- My NYPL
Tools and Services
- Using the Library
I am a...
- Classes & Events
- Support the Library
As the boss, you're expected to have an answer for every situation. But as advertising exec Curt Hanke explains, sometimes acknowledging that you don't know it all can be the best move for your business.
In a 2012 study on the state of marketing conducted by IBM, 52 percent of Chief Marketing Officers said that they are unprepared for the expected level of complexity over the next five years. Which only makes me wonder whether the other 48 percent were posturing, daydreaming when they answered the survey, or really think they have it all figured out.
From big data to the myriad of little dials we need to turn in managing our brands, there has never been more to do, less time in which to do it, and such a paucity of patience for poor performance.
So what’s a marketer to do? Develop more sophisticated systems and tools? Invest in new methodologies and engagement strategies? Create deeper integration between every function in their business--from IT and Finance to Customer Service and Sales?
(Yes, yes, and yes.)
But while these might be some of the functional changes required to stay competitive, I’d suggest that there is a fundamental approach that is the fountainhead from which success in this new era of marketing must truly begin.
In brief, this approach can be captured in three simple words: “I don’t know.”
That’s right, I’d maintain that acknowledging (and for some, this might feel more like “admitting”) a lack of knowledge within and across this business function is a critical skill for marketers of all stripes. Here are a few reasons why.
“I Don’t Know” Creates Possibilities. It’s been said that the key to success is to never stop learning, while the key to failure is to think you know it all. Modern-day marketers need to be comfortable acknowledging their blind spots. It’s truly impossible to be an expert at everything in an area of exploding apertures, approaches, and analytics; by starting with a baseline of what is not known, exploration into untapped possibilities for the organization can begin in earnest.
“I Don’t Know” Inspires Engagement. Do you want to work with or for the person who knows everything? Or would you prefer the leader who wants everyone to use his or her talents, curiosity, and passion to help find the answer? By creating space for new data, ideas, and perspectives, “I Don’t Know” helps marketers (and businesses) get the most from their teams.
“I Don’t Know” Defends Against Complacency. Andrew Grove, former president and CEO of Intel, is famous for saying, “Only the paranoid survive.” With not just increasing information but also decreasing control in the participation age, great marketers (and leaders) need to fight against getting comfortable. It is incredibly easy to fall into patterns, particularly when the regression line is gently nudging north. As such, creating a culture of inquiry--where “I Don’t Know” (and “Let’s Find Out”) are valued--helps create constructive agitation.
“I Don’t Know” Is Just More Fun. The 2013 Gallup State of the American Workplace Report found that only 30 percent of employees are engaged and inspired at work. Yikes. By creating a culture of “I Don’t Know,” marketers help build a place where most employees want to work--where their opinion is heard, where there efforts matter, and where they can truly make a difference. In sum: Happier employees, better productivity, and superior outcomes.
For the avoidance of doubt, if you do know something…well, then, yes, state it clearly, with confidence and conviction; let the proverbial dog run.
But to the larger theme here, in my career, the clients and marketers who got the most from their agencies and teams were the ones who were open--and dare I say, fearless--in acknowledging what they didn’t know and challenging everyone around them to relentlessly bring new data, fresh insights, and any and all ideas to the table.
But don’t take it from me. “The only true wisdom is in knowing you know nothing,” said the enigmatic figure known as Socrates.
So, is this idea of “I Don’t Know” relevant for you and your business?
I don’t know; you tell me.
If your customer is angry at your company, you must do much more than just apologize.
It is difficult, but not impossible, to sell to a customer who's had a bad experience with your company. Here's how:
1. Apologize and probe for details.
If all you do is apologize, the problem remains in the air and the customer will remain skeptical. Therefore, you must figure out, in depth, what happened.
- Customer: "I did business with your company in the past and they were unprofessional."
- You: "I'm sorry somebody else at my company screwed up. I'll try to do better."
- Customer: "Why should I believe you?"
- Customer: "I did business with your company in the past and they were unprofessional."
- You: "I'm so sorry to hear that you had an unpleasant experience with us. Exactly what happened?"
- Customer: "Well, I ordered 100 framistats and..."
2. Diagnose the entire problem.
Continue to ask questions until you understand exactly what happened. There are four reasons the diagnosis is essential:
3. Devise an action plan.
Assuming you decide to proceed, create a step-by-step process that will ensure that the problem doesn't recur. This process should consist of two parts: 1) what you plan to do differently and 2) what you need the customer to do differently, if the customer was partly at fault. Example:
- You: "If you decide to work with me, here's what I intend to do. First, I'll give you my private number, so you can call me directly whenever you have any questions... [etc.] How well does that address your concerns?"
- Customer: "It's okay, I guess."
- You: "Great. Now here's what I'll need you to do, if we decide to work together. Would you be willing to give me a heads up the moment you know that you'll need fewer framistats?
- Customer: "I can do that."
This method gets you and the (now formerly) irate customer working on the same side to fix the problem so that it doesn't come back to bite either of you.
Like this post? If so, sign up for the free Sales Source newsletter.
There are plenty of good reasons to start your company far away from one of the major tech hubs. Even if it's a tech business.
When many entrepreneurs think about where they should found their startup, a few locales typically top their list: Silicon Valley, Seattle, Austin, New York, and Boston. While it’s true that there are numerous high-growth companies based in those areas, with more founded each year, they are by no means the only places you can successfully build a business.
Just look at ExactTarget, the integrated marketing platform that was recently acquired by Salesforce.com for $2.5 billion. While the company now has offices in San Francisco, Seattle, and New York, any guess where the business was founded? Indianapolis. Yes, that Indianapolis -; the 13th largest city in the country, and a metropolis best known for auto racing, corporate conventions, and the Colts, not high-tech startups.
ExactTarget isn’t some sort of outlier success story, either.
At my Boston-based venture capital firm, many of our portfolio companies are headquartered in cities that are nowhere near being classified as traditional tech hubs. A few examples include learning management tool Instructure, which calls Salt Lake City home; website optimization solution Monetate, which has its roots in Philadelphia; and local marketing automation software provider Balihoo, which continues to thrive in Boise, Idaho.
When and Why Location Does Matter
Of course, there are benefits to operating in traditional tech hubs, particularly as your business begins to scale. Generally, those hubs provide greater access to talent, mentors, partners, and investors, while idea sharing tends to be more advanced and free-flowing. As such, it’s generally far easier to find and hire specialized team members in San Francisco than in Portland, Maine, while the investor-to-investee ratio in New York will obviously be higher than it is in Miami.
That doesn’t mean that I’m suggesting your business needs to pack up and move to San Francisco if you want to catch a venture capitalist’s attention. Instead, I’m simply addressing the potential downside of operating a growing business in locations that are off the beaten path.
If you’re headquartered in a smaller city, you will just have to work harder to identify people with the level of expertise you need to nail the process of scaling. It’s certainly possible, as the companies listed above have shown, but it’s a challenge nonetheless.
Passion, Innovation, and Execution Always Trump Location
Ultimately, if your startup has the right leadership and vision, and it’s able to achieve product/market fit, then it shouldn’t matter if you operate in Greenville, South Carolina, or Cupertino, California.
