Hiding From the Pain

With so many things to think about when starting a company, entrepreneurs tend to overlook scalability of secondary areas such as marketing.  Every business has different scalability pain points – if you run an internet business then computing resources is the main issue whereas if you run a retail store then floor space is an issue.

The most common response to these secondary areas is “we’ll get to it later.” However, if you don’t pay attention to these issues, they just get bigger and could end up costing you more money. For some companies marketing is not their main expertise so they might throw some money at Google AdWords and passively watch the analytical data. Now, what happens if they decide to increase their marketing budget by 10x? If the current marketing plan is not optimized then you can imagine what will happen when they really want to crank up the ad spend. In this example, it makes sense to analyze the advertising data and slowly scale up the marketing spend.

It’s hard to believe but some companies even neglect their basic pain points. Friendster one of the first social networking sites was launched in 2002 and quickly become very popular. It was so popular that the site would be inaccessible for hours because of the amount of traffic it was receiving.  After many months of sporadic outages many people became frustrated and soon found a new home at MySpace. As a sidenote, all the patents that were issued to Friendster over the years were recently sold to Facebook.

Building a company with scalability in mind at all levels might seem idealistic but that’s what separates million dollar companies from billion dollar companies.

The above article originally appeared on GQindia.com.

Lost in the Herd?

So, you dream up this great product/service that you think everyone will use. Then you start to search on the internet and realize many similar products already exist. Since, most entrepreneurs are not creating new markets but instead improving on an existing product/service what do you do?

The first option is to come up with many reasons why your product offering will not succeed and might require too much effort.  The second option is what separates dreamers from entrepreneurs, who decide to take the challenge and absolutely believe they can make it work “this time.” A prime example is Gmail, before Gmail most of us were relegated to the sub-standard offerings from Hotmail, Yahoo and the many other free email services.  The lead developer, Paul Buchheit, felt he could improve on email and once Gmail was introduced it was a success with the tech-savvy crowd. Granted, Paul had the backing of Google whereas many start-ups don’t have that luxury. But, he also had to achieve massive success or it would have been considered a failure within Google.

For startups without the backing of a large company like Google it can be daunting to enter an existing market with many players. But that is the challenge and thrill that many entreprenuers yearn for, the ability to differentiate their company in a crowded field and succeed. Some call it a risky strategy but without risk their is no reward. Usually the reward is monetary but it can also bring notoriety among peers or too a much larger audience. The idea of entering a crowded market is similar to looking at a glass of water – is it half full or half empty? It’s all about the individuals perspective.

The above article originally appeared on GQindia.com.

Hockey Stick of Growth

When an entrepreneur starts a company one of the things they all secretly dream about is the hockey stick of growth, which is exponential growth within months of starting up. Beyond the entrepreneur, it seems everyone is chasing the “new thing” whether  it is reporters, venture capitalists or consumers who all want to be a part of the winning team.

So how do you achieve the hockey stick of growth? That is like asking what is the meaning of life. Achieving exponential growth is a combination of many things – product fit, hard work, excellent team, market timing, money to spend, etc…and of course luck. So in essence there is no real answer to the question, you can only guess and make assumptions.

Recently, an internet company called Evernote added it’s 5 millionth user and they talked about their growth curve on their blog.  The first million users took 446 days to achieve whereas adding the most recent 1 million users took only 83 days. That is absolutely hockey stick growth by any measure.

It’s not only about growth but also retaining those customers, as they say “easy come, easy go.” Friendster one of the first social networking sites had so much exponential growth early on that their servers would constantly crash. This left many users frustrated and looking for other sites they could visit such as MySpace. Of course, as an entrepreneur the first goal is to get big and then worry about turning into the next Friendster.

The above article originally appeared on GQindia.com.

Got a Question?

The internet has made it easy to get information on almost anything with the help of search engines like Google. But, if you have a specific question then getting an answer is not so straight forward.  Sites such as Yahoo! Answers were supposed to fill that gap, but instead have de-generated into a spam fest. Over the past 18 months many new sites have come online to fill the role of Yahoo! Answers, sites such as Mahalo, Stack Overflow, Hunch and Quora.

Most people are talking about Quora since it has a very easy to use interface and highly curated content. The initial launch was restricted to select people in the technology sector such as entrepreneurs and venture capitalists which created the buzz. Also, many of Quora’s employees have came over from Facebook including the CTO of Facebook, Adam D’Angelo. However, what really has set Quora apart is they actively monitor the conversations which leads to very rich content. Recently, someone ask a question about how much does Netflix spend on shipping costs.  Normally, a question like that would get all sorts of responses but the correct answer came from the CEO of Netflix himself.

