|Musings from Jay Weintraub, Customer Acquisition Strategist. Currently, Founder of Grow.co. Previously Founder of LeadsCon.
Technology companies have by their definition been about technology. So, who better to start and build such a company than a technologist? Prior to the internet, though, most pure technology companies had, if not a business/sales founder, a business/sales executive as part of the core team. Why? Because no one would see or use the technology if they didn't. It would still be in the garage where it was first built.
The internet changed the paradigm. Take Google. It too could not exist were it not for stellar technology, but it did not have or need as part of the very early team a face to the business that evangelized and sold Google to the outside world. As the shift to mobile and social really took steam, the recipe for startup success in digital was forever changed. It was all API versus ANI (a bad telephony reference).
Sales people in classic tech companies were never seen quite on the same level as tech, but the new paradigm turned sales people into second class citizens in some firms, a different species at others. There are early Google sales executives worth eight and nine figures, but they were only laughing after going to the bank.
In this paradigm shift was lost a universal truth. Every company needs sales. It's a matter of when, not if. Many companies will fail because they assumed they wouldn't or their "when" was too late.
A handful of businesses can scale without sales. And that number is far higher than ever before. But that doesn't mean they don't need sales, and unfortunately, that some companies can get to scale without sales has caused certain people to assume they won't need sales.
If there is one thing I have learned, in more companies than some tech-minded folks will think, sales beats good technology every day. Like ideas, the best product does not always win. In fact rarely is there a product where a better version doesn't exist. The moat in these cases is based on people - either people who sold that product, or people who use that product. People make the difference.
I remember talking to a company that wanted to get into lead gen. They thought they could buy traffic better and cheaper. They also thought they could optimize how they worked, all because of technology. Six months later, we caught up. They had better tech, but they weren't winning. They couldn't understand how another company was beating them. The answer was sales. The other company made $40/lead where they made $20/lead. Optimize all you want, but even an impressive 20% improvement won't make up for a 2x difference in the starting point.
Time and again, I have seen this scenario. A company I met with recently has a rather average product. Yet, they are the market leader. It is painful how underwhelming their product is compared to what is available. Why are they ahead? Sales.
Sales is not saying one can have or should have a bad product. But, as we know, good sales can certainly sell a bad product. A bad product won't make for a sustainable business, and in the above scenarios, neither are a bad product. They are just far from the best.
If you are a tech company, go ahead and build an equally impressive sales team. You will need it. If you are selling technology or are a tech company but not a Facebook, then you already know that you need the best sales around... or you wish you had known.
(Originally published on November 6, 2014)
Google. Apple. Facebook. Yahoo. Twitter. AOL. Amazon. The list of big companies that choose to buy their way into a product or market rather than build it themselves. And these are just tech companies. What about Berkshire Hathaway? Merck? GE?
The tech industry is a fun one to ponder because here are companies with arguably some of the smartest people working for them and with at times limitless resources. So why then would they want to buy when they can certainly build for less? Not only can they build for less, but many, like Facebook or Google, have the built in network effects to instantly scale what they've built. Just look at Facebook Messenger.
Build versus buy is a question that still has me shaking my head at wonder, and while I have partially lived it, yesterday, I had the chance to talk to two entrepreneurs who used to be intrapreneurs. They shared their personal experiences of what it is like trying to build internally and why they left.
The two entrepreneurs are not from the tech industry but the events industry. It is an industry that I have grown to love, even though in our tech centric world, saying you create events causes those high on the tech juice to look at you with a mix of sympathy and bewilderment, as though they are trying not to say out loud, "Oh you poor thing. Could you not get into a tech company?"
Assuming for a moment that some of those outside of tech have valid insights on business, I thought I would share what for me are two really interesting reasons why companies buy. They are reasons that until recently I didn't have enough insight or exposure to understand, and these intra-turned-entre-preneurs represent one of each.
There Is No "I" in Bureaucracy but there is "Money"
Big company bureaucracy is a pretty obvious reason why entrepreneurs leave. But the "bureaucracy" is often not just a function of size. It's usually about money and increasing or at least protecting their valuation. We're not talking about the valuations based off non-financial metrics like users or market potential but those based off revenue and earnings… something large event companies do very well.
So, we'll use an example from the events world. New events are like any business. They require investment, and very rarely do they make money on the first go round. Compounding things, rarely will you know from the gate whether something is worth doing again. Assume then that a large events company wants to launch a new brand, and for simplicity's sake every test will cost them $100,000. If they allow ten tests (which could be five shows for two years or 10 for one year), that is $1.0 mm in costs. If they are valued at 10x earnings, that $1.0mm off their bottom line, represents $10mm off their valuation.