In my experience, the best companies form wherever there’s a great entrepreneur with a great enough idea and skillset to get something going. I’ve seen that happen in Maine, Florida, Idaho, Southern California, and everywhere in between.
That said, I often advise entrepreneurs who are looking for the right place to build a business to consider one key factor: Try to pick a place with a professional football team nearby. The National Football League has done its homework, and its teams are in geographies with big populations. Typically, that translates into a pool of talent, mentors, and investors that is large enough to fuel almost any company’s growth.
Still, even that isn’t a deal breaker.
As a venture capitalist, I’d much rather invest in a company that has all of the core components of a potentially great business in a not-so-great location than in one with myriad holes that happens to be in one of the major tech hubs. If that means flying to meet with entrepreneurs in Albuquerque instead of New York, then I’m more than happy to book my ticket.
A new report finds gradual improvement for venture-backed IPOs
The third quarter of 2013 was the first consecutive quarter with more than 20 IPOs since 2004--with a total of 26 venture-backed initial public offerings. In addition, today’s report by Thomson Reuters and the National Venture Capital Association sheds some light on trends with these recent IPOs.
Twenty-two of the 26 companies are currently trading at or above their offering price, according to the Exit Poll. The largest IPO of the quarter came from FireEye Inc. (FEYE), a global network security company that provides malware protection. It is currently trading on the NASDAQ at more than twice its $20 offering price.
“On the IPO side, favorable public market conditions and stronger valuations are contributing to better quality IPOs for venture-backed companies as evidenced by the jump in dollars raised on the public markets,” NVCA Head of Research John Taylor said in a statement. “However, we are still well below ideal levels as VCs are still investing at greater rates than they are exiting those investments.”
This past quarter’s 26 venture-backed IPOs were valued at a total $2.7 billion. By number of deals, that represents a 13 percent increase from the second quarter.
While IPO activity continues along a gradual positive trend, venture-backed acquired companies saw strong deal value in the third quarter. Forty-one percent of total disclosed transactions were deals with values that were more than four times the venture investment.
The information technology sector led the number of M&A transactions, with 78 of 107 the venture-backed deals. As for IPOs, 16 of the 26 offerings were from life science companies.
Many people want to work from home so badly that they are willing to take a pay cut to do so.
Are you running a technology business? Or do you have tech people on staff? Tech people aren't cheap, and there can be demand for certain skills can be high. Every business would love to have a loyal, hardworking, skilled set of tech workers for less money than they currently have, right? How can you do this? Telecommuting.
A new study by GetVOIP says that, on average, tech workers would be willing to take a 7.9 percent pay cut in order to have the privilege of working from home.
Money is a powerful motivator, but not the only one. Shortening the commute from an hour (not uncommon in high tech areas such as Silicon Valley) to three minutes, being able to spend more time with their families, and even having more time to do actual work can all be considered perks by many employees.
A survey earlier this year by Kona/Sodahead showed that 70 percent of people would prefer to work at home. Combine the results in these two surveys and you'll see a plain picture for an easy way to cut costs, increase productivity and employee happiness: Telecommuting.
Not every tech employee is willing to take a paycut to work from home--in fact it's almost half at 47 percent, but that still leaves you with 53 percent who would be interested. And at high tech salaries, GetVOIP estimates you could save almost $7,000 for each tech worker who did work from home.
Another way to save money with telecommuting is to consider whether you really need your tech employees to come into the office with any regularity. The less they need to be physically present, the farther away they can live from the office. If that lets you recruit from areas with lower costs of living, you can reduce your salary costs even more.
Additionally, if you don't have to have to provide space for each of your employees, your physical facilities can be smaller, and therefore less costly. Even expenses such as utilities can drop without as many lights and computers to power up. Employers don't generally reimburse their telecommuters for their home utilities. (Although your employees would certainly appreciate it if you did.)
Telecommuting isn't the answer to every problem. Some employees do not work well from home. Some jobs require frequent face-to-face collaboration. Some people just don't want to work from home or have home environments that aren't conducive to working well from home. There is something to be gained by spending in-person time with co-workers.
But telecommuting is still definitely something to be considered. After all, if you can get the same quality (or better!) work, with happier employees for less money, it's at least worth a look.
Think high profits are the key to a high sales price? Think again. A number of factors could matter much more.
Think you don't need to have an exit strategy--you'll be running your company until you retire or die? "At some point, whether it's your kids or their kids, someone is going to want to sell the company," declares Ben Straughan, partner in the Emerging Companies & Venture Capital practice at Perkins Coie. "There really is no 'forever' in the company world."
Besides... even if you are going to keep your company, isn't it nice to know you've built something with intrinsic value that you can sell for a large sum if you ever want to or need to? "You may want to know that you have liquidity," Straughan says.
Or maybe you already know that you want to do this for a few years, then cash out and go on to something else. The point is this: How do you get the best price?
1. Turn a profit--maybe.
All things being equal, a company that's turning a profit is a more attractive acquisition than one that's losing money. But you might be surprised at how big a difference other factors can make. Your business could be highly profitable but not very sellable, or unprofitable but highly sellable. Read on to find out how.
2. Own great intellectual property.
Companies from Grand Central (which is now Google Voice) to Mint have been acquired not for their customer base but for their software. And it's not just software that makes a company valuable: Trademarks, copyrighted content such as text, images, or video, or designs can all make a difference.
So while there's little point in designing, say, a customer relationship system with Salesforce.com out there, if you can design a better system for doing something, you'll raise your purchase price. Same goes for content you create. The trick is this: The company must own the intellectual property. So try to get the copyright on anything created by employees. And make sure anything you yourself create is copyrighted or trademarked in the company's name, not yours.
3. Have lots of different (and happy) customers.
"Customer concentration" can be a problem when you want to sell, Straughan says. "You could have a hugely profitable customer, but if you only have one, you might be more profitable than another company but have less sales value."
Leaving aside the obvious problem that having one customer can make you very vulnerable, the more diverse your customer base, the more attractive your company is for purchase, especially if those customers love you. "Customer loyalty is a tremendous asset," Straughan says.
4. Be sticky.
Ever wonder why banks offer incentives if you set up a direct deposit? Because once you've got automatic payments set up, it's a big pain in the neck to switch. That pain is what makes your product or service "sticky"--and more valuable to acquire.
5. Have great talent.
If you have great employees with highly sought-after skills, your company may be attractive as an "acquihire"--a company that is bought in order to hire its employees. If you needed one, this can be a good reason to invest in hiring the best people you can find, paying for training in new skills, and creating an office and work environment where they will be happy and engaged.
Including yourself. After all, in almost any acquisition, the company's most valuable asset is you.
Sustainable innovation comes from mining the talent pool of people whose non-mainstream backgrounds lead to new perspectives.
For entrepreneurs and corporate leaders alike, the most coveted prize is innovation-fueled market growth. Yet few organizations fully capitalize on their greatest potential source of innovation--diversity.
Despite a vast body of research on the subject of innovation, there is a significant gap when it comes to understanding how to create a culture of sustainable innovation. New findings from the Center for Talent Innovation (CTI), based on input from 1,800 survey respondents, 40 Fortune 500 case studies, and 100-plus innovators, fill in key dimensions previously not understood or examined.
Serial innovation comes from diversity.
