Nesheim Online

WORDS THAT ARE DAMNATION TO STARTUPS: Similar

"Similar" is a killer word for startups.

That word has such boring implications that startup leaders should delete it from their vocabulary.

If that is what you are bragging about, to investors, employees, bloggers and customers, please go no further. Save yourself the agony of learning the hard way. End it all now (your idea, not yourself!).

Why is "similar" so awful for new enterprises? Take a look at these reasons:

• No one (in the know, or who is cool) will spend money on similar when they can buy the original.
• A similar date is boring, the original is hot.
• People wanting change want big change, not similar (think notebooks versus laptops).
• New products that win big are radically different (think iPhone versus all the rest).
• Investors see ten similar ideas every week, they are looking for something very different.

If your idea for your startup is similar to other products on the market, you need to be courageous and create something radically different.

How radical? I'm glad you asked.

Take a look at the findings of new consumer product survey and you'll instantly see what I mean. (It is a quick read). The title says what is in the article: "iPhone vs BlackBerry: Survey Pits Sexy Against the Suits".

So now you get it: Winning is all about what marketing gurus call positioning. Your product is radically different in the mind of the buyer, it is so psychologically different that is will not be called similar by its buyer. That is where you want your product to be in the head of your ideal customer.

BOTTOM LINE: "Similar" is not in the vocabulary of serial entrepreneurs. They have learned to be radically different in the minds of their ideal customers. The customers instantly recognize the difference (between your product and those of the competitors). That is what positioning is all about. When you learn to do that, you'll be on your way to becoming a black belt in marketing, a skill mandatory to win the global new product wars. Use it to build your unfair competitive advantage.

I wish you The Best on your Adventure!

GREAT PUBLICITY, BUZZ, BRANDING START WITH MAKING "GREAT STUFF": Serial entrepreneurs know it, that's how they built amazing startups

Monday evening I used a new startups's video discovery service, Rippol, to explore for videos on marketing advice for entrepreneurs.

I found and watched a very simple presentation about the secret to getting that buzz I blogged about Monday. It was so clear and so "on the money" that I wanted to share it with you.

The presenter's advice is: "make great stuff".

In other words, don't try to use buzz to make up for bad stuff you create. That does not work. Nor can you advertise your way around end users bored with your stuff. You have to focus on a great idea for selling great stuff.

So here is your homework for today: watch the 2 minute video and think about your marketing communications plan priorities and its focus.

BOTTOM LINE: Great companies are made from great ideas. Poor ideas plus a lot of time, money and effort do not compensate for poor ideas. Build great stuff and it will generate buzz.  Then you just have to fuel it for a while, and like kindling wood used to start a campfire, soon the blaze is roaring, without any other help from you. Great ideas for great stuff is central to building an unfair advantage. You can do it if you focus on the great stuff rather than great buzz.

I wish you The Best on your Adventure!

START WINNERS MOVE FROM GIANT TO TINY TO WIN: Learn and apply “Funneling “to focus precious, scarce power in your new enterprise.

Yesterday I listened to entrepreneurs from several teams talk about their initial ideas for startups. Each one of the five teams was describing solutions for a small problem. Several were merely improvements for existing products. Those starting points never win for startups. They lead to mediocre results, at  best.

Instead, you should be looking to SOLVE THE GIANT PROBLEM and work your brain to find how to DO SOMETHING NOT DONE BEFORE. The capital letters help you get the intensity with which I am trying to communicate with you.

Why? Take a look at these reasons:

·         Starting thinking about solving a giant problem leaves you room for a lot of competitors. You then have a chance to pick out a single slice to focus on and dominate. Competitors can pick other slices to work on, easing the competitive stress.

·         Giant means  a lot more. You have more potential sales and wealth production. You get more media attention. More talented people want to join you. Investors are more eager to finance you.

·         Not done before is sizzling. You get more attention from flying the first airplane than making one that flies faster. Bloggers want “news” (new is what they want, not better).  Bored techies want fresh, different, challenging. Marketing whizzes what to work on something different. Investors want to put tons of cash into “Wow! Did you see that?” (“I never saw that before!”) startups.

