Strategy

Business Case Versus a Return on Investment?

Business case … return on investment – often used interchangeably, these two sales tools are related but different.

Let’s look first at the term ‘business case’ – I often see this being used as the economic argument for doing something. It isn’t, except in the most abstract form whereby all decisions made in business are founded on economics. A business case is simply ‘the rationale for doing something’.

Don’t get me wrong – a business case can be based entirely on a return on investment model (which I’ll come to), but it isn’t the same thing. Why might you decide to do something? Well, here’s a few examples:

• It will help you win a major new customer – as, for example, becoming certified to an ISO standard may significantly increase your chances of getting business from government bodies
• It creates a cultural change – a few years ago I worked with a client which was selling a solution into the utilities industry which made contractors take photos of their handiwork prior to relaying tarmac. The business case for this was that less rework would be required because contractor staff would realise that they couldn’t hide a botch job beneath six inches of asphalt
• It will improve your staff (and hence productivity) – Lever Brothers did not build Port Sunlight because someone turned up in their office with a spread sheet; they did it because they felt that it would make their employees better people and give them a happier life.

When you are asked to present a business case for doing something it is useful to refer to Rick Page’s Shark Chart. This tool summarises the relative value of arguments made for doing something. The hierarchy goes like this:

• Strategic – providing advantage
• Political – reducing risk
• Financial – creating a return
• Cultural – driving change
• Operational – solving problems
• Capability – delivering tools

When you create your business case, you should always seek to get as high up the shark chart as possible – don’t talk about ‘time saved’ (an operational argument), describe outmanoeuvring a competitor (a strategic case). Needless to say, the higher up the Shark Chart you venture, the more evidence based and compelling your detail needs to be.

So where does a return-on-investment fit within this? A return on investment model would normally be found being used as a tool to explain the economic rationale based on known values drawn from the business – where evidence is more about the nuts and bolts of existing numbers rather than about opportunity. It is possible to include ‘value of new customer’ within a return on investment model – but it often lacks credibility because the likelihood of a new customer being won is low, and the follow on impact of that win is next to impossible to quantify. Sit this next to reduction in headcount figures brought about by the installation of a new piece of machinery that replaces a manual process and you will understand what I mean.

Posted by David Gates on October 26, 2012 at 10:00 am in Account Management, Blog, Strategy | Permalink | Comments (0) | Trackback (0)

         

What I Know About Hiring and Firing: Part 3

In the past two weeks, I have been sharing my insight on the recruitment challenges of growth companies. In part 3 of the series, I discuss the benefits of promoting internally:

3.       Promote don’t hire

As the organisation grows, new roles and positions must be created. These generally fall into two categories.

First are those roles that demand some specialist competence and experience that is not found within the existing workforce.

Second are those positions that are essentially more senior management roles for functions that already exist, albeit in emergent form, and where some basic competence already resides in the organisation. In this context, consider promotion over hiring.

Ambitious, self-starting, driven young individuals are drawn to start-ups precisely because there is an opportunity to assume responsibility, pioneer a role, and simply ‘do stuff’. The self-learning opportunity is immense. Passion trumps experience. These individuals are what make start-ups tick. In many ways, they define the culture. They should be encouraged and rewarded.

In many cases, they may already be fulfilling the part, if not all, of the role you envisage. Give them the role before you give them the title. When they demonstrate the ability, talent, and energy to go further, promote them. That is the reward for working in a start-up – to gain more experience faster.

Find them mentors that can support them in tackling their most critical challenges. Look for mentors in your ‘circle’, and that includes tapping members of your board. While they won’t play the role themselves, ask them to suggest someone in their network. Get them to pull a favour. Mentoring works. Use it.

The fourth part of this series will be published next week. Click here to view part 1 and part 2.

Posted by Shields Russell on October 24, 2012 at 10:17 am in About RIG, Blog, Recruitment, Strategy | Permalink | Comments (0) | Trackback (0)

         

What I Know About Hiring and Firing: Part 2

Following on from the first installment last week, I share my second observation on hiring and firing for founders and CEOs of growth stage companies.

