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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."
Augmented reality campaigns that made a big splash--and a big return on investment.
Heinz Ketchup Developer: Blippar How it works: Open the Blippar app on a smartphone or tablet and point it at a bottle of Heinz ketchup. Onscreen, recipes and videos appear to emerge from the label. Result: Consumers have used the app more than 650,000 times (and counting).
Cadillac Developer: Daqri How it works: On the streets of New York City, Miami, Chicago, and San Francisco, artists made chalk murals of the Cadillac ATS. When viewed through a smartphone app, the scenes appeared to come to life. Result: Some 56,000 people used the app to view the murals, and another 900,000 mentioned the campaign on social media.
Mitsubishi Electric Developer: Metaio How it works: Mistubishi's sales force comes armed with a tablet app that allows potential customers to see onscreen how its sleek wall-mounted air conditioner would look in their home or offices. Result: The app contributed to a $30 million uptick in 2013 global AC sales.
London 2012 Olympics Developer: Xomo Digital / Wikitude How it works: One of AR's first big smashes, the official London 2012 app displayed nearby transportation and scheduling information for more that 40,000 live events based on where users' cameras happened to be focused. Result: Millions of fans used the app to navigate the Games.
Four smart augmented reality campaigns that made a splash.
Want to use augmented reality to boost sales? Take a page from these smart augmented reality projects that made a big splash--and a big return on investment.
1. London 2012 Olympics
Developer: Xomo Digital/Wikitude
How it worked: One of AR’s first big smashes, the official London 2012 app displayed nearby transportation and scheduling information for more than 40,000 live events based on where users’ cameras happened to be focused.
Result: Millions of fans used the app to navigate the Games.
2. Mitsubishi Electric
How it works: Mitsubishi’s sales force comes armed with a tablet app that allows potential customers to see onscreen how its sleek wall-mounted air conditioner would look in their homes or offices.
Result: The app contributed to a $30 million uptick in 2013 global AC sales.
How it works: On the streets of New York City, Miami, Chicago, and San Francisco, artists made chalk murals of the Cadillac ATS. When viewed through a smartphone app, the scenes appeared to come to life.
Result: Some 56,000 people used the app to view the murals, and another 900,000 mentioned the campaign on social media.
4. Heinz Ketchup
How it works: Open the Blippar app on a smartphone or tablet and point it at a bottle
of Heinz ketchup. Onscreen, recipes and videos appear to emerge from the label.
Result: Consumers have used the app more than 650,000 times (and counting).
Courtesy of Blippar
The way start-up companies get funded is changing, and traditional venture capitalists aren't pleased.
The way start-up companies get funded is changing, and it's freaking traditional venture capitalists out.
A company called AngelList came out with a new product called AngelList Syndicates.
Through AngelList Syndicates wealthy individuals can invest their money with so-called "angel" investors, who will turn around and invest the pooled money into start-ups.
AngelList will collect 5 percent of any profits those investments earn. The angel investors will get 15 percent. The wealthy individuals will get the rest.
Over the weekend, entrepreneurs and "angel" Jason Calacanis shocked the start-up world by saying he'd started an Angel Syndicate and raised $300,000 with it in just one week.
Here's how AngelLists Syndicates will change things, according to people in the industry:
Angel investors will be able to "lead" rounds in early stage start-ups. "Angels" are usually well-connected, wealthy people in the tech industry who invest their own money into start-ups. They've been around for a long time. But thanks to AngelList Syndicates, they can now write much bigger checks --checks as big as the ones only professional venture capital firms used to be able to write.
Fundraising won't take as long. Jason Calacanis, who has already raised $300,000 through his AngelList Syndicate, says "VCs take weeks to get their partners to agree on a deal, and I understand that's part of their value to their LPs. But it also creates problems for founders, who are frequently caught up in the middle of partner conflicts (i.e. you didn't support my Google investment and we lost $250 million, so I'm going to not support your deals). It also means founders have to wait weeks, sometimes months, to get their funding closed.
"I take a couple of hours -- and sometimes a couple of days -- to make an investment decision. In fact, I typically decide in minutes. Because at the end of the day, I'm a product guy. I can tell if a product's good or not -- and by extension, if the founders are good or not -- in minutes."
This is a great way to fund apps. Apps are inexpensive to make, but they have short idea-to-execution windows, so they can't afford to spend lots of time time fundraising.
Entrepreneurs will have more choices, and will probably get better terms. Union Square Ventures partner Fred Wilson says, "The more folks who can lead a round, the better, at least for the entrepreneurs."
