on: feeding itself or growing up?”. I guess the answer would be “yes”. Startups, like babies, require further growth by definition; otherwise you’re just running a business. So if a startup focuses solely on profit, it may never take the risks that are required to grow. By the same token if a startup focuses only on expansion fueled by VC money, it may not have legs to stand on when it needs to back up those extravagant claims it made (a la Digg). I’m not saying that VC is invalid or that projects with big ambitions (like mine) are dead, but I do think that inflated egos, hot-air pitches, and over-valued stocks are being market-corrected in short order. Hopefully that’s a good thing.