    2.       Recruitment as a core competence

The hiring challenge intensifies as growth accelerates and greater demands are placed on the organisation. The interval between new hires shortens. Hiring is prioritised on the back of success. Key positions must be created and filled. Hires must be on-boarded ahead of projected growth.

A key strategic issue facing all CEOs is determining what competence is ‘core’ and what is ‘peripheral’. Core activities are those that directly contribute to the company’s competitive differentiation. Building capability in these areas translates into a distinctive performance advantage delivered through efficient collective execution. Core capabilities matter, and hiring, along with people development, are the pillars upon which all capability building rests.

Easy to say: hard to do.  Start by seeking out smart practices (This will be the subject of a later blog post). Look at companies that hire well. Ask them how they do it. Non-competing companies will happily share practice. Look at the abundant literature.  Formulate your ideas into an end-to-end process that you feel reflects your culture.

Then start the process of improvement.  Review the process after each hire and keep learning. Source feedback from successful and non-successful candidates, from HR experts, from Board members, and from colleagues.  Ask for feedback or advice and you will generally receive it. Innovate around the process in a way that reflects and develops your values and your culture. Only in this way will a fit-for-purpose process evolve.

Above all, when you get it wrong (and you will), avoid the frequently trod path of blaming the hire. Be self-critical. You hired the person, and if it turns out that there is a mismatch between the person’s capabilities and the demands of the role, then it is your judgement that is in question. You designed the process that generated the data points that informed your judgement. Revisit the process and get value from your failure.

Part 3 of this series will be published next week. To view part 1, click here.

Posted by Shields Russell on October 17, 2012 at 10:15 am in About RIG, Blog, Recruitment, Strategy | Permalink | Comments (0) | Trackback (0)

         

What I Know About Hiring and Firing: Part 1

In this four part mini-series on recruitment, I will share my insights into the hiring challenges of growth companies.

As a body of ideas, I make no particular claim to originality. Rather, I hope that the filter of my experience of working in and around entrepreneurial ventures for over 15 years will inform my perspective with insights that are borne of experimentation and practice.

My search has been one that always seeks to balance ‘the art of doing’ with a ‘scientific approach’: to inject some science into art and some art into the science.

My thoughts are written with founders and untested first time CEOs in mind. Theirs is an incredibly challenging role and chief among their challenges will be ‘hiring and firing’.

Ensuring that the coffers never run dry is a fear-inducing imperative. And yet, of all the issues that a CEO must tackle, people issues can be the most agonising and the most difficult to act upon decisively and with the intended effect.

As the company grows, people management comes to the fore. The company is its people and ‘growing’ the company almost invariably means growing the number of people as well as ‘growing’ the people themselves to meet the challenges of growth.

1.       Don’t delegate ever

As a general rule of thumb, as a company grows, the CEO must delegate. Failure to do so will create a ‘cartwheel’ organisation that will stymie growth.

For the CEO, the critical questions are about ‘what to delegate’ completely and ‘when to delegate’. Yet when it comes to hiring, the answer is simple. Don’t. Ever. Hiring is simply too important to delegate.

Consider this: the earlier the stage of the company, the more critical each new hire is. If you are a small five person team, the new hire will represent  17% of your team. An attractive opportunity for the new employee:  a critical, foundational decision for you.

This person will become part of the fabric of your organisation and will influence and shape it for better or for worst. A great hire will add expertise and will balance your team.  A poor hire will add little and leave weaknesses unaddressed.  Sub-optimal hiring equates to a brake on the development of the organisation and loss of opportunity.

Look out for the second part of this series to be published next week.

Posted by Shields Russell on October 9, 2012 at 10:15 am in About RIG, Blog, Recruitment, Strategy, Uncategorized | Permalink | Comments (3) | Trackback (0)

         

3 differentiators of growth businesses

At RIG, we work with technology-enabled companies with high growth potential. In some cases, this means true “startups”: early stage companies with seed or Series A investment still refining the process for taking their product to market.

However, a number of the clients RIG has worked with fall into a different category: well-established companies looking to kick start a new phase of growth. An interesting point to consider with these organisations is what differentiates them as “growth” companies from “lifestyle” businesses.

