7 Opportunities to Save on Startup Expenses

Older, more established companies have the flexibility of deciding how to allocate their budgets and spend their available funds on the resources that make their

Startup Tips,Guest Post,YEC businesses more comfortable and easier to run. But as a young startup, you have no such luxury! Because it’s important to make every dollar count while your business

is still growing, you’ll want to take a look at the following seven opportunities to save money on common business expenses:

Expense #1 – Office Space

First of all, with many of today’s alternative office space options, it’s entirely unnecessary to run out and sign a

But if you absolutely must have a traditional office for your startup, contact property management companies in your area and ask to see non-traditional spaces or spaces that the agencies have had trouble renting out. With a little negotiation, you may be able to save big on spaces that would otherwise remain empty.commercial lease to house your startup. Instead, look into incubator spaces, co-working offices and executive office rentals – all of which can provide you with flexible office space options at a much lower cost.

Expense #2 – Office Furniture

One word: Ikea.

Although, more seriously, if the world’s leading producer of cheap furniture doesn’t appeal to you, consider seeking out used or consignment furniture stores in your area, hitting up garage sales for discount items or even pulling the extra furniture out of your parents’ basement. When your startup is first growing, all you need is some place to sit and work – it doesn’t have to be pretty!

Expense #3 – Office Supplies

When it comes to purchasing the necessary office supplies for your growing startup, the lesson here is that the best offense is a good defense. Instead of looking for ways to save money on the supplies you think you need, focus instead on eliminating the need for physical supplies. As an example, if you pursue a “paper free” office, you remove the need for paper clips, staplers, staples, hanging files and a host of other associated products.

If you absolutely must purchase some supplies, try cashing in some credit card reward points to fund these expenditures. It’s an easy, creative way to free up the extra funds needed to purchase your must-have office supplies.

Expense #4 – Shipping Expenses

While there’s no way to eliminate postage fees (if your startup ships out a physical product), you can cut back on the cost of packaging products by reusing boxes, picking up free shipping containers from USPS or even collecting serviceable packing materials from other businesses in your area (grocery stores, in particular, get rid of sturdy boxes every day).

And, when it comes to the actual postage fees you pay to ship your products, be sure to shop around to get the best rates. Yes, you’ll wind up paying something, but you might be surprised by the variability in rates that exists between today’s major shipping carriers.

Expense #5 – Employee Costs

The hiring and training of employees typically represents a startup’s largest expense. As such, take the following steps to minimize unnecessary expenditures in this area:

Consider bringing on new employees as independent contractors. This will minimize your tax burden and give you more flexibility regarding the costs associated with terminating employees who don’t work out.
Invest in improving your interview process. Training a new employee, only to have him or her leave down the road due to a bad fit, represents a tremendous cost to startups in terms of lost productivity. You can reduce this fiscal waste by enhancing your hiring process so that you’re more likely to wind up with suitable candidates.
Offer benefit reimbursements – not benefit plans. Although providing employment benefits will help you to attract better employment candidates, it isn’t cheap to set up group health plans or other benefits packages. As a cost-saving alternative, consider offering employees a set monthly reimbursement for benefits that they purchase on their own.

Expense #6 – Advertising

Established companies can run pay-per-click (PPC) advertising campaigns, run TV spots during popular programs and send out highly-effective direct mail pieces. You probably can’t.

Minimize your advertising expenses by taking advantage of “free” (as in, free outside of your time investment) techniques like SEO, content marketing or social media marketing. It’s possible to generate a significant amount of traction in this way, which can drive the sales volume needed to make traditional paid advertising methods a possibility in your business’s future.

Expense #7 – Professional Fees

One last expense that you’ll likely encounter as a startup is professional fees – that is, the amounts that you pay to accountants, lawyers and others for their services.

While you shouldn’t cut them out of your budget entirely, look for opportunities to barter services or products in order to get a discount on your bill. No matter what professional skills you have to offer, you should be able to find the common ground needed to craft an arrangement that benefits both parties, while saving you some serious cash.

Sujan Patel is the founder and CEO of Single Grain, one of the top Digital Marketing agencies in San Francisco, CA. With more than 10 years of Internet marketing experience, Sujan leads the digital marketing strategy for companies like Sales Force, Yahoo, Intuit and many other Fortune 500 caliber companies.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

The Dropbox Story: From 0 to 100 Million Users: How a Simple Video Can Change Your Business

Startups: Is Your Public Relations Strategy Outdated?

There’s one thing that’s consistent in this world: change. This is no less true in business; industries have to evolve to keep up with developing technology and new trends. On top of that, they have to promote their ability to keep up altogether.

In the past, public relations required a client to pay a large retainer in order to be mentioned in a sidebar or get quick features published, promoting a service or product. Today, the future of PR is online, and it includes a combination of content marketing, SEO and thought leadership. Times are changing, and there are some things you should take into consideration when you’re making decisions about your startup’s PR.

People Want to See Results

In the past, PR companies weren’t held to meeting specific client expectations. They could always hide behind saying, “How do you measure credibility and authority?” Clients consistently felt screwed over by PR companies because they were paying a sizable retainer without any way to gauge the results. With online tools, you can now track exactly where leads and opportunities are coming from. The analytic tools that are available online — like Google Analytics, DoubleClick Ad Planner, WhoReTweetedMe, and Klout – can help you get a better idea of the results of placements.

To break down sales barriers and comfort people who have previously been shafted by PR companies, pay-for-performance models should be adopted. When I switched Digital Talent Agents to this model, our client base doubled and customer satisfaction increased. Retainers have left a bad taste in many people’s mouths and will continue to be used less. Don’t ride this dinosaur any longer than you have to.

