crowdfunding – money for nothing?

In the olden days, if you wanted to start up a business or launch a new product, you either had to have lots of your own money or find an investor willing to part with theirs.  For most budding entrepreneurs, it meant having a whip-round amongst friends and family to raise seed capital.  Which, inevitably, meant that those same friends and family then felt that they had acquired the right to tell you exactly where you were going wrong with your idea…

Then came Dragons Den.  Which taught us all that the boy scout motto applies equally to investment pitches and convinced the entire nation that an idea without a patent is utterly worthless.  It also provided a valuable insight into human beings’ capacity for self-deception (remember the guy who wanted £100k for his amazing device for helping drivers drive safely abroad??  It turned out to be a single glove that you wear on your right hand when travelling abroad, to remind you which side of the road you should be on…).

All very enlightening, but, ultimately, it was hard to take the show seriously when one of the dragons clearly thought that a retail high street stationery business was a good idea.

I’m out.

crowdfunding

Now there’s a new way to get investment.  It’s very trendy and inclusive and gives people a warm, fuzzy feeling inside.

It’s called crowdfunding and it involves getting lots of people to invest a small amount of money in your business or product.

When I first heard about it, I was skeptical. I mistakenly thought that each person who invested would get a teensy piece of equity in the business, so you’d have lots of little shareholders.  I assumed that it was a bit like taking your company public, but without people being able to then buy and sell their shares.  I thought that it sounded interesting, but I wondered what would happen if you wanted to sell your company on?… hmmm.

Turns out I was right to be skeptical, but way off the mark in terms of how crowdfunding works…

kickstarter

There are a ton of crowdfunding platforms out there now, but Kickstarter is the biggest for the US and UK markets.  The Mack was looking to use it for one of his business projects and explained how it worked.  We were in a Vietnamese restaurant at the time.  I almost spat my pho out at him.  I definitely remember telling him that he was immoral and that I wouldn’t be any part of it.

Overreaction?  Maybe a tad, but I’ll let you be the judge of that.

So the premise of crowdfunding is that it allows individuals to invest small amounts in businesses or projects that they like the look of and it allows companies to raise money without having to give away any equity.  Typically, individuals can invest upwards of $5 in a project.  In return, they get some sort of reward or recognition.  Whether that’s a name-check on the art film project or an advance copy of the role-play game they’ve invested in.

So you could look at it as a platform which gives rein to the ultimate free market principles.  Power to the people.  A chance for consumers to influence the latest products and support the arts.  A way for small companies to forward-sell innovative products.

Or, like me, you could just look at it as absolutely barmy and ripe for scamming.

money for nothing?

Because it’s not even money for old rope.  It’s basically free money.  It’s the equivalent of the friends and family whip-round of old, but with 10 million mates all chipping in a couple of quid.

It flies in the face of all conventional business wisdom on bootstrapping and angel investment and careful financial husbandry.  You don’t need a business plan.  You don’t even need a company.  You don’t need to show anyone your finances.  Or tell investors how you plan to spend the money they’re investing.

All you need is a project, a snazzy marketing video and enough people who are happy to part with the cost of a latte, and bingo!  Instant success.

Because not only do you raise the money that you need, but you also get massive exposure to your target audience and, if your fundraising exceeds all expectations (the largest amount raised was $10m; over 10,000% of the target), the media will pick up on it too, so further free advertising and even more potential customers.

The most successful projects seem to be those involving funky technology products (smart watches, games consoles), computer games or arty stuff.  That would seem logical – the people who like those things tend to be early adopters anyway, so of course they’d jump at an opportunity to say that they helped make that product a reality.

The Mack and I think it’s only a matter of time before crowdfunding is taken over by organised crime.  Gullible punters willing to part with cash in return for nothing?  It’s the ultimate investor-endorsed Ponzi scheme.

Maybe because of this, Kickstarter has closed its platform to all but “creative” projects.  Don’t be put off.  It seems as though “creative” stretches a long way.  Just take a look at some of the projects that have been funded recently and you’ll get an idea of what flies and if it could work for your project.

And even if Kickstarter is a non-starter, there are many more crowdfunding platforms out there.  Country-specific platforms, sector-specific platforms, even worthy causes platforms.  If you’re looking to attract crowdfunding, then you need to think seriously about the amount of money you need to raise and which platforms get enough of the right eyeballs to make that likely.  As with all of these things, with popularity comes fragmentation and if there are too many platforms, then it becomes harder to attract enough mugs, sorry, investors, to your project.

So my advice…  Get in there now if you’ve got an idea but no cash.  In a troubled economy, it seems there is no shortage of people willing to throw money at new “stuff”.  And they expect almost nothing in return.

Jeez, I bet Madoff wishes he’d thought of this…

hey, what’s the big idea??

I’m going to come clean.  I don’t have a big idea.  I don’t even have a medium sized one.  There are probably a few small ones scattered about somewhere in my brain (the mental equivalent of lost coins down the back of the sofa).  But I can definitely say, hand on heart, I do not have anything vaguely approaching a big idea.

It’s interesting, there’s a definite assumption that if you’ve quit your well-paid job to start your own business, it must be because you’ve got this amazing idea.  I’ve noticed that people are really uncomfortable with the concept that you might just be mooching along seeing what comes your way.  In a social or networking context it goes a little something like this:

group shot 1

group shot 2

So without being in the slightest bit defensive, I thought it only right that I debunk a few unhelpful myths: 

the next-big-thing-myth

The next big thing is only the next big thing when it becomes the next big thing.  Got that?  Ok, let’s move on.

the we-planned-this-from-the start myth

Take a look at any of the internet big guns: they all started out as something pretty different from how they look now.