·         Tiny is laser power. Focusing your giant thinking produces energy that is thusly tightly concentrated, aimed at a very small target. That increases the heat on the target. It is intense power used by winning startups. Then you become 50 Marines against 700 terrorists and emerge from the battle without a casualty, victorious. Hot laser bores through tempered steel (and your competition) in split seconds.

So what do you do next? Simple: Move (funnel) from giant to tiny.

·         Funneling Example: Help people use personal computers to do sophisticated mathematical and numerical analysis, affordably, quickly (GIANT PROBLEM, 1970s). Solution = invent a “digital spreadsheet” (Visicalc, 1-2-3).  Focus = Concentrate selling the first spreadsheet to Wall Street stock analysts (TINY).

o   The process for moving from GIANT to TINY is called “Funneling”. Picture a funnel, large at the top, narrow at the bottom. You start at the large top and begin to move smaller and smaller as you divide your giant market into segments, then divide the segments into smaller segments. Finally you arrive at the segment containing your “Ideal Customers”. That is your first bowling pin. In my spreadsheet example, the follow-on bowling pins were the finance staffs at larger corporations, and market research staffers.

·         Not Done Before Example:  Netbooks and smart phones are examples of new categories of products. They did not exist before they arrived. They were not improvements of existing products. They were so new that they created a fresh class of products. That becomes a “new wave”. It is has enormous wealth creation energy. You want your startup to be fueled by that energy. You surf it to victory in a new class of products.

o   With good strategic timing, you can be “first to get it right” as Apple did with the iPod (RIO was the first, and died). Netflx did it with movie rental distribution (and expanded to streaming videos), Cisco did it with routers (and expanded to become a global IT networking gorilla) and so on goes the cascade of winning startups that funneled to gorilla-class victory.

BOTTOM LINE: You win if you start with giant thinking. Sure, a small idea can be a starting point and can cascade you into giant thinking: one team talked about a light enhancement device for fashion items, then realized the market was huge, gigantic for other additional applications. Now their job is to funnel and focus. That is how to add amazing power to your startup idea. It is how to execute your business plan to victory. It is what powers construction of an unfair competitive advantage. I wish you The Best on your adventure!

FOCUS YOUR STARTUP ON ONE MARKET SEGMENT: That starts your sales momentum

I talked this week with entrepreneurs seeking to get into the largest markets they could dream of. Large is good -- that leaves lots of room for competitors -- but "Everyone on the Internet needs it" is too large: you cannot succeed, it is too vague and too large to work with.

My suggestions to focus are simple: each is intended to assist the large-thinker to focus on one target market segment, without loosing grasp of the amazing potential of the much larger large market. So try these on your startup:

• Move from "everyone" to "someONE": If you believe everyone on the Internet will watch a movie on your streaming video service, think about what individual would be most likely to use it. Move away from the general to the specific. Shift from group to person. People make spending decisions, not groups. Your objective should be to figure out who that ideal person is for what you intend to offer.
• Divide and line up bowling pins: Slice your pie into market segments. Chose one to focus on and two to follow. Line them up like bowling pins. First one knocks over the second two. That is how you build momentum. Divide using geography, gender, income, need and so on. Devote most time to figuring out the first bowling pin.
• Grow sales by adding market segments: As you conquer the first pin/segment, add the next to your market size forecast. Then figure out the adoption rate of the additional segments. That leads you to your $ sales forecast. Each is focused, each adds revenue and momentum builds.

You are not abandoning "the big market" this way. It is how real startups win. Focus first leads to expansions and takeoff.

BOTTOM LINE: Yes, start big (huge is better), then quickly narrow down and focus. Pick and line up your bowling pins. Then execute your plan. The momentum will follow. You'll leave your unfocused competitors in the dust. It will be part of your unfair advantage. I wish you The Best in your adventure!

STARTUP CLARITY AND FOCUS: Avoid confusion that leads to frustrated founders.

Recent discussions with a series of startup founders dwelt on their struggles to get potential investors and employees, as well as bloggers, excited. I was impressed at how earnest and energetic they were, as well as the height of their frustrations. Central to their lamentations was their inability to clarify what “it” was that they were planning on creating and selling. That is not uncommon to inventive minds trying to do something never done before. It sure can be frustrating. I know, I’ve been there often. If you are among these sorry souls, you have my sympathies.

