VC in DC

Tech Trends for 2012

Expert insight from G+ reinforces the rise of everything social, mobile, and cloud as well as some likely new twists from emerging technologies in 2012.

 

Want the Job? Ask these 4 Questions.

Most interviewees focus solely on their potential answers to interviewer queries when they prepare for an interview.

But it's really the questions you ask that can make or break your candidacy.

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At appropriate intervals during an interview, you should ask questions that communicate your interest in the position, highlight your capabilities and demonstrate your commitment to excelling in your career. 

Remember, since you’re competing (either with other candidates or against yourself),  by asking questions you are expanding your competitive palette from just answers to your answers and your questions.

“Based upon this interview, what doubts, if any, do you have about my ability to do this job?”

Tackle the interviewer’s doubts by first discovering them and then addressing them.  Some will be legitimate shortcomings but most will be misunderstandings. 

Either way, you should take your best shot at diffusing the interviewer’s concerns. 

Alternatively, the interviewer may respond that they have no doubt about your ability to handle the job.  And if they think this, you benefit from the interviewer stating it aloud. It helps strengthen their belief.

“I think I would fit in well with your company culture and values. How and how much does the company evaluate potential fit in its hiring decision process?”

“I think I would fit in well with your company culture and values. How and how much does the company evaluate potential fit in its hiring decision process?”

O.K., it’s a totally loaded question, but it is effective at getting the interviewer to think about your fit with the company. It also sets up a statement about how that fit should weigh favorably in the decision to hire you.

 More employees get let go for not fitting into the work culture than for any other reason. You should never fail to ask this question if you’re being interviewed by a potential boss.

“I know you must be talking to others about this position, and I may not be the lead candidate. Is there any additional background or information that I could provide to become the lead candidate?”

If you’re not the lead candidate, you should find out why. The competition may be too fierce and you should be looking elsewhere.  There are better and lesser people out there. The sooner you know that the competition is insurmountable, the better.

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Or you may be able to dispel the perceived superiority of the “lead candidate.”  Then again, you could be the lead candidate.  And if you are the lead candidate, the next question is critical...

“I really like this opportunity; I would like to ask for the job…”

Revel in a pregnant pause, ask for the job, and wait for the answer.  You could get it right there, especially if you’re the lead candidate. 

You may get a response such as “we have other people to see.”   To which you may respond, “Of course, I have some other interviews as well, but I wanted you to know that I would like this job.”  

Look, you should ask for every job you ever interview for.   Not necessarily because you want the job but you should never leave an interview completely uncertain of where you stand in the candidate ranking.

Asking for the job will provide you information about how you stack up against the competition and where the company is in the hiring process.

This post was originally published on BusinessInsider.com's Warroom .

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Display advertising: The King is dead. Long live the King.

Image by bigyahu via Flickr

The statement above has been historically used to declare ascension of one king to the throne upon the death of his predecessor.  Today we see many reports about the death of display advertising and the vehicles (newspapers and magazines) supported by it.  But display advertising isn't dead, it just taking new forms.   In the process of taking new forms, it is changing modernizing its business model and supporting new vehicles for display advertising. 

Just as Google revolutionized online display advertising by changing the business model from impressions to performance based (cost-per-click) pricing, there is an emerging generation of companies changing the business model and primary media of display advertising.    (One of those companies is LivingSocial, upon whose board I sit, and get to see this sea change first hand.)

One area where this change in the display advertising market is visible is in online group buying.  It is my belief that people often mistake online group buying as a fad.  I would argue it is a far more fundamental change, a seismic shift in the display advertising market.  This shift is from simple display to performance advertising.  And just like in online advertising before it, this is a big, compelling shift.   What makes it even more significant, is that group buying is bringing performance advertising to smaller, local merchants.

The idea of group buying, usually of coupons, where everybody gets half off at restaurant ($50 coupon foor product priced at $25) so long as 100 people commit to participate, is but one of the shifts in the display advertising market. The restaurant industry employs 12.7 million Americans in 945,000 locations — and 2010 sales are expected to reach $580 billion.  Even at 5% of sales for marketing/advertising expenditures, the restaurant industry is a potent economic force.