Yet, if they purchase even a marginally profitable company for $10mm, even though they have technically spent $10mm, their valuation doesn't just stay the same, it can increase. And, given that their business is one of real revenues, it means they most likely have access to debt at attractive rates so that they can spend this money against future earnings (from the acquired company) rather than using their own cash.
It may sound simplistic, perhaps selfish, but if someone makes a company a lot of money, at some point in their career, they will start to weigh the value they feel they have created against the value they have received in return.
This is such a slippery slope, full of ego, entitlement, and exaggeration. But, for every number of those who do add value but are clearly smoking something with respect to what they feel they deserve, there are those who are truly capable of creating shareholder value from scratch in a new entity with them being a much larger shareholder.
Shareholder value is of course revenue but equity, and if someone is special and able to create both, then a company is truly lucky. But, that existing company structure almost always is the downfall, as it is virtually impossible to manage the company's valuation and pay the person in some direct fashion (without then hurting the valuation). The same way that food at a restaurant has baked into not just the food costs but all other overhead, a company at scale has to use the value created to distribute across the whole company even if one person plays an outsized role.
If you are not first, you aren't exactly last, but you aren't ever going to get a straight percentage upside. Each incremental dollar created means less directly to you. It's slightly perverse, but it's the reward a company gets and you get, but only if it is your company.
My thanks to these two business builders for sharing.
What made the last hour of the U.S. Open so special was not who won, although the statistics of Jordan Spieth’s victory may never be matched in our lifetime (youngest to win the U.S. Open since the legendary Bobby Jones in 1923, the youngest to win two majors since Gene Sarazen in 1922, the only player since Tiger to win four pro tournaments since 1940, and the youngest ever to win the first two majors in a row). What made that last hour so special were the multiple, intersecting story lines of players that all had something unique to contribute, but none of them individually had the star power of a Tiger during his prime to dominate or distract from the narrative.
In that final hour three names really stood out — Dustin Johnson (“D.J.”), Jordan Spieth, and Louis Oosthuizen. The most remarkable golf actually belonged to Oosthuizen, whose round was so epic it is almost hard to describe and harder to appreciate if a non-golfer. This is a guy who when teeing up on his final nine holes was nine shots off the lead. He did what golfers only dream of, let alone on a course that was not only difficult but among the most maddening and publicly bemoaned by players ever.
To put Oosthuizen’s round into perspective, we start with the “birdie,” which is when a player completes a hole taking one stroke fewer than the goal, i.e., “par.” There are golfers who go their entire life without a birdie. And really good golfers (non-pros) are happy to get one or two a round. Sometimes pros only make one or two a round. Oosthuizen made six in his last seven holes including a stretch of five in a row, on this course of all courses (see bemoaning above), on his final nine holes of the final day of one of golf’s biggest tournaments, including one on the last hole, which, as was the case all day for him, he had to earn — no super long hitting setting up a seemingly guaranteed birdies the way Tiger, Phil, Bubba, and D.J. have made viewers almost accustomed.
Being initially so far behind in score and playing ahead of the two groups with which the lead was held all day, Oosthuizen’s quiet brilliance might have gone unnoticed had it not been for that last hole. After stringing together the aforementioned five straight birdies, he was standing on the tee of 18th now only two shots off the lead, thanks to some stumbling by the leaders. By the time Oosthuizen finished the 18th, our two leaders had dropped back even further, and with that birdie 4 on the on the par 5 last hole Oosthuizen was now tied for the lead and in the enviable position of being finished. In his final nine holes, he went from nine shots back to one that needed to be beat. It’s hard to ask for more as a viewer.
D.J. and Jordan also played their parts to perfection. Entering his final nine holes D.J., enjoyed a two shot lead and was playing seemingly untouchable golf. But as we entered that final hour, we saw D.J., go from two shots up to two shots back. There were no major mistakes — a few good putts that didn’t find the bottom of hole. Yet, these minor misses arguably telegraphed the gut wrenching finish we witnessed during that final stretch.
As mentioned, D.J. didn’t do anything wrong when he bogeyed three out of four holes early into his final nine holes. The ball just didn’t go in the hole. That happens a lot in golf. Three makable puts. Three near misses.