The study reveals that serial innovation--the kind that drives and sustains growth--is highly correlated to two types of diversity. Inherent diversity describes "embodied" difference--traits you were born with and have consequently been conditioned by, such as gender, ethnicity, and sexual orientation. Acquired diversity, in contrast, is not who you are but how you act as a result of what you’ve experienced or learned. The combination is a powerful amalgam we call two-dimensional (2D) diversity.
It’s no surprise that an inherently diverse workforce confers a competitive edge by "matching the market" of diverse end users. Simply by being women, people of color, gay, or of a different nationality, age group, or socioeconomic background, their insights help identify and address new market opportunities that others may not even see. CTI research shows that teams with at least one member who brings an innate understanding of the "points of pain" (unmet needs) of the target market (consumer/client), the entire team is as much as 158 percent more likely to understand that target. That in turn increases the likelihood that the team will innovate effectively for the end-user with the unmet needs. Given the radically changing demographics of American and global consumers, this end-user understanding is more critical than ever.
Encourage a "speak-up culture" and you unleash the potential of every employee.
Yet an inherently diverse workforce isn’t enough to unlock innovation. For an innovative idea to be developed and deployed in the marketplace the buy-in and endorsement of decision-makers at every level is required. That’s where acquired diversity matters most.
Leaders with acquired diversity help establish the "speak-up culture" that is so critical to unleashing the full innovative capacity of each employee. These leaders are more likely to demonstrate behaviors critical to innovation:
- They give equal time to everyone--they often solicit the quietest voices in the room
- They empower team members to make decisions
- They enable the right kind of risk taking
- They make sure that each team member gets constructive and supportive feedback
- They share credit for team success
When leaders exhibit these behaviors, the results are measurable and dramatic. Employees are 3.5 times more likely (67 percent versus 16 percent) to contribute their full innovative potential.
It turns out the magic really happens when both acquired and inherent diversity are present--which adds up to two-dimensional (2D) diversity. Companies with both inherent and acquired diversity in leadership are 70 percent more likely (46 percent versus 27 percent) to capture a new market, and 45 percent more likely (48 percent versus 33 percent) to improve market share. Their teams are able to bring more passion, creativity, and openness to radical and transformative ideas.
Listen carefully to different voices or risk missing an opportunity.
The marketplace is littered with missed opportunities and failed products because diverse voices weren’t in the room or their proposed ideas were not supported when decisions were made. For example, Bertelsmann passed on buying Skinnygirl Margarita because the all-male team Bethany Frankel pitched the idea to did not get why women might want a low-cal alcoholic beverage. In 2012, Skinnygirl Cocktails was the fastest-growing brand in the spirits industry. Conversely, Eurostar spent millions on the ePad Femme--a tablet designed for women by men--only to see it tank.
To avoid such perils and to maximize the innovation potential in your company, the combination of an inherently diverse workforce and leaders who prize difference and value every voice may just be the most transformative investment of all.
The latest government shutdown moved an Inc. editor, married to a federal employee, to poetry.
Compared to the government shutdowns during the Clinton administration, today's shutdown is more ideological, more bitter, and potentially far more damaging to the economy and outlook for business owners.
But for furloughed federal employees and their families, the practical effect is all too familiar. Last night's debacle in Washington moved Inc. editor-at-large Leigh Buchanan, who is married to a federal employee, to dig out this poem, which she wrote during the last shutdown.
Lament of the Federal Employee's Spouse
When first we met, I would have bet
That you had great potential
But now I know that isn't so
For you are non-essential.
I turned your head, your ego fed
With treatment preferential
But now it seems those were but dreams
For you are non-essential.
If you could sing a song like Sting
Or gab like Walter Winchell
Then there'd be cause for my applause
But you are non-essential.
That I'd find out there was no doubt
Discovery was eventual
But though it's queer, my furloughed dear
To me you're STILL essential.
Three partners from the Morgenthaler Ventures have raised $175 million for the new, IT focused Canvas Venture Fund.
Founded in 1968, venture capital firm Morgenthaler Ventures is one of the oldest in the Silicon Valley. The firm has invested in some of the tech world's leading companies and technologies, including Evernote, Lending Club, and the technology behind Apple's Siri. Last month, the firm's three partners--Rebecca Lynn, Gary Little and Gary Morgenthaler--started a new $175 million fund, called the Canvas Venture Fund, which will focus on Series A and B investments in early stage financial, mobile and health care IT companies.
Lynn recently spoke with Inc. staff reporter Abigail Tracy about what the partners have planned for the Canvas Fund, what qualities they look for in an investment and the importance of a strong VC-entrepreneur relationship in early stage companies.
You are a general partner in Morgenthaler’s last fund, the $400 million Fund 9, which also invested in IT technology. How will this fund be different?
Fund 9 had a life sciences component, which Canvas won’t have. We really wanted to send a signal to the market that we are IT focused and IT only. We will, however, use the same investment strategy that we employed in Fund 9--focusing on lightweight business models that are capital efficient. We are not going to deal with hardware, chips or things of that nature.
Canvas has yet to make an investment. What qualities will you be looking for in companies seeking investment?
We learned a lot in Fund 9 and we learned that first and foremost it is about the entrepreneur. When you look at the threads that tie a company together in terms of what we look to invest in--it really boils down to the entrepreneur. We look for people who are absolutely driven, committed and have a real passion for what they are doing. It’s a tenacity and persistence in a vision that we look for. From there, it is about it they are attacking a big enough market and if we believe they can build a very large company.
Is there any reason why Canvas won’t be investing in some of the areas Fund 9 did such as life sciences?
The partners that we worked with before who had backgrounds in life sciences have since moved on to different funds, so we no longer have that expertise. We believe that successful funds will be smaller, focused funds. You can’t boil the entire ocean. Being a good investor is being knowledgeable and diving deep into core areas.
Can you talk to me a little bit about the relationship with these entrepreneurs you invest in?
This relationship plays a big role. When you are doing Series A and B investing you are going to be with these companies for a long time. There are going to be good days and there are going to be days where it is all hands on deck. You need to be able to trust the CEO and they need to be able to trust you. You are his or her teammate and its not just for six months--it can be six years or more even. We take that relationship very seriously.
Looking forward, how much do you plan on investing in a chosen company?
It will depend on the stage of the company and how much they really need to execute their plans. We usually give about $3 million to $10 million in the first round and will continue to back that company going forward based on potential. If you are going to put more money into a company, you have to see potential--and the CEO has to see it too. You invest in the vision.
What advice would you give to an entrepreneur who is looking for funding?
What I always tell people is to do their research. Its not about the firm its about the partners. Entrepreneurs need to identify the partners that are really interested in what they are doing and then build a relationship. Entrepreneurs should start early, before they need the money and ask for advice. Then, keep the VCs updated, so they can see the entrpereneur's progress. Then when the time comes to ask for money, that entrepreneur isn't starting from nothing. My other piece of advice is to not necessary approach the most senior partners in a firm. The younger, newer partners will have more time and energy to invest in a company and they will work like crazy to make it succeed.
The ACA's health-insurance exchanges open today. What does it mean for small-business owners?
It’s finally here. Come hell or government shutdown, Tuesday, October 1 is opening day for Obamacare’s central feature: the health-insurance exchanges.