Pay-pal grew from a digital wallet solution.  Facebook started life as “Facemash”, a “hot or not” ratings site for Harvard students.  Amazon, if you remember, started off just selling books.  Google and You Tube spent years in the financial wilderness before finding a revenue model that turned a profit.

So don’t feel that in order to create a worthwhile business, you have to have figured out the path to global success from the very beginning.  Chances are you are going to have to radically change your concept, business model or both along the way, so your best approach is to be mindful of this from the outset and welcome the process.

the ability-to-predict-the-future myth

I’ve yet to meet someone who is in possession of the double-whammy combo of a crystal ball and hindsight.  Instead, we’re all members of the coulda, woulda, shoulda club.

I was supposed to go to a talk last month given by some important people in tech circles (Google, Groupon) on tech trends for 2013.  I couldn’t make it, but heard that it was interesting enough.  Conspicuously lacking in any substance though.  Mainly a rehash of what’s already out there with a bit of wishful thinking (Google+ anyone?  Anyone at all??).

I mean, between them, these guys have quite a lot invested in trying to work out what’s next for the tech juggernaut.  But they still don’t know for sure.  There were a lot of bets hedged.  So if they can’t predict the future, I’m sure as hell not going to try to.

the must-be-original myth

Sometimes, the best ideas are the ones that are derived from something that’s already out there.  I’m not advocating stealing anyone’s intellectual property.  I am saying there’s no point reinventing the wheel (unless you are in fact inventing a better wheel).  If you can improve on an existing product or service then that is just as legitimate a business as creating something totally new.

Look for the gaps in functionality, application, quality, service, cost, target markets.  There may well be a business hiding in between.

the gotta-change-the-world myth

Between them, Bono and Bob Geldof haven’t really managed to change even part of the world.  And they’ve got a heap of money and publicity behind them and they’ve been banging on about it for years.

Let’s be honest with ourselves for a second.  How many of us really believe that the iphone has actually changed the world?  Or Google?  Or Facebook?  They may have changed the way that we communicate, or obtain information, or interact, but they have not fundamentally changed the world.

If the strap line for the new iphone 6 is that it has brokered peace in the Middle East, then that’s a different story, but until then, we all need to get a bit of perspective.  (I actually think that unless Apple sorts out its woeful maps, the next iphone is more likely to incite violent land-grab insurgency, but I may be unduly pessimistic…).

the if-it’s-not-big-it’s-not-worthwhile myth

This one is the most damaging in my opinion.  I have no problem with people aiming high, if that is what inspires and encourages them.  But more often than not, this sense of having to have a big idea in order for your business to be valid, does nothing except cause paralysis.

There is nothing wrong with wanting to create a business that is just big enough for you.  If you look around you, that’s exactly what most businesses are.  Small.

If your goal is to create an empire, then by all means, sharpen your sabres and round up your troops.  But I view that brand of business colonialism as outdated and slightly distasteful.  To me it smacks of sitting in a leather swivel-chair with the obligatory white fluffy cat.

I think it’s ok to dabble, to start small and see what happens.  Without the pressure of a big idea, there is more room to grab the small but perfectly formed ones.  I see it in terms of the Crystal Maze.  Those teams in the Crystal Dome who aimed high ended up jumping around with arms flailing trying to catch the gold tokens being blown all over the place.  They lost.  The smart ones aimed lower and were able to gather up the already fallen tokens from the floor.  They won.

So that’s where you’ll find me, scrabbling around on the floor, picking up the overlooked ideas…

girl on girl action… networking for fierce women

Look away now if you are of a sensitive disposition, but I consider myself a feminist.  Brought up in an all-female, intelligent, self-sufficient household, this was only going one way.  It’s something I’m proud of.

But here’s the rub.  I have always instinctively shied away from any women-for-women type groups.  I think that it’s because I’ve never personally encountered any barriers to career progression or missed out on opportunities just because I’m a woman.  Or it’s because I can’t stand Loose Women.  One of the two.

That’s not to say that I can’t score a full house in City-boy chauvinist bingo.  Been eyed up when I’ve walked into a meeting room full of guys?  Yep.  Been bought champagne and inappropriate presents by clients when my male colleagues got diddly squat?  Yep.  Been complimented on my outfit/shoes, whilst they have a good gawp at my arse/legs.  Yep.  Been the only girl in meetings with male investment bankers taking turns to peacock (deliberate emphasis) and talking about strippers?  Bingo.

In spite of all that nonsense, I’ve always preferred to work with men.  I’ve found the dynamic more straight-forward, less loaded, less-mercurial.  I’ve felt freer to say what I think and to challenge decisions.  And my own experience has been that I’ve been encouraged, my abilities trusted and my contribution hugely recognised.

In contrast, I (and many of my friends) have had difficult working relationships with other women.  I’ve encountered pettiness, barbed put-downs and being undermined in front of colleagues and clients.  Friends have been held back from long-overdue promotions, been wickedly out-manoeuvred by colleagues they thought of as friends, and been given career-stunting appraisals from female bosses threatened by their talent.  It’s pure, childish playground ganging-up and the few rare times that I have cried at work have been because one of the other girls has been mean to me.

So every time I read something that says that we need more women on boards of companies or that it’s a disgrace that the pay gap still hasn’t shrunk, I whole-heartedly agree.  But I also know that we cannot lay the blame any more on the old boys’ network.  Because at least the boys, in the main, are promoting one another.

mean girls

What makes me sad (and it really does upset me), is that women are still holding other women back.  All the bloody time.  And it’s got to stop, ladies.  Because if we’re not helping one another, encouraging one another to succeed and supporting one another, then we sure as hell can’t whinge when the guys don’t do it for us.