Nothing in golf is crueler than traveling hundreds of yards in two strokes only to then take more than that on a surface measured in feet. And, nothing is crueler on the green than short putts. The putting stroke shares only inches in common with the swing used with one’s thirteen other clubs. And the tiniest of undesired and unintended movements during the stroke means the difference between the sound of relief and the groans of anguish from ball passing just by but not falling into the cup. The sounds of anguish are almost guaranteed given the putting stroke’s reliance on muscles prone to high degrees of variability in a no stress environment. Imagine these same muscles in an environment where emotions are running so high one can hardly think, let alone think straight.
Alas the greens are the least interesting to watch as a spectator and make for rarely enjoyable highlights without the context of the shots that preceded them. But, what happens on the green has an outsized impact on everything that happens next. A missed put is not simply an additional stroke on the score card. Missed putts have a bat phone to the brain’s confidence center and just one missed putt is often the catalyst for not just future missed putts but all sorts of distracted thinking and frustration laced swings known to wreak havoc to players novice and elite.
All of which sets the stage for D.J. and the 18th. After three misses that for mortals would qualify as impossibly infuriating and confidence questioning, D.J. makes a tremendous birdie on the very difficult 17th hold. This means he enters the 18th tied for the lead. Up on the tee he has no way to know that Jordan Spieth is on the green putting for eagle (the term used to describe a potential score two shots under par). Despite the stress and pressure, D.J. hits a fantastic tee shot. By the time he arrives at his ball, though, he has gone from tied to one shot behind Jordan who two putted for a birdie and the outright lead.
In a superhuman display of talent under pressure, D.J. knocks his second shot on the green, leaving himself an even shorter putt for eagle (the 18th is a par 5) than Jordan had. All of the sudden, D.J. has gone from two shots up to two shots back to tied to one shot back to having a real chance to win the tournament. The collective minds of those watching flash back to other last hole victories, of the ball dropping, and mass celebration erupting as a result of golfer’s dreams everywhere realized. We picture the usually stoic D.J. showing us his version of the fist pump, hat toss, or spread eagle jump. In the back of our minds, we have already prepared ourselves for 18 hole playoff that would happen if he simply two putts for birdie.
In all of our imagining of D.J.’s final put or putts, nowhere did we picture seeing a slippery first putt run five feet by, leaving a slightly uphill curving devil in not just length but putting surface condition. All of the sudden the inevitable tie becomes slightly less inevitable. And as D.J. sets up, is it our imagination or his routine a touch rushed? Memories of holes not long past enter our minds, perhaps even probably his. And before we are prepared, the tying putt slides by. It is over. Jordan Spieth has won. D.J. finishes one behind in a tie for second but leaving a stunned crowd and shocked fans worldwide. No winning putt. No tying putt. Just a three putt from a length just over twice his own height in front of millions, readily available not just in mental replay but digital. All of that work, decades of preparation, his for the taking. Gone in mere seconds. Never to be just like that again.
The player who is probably more upset than any is Patrick Reed. He was tied for the lead at the start of this final four holes of greatness. A very wayward tee shot on 15 had him entering 16 two shots off the lead. Near misses on the putting green meant he stayed their and was not a factor in the final hour’s drama. While so close — he was literally tied for the lead on the final four holes of the final day on one of golf’s greatest stages — no one but him will most likely remember just how close he came. And because no one was considering him as a contender, no one was really talking about him when he dropped behind in that last leg.
For D.J. this is the second near miss in a U.S. Open due to what can perhaps best be described as brain farts. But he has shown he can get there and has the game to win a major. The far harder scenario is when one may never get that close again. In cases like this a pressure laden brain fart could fester and hinder what talent suggests will be a successful tenure on tour. That is far more insidious than knowing you have what it takes but not converting when having the opportunity.
The problem here is that everyone three putts. In fact every single pro three putted at least once on this crazy course. Only one person though three putted on the last hole of the last day where a one-putt meant victory and a two-putt meant a tie for first. That is what makes this situation and golf so unique. It is not a lack of skill that caused this to happen. It is something else, something 100% situational.
While pro golfers putt in competition roughly 130 times per tournament, they have a first putt on the last hole only four times per tournament. And even though there are some forty plus tournaments yearly, the U.S. Open happens only once per year. That means any player has only one chance to put on the last hole of the last day. And the odds of playing in the last group and having that final putt be a chance to win (and tie with a two putt) will come around zero times for the vast majority of professional golfers. That is why Patrick Reed could justifiably feel the most let down, because the odds of being tied for the lead on the last day with four holes to play is not that much greater.
As for D.J., what makes his particular three putt so challenging to overcome is that he did not get beat by another player. Compare this to the other player to come in second, Oosthuizen. His second place will feel far sweeter because he wasn’t even supposed to be in contention. You could argue that he was outplayed, but regardless, when it comes to D.J. he beat himself, which like the existence of short putts, is another unique cruelty to golf.
