Monday, January 11, 2010

Is Social Media Killing Your Business?

from Duct Tape Marketing

I know today’s short post might come as a surprise to regular readers of this blog, but even though I promote the heck out of social media use for small business, I see a dangerous side as well.

Some small business folks equate busy with business. The problem with social media usage is it can keep you really, really busy, without producing a dime of business.

Don’t get me wrong, this is not a post for all those social media is a load of crap folks, this is a post for all those folks that are hiding behind the monitor tweeting away when they really should be out shaking hands, making sales presentations, and attending networking events.

It’s all too easy to get sucked into building a big blog readership or twitter following and then wonder why your phone isn’t ringing.

Social media for the small business is a catalyst, a tool, a way to create awareness and deeper engagement – it’s not a way to take orders.

At some point you’ve got to take orders. If you can’t convince someone face to face of the value of your proposition, don’t expect to do it in 140 characters or less.

Stop using social media as an excuse to be busy and get out there and sell something.

There, I feel much better now.

Bullhorns are overrated

from Seth's Blog

They cost too much and they don't work very well.

Most people ignore them, they don't last very long and they're undependable.

Anil Dash has discovered that having ten times as many Twitter followers generates approximately zero times as much value.

The goal shouldn't be to have a lot of people to yell at, the goal probably should be to have a lot of people whochoose to listen. Don't need a bullhorn for that.

What every mass marketer needs to learn from Groucho Marx

from Seth's Blog

Perhaps the most plaintive complaint I hear from organizations goes something like this, "We worked really hard to get very good at xyz. We're well regarded, we're talented and now, all the market cares about is price. How can we get large groups of people to value our craft and buy from us again?"

Apparently, the bulk of your market no longer wants to buy your top of the line furniture, lawn care services, accounting services, tailoring services, consulting... all they want is the cheapest. The masses don't want a better PC laptop. They just want the one with the right specs at the right price. It's not because people are selfish (though they are) or shortsighted (though they are). It's because in this market, right now, they're not listening. They've been seduced into believing that all options are the same, and they're only seeing price. In terms of educating the masses to differentiate yourself, the market is broken.

Fixing this is almost always a losing battle. Just because you're good at something doesn't mean the market cares any longer.

The Marx Brothers were great at vaudeville. Live comedy in a theatre. And then the market for vaudeville was killed by the movies. Groucho didn't complain about this or argue that people should respect the hard work he and his brothers had put in. No, they went into the movies.

Then the market for movies like the Marx Brothers were making dried up. Groucho didn't start trying to fix the market. Instead, he saw a new medium and went there. His TV work was among his best (and certainly most lucrative).

It's extremely difficult to repair the market.

It's a lot easier to find a market that will respect and pay for the work you can do. Technology companies have been running this race for years. Now, all of us must.

If Wal-Mart or some cultural shift has turned what you do into a commodity, don't argue. Find a new place before the competition does. It's not easy or fair, but it's true. You bet your life.

[Please note that nothing I wrote above applies to niche businesses. In fact, exactly the opposite does. You can make a good living selling bespoke PC laptops or doing vaudeville today, even though the mass of the market couldn't care a bit. How he got in my pajamas, I'll never know...]

Googles new tool

Finding places "Near me now" is easier and faster than ever on

Thursday, January 7, 2010 3:28 PM

Last month, Vic Gundotra, VP of Engineering, demonstrated at the Computer History Museum the ability to search by using your location as the query. Starting today, you can try this yourself by going to in your iPhone or Android browser and clicking on "Near me now" once your location has been provided by your phone.

"Near me now" was designed to address two user problems. First, we wanted to make it fast and easy to find out more about a place in your immediate vicinity, whether you're standing right in front of a business or if it's just a short walk away. For example, you may want to know what other customers think about a restaurant before you go inside (see quick video below) or what they have been raving about on the menu before you order. By selecting the "Explore right here" option, you can find out more about a place "right here" with just a few clicks.

Second, we wanted to make searching for popular categories of nearby places really simple. Imagine that you emerge from the subway station and you want to grab a coffee, but you don't see a coffee shop around you. You can simply search for all nearby coffee shops by using "Near me now". To search other categories of places not shown, "Browse more categories" provides access to our local search productwith more category choices.

"Near me now" is currently available in the US for iPhone (OS 3.x) or Android-powered devices with version 2.0.1 or later. You must first enable location in order for "Near me now" to appear, and "Explore right here" works only if the phone provides location accuracy within approximately a city block.