There appear to be 3 critical traits that define these growth companies from their less ambitious counterparts:

1. Entrepreneurial drive

There has to be a will and an ambition to achieve more in order for a business to grow. Some people are content with the level of success they’ve achieved; there is nothing wrong with this, but they are almost certain to remain in the “lifestyle” category.

On the other hand, for a company with growth ambition, a new push will inherently affect the CEO as well as employees , who may be resistant to change. Having a strong leader in the business with sufficiently compelling entrepreneurial drive to motivate both him or herself and spur on the team to overcome complacency and fear as barriers to success is therefore essential. There must be an element of inspiration that leads the company as a whole to buy in to the growth plan.

2. Strategic focus

The first element of this is having a clear vision and objective for the business, be it in terms of revenue, customer acquisition or another metric. Simply a desire for growth is not a specific enough target for a company’s success. A desire for growth may be the starting point, but this needs to evolve to an articulated objective against which a business can measure itself in order for it to succeed .

The second aspect of this is an ability to let go of and delegate purely tactical issues. If a business has been run a certain way for a number of years, it may be hard to let go of the day-to-day issues. However, in the pursuit of growth, CEOs and MDs need to re-focus their valuable and limited time on the key areas that will drive success. They must be able to create or source senior employees that they can trust (and trust is surely the significant factor) to manage their business. This is not to suggest that executives relinquish all oversight of their companies, but that they must be able to delegate and use their time effectively – as opposed to just using it the way they always have.

3. Appetite for risk

Growth is change, and change is risk. It is relatively easy to keep doing what you’ve always done to sustain a stable, but limited, business. Kicking off new and different activities that have the potential to drive growth puts that stability at risk. Although entrepreneurs may have taken the risk once to found their business, at a later stage in their careers/lives, they may not have the appetite to do it again. If what they’ve done to date has gotten them to where they are and no further, it is clear that change (and the risk entailed) are needed, so the willingness to dive in is critical.

These traits are obviously necessary to start any business, but they may fall off over the course of running a company for some years. Reinvigorating or rediscovering these characteristics is essential to taking a business to the next level.

Posted by Jessica Tayenjam on September 19, 2012 at 10:43 am in Blog, Entrepreneurship, Strategy | Permalink | Comments (0) | Trackback (0)

         

Know Your Customers’ Objectives

Having just been party to a situation (as an observer, I hasten to add!) whereby a vendor got it completely wrong, I’ve decided to reiterate the value of understanding your customer’s objective.

It sounds obvious……it is obvious – there’s very little chance that two organisations are going to form a lasting relationship if they do not understand what their counterparty wants from it.  So why does it still go wrong – in some cases in £1 billion plus value deals?

I feel very strongly about objectives – both that they are expressed, and how they are expressed.  To me it is unacceptable to make statements such as “well, of course we understand what the customer wants”.  I want to see it written down – I want to see it expressed – and I want to see it expressed properly.

I am a big proponent of the SMART objective format.  SMART has been interpreted in a multitude of ways, and those involved in people management have (quite sensibly in my opinion) extended the mnemonic to include ER.  What does it stand for in my world?  I teach the most junior members of my team the following:

• S – Specific – it has to be.  What EXACTLY is the customer trying to achieve?  “Make sales”, “cut costs” – both valid, but get as specific as you possibly can: “the customer is looking to make sales by offering my complementary and disruptive service, on which they can make an 80% gross margin, as part of their wider solution sale”
• M – Measureable – is it?  When can you tick the box to say that the objective has been achieved?  “I want to walk to the top of the hill” is specific; “make more money” is not specific, except in a binary sense
• A – Achievable – the marketing director of the firm with four employees is not going to get 50,000 inbound leads in the first month of operation, nor will they achieve market dominance within three months.  It’s nonsense and the management team needs to be able to take a look at itself and see that.
• R – Resourced – oft overlooked, but so important.  You are going to increase the company’s customer base by 400% by the end of the year – it takes 15 month to bring on an account manager – you need three – you haven’t recruited them.  Again, it’s nonsense.
• T – Time bound – exceptionally important.  We must set our objectives against time lines in business, especially in growth stage companies. You want to grow a company through to listing on the market, but are not willing to say when you’ll achieve the first £1m of sales – what does that say?  You have to achieve those sales within two years, otherwise you will be 95 by the time your revenues warrant a listing.  What’s also important about being time bound is it creates hierarchy in your objectives – stepping stones to the ultimate goal.  List in five years means you need to be half way there in two and a half years, so create an interim objective.