I don’t get it.  It’s hard enough as it is, with the potent nature and nurture cocktail that women get of self-doubt, perfectionism, self-sacrifice and that feeling that we’re doing a terrible job of even pretending that we’re holding it together.  Why do we make it harder for one another?  Why do we make it so competitive, so unpleasant, so destructive?

My sister blames the Daily Mail.  It spews a constant stream of sanctimonious bile and judgment against women – at least any woman over a size 6. Denouncing single mothers as the root of all evil, working mothers as the cause of society’s demise, and voluntarily childless women as selfish freaks of nature.  And it has Liz Jones as its female figurehead.  A woman who has single-handedly done more to erode the advancement of womankind than any other person in my lifetime.  Thank you Daily Hell.  For nothing.

I don’t want it to be like this.  I don’t want to feel that in order to succeed I need to show that I have bigger balls than the guys.  I don’t want to perpetuate the sort of macho bullshit posturing that so many people (men and women) seem to think is ok in business.

I want to run a business surrounded by people I respect and who (hopefully) respect me.  I want to work with people who are smarter than me, because a wise man once told me that the only way your business gets better is if you hire people who are more talented than you.  I want to stay a normal human being and be nice and kind to people.  Because that’s how I am in the rest of my life, so why should I be any different at work?

bizzie birds

So… because I get that the only way to bring about change is to stop mithering and do something about it, I have decided, against my instincts, to join some women-focused business groups.  And I’ll admit to finding it difficult.  The Mack calls it my “bizzie birds” stuff.  It makes me want to punch him in the face.

I have contributed an article to a website called Women Unlimited which provides advice and support to female small business owners.  I had to check myself when I noticed that I was dumbing it down, in case the little women couldn’t understand the message.  Please take a look at their website, it is really accessible and encouraging

I went to a networking event hosted by The Next Women magazine.  It was a pitch evening for female co-founders to present their businesses to a panel of angel investors.  The keynote speakers were brilliant.  The investors were the real deal.  The ideas pitched were pretty much the same as at every other event I’ve been to recently, which made me quietly despair.  But the biggest revelation for me was that I realised I felt much more uncomfortable networking in a roomful of women than if it had been a mixed group or mostly guys.  I couldn’t help myself comparing shoes…

Shame on me.

Clearly, I still have some way to go.  I met a couple of great people and we have agreed to be cheerleaders for one another.  I’m going to stick with it, because I find it hilarious that even though women have an evolutionary advantage when it comes to making connections and being supportive, we are hideously bad at networking in business.

I think part of it is a feeling that we shouldn’t be asking for anyone’s help if we can’t offer something in return.  Men don’t have this insecurity.  I’ll give you an example.  The Mack went to a work thing recently where Chris Boardman (Olympic cyclist) was giving a speech.  The Mack thought nothing of collaring Chris afterwards and chewing his ear off.  The result, they’ve swapped contact details and I know that The Mack won’t hesitate to contact Chris in the future if he needs advice on the best bicycle clips.

I think we girls just need more practice.  Because the more that we all share our expertise and contacts and experience and wealth, the easier it will become for all of us.  And if it means that we have to be fierce (in a nice, Beyonce sort of way) and fearless about it, then fine – just give me a minute to get my best shoes on, and I’ll be right with you, sisters.

Just don’t make me watch Loose Women.

riding the Ferriss wheel…

Hands up how many of you have read The Four Hour Work Week by Timothy Ferriss?

Most of you.  As I thought.  Me too.

And now hands up how many of you have successfully created passive businesses which take up almost none of your time yet which generate enough monthly income to indulge in exciting leisure pursuits and world travel?

Nope, me neither.

Now, I ain’t knocking Mr Ferriss.  Not by any stretch.  I like him and his books.  In fact, The Mack and I have a shared fantasy about which one of us he would choose to marry if he had the choice.  Let’s just say I’m edging it.

a pied-piper for the 21st century 

For those who haven’t read the book, here’s a quick recap.  Tim (I feel ok calling him Tim, after all, we are to be married) says that it’s possible to escape the 9 to 5 grind, to outsource the admin side of your life to overseas virtual assistants and to develop businesses which run themselves, freeing you up to spend your life taking adventure holidays and learning new skills.  And in his book he shares his very detailed blueprint for how you do all this.

Wondrous, I hear you say.  Where do I sign?

I know.  Revolutionary.  I felt exactly the same way.  In fact, Tim was probably the single biggest catalyst for me leaving my job and adopting my new attitude towards the work/life balance (ditch the work, get a life).  He is smart, authoritative, engaging and his vision is hugely compelling.  Who wouldn’t want to follow him to the promised land?

I still think that the book is essential reading for anyone wanting to get more perspective and flexibility into their working life.  It’s just that in the intervening years since the first edition of the book came out (2007), an awful lot has changed in the world and I’m not sure whether the lifestyle oasis that Tim’s guiding us towards isn’t a bit of a mirage.

the abridged version

From a business perspective, it doesn’t make sense for Tim to scrap his existing template and revise his whole book to bring it bang up to date (and I appreciate that the 2011 edition does try to do a bit of that).  But I don’t have anything invested, so I’m going to do it for him.  It’s what any good wife would do…

Chapter 1.  Time Management and Productivity

I, like Tim, do not read newspapers (I’m a happy ignoramus).  I try not to spend hours on the world wide waste of time unless I’m actively looking for something I need.  I also try to limit my consumption of the general pointless amount of white noise and dross that makes up most of the (social) media nowadays.

Update:  The amount of blah blah seems to increase year on year.  Stop trying to ingest all the information that is available to you.  Be uber-selective.  If it really is news, you’ll hear about it.  Limit yourself to one Daily Mail Showbiz binge a month – any more than that and you might as well repeatedly smash your head against the nearest wall – research has shown it has the same effect on your brain.  

