Ops/Strategy Archives - Page 2 of 2

How to Take Advantage of the Latest Trends in Crowdfunding

Those of you familiar with crowdfunding know it’s quickly evolving into an industry itself. In fact, crowdfunding is predicted to create at least 270,000 jobs and inject $65 billion into the economy by 2014’s end.

As an entrepreneur (current or aspiring), how can crowdfunding help you grow your business? To find out, it’s helpful to understand the trends driving the most successful campaigns and to choose the right platform for your project.

Entrepreneurs can take advantage of these three big crowdfunding movements:

The Rise of the DIY Entrepreneur

In the past, entrepreneurs with business ideas relied on venture capital or raised seed funding from friends and family. Crowdfunding offers an advantage traditional methods don’t by providing validation as well as money. A successful campaign shows that there’s a market for what you offer. Getting additional funding is easier once an idea is proven viable.

For example, Bluff Works, a wrinkle-free men’s pants company, had over a thousand backers on Kickstarter and raised more than $128,000 — far exceeding its $13,500 goal. Its founder used the campaign to conduct market research and learned that customers wanted black pants, something he hadn’t considered when launching the campaign.

Leveraging an Existing Network

Another emerging trend is using your existing network to jump start a campaign. This works for entrepreneurs, writers and artists with devoted followings who are invested in what you have to say.

People enjoy the “story behind the story.” A behind-the-scenes look at what you intend to create increases your likelihood of getting funded. After losing her child, Angela Miller built support for her book by sharing her story on social media. Her campaign garnered 217 supporters (70 percent strangers) and raised $12,978 on Pubslush.

Funding Tech, Apparel and Video Production

Cutting-edge gadgets do especially well on crowdfunding sites. The Pebble Smartwatch raised over $10 million on Kickstarter, for example.

Fashion also gets a lot of coverage in the crowdfunding space. Stantt, a casual shirt company, raised cash on Kickstarter and was able to offer over 50 sizes, thanks to precise body measurements and 3D body scans.

Producing films costs a lot of money, and crowdfunding mitigates some of the financial risk. The “Veronica Mars” movie projectshattered Kickstarter records when it raised more than $5.7 million from 91,585 fans of the canceled show.

If your project fits into one of these categories, it’s made for crowdfunding. Even if it doesn’t, you can see what made these campaigns succeed: A real user need (Pebble), dissatisfaction with current offerings (Stantt), and a cult-like following (“Veronica Mars”).

Choosing the Right Platform for Your Campaign

Before setting up your campaign, evaluate the platforms available and weigh the advantages of each.

Kickstarter: This company specializes in creative projects (films, games, music, art, design and technology), all of which remain fully owned by their creators. The funding is all or nothing, meaning you must raise the entirety of your goal to receive any money.
Indiegogo: Geared toward the international community, Indiegogo supports 224 countries and territories, five currencies, and four languages.
Pubslush: My company, Pubslush, funds literary and publishing projects. Authors can evaluate interest in their ideas and learn readers’ demographics. Readers can pledge money to bring books to fruition.
Crowdfunder: Crowdfunder connects investors and entrepreneurs in film and entertainment, small business and technology. It serves North and South America and accepts minimum investments of $1,000.
StartSomeGood: This site specializes in social entrepreneurship and allows you to set a Tipping Point Goal (what a project must raise to make an impact) and an Ultimate Fundraising Goal.

Once you’ve chosen a platform, position your campaign for success.

Learn from other campaigns. Review the most successful campaigns on different sites to see what worked. What wording did they use? What rewards were offered? How much interaction did the users have with backers?
Get advice from those who’ve been there. Reach out to individuals who’ve run successful campaigns. Ask what worked well, what they’d do differently, and what insider tips they can offer.
Develop a pre-campaign strategy. Campaigns that gain 30 percent of their goal within the first week are more likely to succeed. Get between 30 and 50 percent of your supporters in place before launching your campaign.

Crowdfunding opens a world of possibilities, but it’s not an easy out or a guaranteed way to get funding. But if you do your research, choose the appropriate platform, and promote your campaign before its launch, your odds of success are much better.

