The last industrial relic

You probably don’t know this but the office is a weird thing that only turned up when factories did. Sure Lawyers and accountants had them, but not in the corporate form they exist in today. The office was an addendum to where stuff got built. It was there by accident, it was there because the tools of the trade (office machinery) had not been democratized to the point where we could own and have them in our home. The strange thing is that, now we can work from home, the large majority of us still don’t. Not because we don’t want to, but mainly because large corporations lack trust.

Many of us would save time and money if they did not exist (both people & corporations)

I think it’s the last industrial relic. It needs to be radically changed, even the name office is wrong. It sounds ‘official’ and full of rules. Sure we do need to work together sometimes – but personally I’d rather do that in some kind of creative collaboration space.

If offices really add that much value, then why do startups never have them? It’s because entrepreneurs know they are expensive to run, out dated and redundant.

Jason Fried gives us his synopsis on this topic at a recent TED talk. Which I love – it’s 20 minutes worth investing:

The clock is back

The good people at Native pointed me to Made in the now which is an interesting web t-shirt company. They make and sell one limited edition t-shirt every 24 hours inspired by the news of the day. One thing they do is have a count down timer in the top right hand corner of their home page. A lot like we are seeing on group buying sites.

It’s an interesting way to add urgency to a store that is always open. A way to get people to act now, when they know they can usually come back whenever they choose. It’s not a new idea, the whole concept of a real estate auction isn’t to get the highest price, but to force a sale date. As the real estate agents only make their commission when the property sells. So bringing a sale forward is in the commercial interest of any business.

One could argue that forcing someone to buy is slightly unethical. But the flip side is that it gives us a way of finding out if we have our marketing mix right sooner than we normally would without have an expiration date.

The question for startups is what will our clock be?

4 reasons they will buy your startup

As far as I can tell their are 4 main reasons that a company will buy your startup. Particular in the web / tech fields:

1. Talent buy out
2. Technology buy out
3. User buy out
4. Revenue buy out

What’s interesting is that these buyouts happen in that order as well.

The reality is that it’s rare to be the focus of a talent buyout unless you and your team have an incredibly unique set of skills. The tech buy is less difficult and is the savior of many tech startups who have cool stuff with no revenue or customers. In fact, it’s rare enough that we should ignore it as a possibility.

The reality for you and me is that buy out 3 and 4 is where we are likely end up. So the question we must ask ourselves are these:

* If we are aiming for a user buyout, how long can we survive without revenue?

* If we are aiming for a revenue buyout, why don’t we just keep what we’ve built?

Our writing really matters

This guy put some effort into writing the words that appear on his website. The result of his writing is around 10,000 people shared it with their friends. Read it.

www.alittlebitofsomething.co.uk

The words we publish matter a lot.

My Google Plus Problem

Like most people I recently joined Google plus. I went in and set up my account. I was reasonably impressed and it looked quite cool. It had a couple of nice ideas, including the circles of friends concept of segmenting conversations. After I set up the account, it has been on my list of things to do. That is, to go into it, have a play around, get used to the system and better understand it.

A few weeks later I still haven’t done it.

The interesting thing is that during this time I have still engaged with the social networks I already use. Including this blog and my twitter account. Turns out I still have time for social networks, just not that one. The only reason I will use Google plus is because I need to know about it, not because I need it. The fact that I need to invest time to ‘learn how to navigate and use it’,  is also sub optimal.

If everyone ends up loving Google plus, I’m sure I’ll get on board. But my Google Plus problem is that currently I don’t have a social networking problem.

Revenue Compression

When chasing new business in startup land or any business for that matter, the time to revenue is more important than the amount or revenue.

It’s easy to believe that a big $500,000 project is better than a little $5000 project.  Maybe the big one takes a year. Maybe the small one takes a week or two.

I say the small projects rule! But before I choose, the questions I usually ask myself include:

• How long will it take to get the revenue?
• What is the potential for expensive mistakes?
• What is the probability that the project will go over the time estimate?
• Are we paid in time put in or final completion of said project?
• What level of resources need to go into pitching & winning the project?
• Will we get more smaller projects after successful completion of the first?

When we answer these we usually find that the $5000 project that takes a week is a far better option than the $500K project that takes a year. And the reason that they are better is that the revenue is compressed.

