A business acquaintance of mine recently asked for advice to a question every entrepreneur dreads…How do I turn around my failing business? First off, there is no panacea for a failing business and every situation is unique even with best management practices, regardless of industry type.
I thought long and hard before giving my answer to my friend (which is contrary to my usual verbose knee-jerk reactions) and I finally told him about an exercise I learned of that was more in tune with psychology than business. I told him to write down everything he possibly could about his business, what the strengths and weaknesses are, the history of accomplishments the aspirations for the future and so on. After he answered the questions I told him to construct a boiler plate questionnaire of 20-30 questions that he had already provided answers for. I then told him to give the questionnaire to stakeholders of his business such as customers, vendors, shareholders, even competitors (the old adage keep your friends close but your enemies closer). He was shocked at the results that were returned.
The lesson is one of “know thyself”. The first time I learned of it was not in a business application, but a personal test. The goal was to answer a questionnaire regarding my personal characteristics and traits and then let my friends and family answer the same questionnaire that I answered about myself. I was absolutely astonished to realize the stark differences between what I thought of myself and what other people thought of me. Some of my perceived weaknesses were viewed as strengths in the eyes of my friends and family and vice versa. Sometimes like my friend you can’t see the forest from the trees when your in the trenches of day to day operations of a business. We become blind to our business’s faults. Seeing a fresh perspective from an outside source of what really fuels your business and what truly ails your business is the key. There is no better litmus test on how your business is doing or could be doing then hearing it first hand from a reliable but close source.
Don’t always pretend to have all the answers…it’s better to ask the question and find the answer. Then and only then can you devise a strategy appropriate enough to turn around your failing business.
Cloud computing is coming on strong these days where the WebOS is the new desktop. Cloud computing is a web based operating system hosted remotely and accessed via your Internet browser. Two players that have their head in the clouds are Cloudo and iCloud ironically related by the letter “X”. Cloudo was formely known as Xindesk and Xcerion is the company behind the creation of iCloud.
iCloud has launched in beta and you can signup and play around for yourself. The company has a number of applications from money management to IM and video with more being added all the time. iCloud has raised around $12 million according to VentureBeat.
Cloudo on the other hand has been plagued with launch delays (I can relate to that) and is now expected to launch in the last quarter of 2008. TechCrunch stated the following:
This is a product with potential that if it gets off the ground could well convert people to the cloud, however we might all get significantly older waiting for the launch, and Cloudo could be passed function wise and aesthetically by more nimble competitors while we are waiting.
What is interesting about TC’s comment is iCloud is launched and Google could pressure both cloud competitors by upgrading to the cloud and soliciting an already established user base. Take iGoogle for instance, I remember just logging into my gmail or adsense (separately)…but now, I have a dozen services available and Google knows who I am. If you really analyze Google’s portfolio of services and applications, the company already offers and alternative to the desktop. Google would just need to gel together an OS connecting all the services in the Cloud and convert the multi-million user base and viola we are all in the cloud and not necessarily by choice.
The concept could work brilliantly for Google because hosting data somewhere else especially an entire desktop still concerns users and by converting users slowly to hosted services we all become the frog in boiling water, we won’t jump out until it’s too late.
Lotame closed a multi-million dollar series A deal led by Battery Ventures. Lotame is a social media aggregator that focuses exclusively on helping advertisers and publishers monetize the ad space/inventory available on social networks. Lotame keeps the consumer interests at heart as well. A statement from the press release gives a better summary:
Lotame is a company that focuses on providing the most advanced revenue solutions exclusively within social media. It aggregates intelligence across multiple social networking sites, which allows advertisers to build the most targeted and customizable audiences, and gives publishers the ability to monetize their inventory more effectively to garner higher streams of revenue.
Lotame is challenging the status quo online advertising networks (ironic, we use to say that about Madison Ave when referring to online advertising networks). This is very similar in concept to Facebook’s Beacon that serves advertising based on consumer interests and privacy tolerance. The key difference from Beacon is Lotame is not restricted to the Facebook community, rather it uses a cutting edge crowd-control technology to gather trends, interests and likes among numerous disparate social networks and utilizes the data to benefit the three stakeholders: Advertisers, Publishers and Consumers.
This could be a win-win if Lorame’s technology can place relevant audiences around user-generated content, you get the new triple play– advertisers (target the audience), Publishers (monetizing the audience) and consumers (willingly participate as the audience).