Today I’ll share with you my suggestions to the frustrated founders so you can give the tips a try on your new enterprise.

·         Test how clear (or confusing) you are. The idea for “it” – your great thing – may be clear to you. But more often it is not clear to the person you are talking to. Give your audience credit, they are not stupid. But you’ve been working on this idea for a long time. It is clear to you it will be a big winner. However, the first-time recipient of your presentation is most likely to need further clarification. So be prepared to elaborate further, patiently. Try it out on critical friends you trust and adjust your story accordingly.

·         Try to invent a new category name for your “it”.  This is how we got “motel”, “microprocessor”, “social networking”, and “blogging”. These are new names, did not exist before the related startups arrived, and they describe a new thing or service. They announce the arrival of “the next great thing”. The more you can do to become part of the new space the better.

·         Aim at owning a new category. Best of all is when your startup’s name becomes the new category.  Here is what I mean: Intel means microprocessor. Cisco means router. Even if they do a lot more these days. Back when they were new enterprises, they became the category leader and went on to dominate the new space. Google and Xerox are now very clear in what those names mean to people around the globe. That should be your goal.

·         Branding follows owning a new category. It takes around a decade to brand a brand. Startups begin to get there by focusing on standing for something that is clear and leaves an impression when the chosen name (company or product/service) is mentioned. That is one reason clarity along with focus is so important to startups. Yes, you will have to defend your position over time, but eventually it will become branded for what you want to stand for.

·         Focus on something. Startups that try to be this plus that plus that and that are lost. They do not stand for something. That leaves the listener confused. Investors see scarce resources dissipated and the company losing power. Bloggers find it boring to write about the startup. Recruiting employees is tough. Think about being the best in the world at doing something. The key operative word is “best”. That is singular. One. That is focus. Amazon began focusing on offering the largest selection of books for sale on-line (“Never be disappointed looking for a book”.) Google only did search at the beginning (not also portal or social networking).  Netflix focused on offering convenient access to the widest choice of movies. History is filled with examples of startup winners who focused and became the gorilla of the next great thing. That is what you should do to win.s

BOTTOM LINE: Clarity and focus are gold, pure gold, to startups. They can be difficult to find but are well worth the hard work. Global greats figured that out. So can you. It is not magic. It does not take huge resources. Just creative thinking about how to further shape your idea into one that is crystal clear and very focused. That is central to building an unfair advantage for your new enterprise. I wish you The Best on your adventure!

PICK THE RIGHT CATEGORY or ERR AND GET CRUSHED BY THE GORILLA

I'm back from a week of fly fishing with my best friend in one of California's most beautiful wild places. It was a trip filled with renewed spirit, and the fish added lessons that were humbling. The sport is filled with rewards. I recommend you pick an activity that brings you such benefits and pursue it with vigor. It will reward your startup efforts.

This morning I read a helpful comment to my blog on gorillas of June 28, 2009 and will share with you an important lesson for startup founders: "You must be careful to pick the right category or your error will get you crushed by a gorilla.

Here is what Rodgrigo commented:

"John, as much as I agree to this advice in general, many start-ups became huge business by ignoring gorillas. Facebook was a startup when MySpace.com was the gorilla. Google was a startup when Yahoo! was the gorilla. Amazon.com also could have been crushed by Barnes&Noble. The truth is, technology industry is very dynamic and if you have a better technology, focus and the right team, you can compete too, although generally it's not recommended. That's the Innovator's Dilemma at work!"

Here is my reply to Rodrigo:

Rodrigo, you are close to understanding the secret.

MySpace focused on a new category "creating a personality" and became the gorilla of that category. Facebook saw a different opportunity in a new category lacking a gorilla, "social networking." Frendster was the pioneer and got the arrows in their back. Facebook was "first to get it right" and became the gorilla of 2-dimensional social networking (3DSN is starting in Asia).

Yahoo focused on the new category "portal" and became its gorilla. Google focused on the new category "search" and became its gorilla.

Amazon focused on the new category "books on-line". Barnes & Noble was gorilla of "chain bookstores" and failed miserably to enter the new space to compete with Amazon.

Note how a gorilla of a new category fails to become the automatic gorilla of a different new category, instead fails in a sea of red ink losses. Test your history on Microsoft. Then do Yahoo. And watch Google.