These online marketplaces will allow individuals and small businesses to comparison-shop for health plans from a variety of carriers. Business owners in many states finally will get a chance to see their coverage options and premiums under the new health-care law.
The nationwide rollout of these state- and federally-run exchanges is a complicated affair and nobody--not even health-care reform’s staunchest defenders--expects everything to go smoothly. Fortunately, there’s time for the exchanges to find their footing. As for you, we’ve put together a helpful list of FAQs to help you figure out what, if anything, you need to do. And remember: whatever happens over the next few days, there’s no reason for panic. At least not yet.
1. Do I Need To Care?
In general, only businesses with 50 or fewer full-time-equivalent employees will be able to purchase health insurance through the new exchanges. (Note: For companies of this size, providing employees with healthcare is entirely optional; only businesses with more than 50 full-time employees will be affected by the employer mandate. And that’s not slated to go into effect until 2015.)
2. What's this notification requirement I keep hearing about?
By October 1, the Affordable Care Act calls for all businesses with at least one employee and $500,000 in annual revenues to give employees a written notice informing them: (1) that the health exchanges are open, and (2) that, even if they have coverage through work, they may be able to get insurance more cheaply in the exchange. For help, check out the Department of Labor's sample employer notice. Missed the deadline? No problem. In this year of health-care reform mulligans, the U.S. Department of Labor has announced that there will be no penalties for failing to make the notification on time.
3. Where do I find my state's exchange?
If you’ve missed the catchy ads, you can be forgiven for not knowing the URL, or even the official name, of your state’s exchange. To make things extra-confusing, some states are running their own exchanges, while many more--36 of them--have passed all or part of the job to the federal government. Fortunately, there is an easy-to-use search tool at Health.gov. Just select your state and you’ll find a link to either or your state-run exchange or to the federal exchange, where you can start examining your options.
4. What will my options look like?
Employers and benefits experts around the country are warning that many plans offered through exchanges will offer narrower networks of doctors and hospitals than their “regular,” non-exchange plans. Insurers say that these narrower networks let them better control costs, and thus keep premiums down. But it may mean that employees lose access to favorite doctors and other specialists.
In states including California, Illinois, Indiana, Kentucky, and Tennessee, insurers have cut major medical centers out of their exchange-based plans. Blue Shield of California, for example, will restrict exchange members to about 50 percent of its regular physician network statewide.
In many states, the choice of insurers will also be limited: in California, neither Aetna, United HealthCare, nor Anthem Blue Cross will offer products in the state’s SHOP exchange. In some states, there may be only one or two carriers offering small-group coverage--and in Washington state, it’s appears that there will be no small-business plans available in 2014, and Maryland's exchange will not open until January 1.
5. Now what?
In most states, you should be able to at least see what your company’s coverage options are. If you like what you see, you’ll have to enroll by mail or fax; the online option will not be available until November 1 (yes, another delay). Individual states may also have delays in processing applications online, or may require you to work through an actual human advisor. And be warned: some of the state-exchange sites seem to have been designed with inscrutability as a goal (I'm looking at you, Vermont.)
If you can’t find the answers you need--or someone to talk to--right away, well... just keep trying. If email doesn’t work, try calling. I’ve also had success reaching state exchange officials via Twitter. Or go to https://localhelp.healthcare.gov to find official ACA “navigators” and other advisors in your area who can help you figure things out. If you’ve already been working with a licensed broker or agent, you can continue using them to buy insurance in the SHOP; the premiums you pay will be the same.
Once again: don’t panic. You have until December 15 to sign up for plans that start coverage on January 1, and until March 31 to enroll for plan year 2014. After that, though, you’ll have to wait until October to sign up for coverage starting in 2015. Good luck!
How are you faring on the first day of Obamacare? Leave your comments and stories below.
Bright screens, Palo Alto and managing Tumblr ... these are not a few of David Karp's favorite things.
As a founder, is it wise to admit that you're just not that into how your company is run? If you're Tumblr founder David Karp, that might just be another item on a long list of things you don't care about.
In a New York magazine interview, Karp impressed his interviewer, Molly Young, with the number of topics he found dull. She wrote:
Among the topics that bore him are cars ("I don’t like cars anymore"); Internet comments ("Gross"); his company’s colossally expensive infrastructure ("I have a very rudimentary understanding of how Tumblr actually works these days"); and management ("I’m not super-passionate about how we run the company").
But these aren't the first things that Karp is admittedly cool on. In fact, the 27-year-old CEO, who in June sold Tumblr to Yahoo for $1.1 billion, has a long-standing pattern of interview honesty regarding what he doesn't like.
"I'm very antischedule," he told Inc. "Except for board meetings, I don't really schedule things or keep a calendar. I think appointments are caustic to creativity."
"I don't know how you could live in Palo Alto. It's just boring," he said to the Wall Street Journal.
"I don't like screens very much," he told T Magazine in a story about the design of his Brooklyn loft. "'Big bright monitors drive me nuts'; screens in the bedroom are 'gross.'"
So what is Karp into? In addition to coding and simple design aesthetics, Karp is currently obsessed with drones. "I fly my drones all over Brooklyn," he told Young. "These things are amazing. These things are not regulated. I keep destroying them. I’ve had five of them.”
Zack Shariff, CEO of Allen and Shariff Corporation, searches internationally to get highly experienced, qualified people.
Check out how the latest Apple device measures up. Plus--Facebook's latest move to turn TV networks into advertisers.
Each Monday, I cover the tech trends, gadgets, business services, and apps of note. The goal is to highlight not just consumer flash-in-the-pan ideas, but real developments that could impact your business. Post in the comments if you spot other essential headlines!
1. Take the iPhone 5S for a speed test
Don't miss this speed comparison test of every iPhone ever made. It's quite fascinating to watch so many phones shutting down, booting, running apps at the same time. But there's an even more important reason to watch. If you're wondering about whether or not to deploy the iPhone 5s in your company, you might find it convincing (imagine the productivity increases!).
2. Google releases powerful Web designer
Google is serious about HTML5 being the standard for Web design and development (as opposed to tools like Java that may or may not work right on mobile devices). A brand new tool called Web Designer is like Photoshop for the Web in that it's easy to use and yet powerful enough to create a real company website without a ton of training.
3. Ride (and learn from) the console wave
A new report about next-generation console interest is helpful to any small business trying to capture some of that intense momentum leading up to the November launches. Only 15 percent of respondents say they are interested in the Xbox One while 26 percent say they plan to buy the PS4. The report says the blame falls squarely on Microsoft's mixed marketing message. The lesson: come out strong before launch with one clear message and stick with it. Also--if your company can attach to the console craze in any way, do so.
4. John McAfee announces D-Central security device
The famed security company founder, who has made headlines recently for various shenanigans, announced he wants to make a new device called the D-Central. It's a gadget that will cost about $100 and form a private, secure network between other gadgets--in theory, blocking access from government agencies on the public Internet. The idea sounds interesting. For those concerned about business security, you could form a network to share files and messaging without touching the outside world. There are no details on the tech involved or a firm release date.
5. Facebook to hand over private data to TV networks
Facebook is planning to share users' "likes" with the TV networks. While this will be done anonymously, it's worth considering how this move is another step away from the closed, secure network much of the world has come to trust. According to reports, Facebook is offering the data to entice networks to place targeted ads.