What happens next will be an amazing study in fortitude, will, and leadership. D.J. appears to be the type of player who will shrug this off and win again. He is such a talent and, my guess, wired mentally in a way where he both won’t dwell and won’t become a trivia fact. His is a devastating loss and no doubt the butt of jokes for a long time, but at least by being able to contend again, he won’t have the weight on his shoulders the way a series ended error in a Game 7 of a World Series does.
I hope that we will have the opportunity to hear how D.J. speaks to himself. Does he reinforce how great he played, how amazing the experience was? Does he genuinely feel as though another chance will exist, or does he punish himself for a mistake he would never normally make? Does he replay the scene countless times, becoming increasingly tense and angry? He may do all, but his ability to focus on how well his training paid off to get him there, on the great birdie on 17, the absolute clutch shots that put him in the drivers seat on 18, those are the things that will dictate how he plays ongoing.
Like a well funded startup, D.J. has to play in the future as though it will all work out, as though he has not just the talent but plenty of time to achieve the goal. And he truly has to believe it will happen, that this was but a blip. Even if he doesn’t win a Major, he has to believe he will and then train like he will. He has to continue to put himself in position, and to use this experience to create an even more unflappable routine he can employ when in future pressure-filled situations. He has to know that he can use this become dominant. He has to view all of this not as a confidence breaker but a confidence builder — let it provide him clarity on where to focus, where to improve. His job as a golfer is not just the physical game but once again always believe he will improve and that he is not any one single putt or set of scores. That’s all of our jobs though. And, if someone can overcome this on one of the most public of stages, we should know we can do it too.
This post originally appeared on LinkedIn.
If you have written
posts a single post on LinkedIn's publishing platform, you too received a personalized looking but ultimately impersonal email from one of the editors on March 16th, the start of the most recent TED.
The email begins,
We love that you’re publishing here and wanted to suggest another idea for a post. TED, that annual confab of big ideas, begins soon. Would you consider writing a post timed to the event? We know readers will be paying attention to the news around TED.
At first, I thought I had been contacted because I actually know a thing or two about tech and events. In fact, one of the “questions” in the outreach email was, “Are conferences like TED still useful? How do you personally make the most of them?”
Alas, far from a personal invitation and attempt to help inspire those who write, the no-reply from email and ending which reads, “Note: We are sending you these story ideas because you’ve published at least once on LinkedIn. If you would no longer like to receive emails like this, please click the unsubscribe link at the bottom of this email.” Sadly, I guess the editor's enthusiastic mention of looking forward to reading what I write may not be the case.
The real reason I was disappointed in the arguably disingenuous content bait email is that I thought someone other than me actually cared about my response to “If you were to take the stage and give your own TED talk, what would you focus on? What’s your idea worth spreading? Feel free to think big, but also be specific (and use examples!).”
For quite some time now, I have been trying to create that pithy yet still true way of articulating the interplay between “what” and “who.”
My "what" was a particular performance marketing skillset. That is what I learned while at Advertising.com, and it was that skillset that made me valuable to Oversee.net whom I joined as one of its first employees. That knowhow played a key role in my writing and ultimately in being able to found LeadsCon.
I knew "who" mattered, but my aha moment came the third year of LeadsCon, when someone asked, “Why should we attend. It’s not as though you know more than we do now.” The thing is. They were right. What I knew about lead gen was no longer a competitive advantage. It began to be who I knew and what I knew as a result of those interactions that was the value-add to others.
All of which brings us to an article in Fortune on angel investor extraordinaire Chris Sacca, who went from out of job to billionaire in less than a decade. How? It’s the perhaps ultimate story of what getting you in the door but whomaking ultimate the difference.
Chris Sacca trained to be a lawyer, and that knowledge of the law got him hired at Google in 2003. He made a few million at Google through his being an early employee and the company's stock market success. For us mortals, a few million qualifies as rich, but compared to billions, perhaps not.
So where did the billions come from? Because of who, namely who also worked at Google during that same time, one of them being Evan Williams, a Twitter Co-Founder. That relationship paved the way to Chris being an investor before anyone knew about Twitter.
Think Chris' ability to invest had anything to do with his knowledge of the law? And was it the legal know how that landed him the chance to help Evan Williams sell $400,000,000 worth of pre-IPO stock?
What about being an early investor in Instagram or Uber? Or being offered the chance to invest before almost anyone else from what have become some of the most talked about companies, including Meerkat?