Image via CrunchBase

The restaurant industry has historically done its customer acquisition through advertisements.  The performance associated with the investment, like all display advertising, has been largely unclear.  The restaurant management is never fully aware of the specific impact of the advertising effort or expenditure.  This essentially is, in a world of  CPC/CPA, why display advertising is losing its market share to online. 

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Let's consider, Option 2, our restaurant owner's chooses to pursue performance based advertising via something like LivingSocial DailyDeal. (Hey, had to get that in there somewhere)   LS offers the restaurant owner the following deal.  LivingSocial will create an advertisement for your free of charge and promote the advertisement to its  10's or 100's of thousands of our users for 24 hours, also free of charge.  LivingSocial DailyDeals will structure a deal with you, the offer/call to action of the ad, that will entice customers to buy a coupon for your restaurant.  (This offer will usually coincide with the restaurant cost of goods which is around 1/3 of retail on average.   The restaurant can set a minimum level of purchases for the deal to be sold so there is no risk of expending effort here unless it is worthwhile. All of which minimizes or almost eliminates financial risk) 

The restaurant can set a maximum number of deals to be sold via the advertising.  Just like Google adwords, by the way, which allows advertisers to cap and control expenditures.   Now, here's kicker for the restaurant owner, LivingSocial will cut a check TO the restaurant owner following the ad campaign's successful run.  Hmmm, for the restaurant to weigh, write a check or receive a check, write a check or receive, ok they don't get to a third consideration.  Who would?

But the benefits don't end there, after the campaign has run,  the restaurant owner will see numerically and obviously the impact of the advertisement (that they didn't pay to create or run) on their business in the following weeks as coupons are redeemed by customers (new and old).  The restaurant owner can now advertise via Cost per Acquisition for customers without any upfront investment or financial risk.  On the back end, they can see how many coupons were redeemed with a full assessment of the return on investment of the campaign.  The restaurant owner can look at display advertising in a whole new way.  She can drive her business with cost per acquisition rather the uncertainty of projected yield .  That is a big change.

It is a powerful change. Not one limited in scope or reach to groups buying in unison. 

It is bigger than that.

It is the future of display advertising. 

The King is Dead. Long live the King.

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6 Deals to Avoid in Small Company Business Development

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The business development function is uniquely critical and powerful in a small company.   Business development folks, unlike sales people, should pursue deals that are trans-formative for the company on an individual basis.  Sales, on the hand, pursues deals that are collectively trans-formative - positively if there are a lot of sales and negatively if there are not a lot of sales. 

Finding great business development talent is tough and most small companies have to grown their business development talent from former sales people.  That transition from sales to business development isn't natural as some of the rules are different.

Since I have advised on a few these transitions, here are my 6 Deals to Avoid.

1.    Stay away from deals with other small companies

Small companies can't help other small companies.  There is no large sales force, brand name, marketing resources or development talent that can be leveraged by one company in the favor of the other.  If your business development doesn't involve sales, it better involve actions (by people).

2.    Avoid "You go first partnerships"

Steer clear of deals that involve co-marketing to each others' prospects where the request is for you to deliver your list to them first or ones that request the two companies to take a set of actions but all of yours are upfront.

3.    Don't do "Barney" Press Release deals

Image by ranesbluesky via Flickr

There is no value in doing press releases where two companies express undying love for one another.  If you aren't taking specific steps, you're wasting time.

4.   Beware the Bureaucrats

Some companies are simply too bureaucratic to be of much help.   If they can't out of their own way internally, they are unlikely to be of much positive effect as your partner.  Don't do deals with companies that can't move the ball forward.  If they don't have a string of successful deals with smaller companies, you're unlikely to be the first.

5.    Understand the heritage

Larger companies with reputations for borrowing/stealing "ideas" or engaging in litigation have earned these reputations.  Be respectful of these reputations, there is no amount of legal agreement wrangling that will protect you.  Don't do deals with companies expect them to behave differently than their history.  Don't do deals with companies that have been accused of purloining ideas on more than a couple of times.

6.    Don't do deals with people you don't trust

If you don't trust them, you are probably right not to trust them.  And like the heritage point, there is no amount of legal word smithing that will keep someone from screwing you if that is their intent.   Trust is a basic, instinctual thing.  Rely on your implicit abilities of who to trust.  Don't do deals with people you can't trust, you can do plenty of deals with people you don't really like as liking and trusting are different.  You can grow to like people you don't initially like as you get to know them.   In fact, it is quite commonplace.  Growing to trust someone over time that you don't originally trust is rarer.  That's because it is harder to trust than like the people you meet in business.