I also try to do important tasks in the morning, before I’ve found too much time for procrastination and diversion.  And I try to do them in chunks, so that there’s a greater chance I will complete them.  The alternative is a sorry trail of half-finished projects looking at me reproachfully as I try to slink out the door unnoticed at the end of the day.

Update: Everything nowadays is billed as urgent.  Don’t fall for it.  There is a world of difference between something that is important and urgent and something that is just urgent.  Be disciplined and stick to your guns.  Do your most important tasks before midday.  Then mentally take the rest of the day off.  You’ve earned it.

However, unlike Tim, I don’t find it necessary to limit responding to email only twice a day at allotted times.  I haven’t set up automated voicemail systems and email bounce-backs with instructions to my correspondents.  Nor have I bothered to set up timers that kick me off the internet if they feel I’ve been spending too long looking at dogs for adoption from Battersea.

Update: By all means, if you are an email/internet/facebook/twitter/angry birds addict and your attention span without Ritalin is that of an ADHD gnat, then might I suggest the radical move of not opening those applications until you’ve finished your work.  But unless you are a really, really busy important person (and, in fairness, Tim is probably one of those), I wouldn’t bother with installing a fortress-like time management regime – it mainly makes you look pompous and, ironically, like you have too much time on your hands.

Chapter 2.  Outsource the Boring Stuff

When my younger sister was out of work and I was working crazy hours, I used to pay her to do those errands that I never had time for.  It was the perfect arrangement.  She got a bit of cash to tide her over, I had dry-cleaned clothes and food in the house and my bills were paid on time.  It was what I imagine having a wife must be like.

So I am all in favour of paying someone to help you with tasks if your time is taken up elsewhere or if it is better spent doing other things.

Tim recommends using a virtual assistant.  Mainly based in India or increasingly the Philippines, you pay your VA company an hourly rate (you can bulk-buy time to save money) and you are assigned an assistant who will perform admin, research or similar tasks for you.

Great idea and, back in 2007, probably quite exciting places for a young, bright graduate in those countries to work.  Fast-forward 5 years and it seems as though those graduates are being funneled into jobs with Google and Apple instead.  Hmmm.

Update: Recent experience with some of the big firms (AskSunday, Brickwork) has been underwhelming.  The assistants have struggled to cope with anything but incredibly basic web-research and cut-and-paste tasks, one explaining that he “was not skilled in summarising or tables”.  Okay then.  Unless you get lucky and find a good one, at around $12/hour, I don’t think it’s worth it for all but the most routine and boring research tasks that you just cannot make yourself do.

Some of my friends use Elance, oDesk and 99designs to find freelance contractors.  Again, reviews have been mixed, so I wouldn’t rely on these outsourced services for anything that is commercially important or time-sensitive.

Chapter 3.  Passive Aggressive Business Building

I really want to believe that it’s possible to create a business that isn’t resource heavy, that can just live on in the background, quietly raking in the money whilst you sun yourself in Acapulco (erm, wasn’t that the plot to that weird Phil Collins film, Buster…?).

And believe you me, I have dissected the step-by-step guide on how to do this, from researching a niche market, picking your product, testing uptake, figuring out how to automate the fulfillment process etc.  And I think that all of this is really sound advice for any start-up business.

But the bottom line is, I think the concept of a passive business is pretty much a holy grail situation.  If found, it’s a happy accident and you’re going to be rich and famous.  One example I came across recently was a former sports fan forum site that made millions for its owners when they added affiliate links to betting sites.  Genius.  But pure fluke.

Most businesses take years, time, money, commitment and aggressive focus to deliver any sort of real return. This isn’t a get-rich-quick solution, no matter how it’s presented.

The way I look at it is through Tim’s own path.  He learned the lessons presented in the book through doing things the hard way.  He’s developed some sensible principles to shortcut many of the hurdles he encountered.  But the fact is that he now makes his money on the back of his books, which required huge amounts of research, time, effort, promotion etc., etc.  So don’t expect instant success on an £11.99 paperback investment.

Update: Read Tim’s book for overall inspiration and to get a feel for how you might build out a business.  Take the building blocks from 4HWW around ideation of your business (it’s always easier to sell what you know, so what are your interests? what opportunities do you spot within your interest group?), assumption testing (cheap marketing and advertising tools, the basics on adwords, launch pages etc.), the 80/20 rule (focus on the 20% of customers who represent 80% of your sales), but expect to put some hard graft in too. 

Epilogue

4HWW is a best-seller for a reason.  It’s an easily digestible introduction to engineering a better working life.  I think it’s particularly helpful for us corporate-whores who struggle to see a life outside of the big box.  So if you’re looking to make lifestyle resolutions this New Year, then get a copy for Christmas.

Just keep in mind when you’re reading and dreamlining that it’s not a miracle overnight prescription.  Tim makes it sound so easy, but I can promise you that it’s a bit of a slog on the other side.  However, given that I’m writing this from a beach bar in Goa, I’d definitely agree that the section on mini-retirement definitely has something going for it…

let’s get quizzical … how to ask the right questions in business

According to The Mack, I am truly gifted at asking the right questions.  The questions that other people don’t even think of.  He thinks it may be because I ask soooooo many goddamn questions that a few of them end up being on the money.  Still, he did say that he thought it was my greatest single weapon in my quest for world domination, ahem, starting a business.  And so I thought I’d better write that down for posterity.  And then prove it.

Question Mark Graffiti

Question Mark Graffiti (Photo credit: Bilal Kamoon)

critical thinking

As a lawyer, you are (if you’re any good), pretty accomplished at taking a whole load of information – most of which has been babbled at you by a client whose method of expressing themselves most closely resembles a neural pinball game – and corralling that information into some semblance of order.

