How to get investors interested
While watching the BBC television show the Dragons Den, quite often the ‘Dragons’ laugh at a business concept they are presented with and think it is ridiculous.
Here’s the one thing that makes them eat their words every time:
Sales figures. Revenue, Customers, Repeat orders.
It’s only then they change their view from ‘not interested‘, to ‘I’m listening‘.
If you ever want to get investors interested, go see them once you’ve got sales. When you have revenue coming in it puts the kibosh on negative opinions. In addition, it increases value of your business and reduces the percentage you’d have to give away for a cash investment.
Come work with us – rentoid.com HQ
We need 6 cool, creative, awesome, caring, rad, personable, environmentally conscious, nerdy, opinionated, courageous, funny, intelligent, political, financially sound people to come and share the new rentoid HQ office with us.
It is the coolest place in the world to work – and suits people who live in Melbourne and or have private helicopters to fly from their location to (Sorry we don’t have a helipad) – but we do have the coolest digs, in Melbourne Coolest inner city suburb (Yarraville) which includes super terrific office benefits including, but not limited to the following:
- Free pizza and Beers on Friday night
- Cone of silence meeting room
- Quite space & library
- Wifi & all your tech needs
- Cole cafes & restaurants on our door step
- Sleeper pods
- Access to our brains…
The cost if $150 a person for a long term commitment. Can’t beat it.
Send me a tweet here if you’re interested – Can’t imagine the space being available for long.
Spoof advertising – Campbells
If you’re from Australia and older than 30 you’ll remember these old school macho advertisements from Solo ‘The thirst crusher’. They we’re the equivalent of ‘extreme sports’ in the 80’s which is pretty hilarious as is the solo man idea. If your not over 20 and from Australia; watch them and keep reading:
And Campbells the soup company have recently aired a spoof version of the solo ads, which I’ll admit I’m a sucker for – in pure entertainment terms, I love it. A great version which has a reasonable link to their product – a retro can of chunky food.
Only problem, is that advertising isn’t film making, and I’m not rushing out to buy crappy canned food any time soon. Sorry Campbells, nice try, but no increase in sales is coming your way, even if some kind of advertising award does.
Startups out there – when advertising be original, it’s about selling, not comedy.
Creativity wins
No doubt all my savvy readers remember the Wicked Sick BMX as was sold on Ebay. Turns out it was a project designed by a couple of creatives at the Advertising Agency George Patterson Y&R. And all I can say is kudos.
Sure creativity takes courage,takes clients and businesses that ‘get it’ and when well executed, creativity wins. The added bonus of creativity is that usually comes at no extra cost.
Free – is not a business model
Firstly – I’ll start by saying I think Chris Anderson is an incredibly clever guy. I thought his book ‘The Long Tail’ was and is the future of business. But when it come to ‘free’ he has got it wrong this time. As has Seth Godin and all the other ‘free’ converts.
As Malcolm Gladwell correctly points out, they are forgetting many of the fundamentals in business, by getting caught up in the stale newspaper argument, which in the new digital economy, is the easy and soft target of who will disappear. The irony of this ‘newspaper’ argument is certainly lost in the broader economy. The non digital economies are a lot bigger than newspapers and other beleaguered digital industries.
So why is it that ‘Free’ is not a business model. Quite simply, any business without a revenue generation model wont exist over time. We only need look at the the dot com bust of the late 1990’s to see this reality. It’s also much too easy to get caught up in the success of Google and others which ’started free’ to build demand. But many of the subsequent ‘Free’ offers like Youtube, Facebook, Myspace, Flickr may have been successful for the owners, only because they sold to a business with a large chequebook – not because the business itself was financially successful. The Google business model is not too dissimilar to that of Network TV – generate eyeballs, sell advertising….. Nothing new here.
The real question in the so called ‘Freeconomy’ is how many businesses can be supported by the advertising sales model? So why the idea of ‘Free’ is being touted as new is beyond us here at Startupblog.