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Time for some Asymmetric Marketing

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I was speaking with someone over this past weekend and shared that I blog on a regular basis.   I described that I try to give "practical advice" related to start ups, financing and growing a business.  The response was a question, "Don't people need impractical advice more?" like alternative ways to market, sell, raise money, etc....

My interpretation of "alternative" advice was what to do when you lack the money and manpower to accomplish what you need to for your small enterprise to grow.    And if there is a single good area for alternative advice, it is the use of asymmetric (guerrilla) marketing by a start up at a trade show.

Here's the scenario, you want to make a big splash at an upcoming industry trade show.  You have little to no money to do so.   You cannot afford trade show space and you don't own a booth even if you could get the space.  It is nonetheless critical for the company to join the fray and get in front of potential customers.   

I have done this with everything from stickers on escalator hand belts ($50) , to posters in trade show elevators ($250) , to hotel key cards with my logo in the trade show's main hotel ($250), to rogue banners hanging from the hotel across the street ($500), to college acting groups staging fake demonstrations dressed as hippies outside main venues of trade show evening events demanding access to my product ($500).  More on these in a minute.  If you're ready to make a splash, ok with people getting a little angry with you, and capable of a stunt or two.  Well here's the plan, and you may just have a lot of fun.   I always did........

1.    Understand the physical geography

Weeks or months prior to the targeted show, go to the trade show venue, surrounding hotels and any known venues for evening events.  Get a grasp on where people will walk, pick up buses, catch cabs, have lunch and meet for drinks.  Know the lay of the land literally.  I know this costs money but it is the fundamental first step.  Meet the bell captain in your target hotels.  Say hello to the head of housekeeping.  Talk with the convention center and hotel staff responsible for handling the trade show organizer.

2.    Determine which real estate and assets the trade show controls

This means everything from key cards in convention hotels to trade show venue itself.   By key cards, I mean the hotel keys one receives when checking in to the hotel.  They are cheap to have printed and generally a hotel will accept your logo'd key cards for usage at a convention for a small fee (as low as $250 or you may get it for free).   Hotels across the street or around the corner, where many trade show attendees will stay,  but are outside the trade show's control are key targets.  Will the trade show provide T-Shirts, Hats or Buttons to any housekeeping, front desk or bell staff?   Does the hotel have an internal video channel running on the hotel's TV's?   Find out what assets exist.  

3.    Get a sense of the rules

Some trade shows, usually mature, larger ones, have a great deal of staff and do a good job of controlling the assets you seek to leverage over a couple of days.  To the degree you can, without tipping your hand, get a handle on these rules. 

4.     Understand that you will need 4 to 7 gambits

Sadly, some of your gambits will be spotted immediately and removed quickly.   Some will not as people can often mostly assume someone else authorized you to replace the hotel's regular coasters in the main bar with the ones with your logo.   All it really took was a tip to the bartender ($50) and your coasters ($125).  Also, your gambits need to be executed in close timing proximity to one another immediately prior to the trade show opening.   Think 4 or 5am on the day of opening.  As you soon be explaining that you didn't know it was wrong to place bumper stickers on the convention center's trash cans ($75), or put decals surrounding hotel elevator call button plates ($50), or decorate the hotel's fake plants with small hanging monkeys/birds/ornaments ($125) or place logo'd doormats outside the convention center's doors ($500) or tape posters in key locations in the rest rooms ($150) or put logo'd toiletry baskets in those same convention center restrooms ($250).   Some of your soldiers won't make it off the beach and you should expect some losses.

That you did all of that as well put large buttons on the hotel maids ($100 tip/$100 buttons), desk staff and T-Shirts on the bell staff ($200 tips/$150 T-Shirts) when you weren't really allowed to do so, well, you should anticipate a stern conversation in which you demonstrate profound ignorance.  Won't do it again, you should say, not this year - not here.