BOTTOM LINE: When studying startup history, be extra careful when picking your market categories. That will keep you from making fatal errors. It will reveal the light in the darkness.

You can study more about categories by searching my blog with the word category and look at some of the marketing blogs I've posted. Even more is contained in my book The Power of Unfair Advantage.

=============

Tomorrow I'l continue on the series FINDING STARTUP SEED CAPITAL.

Tip of the Week: Recession Startups are Leaders

Startups that lead are the winners.

In recessions, leadership stands out. While your competition is sitting on the sidelines, being conservative, yours is boldly marching ahead. That sets your new enterprise up for emerging from the recession at the head of the pack.

Your goal is to become the gorilla of a new market category within five years. That will make you the Google of a new category. The game is then over. You will own around thirty percent share of the new market. The second competitor will own half that. The rest will be single digit shares of market. One gorilla, a chimpanzee or two, and a dozen starving monkeys.

To become a gorilla you have to become the leader within three years, better yet within two.

You become the leader when the bloggers, Twitterers and PR media acknowledge you are the leader.

Your company achieves that buzz with social networking marketing communications. This is what Web2.0 era marcom has become all about. It is new space for fresh innovation in marketing.

What is said about your company becomes what brands your company. The company name will become associated with the word or few words that people mention most when buzzing about your company. Then you are branded. It will never change. That's one reason to carefully think about what you want to be branded with before you do your first company blog.

BOTTOM LINE: Leadership is everything to the startup. In a recession it will give you a strong competitive advantage. When you achieve that, your competition will compalin that you have an unfair competitive advantage.Congratulations!

Tip of the Week: Recession Startups Focus on Ideal Customers

Focus is your startup weapon of choice during a recession.

What do you focus on? Simple: Focus on your Ideal Customer.

Ideal Customer is that specific person who you want to say "Wow!" when they see what you are selling. When you get that emotional response, you have just out-run your competition.

Ideal Customers are very specifically defined: Males, 19-29, living in China, middle-class income, young mobile professionals. Not all males in China. The more specific you define your Ideal Customer, the more compelling your offering will be to their emotions.

A 40-50 year old male in China is not the same as the precise profile I just described. They respond to different emotional probes. You cannot appeal well to both at the same time. Your marketing message looses its sting, its boldness, its persuasive power. Your competition will be able to be more focused and trigger the emotion you that have not. You lose.

Once tightly focused, you will find cousins related to your Ideal Customer. In my example, that would include Females, 17-29, living in China, with the rest the same profile. A second would include the Chinese males not living in China, but with the rest of the profile identical. These secondary profiles are like bowling pins lined up behind your first pin, the targeted Ideal Customer. Line them up and you will see how to gather sales momentum as you succeed with the first bowling pin.

These people are going to communicate with the people in your first bowling pin. That makes your marketing messaging more efficient. The same blogs will buzz and spread the word about your great product offering.

BOTTOM LINE: Focus is your best friend during a recession. Startups that win identify a very specific customer profile and aggressively drive to dominate that market segment (share of market around 30%). The CEO will then go after the next two related bowling pins and sales will gather momentum. Resources will be saved. Bloggers will not be confused about what your business is trying to do. Clarity will spread the word accurately and with the passion that comes from your Ideal Customer saying "Wow!" when they hear about what you are offering. That is a key element to use to build your unfair competitive advantage when doing a startup during a recession.

BUZZ MARKETING: Learn it well to build a great startup

 

Buzz Marketing = "Capturing attention of consumers and the media to the point where talking about your brand becomes entertaining, fascinating, and newsworthy."

I saw that definition yesterday in a presentation of a business plan from a student team in my class at Cornell University. They understand a powerful element in building your startup's unfair advantage. When you get it, you'll be far ahead of your competition.

Young people think advertising is how to announce your startup and spread the word about your cool new product. But that is not how things work in the real world. Advertising is used to reinforce a brand of a product that has already become branded. It is expensive because there is so much waste to advertising. New brands are build with public relations. Advertising reminds people of the brand you have already built.

Serial entrepreneurs use "PR" instead of advertising to spread the news. More specifically, they are masters of buzz marketing. That is what gets people around the globe emailing, blogging and text messaging about their cool new startup product. China or Chile, U.S. or United Emirates, they all are part of buzzing about new products. It is global. It is now.