So once you’ve got your SMART objectives written down, what next?  The reason you are doing this is to align with the customer – so you need to get them to confirm the objective.  And at this stage, if you’ve got anything about you, you shouldn’t worry about  being wrong – if you know anything about your customer you’ll be 60% of the way there, and you’ll find the customer’s willing to take you the final steps of the journey.  Remember, you need them but equally they need you – and agreeing a set of SMART objectives gets everything both parties need out in the open.

Two other tools you may also wish to consider are the “in order to” and “so what?”.  The “in order to” expresses why the objective is being set, creating a level of context.  It may also identify the driver for the specific objective.  So, as an example: “we are going to cut our technical staff headcount by 20%, whilst maintaining service levels, by the end of the year” – the “in order to” in this situation might be “in order to remain competitive in light of a new market entrant’s low cost delivery pricing strategy”.

The “so what?” tool is different – it is a methodology by which you identify the tasks and implications relating to a set of objectives.  Staying with the 20% headcount, the “so what?” question might elicit the answer: “so we need to identify what headcount is inefficient, and where heads have the lowest impact of service levels”.  This process starts dictating steps you need to take in order to achieve the objective.

Posted by David Gates on September 7, 2012 at 10:00 am in Account Management, Blog, Partnering, Sales, Strategy | Permalink | Comments (1) | Trackback (0)

         

RIG Reflections

One of my main goals for my time at RIG was to try and figure out whether or not I have what it takes to launch my own business venture in the future. I was hoping that by working with clients who themselves had launched successful businesses I could potentially identify some of the skills necessary to succeed.

Having lived in what is every-so-often referred to as TechCity (to some people’s dismay) for about a year, I have attended several entrepreneurship events. These gatherings usually present the scene for a large number of individuals to come together to talk about how this awesome idea that they came up with in the shower the other day is going to be the next big thing.

In comparison to this, I have for the five past weeks while being at RIG met people that have actually launched their own businesses and successfully managed to deliver value to their customers. This experience has provided me with some fresh insight in regards to what is needed in order to be a successful entrepreneur; obvious to some, but without a doubt something that a lot of aspiring entrepreneurs, especially the ones still in university, fail to realise.

In a simplified way, the traditional approach that most young entrepreneurs seem to pursue when it comes to idea generation (something I am no exception from) is focused on taking an emerging behaviour—for example streaming movies online—and pairing it up with a ‘new’ business model such as freemium, subscription or micro-payments.

The first problem with this approach is that we often forget to think about whether our new product/service idea provides something that users actually want. The second problem, and presumably the main one is – can I build it? Way too often people tend to come up with interesting ideas but forget that the important parts that drive success lie in the implementation of the idea and the go-to-market-strategy.

You, as a founder, have to be central to the idea and not rely on other people to build it. You become the central part of the idea when you are directly contributing to the success of the product or service you are providing; therefore you will need a deep domain knowledge of the area in which you want to operate. In order to be successful people need to stop picking areas that are considered as having high potential and go with what they know best. Obviously it’s possible to succeed anyway, but there is a risk that you will waste a lot of cash, time and talent trying to construct a business that you actually know nothing about. In other words, if you are starting an online focused business the first thing you do should not be to write a business plan but a line of code.

So, coming back to my reflections on my time here at RIG, I would say that one of the main things I have learnt while engaging with entrepreneurs on a daily basis is that if you want to start a business and make it work, do it in an area where you hold expertise, and more importantly, an area that you are sincerely interested in. Don’t try and search only for the opportunities around you, instead look at what you are really good at and how you can apply that in a way that will benefit you the most. Don’t get too hung up on trying to identify gaps in the marketplace, instead look at what type of product or service only you could develop, you have to be the key piece in your own business – that will give you a true competitive advantage.