According to Paralympic medalist Bonnie St. John, success comes from dreaming big while staying realistic and getting up when you get knocked down.
A new report shows that small business owners might not be prepared for a hacker attack.
According to a recent survey, more than 40 percent of small businesses report that they have been the victims of a cyber attack-- and it has cost them thousands of dollars.
The 2013 Small Business Technology Survey was conducted by The National Small Business Association, a nonpartisan Washington, D.C.-based advocacy organization. The NSBA surveyed more than 800 small business owners and found that the average cost of a single cyber attack to a company was $8,699. In the case of the hacking of a company’s business banking account, average losses were $6,927.
“Exacerbating the cybersecurity issue for small firms is the fact that business checking accounts are NOT protected when it comes to online hacking, unlike consumer accounts. The majority of small firms, 75 percent, aren’t even aware of this,” the report stated.
The survey included answers from small business owners who represented a range of industries from manufacturing to agriculture to finance. Almost all said that said that cybersecurity was either a very important concern or somewhat of a concern for their business.
The NSBA found that there was a decrease in the amount of companies that paid an outside firm to handle their IT needs. In 2010, 36 percent of survey respondents said an external company handled their tech support, compared with 24 percent in 2013. Small business owners are taking on a large share of this responsibility, as 39 percent reported that they themselves are in charge of online security at their company.
While security was ranked as a top three issue when it comes to small business owners’ technology challenges, this particular survey didn’t delve into how companies are handling their concerns. Just last year, a separate survey by the non-profit National Cyber Security Alliance and Symantec found that 83 percent of small businesses don’t have a formal cybersecurity plan.
How do business owners feel about the government shutdown? It's "outrageous," says one.
Right-wing House Republicans engineered a shutdown of the federal government, by demanding that the Democratic Senate approve a spending bill that would have delayed the implementation of the Affordable Care Act, a demand they knew would not be accepted. Non-essential government activity ceased as of midnight this morning. It's the first such closure of the U.S. government in nearly two decades.
Global markets fell and business owners reacted with anger and alarm. The legislative impasse threatens the fragile economic recovery and could set the stage for a potentially catastrophic default on U.S. Treasury debt later this month.
"This is an absolutely outrageous scenario enabled by inept lawmakers who are bogged down in their own private and unnecessary [interests]," says Larry Miller, founder and chief executive of BNL in Lovettsville, Virginia, which provides systems engineering and program management to the Departments of Defense, Treasury, and the Veterans Administration, among other agencies.
Bracing for Weeks Without their Biggest Customer
Miller's BNL, which is No. 391 on the Inc. 500 this year and has had a three-year compound annual growth rate of more than 1,000 percent, and $6 million in revenue in 2012, prepared for a shutdown that could last as long as a month. Miller reached out to his 55 employees weeks ago and told them that they will not be laid off or furloughed, and that he will do what it takes to get through the tough times.
Miller will offer employees time off, or the option to redeploy to work on project infrastructure, such as process engineering and documentation, updating the process documentation library, and maintaining reference data and materials.
Practically, that means Miller has to continue paying salaries, health care costs that amount to about $1,200 per employee per month, and other benefits at a time when revenue is not flowing.
"Most of our contracts are fixed-price cost accounting standard," Miller says. "There is a high risk we won't recover the cost."
Some Entrepreneurs Stalling Hiring Already
The budget crisis and looming government shutdown will likely force Michael Lin, owner and chief executive of LinTech Global, to put off hiring an employee he wanted to start October 1.
LinTech, of Farmington Hills, Michigan, does enterprise software consulting, systems integration, and help desk and network support for federal agencies as well as commercial entities, is No. 412 on the Inc. 500 list. It had revenue of nearly $3 million in 2012, and has experienced a compound annual growth rate higher than 1,000 percent in the last three years. He was expecting a new federal contract to get signed this month, but that's now in limbo.
"We may have to delay hiring . . . until the project gets the green light," Lin says, adding that, luckily, most of his other projects have already been funded for the year.
More than anything, Lin says he is dismayed by the budget crisis. "By now I am used to this, but it seems to happen every year with the debt ceiling or the government shutdown, it is always in discussion and we have to play it as we go and adjust our strategy," he says.
Razor-Thin Margins Only Getting Thinner
For her part, Joni Green, founder and chief executive of Five Stones Research in Brownsboro, Alabama, says the government shutdown will dramatically affect her business this year. Like Miller, the costs for her contracts are fixed.
"This will put us in negative profitability mode," Green says. "If we ran the business like the government, we would long ago have shut down."
Green, whose company is No. 421 on the Inc. 500 list for 2013, has 51 employees and had revenue of more than $5 million in 2012. Though the company also had a compound annual growth rate of more than 1,000 percent in the past three years, Green thinks her $9 million revenue forecast for 2013 may drop.
Green, whose company provides engineering, logistics, and information management to the Airforce, Army, and Navy, says the sequester from earlier this year has already forced her to operate on razor thin margins.
"We have been driven by the budget cuts and cost slashing so much this past year that the management reserves on our contracts are minimal," she says.
Green says 13 of her contracts, or 80 percent of the total, will be delayed by a government shutdown. Five Stones Research also bills on a monthly basis for the prior month, which could hurt its accounts receivable collections for months, particularly if the shutdown lasts for several weeks or more.
She adds that uncertainty about the debt ceiling, the budget crisis, and lingering questions about pricing for health care next year are like neon blinking question marks making it next to impossible to budget, which the company usually does three years out.
The uncertainty interfered with Green's hiring plans, too.
"We are only hiring if absolutely necessary," Green says. "I would have thought by this time this year, we would have hired three more [employees]."
The Longer-Term Implications
Economic experts say the government shutdown could haunt small businesses and their growth prospects for years to come.
In the future, owners seeking funding from bankers or investors will have to explain why they weren't able to meet their budget expectations.
"When you have a funding event, you have to talk about your history and you cannot just use the excuse of the government, because everyone knows it is harming everyone and it just ends up looking bad for entrepreneurs," Laura Gonzalez, professor of finance and business economics at Fordham, says.
BNL's Larry Miller concurs. Speaking as if the shutdown were already a foregone conclusion, he says: If we were able to avoid a shutdown, "we would have been ahead of valuation, and our EBITDA would have been much higher, and banks would have been happier," he adds.
In a statement on Monday, the president indicated a willingness to negotiate, but only if the immediate threat of shutdown is removed.
President Obama stressed Monday that he wants to negotiate with House Republicans over the budget. But as a precondition for those talks, he wants the threat of a government shutdown to be taken off the table.
House Republicans have been trying--unsuccessfully, so far--to use both of these possible economic disasters to wring concessions out of the White House.
In return for passing a temporary spending measure for a few weeks, they want the launch of Obamacare delayed for a year until 2015 and the removal of a new tax on medical devices to help fund the program. Without a deal of some kind in place by midnight on Monday, several government agencies will begin to furlough employees and close offices.
But these demands are extremely lopsided compared to what the White House would get in return. Obama would need to delay his signature program in order to keep the government open for less than two months, at which point he might have to give away much more simply to keep the government open.
Obama stressed that crucial nuance in remarks inside the Oval Office on Monday.