Paper Is a Thing of the Past

Instead of grabbing your morning paper off the front porch, you likely get your preferred content on your tablet or phone these days. The future is online, so print editions are becoming archaic and far less beneficial. The focus won’t be on just the initial placement of an article, but on the potential effect of it going viral. Social media can accelerate media exposure just by having the right influencer sharing it with his networks. If you don’t get the social media boost you’re looking for, there are content aggregators, like Zite, that give your content another vehicle to reach the right influencers.

Google is also rewarding site owners for the higher amounts of quality content they have available. The easier it is to find your name and your article, the more exposure you will get; that allows for a tail benefit that can last much longer than a one-day feature in a newsletter. Magazines and newspapers are thrown away after one read and don’t give you the opportunity to amplify your media exposure, but an online post can be shared over and over again.

The Best Promotion Is Not Being Promotional

Personal and company branding will be extremely important in any PR campaign. The more you concentrate on building your brand, the more press opportunities will naturally come to you. People can see through a promotional piece pretty easily, so direct your efforts toward educating people as a thought leader. It’s the best way to promote yourself without seeming like you’re being promotional. If you just concentrate on a promotional piece to bring in leads, you’ll have a short-term gain. However, if you change strategy and start developing your own content as a thought leader, you have a short-term gain and you help build your long-term brand, which ultimately is more important. It’s what everybody should be working toward. Industries and approaches change, but your reputation can last if you play your cards right.

“Mad Men”-era public relations are a dying breed. Old-school PR companies companies may still insist upon paper press releases, a trusting attitude toward the “results” they’re producing, and promotional features that focus more on what your clients can do for you than what you can do for your clients.

But if you want to keep up with changing times, ditch these efforts, and focus on PR that gives you a high return on investment every single time. Insist upon results, and you won’t feel screwed by PR companies – you’ll feel empowered by them.

John Hall is the CEO of Digital Talent Agents, a company that helps experts build their personal and company brand through producing high quality content for reputable publications.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

Now check out 5 Rules for naming your startup.

10 Ways Subscription Sales Can Increase Your Startups’ Sales

TRY TO BUNDLE AND FINANCE

“Consider bundling your products into groups of commonly utilized items, and offering your customers the chance to pay for a “package” on a monthly basis rather than all at once. For example, If your average client buys 10 widgets a year for a total of $110, offer a package of 10 widgets for only $9 per month. Basically, you’re offering in-house financing. People love that sort of thing.”

– Robert Sofia | Co-Founder & COO, Platinum Advisor Strategies

PRODUCT OF THE MONTH CLUB

“Subscription plans that automate sales are a great way to get your product out to raving fans regularly. Whether it’s a cupcake, T-shirt or fabric of the month, giving regular access to your new and best sellers can build anticipation and brand loyalty.”

– Kelly Azevedo | Founder, She’s Got Systems

INCENTIVIZE GIFTING TO OTHERS

“We have a “Mod of the Month Club” where customers choose any one of our watches for a heavily discounted price (30-45 percent off retail). We always make sure to thank these members by offering them first-looks at our new merchandise. The best perk: we offer an extra strap ($15-$20 value) in the package when customers tell us they are “gifting” the watch, gaining us new customers monthly!”

– Aaron Schwartz | Founder and CEO, Modify Watches

USE MEMBERSHIPS TO CURATE

“Subscriptions and memberships are a great way to offer customers the best of the best — wines handpicked by the best sommelier or this season’s must-have shoes chosen by a Hollywood stylist. Combine subscriptions with curators to offer customers the best of your selection.”

– Laura Roeder | Founder, LKR Social Media

HELP YOUR CUSTOMERS USE YOUR PRODUCTS

“Customers come back to companies whose products and services they use. A membership program that helps a client actually learn how to effectively use what they’ve bought makes it more likely that they’ll come back to you. That can include offering case studies, in-depth training and support far beyond the typical user’s manual.”

– Thursday Bram | Consultant, Hyper Modern Consulting

PROMOTE ACTION AMONG YOUR MEMBERS

“By positioning your membership or subscription as the best way to take action, you’ll inspire people to join. Very few things motivate people as much as spending money. If they are spending $50/month on your service, most people will actually do something with it, thus see results. These positive results become the best testimonials you’ll ever receive.”

– Sean Ogle | Founder, Location 180, LLC

START TO SUBSCRIBE AND SAVE

“Follow Amazon’s lead and implement a ‘Subscribe and Save’ program, where you give customers a discount for setting up a subscription. It’s an added convenience for the customer and it’s a nice revenue stream for the business.”

– Josh Weiss | Founder and President, Bluegala

CREATE COMMUNITY MASTERMINDS

“If you already have customers that are willing to pay for your products, there is an opportunity in bringing all of your customers together to share their ideas and network. By creating some sort of forum or mastermind platform, all of your customers will be able to enjoy an uncontested level of product support, fresh ideas, and new opportunities through your community.”

– Logan Lenz | Founder / President, Endagon

PICK YOUR PROBLEMS WISELY

“Examples of subscription services with high lifetime customer values include hosting, email marketing, and other self-service apps. The key to them is that they solve an ongoing problem. In other words, you don’t just need hosting for your website next week, you need it all the time! So, pair your product with a subscription that makes sense. For instance, web design and web maintenance packages.”

– Matthew Ackerson | Founder, Saber Blast

EVERY COMPANY IS A MEMBERSHIP!

“The key to long-term sales growth is developing a loyal customer base that you can tap into in order to sell new products and add-ons. And the best way to build customer loyalty is with a rewards program. Whether with points used to redeem reward items or randomly distributed benefits, any merchant can convert its customer list into a membership.”

– Michael Tolkin | CEO, Merchant Exchange

You can find more startup tips here at nibletz.com The Voice Of Startups Everywhere Else.

How to Find the Right Venture Capitalist for Your Startup!

This is one match that’s certainly not made in heaven — you’ve got to toil and woo several partners to finally arrive at one that best understands you and your business, and is ready to commit to you in the long term.