Here’s what ‘Free’ really is – it’s part of the marketing mix. It’s the 4th P – Promotion. It always has been and always will be. Anything a company gives away for free is a promotional tool to sell something. If these businesses who use the so called ‘free model’ fail to sell something there are only two options for them as time passes:
- Go broke & run out of cash
- Get bought by large company who values what they have created, albeit ‘non-financial’
Whether it be Proctor & Gamble, giving free shampoo in letter boxes in 1957 or Google giving free search and maps in 2009. It’s part of the mix to attract potential customers, who will be converted into on going revenue. It isn’t free. Free is not a business model, moreover it’s sampling & promotion for associated revenue generating activities. So to call it the future of business as ‘free’ is absolute folly.
Sure Anderson can argue that digital stuff is becoming so cheap it may as well be free – as per the transistor example he uses. But the thing that really costs money is building demand and infrastructure – the kind of stuff that’s really expensive. The other point to consider is the example of some things which previously cost money (a newspaper) is now available free on line, doesn’t mean everything is heading down the free path. Rather it means that certain industries are dying – not that ‘paying’ will be a thing of the past. In fact there are just as many examples of items which were once free, consumers are now being charged for Education, Toll roads, Water, Seeds.
The advice I’m giving here is simple.
No business can survive without revenue. Free, isn’t free, but a promotional expense, the 4th P. If your industry is getting flooded with free – it’s on it’s deathbed – look elsewhere. Industries die all the time when the revenue dries up just like those trying to cope with the current digital conversion. Don’t assume you can build something awesome and give it away with the ability to sell it (the business) or something associated later – chances are you’ll run out of money before that.
The future of business isn’t Free, and the idea isn’t new, it’s part of a complex marketing mix. And if you want to own a startup to thrive, my advice is simple. Have a price which isn’t all zeros.
Deus Ex Machina
I had the pleasure the other day while in Sydney to be taken to the Deus Ex Machina workshop. For the uninitiated Deus (as the in crowd call them) are re-built old motorbikes – think big 400cc 1970’s Japanese motorcycles, which are re-built with the greatest retro feel ever and style which is all it’s own. Apparently one of the owners is an Ex Mambo founder and you can see that they certainly have a flair for design and all things super cool. As the pics below show – these guys really understand ‘Theatre at Transaction’.
In summary it’s a great ‘Re’ business. A ‘Re’ business is where we take something old / second hand and make it full of awesome. My words – can’t do Deus ex Machina justice. So maybe this photo journal below can – enjoy!
This last one is my personal favourite – I can see myself buying this Deus and strapping my Surfboard in the surfboard carrier and cruising down the Great Ocean Road searching for a few secret tube rides.
Path to startup success
As published in Australian Anthill this week.
I was thinking about business and at what point it becomes possible to believe you have a good chance of winning. I came to the conclusion that four elements pave the way to start-up success.
The four elements are:
- Your concept has been validated in market.
- You know what to do.
- You know how to do it.
- You are actually doing it – right now.
If you work through these four elements, then success is inevitable. Of course, all of these elements need some explaining.
1. Your concept has been validated in market
Firstly, let’s look at the last two words in this sentence – in market. This means you have launched, you are live, and you have customers and revenue. We have gone beyond the idea (the easy part) and launched something, which makes the original business launch plan a historical and irrelevant document. Until this point, there is no proof that anyone actually cares about your idea; that anyone will buy your thing.
Concept validation – this occurs when people are buying what you sell, as well as any positive coverage you receive. Positive coverage includes people and media talking about what you are doing – not what technology you have used, or how you bootstrapped your business (which is not concept validation, but method validation), but talking about the benefits your business is providing customers and the problems you are solving. This coverage is about them, not you. At this point, you know the business has potential and isn’t a stupid whim.
2. You know what to do
You’ve been doing what you do – selling what you sell – long enough to know the crappy parts of your business. You know what you must improve to make your semi-broken yet still alive start-up better. You’ve worked out where the original model and plan was terribly wrong. You’ve also been around long enough to gather feedback from the market, which gives you a good indication of how to improve your ‘thing’. Until this point, innovation, location, good people and lots of saying sorry has kept you alive. But time has nearly run out, and you’ve learned what must be done to grow and eventually thrive.