You then have to extract the relevant issues from the information you’ve assimilated, analyse those issues, apply the legal knowledge and expertise that you’re supposed to have to those issues, and come up with a solution for your client.

The way you do all of that?  Questions, questions and more questions.  And I’ve discovered it helps if you write the answers down.

The same rules apply when it comes to your business.  Learn to ask the right questions of the right people and the whole start up process will suddenly seem so much less daunting.

Q.  when should I ask questions and when should I pretend that I already know everything?

A.  I don’t really have a fear of asking questions (quizophobia??), nor of looking stupid (statistical probability).  I’m one of those superficially knowledgeable people.  You know, a bit like Henry’s Cat.  I know lots and lots about nothing, and not too much about that…  So I can come across as worldly and clued up, but actually I’m pretty darn ignorant.

Which means that, if I’m in a situation where I’m lucky enough to be talking to someone who actually has real, genuine, actual, honest-to-god knowledge about a topic, I will happily quiz them till I run out of questions (or they run out the door, whichever comes first).  My mantra – if you don’t ask, you don’t get.

My thinking is, most people like to share their knowledge.  It gives them the gentle glow of superiority.  Asking questions of someone demonstrates that you are interested in what they have to say.  And that is precious salve to the average human ego.  Don’t waste an opportunity to get your hands on some expertise, just because you’re worried what the “expert” will think of you.  Most times they won’t remember you anyway…

Q.  what questions should I be asking?

A.  Good question, you’re getting the hang of this!  It’s going to depend on the context.  The way I formulate questions is to break down my problem into logical segments based on what I know already, so that I can identify the gaps in my knowledge (‘cos that’s where the questions are hiding).

Let’s take the scenario where you have an idea for a product, but you need someone to help you with the design and development of that product.  You’ve found a few potential developers, but you’re unsure who to go with.  You’ve asked a few basic questions, like how much will it cost and what the initial steps would be.  But what else?

Here I adopt a Johari’s Window* style analysis (ooh, fancy).  Between you and the developer there are four possible combinations of shared knowledge:

1.  known knowns:  these are facts about the product/development process that are known to both you and the developer.  So these answers are already in the bag.  Right now, these might only be the basic description of your idea and the cost and initial steps of the development process.

2.  known unknowns:  (also called your “blind spot”) this is information that is known by the developer but which is not known by you.  This is where you should be formulating your questions.  Ask the developer what experience they have in working with people in your situation and with similar ideas to yours.  How does the development process work?  What input will they need from you and what form will this take (e.g. meetings, telephone calls, emails?).  How long will the process take?  What problems have they encountered on previous projects and what have they done to resolve them?  Do they envisage any problems here?  What do the quoted costs specifically include? Are there any hidden/extra costs?

3.  unknown knowns:  this is information that you have squirrelled away in your head, but that the developer might need in order to do the job or even accurately to quote for it.  Don’t hold back information (if you’re worried about confidentiality, get the developer to sign an NDA).  Try to give the developer as much info as you can think of.  Then ask the developer what other information they need from you now and ongoing on the project.

4.  unknown unknowns:  in this context, these will be things that neither you nor the developer have thought of.  Don’t worry about that.  I’ve never once come across a project that didn’t bring up some unknown unknowns (also called WTFs).  If you’ve asked the right questions in the earlier stages, then it shouldn’t be anything that you two can’t handle.  You’ll be fine.

Q.  who should I ask?

A.  Generally, someone with more knowledge than you on the subject.  Or Stephen Fry.  Probably.

But seriously, I’m a practical problem solver.  I don’t often go in for conceptual debates on hypothetical issues of the day.  I want straightforward, pragmatic, relevant advice.  Preferably from someone who’s been there, done that, got it right (or better, got it wrong and figured out how to get it right next time) and written the book.

That doesn’t mean that I expect other people to fix my problems and give me all the answers.  But it does mean that I seek out people with specific experience in dealing with my particular issue (and I’ll interrogate them mercilessly to pinpoint the relevance of that experience).

I’m also prepared to pay for that expertise.  Scrimping on real expertise is a massive false economy.  I’m not suggesting being overawed by their brilliance and telling them to name their price.  I am saying that if by paying for their advice it enables you to skip forward 3 steps on your business plan, then that’s money well spent.  And, in my world, it entitles you to tap them for some free follow-up advice should you need it in the future.

Q.  so I should just follow their advice to the letter, then?

A.  Err, no.  Have you been listening to a word I’ve said?  What is the topic of this post?  That’s right, questions… Keep up.

Check that the advice or proposal given actually solves your problem.  It’s a bit like exam essay writing at school.  You remember?  When the teachers drummed it into you to ANSWER THE QUESTION.  Yet it’s amazing how common it is for someone to think they’ve given you the perfect answer, but actually they’ve turned sharp left and embarked on an utterly irrelevant tangent.  On your time and money.

If you don’t feel that you’ve got your answer (and you’re paying for it), then go back and ask for clarification.  Don’t be scared that you’ll look foolish – there is nothing more foolish than paying for a service that you haven’t received.  It’s a bit trickier if you’re asking for free advice – you’ll probably be told to jog on – but you never know your luck!

A quick final word on that last point.  By all means, take full advantage of any expertise you can draw on for free amongst friends and family, but be aware that this comes at a price to them (their time and energy), so be considerate, very grateful and prepared to do something for them in return.

*Nerd note: Johari’s Window is usually used for self-awareness and character analysis.  But I think it works just fine for this purpose too.

the laws of consumer attraction … 4 steps to winning and keeping customers

I was sad to see the other day that cop.copine had closed* on Upper Street.  It used to be one of my favourite French boutiques. Its rue Rambuteau store in Paris is definitely one of my ex’s orientation landmarks for the city. Poor boy.