Post by Philip Gasslander

Posted by RIG Admin on July 25, 2012 at 10:00 am in About RIG, Blog, Entrepreneurship, Strategy | Permalink | Comments (0) | Trackback (0)

         

Adopt the ABA Revenue Model

Are you in the process of establishing or growing an early stage web business?　 If so, I thoroughly recommend the ABA revenue model.

What is it, I hear you asking?　 It’s the “Anything But Advertising” approach.

Over the last twenty-four months we have detected a shift in the type of technology start-up being established in London.　 For whatever reason (and I suspect a $100bn initial public offering may have something to do with it), the proportion of B2B versus B2C businesses seems to have changed markedly.　 A number of commentators have already noted the number of “Global Vice Presidents of Sales” floating around the Old Street roundabout – usually residing in start-ups with two other employees (one a President and the other an Executive Vice President).

I read a nice set of statistics recently on LinkedIn’s blog that demonstrates the dangers of assuming eyes plus hours equals cash – an assumption that I fear underpins a lot of these start up businesses:

• LinkedIn users spend an average of 18 minutes a month on the site. Facebook users spend 6.4 hours a month.
• LinkedIn gets $1.30 in revenue for every hour those users spend on site. Facebook: 6.2 cents.

Surprising, aren’t they?

How to monetize website based business is something we’ve debating at Rapid Innovation Group recently – and I was pleased to find earlier that we are not alone in this debate, with this Wharton professor expressing a similar ABA preference.　 However, other than Professor Clemons no one seems to be addressing this issue.

So why wouldn’t you depend on advertising revenue as your main source of funds, other than on the basis that Facebook cannot make substantial amounts of money from it?　 Firstly (and sadly), when things go bad in the economy advertising revenues tend to get hammered – and secondly, how many other businesses (starting with Google) are trying to make money from the same source?　 Yes, the answer is lots.

I do not have a definitive answer for you, but what I will say is this: if you are creating or seeking to grow a business, you need to be looking for sustainable revenue streams.　 If you are providing a product or service that is to be used day in, day out, you do not want to be dependent on the vagaries of wider economic performance for your end of quarter sales figures.　 Identify another way of extracting value from your customers early on, have a rational reason for setting your pricing point, and then stick to your guns.

Examples you should be considering:

• Do people go to your service on a regular basis?　 Then use a subscription model
• Do your customers want different amounts of something each time they visit?　 Then use a transactional model
• Do your customers need to understand your service before they can see value?　 Then use a no-charge-but-I-need-your-credit-card-details-in-advance trial model

Whatever value your service or product provides, please do not kick off into the market on the basis that your customers might be interested in a General Motors Chevy Cruze or a package holiday to Spain as a result (unless you are selling cars or Spanish package holidays)!

Pricing models and points are difficult issues for early stage businesses to address – but they set the tone for the business over the coming decade, and demark your limits of growth to an extent – so make sure you get them right!

Posted by David Gates on July 13, 2012 at 11:00 am in Blog, Entrepreneurship, Pricing, Sales, Strategy | Permalink | Comments (0) | Trackback (0)

         

RIG Presents at Cambridge Cleantech

RIG strategists, Simon Jackson and Paul Higgins, recently presented at a Cambridge Cleantech event held at Mills & Reeve law firm in Cambridge, UK. Presenting on the issues surrounding taking high-IP technologies to market, Simon began the presentation by covering a series of issues essential to establishing an effective strategy in terms of moving out of product development and into the market:

Paul Higgins then went on to provide a couple of case studies of how to put this theory into practice:

Posted by Aaron Ralby on June 20, 2012 at 2:07 pm in Demand Generation, News, Strategy | Permalink | Comments (0) | Trackback (0)

         

The least risky startup is the one that only you could have started

Following on from my previous post about risk in startups I wanted to write a few lines about how entrepreneurs can use these ideas to their advantage.

