In most industries probably not. But music is different (like art and a few others where commitment and commerce are closely linked). SELLABAND has developed an interesting business model to exploit this combination of passion and partnership. Details HERE.
The idea is “believers” aka investors invest $10 in a share of a new band. When the band has raised $50,000 (5,000 investors) SellABand helps them produce and promote a CD – the investors get one copy of the CD for “free”. Money is split between the band, the investors and the company. Any time before the band raises 50K an investor can get their money back or switch it to another band.
Seems to me that $10 is a really cheap way to “own” part of a band for people who like to be early adopters of new music and a way for a band to raise money but more importantly get 5,000 folks promoting their music from the get go. For the investors, it’s like paying $10 to be a promoter of an idea virus. And you get a CD for the price.
UPDATE: Slice The Pie has a similar concept.
Takeaway:
[tags] entrepreneur,record label, Music Business, business model [/tags]
Here’s a great story by a guy whose company was off-shored out of business. In the process of going out of business he laid off his customer service department before dumping his production department, He found out that customers were happier without the customer service department. [The bigger story is here you may have to pay money or time (watch an ad) to read it - well worth either investment.]
Why?
It made me realize customer service is like middle management. It might have served a purpose at one time, but with free and simple communications, and ubiquitous information it’s probably time to re-think if the old structure is the best way to accomplish the goal. The real benefit of technology is to flatten organizations. But that requires using technology not just to do things in the same way (only faster). Rather you must use technology to do things that were not possible before. That’s what cutting edge organizations do.
Takeaway:
[tags]entrepreneur, management, customer service, technology, small business[/tags]
You’ve got something you think I’d like. You want to get paid for it. I’ve got the right to say no, of course, but why do you have to be ashamed to come out and ask? I’m upset right now because I just got a call from a public radio station I’ve supported in the past.
[Digression - I live where I can listen to 3 public radio stations and I do. Frequently. And I support them. Donations have ranged from $100 to $1000. So I like these guys. Until today. End of digression]
The call started like this: “Hi Mr. Seiffer [Dead give away right there when they use my name. At least he pronounced it right] I’m calling from WNYC radio. You appreciate the coverage we provide and blah blah blah ….”
The call ended like this: “Sorry I’m not in a position to give right now” and I hung up. But that’s a lie. Who’s not in a position to give $35 or $50 bucks? You blow that going to a movie if you’ve got kids. So why am I upset? I guess it was the hypocrisy of the whole thing. Not showing any idea that his call might be an intrusion and then having a stranger try to tell me what I like and why.
The best way to respect my time is not to ask if I have time to talk, or how am I doing. Just to get to the point. You know I like the station – you’re getting my name from a list of donors! Don’t act like you have to remind me. You’ve got 10 seconds; come right out and ask for money. Like this:
“Hi. I’m calling WNYC contributors because we need more money. Can you make another donation at this time?” Short, honest and respectful. Of course they should be prepared to talk if I say “But I just gave – why do you need money again?” They should even be prepared to bribe – and I don’t mean with another damn tote bag – how about with my privacy. “Well, sir if you can’t give now, is it because we did something to piss you off? Or can I put you down for a gift in 6 months? If you say yes to that I can promise you won’t get another call or letter from us till then. “[but then they better make good on that promise].
They could even be funny. “Hi. I’m calling WNYC contributors to beg grovel or plead because we need more money. Would you prefer begging, groveling or pleading?” That would be a lot more respectful that fake conversation.
Takeaways:
My natural inclination is to believe the facts but disbelieve the story. That is, I usually think there are explanations (perhaps luck, perhaps existing trends) that people don’t give enough credit to. Instead they tend to assume that everything good that happened was caused by something that they did.
Even with that caveat, Hugh MacLeod’s explanation is impressive.
Note: The picture is from the Stormhoek Blog
Takeaways:
[Update: The hyperbole is mine not Hugh's. I knew that. Check out Hugh's comment here]
[tags] entrepreneur, marketing, web 2.0, blogging, small business [/tags]
What a thrill it is when that day finally comes. That is the company founder’s joy. Also the company founder’s deception. Also (potentially) the company’s destruction.