But I felt partly responsible for that store closure. Because, although I loved the clothing, I never once bought anything. Not one thing. Back in the days when I lived in Paris, I was too poor to afford their clothes. Then by the time I could afford them, there were newer, more exciting brands on the market. I forgot all about their existence.  I’m such a terrible customer. I’ll worship many beautiful things, but always from afar. I rarely purchase.  I even get my books from the library…

All of which made me think about the inherent challenge in attracting and retaining customers.  Although I believe that it’s an art rather than a science, with a hefty dose of luck involved, there are some fundamentals that you should focus on when building out your business from idea to reality.

1. who’s buying?

Who is your customer?  No, really, I mean it: who is your customer?  I’ll ask you again: WHO. IS. YOUR. CUSTOMER???

Don’t give me that “universal demographic”, “oh, it can appeal to everyone” b.s.   The bottom line is that we, the consumer, have more choice than we know how to deal with.  And I speak on behalf of all of us when I say we are totally overwhelmed.

So you’d better be specific about who you’re targeting. And get to know them. Intimately. What do they buy now?  Where do they buy it? How do they transact? What’s their average spend and how often do they purchase?  What are their likes, dislikes, habits and foibles?  What are they saying about your competitors?

Sure, your product or service may have broad appeal, but in start-up nirvana biggest-bang-for-your-buck terms, your best bet is to target a niche demographic where you can pretty much guarantee take-up of your product.

If you’ve followed the Lean Startup Machine process, then you’ll already have drilled down to find your ideal customer.  If not, then I suggest that you use some of the LSM techniques to engage with your target customers and check that your product or service turns them on.

clever brand positioning: cat people are chocolate people

2. stickiness

In VC-world (and yes, I’m singing it in the style of the PC World jingle), when those capitalists look at a fledgling business to see if it’s worth investing in, one of the key things they’re looking for is evidence of customer stickiness.

How much repeat business do you generate? How loyal is your customer base?  Do you get recommendations from existing customers?  How engaged are your customers with your brand?

Their reasoning? It’s generally much harder to attract new customers than to keep those you’ve got.  This particularly applies where you’ve been first to market for a product. If you have retained customers when rivals have surfaced, that demonstrates the strength of your brand/product and makes a good case for the long-term viability of your business.

So how do you keep your customers sweet?  Think of it in relationship terms.  You have to work to keep the spark alive.  Don’t become complacent or neglectful: reward loyalty, do a little something special for those who have been with you for the longhaul.  If you do something wrong, apologise and make it up to them.  Above all, keep talking to them.  Don’t be one of those couples in a restaurant who sit there in silence praying for the food to arrive, to give them something to do.  Have a deep and meaningful conversation with them from time to time to make sure that their dreams, hopes and aspirations match yours.

3. don’t believe your own hype.  

You may be hotter than Felix Baumgartner’s space pants, but you are only there because of your customers.  By all means, be enamoured of your product or service – if you’ve created something amazing then you can rightly be proud of your achievement.  But beware of being sucked in by your own marketing spiel.  Try to stay a little bit humble.  No-one likes a boaster.

Humility and integrity are difficult traits to find nowadays.  Life seems to encourage bragging and brashness.  I think this will shift as people grow tired of all the empty shouting.  I believe that businesses that stay true to their values have more staying power.  This is not to be confused with staying static in the market – over your business lifetime, you will doubtless have to be flexible, to change your product in line with the shifting needs of its audience – but what you stand for shouldn’t change.

So before you get swept away on the tide of marketing and sales, give some thought to what your business stands for.  Think about those brands in your space that stand out for you and identify what it is that their brand captures.  Before any big decision, ask yourself “is this really us? Is this what we do?  Is this what we stand for?”

4. make your customers work for you

I feel as though social media has brought us right back around to the days where everyone lived in small villages and knew everyone else’s business.  The means of sharing, gossiping, reviewing and influencing may have moved on from over the fence, but the effect is the same:  the success of your business depends on what your customers do and say about you.

Those who see this as a modern facebook and twitter-driven phenomenon are missing the point.  It has always been this way.  The only difference now is the scale and speed at which opinion spreads.

If you’ve targeted the right customers, then they will be so excited about your product that they will spread the word for you.  Harness that collective energy and you have the most effective sales team you could hope for.  Apple may be the masters of the universe at this in modern terms, but Avon built its entire 120 year old business on the back of peer-to-peer sales.

So actively encourage your customers to talk about you.  Offer discounts or value-adds for referrals.  If they say nice things, thank them with rewards (or an old-fashioned “thank you” will do).  If they are less than complimentary, find out why, apologise and use the feedback to do better next time.  They are your people.  Put them to work for you.

—————————

*I was wrong! It had only closed for a refurb and to change from a full range to a diffusion collection.  Interesting pivot for their business.  I still can’t afford any of their clothes though…

business planning 101

Business plans have a bad rep these days.  I’m not sure what happened.  Maybe they let themselves go, piled on a few pounds and stopped returning calls…

I suspect that the issue lies with the idea of what a business plan should be (dense and serious) and what it should contain (lots of dry facts and figures, a liberal sprinkling of pie charts).

Whatever the reason, whenever I talk to someone about their fledgling business, nothing gets me stonewalled quicker than asking them how they put their business plan together.  Particularly in the tech or creative sectors.  Business plans are seen as old-school, flabby and a waste of time that could be spent creating an amazing viral campaign.

Well, call me old-fashioned and pour me a sherry, but I’m pretty certain that they still have their place.  I’ve yet to be in an investor meeting where the money guys have said “we’re not interested in your business plan, just show us that cool remote-controlled egg timer app again”.  (If you do know money guys like that, please send them my way.  Especially if they want to invest in egg timer apps.  I sense a real opportunity in emerging markets).