Satya Patel from Battery Ventures has some great statistics about the brand stickiness of social media and user-generated content for further discussion.
This space is gaining tremendous momentum in 2008 as discussed in previous posts.
Amazon had a unknown server outage today starting at around 5am and lasting until quarter-past 7am. The reports in main stream media and blogs have been comical based on how quickly people want to throw AWS (Amazon Web Services) under the bus. Granted Amazon does not have a SLA (service level agreement) but, is that really any different than owning your own infrastructure. Unless you are hosting applications on the edge (think Akamai) and other CDN’s, hosting is bound to fail at some point….even SLA’s that offer 99.999% uptime have cryptic legal language that exonorates them from legal damages. I had a webhosting company for 2 years before selling off the assets and referring business to parnters and downtime is inevitable. It’s how well you manage the downtime and your customer service requests that matter.
Startup Addict has AWS in our business plan…although not implemented for 1.0 and 2.0 release it will be incorporated by 2.5 release, it just makes good business sense. The impressive aspect of the downtime was how quickly it came back up and you better believe Amazon will be throwing resources at rectifying and preventing this problem in the future. As I reported on earlier, numerous startups are attempting to compete with AWS and are offering SLA’s but, this practice is limited because the SLA is inevitable for Amazon. The reason one is not in place now is very clear after this event –Amazon is still working out the kinks. A new startup will not find a better economy-of-scale anywhere than at Amazon web services for infrastructure (unless your VC funded and have a high burn-rate).
TechCrunch just reported FastCompany has turned social network. It has eerie similarities to StartupAddict.com. It was built on Drupal with OpenID just like SA 2.0. It appears tardiness is the price SA 2.0 is paying for bootstrapping. However, we’re almost out of the box and now have a solid foundation for expandibility that SA 1.0 never would have delivered. Be sure to read our previous post “Why Drupal was the obvious choice for SA 2.0″
6 months ago I may have seen FastCompany as a competitor in this space but with the current trends of portable data I think it actually is a boon. FC has always been a solid brand that I’ve respected. It’s nice to see them turn to the social networking space on Drupal. I think the synergies between FC and SA will benefit entrepreneurs and others addicts in the startup value chain. I look forward to joining the FC community.
If you didn’t get to beta test SA 1.0 back in May 2007 check out our review at
Techdirt poses an interesting counter argument to the typical rocket growth conversations among social networks lately, pointing out coincidences like Bill Gates killing his Facebook page on the heels of Microsoft’s recent $240 million FB investment. Techdirt also discusses the current declining growth trend among early adopters in the social networking space including my favorite, Friendster. FYI - If you haven’t read Inc’s spread on John Abraham’s rise and fall of Friendster “the first social network” from last year it is a must read for anyone interested in this space.
Bloggers attack you, call you “a real asshole” and “a very lucky idiot savant.” Former investors badmouth you. Other entrepreneurs copy your ideas without giving you credit. The New York Times makes reference to your “ballooning ego” and the local Fox affiliate can’t even get your name right.
Here is why I’m not buying into the social network counter argument:
I think social networks as we have come to know them are maturing at a rapid pace. User’s are continually barraged with new social media solicitations and sign-ups everyday. In addition, users are tired of spammers and over zealous ads. Companies like Google, Facebook and Myspace are scrambling to bring order to user’s craving more through the exchange of their social graph data.
Social networks are answering in the form of open api’s, portable data, OpenID and advertising models that will actually have standards. The social network has become a teenager (in Internet years) and is going through some growing pains. Most users maintain accounts hoping to take their profile and friend data with them to the next “it” property when the standards and technology is implemented.
Just like so many Gold rush trends in history, the “me-too” brands will eventually join the deadpool through attrition. The social aggregators and social platforms that hold true value propositions and offer real services to their userbase will survive. Monetization through advertising will continue to be the bloodline for the social network, but don’t under estimate what users may eventually pay for real benefits.
Sending a virtual cocktail or electronic poke is fun and viral but does it benefit a user over the long-term? Expanding your rolodex of like-minded people, pooling resources, solving problems and making money as a user through your social network is the stuff that will stand the test of time.
Forbes had a great article on entrepreneurs debating whether to start a real estate brokerage firm. The article focuses on 8 core systems that are a must review for the real estate potentials:
As a principle Broker and owner of a real estate brokerage firm, I felt compelled along with Forbes advice to offer a few suggestions for the real estate addicts. Evaluating the impetus of your startup decision should be your first question…why are you starting a real estate brokerage firm to begin with?