Amanda L. Barbara is the vice president and co-founder of Pubslush (www.pubslush.com), a global crowdfunding and analytics platform for the literary world. Follow on Twitter

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

Digital Marketing Strategies for Startups

http://www.dreamstime.com/-image19220483

Many startups end up spending more money than necessary.

Which is crazy because a company can be launched for much less than expected.

The key is to use a marketing strategy that is innovative, ROI focused, and customer-centric rather than one that relies on branding and traditional mass media. One of the best ways to accomplish this is through digital marketing.

The Case for Going Digital

Digital marketing is a great alternative to traditional media. Traditional media often requires spending hundreds of thousands, if not millions of dollars on radio, TV and billboards. In comparison, the Internet allows advertisers to test on a small scale, easily control costs and market to targeted prospects. That’s not to say that traditional media outlets are not effective. It’s just not viable for startups with small budgets.

There are many different ways to market online. The list includes social media, paid advertising, search engine optimization (SEO), email marketing, and more. Entrepreneurs can use these platforms in innovative ways in order to acquire customers even with small budgets.

For example, using integrated marketing can maximize the results of more than one advertising/marketing platform. Another example is identifying cost effective ways to get the word out about your company

Building an Audience for Social Media Platforms and Blogs

One way that new companies can establish themselves is through social media engagement and blogging. Using social media and blogs is a great way to build an audience, create relationships and interact with the target market. Many companies are using content marketing and leveraging relationships to build followers and readers for their social media platforms and blogs.

Creating high quality content and marketing it works really well because people respond to information that is relevant to them. In many cases, readers follow up with the content creator in order to subscribe and get additional content. This is a long term strategy that can take as long as one year before a business starts to see significant growth. But after the year mark, many businesses go on to establish brand awareness and immense market presence.

The Importance of Using Search and Integrating Different Strategies

Search engine optimization (SEO) is another way to acquire new leads and customers. It is a strategy that requires you to optimize various factors on and off your website to get your website to rank in the search results. People use the search engines to do everything from learning new information, comparing different products/services to researching businesses. Getting your website to rank in the top results for search terms related to your company will help you reach targeted prospects while also branding your business.

The perfect example of integrating different marketing strategies is using both content marketing and SEO together. A content marketing campaign will help build an audience for your blog and social media platforms while also helping you acquire backlinks. Additionally, backlinks are one of the biggest contributing factors to ranking well in the search engines. The visitors that result from the search engine rankings can be directed to impactful content which is likely to be shared.

Affordable Paid Advertising Platforms

If you have a modest budget to work with, it might be a good idea to use pay per click (PPC) advertising. This is an advertising platform that is similar to offline display advertising. It will display small ads in the search engines, and you only incur costs when somebody clicks on your ad. The best feature about this advertising method is that your ad only shows up when somebody searches for search terms you’ve bid for.

Retargeting can be used in addition to pay per click advertising. This is a type of display advertising where your ad is shown to visitors across a network of websites. When a visitor comes to your website, they are tagged with a browser cookie. Usually, once a visitor leaves, you lose the chance to market to them. But with retargeting, your message will be displayed across a network of sites, allowing you to follow up with them.

An innovative strategy that can be used to make this advertising more effective is to combine it with email marketing. By leveraging your existing email list, you can refer readers to one of your pages that will tag them with the cookie. This will ensure that your readers come across your ad while they are surfing other websites.

The lesson here is that there are many different ways for a startup entrepreneur to grow. Online channels can often enhance or replace a function of a business.

For instance, a social media account can be used as a public relations tool. The result is that there are no big expenses used to hire a public relations department or company. It’s really all about exploring different marketing channels and being innovative with them.

Where Failing Startups Get Lost

Conversations in the startup community seem to be dominated by funding, features, and hacks. The ability of founders to balance the new information that’s out there with the tried and true principals of business is a critical differentiator in the success or failure of startups. Failing to prioritize the basics of running a business can doom the business, regardless of the product, the sales team, or the investment. Likewise, sufficient attention to running the business can cure a failing startup.

