The office & the factory

I’ve been thinking alot about the differences of various businesses I’ve been involved with. I invested the formative years of my business life working in consumers goods companies. Classic fast moving consumer goods companies that thrived through industrial revolution and then boomed during the TV industrial complex.

I’ve since invested most of my time in service based internet businesses, startups and advertising. They both have relative advantages and disadvantages that I only ever realised once I had time to digest the dynamics in each of them. The most interesting observation I’ve made is the difference when the office and the factory are the same thing. This occurs in  service / web based business. In consumer goods the office and factory tend to be separated.

The key advantage that the consumer goods scenario has is that the office is not linked to output. It creates time for thinking. The immediate concerns of what needs to ship today are somewhat removed. The urgent, doesn’t get in the way of the important. Yet, the challenge here is that we can become out of touch with how things work.

The key disadvantage of  the service scenario (office is the factory), is we don’t have as much time to think and consider. There is always something that needs to be created, done or fixed. Over time our mental flexibility declines as we get absorbed in shipping what we make and meeting deadlines. Yes, we know what is happening, but we get too close to it. We lose vision and creativity via also ‘being’ the production process.

The important thing for startups and marketers alike is to know which environment we are operating in, and to work real hard on the area of disadvantage.

Promote yourself

I often wonder whether or not advertising on work cars is a good idea. Especially given it is in many ways one of the negative sides of business – distribution, busy road, pullution. It might remind consumers that the brand is part of a large corporate monolith. You get the picture. But I’m starting to think this is different for startups.

Firstly, we’re only likely to have one or two vehicles out on the road. Secondly, it’s a good way to create brand awareness cheaply. A colleague of mine who has started a beverage company Jarritos Mexican soda has done just this. At a cost of $2000, he’s invented $50,000 worth of advertising. Which is what branded cars cost via media agencies. See below.

The key element to doing this successfully is making sure the vehicle and advertising matches the brand. For example, an environmentally friendly business should really only partake in such branding if it’s prepared to invest in hybrid / electric vehicles.

Would you advertise your startup on your car? In addition is there an opportunity to start a business branding civilian cars and in doing so helping the general population pay for their transport?

When we get big

There are many things we’ll implement when we get big enough. When our footprint is big enough to deserve the investment of the bigger, game changing idea. When we achieve X, we’ll implement Y.

Maybe we ought implement Y now and skip X altogether?

Startup School… tweetstream

You may be aware that I recently ran my annual Startup School in Melbourne.

During the event we ran a tweet stream of the ideas and soundbites coming from the forum. A lot of people followed the hashtag #melsus and said they got some great stuff from it. One person in particular Josh Moore, took it to the next level and pulled together a great PDF of the event via what appeared on line from it. Entirely his idea and work.

We both thought it was worth sharing here as a small entrepreneurs e-book made up of tweets and links in different categories.

Click here to download – Startup School tweetstream ebook PDF

PS: there are some pictures of me in it *red face*, which Josh saw fit to include…. and who am I to moderate his work?

You can follow Josh on Twitter here. And see his blog here.

Selling a vision

Aj Kulatunga of  Dream Build Inspire Lead asked me via twitter the following question:

Quick advice. #1 Tip for selling a vision ?

So I thought it was worth sharing the answer here because the answer had to be delivered in less than 140 characters.

It’s about their vision, not yours. You need to demonstrate what’s in it for them. Not you. Let them own it. Perceived co creation.

The Thomas Edison Strategy

In business, demand is invariably more important than supply. If demand doesn’t exist, supply is irrelevant. If demand exists, supply will eventuate.

I happened upon a quote from one of the greatest inventors / entrepreneurs in history Thomas Edison. Despite the simplicity of the idea, it’s very profound.

“I find out what the world needs, and then I proceed to invent it.”

This is some pretty good advice for any entrepreneur. It’s better to make what you can sell, than try to sell what you can make.

Borderless Venture Capital

This is the third of my crowd sourced blog entry ideas as suggested by Aida_Lee. Aida wanted to get my thoughts on the following: In today’s cheap, quick and global market, what do you see as the blueprint for a border-less venture capital to work?

There is no doubt Venture Capital has been a bit of closed shop historically. And although we’ve seen some opening up of business funding in the USA with vehicles such as the techcrunch 50 and Paul Graham’s Y Combinator, other markets such as Australia are lagging behind quite significantly. My views are the opinion of someone who has raised venture and angel funding before for new ventures.