Like most businesses your startup will have a greater chance of success by seeking a niche or an under-served market within your industry vertical (real estate in this case). Your focus must go beyond representing just buyers and sellers. Your focus should be one of specialization:
1. Luxury or high end homes
2. Land specialization
3. Commercial specialization
4. New Construction specialization
5. Relocation services.
6. Technology focus that gives your firm a competitive advantage.
My brokerage success (and the reason I started a brokerage firm) was based on two fundamental problems I wanted to solve:
1. Corporate relocation services (employee’s coming into the state) were grossly under-served in my market area.
2. I was losing land and house sales (as a real estate developer) because not all potential customers wanted to live in new communities or subdivisions created by my real estate development business.
Solutions:
Once I got through the various educational courses, state licenses etc.. I started to put real estate brokerage to work:
I attacked the first problem by contacting the relocation companies bringing new employees into the state. I then contacted the human resource departments of expanding and mid to large sized businesses. I made sure to provide exceptional service so my new startup would be the preferred choice for relocation. This ultimately lead to a tremendous amount of inbound referrals. There is no substitute for great service when it’s needed most.
The second problem was solved by being able to offer prospective customers land and houses outside company owned communities and subdivisions. The law allows owners of real estate, developers and builders to sell their own real estate, but a real estate license is required for representing “other peoples” real estate. The real estate license afforded me the ability to show other real estate property of interest to customers. This was critical because I still controlled the sale rather than watch a customer walk out the door. It may not have been a sale for one business but a great sale for my new brokerage company. The benefit for the customer is having one point of contact and a sense of trust.
By solving both of those problems with a real estate brokerage firm it has enable the company to be cash positive within the first 6 months of inception and bring in multiple revenue streams further insulating against a down real estate market. The company is now moving on to other areas of service and actually have cash positive money for sales and marketing rather than long-term debt.
I always joke with my brother (he’s a startup addict too) about how we are industry agnostic and would bake bread if the right opportunity presented itself. The salient point to take away (if you read this far) is “what problem are you solving and how are you going to solve it better?”
You will need to flesh out your value proposition and prove it is more unique than existing competitors. Startups can be more successful than historic statistics show if we as entrepreneurs spend a little more time planning out the real focus and customer benefits.
In the seed stage (no money) try spending less on marketing and advertising and focus on a flagship customer and providing fanatical service. Network within your circle of influence (friends, family, grocery store, social networks, co-workers). This will get you cash positive faster by truly meeting a need and the rest will fall in place.
I was cruising through the various documents available at Scribd ( previous coverage here) and ran across the 10 Deadly sins of Startups that entrepreneurs encounter by Bill Baloglu. The document is well drafted with elbow grease experience and the typical red flags of the startup journey.
** Use the slider bar at the top of the document to zoom in **
Google is rumored to be buying Plaxo for $200 million. According to ValleyWag the move may be out of complete friendship between Brad Fitzpatrick at Google and Joseph Smarr, Plaxo’s chief platform architect. Whatever the reason this acquistion does fit in with Google’s OpenSocial plans dispite a heavy price. I might just be frugal but wouldn’t 50M have covered it?
This is interesting news seeing how previous reports stated Facebook was acquiring Plaxo (in the $100 million range…explains the 200M purchase) from VentureBeat and TechCrunch
For those of you out of the loop on Plaxo, the site is allows users to sync contacts through its web site, to create an aggregated universal address book. Contacts and profile information from Yahoo, Google, LinkedIn etc… in one manageable interface.
When a property is hot, it’s hot. Google’s on a social graph mission and Plaxo is a natural stepping stone for the company’s completion of the death star. I guess Facebook was still working out the kinks on Beacon.
A new entrant to the “people search engine” space 123People.com. According to TechCrunch (waiting for private invite to further test) the company is in private beta only. Where 123People differs a bit from competitors is by aggregating more tangible personal information like phone numbers, email addresses etc. This could be one area that places that company in trouble based on where the exact sources the data is aggregated from. Currently it’s taken from publicly available information and social networks. “People search” startups are crucial this year as the social graph API matures and data is continually swapped and aggregated between disparate sources. This will only further beg the question who owns the data…the controllers or the controllees.