The recently launched Q&A sites have taken the original idea of a question and answer forum and added a social element to it. In business, sometimes it’s not always about creating something completely new but improving on an existing idea.

The above article originally appeared on GQindia.com.

Changing Gears

The ability for a start-up or a large company to shift strategies is critical. This ability is often referred to as pivoting, personally I like the term changing gears. If you glance at the initial business plan for many companies and look at what they are doing today, they are completely different. As I say, everything looks great in PowerPoint but executing on those plans in real-time has a life of its own.

Research in Motion, the makers of the BlackBerry, was founded in 1984 and they launched the first BlackBerry in 1999…yes, 15 years after they started the company. Do you think their initial plan talked about a wireless communications device? Probably not, however they were able to change gears quickly from their two-way pager which was their bread and butter product and jump into the fast growing email market.

Microsoft a household name never set out to dominate and capture 90% of the operating system market. Initially, it was started to provide programming tools to developers. However, when a deal with IBM almost fell through Bill Gates bought an existing operating system company and closed the deal with IBM. Over time Bill realized the real money was in the operating system business and focused more attention on the newly acquired company.

It’s very easy to talk about changing gears but is very difficult in a start-up because you tend to be married to the idea that you started with and to change direction can be unnerving.  Great businesses and people have the ability to foresee the future and change today to take advantage of it.

The above article originally appeared on GQindia.com.

The Elevator Pitch

If you were in an elevator with Ratan Tata, Richard Branson or Bill Gates what would you say about your company? That’s the essence of the “elevator pitch” imagine you have 90 seconds to introduce your company. The process of putting together an “elevator pitch” will help you think about what you’re doing in a clear and concise manner.

Of course in 90 seconds you don’t have much time to talk about the weather or how you like the color blue. The basics include a quick introduction of yourself, what problem you are trying to solve and the solution you have. Some examples of a problem: Micromax – people in Tier II/III have different cellphone needs; Google – people are not finding what they need on the internet and it will only get worse.

Once the problem is identified, the magic starts when you start talking about how you plan to conquer it. Taking the above examples: Micromax – we plan to make inexpensive phones with features such as a flashlight, FM radio and dual SIM slots; Google – we have a computer algorithm that scans the internet for content and ranks it based on keywords.

The pitch must get the person excited about the idea and ask for a meeting with you. If the person asks for more information then you can pat yourself on the back for a job well done. Of course, the elevator pitch concept can be extended to almost any situation where you have to ask for something. Need a new laptop, new car or the latest gadget from Apple? Have a quick pitch for why you need it, not why you want it.

However, if you’re stuck in an elevator with Tata, Branson and Gates because of a power cut, you better make sure you have more then 90 seconds worth of conversation. You don’t want to be stuck talking about your favorite color or the weather after you’ve finished your pitch.

The above article originally appeared on GQindia.com.

Group Buying v2.0

During the dot com collapse of 2000, flash sales were the rage with sites such as Mercata offering deals on products. However these sites died when the venture capital money ran out. This time around the model has been refined by including a social element and broken into two segments: one offering local services and the other offering products mainly from excess inventory. The segmentation is not only producing real revenues but more importantly generating profits.

Globally, Groupon is the leading social group buying service for many cities around the world. The idea is that a local restaurant or other service related business might want to attract new customers and would use part of its marketing budget to offer a 50% off discount to attract new customers to a restaurant. Then if your friend buys the “deal of the day” you might be enticed to buy it since you trust your friend when it comes to restaurants. This added social component has given Groupon a billion dollar valuation. Closer to home DealsAndYou.com (formerly WanaMo) does the same thing for the major metros in India and has been doing quite well in sourcing deals for its audience. For everyone involved it’s a win-win, businesses attract new customers via relevant offers and customers get a deal on a new place.

The second category of companies such as Hautelook and Gilt Groupe provide flash sales for excess inventory (known as exhaust in the apparel business). The idea is that name brands don’t want their excess inventory to go on sale and cheapen the brand. Instead, they give it to companies like Hautelooks who sell it via alternate merchandising channels to people that might otherwise never buy a high end brand and in turn attract new customers. The added social element makes certain offers viral and attract even more new customers.

Another twist to the product category is ShoeDazzle which is completely changing the distribution model for shoes. You pay a monthly fee and get access to new shoes that are designed specifically for ShoeDazzle customers. ShoeDazzle is able to leverage it’s vast customer database and run analytics on what type of shoes it’s customers want. In this scenario ShoeDazzle owns multiple parts of the buying chain – designing, marketing and selling to the customer. It’s a great strategy that can be extended to other segments in the apparel space.

The idea of a company putting up an online catalog with no social interaction is dead, it’s all about the social group buying experience.

The above article originally appeared on GQindia.com.