I’m talking, of course, about your relationship with a venture capitalist. You’ve probably heard grieving entrepreneurs who, after signing the dotted line, are quite unhappy throughout the relationship with their investors.

But there’s nothing wrong with the venture capitalist (VC) per se. You just made the wrong decision. As an entrepreneur, you’ve got to choose the right VC to work with, because the right marriage can help define how successful your business will be and how happy you will be running it.

Here are 4 key points to consider for a happy and long-lasting marriage with a VC:

1. Expertise: Choosing a VC is just like a marriage — that is, it’s a long-term commitment. You need to court first to find out whether the VC is a right fit for you. Take the time out to research whether the VC has funded companies in the domain they are operating. Research to find out what companies they have invested in and what their level of involvement has been in each of those. Do they have potential conflicts (e.g., is the expertise a by-product of an investment in a potential competitor)?

2. Adding Value: Look for investors who can add value to your business and not just give you funds. The best marriages between entrepreneurs and VCs happen when the latter can contribute to the growth of the former and when it isn’t purely transactional. Entrepreneurs need to ask, when things get tough in my venture, will this VC be a part of the solution?

3. Term Sheets: This is where you really find out what the intentions are of the person putting in the money. Look out for exit clauses; if not clearly defined, ask for them to be. Although they are not cast in stone (I know of one venture where the exit was clearly defined, but deferred as the company entered a new vertical and that added to their top line immensely, adding to a bigger valuation), it helps to know what the person with the money is really looking for.

Term sheets are very carefully crafted to fool even the best of people into believing that they’ve struck a great deal, but in reality, for the entrepreneur, that’s not always the case. So if you’re at this stage, it wouldn’t hurt to have your term sheets validated by experienced entrepreneurs who’ve gone down this road and/or a lawyer who has the relevant experience.

4. Set Expectations: Many deals are left to ambiguity, either because of lack of clarity at the stage of getting into a deal or because of assumptions made by either party. It is very important to set expectations from both ends and be clear about it. Entrepreneurs need to build trust with their VCs and vice versa. If you don’t have trust at the beginning of the relationship, it is bound to cause heartaches at the later stage.

Whatever you do, do not take this relationship for granted. You are in it for the long haul, and giving up because of a failed marriage is the last thing that you want to do with your venture. So take caution before you enter into a contract.

That said, all the best with your pitch! If it has worked out well for you, I’d like to hear your experiences and what makes your marriage successful.

This post originally appeared on the author’s blog.

Rahul Varshneya is a startup coach and the co-founder of Arkenea, an enterprise mobility and cloud solutions provider. He writes on starting up and mobile strategy at http://rahulvarshneya.com/blog.

In the Mouth of a Shark: Learn From ‘Shark Tank’

Have you seen “Shark Tank” yet? For entrepreneurs, it’s one of the best reality TV shows. Cable and satellite packages start at around $30 per month, according to www.directtvdeal.com. “Shark Tank” has five investors that are selected to sit on a stage that listen to entrepreneurs pitch their products and business ideas. After their pitch, the sharks decide whether or not they will be given money to fund their business ideas.

In the process, the entrepreneurs are asked a barrage of questions, sometimes humiliated, often laughed at, occasionally insulted and generally traumatized. Some of the sharks include Mark Cuban, real estate mogul Barbara Corcoran, Kevin O’Leary, who created and sold “The Learning Company” to Mattel for $3.2 billion, FUBU clothing founder Daymond John and comedian Jeff Foxworthy. Despite the hostile atmosphere created by the sharks, participants could walk away from the experience with a big, fat check if one or more of the Sharks believe their business idea is a good one. Lessons can be learned from “Shark Tank” for entrepreneurs:

Find Your Niche

When an entrepreneur makes their pitch, reactions from the sharks can be pretty telling. If it’s an Internet-related idea and Mark Cuban doesn’t like it, no deal. If a clothing idea is rejected by Mr. FUBU, chances are the designer will be sent back to the drawing board. If an idea geared toward an infomercial is rejected by the infomercial expert, it’s back to square one. You can’t be all things to all people, but you should know your target audience and connect with them.

Use Your Passion

Coming from a place of truly enjoying what you do is key, and the sharks pick up on it. One investor came in with just an idea — a medicine dropper in the shape of an elephant for kids — and won investment dollars. AVA the Elephant is now sold in 10,000 stores in 10 countries. Founder Tiffany Krumins used her passion for helping kids to create a successful business.

Fill a Need

Find a need and create a great product to fill that need. ReaderRest Magnetic Glasses Holders from season three is one of the show’s most successful products. It calls itself a “simple solution for eyewear management problems” and allows the user to keep their glasses safely and securely within reach using magnets that automatically attach and self-center. Overall, sales went quickly from $65,000 to $5.5 million after the show.

Do it Better

You don’t have to reinvent the wheel to be successful; you just have to make a better wheel. BBQ sauce is nothing new, but sales of season one’s Pork Barrel BBQ sauces and rubs went from $5,000 to $3.5 million after their investment. Jamba Juice bought season three’s Talbott Teas in 2012. Both products took an ordinary item to the next level, doing it better than their competitors.

Sell the Dream, not Numbers

Some entrepreneurs start working their pitch with statements like, “I sold X amount of my product last year.” These people tend to get the worst deals from the sharks, or none at all. Sometimes the sharks don’t seem to care about numbers like $1 million in past sales, i.e. games2u.com, an excellent company that got no deal. Past numbers do not sell — the dream does.

10 Tools That Simplify Startup Collaboration

Producteev for Productive Collaboration

“I highly recommend cross-platform tool Producteev for collaboration. It’s easy to set up, easy to use, and fantastic for team members who are working on many projects at the same time with others. There is space to comment on projects to maximize productive collaboration, and it’s all about getting tasks done.”