Joy
Well duh! Now you can finally do what you know needs to be done without someone with their own agenda getting in the way. I think we can all relate to this one.
Deception
Of course you have a boss. In fact you have lots of them. The customers are your bosses. When Scott Adams (creator of Dilbert) quit working for the phone company and went out on his own (Dilbert was quite a success by then) he called it “boss diversification”. But this isn’t just a word trick. That’s why it’s a deception. These bosses don’t even tell you when they’ve fired you. And they rarely give you a warning. So they don’t make it as easy for you to know how to please them. Yet pleasing them an absolute requirement for success. Usually the only signal you have is that they’ve decided to buy (or not) and by the time you get that signal it’s often too late.
So your customer base should be considered a diverse, silent boss.
How could it be different?
If you treated them like you want employees to treat you what would you do? You’d make more effort to decipher their behavior. You’d probably test things more and pay attention to how they react to what you do. This is hard with a boss as diversified and silent as your customer base. Testing is tedious. Changing just one thing at a time so you can test feels limiting (just like having a boss). Recording the results can be inconclusive or ambiguous.
But it must be done. The difference between success and failure is due to how good you are at pleasing your boss.
Destruction
Thinking you have no boss can be your downfall. Why? Think about this, when you have a boss, they usually control what you do, how you do it, and how much money you have to spend on accomplishing your goals. That’s why we all went to work for ourselves isn’t it? (See JOY above).
Yes, but to get permission or budget approval your boss made you jump through hoops. In the best of times, that means you had to clarify your thinking, do a cost benefit analysis and show how your ideas would serve the good of the company. Don’t you appreciate it when your employees do that for you?
Without the boss requiring that – you can just take off on a whim, use nothing more than your gut to justify changes in direction or huge spending outlays. I don’t mean to disrespect your gut. I’m sure it’s wonderful. But clear thinking and careful analysis has it’s place too. Without a boss, it’s too easy to ignore these activities and not hold yourself to account.
This has caused the death of many, many companies.
How Could it be Different?
Put in place a structure for the kind of analysis your company needs before every major (and many minor) decisions. Use a board of director if you can – an advisory board at least and [warning shameless plug alert] a coach.
The good news is that you can still decide to go with your gut; approval won’t be based on corporate politics (unless you allow it); and you still have the final say. But finding a way to require some rigor will ultimately help the company grow to please the real bosses – your customers.
Takeaways:
[tags] entrepreneur, customer, boss, management, small business, CEO [/tags]
President Clinton was the keynote speaker at the NAA conference last week. He posed 4 questions to the audience:
The speech was basically a call to think of what we do in light of it’s larger impact on the world.
Being that the NAA is an association of landlords, the concept of using our clout to make buildings more environmentally friendly came up. It made me realize that in 15 years as a member I’ve never heard the NAA address any environmental concerns nor, in fact, any topic that related to our impact on the world at large.
This is typical of business, and it got me wondering why? I think there are two parts to the answer.
1. Living in the Now (aka short sightedness). Business people are very focused on the immediate so they often see investment as expense. That is they look at the immediate consequenses which may be negative, and ignore the future effects which may be so positive they outweight the negatives.
2. Competition. When you have competition, doing something “because it’s right” can put you at a disadvantage cost wise. This can even put you out of business. This is true even when doing “what’s right” would pay off big time in the future. Ironically, the solution to this often involves government regulation to “level the playing field”. Yet business people often see only the short term negatives of any intervention and ignore the long term positives (see reason #1).
I think it’s time for this to change, and companies run by smart people will be able to use this to their advantage. Here are some examples:
Being Green
Is it just a coincidence that the color of the environment is the color of money (at least in the US)? The June 2006 issue of the Harvard Business Review has an article about the profits companies are realizing by building green buildings. It’s available for a limited time here.
