Tuesday, June 26, 2007
In late December of '06 I realized I needed a new start up.
I'm a start up guy, and I was past that role with my last love.
I will miss it with all my heart, but it was no longer a start up. We've left a good team in place to keep it growing.
I left a great person in charge of Banner Graphics when we sold that fine little enterprise. About a decade later that business model is still working sustainably. Banner Graphics, from its inception, through the cool work its current owner Jim has developed, is now 34 years old.
I think I'll use that as my lucky number for the new enterprise.
I'll roll out the details in future posts. For now, rest assured, every synapse is firing, and every start up gene is engaged. I think this is going to be one hell of a lot of fun.
I promise to be fully transparent about it all right here.
Wednesday, June 20, 2007
Chris Anderson closes his wonderful book, The Long Tail, with a set of rules he says comprise the secret to creating a thriving Long Tail business.
Please read the book. Don't rely on my summaries. Because Mr. Anderson is the Editor at Wired and is a Silicon Valley guy, a fair amount of his text relates to enterprises he's familiar with. These often represent really cool breakthroughs in the world of digital commerce.
With self-appointed artistic license, I'm going to cite Mr. Anderson's Long Tail rules and fill in my own take on why these concepts are vitally important for us micro enterprise, citizen entrepreneur types.
Big picture (1): Make everything available.
My take: Within your niche you need to be as open and transparent and as educational as you can possibly make your enterprise. It is in your self interest and the self interest of your enterprise. It also provides the first steps to providing appropriate solutions for the right customers... where all your marketing and commercial efforts should be taking you.
Big picture (2): Help me find it.
My take: Your enterprise and your web site need to glow with usefulness. Make yourself easy to do biz with in every aspect of your organization or perish. This isn't hard. Obfuscating and trying to trick people is far harder, as well as dumber and less efficient.
Then we get the Long Tail 9 rules.
Rule 1: Move inventory way in...or way out.
My take: Knowing what you need to handle and what you need to outsource is mission critical. Surely this will change over time, but it needs to be in the front of your brain at all times. Keep asking yourself, "What is critical that I handle and what can others do better?" What value added piece do you bring to the table? Focus your resources there.
Rule 2: Let customers do the work.
My take: In the digital world they get huge numbers by crowdsourcing. Micro enterprisers can use the same phenomenon to get customers to educate themselves on our web sites first and then provide testimonials after our enterprises have provided them with value.
Rule 3: One distribution method doesn't fit all
My take: Your distribution channels and methods significantly define how you market your enterprise. Draw it out on paper. Think through the consequences. That said, I believe you need to go to market through as many non-competing sales channel as are appropriate. Be transparent and honest with everyone. Start your marketing and distribution research yesterday.
Rule 4: One product doesn't fit all
My take: Make your offering available across a range of needs. Some people need a little bit of your stuff. Some need a truckload. The Long Tail uses the term "microchunking" for breaking up your offer into appropriate pieces. It will help you, and it will help your end users self select their own appropriate entry point.
Rule 5: One price point doesn't fit all.
My take: See above. Making yourself easy to deal with on price and content increases your chances of selling stuff. Multiple price points for entry invite the widest range of potential customers available. You can sort them and grow with them once they are in your world.
Rule 6: Share information.
My take: Your job is to make your end users wish they had more waking hours to absorb all the good info and help you want to share. Do it through every venue you can use, many of which are free or close to it.
Rule 7: Think "and", not "or".
My take: "And" is easier to choose from than "or". Once your new customer has chosen your solution, there are additional benefits you want to be able to offer. Do not pile on here. Just have a good, short list of upgrades to your basic offering available.
Rule 8: Trust the market to do your job.
My take: Society rewards useful solutions. The world is wired up to instantly deliver information, reviews, alternative solutions, and all the other digital word-of-mouth conversations taking place on every subject all the time. You will be put out of business if your offering does not make a valuable contribution to your customer. As you launch, carefully note where those contributions are having the greatest impact. Follow those results, not your assumptions.
Rule 9: Understand the power of free.