"I am not only open to, but eager to have negotiations around a long-term budget that makes sure that we’re investing in middle class families," the president said, indicating that these talks could involve reforms to entitlement programs such as Medicare and Social Security that will start to fuel the national debt to crippling levels over the next several years.
If the president accedes to the GOP on temporary spending, he might have to give up much more when the country reaches the limits of its borrowing capacity on Oct. 17. Unless Congress raises the $16.7 trillion debt limit, the government would likely default and possibly tumble into a crippling recession.
To drive his point home, Obama added that he "can’t have any meaningful negotiations under the cloud of potential default." This is the sign of good faith that the president requires in order to meet with Republicans. It also addresses the attack by Republicans including House Speaker John Boehner (R-OH) that the president would rather negotiate with Iran and Russia than them.
The administration is going to repeat this argument … a lot.
"What they want now--and this is just a two-month continuation of government funding--they want to delay Obamacare for a year in exchange for that," Dan Pfeiffer, a senior White House adviser, told MSNBC. "What happens two month from now? What happens after that?"
The president said he expects to talk with congressional leaders on Monday, as the House decides whether to accept a clean bill passed by the Democratic majority Senate last week that funds the government through Nov. 15. The initial response by the House was to pass on Sunday a bill that delayed Obamacare and ended the medical device tax, after having initially required that the programs under the 2010 Affordable Care Act be defunded.
There are signs that Republicans might choose to cave--and pass a third measure to keep the government open without postponing Obamacare.
"Now, it’s imperative that we fund the government, get on with the business of government," Rep. Charlie Dent (R-PA) told CNN shortly before a Monday meeting of the Republican caucus. Dent said he believes that--even without any Obamacare stipulations--"there are over 218 votes, a bipartisan vote to fund the government in that matter."
This article was originally published on The Fiscal Times.
Mismanaging creative ideas and not taking risks can extinguish your spark.
If you want to be truly successful, you've got to know how to innovate.
Take Blockbuster: The video rental chain managed to successfully transition from VHS to DVD, but failed to beat companies like Netflix and Redbox, which took its idea even further. Rather than upend its business (or at least find a smart way to save it), Blockbuster rested on its laurels, pretending it wasn't getting pummeled by Netflix, which distributed rentals via mail, and Redbox, whose $1 a day vending kiosks made the $5 to $6 "Blockbuster Night" all but pointless.
As the episode proved, innovation requires more than just setting goals. It requires creativity and seeing them through. For this, companies must adopt a "dualistic mindset," as Vijay Govindarajan, a professor at Dartmouth College, and Jatin Desai of The Desai Group, write in the Harvard Business Review. Such a mentality enables them to make smart new products, bring them to market, and prepare for the long-term growth and return on investment.
Still, many businesses stifle innovation before it has a chance to blossom. Here are three things that stop them:
Mismanaging great ideas.
The inability to "harvest and manage" great ideas can kill innovation. One such example is Sony, which "had the ideas and engineering competence to build the first iPod equivalent, but it couldn’t commercialize those ideas because of its own internal battles," say the authors.
Letting resources go to waste.
"In a matrix environment, many organizations compete for the same funds, which leads to duplication of resources and results in inefficiencies and waste," Govindarajan and Desai write. "The challenge is not that an organization has insufficient resources to invest in innovation; the challenge, instead, lies in where to most effectively funnel those resources, and how to do it."
"When organizations become huge, their pace of change and pace of action often slows down," the authors warn. "This leads to lack of urgency. Larger organizations with many people focused on execution can be slow to take risks and design new experiments."
Our guide to the rapidly-proliferating world of online payments.
Mobile payment--so recently novel, now ubiquitous--is getting better fast. Most significant, the services are increasingly targeted. You manage your accounts through QuickBooks? There's a service precisely for you. Your customers use mobile wallets rather than credit cards? You have choices.
In this graphic, the first six options are mobile versions of conventional point-of-sale systems. They come equipped with card readers--dongles--and proprietary apps. The next five options have nothing to do with readers. They are all about the app, on both sides of the transaction: Your customer pays not with a card but with a phone. So these products function less as virtual cash registers than as ways to beef up your brand by adding convenience, word of mouth, and app integration.
How the renegade design company Quirky uses the power of community to develop, make, and sell a torrent of useful objects.
Let's imagine you have an idea for how to reinvent the hair dryer. You're excited enough to sketch this brilliant concept and even--if you have the engineering acumen--to describe its inner workings in the kind of detail that actually reveals its genius. What do you do next? Call Conair? Fax your schematics to Revlon? Maybe you want to make a prototype. Are you competent in electronics? Do you own a 3-D printer? And let's say you did make it--what then? Will you outsource the production? What's the marketing plan? How are your contacts in retail?
I'll stop there, because you get the point. This is why most ideas are trapped in brains. This is why the world needs Quirky.
At Quirky, the mission is simple: to uncover those ideas and to make the things. Lots of things. And quickly. Each week, the New York City-based company receives more than 2,000 invention ideas from its community of some 500,000 (and counting) users, approves three or four of those for development, and ships an average of three completely new products to its growing list of retail partners, a group that includes big-box stores such as Target, Bed Bath & Beyond, and Best Buy; online shops such as Fab and Amazon; and the cable shopping channel QVC. You can even buy them directly from Quirky's own e-commerce site or via its app, and soon you'll be able to go to dedicated Quirky stores.
This is what crowdsourcing looks like when it really works. It works because instead of asking for money or labor, Quirky is asking people to share their dreams and giving them real incentives to participate. It turns out people don't just want to make apps; they want to make things; and by recognizing this, Ben Kaufman has built a $50 million business, attracted $97 million in investment, and established a productive partnership with a giant of American industry. For these reasons and others, Quirky might be the most important innovation engine in business today.
The transitional moment in the Quirky process occurs on Thursday nights, in the spacious front room of the company's headquarters deep inside a former storage warehouse on the far West Side of Manhattan. There, most of Quirky's 150 employees, plus an assortment of invited guests, gather for the Eval, a highly stage-directed debate of the week's best submissions, broadcast live over the Internet.
Quirky CEO Ben Kaufman hosts and is his own opening act. Stout, dark-haired, 26 years old, Kaufman warms up the room and introduces the night's panel before going quiet and staring into the dark to watch a prompter count down to 7 p.m., at which time the cameras go live. "Ladies and gentlemen," Kaufman then bellows, "welcome to product evaluation!"
For a guy who didn't study theater or even go to college, Kaufman is an excellent speaker and showman, a natural evangelizer who is passionate, glib, and blessed with excellent timing. Being an entertainer comes naturally, but he's not putting on a show for the sake of entertainment; the spectacle is calculated. "Invention is this scary thing," he says. "You hear the word, and it seems complicated, involving lab coats." Broadcasting Evals is meant to explode that notion, to make any prospective inventor who tunes in think, I could do that. I'm just like him.
The archetypal him would be Jake Zien. He's the inventor of the Pivot Power, the clever, pivoting power strip that retails for $30 and is Quirky's most successful product, by far, having sold 665,000 units. Lately, Kaufman has been telling people that Zien, now 24, will soon be Quirky's first millionaire. Kaufman claims, in fact, that Zien should make $1 million in Pivot Power royalties in 2013 alone, and then every year after, because the product is branching out into an entire line of Pivot Powers. There's a mini edition, a rugged version, and versions for various foreign power-outlet configurations.