Minimum Wage
Henry Ford made history by paying his workers $5 a day (twice the going rate). The reason? Among other things it allowed his workers to afford his cars. No business in history has survived very long without a market. As I write this, the minimum wage in America hasn’t been raised in 10 years. Real wages for most workers have remained flat during that time. Yet expenses haven’t. How much better would your bottom line be if your market had more spendable income?
A few companies are known for providing actual real living wages for even the lowest employees on their totem poles. Costco is one that’s usually cited and it’s kicking Sam’s club’s butt. Starbucks provides health care for all workers – even part timers. The Container Store pays twice the average wage for it’s retail workers and gives them 10 times as much training as the norm.
What do companies like this know that others don’t? That in this environment, providing better pay and benefits allows you to attract (and keep) the best workers. How much is that worth?
Of course to make this work, you have to manage better – not just pay better.
Don’t even get me started on Health Care
It’s ridiculous that America spends more on health care (as a percent of GDP) than any other industrial country and ranks 32nd in the health of it’s citizens. How much more profitable would you be if your employees were healthier? What if your customers were healthier? Does it really make sense that people stay in jobs they hate because they can’t get health insurance if they move? Does it make a level playing field that GM has $1500 of health care costs in every car and Toyota has $110?
Why has business been so reluctant to demand an overhaul of the system?
Oil
We knew back in the 1970′s that our dependance on oil was a problem. Jimmy Carter proposed funding research into alternative fuels. But we didn’t follow through. 30 years later we’re paying for it. And not just at the pump, we’re paying with the environment and with the power that oil money has given to countries and even terrorists who aren’t exactly friendly.
Doesn’t it make sense that American inginuity that put people on the moon, could be harnessed to solve a problem like this? And in the process we would be creating high paying jobs, and new technologies we could export to the world.
Takeaways:
[tags]Bill Clinton, President Clinton, NAA, Oil, Environment, Minimum Wage, Business, selfish [/tags]
Innovation is the sexier of the two. The cool ideas and “why didn’t I think of that?” make it seem easy. But it’s not.
Execution (though hard) is actually the easier of the two. But it’s boring. Tedious rather, and it takes discipline. These are things we didn’t like about school. But execution works. And anyone can do it. It’s also the more important of the two. Innovation without execution is just a nifty pod-cast before you go belly up. Execution without innovation is the kind of company that makes a “Millionaire Next Door“.
That’s why most of my writing is about execution (and also probably why I’m not the hottest blogger around). But today we’ll take a look at innovation.
I’ve not written in a while because I’ve been away at the NAA conference where there was (with two exceptions) ZERO innovation. One was a product I’ll mention below. The other was an innovative presentation (about execution of all things!) given by a couple of fighter pilots who are part of The AfterBurners.
Innovation comes in two flavors. One is the consistent, tiny changes that go unnoticed. They are actually a part of great execution. The other is the mind-bending, out of the box idea that rocks your world. It used to be called paradigm-shifting. Here are two examples of the latter:
Mobile-Shop exhibited for the third year in a row at NAA – but this year, for the first time they production ramped up so you could actually buy their product. [Full disclosure, I own a very tiny piece of the company] Their idea is that a person working with tools is paid to work, not walk around getting the tools they need (or forgot). And that people who work with tools feel better, and work better when they have the best tools to work with. Until now there’s not been a way for companies to provide the best tools to their technicians in a way that makes it easy for the workers to always have everything they need on hand (less walking, more working) and that provides simple accountability.
Their motto is “Changing the way the world works” but I told them it should be “You Know You Want One” because that’s the reaction from everyone who sees a unit. I saw that reaction when I was with them last Monday in NY when they won the Stevie Award for most innovative new product. One woman wanted to buy one for a father’s day gift. More at www.Mobile-Shop.com
Igglo (a Finnish company) provides a way to show interest in buying a home that’s not yet for sale. They’ve photographed every building in Helsinki (more cities to follow) and provided pictures, maps and such for every one – not just those who are on the market. Buyer’s can earmark a street or area you’re interested in and even post offers on line, You can get a message when a property you like comes up for sale. And for property owners – wouldn’t you like to know who want’s your property and how much they’ll pay – even if it’s not on the market?