Five Monkeys

from The India Uncut Blog

On a mailing list I’m part of, I came across this wonderful excerpt from a book called Thinkertoys:

Imagine a cage containing five monkeys. Inside the cage, hang a banana on a string and place a set of stairs under it. Before long, a monkey will go to the stairs and start to climb toward the banana. As soon as he touches the stair, spray all the monkeys with ice-cold water. After a while, another monkey makes an attempt with the same result - all the monkeys are sprayed with ice-cold water. Pretty soon, when another monkey tries to climb the stairs, the other monkeys will try to prevent it.

Now, turn off the cold water. Remove one monkey from the cage and replace it with a new one. The new monkey sees the banana and will want to climb the stairs. To his surprise, all of the other monkeys attack him. After another attempt and attack, he knows that if he tries to climb the stairs he will be assaulted.

Next, remove another of the original monkeys and replace it with a new one. The newcomer goes to the stairs and is attacked. The previous newcomer takes part in the punishment with enthusiasm.

Again, replace a third monkey with new one. The new one goes to the stairs and is attacked. Two of the four monkeys that beat him have no idea why they were not permitted to climb the stairs, or why they are participating in the beating of the newest monkey.

After replacing the fourth and fifth monkeys with new ones, all the monkeys that have been sprayed with ice-cold water have been replaced. Nevertheless, no monkey ever again approaches the stairs. Why not? Because as far as they know that’s the way it’s always been around here.

I have a feeling that this is the problem with Indian television programming and Indian newspapers. Hardly anyone thinks outside the box. And the box is old. There’s a great opportunity not being taken here because no one has courage and imagination. Pity.


Tuesday, October 20, 2009

Capital deprivation and startup strategies

One of the most important uses of capital is in discovering new markets. With a sufficient pool of capital, new markets can be quickly discovered, probed and exploited; the viable markets invite a rash of competing companies, and unviable markets are neglected and wither.

In India, most companies are severely capital-deprived. With the increases in FDI in recent years, this has changed for the better, but the process of market discovery is still slow and, by and large, left to large companies.

This capital deprivation is one of the reasons that a few large companies are spread across many unrelated markets in India – for example, the Tatas in broadband (Tata Indicom), mobile (Tata Docomo), power distribution (Tata Power in Mumbai), and even electronics retail (Croma).

One of the best features of the American economy is that capital is available to both small and large companies – small companies often doing the work of finding new profitable market niches, and going on to become (or selling out to) larger companies.

In India though, the lack of capital means that most small companies have to think constantly of ways to survive before it becomes possible to sustain the company through cash flows from their primary product.

Some markets require large amounts of capital before it can be said with any certainly whether they are viable or not. In the book "Founders at Work", the founder of Tivo – probably one of the more disruptive products of the last few decades – mentions that it took about $500 million in funding in its first few years. This is an unimaginable amount of money for a small company (or even a medium-sized) company in India to spend, although in the case of Tivo at least, I think the jury is still out on whether this is a viable market or not.

The example of Amazon – which spent several years taking investor money before it turned profitable – is also well known.

These examples – of large capital expenditures before a market is proven – are unlikely to repeat themselves in India since the pool of capital is limited, and flows mainly to large companies. Large companies are typically conservative about exploring unproven markets, since there are multiple internal constituencies that have to be convinced before such projects are green-lighted.

Given this situation of capital scarcity, especially for early stage companies, what is the best strategy for startups to survive?

One is, as mentioned above, to copy products that have worked somewhere else. These have the nice property that you know that someone, somewhere, is willing to pay for that product, and it is also fairly clear how much money is needed to produce it. Companies following this strategy have to be careful that the original product itself won’t be available in their target market before they are ready. For example, making an Indian version of Facebook at this point is probably a poor bet, since the original product has considerable traction. Countries such as China or Germany that have language barriers have seen domestic knockoffs of popular international Web applications before those products were localized into their domestic languages.

Another strategy is to bootstrap the company by doing work for hire. This is a well-established path, and intermediaries like Elance, Rent a Coder and oDesk make it possible to get contract work that (at least in theory) can pay for the salaries of the people working on the "real" product.

In practice, I believe it is all too easy to become a full fledged outsourcing company, and lose sight of the original product. This is fine as far as it goes, but a service company lacks the advantages of leverage that a product startup naturally has. (See my previous post for more on this.)