The concept came to Zien in high school, while he was enrolled in a summer program at the Rhode Island School of Design. The idea, he says, was for "a power strip that could telescope or flex or rotate or in some way accommodate large adapters in every outlet." Zien was really into tech and had spent one too many minutes under his desk fiddling with plugs. He wished he could make them all fit. How hard could that be?
After the program, the idea kept him up at night. Zien submitted the idea to a NASA Create the Future contest and was awarded honorable mention. His prize was a T-shirt. A family friend who was an intellectual-property lawyer encouraged him to get a patent--which he didn't do--and then said that he had really only one option: Take the idea to Belkin or G.E. and say, "Hey, I'm 18 and I have an idea. Please don't screw me." The best-case scenario was a one-time buyout of the IP, and maybe someday he would see his product on a shelf and get some satisfaction. Zien didn't do anything.
Then the same family friend read a story about Quirky in an airline magazine. He called Zien and said, "Here's a company that purports to be exactly what you need." And, Zien says, "They completely delivered on the promise."
Zien joined Quirky's community as a college junior and submitted his idea, and a week later, it was selected. Within a year, it was on sale at Bed Bath & Beyond. Zien knew nothing about electrical engineering; he had submitted only very basic drawings. "It was really them that did the inventing," he says. "They figured out how to make it work." Many zeros' worth of checks later, he is a 24-year-old with few financial worries. "Throughout this whole time, I've been very clear that all I had to do was have an idea, and all the hard work was done by Quirky. I could never have done this myself."
On this early summer Tuesday, Kaufman is preparing to address a group from the Industrial Designers Society of America in Quirky's front room, the same space that holds the weekly Evals.
Kaufman, as always, is wearing a black short-sleeved T-shirt. He has at least 100 of the shirts, made by Banana Republic, chosen because he travels often but hates to pack, and if he ever forgets to pack enough or extends a stay, there's always a Banana Republic nearby. Typically, he rounds out an outfit with jeans and sneakers.
The IDSA, New York City chapter, had come to hear Kaufman talk about his buzzy and fast-growing company, a burgeoning font of product development. But he was prepared for this to be a tough room, because there's some perception out there that the products Quirky makes--owing to the pace at which they come to market--tend to be cheap and gimmicky. Indeed, Quirky's youth has been dominated by clever but hardly earthshaking products like Wrapster (a headphone cord separator invented by Matthew Fleming, a father of two from suburban D.C., that retails for $5.99), Cordies (a desktop cable organizer from Stephen Stewart, of Leeds, England; $9.99), and Stem (a sprayer that attaches directly to a piece of citrus--voilà, instant lemon juice!--from the mind of Tim Houle; $4.99).
Skepticism only encourages Kaufman, and in this case excites him, because he sees an opportunity: to motivate a group of people who share his love of making things. "A whole generation is working on mobile apps and social things," he says a few minutes into the talk. "We're not taking on the right kind of invention."
A slide depicting the Empire State Building appears on the screen behind him. "Does anyone know how long it took to build the Empire State Building?" Kaufman asks with a chuckle. "I love this question. It's a joke around the office now. People stop me and ask, 'Ben, how long did it take to build the Empire State Building?' " He pauses, then says, emphatically: "It took 410 days to build the Empire State Building."
He clicks to the next slide, depicting a peeler.
"Do you know how long it took to make this potato peeler?" Pause for effect. "Three years." Everyone laughs. He's not kidding. The company that made that product couldn't commit.
"The world thinks decreased speed means increased quality," Kaufman continues. "This isn't true. Practice doesn't make perfect; passion makes perfect." He talks in confident sentences. Slogans pour forth in his oratory, and you could chop his speeches up into 1,000 T-shirts or cull the best of them into chapter headings for a business manual. Probably it's only a matter of time until someone does.
He's also convincing, which explains how a 17-year-old persuaded his parents to take out a second mortgage on their home to fund a business he came up with while not paying attention in high school. He sold that first business, Mophie, a maker of iPod and iPhone accessories, for a good sum. This very magazine named him the No. 1 entrepreneur under 30 when he was only 20.
Finally, a quote appears onscreen. It is from Procter & Gamble's now-ex-CEO, Bob McDonald, in response to his company's directors, who had asked why the company's growth had stalled. McDonald's reply: "Because we haven't created a new product or category in years." (As an aside, Kaufman notes that McDonald had just that week been fired but doesn't mention the tweet he sent to mark the occasion; it read: "Bob McDonald out at Proctor [sic] and Gamble. Because he just proctored and never gambled.") "We do that every day," Kaufman says. "What happens Thursday nights in this space is amazing."
As he often does, Kaufman then talks about Jake Zien.
"Does anyone know why we put Jake's picture on every box?" He doesn't wait for a reply. "Storytelling! I want everyone who touches that box to know that it came from someone like them. If an idea is truly good, it will get made."
That, in a sentence, is the crux of Quirky: to strip away every single barrier to entry that stands between a regular citizen with an idea and the result, a fully developed product that can be marketed and sold to consumers.
"The only thing that matters is that good products win," Kaufman barks. "If an idea is good, it ships."
If all Quirky did was tap a motivated hive mind for latent ideas that fill small and important market gaps, it would be a clever company. But it does something far bigger and more complicated. Those ideas need to become things, and that's where Quirky really brings the muscle.
Immediately after a product has been selected at Eval, it moves on to design and conception, where Quirky's industrial designers and engineers use several million dollars' worth of prototyping equipment to realize and refine what most likely arrived on their desks as a thinly sketched idea. Lawyers and IP experts register patents and address regulatory and compliance issues, while the production department sources materials and decides which of the 21 core suppliers and factories (nearly all of them in Asia) will make the product. A quality assurance team tests that product. Packaging for the product is designed in New York and sent to the factories. Packaged products are shipped off to five global warehouses and distribution centers, which in turn send those boxes on to 35,000 retail locations.
By the midpoint of 2013, Quirky had rolled out "around 100 products" in its brief history, according to Kaufman, with "another 200 in the hopper for production" and "probably another 100 on top of that" that had been approved by vote at the Evals but had yet to enter actual product development. Revenue had increased from $62,000 in 2009--when the company started in Kaufman's East Village apartment with three employees, one of whom is now his wife (and the director of HR)--to $18 million in 2012. Sales are expected to triple, to $50 million, by the end of 2013.
Kaufman claims that not one of those 100-plus products has lost money. He has just sat down to lunch when he says this and, realizing how unbelievable the claim might sound, he picks up a salt shaker. "Let's say this cost me $15," he says. "To spool up the production line, I need to spend $10,000, so I know I need to sell at least 5,000 of them to make money. I've never sold less than that number. If you look at each product as its own little business, the products don't lose money." He smiles. "That does not account for the overall infrastructure, the machine, the platform, etc. Quirky as a company loses money every day. We are still losing money."