I actually think that if you were to ask most people running a business what’s the one thing they wished they’d done better at the beginning – the response would be: planning how to manage their business and make money from it.

So in the immortal words of Tag Team – Whoomp There It Is… I’m takin’ it back to the old school…’Cause I’m an old fool who’s so cool (they said it, not me)… and below are some suggested questions to help you generate your very first business plan.

BUSINESS PLAN QUESTIONNAIRE *

1.  PRODUCTS / SERVICES:

  • What products / services are you planning to offer to customers?  Describe in detail.
  • What differentiates your products / services from similar products / services in the market?
  • Who are your competitors? List categories and specific businesses.
  • What does your business stand for (e.g. value-for-money, quality, craftsmanship, innovation, philanthropy)?
  • What testing have you done to ensure that there is a market for your product / services?

2.  CUSTOMERS:

  • Who are your target customers? Describe demographic and customer characteristics.
  • What are your customers’ needs and expectations and how will you service these?
  • How will you attract new customers? (e.g. word of mouth, advertising, discount marketing – groupon, wowcher etc.)
  • How will you encourage customer retention / repeat custom? (e.g. loyalty programmes, refer-a-friend discounts, package deals)

3.  MARKETING:

  • What existing marketing tools/materials do you have? (e.g. current customers who can give testimonials)
  • What are the best marketing tools to reach your target customer audience? (e.g. website, flyers, word of mouth, social media)
  • What experience do you have in marketing and / or what budget have you allocated for marketing?

4.  CAPACITY/LOGISTICS:

  • How many hours per week can you devote to your business? If part-time, draw up a realistic schedule of available hours.
  • How / where will you provide the services/products (e.g. online, via a shop, at home, mail-order) and what type of costs are associated with your delivery method (e.g. travel, heating, lighting, electricity etc)?
  • Do you foresee any problems with your delivery method:
    • for you?
    • for your customers?
  • Do you have everything in place to begin providing the services or products?  If not, what preparation, money and time is required on your part to get you to this point?
  • What is your capacity (the maximum number of customers you can service)?  What would enable you to increase that capacity?
  • Do you need anyone else to help you deliver your product / service to your customers?  If so, how do you intend to work with that person / service provider (e.g. employee, contractor etc.)?
  • Do you have all the necessary licenses and business permits you need to operate your business?

5.  FINANCIAL:

  • What is your current monthly income?
  • How many hours do you currently work to generate that income?
  • How much of that income are you looking to replace with the income from your new business?
  • Is there any deadline for replacing some / all of that income (e.g. because your job is being made redundant, your company has cut back on your hours etc.)?
  • What is your proposed pricing schedule for your product / service? Make sure you list out any one-off fees, discounts, bulk-pricing etc.  How does this compare against your competitors’ prices?
  • What are your monthly costs of providing the services? For each cost on your list above, try to get as accurate an estimate of amounts as possible.
  • What capital expenditure (if any) will you need to spend in order to provide the services (e.g. on equipment, premises etc.) and when will you need to spend this?
  • How long will it be before you start to break even?  How long before you generate enough money to pay yourself a salary?
  • Who will manage your accounts for you?

6.  GENERAL:

  • Why do you want to start this business?  What are your drivers and goals?
  • What obstacles do you see to making this business a success?  How might you overcome these obstacles?
  • What help is available to your type of business (e.g. government grants, local enterprise schemes, mentor assistance, crowd funding)?
  • What are your current plans / timetable for expanding the business?  What capital would you need in order to achieve this?  Where will you obtain this investment?
  • If you had unlimited capital investment, what would you do with it to expand the business?

 

*DISCLAIMER: the above is not intended for you if you are pitching for capital investment.  You’re gonna need some pie charts for that…

the rise of the wantrepreneur

Most of you won’t know this, but I have a visceral hatred of joining in.  I’m not sure what it stems from psychologically, but it’s a feeling shared by my sisters.   Maybe because there are four of us siblings and my mum’s one of eight, so between our extended family, friends etc., we’ve got a capacity rent-a-crowd going on without any effort at all.  No joining required.

It’s not that I can’t be sociable.  It’s just that I hate forced fun.  Or the sort of verging-on-hysterical collective enthusiasm that seems to spawn from spending the weekend with a bunch of strangers on any sort of “teamwork” exercise.

All told, it’s a miracle I made it to Launch48.  I suspect that The Mack may have slipped something into a glass of milk to get me there, B.A. Baracus style.  I pity this fool…

But make it I did (I may have turned up a little late… Ha! Take that, organisers, you’re not the boss of me…).  I spent a total of 28 hours over a weekend in the company of strangers, in a room with no windows.  And I paid for the privilege.

Launch48: the concept 

Here’s their schtick:  willing punters pitch ideas for tech/online businesses on the Friday night; you pick a team to join and spend all day Saturday and Sunday developing your idea, building your prototype and launching it to critical acclaim.

It’s run by a team of facilitators and mentors with different business backgrounds and skill sets to give you guidance (for which read idea-shredding) over the course of the weekend.  It’s part of Oxygen Accelerator, a scheme that takes nascent start-ups and provides a framework and seed funding to grow their business to the next level.  The idea being that Launch48 funnels great talent or great ideas into a ready-made incubator system.

There’s no specific methodology taught here – it’s not like Lean Startup Machine which is all about the process – it’s more about learning as you go and relying on the skills of your team members and input from the mentors.

the rise of the wantrepreneur 

The thing that struck me the most over the weekend was that it confirmed this growing feeling I’ve had since deciding to go into business for myself.  That entrepreneurialism is now a mainstream aspiration.  And every man, woman and dog is trying their hand at it.  There’s even a term for them (me): wantrepreneur.  Catchy.