Perhaps he saved money on legal fees with his knowledge of the law, but his continued success has nothing to do with what got him hired in the first place.
And, I guarantee that all the other billionaires in his circle, if we read their story, we will find instances of who making a much bigger impact than anything they knew.
As conversation around the tech correction heats up, many of the conversations have focused on "burn rates."
What Is A Burn Rate And Is A Burn Rate Bad?
Those in startups (especially venture funded ones) with exposure to the p&l, will be very familiar with the notion of a burn rate. The term is a euphemism for how much a company loses (generally expressed as a monthly amount). Along with their burn rate, you will also hear companies refer to how many months or years of cash they have remaining at their "current burn rate."
A high burn rate is not necessarily a sign of a bad company. Many companies today and in the past would have run out of money had they not sold, had investors continuing to write checks, or exited to the public markets. This includes Amazon, YouTube, and Twitter. The vast majority of companies, though, won't be as fortunate to have seemingly never ending funding to see the vision out to profitability as Google did with YouTube.
A seemingly never-ending supply of money is nice when it happens, but it is a very precarious position in which to put yourself. And it is simply not a realistic position for the vast majority of stratups, even though many are essentially binary bets for their investors. That is, the investors either expect it be a big winner or go to zero.
The burn rate conversation is focused not on the odds of a successful outcome but changes to their spending habits that keep the company at bat longer and less likely to need to go back to the till, which if predictions hold true, will be drier than it has been and as such a rude awakening for many.
Moving Away from the Burn Rate Conversation
While I run a startup and have invested in more than two dozen (don't tell that number to my wife!), as I'm not a professional investor, I am in no position to offer guidance on what one's burn rate should be. Instead, I would like to reframe this conversation in a way that almost anyone could identify. And that is by focusing on revenue, specifically customer concentration.
Although obvious, I think it is still essential for every company, especially young ones to understand their customers as much, if not more than their expenses. A simply way to do this is to say, what happens if we lose our top two? Our top five? It is important for a company to know how many companies make up 10% of its revenue, 20%, 50% and so on.
The next step beyond having a grasp on one's revenue concentration is to understand the companies that are spending with you. This is what many didn't understand or see coming during the 2000 internet crash. They might have had many customers. The problem, though, was that all of the customers were the same. It is equivalent of owning many stocks but all in the same sector, such that any sector changes will impact your entire portfolio more than the market as a whole.
A commonly referenced statistic is that 75% of venture funded companies fail. If one's clients are all venture funded, you might be in a position to lose 75% of your business. Even if your clients beat the odds, they might still view you as non-core to their spend. That was certainly the case in the early 2000's. Seeing the carnage pile up, traditional brands and agencies pulled back on all digital spending, hurting all digital companies. That could very well happen again. If big brands decide that spending on social should be tweaked (i.e., cut), even if they cut budgets by 5%, it will mean billions in lost revenue for the ecosystem.
We have seen huge investments - both by investors and companies as clients. There is clear value and amazing things happening, but it doesn't mean that there aren't potential points of exposure. Understanding those points of exposure - both expenses and income - is a first step to being ready as a company for any changes.
1402 Words. 8mins 56 seconds.
My wife and I have 14-month-old fraternal twins, son Ryan and his younger sister by 11 minutes Madeline.
Other parents have shared with me how awe inspiring and impossible to understand the development process is. I find it doubly so with two kids who share 50% of their DNA but seemingly nothing else, excluding my wife and I as parents.
Most people who see them remark on the obvious external differences, Ryan with his curly hair and brown eyes, Maddie (as we call her) with straight hair, fairer skin, and bright blue eyes. From the shape of the ears to the structure of their toes, looking at them is like looking at a game of Mr. Potato head where two siblings managed to pull their parts from two different parts bins.
Their internal differences, those that my ninth grade biology class cannot help understand, fascinate me as much, if not more than any external difference. We see behaviors common to both because of their age, but I am amazed at the differences in how they process and express what they learn.
My son reminds me of me – sensitive, silly, linear, and determined. My daughter must take after her mother given that her problem solving that already tops mine and as my mom tells me, has patience and calmness not seen in my unless cartoons were playing. Maddie just figures things out without having to try and understand each of the components. I love my son, but I’m often in awe of our daughter. She doesn’t sit there and do what makes sense because it is the obvious way to do so, nor does she hit a wall and keep trying the same thing again and again until deciding to take a different tact.