5.    Hijack a little spotlight in a main event

Most trade shows will have a large evening event for entertainment and networking purposes.   Buses from main hotels to the event have bus drivers who might like to wear a new hat ($100 offered prize to bus driver spotted with it on - done very publicly - early on - as well as the price of the hats.).  Or my personal favorite, the college drama group staging an attention gathering event (as little as $300) outside the large, evening event venue.    They need the "freedom and power" your product provides and they are protesting its limited distribution (by trade show attendees).   To be clear, I would usually have to explain to the head of the college drama group that I wouldn't have a protest permit or anything like that.  If the police came to move along, be polite and get the hell out of there.   They were always cool with this.  And the police never came though the trade show people were usually plenty mad.  Then again, they would pick a public sidewalk which was visible from bus drop off but didn't impede traffic flow.

Another favorite spotlight stealing tactic is bring celebrity impersonators and a photographer with you to the event.  Elvis, Cher and Marilyn Monroe will work really well with a lot of folks.  If your show is in Las Vegas, they are plentiful and affordable (as low as $500 for evening per star).   Capture their emails so you can send the picture or put a button/lapel item on them associated with the picture process.  Or make sure Elvis has your hat on.

Later when you're successful and the company is progressing well, you will spend the $30k or $75k to do the trade show properly,  And, you'll likely look back on these shenanigans with a private smile.  I do. 

And when you get to spend all that money, you'll know which method generates the best results.

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5 Pieces of good news you should ignore

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When you're running a company, one quickly becomes acquainted with the thought that everything matters.  That everything, every little detail, as it relates to the enterprise and its progression is important.  And in that, one is mostly but not completely right.

Some stuff doesn't matter or matter enough.  Perhaps, un-intuitively, the surprise is that most of the stuff that turns out not to matter is good news.  That is to say, positive events that don't translate into anything additive to the company's growth.

Here are 5 that come to mind:

1.    Positive local press

Here it is the Washington Post which is a prominent national publication.   And a great write up in it will certainly bring kudos from your Facebook friends.   Enjoy for a couple minutes and then get back to things that will grow the company.

2.    National TV appearance

Check the numbers on your favorite cable programs.  Unless those include Fox's Bill O'Reilly, large numbers of people aren't watching these shows.  And, even when they are watching, they are likely not interested in your product.  It is exciting and fun.  Just consider it a break from the daily routine.  You still have to concentrate on communicating your value proposition to probable suspects. 

3.    Product of Year from a Trade Pub

It is great fun to win and beat your competitors in a "head to head" appraisal.    Then again, if you take the same effort that goes into influencing one of these and apply to everyone who doesn't read the trade publication (>99% of the universe) -- it would have been a much better use of time.   Plus, there's always a competitive trade publication coming to a different answer and all the trade publication awards have a very short useful life.  So, as they say, fame and magazine awards are fleeting. 

4.    Trade Show Award

Do we really trust these folks?  Really?   If you have a big enough booth, you're entitled to the award for most innovative product or product of the year.  If you aren't profoundly suspect of these, take an afternoon off. 

5.    Calls from Large Company Bureaucrats

They are interested and enthusiastic but utterly powerless.  They are also meaningless in their own organizations but get to be giants within yours.  They call expressing powerful interest and you would be forgiven thinking about the potential positive impact.   Then again, you might have better things to do than give meaning to someone who has chosen to live a powerless life.  Many a small company will find itself turned on its head chasing a huge opportunity that is only the product of a bureaucrat's search for meaning.

I raise these 5 pieces of good news because they are often touted by the CEO's that pitch us as evidence that the company is really gaining traction.  Unfortunately, they frequently tend to indicate that the company won't gain traction because its management is chasing good news that would be better ignored.....

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Always, always, always talk to your angry customers

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When I ran companies my policy was the phone would always be answered by a person.  If a caller was angry or upset – in any way – all employees were instructed to say, “The CEO of our company wishes to speak with anyone who calls and is upset about our products, our services, or with anything about our company.  Could I transfer you to him now?”   

As you can guess, most callers said, “You’re darned right you can transfer me to the CEO.  He needs to deal with this problem now!” 

I took those calls.  Every single one – even if the call interrupted meetings.  (We never interrupted client meetings, though; if I was already with a customer I returned the call as soon as possible.)  I took those calls for years, and even some many were decidedly uncomfortable, what often surprised me was how much I could learn by listening to angry customers.  Over time I identified more employee problems as a result of those calls than I did by any other means. 