– Doreen Bloch | CEO / Founder, Poshly Inc.

Try the New Basecamp

“The revamped Basecamp from 37signals has taken collaboration to a new level. It’s completely redesigned and rethought, and I can see the impact on our team already. It’s no Google Wave, but I’ll recommend it to anyone.”

– John Meyer | Founder/CEO, Lemon.ly

Facebook Member Pages Work

“Closed Facebook groups are nothing new, but I love how many mastermind communities are shifting into the platform to meet users where they already spend hours each day. In one such group, requests are posted around the clock, and it’s not unusual to see colleagues giving feedback and collaborating across time zones and over weeks and months.”

– Kelly Azevedo | Founder, She’s Got Systems

Trust the Team With Teambox

“We switched over to Teambox as our main project management system a few months ago. I have been pleasantly surprised by the unique functionalities it offers teams. Every week, I post conversations in a “New Idea” project that is then discussed in real time. The platform really allows everyone to piggyback on other ideas in order to come with something truly collaborative.”

– Logan Lenz | Founder / President, Endagon

Stick With What Works, Google Docs

“It’s not new but it’s solid. We use Google Docs for everything. In my opinion, it’s the simplest way to have multiple people work on one document and keep things organized.”

– John Hall | CEO, Digital Talent Agents

Join.me All the Way!

“Check out Join.me. It’s a super simple screen-sharing tool that I’ve been using recently, ever since I realized that Skype screen-sharing is terrible, especially when you’re working with someone on the other side of the country. It takes three minutes to install, and you’ve able to give or take away control from your collaborator. It’s also great for sales presentations.”

– Matthew Ackerson | Founder, Saber Blast

Go Zoho for Online Editing

“Zoho allows you to collaborate with its online Wiki, edit Word and Excel documents, and have live discussions. Brainstorming through email or any static site is incredibly difficult, as you lose the dynamic interaction of all participants. Sometimes, the energy created from a response is as important as the content of the comment. Zoho allows you to collaborate in real time.”

– Aaron Schwartz | Founder and CEO, Modify Watches

Asana Is Online Zen

“I’ve been using Asana a lot recently for collaboration and deadlines, and it’s got a simplicity and ease of use that’s hard to find elsewhere. It’s also free if you’ve got a small team, which helps keep your overhead low.”

– Colin Wright | CEO, Asymmetrical, LLC

Hammer Away on Yammer

“Yammer is much more than a company social network. Our Yammer feed has a constant stream of new ideas, articles and more. It’s a safe zone where we encourage employees to think differently without worrying about the minutiae. Yammer has facilitated cross-departmental collaboration and made our company more innovative.”

– Bhavin Parikh | CEO, Magoosh Test Prep

Work and Play With Skype

“Although it’s been around for a while, I still use Skype on a daily basis for collaboration. It’s great for brainstorming with my team, checking in with clients, and even a little “watercooler” chat — which can be challenging to spark with a completely virtual company.”

– Heather Huhman | Founder & President, Come Recommended

Now read this guest post from Jim Sposto, founder of Xtrant, the collaborative tool we use.

10 Must-Read Startup Tips for Young Brands

Everyone wants a “startup” these days. Everyone wants to be a “founder” with little more than a concept, an LLC filing, some Web real estate, and a dream. But how do you really get it done? In early stage brand building, traction is king.

You’ve likely seen the HBO Series “How To Make It in America.” It chronicles the story of two co-founders and their group of friends. There is luck, drama, rejection, implied success, real success, good marketing, poor marketing, and more luck. As difficult as they make it look in that wonderful series, they actually make it look easy. In reality, think less partying, more planning, and little dependence on gimmicks and luck. This being said, with the right approach it can be done. There is still room for innovation in textile manufacturing and fashion branding.

Starting a clothing brand can be one of the most worthwhile pursuits in all of startups. There are elements of: manufacturing, design, communication, marketing, probability and statistics, industrial engineering, timing, and the almighty of them all — foresight. There are so many variables that go into a success or failure. Right now (and I repeat, right now), we are somewhat succeeding. That being said, I thought I’d share some helpful hints.

Proof of Concept

Before a single shirt was manufactured, we had our initial concept feedback. “So, let me get this this straight,” the industry executive said. “You are going to manufacture in the States? You are going to use American-sourced fabrics? And you think you’re going to succeed in the textile industry?” Well, yes.

From July 2012 and through the fall, we focused on sales, feedback, construction revision, and regional media. Between Kevin and I, we bore the brunt of these tasks. Validation via earned media was the most difficult day-to-day task.

Through this initial stage, we were purely focused on “proof of concept” in our first test market — Dallas, Texas. The media response was great! And so, we continued. Active, driven, and confident men do want something more from their dress shirts.

Spring for Traction

After starting up in April of 2012 and launching the website in July 2012 (with only one product), we are now finally leaning into the Spring of Traction. Through the summer, fall, and winter of 2012, we were silently working on perfecting our first pieces, ginning up “first adopter” sales, building relationships, establishing brick and mortar presences, improving our supply chain, not paying ourselves, and paying our taxes. With that behind us, the fun begins. This spring is focused on the push for traction.

After the foundation that we’ve set over the past year, we can begin focusing on the brand’s opportunity and/or visibility to grow within several of our proven early-adopter demographics: professional athletics, military, collegiate, and metropolitan business.

The “How To” of This Blog

What does all of this mean to a young brand? It is a meticulous process that involves quite a bit of sacrifice, help, influence, and yes, just a little bit of luck. Here are some great tips that few in the industry will share:

Start with a concept that no one else is willing to attempt. Remember, it’s even better when people tell you, “Based on the industry precedent, this likely won’t work.”
The design and manufacturing process is expensive. Allot $20k-$50k for your first product run. You will need to achieve a volume of units manufactured to achieve reasonable margins.
Spend money on your branding and your collateral. I can’t say this enough.
Understand your supply chain and have a manufacturing backup plan when those sources, printers, and cut and sew shops are over capacity.
Spend money on your brand’s website and branding videos.
If you didn’t attend a top fashion design program, find a top designer who did and hire that person. Find a way to get that person on your team.
If there are no other options at the start, plan on pouring all of your personal income into the project for the first year or two.
Keep these elements at the forefront: be first to market, drive sales, gain traction.
Customers aren’t free. Find a natural pipeline that will serve as high-conversion customer acquisition.
Ask for help and be willing to pay for it.

The market is always looking for the next great idea; be willing to sacrifice to see it through. Design really well, depict great logo and lifestyle imagery, prove your concept in a transparent way, and then focus on gaining traction as you go. When you need the push, find a well-connected and cost-effective way to move your brand forward.

This post originally appeared on the author’s blog.

Web Smith is a Sr. Analyst, Co-Founder, and Sports / Entertainment / Political Marketing Consultant and a student of strategy. Follow him at: http://www.twitter.com/web.

Startup Weekend Madison: Holsinger Keynote Salutes “Dumb” Ideas That Lead to Unexpected Experiences

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The Dropbox Story: From 0 to 100 Million Users: How a Simple Video Can Change Your Business

In a short five years, Dropbox has gone from 0 to 100 million users.

That’s impressive.

What’s even more impressive is the fact that they’ve done it with one of the most simple website designs ever. Since the first year, their homepage has featured only two main components—an explainer video and a download button.

They’ve also grown without spending money on advertising, and they’ve grown exponentially compared to the competition, despite the fact that there are dozens of similar services competing in the same space.

So what’s Dropbox’s secret? How did they grow so quickly with such a simple design, one explainer video, and spending no money on advertising?

Dropbox’s viral referral campaign

Dropbox started out by using Google AdWords as a way to reach customers. But they quickly figured out that they were spending $233 to $388 per customer acquired. That ended up being too expensive for what was a $99 product at the time.

Thus, they decided to switch to a viral referral campaign to attract more customers. This ended up being one of the keys to their success. Here’s how it worked: Dropbox users were encouraged to share the service via social media and email. If they did, they’d get extra space for free on their own account for every new person who signed up from one of their invites.

The result was that satisfied customers became brand evangelists who helped to get the word out about Dropbox. Due to the fact that they’d get something in return, i.e. free space, users liberally shared about Dropbox via Facebook, Twitter, email, and more. For every customer who was satisfied about the product, there were hundreds and even thousands of other people who were finding out about it and signing up. This resulted in a total of 2.8 million invitations being sent out over a 30-day period.

What an awesome viral campaign. It’s one of the greatest of all time, and Dropbox fully leveraged the power of referrals and social sharing.

But that’s not all that they did.

How a simple design and an explainer video helped Dropbox grow even more

Dropbox’s simple homepage design focuses visitors’ attention 100 percent on their explainer video. There aren’t any other links or any other messages that get in the way. When you land on the homepage, there’s only one thing to do—watch the video.

By focusing every visitors’ attention on the explainer video, Dropbox was able to get more people to watch and learn how the service worked. This in turn led to more sign ups because more people now understood how to use Dropbox. It’s a lot easier to click a download button when you know how something works and understand the benefit, and that’s what Dropbox was banking on with their 120-second explainer video.

The result was a 10 percent increase in sign-ups. That’s right—the explainer video led to a 10 percent increase in conversions. That may not seem like much, but when you do the math with 100 million users, that’s 10 million extra customers simply from using an explainer video. With an estimated $4.80 of revenue per customer (based on estimates from 2011), that’s an extra $48,000,000 in revenue per year. Not bad for a “mere” 10 percent increase in conversions.

3 reasons video worked for Dropbox — and can work for your business too

At this point, you may be wondering, “Why was the explainer video so important? What made it so successful?”

Here’s the answer:

Video is worth 1.8 million words: According to a study conducted by Forrester Research in 2009, one minute of video is worth 1.8 million words. It makes sense, when you think about it. If a picture is worth a thousand words, then a video should be worth a couple million at least. Companies that don’t embrace video will need to hire a lot of writers.
Video leads to huge increases in conversion: Based on research from Internet Retailer, product videos increase the likelihood of a purchase by 85 percent. Additional research showed that product videos gave 52 percent of customers more confidence in their purchase decision. Using the word “video” in an email subject line has also increased open rates 13 percent and click-through rates over 92 percent. Based on another Internet Retailer study from 2012, 46 percent of people will share a video on Facebook, and 40 percent will email links. How’s that for conversion-rate optimization and viral social sharing?
Brain science shows why videos are effective: Simply put, our brains are hardwired to respond to videos. Not only are most people visual learners, but people retain 68 percent more information from video than from plain text. By using video, which stimulates both visual and auditory senses, you’ll make sure that customers understand your business 68 percent better than if they’d only read plain text.

Dropbox increased their conversion rate 10 percent by using a simple explainer video on their homepage. This 10 percent increase led to 10 million additional customers and $48,000,000 in extra revenue. This was all done with a 120-second explainer video that cost less than $50,000.

Was it worth it? Well, a $50,000 in exchange for 10 million customers and $48,000,000 in revenue is quite a return on Dropbox’s investment. If you have a business website and a product, I strongly suggest you consider investing in a simple video too. You may not see numbers in the millions like Dropbox, but you will increase conversions radically with a clear, effective explainer video.

This post originally appeared on the author’s blog.

Andrew Angus is an author, speaker, and founder/CEO of Switch Video, a video animation company that produces simple videos that “explain what you do” in an engaging and compelling format. Andrew is a thought leader in the online video industry, writing and speaking about the brain science behind making your company’s story stick. He welcomes people to reach out to him on Twitter or Google+ and can be booked to speak on Speakerfile.

Now check out these other startup tips at nibletz.com the voice of startups everywhere else.

5 Tips for Young Entrepreneurs Who Want to Be Taken Seriously

I was a 21 year-old entrepreneur when the dot-com bubble burst in 2001. Given the unprecedented volume of dying startups, investors and other business partners became less and less inclined to partner with new companies — especially those led by young founders.

But I felt compelled to win over potential investors, customers, and team members. If I didn’t succeed, neither would my venture.

Here are some of the tactics I used to help establish my credibility as a young founder, and grow my business in spite of my age:

Show others that you’re committed to the venture. Find visible ways to demonstrate your willingness to serve the company. I was always the first person at the office. The signals founders send speak louder than their words.
Present yourself like the most successful people in your industry. Given that most of our revenue came from brand managers and advertising agencies, I couldn’t show up to meetings looking like the college sophomore that I was. I ordered and wore bespoke dress shirts with my monogram on my cuffs. When advertising buyers started our meetings asking where I had my shirts made, the subsequent discussions usually went well. Don’t take this too far and spend beyond your means, of course, but first impressions still count.
Find creative ways to inspire confidence. My team was fired up when well-known leaders like Fred Hoar, the late VP of Communications at Apple, and Dana Summers, Nordstrom’s former VP of Marketing and CIO, joined our board. Sometimes I would ask board members and other well-known advisers to come in and share their lessons with my team. Most leaders love to give back to motivated young entrepreneurs, and this helps improve your credibility in a very noticeable way.
Set and deliver on objectives. Goals and guidelines will go a long way towards establishing momentum and lifting team performance.
Develop your character. While nothing builds trust faster than delivering results, nothing destroys it faster than a failure of integrity. As you see your dream grow from an idea to an enterprise, your opportunities to cut corners will multiply. Grow your character as you grow your business so the latter doesn’t crush the former.

Kevon Saber is the CEO of Fig, a mobile startup focused on personal well-being. Prior to Fig, Kevon was VP of Sales & Marketing at GenPlay Games, a mobile games developer he co-founded which has created fifteen games and $40+ million in consumer revenue. Kevon holds a BS in Finance from Santa Clara University and a MBA from the Stanford Graduate School of Business. Kevon and his family live in the San Francisco Bay Area.

Saber is a member of the Young Entrepreneur Council (YEC), an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

Fueled By Cardboard: Kidpreneurs Kid President & Caine’s Arcade Spark Happiness & Entrepreneurship

7 Steps to Raise Startup Money From a Family Member

My family immigrated from Lima, Peru to the United States before I was born to give me a shot at the American dream. I owe everything I’ve achieved so far to my parents, which is why it’s my goal to support them financially as they get older.

Somewhat paradoxically, to achieve this goal, I raised $5,000 from my mom to start an online affiliate business for U.S. tourism to Peru, called Professor Peru. The idea, of course, is to generate enough revenue to fund her retirement.

But after raising more than $1 million from angel investors, which required an executive summary, Powerpoint presentation and financial projections, I can attest to the fact that fundraising from family members is equally hard, if not harder. The goals and fears associated a family member associates with investing in your business are a far cry from the goals and fears of a professional investor.

If you’re considering raising money from a family member too, here are a few tips to make the process pain-free — and rewarding for everyone:

Understand their financial philosophy. My mom is very protective of her money and absolutely loves to save — she has never before invested in anything. She would rather use her money to pay off the mortgage than to take a gamble at a business that might fail. My mom’s philosophy: “Save now; invest never.” Convincing her to invest in me, then, is a challenge to her very view on money.
Build trust by showing examples of success. To overcome my mom’s knee-jerk reaction to investing her money, it was important to show her clear evidence that success is possible with online businesses. I spoke with her at length about my good friends Cody, Sean, and Chris who have built successful online businesses, as well as my own experience building startups.
Listen closely to investor concerns. My mom was intrigued by the evidence, so it was time to pitch her my idea of an affiliate business for U.S. travelers to Peru. Like any savvy mom, she immediately listed reasons why it might not work! I listened intently to understand her hesitation points. I didn’t respond right away; instead, I waited a day to talk about my idea again.
Address hesitation points. One of the biggest fears my mom had was that no one in the U.S. was traveling. The constant barrage on the news about an economic downturn had led her to assume that no one had the excess income to travel, which of course was untrue. To break this fear, I introduced my mom to four close friends of mine that had recently traveled to Peru. Seeing is believing!
Pitch the bigger vision. While you should certainly consider documenting your agreement in writing, you should also be able to clearly explain the benefits in big-picture terms your family member can appreciate. I asked my mom when she wanted to retire. I then asked her, “What if you could retire in two years?” Though she was skeptical, the seed was planted, and the possibility of an early retirement made her hopeful. Though I didn’t sign any official documents with my mom, your situation may be different if the dollar amount or risk is higher.
Make your ask. There was nothing formal about my pitch; I took my mom out to dinner to her favorite Japanese restaurant to make my ask. No financial spreadsheets, no Powerpoint presentations — just a mom and her son. Note: While Excel spreadsheets intimidate my mom, your family members may want to see detailed projections. In either case, if you can show a well-thought-out plan to spend the money and generate revenue, then you’ll be that much close to closing the deal.
Give a clear timeframe. The pitch itself was a very small portion of dinner, but I did make it clear to her that I needed to know her decision by Friday (giving her two days to make a decision). I’ve learned through years of pitching that the shorter the timeframe, the likelier your pitch is successful.

The result? On Friday, I called my mom, and she told me she trusted me and that she would invest $5,000. And so far, so good – Professor Peru is going strong, with several new partnerships, and I’ve also started development for How to go to North Korea.

Have you ever raised money from a family member? What steps did you take to ensure that the ask was a success — for you and your investor?

Jun Loayza is the President of Reputation Hacks and the original creator of the Beginner’s Guide to Reputation Management. In his startup experience, Jun has sold 2 internet companies, raised over $1 million in funding, and led social media technology campaigns for Sephora, Whole Foods Market, Levi’s, LG, and Activision.

5 Things You Need to Know About Interviewing at a Startup

Everything that I learned in college about interviewing is essentially worthless. After speaking to those that are close to me who will soon be graduating, I decided to jot some pointers down.

Most pertinent to a startup or early-stage environment, the following points stem from hundreds of hours of actual interviewing experience. Tech interviews will be more tech-centric and sales interviews will be more dollar-centric, but all interviews with an entrepreneur will require an entrepreneurial approach.

1. The person interviewing you would rather be doing something else.

Don’t kid yourself. Very few entrepreneurial hiring managers look forward to spending hours of their day interviewing candidates. There is always a critical problem to solve, email to be answered or money to be made buried in their hectic schedule. Interviewing candidates is a need and not a want.

Make the experience as memorable as possible for them and capitalize on their limited attention span. Use the first 15 critical minutes of pitch time to communicate your personal executive summary. Succinctly highlight how you make a difference, how you help the bottom line, how you deal with problems, why you can be player and coach, what motivates you and why you’re there for that opportunity.

2. The person interviewing you will speak to dozens more like you.

You likely have been “chosen” to interview less than you think. With stacks of resumes piling up and a never ending to-do list, the entrepreneurial hiring manager has made a quick, educated guess to speak to you based on the need to solve an immediate problem. Something in your resume, LinkedIn profile or referral has gotten you in front of them.

Make it worthwhile. Be the first appointment on their schedule or the last appointment that day. Give them a reason to remember you throughout the day or during their evening commute. Connect on a personal level and appeal to their emotions. Work days will be stressful, highly charged, energetic and sometimes painful. Give the hiring manager a sense of comfort that when difficult situations and long hours arise, you can be the professional family member that they can count on.

3. The person interviewing you knows the textbook garbage.

Just like you already know how to respond to textbook interview questions, assume that the entrepreneurial hiring manager knows when they are asked by a candidate. Further, if you get the textbook interview questions, run away…run far, far away. It’s a sure sign of things to come but that’s a different topic. Instead, craft questions that are intelligent, pertinent, thought-provoking and challenge the hiring manager.

Likely, you will come up with something that’s already been thought of. The key is to find the sweet spot where the question/thought was previously their own or introduced by someone that they respect. This is impressive and says a lot about your ability with creative problem solving. Understand the business and craft questions related to expanding the business rather than defining it. Repeating facts from a Google search or simply perusing the website is classic, textbook mediocrity.

4. The person interviewing you is not mediocre.

Startups and early stage companies have little time, money, patience and tolerance for layers of mediocrity. You are likely interviewing with someone who is either the direct decision maker or a trusted previous hire. This means that they have either developed their own tests or have already passed the tests so never assume that a half-a**ed approach will fool anyone.

No organization needs mediocrity. Startups and early stage companies especially are not looking for the typical 9-to-5′er looking for defined vacation schedules. Set yourself apart by highlighting flexibility, adaptability, comfort with uncertainty and a general can-do attitude. There’s nothing wrong with living for work in the entrepreneurial hiring manager’s eyes.

5. The person interviewing you is a salesperson.

They have no choice in the matter. Every day they are either selling a product, a service, a solution, an idea or themselves to someone internally or externally. You need to have the same exact mentality in the “everyone sells” model. With limited experience, highlight entrepreneurial endeavors that you started in school.

For pros, highlight bottom-line milestones from previous engagements. Talk facts and figures and make it all relative. Focus on your personal brand and use your reputation as your strongest asset. This reputation can come from your studies, collegiate organizations, co-ops, internships, professional organizations, or employer experiences. No matter what the examples are, show that you identified an opportunity and capitalized on it. Be prepared to sell yourself or don’t bother at all.

There’s more, of course, but these five points should get you started. There’s no substitute for practice, practice, practice so if you are fortunate enough to have a trusted mock-interview resource, use them. The worst interviews in the world are the ones where both parties walk away feeling like the hours were completely wasted. No one has the spare time for that.

This post originally appeared on the author’s blog.

Max Sobol is Partner and President @ IdeaEvolver. He’s passionate about startups: getting them built, staffed, supported, optimized, growing and then some.

Fueled by cardboard lessons you could learn from 2 nine year old kidpreneurs.

Is Your Business “Partnership” as Solid as You Think?

Good contracts make for good relationships. It doesn’t matter if you and your new business associate are the closest of friends, mere acquaintances or siblings. Yes, even siblings would be wise to ensure they’re covered, should anything go awry.

I urge every person considering entrepreneurship to resist putting personal relationships or financial well-being in jeopardy by failing to clearly delineate the terms of agreement in a professionally prepared, legally binding document. It is not a savvy choice to rely upon what has been said, what was written in an email, or even what was casually drawn up between the two of you. These measures to protect yourself may not hold up in court. They sure didn’t for me.

In 2004, I entered into business relationship that I thought was a partnership. My new “partner” and I were going to take the blogosphere by storm with a daily videoblog about Internet culture. (Note: these were the pre-YouTube days, so putting video on the Web was fresh and exciting.)

For nearly two years I acted as a company partner because, well, I thought I was one! Since I was told verbally that I was in a partnership, I acted as a partner in meetings with potential investors, set up the company’s bank account and filed our trademark paperwork. In fact, in order to set up a bank account, we needed a signed contract between company founders specifying the terms of the partnership. I wrote up a quick one-pager, and we both signed it.