According to my mother, I was indeed a lot like my son as a child. I suspect then that he too might develop into being an idea guy; whereas his sister, is more like the hacker. He will wonder why things are the way they are, and she will figure out how to use what exists to get things done faster, cheaper, and better.
Like other idea people, no topic seems unexplored, from a better bathroom experience to those inline with my current efforts, such as ideas for new conferences or event technology. Some I will share; others, I still think are so good they deserve to be locked up in my head waiting for that moment when someone else does it, but where I at least get to say – I had that idea.
Those ideas that we don’t share, are they really the best ideas; or, are the best ideas those that you could share because no one else can pull it off as well as you? As much as I’d like to say it has to be the former, the truth is probably closer to the latter, at least for the ideas that matter. If it’s an idea you can’t share because you don’t want someone else to do it, there is probably a chance you aren’t the only person with the idea or even the best person to pull off the idea.
That notion, that the best ideas might be those that you could share, is what has taken me far longer than I hope it will take my kids to understand. The true value of any idea only comes when it gets executed. Similarly, the success of the idea rests not in the idea but how well it gets executed.
In “Idea Versus Execution A Tale of Two Founders,” I wrote:
In thinking through ideas versus execution, there are three things I've had to come to terms with personally. The first is that I'm an idea guy through and through. The second is that a large number of my ideas exceed my ability to execute, and the most difficult is that almost all of my ideas have been thought of first by others. The ONLY thing that matters is who executes best - not even first but best. For idea guys, this principal can be painful, because it means learning to let go of ideas and realizing that ideas aren't where the value is.
So, why are we still so hesitant to hang on to our ideas? Is it because we truly think that we are the best person for the job, or could it also be something else, i.e., the power of hope the way buying a lottery ticket fills you with promise despite the near-impossible odds? Only in this case, the idea is a perpetual lottery ticket that you can hang onto without having to hear multiple-times per week that you have not won. And even if you lose, i.e., someone else does it, you still get to feel as though you accomplished something by its clearly having been a good idea.
Speaking of hope, this (finally?) brings us to Angry Anthony. Granted, talking about Anthony as an example of an idea guy is slightly extreme and/or depressing, but it does help illustrate the value (or lack of inherent value) in the idea. I call him “Angry Anthony” (well, not to his face), because he is a rather vitriolic sort. He is white, in his forties, and an ex-con. If he finished high school, it does not show in the spelling or grammar of his signs.
Anthony was born and raised in Upstate New York, which like the parts of California not within 75 miles of the Ocean or major metro, resembles a completely different world – one that typically has less transparency about how to escape a world of seemingly limited opportunities. So, it is an unfortunate cliché that Anthony was drawn to the glamour of crime, which in the short-term provided greater excitement and access than the slower, less certain paths. His path though meant at least eight years in prison for a non-violent crime and forever carrying around a felony conviction. Not that he seems all that remorseful, more nostalgic for the days when he had things and experiences worth remembering.
I have already dedicated more cycles than I should to thinking about Anthony, be from a marketing perspective of wanting to A/B test his signs to the cadre of classic curiosities around ways to break the cycle. It’s his ideas that are the most interesting, because like so many ideas, they don’t actually suck. His signs clearly do, as “If I were illegal, I would be working,” is not the sympathy inducing fare likely to win wallet share when up the street sits a man with 1.5 legs, even though his use of funds has some very suspect applications. Add to that Anthony’s views on homosexuality and gender equality, and it whittles down the pool of sympathizers in the form of money. He is though truly homeless, and I’ve not seen him drunk or on any form of drug other than nicotine.
The first idea I heard from Anthony was his wanting to see a KISS themed hotel. He believed that certain brands had enough pull that people would rather stay at a hotel with that brand’s likeness than the one-size fits all approaches of today’s hotels. Would True Blood fans want to? Why not? Maybe this is called Universal Studios, but clearly there is something not completely idiotic about the concept. Anthony even had met someone that was a developer and another person that worked for the KISS brand.
His most recent idea is almost an ad-tech one. It’s essentially an offline ad network leveraging building real estate that in NYC is currently overlooked/underused. If there exists a business painting the sides of buildings with ads, this one can surely work too. He event knows one of the companies that could facilitate (think ad server) were the two sides of the network put together.
Would you pay for this idea? Would you work on it and give some percent of the profits to the idea? It’s arguably not patentable, and even were it patentable, he couldn’t afford to do so. It’s an interesting conundrum that helps illustrate when ideas have value and when they don’t.
In the past, I’ve proposed an Idea Marketplace. With Angel List, Quirky, Kickstarter, etc. we are getting close, but we aren’t quite in a place where an idea can lift someone up from the streets. Hopefully, for Anthony, the “I’m sweating my balls off” sign will perform better than usual.