Partnerships

Partnerships are both a blessing and a curse. The right partner can make a startup successful. While that’s true, it is important to remember that the converse is not. Not getting a partnership is rarely the cause of a startup’s failure. When you find partnership opportunity, it’s ok to pursue it as long as you compartmentalize.

Partnerships tend to monopolize a disproportionate amount of a founder’s attention without contributing to the startup’s success to justify the diversion. Partners also tend to cause feature creep (adding features that were not on the project road map). Startups need to focus their time on sales and the features that are required to get paying customers in the short term. A partner is not an investor, and should more typically be viewed as a potential customer with a very, very long sales cycle. Managing partners as a potential sale help a startup allocate time without overspending in this one area.

Infrastructure

Many technology startups fall into the infrastructure trap. Just because the founder dreams of becoming the next Twitter does not mean that the company, in its infancy, should build the infrastructure of a mature company from the outset. The aspiration to integrate with every platform on the market doesn’t mean a startup should do it today.

When a startup plans to build key components from scratch, it start with off the shelf product and grow into those custom components at a measured rate. Instead of building it’s own servers at the outset, Facebook implemented years later, when the time was right. For every startup whose infrastructure was less than perfect, there are ten-fold that overbuilt and ran out of money before they saw any traction.

Hiring

Startup news sites, pitch days, and startup contests can mislead entrepreneurs to believing that skyrocketing growth is just around the corner. Founders frequently rush to hire, but startups have limited funds and founders have limited time. New employees take both. Very few startups need an executive level software engineer to build their minimum viable product. That is not to say that startups should not hire the talent they need, but only hire the people absolutely necessary. An early stage company rarely needs a data architect or executive vice president of business development. Begin with people who can get you to the next level and share your vision whether their employees or contractors.

Side Projects (aka Distractions)

Don’t start side projects. They require time, money, and attention that a fledgling business can ill afford. You don’t need to organize a community garden to sell your rain gauge. You don’t need to create your own camera to sign customers for your photo sharing website. Yes companies, especially large ones, do it all the time, but it’s a startup killer. Instead, stick with your near term product and sales goals.

Michael Johnstone brings over a decade of technology and business experience to Mark Cuban Companies. He has a proven history of strategic planning, leadership, product development, and operations in both startups and mature companies. Michael is responsible for deal flow and manages internet and technology strategy for MCC portfolio companies. He previously founded Taglyn GPS Tracking, specializing in small fleet management, before selling it to a private company in 2011. Prior to Taglyn, Michael spent nine years as founder and president of eLocomotive Design, which built custom software and websites. He brings a depth of first-hand entrepreneurial knowledge and operational expertise to every transaction. Michael also serves as an advisor and mentor to multiple startups and is a mentor to accelerators including TechStars and DreamIt. Michael is passionate about helping founders turn their startup into fully functional and profitable enterprises.

Why You Don’t Want Employees On Payroll

Dear W-2 employee,

It’s not you; it’s me. I’ve been hurt before by people like you and I’m just not ready to do it again. I’m sorry, but not really. I’ve moved on, and I’m keeping the business.

Best regards,

Ledge

We must buy commitment!

When I did my first full time startup in 2007 I was obsessed with company culture. To my mind, and aided by partners who shared this view, in order to foster loyalty and commitment we simply had to put all of our hires on payroll. We were absolutely convinced that what we were building was too damn important to work with, gasp, contractors.

Fast forward to the end of 2008 and we had eight really talented people on payroll. We were doing top line revenue of just over $40K/month. For the first time in the history of the company I was paying myself (less than the high school kid at the snack bar, but still). We were getting there, baby.

Anyone remember what happened then? It started with “Great” and ended (oh, did it end) with “Recession.” B2B training and development budgets, our life blood, all got cancelled the instant the clock changed to 12:00am on January 1, 2009. It was unreal. We went from $40K/month to $0. For six straight months.

What would you do?

I love this story. Not just because I took a six-figure haircut and burned my friends and family loans to the ground. More so, I love it because it taught me a hell of a lot about what it means to be an entrepreneur. It also makes me a damn good mentor for founders. You know that advice you are ignoring from that mentor with gray hair? Yeah, I was you.