Lower-tier venture capital firms will go bust. At least, that's what Calacanis thinks. He writes, "The bottom half of VCs -- the ones who don't really provide a lot of extra value -- have already been at risk due to their anemic returns, so I predict this is the nail in the coffin. They're fracked."
Fewer angel investors will get to invest in start-ups. Hunter Walk, a partner at VC firm Homebrew, notes that angel investors writing bigger checks will edge out other angels. "Before as a founder I might have been able to get both Dave Morin and Kevin Rose into my deal, offering them each $50,000 slugs. Now they each represent more than $300,000 in syndicate dollars. Does that full slug get invested into each deal or can they pro rata down? If not, all of a sudden the $250,000 in the round I set aside for strategic angels doesn't get me a few value add folks, it makes me choose which syndicate do I want to include. Angels, who previously collaborated, now might be competing?"
Some industry-famous angel investors will get exposed as lousy lead investors. Usually, angel investors take a very passive role with the start-ups they invest in. They write a check that's much smaller than the start-up's main VC investor, and then watch as that VC "leads."
If Angel Syndicate are going to "lead" investments, writes Wilson, "they will have to learn to lead and lead well."
"They will have to step up before anyone else does. They will have to negotiate price and terms. They will have to sit on boards. They will have to help get the next round done. Essentially they will have to work. That's why they are getting carry from the syndicate, after all."
Wilson says many of these angels are going to get exposed as poor leaders by the process.
He writes, "Not everyone is good at this. In fact, very few are. It's hard to be a great lead investor and a completely different thing than being a well sought after angel investor who can get into someone else's deals. Some will turn out to be great at this. Many won't. And only time will tell who is and who isn't."
This is great news for full-service firms like Andreessen Horowitz. What AngelList Syndicates really does is commoditize start-up capital and put a premium on who you're getting it from, and what the people you're getting it from can provide you. That's great news for firms like Andreessen Horowitz, which employ dozens of people to help portfolio companies hire, strategize, and make deals. Expect more VC firms to market themselves to entrepreneurs as consultancies.
This article originally appeared on Business Insider.
A CEO should tell her staff everything, right? Not exactly, says the brazen VC.
CEO transparency. It almost sounds uncontroversial. A CEO should tell her staff everything, right?
Of course not.
It's a hard topic to write about because it's almost an accepted norm that total transparency is good. But it is not. For starters, let me use "CEO" as a proxy to include her "inner circle," which might mean co-founders or senior execs at the business. I do believe in total transparency with your core.
The Mind of the Founder
You took the risk to start your company. You quit your day job and look the leap off of the cliff. It's so much scarier than most people admit, even to themselves.
All of a sudden you know you're going to be judged.
Your parents want to know why on Earth you'd leave a job at Google. "Honey? Aren't they worth billions of dollars?" "Yeah, Ma. But I'm working on a large team of people trying to figure out how to make micro improvements to a paid-search algorithm. Fun stuff, I know, but it's time for me to try something more stimulating." "Oh, OK, Honey. But aren't you getting married next year? How are you going to pay for the wedding?"
Your peer group is envious of you finally doing what they've always wanted to do, but find it too hard to give up the golden paycheck and predictable future. They can't wait to hear your brilliant idea. "What? You left our team to work on that? A tool to better help you find bars and restaurants? Aren't there like 10,000 of those?" "True. But mine is different. I've finally cracked it."
Your VC friends have been egging you on. They told you, "Yeah, man, I'll gladly write the first $250,000. Call me when you're ready to leave." Now they have a deep sigh when they hear what you're actually working on. "Dude, we saw a bunch of those last year. We funded one in 2005 and lost a lot of money."
It's scary because that hard-earned $40,000 you have slavishly saved "for the future" is going to dwindle fast if you can't bring in funding.
But so far this is the easy bit.
Now you've got to convince your peer group to quit their respectable jobs and career arcs and join you. You've got to convince your buddies to part with their hard-earned savings and back you as angels.
And you pull the basic team together with some tech team members working evenings and weekends to conserve cash. You scraped together enough for an angel round, but not enough to pay yourself a real salary. You have a runway that would make San Diego Airport's look long. Nine months seems like a lifetime, but given how long it will take to ship your V1 product (five months) and how long it will take to raise your next round (three to four months), there isn't a lot of room for error.
How can you show "traction" on a product that just launched?
As a start-up CEO, you constantly have to suspend disbelief. Or, as I often tell first-timers, you simply have to have a blind belief that you'll find a way to make it all work out. You simply can't afford to be overly cautious or you'll never achieve anything.
A cautious person wouldn't try to pry people out of Twitter right before their IPO to "join my cause!" A cautious person wouldn't stand on stage and tell a large audience she is going to change the world while secretly wondering when her team is going to work out the bugs in the product so she can actually launch. "We are tackling $1 trillion global market. It's inefficient. And we have the breakthrough technology to change things. We just need your $500,000!"
A start-up CEO's job is to absorb stress so the team doesn't have to. Her job is to turn up every day with enthusiasm, even though her boyfriend just broke up, she hasn't spoken to her best friends in weeks, and she's beginning to wonder whether this idea is so great after all.
Start-ups have to be optimistic because no rational person would actually believe you could build Uber into the amazing company that it is today. A rational person would have assumed that the taxi organizations and regulation would have made it impossible.
I've written about the downsides on health and relationships and about the insane emotional stresses that people don't generally tell you about. And I've written about the unbelievable internal pressure to not let everybody down that can go to the extreme of founders taking their own lives.
Yet the best and the strongest founders are able to overcome the stresses, the self-doubt, the sacrifices, and the risks, and press on with optimism. Perhaps it's "naive optimism," but in reality that's probably the best kind.
The mind of a founder is wired differently than most people. She has a better ability to embrace ambiguity and accept risk. She doesn't fear personal failure or shame as deeply as the next person.
Or as Sir Winston Churchill said, "Success is the ability to go from one failure to another with no loss of enthusiasm."
You need to accept that you are wired differently to know that most people don't want your full level of data and knowledge.
It's kind of like a security analyst. We probably don't want to know everything they actually know, just that they're working hard to keep us safe.
How open should you be with your staff?
Well, you need to be open. I believe in transparency as much as the next guy. But total transparency is what most people think they want, not what they really want.
I'd like to give you a few examples that are more nuanced:
1. Mergers and acquisitions
In the start-up journey, if you have success in your early product launches, fundraising, and PR, you're likely to get "inbound interest" from likely acquirers. It's hard to parse out the real level of interest from people just sniffing around or gathering facts. You try to take calls to be polite and let's be honest--for many of us, the flattery is nice and who knows, maybe this could be a real financial bonanza. But in the back of your mind, you're a realist. You know this isn't likely to lead anywhere, and frankly you didn't quit your job to pursue your life's dream only to sell 12 months later in an acqui-hire.
You take the meeting, but you're not really pursuing it. But staff can't make the delineation in their heads. They see the dollar signs and the victory. They don't understand VC liquidation preferences or multiple return expectations. They weren't with you when you did the VC pitch, when you looked them in the eyes nine months ago and said, "I see only one outcome: We want to build something really big. This project has been my life's dream."
I worked with a start-up CEO who decided he wanted to sell his company. I wasn't in favor, but when the CEO decides it's the right thing to do, you support him. He went on the road and talked to many acquirers. He told his entire team what was happening. There was excitement around the office. The company had been hot, so he had assumed that selling for "just $75 million" would be achievable. But it wasn't. Good press and industry mojo weren't enough to overcome the financial metrics of the business and the offers came in around $10 million.
I wasn't surprised. We decided not to sell. The start-up CEO was not the original founder. He told me that he wanted to transition out of the business if we weren't going to sell it. I know, that sounds terrible. Like most start-up situations--it's complicated. But we parted on good terms.
Here's the thing. His entire team knew about the process and that we didn't sell. Eventually, the tech team departed en masse to find the next great stock option scheme.
Had they stayed, I believe we could have done it together. The business concept was strong, we just needed to tweak it to adjust for market changes and we needed patience and resilience.
I'll put it more bluntly: You simply can't tell most of your staff when you have M&A approaches.
It is a big distraction while you're going through the process. It is a big distraction when buyers play the usual mind games like, "Well, if we don't buy you, we'll buy your competitor and compete with you." Yes, that happens all the time. It is a big distraction when they seemed all hot-and-heavy at your first meeting, but didn't even bother to call you back. And it's a big distraction when you do finally say "yes" to getting acquired and you deal with the endless minutiae of details involving disclosures, indemnities, and taxation problems.
2. Runway of cash
An employee walks up to me and says, "Mark, I'm thinking about buying a house. Would now be a good time to buy a house? I'd need a letter from you to help with my loan."
"Buy a house? Are you kidding me? We have five months worth of cash in the bank! It's 2003 and VCs aren't exactly lining up to fund startup businesses. Sure, our revenue is growing, but is that enough to raise an internal round? Yes, I know our VCs said they would lead an inside round if we didn't find the money externally, but you do know that they're going to let us run right up to the cliff and fund us when we have three weeks worth of cash left in the bank, right? Of course you shouldn't buy a house. Do you see me buying a house?" (I didn't actually say that. That just went through my brain.)
What I said was, "Well, you do know we work at a start-up and that has more risk than working at Barclays Bank? Our VCs are pretty supportive of us, so I feel good about the future, but of course you know I could never say for sure that they'll fund us going forward. I personally prefer not to own a home in these circumstances, but if you really want to buy a home, I'll happily help you by writing a letter."
I think that is transparency. It's just not total transparency. It's not ruthless transparency. (And yes, he did buy a house.)
I've had this debate privately enough to know that most junior people at companies think that this mindset is a cop-out. But I've also had enough direct experience to know that what people want to know is, "If it is going to be OK or are we facing tough times?" Nobody really wants the details--they want the end product. And trust me when I tell you that 90 percent-plus of the people can't wake up every day with the uncertainties and insecurities that start-up founders face.
Most employees want cruising altitude. Most founders live in take-off mode.
I hate when companies publish too much information about the total stock option allocations, the company valuations, the dilution faced in every round, etc.
It is not out of a desire to hide things or be deceptive. It is because when you share too much of this information with staff, you develop an "options culture" that I find unhealthy. If you find employees building spreadsheets and spending time on exit scenarios and what their take would be, then you know your company has "optionitis."
Of course, as a founder and CEO, you know that your 18 percent of the company at an $80 million is worth more than 26 percent of a $30 million valuation, but I promise you that this is a nuance that even really smart and educated employees struggle with.
"But I was promised 0.75 percent of the company and now I only have 0.49 percent--I feel like I got screwed. I wasn't expecting this much dilution this quickly."
This is a real conversation I have all the time, even now.
I always encourage transparency about compensation, just in a different way.
Other than when we first started and were both dumb and naive ("Well, when we IPO for $3 billion your stock would be worth ...") I steered away from an option culture. My regular speech (which many of you have heard) is:
"Join our company because we're doing exciting things.
Join because you're going to get more responsibility at a young age than you would a bigger company. Join because we're a meritocracy and promote success, not tenure.
Join because every year at the end of the year, you can say that your resume is significantly better than it was the year before. Join because as we continue our successes, we will have more resources to reward you with, and reward we will.
But don't join if you're looking for a get-rick-quick scheme. We're not that company. We pay less than you could earn at other companies. We have to.
All I ask is to earn your employment every year. If at the end of each year you haven't grown in skills and stature; if at the end of the year you don't feel like you're still enjoying the journey; if at the end of the year you don't think your resume is going to look better at the end of next year, then it is time to leave. I'm going to work hard to make sure you never have to. And if money comes through options at the end of our journey that's icing on the cake."
Those are two different types of transparency.
There are transparency issues around firing or redundancies. There are issues around performance of key staff members. There are times when you need to "hire above" somebody not rising to the expectations you have of their role. There are merger discussions, board debates, product miscues, revenue misses, and a litany of delicate topics.
I do believe in being open and direct. I believe in giving people a general sense of the business performance and the challenges the company is facing. I believe in company metrics that are publicized and can be used for motivation and creating a unified sense of purpose.
As a start-up CEO, you'll have to develop your own comfort level with what to share and whom to share it with. But please remember that we're all wired different to accept uncertainty, risk, and stress. And remember, the reason that most people aren't start-up CEOs is that deep down while they might want your job, theoretically most of them don't actually want the kind of life and pressures that come with it.
It's your job to shield them from the dangers they may face.
This article originally appeared on Mark Suster's blog, Both Sides of the Table.
Back before the world knew of the Stones, Andrew Oldham was busy quietly creating the band's image. What he did could teach you a thing or two.
There was a time that the Rolling Stones and the Beatles seemed to be the antipodes of rock and roll. There were the regulated and uniformed Fab Four on one side and the seductive and seditious Stones, who just did what they felt like, on the other.
Only, it's easy to forget how sculpted and planned both groups appeared. Some of the steps taken by Andrew Loog Oldham, manager and producer of the Rolling Stones in the early- to mid-60s, to build the image and brand of the Rolling Stones are great tips for an entrepreneur looking to get ahead.
According to the ADWEEK story, Oldham had done some PR for Bob Dylan and the Beatles, but the Stones gave him a chance to create something from scratch. Not that the band didn't exist in the year between its formation and Oldham's association, but it was the beginning of the difference between being just another would-be band and global recognition. Here are some of the strategies that helped the Stones break through.
Find your positioning.
People love to put things into categories, after which they unconsciously use those categories to decide what products and companies might interest them or not. If a competitor seems to have one category fairly well locked down, look at another way to position your business. Here's what Oldham told ADWEEK:
"The Beatles looked like they were in show business, and that was the important thing," he said. "And the important thing for the Rolling Stones was to look as if they were not."
Although rock was supposed to embody the idea of rebellion, the Beatles at first represented the slick and polished version. The Stones became something else. No identical uniforms for them. They were the bad boys of rock and roll.
Embrace art direction.
When you want your company to become and represent something, you need control over all aspects of your image. Oldham said he "told [the Stones] who they were and they became it." It's a variation on a concept in acting. When you meet the world as a character should, you eventually entice the emotions that go along with the trappings and, so, become that character.
So, when there were originally six members of the band, one--keyboardist Ian Stewart--was chunkier than the rest. Oldham made the odd one out a studio musician. He wanted to create an image that would obtain the attention and, ultimately, money they wanted. That said, you can make the art direction so obvious that the market snaps, like controversial Abercrombie & Fitch CEO Mike Jeffries whose behavior seems to have negatively affected sales.
Get the right attention.
Getting attention from customers is key, of course. Oldham got the band to add "I Can't Get No" to the beginning of the title for the song "Satisfaction." Suddenly the more subversive meaning of the song was brought out in the open.
But you also need attention from the business partners that can have an impact on your success. In the 60s, record companies were pumping out one release after another. Fail to get attention from the label and you could find people going through the motions without remembering your name. So, the song "Paint It, Black" received an out-of-place comma that not only made consumers scratch their heads, but had the labels asking if the punctuation was correct.
Pick the right enemy.
Oldham says that fashion and consumer-oriented brands can do well with having an enemy. But you need the right one. The designated enemy of the Stones wasn't the Beatles. They were focused on different audiences. Instead, the band focused on Elvis Presley, an established bad boy in the U.S., and the U.K.'s Cliff Richard.
Play the branding and image game right, and you might turn into a business rock star.
Want to be a better leader? If you're doing it for the wrong reasons, you'll never really succeed in inspiring people.
Inc.com's contributors write a lot about leadership. These pieces are consistently among the most popular. Small business owners, aspiring entrepreneurs, and even people who just want to climb the corporate ladder all seem to want to know how to do leadership better.
But first ask yourself: Why do you want to be a leader? If you're doing it for the wrong reasons, you'll never inspire people the way you must to really achieve success.
Many would-be leaders are in it for the wrong reasons:
Money is nice, no argument. And many of the highest paid positions come with a leadership role. But if all you want is a bigger paycheck, you're on the wrong track. You'll spend too much time fretting over why your direct reports aren't doing what you want to properly enjoy your wealth. There are a lot of other roles out there--consultants, educators, speakers--where you can use your skills and be well paid without being responsible for what anyone else does. Rake in the green stuff and keep your peace of mind at the same time.
I'm president of a 1,400-member association and I've learned that power is overrated. Power means making the difficult decisions. Power means being the one to determine when employees are fired or laid off. It means disappointing and upsetting people on a regular basis. Sound like fun? It isn't.
Being a leader can come with some nice perks. People tend to be polite to you. You might get the nicer room at the hotel or, depending on your company, the bigger office. But if you're like most good leaders you'll spend little of your time luxuriating in these fringe benefits, and a lot of it worrying about the results you're trying to achieve. It's less fun than it looks.
So what are the right reasons?
A few years ago I was struck by a vision: A banner with the ASJA (American Society of Journalists and Authors) logo across the entrance of the Javits Center in Manhattan, and several thousand people attending the ASJA conference inside. The conference generally draws about 600 to 700 professional editors and writers, and I'm proud of that, but we have a long way to go before we fill the Javits Center. Or have a chapter in every major city, another vision of mine.
If you have a dream of your own that you can't achieve without the help of a lot of people, you'll need leadership skills to get them behind you. Having a mission for your team or organization is the best reason there is for wanting to be a leader.
The best leaders put most of their time and energy into helping other people be more successful, by making connections, giving feedback, and providing the resources they need. Love helping people grow? Leadership is a good fit for you.
If you've started a company or landed in a management position, then you're already in a role where leadership skills are needed for you and your organization to succeed. You have the responsibility of being a leader. You know you want to do it better.
That's the ideal place to start.
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She was ultra professional and had a perfect resume, so she got the job on the spot. Then the trouble started.
I'll never forget the first time I had to fire someone.
I was a middle manager at a start-up in Minneapolis, ramping up a graphics, marketing, and writing department. I usually had a keen eye for talent. I'd interview candidates by asking a few softball questions and then slowly working my way up to more technical queries.
One interviewee (let's call her Sue) seemed ultra professional. She had a good track record at a previous company working as a Photoshop expert and designing flyers and brochure. Her portfolio screamed "talented artist" and she had a direct, no-frills approach. I ended up hiring her on the spot, a gut reaction.
Then the trouble started.
As anyone in management can tell you, you normally find out an employee is going to fail on the job from everyone around you first. "Sue just doesn't understand what we do," they told me at the time. "She knows Photoshop but she can't seem to learn any of the other programs."
Where I Went Wrong
Of course, I went through all of the typical steps in the dismissal process, but our final discussion proved incredibly painful--for both of us. I liked Sue, but the cost of hiring, training, and replacing her was quite high. Unfortunately, she just couldn't do the job. She stormed out of our last meeting with a red face and a rather unkind gesture.
Looking back, I realized part of the issue was that I was not great at "onboarding" people--a process that starts long before someone fills out a W9. (For a long time, I thought onboarding consisted entirely of filling out paperwork. Oops. It's worth noting that I was only a young pup myself in business at the time.) Today, a more data-driven approach can help a start-up avoid some of the costs of making such a big mistake.
Real Cost of a Bad Hire
According to a blog post by a well-known recruiter named Jorgen Sundberg, the real cost of onboarding is $240,000 per employee. That's some serious sticker shock. Sundberg now runs Link Humans, a content marketing company.
He notes that the total cost of recruiting the wrong employee includes hiring, total compensation, eventual severance pay, and other factors like legal fees and totals more like $840,000 when you factor in all of these costs. (This is based on hiring a mid-level manager who works 2.5 years and is then terminated and replaced.)
In other words, how you hire couldn't be more important. And it's not just your task.
"Recruiting isn't just a function of recruiters, it also includes hiring managers and often times, their teams" says Jeff Freeland, the CEO of the Santa Clara, California-based recruiting start-up Jobularity.
"This cost is often hard to measure or is missed," he says. "How much does it cost for, say, a network security manager to set aside a four hour window for him and three members of his team in order to conduct interviews?"
Freeland says it might be 16 hours in aggregate for those team members. Worse, the costs for recruiting tools are going up. He says LinkedIn Recruiter, for example, can cost well over $10,000.
"Small business just doesn't have enough time, energy, or resources to react quickly enough to the demands of their customers. As a result, quick decisions are made on critical hires, which results in the poor fit," he says.
Is there a better way? I like the Jobularity approach and wish there had been something like this back when I was a hiring manager. Freeland told me the idea is to create a holistic view of a candidate using video introductions, profiles of their interests and talents, and--most importantly--a ranking system that is more data driven than most recruiting tools.
Could more data have prevented that terrible day when I had to fire an under-performing employee--and maybe prevented hiring her in the first place? I'd like to think so. Jobularity is still in beta though, and so the company doesn't yet have much data on its own success in matching candidates to jobs.
So what are your horror stories? Do you hire on gut feelings, or a different approach? Post in comments!
The managing director of Draper Fisher Jurvetson opens up about what impresses him during pitches--and what doesn't. One suggestion: Be more like Elon Musk.
Over the past 18 years, venture capitalist Steve Jurvetson has heard thousands of pitches. Jurvetson is managing director of Draper Fisher Jurvetson, the Menlo Park, California, venture capital firm that has backed such successful companies as Skype, Hotmail, and Tesla Motors. We asked Jurvetson what impresses him during pitch meetings, what doesn’t, and why some entrepreneurs are, in his words, “just kind of magic” in a presentation.
Save the Speech
Treat pitch meetings like a conversation, not a speech, Jurvetson says. Of course, you should be prepared to outline your business idea and the massive opportunity it represents. (Brief PowerPoint presentations are OK.) But be prepared to go off script. During pitches, Jurvetson asks lots of questions, partly to see how well an entrepreneur adapts and responds to the unexpected. “The point is to show you’re good on your feet, that you can get an idea across, and demonstrate how you think in the context of the meeting,” he says.
Be honest and precise when you answer questions. “We have a disdain for the sales pitch,” Jurvetson says, recalling meetings with glib entrepreneurs who respond to straightforward questions by tossing off anecdotes instead of providing analytical responses. “Being slick is not the right answer,” he warns.
One huge red flag for Jurvetson during pitches? Co-founders who cut each other off and are clearly not getting along, which could indicate bigger troubles within the business. “That happens more often than you’d think,” he says.
Above all, your pitch should get investors excited. “It’s that infectious enthusiasm that gets us jumping out of our seats about whatever it is an entrepreneur is doing,” Jurvetson says.
The most impressive entrepreneurs are curious and deeply knowledgeable about a wide range of topics, Jurvetson says. “Elon Musk wins you over with his elegant mastery of engineering, be it for the rocket or the car,” Jurvetson says. “But what blew my socks off was when our conversation veered way off topic. We started musing about whether it was possible we all lived in the matrix, and Musk still had deep knowledge. It made me believe he could connect the dots in a way that lesser minds couldn’t.”
Alexis Ohanian has invested in more than 60 companies, including Evernote and HubSpot. Here are three things he looks for in a pitch.
The Market Is Big“No huge surprise here, but I need to believe your company has potential to be a $1 billion business one day.”
Not Just Growth--Acceleration
“I want to see week-over-week growth, and growth in how much you’re growing week over week. That’s in users or revenue--or, ideally, both.”
The Founder Is a Little Intimidating“You know those people you can just feel are going to succeed, no matter what? They aren’t just talk; they are executing relentlessly. That’s a perfect founder.”
Thanks to the Internet, customers know nearly everything about you before you've even met. So skip the hard sell and learn something about them instead
Most salespeople believe that what they are selling is unique. As a result, we think of ourselves not just as salespeople, but also as educators, charged with teaching customers about our the value of our products.
But most customers I meet today have zero interest in being taught. They already know.
When I go out on calls these days, I typically hear something like this: “Before you get started, I have a few questions. I know what you do, and I completely understand your offering. But you should know that I just spoke with one of your competitors, and they are significantly cheaper than you. Plus, there are several features that we want, but according to what I have read on your website, these features aren’t available with your product.”
And why wouldn’t they say this? Buyers today have access to a seemingly endless supply of information. That enables them to form opinions about us long before we even meet. The days of the salesperson being the sole source of product information are probably gone forever.
How to respond? Stop being the smarty-pants teacher. Instead, be a curious student.
With that in mind, here’s how you might respond to the above prospect: “I look forward to satisfying as many of your pricing and product questions as I can on this call. But in order for me to answer your questions with confidence, I have few short questions myself about your business, your organization, and how you would use our product. Once I begin to understand, I can then provide the answers that are specific to you and your environment. This generally takes about 10 minutes. Do you have 10 minutes right now?”
This short setup accomplishes several things. First, it slows everybody down so that you aren’t racing into the weeds too soon. It also shifts the paradigm. Now, it is the customer who must act as “teacher,” while you take on the role as “student.” Finally, it presents the customer with a definite finish line: just 10 minutes or so of questions.
You can learn a lot in 10 minutes. Explore how your prospect views his marketplace, and his company’s role within it. Don’t be afraid to get personal: Why did this customer select this particular industry in which to build a career? Why this company? Not only is this an invitation for him to brag about his company’s expertise, it also lets him explain how and why he makes certain decisions.
His answer will help you determine two very important things. First, how much decision-making authority does he actually have? Also, should you be selling to the customer's “pain” (that is, how your product can solve a problem) or “pleasure” (how your service can help this organization get to the next level)?
I also like to ask questions about the organization itself. Why did it select its current location? Is this where their talent resides? Why is it structured the way it is? To better exploit market opportunities? Once you know more about the organization, you can truly start to understand what the company really wants and needs. You’ll also know whether or not you’re talking to the right person.
Bottom line: With just 10 minutes of behaving like a student, you can turn an entire meeting around.
The threat of a government shutdown and theatrics in D.C. distract from the main event: long-term economic prosperity.
If your car drives off a boat ramp or a bridge into the water, you have eight or nine seconds to get your car windows open. If you delay by, let's say, trying to open the door or calling 911 on your cell phone, it will be too late. Your car will fill with water, you and your passengers will not be able to get out. There is no time for dithering or argument.
But in Washington, nothing bad happens to elected officials when they avoid taking on the tough issues--issues, in fact, that will drown the country if left unattended indefinitely. The foot-stamping and tantrums of the past several weeks might make an observer think there is nothing important to do in the U.S. capital. But in fact, the neglected business of governing gains urgency with every passing month. American competitiveness in the world market needs to improve to create jobs and secure the country's financial future.
If elected officials had their eye on the nation's long term prosperity, what would they be doing? Negotiating, not grand-standing. In a successful negotiation, everyone walks away a little happy and a little unhappy. No one gets the whole cookie. Here are key issues they need to reform--fast:
When the tax code encourages big multinationals to open a research facility or factory in a high-skill, low-tax country like Ireland or Singapore, the U.S. loses not just the engineering, management, technical, and factory line jobs, but the small business supply chain to service that operation, the small business outsourcing of maintenance and security, the small business benefits of spending by those employees, and the rents and taxes that accrue to the immediate locality. The U.S. now has the highest corporate tax rate in the world, when state taxes are included, pushing jobs overseas. The White House and Republicans agree that something must be done, but nothing has been.
A Republican party that was once pro-immigration because immigrants further economic prosperity has handed the baton to the Democrats. Everyone agrees some immigration is good and the current law is bad, but no new law has passed.
The drama in Washington over the budget and the debt ceiling conveniently distracts from the essential, arguably existential problem of the country's future obligations to social security, medicare, and government employee benefit recipients. The population bulge of retirees and the expense of the health care system make pay-as-you-go unsustainable. Programs must be scaled back or means-tested, taxes raised, health care rationed, economic growth dramatically boosted, or some combination of the above--or the U.S will sink under the weight of its promises to pay. The numbers are terrifying.
The selfish, embarrassing behavior of the Congressional extremists would not be countenanced in any pre-school classroom. If elected officials continue to serve only their own interests, rather than in the interests of this country, the economy, and generations to come, political reform may become the most important order of the day.
Need to motivate your staff? Check out these tips on giving a great pep talk from the U.S. Army's highest-ranking enlisted man.
In April 2004, in the early days of the Iraq war, an armored vehicle drove under a bridge and hit an improvised explosive device, killing one of the three U.S. Army soldiers on board. It was the first casualty in the war for 1/7 Cav, the 1st Squadron, 7th Cavalry of the U.S. Army. Sergeant Major Ray Chandler, the squadron’s highest-ranking enlisted soldier, faced the task of talking to the troops. He had worked closely with the man who died. And he worried that the tragedy happened because his unit had grown complacent.
Today, Chandler is the Army’s highest-ranking enlisted soldier. As a 32-year veteran of the Army who has served as a tank crewman and a command sergeant major, Chandler knows a thing or two about motivational speeches. “So much of what you’re asking a soldier to do is irrational,” he says. “That’s why it’s both so difficult and so important to talk to them.”
Following the casualty in 2004, Chandler gathered his unit for a pep talk. He began by asking soldiers to share positive memories of their lost comrade and talk about how they felt about his death. Next, instead of assigning blame, he calmly explained that their future vigilance would be a form of paying homage. “We need to honor his sacrifice by doing what we know to be right,” he said. “We’ll help each other so that we don’t repeat it.” Thankfully, the unit didn’t lose another soldier for the rest of its two-year deployment.
In any motivational speech, Chandler says, it’s crucial to show team members that you care about them as individuals and trust them to fulfill their roles, and that everyone’s role matters to the higher cause. Chandler used that approach to motivate the 1/7 Cav when it was charged with securing more than 100 polling places during Iraq’s presidential election, a task that would stretch the unit thin and expose it to insurgent attacks.
The day before the election, Chandler and his commanding officer assembled the troops. They didn’t downplay the situation. “You are going to be a target,” Chandler told the soldiers. He reminded them they were responsible for developing security plans for their sites, explaining that their objective was to ensure the election process was not disrupted. Their success or failure, he said, would have strategic consequences for the United States.
The day of the election, which proceeded as planned, Chandler and other squadron leaders circulated among the polling places, encouraging the soldiers, supplying hot food, and offering support. “If you’re going to demand your people do something extraordinary,” Chandler says, “you’ve got to be there with them while they’re doing it.”