Fred Wilson’s post on his AVC blog from 10th June entitled What Do You Look For? had an interesting line in response to questions about the criteria he uses to assess startups:

I’m asked this question all the time. Is it team? Is it the idea? Is it product? Is it market?

The answer is that it is all of them and most importantly it is the way they all come together in a single company. Why is this the right team to do this? Can they package their idea correctly for the market? Is the market ready for their product?

In other words, like all professional investors, he looks for the best combination of the startup’s founding team, the quality and promise of the product, the growth of the market, and so on. And ‘best’ here really means ‘least risky’, or ‘most likely to give a sufficient return on my investment.’

Look at this from the entrepreneur’s point of view.

If you’re sitting on the bus trying to come up with business ideas so that you can get out of your corporate day job then you have the same criteria as Fred Wilson – you’ll want to bring together the best team to work on the best idea and make the best product for the best market. You’ll want to reduce your risk as much as possible.

Now think about all the other people sitting on buses also trying to work out business ideas. What is it that makes you better able to come with and launch a successful business than them? If you could start any business then what strengths, experiences, networks, skills can you build on to make that business better than any competing business that anyone else could come up with?

The startup that has the least risk (to you and to your future team-mates and investors) is the one that only you could have started.

If you have worked as a trader for your whole career and you know more about assessing the value of certain classes of equities than anyone else in the world then you’ll already have a knowledge head-start on the competition. If you can get together with the bank’s superstar developer who knows more about data switching in investment banking trading platforms than anyone else, and you can get your old company’s CEO on board as an investor or non-executive director, then you’ll be in an even stronger position.

Soon you’ll realise that nobody else in the world could have the same combination of deep domain knowledge, relevant technical expertise, and personal networks as you. Nobody in the world. That makes you an attractive proposition to any investor (assuming you have a good idea, a good market, and so on).

At RIG we’ve also used this sort of thought process to help entrepreneurs figure out which market to focus on strategically when there are many possible alternatives given what their product is capable of doing. When you have products that could be applied to many different problems in a variety of different industries, figuring out where you have the most knowledge, experience, and personal networks is the simplest way of giving yourself the best chance of succeeding.

Follow @paulhigginz

Posted by Paul Higgins on June 11, 2012 at 2:50 pm in Blog, Entrepreneurship, Strategy | Permalink | Comments (1) | Trackback (0)

         

“Building a product that people want” – An Interview with Dragos Ilinca, CMO and Cofounder of UberVU

Dragos Ilinca is the CMO and cofounder of UberVU, a social media intelligence company with bases in London, Bucharest, and the USA. Dragos began our interview by describing the genesis of UberVU as it evolved out of a web-marketing consultancy into a social media posting platform, into a social media monitoring tool, into its current form as a social media dashboard with social media intelligence.

In your opinion, what is the most difficult part of getting a startup off the ground? Is it getting funding, working together as a team, is it actually developing the product, or something else? Or is it everything in combination?

I think it’s everything in combination. It all comes down to building a product that people want because I think everything falls into place from that. Of course in order to build that product, you need a team. We were lucky because we had known each other for a lot of years, we had started other businesses together, but I look around and a lot of people are looking for co-founders and I think that’s really, really hard, finding someone to start a business with. And once you do that, its about just building something that people want—even if it’s a minimal sort of version—because if you do that, raising money shouldn’t be difficult. If you manage to build that product, that kind of means you’ve got a team, and if you’ve got that team and product, raising money should come pretty easily. So in our case, I think it was definitely figuring out what product to build, but I see a lot of entrepreneurs who are starting with building a team, especially in places like London where developers have so many options to choose from. They could work for, you know, the finance industry, or an already-established startup, and if you’re just starting out it’s difficult to get talented people to join you.

Perhaps it’s too early to ask this question, but in terms of your experience working with social media, how do you adapt? How do you know when to stay your course with your vision for developing a product, and how do you know when to pivot? The social media world is constantly changing, so how do you adjust for that?