So, ignore advice I did. I refused to believe that each successive month was not an ugly aberration. Certainly this can’t continue… for three years.

I ran out of money, laid off the entire staff, and closed the doors in June 2009, a month before my first son was born. In reality I was lucky. I got a consulting gig the following Monday and started making actual income that persisted through the recession. Many were not so lucky.

So what does this have to do with payroll?

Factors in the failure of this company were varied. We had significant marketing issues and were likely peddling a valuable solution to a problem no one wanted to try to solve when the chips were down. We would likely not have survived 2010 even if we got through 2009. However, we also had one significant operating flaw: too much payroll overhead.

I believe sincerely, and have accumulated proof, that our critical failure was to believe we could not create and deliver an exceptional experience with contract staff. We simply burned too much cash staffing our bench. What’s worse, when that fact was clear and I most definitely should have cut staff, I balked. I took care of people to the detriment of my company, my partners, and my family’s finances. I paid everyone else until the bitter end and left myself with a huge debt load. (I paid, and intend to keep paying, the company’s debt even though it was unsecured.)

Contractors can be blow your mind awesome.

I’m not saying it was really like this; I know everyone on staff was doing their best. But, it often felt like I was killing myself trying to sell enough work to pay everyone else. During the day everyone was in a desk waiting for a gig and during the evening and night I was alone at mine trying to eek out how the hell I was going to make it another week. I got to where I hated getting out of bed to go to work at my own company. That’s a sad place, the kind that makes CEO peer groups and therapists grateful.

Since that very expensive learning experience I have started somewhere around 10 additional companies. Every single one of them has been successful with an exclusively contract workforce. At first I did this begrudgingly. I just couldn’t afford payroll. I paid when the client paid. It didn’t take me long to realize what I had created by accident.

My contractors are bar none the most effective, efficient, and loyal people I’ve ever worked with. (I refuse to say they work for me, always with me.)

How was I so wrong about this? I think it was a fundamental misunderstanding about motivations, incentives, and the entrepreneurial spirit.

Let’s dive into the lesson.

I need you hungry. If you want the “security” of payroll we’re not a good fit. I need you to thrive on projects for which I will pay you well and not give you shit about your rate. I need you to starve if we don’t collectively kick ass, and I need you to love it. For that I’ll always pay you and do so before I pay me.
I need you to appreciate public feedback as compensation. I started hiring Odesk and Elance contractors shortly after the sites opened. I loved how I could get great talent for projects who worked for their 5 Stars because their top ratings got them more gigs. To me that’s a brilliant alignment of incentives.
I need you to own it. I’m a huge proponent of project-based interviewing. You get a gig. If you jive with me and you kick ass, you get another gig. It’s elegant and, again, incentives are aligned.
I need you to take my call first. This is why I don’t haggle on rates. I ask a contractor what he or she wants to make and I don’t argue with the answer. If it fits the project, I pay it. If not, I’ll tell the truth, allow for a lower bid at their option, or file their info for the next gig that’s a fit. In exchange, I want to be first. Every time. I don’t care about your other clients. I pay the best, I manage the best, and I bring the best gigs. If you want that then we’re a good fit. I care more about fielding the best team and winning than I do about anything else. My clients demand it and I’m your client, so I demand it.

This works for me.

I have a sick team that has joined me, project to project, in some cases for 12 years or more. None of them has ever asked me for a salary or benefits. None of them is hurting for money. We absolutely kick ass together and we bring the goods. More importantly, we work like an all-star team together. We support each other. We have a damn good culture even though we don’t share a shred of durable binding.
It’s awesome, and it’s why I’m done with payroll.

Why Go Big or Go Home is Terrible Advice

You know what’s really sexy?

Big.

Big user numbers. Big engagement numbers. Big markets. Big press stories.

In theory, if you line these all up, you’ll soon be looking at big profits. And, we all know that when it comes to profits, size definitely matters.

The problem is that going big or going home is terrible advice. Here’s why:

Size is Relative

What is “big” exactly? It’s a relative term that relies on comparison.

