The best deal is not the best deal

When negotiating with a supplier in business, it’s a natural desire to want to get the best deal. And when we think of deals, we think of the value equation: The product or service as a function of price.

If we take this approach and succeed the net result is this: The party we are dealing with gets their margin squeezed and they make less money from dealing with us.

This isn’t the best deal. In fact, it is not a very good deal for both parties. Low margin customers usually get sub optimal service, attention and effort put into their account. In startup land what we usually need is love and attention more than sharp supplier pricing. Which is why best business practice is to leave something significant in it for the other guy.

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What FMCG marketers should do

Known as the most innovative industry for much of the commercial world from the 1950’s, consumer goods have got caught napping.

Retailers are cutting their lunch through some classic backwards vertical integration – that is, making the products their suppliers make.

So my question is this, why aren’t the global fast moving consumer goods companies taking on the retailers at their own game? What they should do is simple. Develop a consortium of supermarket suppliers and buy a supermarket chain. The missing link in their marketing mix – distribution control. They need to get back some control at the retail level or the long term picture is one of reduced shelf space, and more retailer erosion of their business. Consumer goods companies need to compete with their retailers in the same way the retailers compete with them.

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Bratz dolls & stealing ideas

It was recently decided in an appeal court that success of the Bratz dolls brand is not based on the idea. It’s my favourite court ruling in a long time. In April 2009, a federal judge upheld the $100 million jury verdict that essentially gave Mattel ownership of the billion dollar plus Bratz brand. Which basically gave Mattel the rights to most of MGA’s Bratz products. A jury in the case found that the designer who created the dolls was working at Mattel when he conceived of the idea and the name and made the initial drawings for the pouty and multi ethnic girls.

But this decision got over ruled a few a days ago by a unanimous panel of the ninth circuit.


“It is not equitable to transfer this billion-dollar brand, the value of which is overwhelmingly the result of MGA’s legitimate efforts, because it may have started with two misappropriated names,” the appellate panel said in its ruling today.

“It is not equitable to transfer this billion-dollar brand, the value of which is overwhelmingly the result of MGA’s legitimate efforts, because it may have started with two misappropriated names,” the appellate panel said in its ruling today.

The great thing about this decision is that it reconginizes where true brand value comes from, everything ‘but’ the idea. As I’ve always said on Startup blog ideas are near worthless when it comes to building brand equity. Rather it’s the rich combination of design, building supply chains, inventing demand, effective distribution and the constant iteration of these factors. It should not only be a lesson for entrepreneurs, but large lazy corporates who try and beat their more nimble and innovative competition in the courts.

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How to win a debate

Winning a debate isn’t about proving the other party is wrong. It’s about proving you are right. In fact it’s about proving that you are more correct, even a little bit.

Then, by inference the other party must be wrong.

Although that’s a nice tip, debating is hardly the approach we need in any part of a startup business. The best advice we can give here is to never enter a debate, and let the other party believe they are right. Startups are about building relationships, not sabotaging them.

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Top 7 startup tips

I was asked to give a list to Tim Reid on a few micro marketing / startup tips for his terrific podcast. I thought they were worth sharing in point form here.

  1. Project management is the key skill (Outsource weaknesses, be blissfully unaware how to do technical things, manage the value chain.)
  2. Think micro (Start small, no tiny. think hyper-local, and expand out from there)
  3. Compound effort (Our labour compounds over time like interest and investments do, social media takes compound effort)
  4. Speed is better than perfection (perfection is the enemy of success, launch review and iterate constantly)
  5. Manage for cash flow not profit (Money in and money out are the only 2 financials that matter, we can’t go broke when cash flow positive)
  6. We’ve got to sell (Selling is a core skill, we have to sell not just to customers but to everyone in our business world, employees & suppliers too, have a sales guru in your team)
  7. Start now (The right is never going to come, stop waiting for it)

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Be needed

Our job as entrepreneurs is really to build a business in which people depend on. The best we can possibly hope for is having a group of people at both ends of the value chain who really need us. Not just customers, but suppliers as well.

Suppliers who need us to succeed so they can feed off our success. Customers who need our stuff to get through their months, weeks or days. When we are needed, we are on our way to have a solid business.

Do your people in your supply chain need you to exist?

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International team & Time zone issue

I’ve always been an evangelist for international outsourcing. Especially as it pertains to digital work. I was asked recently if it has added complexity because of time zone differences. I had never consider the issue before, so I stopped to think about it for a while.

And this is my answer:

Having staff work on the other side of the world is usually an advantage. It feels like we have double the amount of business hours in a day. For example, when it is 5pm and something important comes up, I don’t have to wait for the next day for it to get started on. I can brief it out, and have it on my desktop by the next morning. For small startups getting things done quickly is what matters, and this process is a bit like inventing time.

Startup blog says: having a team in different time zones is rad.