Innovation never ends

I happened upon this video (being a surfer and all) and was totally inspired by the product innovation. In real terms it is innovation at its core:

Problem – Solution.

They had to find and invent the technology to solve the problem. Rather than having some technology they were trying to find a use for. The video is worth watching, as the lesson is one any and everyone can take heed from.

It also reminds me that innovation will never end. Just when we thought the wetsuit solved all the problems it could (cold water / sunburn, wax rash) a human need takes it to the next level. Just like Bucky said: eventually we’ll be able to create everything from nothing.

Big props goes out to Billabong. If I was running Ripcurl, or a surfing startup, I’d be working on a wetsuit with an oxygen pouch!

The genius excuse

I’ve heard a lot of people call entrepreneurs ‘a genius‘. Usually when someone has achieved amazing success. The most recent call of ‘genius’ has been directed to Mark Zuckerberg – though some may refer to him as the evil genius. I to have been guilty of this affliction. I play the ‘genius card’, when I have envy over what someone else has achieved.

It’s a great card to play, because it infers luck. It infers that they have been born with unusual and exceptional skill. A lucky sperm! This genius birthright is then the result of their success. Not hard work, not embracing failure, not sleepless nights and hours down in the skunk works. The genius card in reality is our way of justifying our own lack of success, or more aptly – effort.

The challenge we must set ourselves is to stop using the genius excuse. Because we know deep down in our hearts, we are trying to marginalize others success so that we feel a little bit better about ourselves.

Richard Branson – Live

I’m going to a breakfast 7-9am with Richard Branson tomorrow – (Australian Eastern Standard time) Well we aren’t exactly sharing an omelet, but I’ll be in a prime seat near him. I intend to live tweet some interesting sound bites, and take some mobile video footage.

So be sure to tune in to my tweet stream: http://twitter.com/#!/sammartino to get your share of Branson brilliance.

By the way – a massive hat tip to uber entrepreneur Valerie Khoo for making this possible and getting me a seat at the table.

Steve.

 

the FMCG strategy

As far as I can tell this is the strategy of every large FMCG company – (Fast moving consumer goods – think super market and convenience stores).

Keep prices low. Never take a price rise.

Sell to who we’ve always sold to.

Only make things the factory can make.

Focus on volume, that’s what keeps the factory busy.

Deliver short term quarterly profits.

Innovate incrementally. Flavours, sizes.

Only invest in a brand if there is an immediate return in sales.

Buy media on mainstream channels.

Buy startups who innovate in our category.

Conduct significant research to test ‘everything’. Make all changes research suggests. Safety in research.

Roll out good ideas from one market (Country) in all countries.

And this industry wonders why it fails to grow, increase revenue or attract change agents. As someone who has worked in the space for many years, it’s time someone told the industry to forget everything they think they know. This strategy isn’t working. It’s why companies like Kraft foods have the same share price they had 10 years ago. That is zero capital growth. It’s one example of many large multinationals with a similar financial performance.

So far the consumer goods industry has been quite lucky. They’ve been insulated from the effect the web has had. But this is all about to change. The squeeze is about to come, and unless they reverse their strategy over the last 50 years, the future is not bright. In fact they need to flip everything they currently do:

The new FMCG strategy (for those who want to thrive more than survive)

Innovate so that price is not an issue. Make stuff people will pay a premium for.

Open up new channels of distribution. Over invest. Compete against their retailers.

Make things people want. Focus on the design of the product, not compiling it. (Manufacturing)

Focus on revenue. Ignore volume. Remove it from all tracking and all documentation. Report everything in dollars.

Do not give the market forecasts. Report results on year end only once.

Innovate dramatically. Embrace failed launches. Most fail anyway, so get more to market.

Invest in brands without expecting a short term revenue boost.

Build your own brand media channels.

Set up startups in your category. Put them in a skunk woks facility. Different space for a new culture. Then sell the startup to your competitors. Do it again.

Do not do market research. Only research what can be done & know how to do it. Invent the future for the audience

Sack all global marketing & innovation teams. Innovate locally.

This wont happen in any large FMCG company ever. There is too much to protect. Things like reputations, executive bonuses and careers. But 10 years from now every FMCG will be asking what happened, just like information industries and the car industry did. The change is coming whether they like it or not.