3. You know how to do it
Not only do you understand the above conceptually, but you actually know how to make this stuff happen. You’ve gone beyond ideas for improvement, such as make the website more usable, reduce the price of the widget, create national brand awareness or increase distribution. Now you actually have an executable plan in place.
So what is an executable plan? An executable plan is a set of projects that are achievable with the immediate resources you have at your disposal, in a reasonable timeframe. Financial resources, human resources, organisational infrastructure – an executable plan that you can deliver to the market, not a pipedream of appearing on Oprah or getting funding from Sequoia Capital. You have the team with the skills to bring the improved offer to market. It may not require huge financial resources, it may involve more creative solutions, but you know you can do it.
4. You are actually doing it – right now
The plans have been put down as discussed in parts two and three. In fact, you won’t even need to look at them again. They are now ‘historical documents’. Instead, your team is fully engaged in implementing what you have agreed is the correct strategy. The steps to completing the projects are known. They are live projects the team is actively engaged in on a daily basis, which will fundamentally change the marketing mix of your business. The projects have budgets and deadlines and you will not rest until they have been completed. Only then will you need to go back to part two again, and work out what to do. Then go through the process again. In fact, this process never ends. In continues in perpetuity. The important thing is that you implement strategies before re-viewing them. There is nothing more counterproductive than constantly re-assessing what to do. The only way to know what works is to experiment and do it.
When we do this – we are on the path to success. This should perhaps be defined as: “Success = the progressive realisation of a worthwhile ideal.”
Direction evidence
Talking to my business partner today he made a simple statement:
‘Your task list and calendar should reflect your overall goals’
And it’s statement worth assessing in a methodical fashion. We should think about where we want to be in 5 years, and see if any of the tasks we are doing today are moving us closer to our goals. Our entire day doesn’t have to be filled with task that lead to achieving long term objectives, but there should be ‘direction evidence’. If there isn’t any directional evidence of where we and any business we are involved in wants to be – then quite simply, we need to review our task list and make sure things are aligned.
Consumer language & leadership
It’s one thing to be clear and succinct in our copy writing, and it’s another thing entirely to create language which means something to consumers. Language which paints a clear picture in the consumers minds that you can solve their problems. The best way to do it is to relate numbers to something we are all very familiar with…. ‘Join for the price of a coffee a week.’
In recent times some of the world leading websites have done this beautifully. Web businesses where scale matters to the end users, websites where this type of language can be the difference between a click out, and instant confidence.
Seek.com.au – A new job loaded every 30 seconds (Great this’ll have the job for me for sure…)
Elance.com – $201 million in provider earnings. (Wow, I will make money using this site…)
Flickr.com – 2744 uploads in the last minute (This is a safe place to store my photos…)
As soon as we read information like the examples presented above we know we are in the right spot. That we can do our business right there, right at that moment. And I know what you are thinking, this is the type of language that is limited to the successful few – not so, all it takes is a little bit of creativity to find some numbers which mean something….
We just need to work out what we are the most, best, biggest, quickest at, and there will be something. Maybe your site is the hyper local expert. Has more X from your city. The most members in Y community or the lowest click out rates for the industry? Even a micro website does something the best. And as soon as we work out what we are the ‘most’ at, we need to put it right there on the home page, no better yet, the top of every page on our website.
Startup steps – brief post
First step - Idea: easiest bit.
Second step – Plan: Not as important as you think. A single page summary will suffice, at least until we get to revenue.
Third step – Funding: Better to use your own money. If you can’t fund it go back to first step and get a new idea.
Fourth step – Build it: This will be harder than you thought. Think QDOS. Quick & dirty operating system. Just get a product out there. You can improve it later.
Firth Step – Sell it: This is the really hard part. Getting people to pay for your product or service. In an economy and where the latest buzz word is ‘free’ this is where you can see if you’ve got what it takes. If you can’t sell, get a job in a nice safe office. Selling is the vital final step for all entrepreneurs.