I don’t think there’s an easy answer to it, but it kind of comes down to traction. If nobody likes your product or buys it, you need to do something about it. If you have a few people who really, really love it, then you need to understand who those people are and why they love it, and if there’s an easy way to reach more of them, that’s your whole market. And if you’re happy with that that’s fine, but if you need a way larger market, you can potentially work with them and figure out what a dumbed-down version of that product is. I think the most difficult thing is actually making the decision. I think deep down you kind of know when things aren’t really going well, and you can stick around for three months, maybe another six months and see: make a plan, and just say we’ve got this deadline and if things don’t pick up we need to do something about it. But I think people deep down kind of know, but they’re just afraid to make a decision. You need to be able to say, “What we’ve done so far, yeah, it’s a lot of effort, but in the end, people aren’t really paying attention to us and aren’t buying the product, so tough luck. We need to start all over again.”

UberVU strikes me as a pretty advanced mechanism, integrating social media and media monitoring. Do you think the days of simplicity in application development are over? In other words, do you think the skill-level required to produce groundbreaking apps will only become higher as times goes on?

Probably. That’s probably true. Because we’re a business tool, so from that point of view, we need a lot of technology to do what we do. But look at something like Instagram, for example: there’s not a lot of technology in there. If you think of technology just in terms of code, you know, other people can build that kind of stuff in a weekend. If you think of technology as also the mechanism by which they’ve been able to build viral coefficients in it so that it spreads and that kind of stuff, then that’s very difficult to replicate by other people. So I think if you’re building consumer apps—if you know what you’re doing—you can still get away with not having a highly technical solution. But even so, if you look at Colour, they’ve got pretty hardcore technology in there, and it’s just a photo app, more or less. So even these things are becoming more and more complex, and I think the reason is that you can do so much more now with the technology and the stuff that would have been impossible to do in real time is now possible, so you can build a lot better experiences for the user; and the second thing is there are so many people looking at the tech space, that if you build something that can be replicated within a week, and you’ve got absolutely nothing else that can make you succeed, then it’s just not worth it, because other people will copy you ASAP. Just look at Groupon as an example. A lot of people think it’s the technology and they built that in a weekend and there are hundreds of clones; but actually the difficult part is the sales behind it, selling to small businesses and being able to scale and that kind of stuff. So if you think about that as sales, not really technology, but technique and strategy, then it’s very difficult to replicate it. In terms of actual code, some people can probably build that in a day. But it’s not that that makes it work.

Since you’re the CMO, I wanted to ask a marketing related question. Since uberVU and so many applications are so heavily grounded in the online world, how important is actual person-to-person interaction in marketing?

I think it’s still important to have the in-person interaction. Not all the time; we started selling online with credit card, so it wasn’t necessary to meet anyone at that point. You could, you know, make the product and the company look more human by having photos of the members of the team on the website, having a video where you present certain stuff, having a blog that’s very human, but now that we’re moving more into the enterprise space and we’re starting to get customers like NBC or the World Bank, for these sort of things it looks like it’s pretty important to meet face to face, and if you cannot do that, at least have a few phone calls. I think the higher price you charge for what you do, the more you need that sort of relationship. And it’s not just because of the person-to-person interaction; usually if you’re charging a lot of money, the solution that you’re selling, you need to really understand the customer’s use case and be able to show them how the product is really going to make an impact. And these solutions are usually pretty complex, so it’s not like a photo sharing app: you take a picture, you share it with your friends, pretty easy to understand. It can be pretty hard to articulate just from a website and understand exactly how that could be used in your organization, and understand how easy it is to use even though it’s got this breadth of features. It’s hard to make the jump from, ok I see this demo video, how could I use it for my specific use case? It’s very difficult to understand that. And people just don’t have the time and don’t want to take the effort, so instead of researching that tool for 30 minutes and not understanding, it’s sometimes more useful to say, ok let’s just have a 30 minute phone call, you’ll tell me about it and I can explain really easily how we can help or how we won’t be able to help and you’ll probably need some other tools.

Posted by Aaron Ralby on April 27, 2012 at 1:45 pm in Demand Generation, Entrepreneur Viewpoint, Entrepreneurship, Market Views, Product Development, Real World Lessons, Strategy | Permalink | Comments (0) | Trackback (0)