Should you shoot to be the biggest company in the city? Your state?
Are you only successful if you’re the market leader?
Do you need to be the biggest company in the world??

The truth is that small and medium-sized companies are successful every day. They make a lot of money, provide employment, and make their founders wealthy, even if you never hear about them on Twitter.

Jason Lemkin recently advised founders to shoot for an order of magnitude bigger. Success is really about the math, and for the majority of entrepreneurs going big isn’t necessary to make the numbers add up.

Motivation (And Personality) Matter

Newsflash: entrepreneurship is hard enough. Building something from nothing is hard, no matter what your goal is.

Trying to be the next Facebook/Google/Uber, etc? That’s a level of sacrifice most founders just aren’t made to handle.

A lot of articles would now chastise you and make you feel like you’ll never be worthy or “part of it” if you aren’t cut out to be the CEO of a $20 billion company.

But, imagine a world in which we’re all Mark Zuckerberg or Travis Kalanick.

The truth is we all have different personalities, motivations, and responsibilities. And that’s okay! As the saying goes, “It takes all kinds of people to make the world go ‘round.” The same applies to business and entrepreneurship. It takes all kinds of companies to create a full economic ecosystem.

“Know thyself” is indispensable wisdom. When you understand your own true personality, motivations, and desires, it’s a lot easier to know what kind of business you should build–and it’s totally acceptable if it’s not change-the-world big.

Heroes Are Outliers

Along those lines, it’s imperative to remember that those mega companies we all admire are outliers.

Depending on who you ask, something like 75-99% of startups fail. Of the small percentage that “succeed,” almost all of them are acquired.

2013 saw the largest tech IPO class since 2000 with 188 companies going public. That’s 188 out of the thousands of companies started each year. And let’s be honest, the only one we really remember is Twitter.

On the flip side, there are thousands of entrepreneurs making great money pursuing their own ideas, even though they’ll never be featured on TechCrunch or close a $1.2 billion financing round.

What I’m Not Saying

I’m a big fan of innovative, change the world ideas. I fully believe we haven’t reached the edge of our ability to create new technology that will improve or enhance lives (and, yes, make money). So, if you have that kind of idea and drive, absolutely go big.

If you don’t, though, it’s time to stop drinking the go big Kool-Aid.

Why You Should Take All Early Startup Revenue–Even When It’s Off Target

I dropped this tweet recently which got a lot of attention:

I honestly believe this goes hand in hand with the true discipline of the Customer Development Process. The idea here is really simple: don’t start a company around something you think is a good idea. Rather start it around something that someone else indicates he or she will pay you for. That’s the true essence of the MVP — it’s the least product someone will pay you for right now.

Where I’ve tripped myself up in this equation is around the standard logic that you have to go into business doing something you are passionate about. I’m just not sure about that. It makes for great online courses from authors and gurus, but I’ve done it and at least in my case it didn’t pay off. There are a few reasons for this.

Hello, visionary Chief Sales Officer.

As the startup founder you probably have the product vision and are the most adept at selling that vision. If you ever intend to make money you are going to have to sell a lot of what you know because you’re the one who really gets it. Therein lies the problem — if you are spending all your time selling, who exactly is spending all of his or her time on the doing, making, performing or whatever else it is that your company gets paid for?

You can’t do both at the same time. It’s very hard to strike the appropriate balance because when you land your first big client you don’t have the money to hire anyone else and you spend all your time delivering on that first sale. When you do that your pipeline dries up. Then your first client pays on Net 30 or Net 45. You deliver, you wait for cash, you get back into selling and you face a nasty cash gap.

The point is that you won’t really get to do what you are passionate about, at least not for awhile, because you have to sell what you are passionate about before you get to do it. Whenever you are doing it you don’t get to sell it (as much; there’s the art of the upsell that I will discuss at some other point).

You are not the customer!

Now, I don’t think you should hate what you are starting a business around, but you just aren’t the customer. You might be solving a problem or set of problems you had or have but that still doesn’t make you the customer. The customer is the person (hopefully many persons) who pays you money to solve her problem. It doesn’t matter if you think you’d pay you to solve your problem.