My treatise of all treatises has been interrupted this morning by something much more mundane, a customer service call with United Airlines.
Fliers like me fall into a funny category. We are the hard to measure incremental dollars. It is exactly what a loyalty program should capture, but it's not easy to track what that actually gets the program provider. My back of the envelope math suggests that United made $2,000+ incremental revenue of me each year. That's the amount I could have saved by flying the better route and the better price on a different carrier. Instead, in the aim of maintaining my status, I flew on United.
For the past twelve years, I have hit Gold, which on most airlines entails 50,000 miles. The big difference for me is that most of the miles were spent as though it was my money. A good 70% were business travel, but it was for my business, so each trip was evaluated and each dollar mattered. The extra dollars I could have saved would have been felt, versus the more coveted travelers whose companies pay or the most coveted travelers, consultants, who get other companies to pay but keep the perks of flying the most expensive class of tickets.
No Status for You!
On my customer service call looking into two fees that I had never had in the past, what I found out is that I have no status for 2014. I flew 24,497 miles in 2013, which is 503 miles short of the lowest level, Silver. There was a site that allowed travelers to pay for miles to get them to the next status level if they came within a certain number of miles. I feel like I saw a piece of direct mail about it to my wife.
My error? I assumed. I assumed that my loyalty was automatically worth something. That it would be recognized and rewarded by at the very least a bump to Silver. How foolish ultimately, as the rules are the rules. All I can think is how nice to be so spoiled and entitled as consumers to find this strict adherence to clearly marked rules unacceptable. But that's the new customer service reality. It is no longer about adhering to your rules. It is about performing up to the new global standard.
Now that I have zero status, I have zero incentive to stay loyal. I might has well see what is the best return for not only the $2,000+ incremental dollars but the annual travel budget. It's one thing if the company offers the best of the best, but in United's case they are lacking in so many ways, for example:
As it's easy to my ego protective state of assuming I mattered, I'll bypass a few more woe is me comments and skip to what I'd do if I were them.
1. Know Your Customers
A) Look for people who have obviously shown loyalty and bucket them, e.g., 2 or more years, 5 or more years, 10 or more years. Have a few basic criteria for each bucket, e.g.., minimum status level, maximum status level, and average status level. Goal: simple but meaningful segments
B) Their customer service history - number of times called, issues unresolved or escalated, refunds processed, etc. Goal: how resources intensive are they and are they introvert customers or extrovert customers.
C) Get some sense of their digital self - are they connected, public, chronic complainers, able to offer real insight. Goal:
D) Assign a score or have multiple scores based on miles, dollars, consistency, service, digital; make the data simple to read and intuitive. Goal: a universal way for anyone to understand a customer in one quick look.
E) See What They've Received And Score It- when was the last upgrade? Average number of perks (e.g., upgrades) last year, in the last x years. Goal: have they been rewarded and are they feeling loyal. Create an index of perks to x (trips or miles) so you know their sentiment.
F) What What Has Changed in Their Life - Are they buying for different people? Did they go from one ticket on non-business trips to two or three or four (like us with twins)? Maybe they didn't get an upgrade because they started flying with their wife and didn't want to be separate? Maybe they have had a kid or kids. What has the data said about their flying change. Did they relocate? A lot of this data is easy and inexpensive to append. Goal: Combine other relevant data to act as triggers and ways that let you take action in a way that feels more personal than messaging by status level.
2. Look for Deviations
Set alerts for any changes or the possibility of change. The data will tell you what a person's typical frequency is. Are they not taking certain habitual trips? Have they started to trend differently? Goal: Know almost before they do what may be happening so that you can take action.
3. Take Action And Proactive Acts of Kindness
Let's take someone like myself who has given 10 years of loyalty for what used to involve an upgrade or two (until the program changed and my route no longer qualified for free upgrades) and earlier boarding (now available for $300/yr via a credit card). In my case, they could have, in an ideal world, given me a year free of status in recognition of past loyalty and life events. Or, they could have sent me a note about my status and instead of saying click here to pay, they could have just given me Silver. Finally, they could have actually been proactive about communicating my shortage instead of assuming that I knew exactly where I stood. Just as I shouldn't have assumed, I don't think they should have either. With data aggregation and triggers, they could help create loyalty - timed discounts along with unexpected but appreciated rewards - from status to lounge visits.
It's easy for me to suggest what should be done, but United is a huge corporation, that despite the pretty pre-flight videos, has to operate on the lowest common denominator. That means individual employees are not empowered to help individual customers. Empowered is a culture change, it's a management change, and it means an incentive structure where service matters. Is it possible? Absolutely. Just look at Chase Bank or Best Buy. I actually have loyalty to a bank, and why? No special program but an intense culture change that has saved me some money, some time, but more than anything makes you not loathe a commodity business.
If a 20 year pilot whose airline goes under must start from zero at a new airline, do I really expect less mission critical pieces to be better run?
In 2002, if you took a look at the lead generation landscape, it would have consisted of one main vertical - mortgage and one up and coming vertical, for-profit education. A dozen years later, the lead generation has undergone some radical transformations, from sector diversification to smart uses of technology to connect users with companies more efficiently.
Both mortgage and education exist, each, though looks very different today than before. On the former, we can argue that the recent financial crisis set the industry back. Consumer demand remains strong, but the legislation changes along with interest rate sensitivity, mean that companies cannot come close to fulfilling the consumer demand.
The changes that have taken place in the education space are equally fascinating, and the issues equally charged. It's a topic that I certainly have thought about since going from first-hand marketer to industry organizer. As the operator, I understand the marketer's maniacal focus on demand generation. As a semiofficial liaison for the industry, I understand the macroeconomic and political factors that have translated into not just increased scrutiny but inappropriate labeling of the industry.
I'll admit the slight stretch, but in many ways the business of education is not dissimilar from medicine. At their core, they are helping people live better lives. Like any large, complex, and emotionally charged sector, it is very easy for those on the inside and on the outside to form divergent opinions. And, it is possible for both to be correct. We are seeing it in medicine and certainly within the education sector.
For the uninitiated, the for-profit education sector contains both degree granting institutions and non-degree granting institutions. Of the two, the degree granting institutions are the ones that have garnered the most attention. They include institutions with no central campus, like University of Phoenix, that began with a specific focus on underserved students (working adults) to partnerships between your traditional schools and companies who help them leverage the brand to create an online, profit generating division of the "non-profit" school.
As I've learned by being around education industry, once you attach for-profit to something, it becomes charged, and even more so in education. The term is really a misnomer, and it's unfortunate. Currently, though, the discussion surrounding education has become so embroiled in partisanship that having a meaningful discussion about it can be difficult.
The government loan issue is a tricky one, and for better and worse, it makes innovation trickier because the degrees must conform to accreditation guidelines. It's the same issue surrounding all traditional education and the debate whether what is taught at traditional higher education institutions prepares people for the jobs.
Flying under the radar in some respects are the non-degree granting institutions - the scammy ones being mail-order fraud but the real ones providing skills training, e.g., truck driving. It's a segment of the market that has escaped debate primarily because it is typically private pay, that is, students do not qualify for government backed loans.
The under the radar area is anything but under the radar with respect to their impact, not just on the traditional jobs but some of the most in demand fields, programming and user design for example. Getting a job here does not require a full degree. It requires very specific skills, ones that are able be distilled and taught in a condensed period of time.
Programming was and is taught at degree institutions. With the volume of shared data online - most importantly libraries allowing programmers to quickly use pre-written code - the timeframe for learning has decreased and ability to do things with that training has taken a leap forward. Instead of four years, a person can spend three months of intensive training and be qualified enough to be the equivalent of a paralegal or better depending on the student.
These programs, referred to as immersives/intensives, seemingly have sprung up from nowhere. The first was General Assembly in New York, and today the field contains 70+ institutions, more than half of whom have formed in the past twelve months. Like any new education discipline, it just sort of happened, but the more business savvy realized that they were on to something.
The course fees are anything but trivial, averaging $10,000 or more for the three months. But, the current market demand for the skill and subsequent placement rate means that the $10,000 becomes a pretty calculable ROI for students, many of whom upon getting placed will earn back the money in the first year. Even if they earn back the money in three year's, that far exceeds the ROI of most other education.
What I saw watching the space was something akin to the education industry in the 90's and early 2000's. I had a scratch pad of a site that would compare the schools and aggregate the information to assist with the student discovery process. Two years later, not having actually done anything with that paper, I decided instead to back a startup that had the same idea. It is called CourseReport.com, and for hard core lead gen folks, it's directly approach will appear familiar, but instead of just aspiring to be a discovery platform, they want to help be an end to end play for the student.
It will be fun to see where this space goes. No doubt the "big guys" of for-profit education are already hard at work at looking into this space. More than anything, I hope this space will continue to do what it has started to - providing education that is actionable and employable.