In short, our customers not only kept us in business – they also identified issues for me.

Here’s an example.  An angry customer is on the phone with a support person.  (Or, really, with any company employee; every employee who works for you is ultimately paid to help customers and make them happy.)   The customer said, “I spent a lot of money on this product… and it was delivered with a part missing.  I need that resolved immediately!” 

The employee said, “I understand the problem… but it will take a fair amount of time to resolve.  It’s now 4:45 and I get off at 5:00.  It will take more than fifteen minutes to resolve this issue; I think it’s best if you called us back tomorrow.” 

(I’m not making this up.)

The customer became angrier.  (Big surprise.)  Another employee overheard the call, stepped in, and had the call transferred to me.  I apologized on behalf of the company, determined the problem, brought in a more conscientious employee to help… together we made sure the missing part shipped overnight. 

Fortunately for me, but perhaps unfortunately for the original employee, they didn’t have to worry about getting off at 5:00, much less taking the call the next day.  I fired him.  Treat a customer that way once and you’ll surely do it again.  I considered myself lucky to learn about this problem employee when I did. 

At least 75% of the time simply by taking angry calls I would learn about employees who were inconsiderate to customers or vendors.  I couldn’t be everywhere.  I couldn’t see everything.  But dealing with angry customers increased my reach and vision dramatically.

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What Rocky and Bullwinkle taught me

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My former secret past with cartoons was exposed on national TV last weekend.  

In 1997, I was running a Internet entertainment network of websites that included a joint venture with Universal Studios.  The JV with Universal was a website dedicated to entertaining boys and girls between the ages of 7 and 11.   Universal Studios had movies, TV shows, record labels, and various other entertainment assets within its company.   The "rights" to each property (movie, show, character, artist, song, product) were specifically and individually negotiated by the Studio and the property originator.  We wanted to work "Babe -The Pig" (great movie -"that'll do pig") but quickly established that we would need to negotiate separately with the producers/directors of the film who owned "Babe" and the artist who provided Babe's voice.   Getting both in the boat at the same time proved impossible at the time as people misunderstood and profoundly mistrusted this new medium -- the Internet. (In hindsight, I should gone after the duck in that movie -- he was a star...)

From there, I went after some famous cartoon assets for which Universal had some distribution rights.  But those distribution rights, which mostly dated from the 1960's didn't quite include the Internet.  So, I set out to contact and convince the then current owners of the rights to various cartoon properties including "Rocky and Bullwinkle", "Woody Woodpecker" and others, that they should license my company their characters for usage on an Internet website.  First, however, I needed to explain what the Internet was and why it was important. "Well, the Department of Defense needed a network architecture that wasn't at all switching oriented...." Ok, I didn't say that but it was a trifle challenging to make the computer network as an entertainment medium point.  In the process, I hope I educated them as to this emerging medium and its potential.  In return, they thought me a great deal about intellectual property, branding and the power of licensing.

Given that rights were typically in the hands of the children or grandchildren of the creators rather than the creators themselves, it was interesting discussion about the intellectual property, its brand meaning and future.  Those conversations about the cartoons, their creations, the creators and product distribution were some of the most interesting ones of my 30 years in business.  And it was a life lesson in the power of branding and licensing.  From meeting with these folks, I really considered that effective branding often relies on making something that is inanimate into something animate.  I had always thought of life less brand attributes.   I learned that has to be multi-dimensional and organic.   That branding is about creating a genuine relationship between people and a product.  People build relationships more readily with living things. That keeping the a brand and its character genuine in its usage over time was critical.  When I work with a start up now, I frequently counsel brand the product because it will serve to brand the company. Which isn't necessarily true in the reverse, branding a company doesn't consistently brand its products.

And I learned that licensing is the ultimate game of control.  They slice the licenses pretty thinly in Hollywood.  And they are wise to do so, as they've seen the rise of new mediums  and unexpected opportunities before with radio and TV.  So, while I am not a branding expert, I became convinced that it better to brand a product than a company.  And that every license is a very sharp, two edged sword. And if you brand well, it will only pay if you control and protect your brand along the way. 

But I really didn't expect a cartoon oriented question of TV.