The work commitment was as expected for the co-founder of a startup. Basically, I had no social life — everything was about making the show and business a success. Newly 23 years old, right out of college and living in New York’s East Village, I declined too many invites to count to events, parties and dance clubs. Some friendships faded over time because I was completely preoccupied with writing show scripts and responding to business emails until the wee hours of the morning. As is typical of the entrepreneurial mindset, I put everything on hold for the good of the company.

At first, the show was an incredible success. In fact, we were so popular we could barely keep up with the media inquiries and find the time to shoot our daily videos. Profiled in The New York Times and on CBS Evening News, among many other outlets, and emailed daily by interested investors and potential collaborators, it seemed clear we were on a rocket ship destined for greatness.

Unfortunately, the skyrocketing success of the business was met with the equally speedy downhill slide of our relationship. The partnership became increasingly rocky as we planned to move the show to California. The move was delayed for months, to the point where I found myself subletting a series of New York apartments as I waited for my partner to feel comfortable.

In the end, he never did.

Finally I was given an ultimatum — stay in NYC or you’re off the show. To my amazement, I realized I was being treated as an employee rather than a partner. Since we had only my quick one-page document for an operating agreement, there was nothing I could legally do.

Moral of the story: no matter how nice the guy or gal you’re going into business with seems, you always need a lawyer. I was naive to believe that talk and a self-created contract would hold up in court. That’s because I never imagined I’d need to go to court — why should I? My partner was a nice guy.

My first entrepreneurial pursuit was chock full of some of the highest highs and lowest lows I’ve ever experienced. Yet even with all the heartbreak of this first endeavor, I’m still at it, reaching for more highs with one significant difference: in the two companies I’ve co-founded since co-creating that first one, I have protected myself by hiring a good attorney. Yes, lawyers can be pricey, but it is money well spent. When everyone knows there is a legally binding document signed before the venture starts, expectations are plain and clear to all parties from the get-go. If not, there might be some funny business or eventual rewriting of history.

Have your legal counsel make certain everyone is on the same page, because believe you me, that’s the only place you want to be.

Amanda Congdon is a California based on-camera personality, new media pioneer and healthy food entrepreneur. She has produced and hosted many web and mobile TV projects; her show, AC on ABC, made Amanda the first video blogger for a major network, ABC News. She is currently Co-founder and Director of Operations at Vegan Mario’s™ Organic Kitchen.

11 Founders offer advice on getting a job with a startup.

Startup Tips: Building Perseverance From Ken Oboh Co-Founder Of Remix.com

Startups, like fragile seedlings, need to be in the right environment to flourish. It takes drive and doggedness to see any idea through to success, and persistence is often the only thing separating those who succeed from those who fail.

That’s why one of the most vitally important aspects of starting a new business is being in an entrepreneur-friendly environment. Although many people think of capital, labor, or experience as the most challenging aspects of starting a new business, finding people to provide advice, support, contacts, and resources can be just as difficult.

It’s much easier to keep pushing toward a goal if you have a community of people who understand and encourage you. Being an entrepreneur takes more drive and guts than most people can comprehend, so surrounding yourself with like-minded people can help you succeed.

Find Your Motivation and Drive

Anyone who wants to pursue an extraordinary goal — from professional golfing to creating a company — must have an extraordinary level of motivation to succeed.

In my experience, discouraged entrepreneurs who are unable to overcome negativity are often those who do not have a deep passion for the area of business they’re in, or who lack the sheer desperation of not wanting to fail. As with losing weight or giving up smoking, being persistent enough to see a goal through to fruition requires strong motivation.

If you’re building a startup, be sure it’s something you’re interested in; invest yourself in your startup’s success. Successful entrepreneurs would often rather die than give up — an attitude that will help you push past criticism and other obstacles.

Seek Out the Right People

Unless you live in Silicon Valley, you’ve probably been the target of negativity from people who don’t believe in your idea. Dedicating your life to a business idea requires single-mindedness and dedication, which is hard for people who aren’t entrepreneurs to understand. Normal people fear the risk, hard work, and intense commitment required to succeed in business, which leads them to try to dampen the aspiring entrepreneur’s enthusiasm.

All that negative energy can be disheartening, and it will ultimately work against you. Persistence is the key to success. If you’re living in an environment without a network of people with similar interests, you may be shooting your startup in the foot.

When my business partner and I first decided to pursue our own business ideas, most people didn’t understand what we were doing. They constantly tried to steer us toward more conventional jobs. We began meeting weekly with a group of six entrepreneurial-minded friends to study and share ideas. After two years, Chris and I eventually hit upon a business idea that began generating revenue for us. In retrospect, those meetings were the most important factor that contributed to our success.

Be your own best friend when it comes to encouragement. Surround yourself with people who will help you work toward your goals and inspire you to persevere.

Building a web of support is even easier now with online networking sites like Facebook and LinkedIn. Here are three tips to help you build a network online:

1. Join the conversation.

Become an active participant in online groups formed by like-minded entrepreneurs around subjects that you are interested in or passionate about. Get engaged in the conversation: Ask questions, learn from other members, and share your perspective.

2. Initiate community.

Set up your own groups or forums and invite people you’ve met through similar groups to join. This will increase the strength of your relationships and your connection to an online community in your field.

3. Do your research.

Look for people who’ve been successful in your area of interest to find potential mentors, either directly or indirectly. Most people are happy to be contacted by fellow entrepreneurs for their advice and expertise — especially if you’ve already established yourself as an up-and-coming person in the field by connecting to online communities.

Startups need to be surrounded by people who understand what they’re trying to do and who can offer emotional, moral, technical, and even financial support. Seeking out help is one way to encourage a persistent mindset in yourself. In the meantime, be aware of what’s motivating you and consciously work to build the perseverance you’ll need to succeed.

Ken Oboh is the co-founder of REMIX.com and UMIX.com, two revolutionary music sites that give users the power to be their own DJs. Ken is a serial entrepreneur in the entertainment industry.

Now read I know we want venture capital but what is it?