An additional option, which I believe more and more companies in India will adopt, is to conceive and develop a product in India for the international market.

While examples of US companies that develop their entire product in India while targeting the US market are now commonplace, these companies are typically American companies with American (or Indian-American) founders.

Companies created by Indians in India have traditionally focused on the market at their doorstep before venturing abroad. In some cases, especially for technology products, the Indian market may take several years to become large enough to support Indian startups. In such cases, it makes sense to target global markets side by side with, or sometimes even before, the Indian market.

This "global from day 1" attitude is probably most evident in companies from Israel, as well as other small European countries that lack a large home market. For products where the Indian market is more similar in size to, say, Belgium, than the US, it may make a lot of sense for Indian companies to think international from the start.

[This post is authored by Abhijeet Vijayakar - founder of Nunook Interactive Pvt Ltd, a game startup in Mumbai and Chennai. Nunook is currently developing BrainNook, India's first online, educational virtual world for kids, parents and teachers. In a previous life, Abhijeet developed 3D graphics engines (and games) at Electronic Arts in the San Francisco Bay Area. He highly recommends not succumbing to capital deprivation syndrome.]

Monday, October 5, 2009

Get Customers First and Then Write a Business Plan

from Wil Schroter's BIGGER Blog - Go BIG Network

If you’re thinking about starting a company, please don’t write a business plan. Stop, put the keyboard down, and step back. You’re wasting valuable time.

Don’t get me wrong, I’m not suggesting that you run aimlessly into the startup abyss. What I want you to avoid is the black hole of planning that most entrepreneurs get into when starting a company. They get sucked into a time warp where a formerly great idea gives way to months upon months of “thinking” about the idea instead of just making the damn thing happen.

If Nobody Buys, it’s Not a Business

The first step, before writing a plan, is to validate the concept. If nobody will ever buy your product, it’s unlikely that a business is ever going to form. Focusing on the product first, and more specifically the customer’s willingness to buy that product, is by far the most valuable time you can spend early in your business.

In addition to validating your concept, selling the product early allows you to prove some key assumptions in your plan before you begin writing it. For example, wouldn’t it be helpful to know what someone would pay for your product before you built it? You would be surprised how much information you can gather from potential customers just by asking them what they would pay for a hypothetical product. “If you build it, they will come” might have worked for Kevin Costner in the movie Field of Dreams, but it’s a formula for disaster in a startup.

The Prototype Company

Sometimes finding out early that your idea isn’t as viable as you thought is a blessing. Instead of spending months writing an elaborate business plan on a completely unproven idea, try putting together a “pre-business plan” that consists of only about five pages that quickly communicates your idea and focuses on the key assumptions that drive your business. These key assumptions are often questions like “Will people buy the product as I’ve defined it?”, or “what will they pay?”, or “how much would it cost me to sell this product?”.

Imagine that the first few months of your business are really more like a great big “prototype company”. Focusing strictly on the sale of the product and proving your assumptions, even on a small scale, will allow you to write a far more comprehensive and viable business plan when you are ready to formalize your thoughts. Additionally, you will be able to make much more accurate forecasts on the business when you get a sense for what it really takes to market, sell and deliver the product.

Your Business Plan is Not an Application for Capital

It’s a common misconception that investors want to see a business plan before they will consider investing in a concept. That’s not entirely true. What investors want to see is that you can demonstrate your ability to sell the product to paying customers. Ask anyone (even yourself) who you would rather invest in – a startup company that is making money without a plan or a business plan that isn’t making any money? Writing long, elaborate papers might have impressed your instructors back in college but it won’t win you any points with investors. They want results, not ideas.

Keep the Plan Simple (and listen!)

Despite what you may have heard, most of the best business plans are as simple as possible. It’s far more important for you to demonstrate that you can solve one market need incredibly well than being able to show you’ve thought of every possible market niche and have included it in your plan. Think quality over quantity.

The process of writing your business plan isn’t to show off how much you know about a concept. The most important aspect of writing your plan is to become a voracious listener. Listen to what your potential customers are telling you they want in a product. Listen to what they are not getting from the existing products. Listen to what investors are looking for in the companies they put money into. Your business plan should read more like a record of all the valuable information you have heard, presented in a meaningful way that makes the case for your company’s potential success.

Put Down Your Pen and Pick Up the Phone

You’re much better served to do your business planning by picking up the phone and asking customers to buy than you are