This is not surprising for a four-year-old company that has more than quadrupled in size, and it has hardly deterred the world's venture capitalists. In 2012, Quirky took on $68 million in Series C investment, led by Andreessen Horowitz. Scott Weiss, the love-struck partner who led that investment, calls Quirky the "most exciting retail concept we've seen since the Apple Store." He talks of Quirky as disrupting a solid, giant business that isn't often thought of as disruptable: consumer products. Weiss interviewed all of Quirky's major retail partners during the research phase, and what he kept hearing was that retailers were shocked by the pace of innovation; they almost couldn't handle it. "I was talking to Target," Weiss says, "and I think their quote was, 'Nobody is innovating at the pace that Quirky is.' " (This is a major reason Kaufman is so aggressively shifting the sales strategy so that Quirky sells direct. It's also a way to increase profits.)
Weiss says Quirky is such an "orthogonal idea" that the business world almost doesn't know where to put it. In many ways, it looks and feels like a New Economy business, and certainly the Internet and a platform of proprietary software enable Quirky to access its universe of no-cost inventors. It's also a retail products company that designs, manufactures, markets, and ships boxes full of things you can actually use. "It's just not on any typical market map," Weiss says. "It has a little of the 'I'm not sure how it works but it does' thing going on. How do you disaggregate every step in the development process and allow people to contribute to it? Fusion is happening under the hood there."
This spring, representatives from another company that knows a little something about invention paid a visit to Quirky HQ. That contingent, from General Electric, was led by Linda Boff, executive director of global brand marketing. Like Weiss, Boff was smitten by Kaufman's googly-eyed devotion to excavating the world's lost ideas.
It wasn't vision alone that sold G.E. So many entrepreneurs, after all, have Big Ideas. What impressed Boff and the G.E. management team all the way up to Jeffrey Immelt was that Kaufman had already built an entire infrastructure to support his. "He's figuring out everything from blueprint, pricing, packaging, marketing, retail channels," Boff says. This was a company that was already making things, all the time."What we loved about Quirky is their commitment to invention, their speed to market, and that they get this amazing community to help think about the everyday problems that all of us have."
With only minimal discussions, the companies decided on a two-pronged partnership that would begin this summer. The first part was the launch of a co-branded line known as Quirky + G.E. Basically, Quirky has challenged its community to invent app-enabled products for the connected home, and those selected will be developed in conjunction with G.E. The idea, Kaufman says, is to create "a whole universe" of products--alarm clocks, smoke detectors, doorbells, sprinklers, appliances, etc.--all of them intelligent and controllable by smartphone. The first co-branded items, including a bedside clock that learns your schedule and adapts your alarm accordingly, will appear by year's end.
But there was something else Kaufman wanted from G.E.--access to its vast library of patents. Not so that dudes in Ohio could invent new versions of jet engines, but so that those dudes could use jet-engine blueprints to, perhaps, build a better fan. With surprising alacrity, G.E. said OK. The first 1,000 or so patents were scheduled to go up on Quirky's site by fall, with more to follow, and Kaufman was so pumped about the idea that he had begun wooing patent libraries at research institutions such as Harvard and MIT to join the party.
In the early stages of the partnership, though, the most important thing Kaufman gets from G.E. is the residual luster of being connected to such a prestigious name. A company that calls itself Quirky certainly can't just start making car seats--let alone smoke detectors--with any hope that consumers might actually buy them.
Some of that is because of its short history of making mostly simple objects, but it probably has as much if not more to do with the name Kaufman chose. If the aspiration is really to make anything the community proposes, there's a real case to be made that the name Quirky is self-limiting.
"It's an interesting question, and something we talk about every now and then," Kaufman says. "It's also the most memorable name. Everyone self-identifies with being a little bit quirky; everyone wants to tell you they're quirky even if they're really vanilla and boring."
On the other hand, the word itself doesn't exactly connote quality or dependability. "Given enough time, people will realize we named the company Quirky because we have a unique and unconventional process," he says, not backing down. "It's not quirky quality. You just prove that over time, by making great stuff and shipping great stuff and never having a product problem."
Basically, as Kaufman sees it: Quirky is as Quirky does.
As Quirky's portfolio grows, other branding challenges arise. Most product companies make either tons of cheap things or a more limited quantity of expensive things. Kaufman wants Quirky in every space. "From a branding perspective, it gets a little complicated," he admits. "We have products in the MoMA store and others at Rite Aid. I can't think of another company in the world that does that."
Kaufman oozes confidence, sometimes to a fault. And he has a way of swatting away suggestions of problems that might lurk ahead, but this is one worth dwelling on. There's a side to Quirky that's like Apple or Porsche--a fetishistic attention to good design in beautiful packaging. And there's another side that is all about cheap and fun (but still in cool packaging). The brand identity is muddy. That's hardly what you want when you're trying to increase brand awareness.
Kaufman also has to pay attention to keeping his community committed. His hundreds of thousands of extremely cheap consultants don't just pitch ideas; they pitch refinements for ideas and names and tag lines for products, and they help Quirky settle on a price by voting, en masse, for what a particular product is worth. The day the community loses interest and moves on is the day Kaufman starts scrambling for a new model.
It won't happen, Kaufman says. Community--his community, certainly--is more powerful than that. And so is capitalism. The Quirky community is definitely motivated in part by the potential monetary rewards of participation.
You don't have to come up with the product idea to make money at Quirky; you only have to participate in the process. Scan through the Quirky member profiles, and you'll see members who've earned only a few dollars and others who've earned tens of thousands, in some cases without inventing a single product. Joshua Wright, who now heads up IT for Quirky and stage produces the Evals (his official title is chief tinkerer), started as the inventor of the Shower Station, a $70 shower organizer, but the bulk of his $70,000 in earnings to date has come from pitching the Pivot Power's tag line: "A Creative Outlet." The small percentage resulting from that suggestion ("which took me maybe five minutes," Wright says) just keeps chugging along.
Kaufman says he knew Quirky would work two years ago when he saw a tweet that was a picture of a Target advertisement for a cluster of Quirky products. The tweeter wrote, "I made that." The man, in fact, hadn't made that. But he had been part of the community that voted and refined it into existence, an experience that gave him a sense of ownership.
"I made that" is the primary motivator for everyone in the community. "That's a very simple and straightforward thing," Kaufman says. "But if you do that in the idea-selection phases and the naming phases, then you basically have data that is completely conclusive. The financial part of it is very easy." In other words, people who feel they made something are going to buy it, as are people like them. This makes the investment in development far less risky. "We have this many people wanting to buy this product," Kaufman says. "It's going to cost this much to make, and I'm guaranteed this much revenue. Who is not going to make that?"
His smile widens as he begins to paint the picture of Quirky's further evolution, once he has relaunched the platform (both online and mobile), unveiled a new brand identity (complete with new logo and iconography), and finalized plans for his first three retail outposts, one of which he plans to put "in the middle of nowhere, like Oklahoma City." Kaufman's concept? The story, of course. "The reason you are going to get off your ass, pack your kid up, and go to the store is to have an experience, to discover things," he says. "Quirky is the ultimate discovery. You never know what's going to be there."
Building retail stores is a risky gamble that has sabotaged other ambitious companies, but Kaufman is certain it will work, because he acts on behalf of 500,000 advisers who help steer his vision.
"That's where it's like, 'OK, solve the branding problem.' I get it. But solve it because we need to be able to do this. The data is going to drive a lot of products. We have the most data of any product development company in the world. We can be the most predictive product development company in the world."