The old PR methods are aimed at getting reporters to write stories and reviews about the new startup product. That takes time (magazines prepare stories three months in advance) and money (to pay a PR firm for its staff to call reporters and promote your startup product).

The new PR focuses on stimulating bloggers to start stories about your new product and spread the word of mouth over the internet. That is low cost and very fast.

When picking a PR firm, interview candidates carefully about buzzing. Influencing the new world of bloggers is a new art. Few PR professionals are yet experts at it. So interview bloggers to ask which PR people get it and understand how to talk to bloggers. When choosing, get your PR firm candidates to show you examples of their successes with influencing bloggers. It is difficult to do, and few PR staffers yet do it well. It is a work in progress to learn the ins and outs of the strange new world of internet media communications.

Be innovative. Especially about what you do with events to get attention. Event marketing has proven to be very productive for startup buzz marketing. Events can be one time internet contests or raffles (give away an Audi TT and you will get a lot of attention and a long list of interested end users. The cost of a car is less than one month of advertising.). Or consider sponsoring a charitable golf tournament for handicapped athletes (just supply your employees as weekend volunteers). There is no shortage of stimulating ideas to pursue.

Be worth talking about, excitedly. You must stimulate the "Wow!" factor in people. They have to immediately get what you are communicating and be eager to instantly tell their friends about it. This morning I emailed news about gentle robotic surgery to a friend facing brutal open heart surgery. Word passing is triggered by emotional stimulation. Even about industrial machinery. Yesterday I had graduate students speaking excitedly about moving dirt on farms to get rich. You must find out what in your cool product will turn on your targeted bloggers so word starts to spread quickly. If bloggers are bored, you'll not get far with your new product. It takes a lot more than "twenty percent less energy required" to get the end user excited.

Use real substance in your product offering to stimulate bloggers. Avoid trying to be provocative just to get attention about your boring product. Your boring may be able to be changed to stimulating if you apply a bit of creativity. Here is one example: shift from talking about the reliability of your manufacturing machine and instead move to talking about how it will not set the customer's factory on fire. That triggers emotions and the buzz starts.

BOTTOM LINE: Getting buzz marketing working is central to your marketing communications program. Key to buzzing are bloggers. This is the era of bloggers. They start passing the word along the internet. Find a PR firm to assist you creatively plan and execute so word of mouth is stimulated and goes to work for you. It is a lot more effective and less expensive than advertising. Serial entrepreneurs can do this in their sleep. It is second nature to them. They know its power and devote serious, innovative and determined time to doing it with excellence. When you can, you'll be far ahead of your competition as you build your unfair advantage.

NAME IT OR LOSE IT: What is "It"? and What are you aiminng to dominate?

"What have you invented?"

"What is this new market category you are aiming to dominate?"

Those are two of the biggest questions startup CEOs will be asked. You have to be able to answer them on the spot. Your responses are central to the formation of your unfair competitive advantage. Without them, you are like a cork in the proverbial startup ocean, rudderless, moving at the will of the waves, tossed to and fro.

Here is a fine example to get your thinking going:

After Edison invented the cylindrical talking playback device, others produced alternatives, some on disks. The public called all of them “talking machines.” All were expensive and unreliable players until Johnson invented a solution for Berliner’s wobbly rotating disk. They decided to call it a “phonograph”. The company they formed was Victor Talking Machine Co. They named their player the Victrola which became hugely popular. It’s icon was the fox terrier dog sitting with its head cocked to one side, listening to a phonograph. Johnson pioneered the mass production of entertainment. He transformed entertainment from events performed live for limited-sized audiences into today’s vast, multimedia industry. [From Investors Business Daily,  2008 March 4].

You need a similar story. The thing you have invented needs a name. The market segment you are competing in needs a name. Both have to be part of your exciting story about your quest to transform a vast market.

BOTTOM LINE: Try inserting your name for Johnson's and then substitute your company name and so on. Keep crafting until you get a story that works for your company. When you do, you'll be way ahead of your competitors and well on your way to becoming the leader and gorilla of a new market category. Like Amazon, Google and [put your company name here]. It is central to forming your unfair advantage.