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The iconic family business has released a new line of bats designed to reduce breakage--and improve safety for players and fans.
The crack of a wooden bat is a quintessential part of baseball. But shattered bats also pose a danger to players and fans. This spring, in an effort to cut down on bat breakage, Hillerich & Bradsby, the maker of Louisville Slugger bats, introduced its hardest line of bats yet.
MLB Prime bats are hand cut from maple or ash so the grain runs lengthwise in straight, consistent lines. Next, they are vacuum dried, compressed, and covered with three layers of water-based topcoat seal in the company's Louisville factory. "A bat breaking will always be part of the game," says Bobby Hillerich, director of wood bat manufacturing for Louisville Slugger. "But these changes will help keep the players and fans safer."
His company customizes the bats, which retail for $120, for hundreds of major league players, including Tampa Bay Rays third baseman Evan Longoria (shown here swinging a large-barrel I13 model made of northern white ash).
J. Frederich Hillerich, Bobby's great-great-grandfather, started making bedposts and other lumber products in 1859. Today, Hillerich & Bradsby has 300 employees and makes 1.8 million bats a year. It sells bats, gloves, and other baseball accessories worldwide.
If you know him as the tough guy from Shark Tank, you might be surprised to see his soft side.
On ABC's Shark Tank, Fubu founder and branding expert Daymond John is a no-nonsense kind of guy. Here, he shows us a softer side.
What's one thing your employees would be surprised to know about you?
I actually like them.
What's your theme song?
"Going the Distance," by Bill Conti. From Rocky.
Which TV or movie character would you like to go into business with?
The Grinch. He's straight to the point. He's a little crazy, and he clearly doesn't let emotions get in the way.
Who gives you the best advice?
[Marketing expert] Jay Abraham. He always challenges me, and he makes me feel dumb, which is impressive.
Whom would you trade places with for a day?
President Obama. Why not be the most powerful man on the planet? Plus, he's just cool.
It's 8 p.m., and you're traveling alone on business. What do you do all night?
Catch up on emails, start answering the emails coming in from China, and read my goals.
The biggest myth in business is…
You need to be mean and cutthroat to get ahead.
What company do you not want to start but wish someone else would?
A puppy cuddle company. Take puppies around to different places, a bunch of puppies, and allow people to have the puppies jump all over them and cuddle with them. Like puppy therapy.
What have you sacrificed for success?
What have you learned about yourself while running your business?
I don't take failing easily. That, and all the responsibility falls on me. The buck stops here.
Can organizations use internal crowdfunding to surface great ideas and inspire employees? One company is testing the waters.
Crowdfunding platforms like Kickstarter and Indiegogo are the natural home of those with more dreams than resources -- bold inventors, penniless artists and would-be entrepreneurs with radical business plans. But according to a recent HBR interview, they may actually offer businesses a way to recapture some of this trailblazing energy as well.
In the post Walter Frick interviews Michael Muller, one of the authors of an internal IBM academic paper about its experiments with crowdfunding. Rather than using its platforms to fundraise, IBM is essentially letting employees vote for each other’s best ideas with the corporate equivalent of Monopoly money, spurring creativity with a bit of healthy competition and surfacing innovative solutions that might have got lost in the organizational welter. Muller explains the details:
We don’t have people use their own money An executive allocates a budget to the participants in the experiment. In our first case, a vice president in research allocated $100 to each of the 500 people in his organization. There was a website that was inspired by Internet crowdfunding websites, where members of the organization could propose projects, and members of the organization could take their $100 and spend it on each others’ projects. The trial lasted about a month and the funds where available on a use-it-or-lose-it basis, meaning you could only spend it on somebody else, not on yourself. And at the end of the trial, if you didn’t spend the money you didn’t get to keep it.
What sort of proposals won the battle for internal funds? Everything from ‘afternoon beverage’ to some in-house, shared athletic equipment and a streamlined way to pay for small outsourced tasks. The pilot also revealed that participation was high -- 45 percent of employees engaged as compared to the 10 percent that use the company’s social media platform regularly -- and projects proposed by those lower down the institutional food chain were most likely to get funded.
The post closes with some advice for other businesses thinking of trying similar experiments. "It’s important for the sponsor to say what kind of innovation he or she wants to see, and what is out of bounds. Also, organizations should actively campaign to get everybody involved, otherwise money doesn’t get spent," says Muller.
All of which is fine and dandy but if your business has tens of employees rather than thousands, could something similar work for you?
Perhaps not in the form IBM utilized, but the underlying idea of engaging employees by giving them a sense of control over how a small portion of the budget is spent, has worked in various guises for business of all sizes. Startup Coffee & Power essential crowdsourcing bonus allocation to reportedly good effect, while recent research shows that so-called "prosocial incentives" -- essentially giving employees money to give away to others -- increased team bonding and employee happiness.
Could you put the principle of crowdfunding to work in some way at your business?
It's not rocket science. Being a better leader starts with the little things. Here's what you need to know.
Let's jump right in, shall we?
1. Switch off your cell phone. Go on, you can do it. Just for one meeting.
2. Look people in the eyes. Practice doing it consistently.
3. Think. Pick an hour in the day (the week, if you're really strapped) and just think. Don't listen. Don't read. Don't talk. Don't eat. Don't drink. Just think.
4. Get out of your inbox. Twice a day is enough for most people. If it's not, for you, then you have deeper communication management problems.
5. Stop using amplifying adverbs. Every time you use words like 'very', 'fundamental', 'must-do', 'imperative', you drain their impact. Simply state what you want to say, or want done, without amplification.
6. Ask 'What can I do for you?' Many leaders fail to recognize that they can be a tremendous asset for their people - but only if they place themselves in that position.
7. Get out from behind your desk. You do know the real action is happening elsewhere, right?
8. Get comfortable with silence.
9. Know your presuppositions. Before any important meeting or discussion, jot down what presumptions, assumptions or biases you're walking in with. Note that they might be right, helpful, useful - or they may not.
10. Distrust what you trust. Not all the time. Just often enough to rethink what you take for granted.
11. Don't talk to think. Thinking out loud is confusing when the person doing the verbal processing is the leader of those who are listening ('Is this an instruction? Are we really going to do this?'). Only do it with people who know you well, or make it clear when you are 'just musing'.
12. Give positive feedback three times more often than you do. You don't do it enough, trust me.
13. Get low-level seating in your office and use it. If you have the real estate, add a round table (or a coffee table), and use it by default. Make your desk a work surface, not a communication barrier or power play.
14. Be present. You can only be in one place at a time-- so be there. Stick a pin in your palm, snap an elastic band on your wrist. Do whatever you need to give the present your full attention.
15. Ask more than you tell. Sure, there are communications that require you to be declarative, but leadership as a whole is an exercise in inquiry.
16. Show more than you demand. The leader as a role model isn't something that's talked about much right now (mostly because of the lack of such role models in many areas of life-- politics, sports, entertainment), but it's still the most powerful tool in your leadership toolkit.
17. Repeat yourself. When you literally feel nauseous at the thought of repeating what's important, others are just beginning to get it.
18. Batch crap. When you allow the prospect of dealing with dreck to get you down, you underperform. Pull together the three or four things you truly loathe the thought of doing, and get them done as early in the week as possible. You'll be amazed how well you perform the rest of the week.
19. Only use email to move around information. Your keyboard isn't a proxy for rich communication.
20. Reach down two levels. Don't build a cadre of lieutenants who get all your attention. You're leading the enterprise, not your immediate reports.
21. Be nice. Whatever reason you use to justify being a jerk, you're wrong.
Want more insights on how to maximize your leadership potential? Download a free chapter from the author's book, "The Synergist: How to Lead Your Team to Predictable Success" which provides a comprehensive model for developing yourself or others as an exceptional, world class leader.
Customer retention is the whole ball game.
In today’s frantic environment, it’s hard to know what a start-up should try to hang on to and make its own. For new mobile applications, the rate of abandonment is ten times faster than the rate of adoption across almost every age cohort. In the world of six-to-15-second videos, Andy Warhol’s 15 minutes of fame seems like an eternity and a tired remnant from another time.
In building value for your business, sustainable customer retention is the whole ball game. Increasing retention isn’t easy, but it’s a lot easier to achieve when you understand the relevant drivers of behavior and then build your own program to support them.
The best players in this area are masters of what I call “manufactured addiction.” It’s the art of making sure that your users will love you even more tomorrow than they did yesterday. All it takes to succeed is a basic understanding of human nature and a plan that capitalizes on some of our most basic emotions.
Here’s a short list of the fundamental ideas and emotional drivers that your engagement and retention plan should incorporate:
1. We are basically lazy
We’d rather have simple, boring, or repetitive things done for us than do them ourselves. We’ll happily exchange our loyalty for improvements in our productivity, savings of time and effort, or other benefits. Everything today is a deal--we engage in constant calculations of the personal value of various proposed transactions. Often, we make these repeated determinations automatically and almost unconsciously.
2. We hate to waste our time. We especially hate redundancy
How many times have you been asked to supply the same information repeatedly? Other than making healthy people physically ill, the worst injury that hospitals have heaped upon the human race is making us complete ridiculously redundant documents.
This is why socially-engineered tools such as the omnipresent Facebook Connect button are hugely powerful connectors and retention devices. They avoid the constant need for new site users to re-supply the same data over and over, and save programming costs for the owners of more than 10 million independent sites.
3. We don’t know when to quit
Once we have mentally invested our time and energy into any activity, we are much less likely to abandon it. We seem to always believe that our switching costs are much higher and more onerous than they actually are. As a result, we are virtually incapable of bestirring ourselves and choosing any less-than-overwhelmingly-compelling alternative to almost anything. Even the most useless, trivial and fleeting rewards (ranks, powers, badges, scores, etc.) make leaving that much harder.
4. We don’t want to disappoint our friends
We often underestimate the power of peer and other social pressures, even among grown-ups. The more “connected” we believe we are, the longer we will remain--even when the activity has ceased to hold any personal interest or provide any real value. It’s the contagious power of the crowd. There is a palpable sense that in “leaving” even the most useless environment, website or other fruitless activity we are abandoning our “friends” and depriving them in some sense of the benefit of our continued presence.
5. We do much more from habit than from rational, conscious choice
The repeated use of any product or service tends to become a habit, and habits are hard to break. When habits are reinforced by peer pressure, collective action and other group dynamics, they become even more difficult to dislodge. We don’t appreciate how sneaky and powerful habits can be because they begin as weak tendencies, which we think of as intentional preferences. Their power isn’t readily apparent until we discover how hard they are to break. Make your product or service easy to use, readily accessible, and friction-free, and you’ll own me.
6. We want to be leaders, not losers, and everyone keeps score
This is why cab drivers can quote you the precise opening night movie box office grosses for their favorite films. We’re competitive, and sometimes it’s more important to us that our friends lose than that we win. It’s a little like the two guys running away from a hungry bear. You don’t have to beat the bear--you just have to outrun the other guy.
While leader boards have a certain appeal, peer-to-peer comparisons are far more compelling because you always want to know where you stand relative to your friends. Only things that are relevant to us as individuals will compel or change our behavior. While financial considerations will max out, there’s no clear limit on the power of meaningful status-flavored achievements and rankings to drive increased and extended performance in business and social contexts.
7. We live in a “what have you done for me lately?” world
Just like Walmart and Costco religiously change their in-store displays every week, any site that doesn’t feed the new, fresh content beast is doomed. Return visitors come with a set of progressively higher expectations. They want to be offered new and extraordinary experiences on each visit.
There are two solutions. One is to hire more people and constantly obsess about the need to create clever new content. This is almost as bad as doing nothing and much more expensive.
The second, smarter, way to go, is to free-ride on obvious and available content that is being generated regularly and consistently by other providers. I’m not talking about stealing. I’m talking about sitting down with a national events calendar and building a full year of piggy-backing your content off of the constant and recurring flow of events, activities, anniversaries, holidays, films, etc. that beat a path to your door all year long.
This seems so obvious that you would think it would form the foundation of virtually every site’s programming. Yet almost no one (except Google, which does a new header every day) takes the few hours of creative thinking and organization to ensure a stream of content ideas that the entire rest of the entertainment, news and media world are engaged in promoting for them. How much easier and cheaper could it be?
8. We all want to drive the train
Many young and active social media users want to have as much impact and control as possible to make up for the frustration, helplessness and impotence they often feel at work. This sets up an interesting problem for many websites. If everything is too easy to accomplish, the users lose interest. They want an active role in the process.
I suppose there are some people who would accept a fundamentally passive experience, but they aren’t the users you looking for. We want the people who make things happen, not the ones who watch what happened, or worse yet, the ones who wonder what happened. When your users are part of figuring something out and accomplishing even interim goals, they’re going to be much more committed to the enterprise and to its success. The best and most compelling sites convert initial involvement into active engagement and then engagement into return and retention--all as a part of one seamless process.
Equally importantly, the most enticing sites are fast. Every time we visit a site, we’re expecting and hoping to learn something. The key to effective learning is the immediacy and accuracy of the feedback. We’re not checking the calendar here--the cycle time for everything these days is in minutes, not months. Everything is in the moment. If you want me to come back, you’ve got to deliver the goods every time I visit.
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.
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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.