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Know thyself, know thy competition better

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The fastest and most direct way to start up success is an acute, deep understanding of your competition.   It is also the most powerful evidence that you can present to potential investors.

Consider the case of an entrepreneur who arrives with a complete understanding of competitors' products.  This conveys insight into market, opportunity, sales strategy and product superiority.     Alternatively, if the entrepreneur doesn't demonstrate that understanding it undermines everything and I mean, everything, within a business plan or proposal.  The management loses credibility as does do the financial projections.   Without that demonstrated understanding of competitor strengths and weaknesses,  assertions sound like wishes instead declarations of knowledgable intent.

I often advise young people that are striving to contribute and advance in an organization that nothing can differentiate oneself as powerfully as being an expert on the competition.   It is available to all but sought by few.   Being a known "expert" on the competition will bring people from across the organization to one's door step.  Which, if you're young and interested in moving up, is an unparalled platform for recognition.

On the other hand, you may be an entrepreneur and interest in raising VC (ie, you're reading this blog), and if you want to blow the doors off at venture capitalist presentation -- leave no one doubting your complete command of the competitive situation.  Doing so will build positive conviction about you and your deal.  For that matter, nothing will take your further in quest for start up success.  It also makes a lot easier to access investment.

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The Two Headlines? Good news and bad news.

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If one is doing a good job at growing a company the amount of issues, challenges and successes will grow over time.  With that the days and nights become full and the concern arises in the CEO's mind as to the prioritization of the things.   And yes, most CEO's can readily assess and order priorities.  They also worry more than your average bear because  situational analysis skills are critical to success.   Worry enables many start up leaders to anticipate what will go wrong and contemplate possible reactions.   Yet, the time spent worrying isn't time spent defining responses and decreasing time to react.

Nonetheless because of worry, they don't always react as quickly and as well to things as they would, upon further reflection, wish they had.    I  argue that time spent worrying is a waste for start up leaders.  Why, well, one can't always anticipate what will go wrong.   So, my thought is produce action plans, think about responses, reduce reaction time while limiting scenario creation effort.  Just make up possible problems and spend time contemplating responses.  Short response times with effective plans is the order of the day.

Woulda, Coulda, Shoulda can haunt anyone in any position. This is particularly true for someone who makes many critical decisions.  In talking and working with those folks, I find there is more regret about arriving at the right conclusion sooner than the occasional mis-step. 

To counter that, I typically ask CEO's to tell me what would be the content of two headlines in tomorrow's paper -- one of which is the best news possible from the company's perspective and the other the worst news possible.  You would be surprised how many times the imagined headlines actually make into reality and the paper.   In any case, the act of imagining these headlines prompts the CEO to do some critical things.  First, the CEO can assess possible steps to progress the best headline and mitigate the effects of the worst headline.  Second, the CEO can prepare an action plan in response to the arrival of either headline into the company's future. 

The process of preparing for these 2 events shortens the response time while enhancing the quality of the company's response in the moment. 

The CEOs I have done this with will often muse about how unlikely they thought either headline was at the time of its creation.   

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Boy, I am glad that I'm not a channel manager

Distribution channels are still a valuable necessity in a lot of industries.  But in many industries, they are truly under attack.

We're seeing opportunity after opportunity where value will flow from the content creators and thought leaders without the participation of a distribution channel in the classic sense.  Whether it is writer, artist, musician, reviewer, subject matter expert or other, the Internet is enabling the flow from its source to a multitude of destinations without restriction.  More importantly, value is flowing too.   

An example of this is BrightHub.  BrightHub aims to enable product reviewers to participate in the economic impact of their articles.   Consider for example, that a product reviewer may have established a large following and be a trusted source.  What is the fair economic value for a truthful, positive review that drives product sales?  Who receives that value?   

Heretofore, a magazine might pay the reviewer a small portion of the true economics to the reviewer and leverage the resulting impact to drive ad sales.  Good for you if you're the magazine.  Bad for you if you're the reviewer.   So in the BrightHub model, the reviewer benefits from the value of their own brand and participates in the industry created by their work.  I only point to them as a suitable example.

They're are, in fact, many great examples of the content creators disaggregating the distribution channels that have long retained economic value by restricting the conduit and leveraging the resultant scarcity. 

We live in a great time but it isn't going to be great for everybody.