Then when supply meets demand, Igglo can connect buyer’s and sellers for less than normal real estate commission because the hard work is already done.
More Here.
My point about both these businesses is that the innovation is a whole new way of looking at something – and building a company around it. If you’re like me you feel a combination of excitement (How cool is that!) and remorse (Why can’t I come up with something like that?) when you see this kind of innovation.
Don’t worry – there’s always execution.
I just posted Everything I know about Business all in one place.
What’s considered “newsworthy” by the business press is either about trends that have a very broad appeal, or what Hugh McLeod calls business porn. The reason any kind of porn has any appeal at all is that it’s a fantasy. So that kind of business news is obviously irrelevant. As for the trends – they usually don’t apply to a small company. One can make a very successful company flying under the radar, or exploiting niches that have nothing to do with larger trends.
However, there are times when the larger issues do have an impact, but small companies don’t usually take time to consider them. Here is an exercise to solve that problem.
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Financial Impact Grid
From The Star Bulletin by Ralph Perrine,
SOMETIMES I sit with business decision-makers and draw what I call an Impact Grid. In the middle square we put the company. In the next square we put the company’s clients. In another, the client’s customers.
In adjacent squares we put the company’s partners and vendors. We talk about what impacts these squares. It helps business leaders think about the impact of economic factors: employment, interest rates, and so forth.
It also reveals lines of impact for specific scenarios: If client A’s customers are hit with a shock (hurricane, bird flu, rising energy costs), then client A is going to experience a downturn in sales. That in turn will have other implications.Â
If you build it, they WON’T come.
Build a better mousetrap and ….[fill in the blank]
If you answered the world will beat a path to your door, you’ve been infected with the Myth of the Mousetrap. I say infected because myths are stories we believe about how the world works that turn out not to be true. The good feeling we get from believing the story outweighs the pain of the reality check. So the myth persists. Perhaps it’s related to the desire for a CERTAIN button
The Myth of the Mousetrap is perhaps the most damaging myth about business. It gives the impression that building a product (no, make that building a good product, or even just a better product than the other guy) is the majority of what it takes to build a business. That’s just not true. Yet the comfort of believing it forces countless business owners to endure the pain of failure despite having a good, or great, or superior product.
It seems that this problem plagued the inventors of the television, the shopping cart, and the more recently the shootAndstar Rebounder. [**Disclaimer – free advice is worth what you pay for it, and in the case of the rebounder inventor, it’s unsolicited to boot. Not that that has stopped me before.]
Click here and scroll down to the section called HE SHOOTS – HE SCORES! You can see from his comment he’s focused on the product. Unlike his web site which seems to be focused on large colored letters. There is only one picture of the device, and I can’t tell how it works without some study. There’s some mention of a video, but it doesn’t link to anything – not in my browser (Firefox).
These mistakes are typical of people who build a product and hope to turn it into a business. Think how different if this were invented by folks at Spaulding or Nike – people who built a business that they hoped to improve with a new product. I suspect they’d be thinking price point, marketing costs and distribution channels way before the prototype was built. There’d probably be licensing deals with hoop manufacturers and almost certainly a patent application. Not that this would guarantee success, they’d obviously have a larger cost structure to satisfy – but they’d start knowing it takes more than a great idea.
And yet, the rebounder inventor is doing better than many I’ve known about. Sales in 30 states and other countries in about a year? Not bad. New technology makes it easier and cheaper for a solo practitioner to do some of the good things a big company would do. If he does that, while still keeping his cost low (and don’t quit the day job) he could have the best of both, and end up with a real successful business.
You can buy some at www.nothingforsalesite.com or read an article about it.
Takeaways:
This is not really my first post. I’ve dabbled with blogging before and want to include some of those posts to get this blog off on solid footing. I have changed the dates of those posts (they mostly happened before Feb 2006) but didn’t want to have a bunch of thinly populated archives. After Feb 28, 2006 the dates will be accurate.
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