In my view a thing things need to happen for the traditional structure of Venture Capital to change:

1. A startup community must evolve in a tight geographic region – this often facilitates events such as those mentioned above in Silicon Valley.
2. Disruptive technology must become available which breaks down traditional access barriers to outsiders.

Number 1 has happened in only a few locations, namely S Valley, but number 2 has happened all over the world and this is where I see the major changes. The thing that new internet technology has done is brought entrepreneurial communities together. Now we can find each other without having to live near each other. But the funny thing about raising funds for what is considered risky investments, is that it isn’t nearly as much about the idea or revenue potential. It’s about the ability to the team raising to sell themselves. And all real selling requires lots of face time. It’s hard to do this on line, or across borders. So I think that large capital raising wont change a great deal in the future. But, I do see an important  capital raising revolution coming:

Crowd funding.

It’s been done already in a few markets, and some entrepreneurs and start ups have already used this technique to raise money for their venture. The idea has been well documented, but a true revolution, such as social networking  has yet to happen. The main thing holding it back has been government regulation from the likes of the SEC and ASIC in Australia. What I think the next iteration will be, is a web based business which takes micro payments / investments (a little bit like Kiva) from a large number of punters (for lack of a better word) to fund the new business. Method of which would be like an on-line float for startups. The investors who then would become digital evangelists for the new company. There would be a synchronized  ‘investment beta’

The key service of such a site would be to overcome the legal vagaries for all participants and be able to take investments in multiple currencies from multiple markets. There is no doubt this would leverage the quickly building on line entrepreneurial communities. It would also have an important impact the venture capital industry structure the same way digital freelancing websites like elance have respectively.

I’d be interested if there are any sites already doing pure crowd sourcing, and to hear what your thoughts are.

Startup Idea Generation

This is the second of my crowd sourced blog entry ideas as suggested by Aj Kulatunga. Aj wanted some basic suggestions on how to develop an idea to start a business.

First of all I start by saying, the idea is not nearly as important as people think it is. The problem with a new idea is that we need to go the effort of education people, building a new supply chain and inventing demand. Sometimes ‘selling potatoes’ is a better option. That said, I’ve been asked to give inspiration for idea generation – so here are the Sammartino methods.

The law of the opposite:

Equal and opposite version of existing successful products / markets / services.

Not from here:

Bringing stuff from elsewhere to this market and positioning it as such. Usually imported or licensed version.

The N^th:

The more intense version of something. More power, ingredients, recognition. The Nth degree. For example red Bull is really an Nth version of coca cola. More intense energy hit. Hummer is also an Nth 4 wheel drive / SUV.

Idea Borrowing:

Local versions of overseas success. Quickly adapting successful ideas for overseas markets. Although these days you have to be very quick. That said, it is easier to find them out via websites such as springwise.

The unexpected version:

Eg Extreme Sour Lollies

Selling Potatoes:

Nothing new, existing idea, existing industry, with large existing demand. But must have low barriers to entry. But do it better, try harder, with amazing customer service levels.

Gourmet / Natural version

Has happened a lot in the grocery / supermarket categories. Entrepreneurs have taken advantage in categories like Juice and yogurt.

Extraction method

Take a tiny part of a successful and existing business and just do a micro niche of it. Twitter is this for Facebook. Just taking the status update part.

Danger of trophy Ideas – This link

Your friends & family don’t care

Seriously, your friends and family don’t care about your startup. They don’t have to. Sure they might pretend to care, but mostly they’ll wish you luck and get on with their lives.

Of all of my family members, only one has ever listed an item for rent on my website rentoid.com At first this surprised me.  I thought that having a very broad target audience, they’d like it and get involved. They didn’t. So why we feel the need to seed our new startup with family and friends is beyond me. It’s really a waste of time. If they don’t like what we do, we’ll be offended. If they don’t buy what we sell, we’ll be offended. The feedback is less like to be honest than from a stranger. And most of all we are not going to get rich selling to our family and friends.

Startup blog advice is this: Go direct to your real market. Family and friends rarely, if ever, hold they key to startup success. So why delay the start of said success by launching to them?

Startup Survival

In nature, with every second something lives for, it’s probability of continued life increases exponentially.

The lessons for startups is simple, do the stuff that keeps you alive longest. And the most important thing we can do for our startup is keep our costs low. Low cost operations gives us the advantage of time. And time is the most important asset when it comes to working out our business model. Not capital, not technology, not employees, not research. Just time.