Make money to stay alive.

My opinion differs from many people at this point. I agree that hardcore focus is important in the early stages of a company. I also agree one should not get distracted “chasing” revenue. However, I disagree with the notion that one should not accept any revenue that in some manner validates some manual or grossly inefficient manifestation of the startup’s MVP. A lot of times that’s some kind of consulting that sort of, kind of, looks like what you intend to do later. I’m not saying hang out a big marketing banner about it, but if the opportunity presents itself to make some cash I think you should take it.

Mind you I’m not saying make that part of your business vision or even mission, but rather use that cash as a way to keep doing what you are doing for as long as possible so you can keep bootstrapping. If you are like 90% of businesses you will get no angel investment*. If you are like 97%+ you will get no VC investment*. That’s why I think you should take the money!

If you can rework your early business model around making early revenue then DO IT. Stay in business. Live to fight another day. As a friend and colleague from my first startup said while addressing the rest of the team (in our garage-office), “No margin, no mission.”

Agree or disagree?

* I’m estimating here and not using references. These numbers are based on conversations I’ve had with academics and investors, not based on research.

9 Great CRM Tools for Startups

Highrise

“My cleaning company uses Highrise. It’s for our service managers and owners. We track all of our email communication with clients, important information, anniversaries and notes about their homes/offices. It also has tasks so I can make sure my managers take care of things. With reminders, we never miss a client anniversary. It’s been a great web-based CRM solution. ”

Kyle Clayton, Jackrabbit Janitorial

Streak for Gmail

“The Poshly team uses Google Apps for Business throughout our organization, including for email solutions. Because we’re in Gmail all day, it’s easy for us to integrate Gmail-based CRM options, likeStreak. Streak is fantastic because it not only has traditional CRM capabilities, like shared contacts and accounts, but it also lets us save text “snippets” that we can use to standardize email replies.”

Doreen Bloch, Poshly Inc.

Intuit QuickBase

“Being a startup, we loved custom-building everything to our own needs, rather than getting frustrated with standard options. We absolutely love Intuit’s product QuickBase that allows a young company to customize fields and sections according to its unique workflow. After seven happy years, we’ve grown and are now migrating to Salesforce.com, which is better suited for larger organizations. ”

Shradha Agarwal, ContextMedia

Saleforce.com

“We originally used Zoho, but we switched to Salesforce.com as we grew our sales team. At this point, Salesforce.com has even more features than what we need; this will enable Salesforce.com to scale well as we continue to grow. ”

Jesse Pujji, Ampush

Infusionsoft

“We are big fans of Infusionsoft. While it’s not advertised as a CRM, it does so much more to automate your business and your marketing. As we’ve grown, it’s become more and more valuable. Sometimes, it seems as though it can do just about anything, which leaves endless possibilities for as long as we are technically a small business.”

Benji Rabhan, MorrisCore

ONTRAPORT

“I’m a fan of ONTRAPORT. The software offers a good 360-degree view of your contacts, along with lead scoring and automatic routing of leads.”

John Hall, Influence & Co.

Salesforce.com

“Salesforce.com is an amazing platform that can be customized well beyond its basic features. There are also many plug-ins that can be used for things like marketing and ERP integration. We periodically make changes to the way we use the system, so it can grow as our organization grows.”

Ziver Birg, Zivelo

Our Own System

“We built our own proprietary CRM from scratch over the last five years. The existing products in the market, from Salesforce.com and similar companies, were not specific enough to our particular business. Building it in Ruby on Rails and hosting it in the cloud (Amazon’s EC2 stack) has allowed us to easily scale up as our company and team grew.”

Chuck Cohn, Varsity Tutors

Highrise and Salesforce.com

“When we first started out, we had a small team, and Highrise (37signals) was an excellent way to manage contacts, keep emails attached to accounts and delegate tasks. Now that our organization is bigger and we have more sophisticated campaigns, Salesforce.com really is the way to go. Innovative features, like Chatter, allow for an organization with a global presence to keep everyone in the loop.”

Michael Costigan, Youth Leadership Specialist