My take: Understand that you will do many demos, presentations, product placements, life juggling heroics, distributor circuses, and seminars, all for free. This is your entrepreneurship hazing ritual. Welcome, and get over it. We all do it. Free stuff is a component of what we all do at the beginning of new enterprises. That said, remember that smart marketing leads to cash flow, my friend.
Chris Anderson is in fact, working on a new book tentatively titled, 'Free'. It's a really intriguing concept. The most popular working subtitle discussed on the Long Tail blog is 'Free: How Companies Get Rich By Charging Nothing'. The scuttlebutt I've heard on the radio is that Mr. Anderson may be giving this new book away to people who will accept advertising placed in the book. Copies without advertising would be sold through traditional channels. Not sure if that's true.
That's it for The Long Tail for now. Read or listen to this book.
Chris Anderson's blog announcement about Free with great subtitle suggestions. May 20, 2007
Saturday, June 16, 2007
I'm going to keep Chris Anderson's Long Tail info coming. Another post will follow.
"More than 99 percent of music albums on the market today are not available in Wal-Mart. Of the more than 200,000 films, TV shows, documentaries, and other video that have been released commercially, the average Blockbuster carries just 3,000. Same for any other leading retailer and practically any other commodity - from books to kitchen fittings. The vast majority of products are not available at a store near you. By necessity, the economics of traditional hit-driven retail limit choice."
"When you can dramatically lower the costs of connecting supply and demand, it changes not just the numbers, but the entire nature of the market. This is not just a quantitative change , but a qualitative one, too. Bringing niches within reach reveals latent demand for non-commercial content. Then, as demand shifts toward the niches, the economics of providing them improve further, and so on, creating a positive feedback loop that will transform entire industries - and the culture - for decades to come."
Read excerpts from The Long Tail
Friday, June 15, 2007
When my start up buddies and I start trying to talk smart, you'll typically hear the phrase "great long tail stuff".
The Long Tail by Chris Anderson is so good, I've always thought of it as the 'White Album' of the new entrepreneurship.
The subtitle is "Why the Future of Business Is Selling Less of More."
This is really a wonderful validation of the micro entrepreneurship renaissance taking place all over the world. Parts of the book focus on higher tech business models, but the implications for all of us as nurturers of small enterprises are profound.
Do NOT take my summary as remotely comprehensive, but one heartening take away from this book is that there is much more stuff sold in the small niches of the world economy than are sold in the media covered mass market economy
I've had several pieces from the Long Tail ready to post, but I was looking for the right context.
To heck with waiting. A new eMail from a friend reminded me of many other Long Tail truths that need trumpeting. That said here's a good introduction to this great book by Chris Anderson.
"Today we are not so much fragmenting as we are re-forming along different dimensions. These days our watercoolers are increasingly virtual; there are many different ones; and the people who gather around them are self-selected. Rather than being loosely connected with people thanks to superficial mass-cultural overlaps, we have the ability to be more strongly tied to just as many if not more people with a shared affinity for niche culture."
As start ups and emerging enterprises we all can benefit from this newly emerging business model. Critically, we can readily make our contributions into the growing and ever changing fractal niches that exemplify real life economics in the 21st century.
The cost to enter the market as an entrepreneur has never been lower. The cost of distributing our new solutions has never been less expensive. As Mr. Anderson beautifully identifies it, the number of opportunities has never been greater.
More Long Tail thunder to follow.
Chris Anderson's Long Tail site
Monday, June 11, 2007
Thomas Friedman had a very interesting column in the New York Times last Sunday, June 10, 2007 titled, "Israel Discovers Oil".
He was referring to a tour he made there recently to visit the high tech student start ups being supported by Israel's government, university and their aggressive culture of start up funding.
Here are a few of my favorite pieces from the article...
"Pointing to a room full of young Israeli high-tech college seniors, [his host] Mr. Bronicki remarked: "These are our oil wells."
"It was quite a scene. Once a year Ben Gurion students in biomedical
engineering, software, electrical engineering and computing create
elaborate displays of their senior projects or — as in the case of a
student-made robot that sidled up to me — demonstrate devices they've
"Today, every Israeli Jewish mother wants her son to be a dropout and go create a start-up," said [venture capitalist] Mr. Vardi, who is currently invested in 38 different ones."
"... when the world becomes this flat — with so many
distributed tools of innovation and connectivity empowering
individuals from anywhere to compete, connect and collaborate — the
most important competition is between you and your own imagination,
because energetic, innovative and connected individuals can now act on
their imaginations farther, faster, deeper and cheaper than ever before."
"Those countries and companies that empower their individuals to
imagine and act quickly on their imagination are going to thrive. So
while there are reasons to be pessimistic about Israel these days,
there is one huge reason for optimism: this country has a culture that
nurtures and rewards individual imagination — one with no respect for
limits or hierarchies, or fear of failure. It's a perfect fit with
this era of globalization."
As Mr Friedman points out, "These are oil wells that don't run dry."
I can't post the entire article because it's copyrighted by the New York Times, but you can find other bloggers who have. You can also subscribe to the Times on line for $7.95 per month to get this and all the rest. I don't blame them, but I read mine at the library.
Saturday, June 09, 2007
There are all kinds of start ups. None is all good. None is all bad, except the illegal ones.
My point is that there should NOT just be a single kind of start up that is anointed. There are many worthy start ups from all walks of life serving all kinds of needs and populations run by all kinds of entrepreneurs that deserve credit and support.
We have a contest here in my home state of Wisconsin, called the Governor's Business Plan Contest. It awards $50,000 to the winning business plan to help them launch. Good stuff.
My town is fortunate enough to have two newspapers. Both had articles about one entry in the Gov's biz plan contest. I read the first one this morning at my house. I read the other paper at the library in the afternoon. By the time I'd washed the dinner dishes I'd grown a bit miffed about the entire subject and here's why.
My paper, the Madison Capital Times, was pretty poetic about a product that has gotten to the semi finalist stage. It's a new kind of paper built from nano components. "Two Apppleton businessmen hope to make a mesh so fine that the smell of flowers could permeate it, but not pollen. A breeze could flow through it but not rain."
Great copy. I wanted to sell for these guys.
The afternoon paper put some numbers to it and I was a bit taken aback. These Appleton guys, ex Kimberly-Clark folk, need the $50K prize money to license the tech and write a marketing plan. They need $4.07 million to launch.
As I said, this is one kind of start up and there is nothing inherently wrong with this. It's only one kind of start up though. Many of the other entrepreneurs out there struggling for micro financing and encouragement would drown in $50K.
I guarantee I could've started up 50 different Wisconsin small businesses for that $50K in the time frame this one contest was going on.
Would the results be the same? Of course not. Two different start up models.
But consider two possible outcomes. One company gets a cash infusion as an approved, anointed start up. The owners leverage that into some further funding rounds, and they bring in the private equity guys and VC crowd. At this point the Appleton guys are unlikely to control anything. It looks like a great product. As I said, I'd LOVE to sell it. Let's say they run the thing up into some big numbers. Numbers that are generating taxes and hopefully jobs. But guess what? That entity is on the exit ramp. Anything generating profitable numbers at big enough revenue streams is more valuable sold than operated. Everybody reading this knows that to be true.
The other possible outcome… We put the $1K into 50 companies or $2K into 25 new enterprises. Sure many small start ups can fail, but if you're smart about it, you can limit that exposure. These new enterprises are not generating big revenue numbers. But their profitability can be solid. And what are you left with? Dozens of new enterprises. Taxpayers. Making jobs for themselves and maybe a few others. Serving on PTAs and volunteering all over town. Putting money in the worship basket. Paying local professionals for their support and buying as locally as possible. Do I need to keep going?
Neither model is perfect, but at least we shouldn't shut out the smaller alternative path.
I built businesses in Wisconsin not because it was a low tax state or that I could get some kind of big financial kick back for moving here. I built my companies because of the libraries in Wisconsin, the parks, the schools, the community of caring, interested stakeholders at all levels that were concerned with making access and input available to all.
My point is that we should consider breaking this kind of start up development stuff down to smaller administrative levels, where the people in charge are surely as overworked as they are at the state level, but where there is probably a level of understanding of street level economics that has a different and perhaps equally useful understanding of what can help economic development.
My former neighbor Margaret Krome is a columnist with the Capital Times in Madison. I liked what she said about this dichotomy in a column she wrote about our work a few years back…
"Wisconsin has always been a hotbed of neat ideas and great innovations. But what it took to make Wisconsin the company's home is our standard of living. As next year's budget fights start heating up, it's important to remember that conservation, clean environment, an investment in culture, natural resources and schools are what draw and keep companies like Rick's in Wisconsin."
"In the last decade, Wisconsin has invested heavily in the biotechnology industry, on the theory that its jobs are environmentally benign and offer high salaries for workers. The same day I toured the Illinois metalworking plant [with Rick], the Commerce Department was leading a delegation of 70 Wisconsin biotechnology leaders to a trade show in San Francisco."
"But Rick's company suggests another meritorious strategy. State job development planners should recognize and support virtual businesses like Rick's with headquarters in Wisconsin, even if it manufactures in another state. Headquartering more such businesses in Wisconsin could attract a well-educated work force, generate a significant tax base, and encourage innovative entrepreneurs like Rick to make money while solving environmental and social problems."
70 biotechs and all the related state folks to San Francisco? OK, different kinds of start ups. We need those kind very much and I'm glad they went. That visit was in 2004. How many of those biotechs prospered? Where is the followup?
What many of the state's new entrepreneurs would appreciate greatly would have been the tip money they left out there in California. Hell, half the tip money. Many more of us could be now volunteering at our PTAs and working on our own enterprises with small micro enterprise pushes that could've and should've been made simultaneously.
I'm about to roll out a new format for this discussion, and I can't wait to share it with you.
Madison Capital Times article by Margaret Krome
Friday, June 08, 2007
I'll tell anyone who asks that it's riskier NOT starting your own enterprise than it is starting one. I believe this is true for many reasons.
Blindly trusting your economic and personal security to idiot bosses, unexpected buyouts, plant closings, restructuring, and all the other unpleasantries of the free market seems damn risky to me.
I was scanning biz books at the library this morning and found a new reason to add to the list. This time, the reason is a positive one.
For those who have read these posts for a while, you'll know that I think most any book on business is worth scanning. If the majority of the book is not applicable but you get one good idea, then your time was well spent.
The book I found this quote in struck me as a good book to scan, but not one focused on micro entrepreneurs. It was called MBA in a Box, by Joel Kurtzman, a gentleman with some serious big business moxie.
The quote that did jump out as appropriate to the discussion of entrepreneurship was taken from Richard Branson, the founder of Virgin.
The quote was in a chapter titled, "Intellectual Capital, Not Financial Capital, Drives Value." Mr. Branson said this: "What I do best is finding good people and letting them work. Virgin staff are not merely hired hands. They are not managerial pawns in some gigantic chess game. They are entrepreneurs in their own right."
It strikes me that large corporations and big businesses are striving to become more entrepreneurial and value that trait in individuals more and more. If someone as bleeding edge as Richard Branson, who is soon to bring us private space travel, can promote the entrepreneurial ethic in large corporations then you, friend, are on the right path.
Starting your own enterprise establishes your credentials as an independent thinker and a creative risk taker.
Should you ever decide that you want or need to leave your start up, your entrepreneurial credentials will serve you well going forward.
Yet one more reason - on a long list of good reasons - to start your own enterprise.
Entrepreneurship builds your resume, no matter the outcome.
About Richard Branson
About Joel Kurtzman
About photo, Ebony jewelwings.
Wednesday, June 06, 2007
An interesting report was just released by an angel funding network in my home state of Wisconsin.
I focus on Micro Entrepreneurship where self funding and micro funding is the norm, but there's all kinds of early stage financing possible these days, and the game is getting more interesting by the day.
If you're in an enterprise that's considering an early stage investment round with outside investors, the news is hopeful. A rising financial tide seems to be lifting many small boats.
The two pieces of the report I find interesting are the comparisons of the overall volume of early stage investing with investments placed by the formal angel groups.
"Early-stage investing: Total early-stage investing tracked in Wisconsin rose to $102.9 million in 2006, an increase of 54 percent over 2005. The complete early-stage risk capital market includes angel networks, individual angels, informal angel groups and early-stage funds. Improvements in reporting could account for some of the increase in individual angel investments, which was a new reporting category in 2005."
"Angel investing: Angel investing in Wisconsin rose dramatically in 2006. Data from several sources confirm that angel investing in the state rose much faster than the national average, estimated at 11 percent by the University of New Hampshire Center for Venture Research. The number of Wisconsin group angel investing deals and dollars invested increased substantially in 2006 when compared to 2005. The dollar amount of network investing increased 38 percent to $7,427,170 while the number of deals rose 50 percent from 18 deals in 2005 to 27 deals in 2006."
Obviously, when you take in all early stage investors, the total will be much larger than taking just the totals from the formal angel networks. $102.9 million VS 7.4 million is quite an eye opener though.
When you work the math the average deal done by the formal angel networks is about $275,000 per deal.
Having been through these wars, I know that the larger pool of seed stage investors includes investments that are much smaller than the network angel deals.
Conclusion? If you're an enterprise that needs outside funding in small amounts, avoid the formal angel networks. You're wasting your time. However, if you're looking for smaller amounts, it appears the world is turning your way.
There is some VERY interesting news about some of the bigger venture capital firms leapfrogging both of these financing levels into the world of micro finance, but I'm saving that for another post.
In the money world of small biz financing, it's a jungle out there friends, but you can do it. The world is looking for your creativity and your drive.
Go get 'em.
Download full text at WI Angel Network (WAN)
Saturday, June 02, 2007
In these posts I try to tie current events and discussions into the world of start ups and micro entrepreneurship.
I like Discover Magazine a lot. It's a very good overview of science, technology and the future as their tagline says.
Last month Discover put out a special issue called "The Invisible Planet: The Science We Don't See." The lead article asked the question, "How Much Does The Internet Weigh?"
As micro entrepreneurs, you and I probably won't invent the next internet. However, it's interesting to ponder how much impact seemingly tiny contributions can make on the world.
The weight of your entrepreneurial contribution may seem small to others, but it can be world changing for you and the people who will benefit by it.
Beginning something big shouldn't be measured by marble facades or employee counts. The impact you make is what's important.
Ready for the weight of the internet? Here's Discover's measured conclusion…
"The weight of the Internet adds up to just about 0.2 millionths of an ounce."
"Love letters, business contracts, holiday snaps, spam, petitions, emergency bulletins, pornography, wedding announcements, TV shows, news articles, vacation plans, home movies, press releases, celebrity Web pages, home movies, secrets of every stripe, military orders, music, newsletters, confessions, congratulations—every shade and aspect of human life encoded as 1s and 0s. Taken together, they weigh roughly the same as the smallest possible grain of sand one measuring just two-thousandths of an inch across.
William Blake’s famous poem Auguries of Innocence (1803) begins, 'To see a world in a grain of sand....' He was being more prophetic than he could have ever known."
Press on friend. Measure yourself by your own goals and standards and you can change the world.
How Much Does The Internet Weigh Discover Magazine, special issue May 2007
Friday, June 01, 2007
I did an entrepreneurship seminar with a great group of students from Cardinal Stritch University's Broookfield, WI campus one evening this week. As always, I come away from these student seminars smarter than when I went in.
It's inspiring to be around people of all ages that are looking for smart, sustainable solutions to doing enterprise.
There are so many hyped up start-your-own-business schemes that bombard the culture, it's really refreshing to be among people that reject that nonsense and want to get under the hood of start ups and get smart about it for themselves.
Best question of the night: How do start ups determine pricing?
I get smarter and feel more optimistic every time I do one of these seminars.
Thanks to the business program and my new friends from Cardinal Stritch University!
Cardinal Stritch University, College of Business, specializing in high quality, practical adult education