And the fact is, the barriers to becoming an entrepreneur (particularly an online entrepreneur) have never been lower.  I’ve added links at the end of this post to various projects that were launched over the Launch48 weekend. This shows what can be created in a really short period of time, with limited resource and pretty much zero capital.  Pretty impressive.

Now some of you will be reading this thinking – great, the internet has democratised what was once the preserve of the rich, or the well-connected, or the MBA graduate.  And I agree that there is something cool in entrepreneurship being more accessible.

But I can’t help but feel that maybe Elvis has left the building.  Or is at least on his way to the loo….

My concerns are threefold:

  • It’s too easy to ignore the doubts:  because it’s so relatively simple and cheap to translate an idea into an online presence, people forget that just because you can create an app for something or create an online service or product, it doesn’t mean that you have a business.

My Launch48 team was as guilty of this as anyone.  We created a web-based app to help people be more organised.  We identified a niche market for that product and it had some useful functionality.  But when we looked closer, the problem that our product was designed to solve really wasn’t that big a problem for our target market.  And for our affiliate revenue model to work, we needed a lot of customers to use our product. Bottom line: if customers don’t really care about the problem you’re trying to solve, then that’s a hobby project, not a business.  I’m out.

  • It’s a crowded marketplace: nowadays, you do any kind of competitor analysis on your idea and chances are Google is going to spit out a gazillion hits of people all doing something similar in your target space.  Some of the mentors I spoke to about this said they weren’t worried.  That the best ideas, if well-executed, will always rise to the top.

I’m not so sure.  I don’t think it’s enough to do something well.  I think that from the customer perspective, all that competitor noise in the market is a huge distraction.  It diverts attention away from your idea.  It turns customers off.  Unless you’ve got a truly unique angle or you’re in another league to your competition, to them you’re just another [insert your product or service here].

  • It seduces you into thinking building a business is easy:  I worked for a company that grew to four times its size over the four years I was there.  I’ve seen first-hand just how difficult it is to build a sustainable, dynamic business from scratch.  Getting your idea to some tangible form is barely step one.  Turning that into a real business is the rest of the story.  I like that there are programmes like Oxygen Accelerator that try to help fledgling startups find their feet, because it’s pretty brutal out there if you’re trying to do this alone.

I like to think that I’ve picked up a bit of experience over the past 10 years.  And I still don’t feel equipped to run a real business.  I know that it will be a continuous learning curve and I’m fully prepared to fall flat on my face.  I’m all in favour of enthusiasm and having a go.  But I think there’s wisdom in knowing when to get help from more experienced people and learning to identify when it’s time to pull the plug, rather than pivot.

wanna join in?

If you’re thinking of attending a Launch48, Lean Startup Machine, Startup Weekend or any of the other workshops that are springing up all over town, here’s my guide to help you decide if it’s for you:

It’s for you:

– if you just want to see what this start-up lark’s all about;

– if you want to meet enthusiastic fellow wantrepreneurs and share ideas in an open, encouraging and facilitated environment;

– if you’ve got a burning idea and want to test it without spending much money and by using resources (designers, developers, mentors) that you might not otherwise have access to.  One of the Launch48 teams had a fairly well-developed idea and they used the weekend primarily to get developers to help them with A/B testing of various websites.

– if you’re not quite ready to work on your own idea, but want to try out some of the methods for validating business ideas – essentially a trial run before you go and do it for yourself.  You’ll pick up tips (using launchrock for a free landing page instead of paying for unbounce; using Amazon Web Services for pretty much everything your baby web app might need) that’ll save you time and money.

– if you want to talk to people who are already living the tech start-up dream.  The mentors are encouraging but realistic.  They’re not there to humour you, they’re there to challenge your hypotheses, test your assumptions and make you think like an entrepreneur.  They don’t hold back and they don’t sugar coat their feedback.  But they do know their onions and they’re more than happy to share their knowledge and experience.

– if you want to get discounts on useful products and services.  All of the weekend bootcamps provide participants with a great range of discounts, worth £thousands, on useful services – google adwords, free hosting, design services etc.

What it’s not:

– it’s not the place to come if you’re determined to work only on your idea.  We lost around 1/3 of participants after the Friday night.  They came, they pitched, their ideas weren’t chosen and they didn’t bother coming back.  If that were me, I  would be taking that feedback seriously.  If you can’t sell it to a bunch of eager wantrepreneurs, you might want to take another look at your idea, buddy…

– it’s not the place to find developers (although apparently Launch48 in Croatia is that place).  Developers were outnumbered by business peeps by about 8 to 1.  We didn’t have a developer in our team, so don’t come to one of these events expecting it to be a hackathon.  It’s not.

– it’s not the place to come to learn all the steps in creating and launching a tech start-up.  There are no teaching sessions – you get on with it as best you know how.  If skills are what you need, Launch48 has just set up some one day practical workshops for specific skills (e.g. customer discovery; methods for validating ideas etc.) or look at General Assembly‘s programme of workshops and webinars.

– if you already have great business experience, then it’s not the environment to pick up any radical new business skills.  The same principles as apply to any business apply to tech startups.  I think that the participants who got the most out of the weekend were those who had great ideas but perhaps lacked some of the business-planning and execution experience that the mentors could provide.

If anyone has any questions on Launch48 or Lean Startup Machine, then please post in the comments section and I’ll do my best to answer them.

Last but not least, I’d like to thank the Launch48 organisers for putting up with my world-weary cynicism, general bolshiness and unsolicited “feedback”.

A few of the Launch48 London Teams: