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And now a word from our sponsor--the Affordable Care Act
Congressional Republicans may be blustering (and filibustering), and states like Florida, Missouri, and Ohio doing their best to undermine the rollout of new public health care exchanges. But from Connecticut to Hawaii, other states are going full-steam ahead to promote their exchanges with slick marketing campaigns that would make a Madison Avenue proud.
The Associated Press estimates that states and the federal government will spend at least $684 million on publicity, marketing, and advertising related to the launch of the exchanges, which are supposed to be ready for open enrollment by October 1. Citing figures provided by TV executives and a broadcasters’ trade group, the Wall Street Journal predicts that insurers alone will spend about another $1 billion on TV advertising related to the health-care overhaul.
Most of the beneficiaries of the boomlet in Obamacare advertising are small, entrepreneurial marketing shops. Louisville agency Doe Anderson scored an $11.3 million contract to run Kentucky’s educational campaign; GMMB, a D.C-.based firm with a Seattle office won the $9.37 million contract to educate Washington state residents; and Pilgrim, a Denver-based shop, was tapped to promote Connect for Health Colorado.
Most of the spots are aimed at groups that have traditionally had large numbers of uninsured: young invincibles, whose participation in the exchanges is essential, and minorities. While most states’ ads focus on individuals, a few, including Connecticut and Hawaii, have ads that target small business owners, too, emphasizing benefits such as the Small Business Health Care Tax Credit.
Here, a sample of the Obamacare pitches. What do you think? What would Don Draper say?
This spot, made for Cover Oregon by Portland-based agency North as part of a $9.9 million contract, has garnered the most publicity. Teetering perilously on the edge of Portlandia spoof, the ads feature Oregonian singer-songwriters Laura Gibson and Matt Sheehey earnestly strumming guitars in front of idyllic rural backdrops and exhorting a young millennial target audience to “live long.”
Arkansas awarded a $4.3 million contract for marketing its insurance exchange--Arkansas Health Connector--to the Little Rock firm Mangan Holcomb Partners earlier this year. In addition to TV, radio, and print ads, the campaign will include gas-pump advertising at stations around the state.
Colorado’s ads by Pilgrim emphasize the benefits of competition among insurance companies in its exchange--and tout the potential for many Coloradans to receive tax credit subsidies that will reduce premium costs.
With a multicultural cast of animated characters, this 30-second TV spot for Kentucky’s exchange, created by the Louisville, agency Doe Anderson, appeals to “everyone who had to choose between medicine and a mortgage payment.”
A match made in heaven may be hard to come by, but that doesn't mean you can't make it work.
Partnering with a competitor or giant distributor isn't easy.
Corporations and start-ups often speak different languages, or one moves slow while the other moves quick. Sometimes the companies complement each other, but most of the time problems arise. A start-up's unorthodox practices, for example, might tarnish the more established brand's reputation. Or perhaps both start-up's cultures will clash and one will pit itself against the other.
August Turak, author of Business Secrets of the Trappist Monks: One CEO's Quest for Meaning and Authenticity, says, "The single biggest mistake we make in our partnership efforts is treating potential partners as if they were end users. While the interests of partners and end-users must overlap, they are seldom, if ever, identical."
Here are three of his tips for making partnerships work:
Move the corporate mule.
Corporations can be slow moving and for that reason Turak suggests doing most of the work yourself. "Getting executives into a room and hammering out a contract doesn't make a deal. Every partnership is like moving a stubborn mule," he says. When Walmart was looking for a partner to provide sunglasses, for example, one company came to the meeting with their sunglasses already tagged, coded, and mounted on display cases. They even studied Walmart's floor designs and suggested spots for their products.
Roll products out slowly.
Turak says to avoid blanket launches after forming a partnership and roll out slowly, ideally in small batches. "Every cleaning solvent recommends trying it first on some inconspicuous place, and this applies to joint ventures as well," he says. "Not only will we uncover potential hitches, but managing the critical buzz is much easier. Always remember that people talk and that first impressions are critical to making a deal successful."
"Always remember that a heavy handed 'push' from corporate headquarters often backfires," says Turak. "If, for example, a sullen salesforce refuses to sell your product, it will be your product, not the salesforce that your partner will blame. Winning hearts and minds upfront among the rank and file is much more effective than relying on diktats and quotas from corporate."
A well-intentioned interaction can backfire at any moment. Before you engage, listen. Then make your tweets relevant.
As a leader of a social media agency, I often obsess over the tweets that my staff sends on behalf of brands. That’s because a well-intentioned interaction can backfire at any moment. I'm fairly well versed in what to do and what not to do when this happens. But I can only imagine how a small business might feel when readying to engage on social media--one misstep can reverberate well beyond the intended target.
Avoid a Twitter #hashtagfail by remembering three pieces of advice.
The authentic voice is the loudest.
When McDonald's launched the promoted hashtag #McDStories, it envisioned a stream filled with tweets of love. You know, fond memories of good times at the chain. Instead, it turned into a McDonald's bashing party, where moms rallied against the company's highly processed, unhealthy options. The intention was to promote products and recall cherished memories of family trips to McDonald's. Instead, the brand received tweets like these:
One time I walked into McDonalds and I could smell Type 2 diabetes floating in the air and I threw up. #McDStories (via Twitter)
Dude, I used to work at McDonald’s. The #McDStories I could tell would raise your hair. (via Twitter)
Ate a McFish and vomited 1 hour later….The last time I got McDonalds was seriously 18 years ago in college….. #McDstories (via Twitter)
This doesn't mean that McDonald's needs to steer clear of Twitter. But creating a hashtag around its brand's aspirations versus its brand's reality certainly did backfire.
It's not about you.
It goes without saying that the Oreo "Dunk in the Dark" moment at the Super Bowl changed the game of engaging around real-time events on Twitter. It won every advertising award under the sun, and brands flocked to Twitter to search for what major event they could tap into next.
Award shows, holidays, and other pop culture events became reasons for brands to share their messages. However, brands have repeatedly taken this a step too far. Many brands took the opportunity to use September 11th, a day of remembrance, and make it a day about themselves. AT&T was a classic example; they posted this image of the lights at the 9/11 memorial as displayed from an AT&T phone. September 11th is not about AT&T. When people are talking about September 11th, they're not thinking about the sales being offered by brands. If you want to post a message around a holiday or event, don't make it about you.
If you have to stretch to make a connection, don’t.
With the recent push for real-time content, brands are desperately trying to connect themselves to current events.
According to Twitter, the birth of the royal baby generated conversation measuring at 25,300 tweets per minute. Brands felt the need to participate. This made sense for baby-product-only brands, such as Pampers or Johnson & Johnson.
But many companies tried to make a connection to this momentous occasion despite the fact that their brands had no relevance to the event itself. Nintendo made the birth all about their Princess Peach character. Worse, Charmin tried to connect their toilet paper to the "royal throne."
The bottom line: If you have to stretch to make a connection between your brand and something happening out there, it's not likely to work.
Want to know the most effective way to use Twitter, try just listening. By listening to what your customers are talking about, what your competitors are saying, and what's happening out there in the Twitterverse, you'll be able to speak--or in this case, tweet--in ways that are more informed and which then have more of an impact.
A rhetoric expert translates the body language of six famous speakers, including Steve Jobs and Bruce Springsteen.
Gestures and body language have long been powerful public-speaking tools. In the 19th century, rhetoricians created gesture manuals, codifying the connotations of poses including “defiance,” “ridicule,” and “penitence.” (Pictured above is an illustration of how to make a declaration from an 1899 edition of the White House Hand-book of Oratory.) Back then, speakers would learn each gesture and pose appropriately when they spoke, with the idea that the audience would understand the subtext.
These days, most speakers don’t put quite as much thought into body language. But their gestures still speak volumes. With that in mind, we asked Jay Heinrichs, an expert on oratorical history and the author of Thank You for Arguing, to analyze the body language of some contemporary figures.
The Regular Joe
This informal, “regular guy” pose sends the message that musician Bruce Springsteen is “a pal and not really a, you know, god,” Heinrichs says. “If you’re not a deity, go light on the informality, because it can lower you in the audience’s eyes,” he says.
Vice President Joe Biden is known for his direct speaking style. This show-all-the-teeth, crinkly-eyed expression conveys Biden’s “love-you’re-here attitude,” Heinrichs says. “Crow’s feet strongly recommended,” he adds.
Anthony Weiner, shown here at a July press conference, is making an encompassing gesture, indicating that he’s telling the whole truth. “Of course, we’re speaking rhetoricalIy here,” Heinrichs says. By holding her arms in front of her body, Weiner’s wife, Huma Abedin, is signaling self-protection and vulnerability.
Beyoncé Knowles’s “female celeb pose” exudes poise and confidence, but it’s not for everyone. “This takes practice and is really hard to do unless you’re X-ray skinny, female, and beautiful,” Heinrichs warns.
The Quiet Genius
During presentations, the Apple founder often looked down and strolled across the stage as if the audience weren’t there. Heinrichs refers to this as the “genius gesture.” “It’s as if you’re composing amazing thoughts in your solitary, genius way,” he says.
The Power Player
Soon-to-be-ex-Microsoft CEO Steve Ballmer is using a power stance that puts focus on the hips, hinting at sexual prowess. “The gesture implies turbocharging,” Heinrichs says. “But it can give the impression of trying too hard: ‘These Windows tiles are gonna rock and roll, people!’ ”
Business models for everything from crash pads to cocktail dresses have been disrupted by this new trend. Is your business next?Can you remember the last time you saw a movie? Did you buy it or stream it from a service like Netflix or Amazon Instant Video? If you streamed it, you’ve joined the sharing economy, where consumers prefer to rent access to something instead of owning it outright. The sharing economy is exploding around us: •Instead of dropping $1,850 on a Catherine Deane "Godiva" gown, you can check out Rent the Runway, which allows women to rent the dress (and an entire collection like it) for $300 and guiltlessly return it the next morning. •Airbnb allows you to rent an expensive house for a short period of time, and the home owner gets paid to share their pad for a few days. •Zipcar enables you to rent a car by the hour, when you need one, without the expense of owning it. •We’re not downloading as many songs from iTunes as we used to. Now we simply share access to a music library from Spotify or Rdio. •Last month, eRetah announced they are launching a NetFlix-like model for e-books: all-you-can read books for one monthly fee. •Next time you need to do a major home renovation, don’t bother to buy a nail gun. You can simply rent it for the weekend from SnapGoods. Sharing stuff has been around since stuff itself, but the new sharing economy is being fuelled by technology: Websites like Airbnb match buyer and seller; your GPS-enabled iPhone allows you to find the closest ZipCar; Facebook and LinkedIn enable you to vet anyone you’re thinking of doing business with; and sites like PayPal allow you to safely pay for what you’re renting. There are two models gaining traction in the new sharing economy: A Sharing Marketplace Creating a sharing marketplace like Airbnb or Vacation Rental By Owner (VRBO) means you set up the marketplace but you don’t actually own the things being shared. You simply take a cut of the transaction. The chicken and egg challenge is that you need listings to get traffic and you can only get the listings if you have traffic. Buy to Rent In the buy-to-rent model, you buy something with the intention of renting it out. Unlike the sharing model, Rent the Runway actually owns the dresses. Two key metrics define the buy-to-rent model: how long it takes to recover the cost of buying and your cost-to-rent ratio. Take the Catherine Deane gown, which costs $1850 retail. Let’s say Rent the Runway pays $1,000 for the dress (since they are buying a bunch of them, they probably get a discount similar to a retailer). Since they rent it for $300, and they need to steam clean it between each rental, they probably break even on the fourth rental. If they can rent the dress once per month, it will take four months to get their money back on buying the item. Buy-to-rent businesses often need a lot of capital, so the faster you can recover your cost of goods rented (COGR), the more sustainable the business. The other number that is important is the buy-to-rent ratio. In the case of Rent the Runway, it’s around 6:1; meaning you can buy the dress for about six times the cost of renting it. Obviously, the higher the ratio, the more attractive the rental option becomes for the consumer. On the flip side, the less often you need the item, the lower the buy-to-rent ratio needs to be. A wedding dress rental company, for example, may support a 3:1 buy-to-rent ratio, whereas a multi-purpose cocktail dress from Rent the Runway may only support a 6:1 ratio. There was a time when the pride of ownership trumped any cost saving associated with renting. But in an environment where everyone is “deleveraging,” and technology allows us to share without dramatically impacting the quality of our experience; for many, access now trumps assets. What will your sharing business model be?
Here are three things you can consider next time you're faced with a difficult decision.
As the leader of your company it's inevitable that you'll have to make some tough decisions along the way. It's part of the job. The way you navigate these decisions will impact how you're perceived and regardless, you'll be judged for it.
In the past 12 years of running my e-mail marketing company VerticalResponse, I've had to make my fair share of tough decisions, but you know, many of those choices have led to changes that have defined our product or our team. Here are three things you can consider next time you're faced with a difficult decision:
Use What You've Got
I'm a shoot from the hip kind of leader and trust my instincts, however that doesn't mean I only make emotion-based decisions. I surround myself with really talented team members and I draw on as many of them as possible to get the facts, figures and all the data I feel I need. But, you often won't get the luxury of having every morsel of information available from which to make your decision, so a point comes where you just have to call the ball and and make the choice based on what you've got. Will you be right 100 percent of the time? Not a chance. But, the longer you do it, the better you'll get.
Tune Out the Noise
It's really easy to get distracted by the noise surrounding any big decision. We've all been there when you've got a bunch of conflicting opinions, people may start to take things personally and it just snowballs from there. Not pretty and certainly not helpful in staying focused on the task at hand. In this case, you've got to clear the noise and make your choice based on principal and the information you've got.
Ultimately, no matter what choice you make, good, bad or indifferent, you've got to own it. If you make a mistake, the single best thing you can do is to be accountable. Immediately. And if you nail it and make the right decision, share the glory with your team. We all know none of us succeed alone. The more we can involve our teams in the good and the tough choices, the more they'll start to think and own the business like a boss--and that helps everyone do well.
If you're struggling to make tough decisions, my advice is to just do it. Use what you've got, tune out the noise and own it.
Have you made a tough decision that went well, or not so well? What did you learn? Share in the comments.
A hot market for initial public offerings and a wide range of relatively mature fast-growth companies should make this fall a big one for fundraising.
The initial public offering, once the ultimate validation for company founders, is in fashion for the first time since the dot-com bust. In the first half of 2013, U.S. IPOs raised $20.6 billion, according to Kathleen Smith, principal at Renaissance Capital in Greenwich, Connecticut. Excluding Facebook’s $16 billion debut, that’s 63 percent more raised than in the same period last year.
And though any IPO boom includes big-company spinoffs and overseas listings, in this one, entrepreneurs are bringing it home. Analytics firm Tableau Software raised $254 million in May and saw its shares rise 64 percent. Marketing software company Marketo raised $85 million and got a 78 percent pop. Biotech start-ups, such as Bluebird Bio and Agios, have had their own first-day frenzies.
Two key factors work in IPOs’ favor, one permanent, the other fleeting. Fast-growth entrepreneurs are starting to take advantage of the JOBS Act, which allows companies with less than $1 billion in revenue to file essentially in secret, get feedback from investors and the U.S. Securities and Exchange Commission, and only then decide to register or quietly back away. Biotech entrepreneurs, realizing that the U.S. Food and Drug Administration is easing certain drug rules, are also adjusting accordingly.
Less reliably, the stock market is up about 12 percent this year, as of this writing. A hot market does wonders for new issues, because investors are “more comfortable with something new when the market is rising,” says Smith. It’s worth remembering, though, that markets also reverse; one debt-ceiling crisis or Mideast flare-up, and risk tolerance can shrivel overnight.
For a flavor of what it takes to go public these days, we asked analysts to name a handful of companies with much anticipated (and probably imminent) IPOs. They named companies with high margins, strong brands, and, in most cases, a founder still in charge. Not a Pets.com in the bunch.
Raised: $120 million
Valuation: $200 Million
In 1994, Dr. Emil D. Kakkis met the family of a child who had a rare metabolic disorder and was not expected to live to age 10. Working with funds initially raised from golf tournaments and bake sales, Kakkis synthesized a treatment to save the child’s life. Kakkis went on to become chief medical officer at BioMarin Pharmaceutical, where he won approval for three rare genetic disorder treatments. In 2010, he founded Ultragenyx, which now has one drug in a Phase II trial and another in a trial set to begin this month. The company raised $75 million last year; Sanofi-Genzyme BioVentures is a strategic investor.
Revenue: $62 million
Valuation: $1.25 billion
FireEye, which filed for its IPO in August, disables sneaky malware that firewalls can miss, such as emails with seemingly innocent zip attachments, and analyzes “zero-day” attacks (so named because they exploit previously unknown vulnerabilities--hence, “zero” days from discovery of the weakness to the attack). It counts more than 1,000 customers in 40 countries, including about one-third of the Fortune 100. In January, the company raised $50 million; investors even include the venture branch of the Central Intelligence Agency. Still, FireEye is the rare IPO candidate that is losing money--$67.2 million in the first half of 2013, despite a doubling in revenue.
Los Altos, CalifORNIA
Raised: $300 million
Valuation: $3 billion
Founded in 2005, while its founders were in college, online storage company Box has raised about $300 million and has an estimated valuation as high as $3 billion. Box says it has 180,000 customers--including more than 97 percent of the Fortune 500--and 20 million users. Revenue more than doubled last year. John Connors of venture firm Ignition Partners (not an investor in Box) says the business software market “moves slowly, sales channels can be expensive, and incumbents are hard to displace. But once you get the flywheel started, the market is very big.” When he says big, he means
big: $3 trillion worldwide.
New York City
Revenue: $800 millION
Valuation: $3.4 billION
With the global economic recovery has come an increased interest in luxury fashion. Gilt Groupe and Zulily are two brands certainly in investors’ sights, but the most talked about is the glamorous Tory Burch. The company sells its line of luxe bohemian women’s clothing, shoes, handbags, and eyewear at its own 90 stores, as well as at outlets such as Neiman Marcus, Nordstrom, and Bergdorf Goodman. For an initial public offering today, “brand recognition is key,” says Kathleen Smith of Renaissance Capital, and Tory Burch has that in spades. Bloomberg recently valued the company at $3.4 billion.
Revenue: $580 million
Valuation: $10 billion
The social network with more than 200 million users filed for an IPO in September--but it used the JOBS Act loophole to do so, meaning revenue and profitability (if any) numbers aren't public at this writing. Research firm eMarketer predicts that Twitter’s ad revenue will hit $1 billion in 2014, and analysts say its valuation is closing in on $10 billion. Skeptics say it hasn’t yet transitioned from popularity to profit, but CEO Dick Costolo, had earlier sent an internal email saying Twitter wouldn't IPO until it had "very predictable quarterly earnings growth." There had been other hints: This summer, Twitter advertised for a financial manager familiar with IPOs and hired ex-Ticketmaster CEO Nathan Hubbard as its new head of commerce.
This story first appeared in Inc magazine. It was updated for Inc.com on Sept. 26, 2013, to reflect the fact that Twitter has filed for an IPO.
The author of "Good to Great" went to West Point to teach leadership. Instead, he was the one who got schooled.
It was a warm, late summer afternoon on the banks of the Hudson River, and a large contingent of cadets had gathered in the Hayes Gymnasium on the campus of the United States Military Academy. Dressed in gray T-shirts and black shorts, they had come to train for the Academy's grueling Indoor Obstacle Course Test (universally known as the IOCT), which involves jumping through tires, climbing ropes, swinging on monkey bars, leaping over barriers, running along a balance beam, and sprinting around a track with a medicine ball, among other physical feats. Cadets say it is one of the hardest parts of a West Point education.
On one side of the gym, a group of cadets watched an older, gray-haired man trying to mount a shelf 8 feet above the ground. He was Jim Collins, the best-selling business-book author who was visiting West Point to hold seminars on leadership. "No, sir," a cadet said to him. "You don't want to do it like that, sir. You look like an old man, sir. You need to do it this way."
"I am an old man!" Collins murmured. Then, he tried it again.
Why was the author of such business classics as Built to Last and Good to Great competing with college students less than half his age? For one thing, Collins, 55, is an avid climber and seldom shies from a physical challenge. (For his 50th birthday, he had scaled the 2,900-foot vertical rockface known as The Nose of El Capitan in Yosemite National Park.) But what Collins really wanted was the opportunity to interact with cadets, to experience what they experience. With that in mind, he had set himself the goal of completing the course in the same time required of all male cadets before they can graduate--three and a half minutes or less. So he was grateful that West Point's rock-climbing team had turned out to coach him.
Glancing around the gym, Collins could see numerous other cadets struggling with various obstacles; some of them were not much farther along than he was. Most of them had at least one or two other cadets standing nearby, coaching, critiquing, and cheering on their compatriots.
That struck Collins as interesting. West Point is a highly competitive place. Every cadet wants to do the IOCT faster than his or her peers. Every cadet also is extremely busy. Yet these cadets were taking time away from their studies and other duties to help their friends get through the course.
Their behavior in the gym was no anomaly. Collins had seen the same phenomenon among his students. And not only were the cadets more collegial, but they seemed to be happier--much happier--than students at civilian universities, including those he had taught during his seven years on the Stanford faculty. Which was odd. After all, West Point cadets lead extremely demanding lives. Nearly every minute of every day is programmed, and every aspect of their lives is regimented, down to the color of their socks and the way razors must be positioned in their medicine cabinets. Meanwhile, they are constantly being tested both physically and mentally--and they often fall short. This goes on for four years with almost no letup, followed by five years of active duty.
How, Collins wondered, did such a burdensome environment produce such a happy, lively, and confident cohort of young men and women? In business, happy cultures tend to be associated with pool tables, foosball, Friday-afternoon beer parties, and dogs in the office--in a word, fun. A cadet's life is anything but fun. And yet these young people seem to get something out of their lives that is missing from the lives of many of their contemporaries.
Collins didn't have long to reflect on this, however, as his coaches were already leading him to the next obstacle: the balance walk on horizontal bars, followed by the jump through a hanging tire.
When Collins was offered West Point's Class of 1951 Chair for the Study of Leadership in the early summer of 2011, he was in the midst of preparing for the publication of his fourth bestseller, Great by Choice, which would wrap up a quarter-century of research into great companies. Although he faced a packed schedule in the coming year, he couldn't resist the opportunity. For one thing, Collins is passionate about reaching out to young leaders, especially those who had made a commitment to service, and none had made a more serious commitment than had the West Point cadets.
In addition, he was curious about the place itself. West Point has been turning out "leaders of character" for more than 200 years. "I expect that it will transform my thinking in some way," Collins told me a week before he started. "I have this feeling something's going to happen to me that will set me on a new trajectory, a renewing path."
The appointment was for two years, starting at the beginning of 2012. Collins would visit West Point seven times, holding a seminar with about 30 cadets on six of those trips and delivering a final talk to the cadet corps on the last one. Most of the seminars would focus on the distinguishing characteristics of great military leaders, using Collins's signature methodology of examining matched pairs of great and not-so-great leaders who faced similar situations and got different results.
When I spoke to him again after his first seminar, he was even more enthusiastic than he had been. He would soon be heading back for his next seminar, which would be attended by tactical officers with combat experience as well as cadets. They would be focusing on the concept of Return on Luck, which Collins and his Great by Choice co-author, Morten T. Hansen, had come up with as a way to measure how much companies benefited from unpredictable events, good or bad, that took them by surprise.
He was also looking forward to the third seminar, in which the participating cadets would be 38 members of West Point's rock-climbing team, who would explore the links between leadership and climbing. Back in 2006, when Collins had begun his quest to conquer The Nose of El Capitan, he had trained with Tommy Caldwell, a 35-year-old Coloradan who is widely viewed as one of the greatest rock climbers of all time. The two had formed a close bond, so Collins invited him to participate in the seminar. Caldwell accepted, and they began brainstorming about how to use Caldwell's many extraordinary climbing experiences to engage the cadets.
By the time I arrived at West Point to observe Collins in action, he had completed four of his seven trips, including the one with Caldwell. On the night before the seminar, I joined Collins and 10 cadets for dinner in MacArthur's Restaurant, located in the historic Thayer Hotel, at the southern end of the West Point garrison. For a couple of hours, they discussed a range of topics, from the qualities of great leaders to the risks and rewards of contrarianism. Then Collins changed the subject. "What is the opposite side of success?" he asked.
"Isn't it failure?" one cadet responded.
"Well, let's talk about failure," said Collins. "How many of you have experienced failure?" They all nodded or raised a hand.
"Failure is part of life here," said a diminutive female cadet, Kiley Hunkler. "There's a recurring sense of inadequacy," she says. "For a 200-pound linebacker, it's having to do a cartwheel. For me, it's the survival swim in full combat gear."
"Does anyone get through West Point without feeling that sense of inadequacy?" Collins asked the group.
"No," they said, more or less in unison.
"From the outside, it looks like everything here is difficult," Collins said. "I think you can go through most universities without ever having a big inadequacy moment. That doesn't seem possible here. You keep getting decked. So why do you keep getting back up?"
"It's better to fail here and have other people help you get it right than to fail in Afghanistan, where the consequences could be catastrophic," said another cadet, Christer Horstman.
"Here, everybody knows it's a learning experience," said Hunkler.
"Yes, and you've put yourselves in an environment where you can't go through without failing," Collins said.
Indeed, repeated failure was built into West Point's culture. Yet that didn't seem to faze the cadets in the least. They came across as irrepressibly positive and devoid of the alienation that infected the other campuses Collins knew. He had also found the cadets to be unusually open and direct in their one-on-one interactions with him. They were curious, questioning, and intellectually engaged, and had no reluctance to let him know when they disagreed with him. And then there was the phenomenon he had observed in the gym: cadets going out of their way to help one another, even as they were competing intensely to outdo one another.
It was a puzzle, and it had been on Collins's mind when he and Caldwell had headed east for the rock-climbing seminar in August 2012. They'd had a four-hour flight from Denver to Newark, New Jersey, and somewhere over the Midwest, they had started talking about Caldwell's ongoing, and so far futile, attempt to scale the Dawn Wall of El Capitan in a free climb-;that is, without any aid from climbing equipment or ropes. No one has ever done it. Caldwell was preparing for his fourth attempt that fall. He would stay on the wall as long as the weather allowed, but the overwhelming odds were that he would once again fail to reach the top.
"Why do you keep throwing yourself at this?" Collins asked. "All it does is give you failure upon failure. Why go back?"
"Because success is not the primary point," Caldwell said. "I go back because the climb is making me better. It is making me stronger. I am not failing; I am growing."
In fact, Caldwell viewed failure as an essential part of his search for the outer reaches of his capabilities as a climber. "To find your limit and experience the most growth, you have to go on a journey of cumulative failure," Caldwell said. "Even if I never succeed in free climbing the Dawn Wall, it will make me so much stronger, and so much better, that most other climbs will seem easy by comparison."
Caldwell asked how the cadets viewed the tension between growth and success. It was a very good question, Collins realized, given how prominently failure figured in the West Point regime. But there was another element that couldn't be overlooked or taken for granted--namely, a commitment to service. Everything the cadets did grew out of their desire to serve. Why else, after all, would college-age students choose West Point over a civilian university where the demands were fewer, the discipline almost nonexistent, and the opportunity for fun and games infinitely more available?
As the plane descended into Newark's airport, Collins took out a piece of paper and drew a triangle. One point he labeled success, another growth, and the third service. Those three corners of the triangle, he sensed, held an answer to the paradox he had observed in the culture of West Point.
They arrived at the Academy that afternoon. Over the next two days, they spent time with the cadets in the West Point climbing gym and the IOCT gym, alternating workouts with leadership discussions. Collins would present a scenario based on one of Caldwell's adventures, such as the time he and three other climbers were captured and held hostage by Islamic militants in Kyrgyzstan. The cadets would then ask questions and talk about how they would have responded.
Through it all, Collins listened with the triangle in mind. He realized that, on one level, it was about motivation and finding "a balanced approach to life and leadership," as he later put it. Success was the obvious one. Everybody likes to win, and the thrill of victory is a heady reward in itself. But people who become the best at what they do are never content with success. Like Caldwell, they have a deep craving to get better and better, which often means repeatedly failing, although--like Caldwell--they don't necessarily experience it as failure.
It was on the point of service that the West Point cadets had really opened Collins's eyes. "I've never been in an environment with so strong an ethos of service running through it," he says. "This is not like doing volunteer work on a Saturday. It's a big signature, a big step up, and it could cost them their lives someday, which they're all well aware of. But they've made that choice."
It's easy to see the success-growth-service triangle as a kind of self-help tool, a framework in which to address the highly personal question of creating a sense of completeness and meaning in life. As Collins says, "It is very difficult to have a great life unless it is a meaningful life. And it is very difficult to have a meaningful life without meaningful work, or to have meaningful work without all three legs of the triangle. The cadets in my seminars have been some of the happiest, most engaged, and most purposeful young men and women I've ever met. I believe it's because they've begun to live the triangle early."
But Collins, of course, is best known for pondering the secrets of organizational, not personal, success. So what do these West Point revelations mean for company leaders whose shelves are lined with Collins's books?
He sees a number of useful lessons. First, "If you want to build a culture of engaged leaders and a great place to work," he says, "you need to spend time thinking about three things."
• Service to "a cause or purpose we are passionately dedicated to and are willing to suffer and sacrifice for."
• Challenge and growth, or, "What huge and audacious challenges should we give people that will push them hard and make them grow?"
• Communal success, or, "What can we do to reinforce the idea that we succeed only by helping each other?"
Collins says he has observed these principles in action in a number of companies he has studied, at least during their best years-;including IBM, Apple, Johnson & Johnson, Southwest Airlines, and Federal Express.
His time at West Point has also given Collins a new appreciation for some aspects of leadership that he had not previously thought much about. The first has to do with frontline, or unit-level, leadership. "I have come to see how important it is," he says. "We tend to think that what matters is having outstanding leadership at the senior level. But great leadership at the top doesn't amount to much if you don't have exceptional leadership at the unit level. That's where great things get done."
He has also realized that great leadership comes in two forms. One form Collins describes as being the right tool in the toolbox at a particular moment in history: "The world needs a Phillips-head screwdriver, and you are a Phillips-head screwdriver. You can get exceptional results, but they tend to be less durable because when the world needs a socket wrench, you're not one." The other type of great leader adapts and grows as demands change: "When Steve Jobs got booted from Apple, a lot of people thought he was a tool in a toolbox. They were wrong."
Third, leaders need to know when to become followers, and followers need to know when to become leaders. "The ability to toggle between leading and following is critical," he says, "because circumstances change."
Ultimately, Collins says, he comes away believing more strongly than ever in the urgent need to learn how to develop great leaders. "I'm convinced that every major problem we face as a country is a leadership problem," he says. "Whether it's short-term thinking in business or a problem with government performance, every problem requires superb leadership to solve."
He tells the story of a cadet who approached him after the Return on Luck seminar. "Sir, we've been talking about Return on Luck in the context of success," the cadet said. "But I see luck differently. The greatest form of luck, at least for me, is the opportunity to be of service and to help others. When you're presented with the opportunity to improve someone else's life, to help them go through a particularly difficult challenge, to engage with great comrades and achieve a noble mission-;what could be luckier?"
A discussion on Quora debates the optimal age for starting a company--and it's not 25.
When should you start a company? It's an ongoing debate with two pretty clear sides: the wisdom of age versus the prime of our lives.
In a recent thread on Quora, the question attracted a lot of attention, thanks to some big names who jumped to respond.
It all started late in August when an anonymous user asked:
What do people in Silicon Valley plan to do once they hit 35 and are officially over the hill? Since life in Silicon Valley ends at 35 unless you hit it big or move up in management (and simple logic tells you that most won't), I'm curious what people younger than this think they'll be doing at that age.
Since then, the thread has only grown, mainly with comments from programmers over 35 who found success. Among them were Wikipedia's Jimmy Wales, TechCrunch's Michael Arrington, Netflix's Reed Hastings, Craigslist's Craig Newmark, and Zipcar's Robin Chase.
Those entrepreneurs were 35, 35, 37, 42, and 42, respectively, when they founded those companies, not surprising since the Kaufman Foundation found the "average and median age of U.S.-born tech founders was 39," and "twice as many were older than 50 as were younger than 25."
Meanwhile, 24- to 35-year-olds have only become more risk-adverse with time, according to an American Express survey, which found 16 percent started businesses right out of school, a 12 percent drop from 2007.
Perhaps that's why a suggestion from Wales, now 47, seemed so on point. "A better question might be," he wrote on Quora, "How can we in the tech community make sure that unusual success at a very early age is not mistakenly thought to be the norm?"
After all, age is only a number.
When it comes to building brands, consumer hardware start-ups have a lot to learn.
For a long time at Contour we believed that if we built the best product it would sell itself. Instead, we lost to a competitor whose brand experience resonated with millions of customers.
The recent flood of new consumer hardware start-ups is fantastic, but also a humbling reminder of how hard it is to build a brand, especially one that stands out.
What I've found is that many of these start-ups try to play up their features but not their experience. That may lure a few customers initially on Kickstarter, but when it's time to connect with thousands of customers, those start-ups tend to get stuck.
Branding is generally difficult for hardware entrepreneurs for three reasons. First, engineering founders love technology, so they fall in the trap of believing that features and specs will win the game. Second, defining a brand customers can fall in love with isn't taught in the lean start-up world or understood by most investors. Lastly, these entrepreneurs haven't started with a niche segment of the market, which makes targeted marketing difficult.
Hardware start-ups could learn a lot about brand building from "lifestyle companies" or traditional consumer products such as Rapha, Method, and Nixon. If you want to move from thousands to millions of customers like they have, here are three things you'll need to improve on.
Sell what you believe.
The Simon Sinek quote, "People don't buy what you do, they buy why you do it" is especially true of hardware.
Although tech reviews and comments from early adopters would have you think otherwise, the reality is most consumers are too busy to care about specs. All they want to know about is why they need your product, how they can use it, and if it's worth the money.
It's a lot harder to sell what you believe in versus what you do, because if people don't agree with what you do, then it's no big deal. But if people don't believe in what you believe in, that can be soul-wrenching.
If you have the guts to start selling what you believe in, customers who share your perspective will join in the cause. Not everyone will follow, but if you can inspire thousands of customers to tell the world how amazing you are, you'll have a chance to build something memorable.
Look no further than Apple, Boxee, and Instagram for inspiration. They had loyal customers from the beginning.
Be the brand of choice.
If your category is massive like smartphones, you don't have to sell the most units, but you do have to drive the most profits. Profits are a requirement if you want to compete long-term, because without them you can't continue to innovate or increase brand awareness--just look at Apple.
In his book, Eating the Big Fish, Adam Morgan explains this concept better than anyone, as he demonstrates how being Number 1 in the market provides disproportionate advantages to companies in terms of awareness, revenue, and profits. "It is not just that Brand Leaders are bigger and enjoy proportionately greater benefits," he writes. "The evidence we are going to consider suggests that the superiority of their advantage increases almost exponentially the larger they get."
One example of how this plays out are activity trackers, a maturing category. Fitbit, Nike, and Jawbone are all duking it out, and all in distinctive ways. Fitbit gets rave reviews, thanks to its focus on everyday people, while Nike, one of the best brands in the world, tries to inspire the athlete in all of us. Jawbone's focus, meanwhile, is design and stylish urbanites.
Smartwatches are another category where branding is key. Pebble smartwatch is still in its early stages of category development, but while the company started out strong, it must remain the people's choice if it wants to rise above the money being thrown at the new category by traditional consumer electronic (CE) companies. If Pebble can keep selling what it believes while delivering on its promise, it might stand a chance.
Smartlocks, on the other hand, are even earlier in their category development, though they have the same challenge. Lockitron, August, and Kevo promise security and simplicity, but none of these start-ups have begun shipping products and only one can be the brand of choice.
At the end of the day, consumers will ask, "Which one of these should I buy?" and if your brand doesn't come out of their mouth, you'll lose. No matter how crowded the category is in the beginning, you have to become the brand that everyone picks. Your story, your product, and your value will make customers choose your product over the others.
Branding comes first. Distribution comes second.
A lot of start-ups get this one wrong--I know I did at Contour.
The lure of selling in a megastore was so strong, we started preparing for distribution before we even had a product to sell. We wound up spending our limited resources on product and distribution, leaving nothing to become the brand of choice.
Our competition took the opposite approach. By selling almost 50% of their product consumer direct, their high margins allowed them to pump significantly more back into marketing. Their ability to reach new customers continued to snowball, creating an umbrella of awareness we could never penetrate.
What a lot of hardware startups miscalculate is the real cost of reaching consumers through retail. On a $200 priced product you generally give away $60 (30 percent in margin) just to get in the store. Add on the additional costs for market development funds (MDF), returns, and customer support, and your real cost to reach a customer is closer to $75. You might as well give a customer $50 off the retail price and sell your product for $150 than walk into retail.
Distribution doesn't increase customer awareness. It only fulfills orders for the demand you've created.
As Pinterest begins to rolls out sponsored pins, here's how to cash in.
Last Thursday, Pinterest revealed its long-anticipated plan to generate revenue through sponsored or "promoted" pins, which it's rolling out gradually. Among other things, CEO and founder Ben Silberman promised that the pins, which promote select small businesses, will be tasteful, transparent, and relevant.
"If a consumer is searching for weddings, they might see a pin from a local shop advertising a deal on dresses, or a local photographer showcasing their wedding portfolio," explains social media expert Bradley Lautenbach, who is COO of Randi Zuckerberg's Zuckerberg Media.
As companies begin testing out the sponsored pins, Inc. tapped Lautenbach and Amber MacArthur, social media guru and author of Power Friending, for a refresher course on businesses can best market to Pinterest's 70 million active users.
Why should businesses care about Pinterest?
"Pinterest has already proven its ability to drive traffic and convert browsers into buyers," says Lautenbach. Pinterest is currently responsible for 41 percent of e-commerce traffic and drives more than twice as much e-commerce than Facebook does. "One reason for this is the simple fact that high-quality, visual content sells," says Lautenbach. "It’s highly engaging."
How can non-visual businesses rethink their strategy?
Get creative. "Pinterest can be a great place for non-visual businesses to promote their company cultures and recruit new hires by pinning photos of the office, behind-the-scenes events at headquarters, speakers that come to visit, fun offsites, etc.," says Lautenbach. "For example, financial businesses can pin visual infographics about the industry or offer tips and inspirational quotes on personal finance and investing."
Your photos "should be colorful, bright and interesting--things that people would want to share," says MacArthur. Just make sure they're authentic. "The Pinterest audience rewards authenticity and they will abandon brands whose pins start to look too promotional," Lautenbach says. "Attractive, compelling images are more likely to get repinned over those that obviously look like ads."
Which businesses shouldn't use Pinterest?
That depends on your customers, says Lautenbach. An overwhelming majority of Pinterest's users are female--about 70 percent. "If a business's goal is to target men," he says, "then Pinterest may not be the first platform to turn to."
What are some ways to track user engagement?
MacArthur recommends following a schedule, say posting a few times a day, and committing to a long-term strategy, because a following won't appear overnight. "It's a numbers game in terms of how often your items are pinned," she says. "For a lot of companies it's going to come down to having a simple spreadsheet and trying to study those successful images, then trying to do more of the same."
After a patent battle between makers of a C-clasp that lets kids connect loops of rubber brands to loom bracelets was described in the Wall Street Journal recently, I was again reminded of the big decision inventors have to make about applying for patent protection.
The founder of Rainbow Loom, a rubber-band jewelry-making kit that’s a hit with the under-12 set, recently sued Zenacon LLC for copyright infringement regarding its clasp system. (It’s crucial to successful rubber-band bracelet crafting because the clasp connects the bands after they’ve been woven together with a loom.)
Rainbow Loom's creator, Cheong Choon Ng, says he sued because Zenacom’s FunLoom clasp works the same way as Rainbow Loom’s clasp.
When do you patent your product?
In our era of 3-D design and printing, affordable manufacturing, and e-commerce, patent infringement is both a legal issue and one of perception. It's fast and easy to tweak an existing design thanks to 3-D printers. Mass production is more accessible thanks to lower manufacturing costs. And e-commerce makes selling products less time- and money-intensive than before.
So should you patent your invention or not? It really depends. I’ve never patented anything because most of the products I create are in the food and health and beauty aid categories, and they are much too easy to copy. I’m always more concerned with creating a recognizable brand and message--these are things that can’t be patented but which also can’t be easily copied.
For most inventors, it’s better to put money and energy in creating such a brand rather than putting it into patenting every product and then investing energy in legal battles to protect those patents.
Use your time and money to prep for the next trend.
In the case of Rainbow Loom, I predict that by the time the case winds its way through the entire legal process, the passion for looming bracelets out of rubber bands will be over. Trends, especially those popular among young people, tend to be short lived. It would be money better spent if Rainbow Loom built its brand into something distinctive and recognizable, and created a variety of products that would always be consumers' first choice despite the competition.
Retailers have said they don’t really care about the brands when it comes to stocking rubber band looms and clasps--they just want in on the trend. However, they would care if there were a brand strong enough that kids were interested in it to the exclusion of all others. Since Rainbow Loom hasn’t focused on creating such a message in the marketplace, their product is not discernable in the eyes of consumers or retailers.
When do you pursue patent protection?
There are exceptions to this, of course--cases in which a utility patent is decidedly worth pursuing. The pharmaceutical industry, for example, spends a great deal of money on drug R&D, so patent protection for a period of time is critical for the company's ability to recoup its investment and make a profit. Most, but not all, consumer products do not fall within this category, however.
Todd Greene, the inventor of the HeadBlade, a specialized shaving implement specifically designed to shave heads at the perfect angle, is one such case. The HeadBlade works like a vehicle and "drives" across the head in a smooth motion--it even looks a bit like an ATV or a jet ski.
Greene has a utility patent for the HeadBlade, which was first sold online. It's now sold at the retail level. Because its mechanism and design (it's in the permanent collection of New York's Museum of Modern Art) is part and parcel of the HeadBlade brand, a patent to protect the look and the mechanics of the product is important. However, something like a simple C-clasp doesn’t fit the criteria that HeadBlade meets.
When considering whether to patent an invention or product, ask yourself if the product itself is the brand or if the product is part of the message of a larger brand. If the answer is the latter, then you’re better off putting your resources into creating a brand people ask for by name.
An entrepreneur shares some tips for securing your brand.
It happens all the time. An entrepreneur starts a business, with the perfect name, brand, and domain.
They set up a fan page on Facebook. Then they organize the entity, pouring time and resources into the project.
And then, the unthinkable happens.
A cease and desist letter arrives in the mailbox, demanding they stop what they're doing. The letter claims that they're infringing on the other company's trademark. What can they do?
Fortunately, there's a way to make sure your next brand doesn't become mired in an intellectual property dispute. Here's how to make sure the brand's available long before you start building a business:
Do your homework.
Always conduct a trademark clearance search before you start using a brand name. A well-researched report will identify any potential other brands your proposed brand might conflict with.
Hire a professional.
Hand-in-hand with the search, have a skilled trademark professional interpret the results. Too many times entrepreneurs rush a product to market believing their brand's in the clear when it's not.
File for protection.
Once you've completed the first two steps, you should immediately file to protect your brand with the U.S. Patent and Trademark Office. Even if you're not using the brand, an intent-to-use application will secure your rights the day that it's filed.
If the recent crackdown on fake reviews isn't convincing enough, read on to find out why buying a good reputation is never the answer.
On Monday, New York’s attorney general announced a crackdown on 19 companies that wrote fake online reviews for themselves or their clients.
I’m glad the attorney general took decisive action on behalf of consumers--but I’m dismayed that it was even necessary. These companies should know better.
Here’s how wise business owners and operators pursue their reviews and digital reputations:
Real reviews by real customers are the only ones that matter.
The review ecosystem is valuable to consumers because it relies on you and me to give others like us helpful insight on thousands of different businesses. The system works because we trust that what we’re reading is from real people. But when false reviews are prevalent, they poison this great ecosystem, eroding trust, making it less likely we’ll want to read or write reviews. That’s a shame because reviews don’t just help consumers--they help businesses, too.
Good businesses get this. They know they can identify what’s working and what’s not working from review content. They understand that they’ll see emerging trends, enabling quick course correction, or be able to pinpoint the practices that are working well--all on the basis of strong feedback. And they know that if they’re doing good things for their customers, genuinely positive reviews will spur additional welcome growth.
It's OK to ask for reviews.
Smart businesses know the importance of reviews. They know consumers are actively relying on them to make purchasing decisions. In fact, four out of five consumers have changed their minds about a product or service based on negative online information. And if a company has been in business for more than a couple of years--especially with repeat customers--they are doing something right. But in many industries, reviews don’t happen organically or at the large volume required for a credible review rating. That’s why it’s more than smart --it is crucial--for businesses to invite their customers to review them.
When you get reviews, pay close attention to them.
Smart businesses look at reviews from different platforms. They know that multiple review sites are pertinent to them--but some may be especially useful--and they act accordingly. These companies also know that it’s not enough to monitor just a parent location. If multiple locations exist, they all must be regularly managed. And review sites also offer critical intelligence about competitors. Understanding what people do and don’t like about a competitor--in their own words--helps these businesses develop more effective strategies to triumph in the market.
It's never OK to pay for reviews in any way.
More reviews from real customers translate into a review profile that is more accurate and trustworthy. It’s legitimate for businesses to ask their customers for feedback online--as long as it’s done in the right way. They should not incentivize customers to leave feedback; coupons, free products or services are to be discouraged. Offering customers money for a review or paying someone else to write reviews is the wrong path.
Some blue-chip companies have a long history of paying for surveys. In my opinion, even that is generally to be discouraged. The right way to get reviews is simply to make it as easy as possible to get feedback without resorting to incentives. Instead, good businesses explain to customers why online feedback matters so much. They ask clients to share their honest experiences on the review sites that matter most to the company.
All businesses should be governed by ethics, a framework that helps them carefully navigate tricky waters and make good decisions. If they choose to use the services of an online reputation management company, they work with one that adheres to strict and clearly articulated ethical guidelines. They’ll interview these companies carefully and ask tough questions to make sure their selection is correct. They’ll ask if the online reputation management company has formal ethical guidelines and what they are, if they engage in astroturfing and other deceptive practices, if they have rules on which customers they’ll serve.
My own company has a manifesto on these topics, and we make training on best practices a central part of employee onboarding. Our sales team, for instance, understands they are absolutely prohibited from offering to create reviews but we go even further: we instruct them to make sure it’s never even implied to the customer, to specifically go out of the way to explain that this is not who we are or what we do.
Empowering employees is just smart business.
What’s a bad sign? When a company says it will do “whatever it takes” to get results. If you’re a great business, you know that a no-limits, “whatever it takes” approach usually leads to choices that ultimately damage you. Engineering fake reviews falls squarely within that category. Conversely, a good company gets that a short-term gain is a long-term loss when achieved via questionable means. Instead, it reinforces its ethical guidelines and operating standards regularly with employees, particularly in departments with high turnover and, consequently, new faces. We’ve also developed technology that helps our customers discover when fake reviews--both positive and negative--appear to be showing up in their ecosystem. That’s important because sometimes a company’s own employees will attempt to game the system. It's your job to understand how and why it’s happening.
Ultimately, fake reviews serve neither the consumer nor the business--the very definition of a lose-lose situation.
They're the most driven, creative, and successful people at work--and they're just waiting to transform your business. Here's how to spot them.
"Intrapreneurs" are workers with innovative ideas and the ability to act on them quickly.
Vijay Govindarajan, professor at the Tuck School of Business at Dartmouth College, and Jatin Desai, CEO of The Desai Group, write in the Harvard Business Review about how to spot them so you can put them to use and foster a start-up environment at your company.
Here's what helps them succeed:
Money isn't what drives them.
"The primary motivation for intrapreneurs is influence with freedom," Govindarajan and Desai write. "They want to be rewarded fairly, but money is not the starting point for them."
They spot trends before everyone.
"[Intrapreneurs] are not sitting around waiting for the world to change; they're figuring out which part of the world is about to change, and they will arrive just in time to leverage their new insights," say the authors.
They "greenhouse" ideas.
Intrapreneurs never share their ideas until they're airtight. Good ideas are disruptive, but intrapreneurs know the value of testing (and re-testing) to ensure that idea clicks. "They do not act impulsively on a solution immediately, keenly aware of the need to honor the discovery phase for the new solution, giving it time to develop and crystallize," say the authors.
They know how to pivot.
Smart entrepreneurs know when to shift their business strategy from something that isn't working and intrapreneurs are no different. "Steve Jobs pivoted Apple from being an education and hobby computer company to a consumer electronics company," note the authors. "Wipro of India pivoted from being a small vegetable oil manufacturer to a software outsourcing powerhouse. CEO Tony Hsieh of Zappos pivoted from selling only shoes to becoming an online customer experience company." Look for the same in your workers.
The Gilt founder explains how he evaluates business opportunities. Hint: It doesn't involve a spreadsheet.
Since Kevin Ryan stepped down as chief executive of flash-sale site Gilt Groupe late last year (he's still chairman), he has been spending a big chunk of his time coming up with new business ideas he'd like to launch.
As a serial Internet entrepreneur--Ryan also founded Business Insider, which now has 26 million monthly uniques, and earlier built DoubleClick from a 20-person Internet start-up to 1,500 employees--he remains focused on online businesses, though he's agnostic to whether they're consumer-facing or business-facing. Among his particular areas of interest: health care and security.
How does Ryan come up with new ideas, and decide one is worth building into a business? At the Inc. Women's Summit in New York yesterday, Ryan explained he seeks to identify a very basic problem or "pain point" to fix.
Put simply, he said: "If anything online takes you more than two minutes, you should be thinking, 'Is there a better way to do this?' It shouldn't take two minutes."
A Track Record of Business Ideation
Indeed, the problem-to-fix method is how Ryan came up with the idea for Gilt, the flash-sale site he grew to more than seven million members and $600 million in revenue.
Several years ago, he was walking near his home on 18th street in Manhattan at 5PM on a weekday afternoon, when he spotted 200 women waiting in line. When he asked one what she was waiting for, she replied: "It's a sample sale!"
Ryan immediately recognized a worthwhile problem that could be solved. As it was, a lot of people were so deeply passionate about the sample sale, they would wait in line, despite the inconvenience. What if it were easier for them? "That was 200 people," Ryan thought, at the time. "Other people could be stuck at a conference, or live in Kansas or Westchester, so maybe there's 100,000 people who would like to be in this line but couldn't."
This problem-to-fix method is also how six years ago Ryan came up with the need for MongoDB, an open-source document database that now has 100,000 business customers and 200 employees, and a valuation higher than $1 billion (higher than Gilt's).
Ryan saw that a rudimentary document storage database was always the choke point for online businesses. Businesses today use the same database they used 25 years ago. "Any time I see something like that I think, 'Is that really the best we can do? Sometimes the answer is, 'No, there's a better way of doing it'."
You can easily see other examples of how this business idea generation process can work elsewhere, too, Ryan said. For instance, driving to the Hamptons, you could imagine avoiding a traffic jam if the people three cars ahead of you had just told you about it. That's the basis for Waze, which sold last month to Google for $1 billion. (Ryan had nothing to do with it.) "It's not that hard," Ryan said. "They solved a very simple problem."
Or an on-order car service. "I used an Uber car to come here," Ryan said. "That's yet another I didn't think of and it just raised money at a $3.5 billion valuation."
Your Turn: Think Big
Don't fall into the trap of creating such a specific idea that it can't replicate and scale. "Start as narrow as you can, and have an opportunity to lay the groundwork for something bigger," Ryan said.
A social network for left-handed Albanians, say, is not going to be big enough that it matters, Ryan joked. When he launched Gilt, he was determined to pick a name and design that was gender-neutral, so he could easily roll it out to men's shopping when the time came. Rue La La, another members online shopping site on the other hand Ryan pointed out, started with a feminine name and color scheme, making it harder to segue into other segments.
Ryan had a similar roll-out approach for Business Insider. He started very focused on two journalists covering technology in New York, and was able to then expand to technology nationwide, and then to business, finance, and Wall Street.
Value Your Time: Cut Bait After a Year or Two
If you're pursuing an idea and it doesn't work within the first year or two, "you have to just suck it up and say, 'This idea didn't work,'" Ryan said. "Either make a radical shift, or shut it down, or sell it and get out."
This was the case for Ryan with ShopWiki, a shopping search engine he started in 2005. "It wasn't viral. It wasn't growing. Advertising wouldn't have helped." So he got out.
You don't want to get stuck on a dead-end project for four years. "Your time is very valuable," Ryan added.
Freshii founder Matthew Corrin describes why it's necessary to innovate as he scales his food chain, and how he does it.
00:11 Matthew Corrin: Idea generation within our business, we're a franchise organization, company-owned and franchise stores. And we loved the concept of the Filet-O-Fish, and the Big Mac, and the $5 Footlong, all being created by franchisees. And so, we want our franchise partners to be very collaborative in innovation, whether it's menu or beyond. We've had some very clear examples. Quinoa [00:35] ____ to our menu, right? Didn't exist before a franchisee came to us and said, "I'd like to test this", and he did, and now it's across to the entire system. And I can go through a few things that are like that example.
00:48 Corrin: So, we really look to our franchise partners who are sophisticated, well-connected, creative, entrepreneurial in their own regard, to collaborate together and to add significant value to the system at large. You want to, you wanna innovate. For any bricks and mortar business, you can't just scale. And franchising allows for you to really have rapid scale. We'll double our store count in 2013 and we would never have been able to do that through company stores-only, only growth. But if you just scale and don't innovate at the same time, I think you, you sort of... You're in trouble, because there's too much interesting competition going on around us. And if you just innovate and don't scale, then you don't get the benefit from the economies of scale, which especially as a food business where we get to purchase our produce for better pricing and get a consolidation in an economy of scale for buying really, buying power, which lowers costs and improves our margins.
01:45 Corrin: And so, we really have to think about both. But the other thing that's very important is franchising is all about consistency. And so, we need our franchise locations, all of our locations, staying very consistent, whether it's Chicago, or Dubai, or Vienna, or Stockholm. And so, we have a very systematic approach to how we test and how we introduce new products to our menu. And it's not... We don't allow just rolling it out and finding about it when we send our secret shoppers in or when I tour to a store. But we're also very receptive to the fact that actually we brought on some really great entrepreneurial creative partners, and so we... I'm very interested in having a phone call on my cell on a Saturday to talk about something that they saw, that they think is interesting, and they'd love to test. And we're all about supporting that idea.
After striking out with a number of investors early on, Lawson took a page from Steve Jobs.
After I founded Twilio in late 2007, I started pitching our product--software that lets you make voice and text calls online--to investors. I heard no from many of them, but one guy sticks in my head.
He half-listened to what I was saying and then said, “Sounds like you’ve got a nice lifestyle business here. Certainly nothing big enough to be venture funded.” I was thinking, We’re trying to reinvent a $2 trillion industry. How is that not big enough?
What I had in my head was not translating into words. During pitches, I jumped right into use cases, and I’d wind up arguing with investors about whether dentists needed my service.
So I sat down and I watched a bunch of Steve Jobs keynotes. I studied how he set the stage, describing the state of the world as you know it, and why it sucks. And then, boom--he gives you the answer to a problem you didn’t know you had until five minutes ago.
I started using the same approach to pitch Twilio, explaining how we built the product back when I was at StubHub and needed a way for buyers to talk to sellers online, how I heard the same complaint from other developers, and how any industry could use a way to communicate with customers online.
Finally, I explained how Twilio fills that hole.
I’ve raised $110 million so far, and I believe it is because of how I set the stage. The point isn’t how our product works. What matters is what it can do. That story arc makes a huge difference.
Businesses across the country are worried they're going to be forced to insure their workers. But the real problem has nothing to do with healthcare.
Here's a story about restaurants and Obamacare, only it's not about restaurants and not about health insurance. It's ultimately about something facing every business owner: the need to raise prices--and what happens when you feel like you can't charge enough cover the costs of doing business.
Restaurant owners are reportedly negative toward the Affordable Care Act, the official name of the legislation commonly referred to as Obamacare. The problem they see is the 30-hour rule that says employees working 30 hours or more in a company with at least 50 employees are covered by the health care mandate, as Bloomberg Businessweek reports:
Restaurant owners face two choices: If their businesses are profitable, they could dig into margins to cover the cost of insuring additional workers, thus curbing growth; or the owners could simply cut workers' hours to stay away from the 30-hour threshold as much as possible. Some 16 percent of restaurant workers are at risk of reduced hours, according to estimates from the University of California at Berkeley's Center for Labor Research and Education.
What's a Business to Do?
Some chains like Firehouse Subs don't plan to cut hours, but expect that the financial impact will slow expansion beyond the current 660 franchised and company-owned restaurants. Others like Papa John's took heat for its CEO John Schnatter saying that it might add 14 cents to the costs of pizzas and that some franchise owners might cut hours to keep more people below the 30-hour limit. Schnatter claims that his words were taken out of the context of saying that 100 percent healthcare coverage was "good news." Even if he didn't add that part, he only voiced what many were thinking.
Here's where things move beyond restaurants and health insurance. Many companies run into conditions and events that translate into greater expenses. And many CEOs and owners are very concerned about raising prices.
On the surface, it's not hard to see why. The economy is still stumbling along and the real annual household income adjusted for inflation has been at best stagnant for decades now. (In some areas, like fast food, already low wages have been decreasing, when adjusted for inflation, since at least 2009.) Competition is fierce and globalization brings more of it. Big distributors demand ever lower prices.
And yet, you can't run a business from a position of fear. Be informed by fear, sure. But when you become paralyzed and can't take steps that you must, like raising prices when necessary, your company is in deep trouble. You cut hours or pay or benefits to workers, which makes them more likely to leave or to work in complete dissatisfaction and resentment. You skimp on ingredients or components. Maybe you start nickel-and-diming customers, adding in extra fees or cutting back on what you deliver.
These are tactics to undermine the long-term success of a business. If you deliver real value to customers, they'll understand and recognize that they can't get something for nothing. If you don't, then taking shortcuts won't ultimately help.
Inventor Stephen Wolfram responds to the turbulence and fuss that he instigated when he published his book, A New Kind of Science.