07. October 2014 · Comments Off · Categories: Uncategorized

downloadIf video killed the radio star, social media may be killing the free press.

Last week Target made headlines in Canada for all the wrong reasons.  The story arose because a few customers (or guests as Target likes to call them) snapped a picture of two pairs of kids pajamas inspired by popular DC Comics superheroes.  One pair featured the message “Future Man of Steel”, the other pair stated, “I Only Date Heroes”.

While not trying to debate the suitability of a young girl’s pajamas inscribed with messaging about who they may or may not want to someday date, there can be no doubt that the resulting Twitter and online outrage was stoked by the contrast between the two messages – the picture of the PJs (which went viral) was clearly taken to maximize the difference between how consumer society treats little girls and little boys – little girls should want to date heroes and little boys should grow up to be heroes. Of course, this is offensive to many.

When I visited my local Target store this week, I was surprised to see that there were in fact a bunch of other pajama choices in this DC Comics line – a girl’s set with the message “Cuttest Hero Ever” and a boys set stating, “I Spent Nine Months in the Bat Cave” to name only two.

When you see the all the messages, it suddenly didn’t seem quite as misogynistic.

Troubling is not that the photo went viral on social media (individuals presenting a skewed subset of the facts to support their pre-existing position is nothing new); troubling is that the mainstream media jumped on this story without seemingly knowing all the facts – happy to echo the message initiated by a handful of online influencers who had not presented a fair and balanced story to begin with.

The cynical view is that we have no one to blame but ourselves – online news sources (and newspapers especially) have struggled mightily to replicate the revenues they derived from their journalistic efforts in the pre-digital world. Consumers have consistently rejected their online business models, seemingly expecting to get content for free   In fact, publishers have increasingly turned to revenue models which blur the line between editorial independence and sponsored content,  This can’t end well.

But at the heart of every problem, lies opportunity. Social tools have emerged which designate influence (Topsy).  and allow for social sourcing of news (Hubub) in a potentially more balanced way.  Other services, like Newsie (which was acquired by Linkedin in July) scan the Internet for mentions of anyone in your social networks, Flipboard and Pulse (also acquired by Linkedin) aim to give your social feeds a more magazine-like look and feel.  In fact, social platforms like Linkedin are increasingly focusing on the publishing content as a strategy for engaging and retaining users.  Will Linkedin tomorrow be the Forbes of today?

Whether its kids pajamas, politics, sports or any other issue worthy of public attention and discourse, two things are clear – the very nature of content is changing and the killer app is still waiting to be developed.  The next great online CEO may be the one who figures out the dichotomy of providing quality, objective content that consumers are willing to pay for.

26. August 2014 · Comments Off · Categories: Uncategorized

Ask the leadership of any company that has scaled its sales and operations, and they will likely tell you that partners are essential to success.  Fewer companies,however, have a focused and disciplined approach on managing their partners.

One reason is that partnership management is often not built to answer the right question.  We’re all familiar with the traditional value proposition question:“why should I buy your product?” This question is often applied to partners when really the superior question is actually,“why should we bet our resources and reputation on you?three-doors-web

This universal question can be applied to all partners, but it is also useful to group partners into three general categories: supply, distribution and influence.  The very first step in building a successful partner strategy is understanding these three categories and grouping existing partners accordingly.

Supply Partners: The supply partner can provide your company with a broad range of products – everything from paper and pens to integral components of the end solution you sell to your customers.   Some companies will manage all of these relationships through a Procurement function – more advanced programs will distinguish between supply partners whose products are used in the regular course of business operations (think paper and pen vendors) and the supply partners whose products have direct implications on product strategy.

The strategic analysis when managing these partners: is buy vs. build.  Successful management of these vendors will create cost reductions and increased focus on your company’s core competency and will enable a faster time to market;  It may also allow you to offer a more complete product offering to the market by including third party technology or products which compliment your company’s own.

Distribution (or Channel Partners): Channel partners extend the sales reach of your organization.  They can be direct or indirect in nature and generally help to accelerate time to market (though they may be absolutely necessary to even operate in some markets where significant barriers to entry exist).  Channel partnerships are particularly important for early stage companies that can quite often get caught in the chasm of needing to grow sales capabilities while not having the resources required to hire and manage a dispersed sales force.

My next blog entry will provide more focus on channel partners and applying basic portfolio principles for the effective development of a partner portfolio.

Influence Partners: This is admittedly a bit of an “other” category, but it is important nonetheless. The strategic analysis with these partners generally focuses on the delta of achieving a defined goal alone vs. in partnership. Examples can include marketing partners, association partners, co-selling partners, ecosystem partners and government partners

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With thanks to Best Practices for Measuring Partner Relationships by Professor Lynda Kate-Smith. Offered as part of the Stanford Innovation and Entrepreneurship Certificate.

06. August 2014 · Comments Off · Categories: Partnerships, Uncategorized

If you lead a technology company, you likely know that the only thing harder to find than a good coder is a top tier account exec. There is a premium on qualified business development people that can take your company to the next level – and, surprisingly, you might be overlooking those could fit the description.

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About 85% of an iceberg’s mass lies underneath the surface of the ocean.  Likewise, the best sales talent your organization can find may come from applicants with unconventional backgrounds or even those already working for you in other functions.

Mark Murphy, author of Hiring for Attitudetracked over 20,000 new hires and found that 46% of them fail in first 19 months and 89% fail due to behavioral reasons or attitude  If you do that math, that means only one in twenty hires fails because of their hard skill set whereas two in five fail because of their soft skills.

Despite this and much more supporting data, applicants for sales or business development roles are generally filtered by linear, experience-centric questions such as: “have you carried a quota before” or. “what is the biggest deal you have closed”. What I find most ironic about this is that most startup founders or early stage execs, by applying this logic, likely would have declined their own application.

When it comes to identifying potential high performing business development talent, what you need to know can be assessed with four criteria:

  1. Emotional Intelligence: You will quickly get a feel for an applicant’s EQ when you are interviewing them, but look for a history of community engagement, public speaking and / or customer-facing experience on a CV. I personally got a lot out of early career experience interacting with customers on the front-line. In the long run, if an applicant does not like interacting with people, they will not succeed in a role where they have to put up with a lot of politics and personalities.
  2. Customer Orientation: The best sales professionals build enduring relationships and understand the customer both as an individual and in the context of the business. They genuinely approach the job as though they are a partner helping to solve a problem rather than an account executive trying to close a deal. Formal sales approaches like Solutions Based Selling have attempted to codify this skill set, but it really comes down to an ability to partner and deliver value over several quarters or years.
  3. Process Orientation: Sales – and especially B2B sales – are increasingly complex.  Processes on both sides of the deal need to be aligned and budget and deployment cycles considered.  Moreover, the nature of the sales cycle itself requires an account exec to be organized and meticulous.
  4. Product Expertise: This is where an internal candidate may be able to truly distinguish themselves and become a top performer relatively quickly. A top tier account executive must be an evangelist for your product. In technology, it can take some time to become familiar with the product(s), but you must have confidence that the candidate you;re hiring has the aptitude and smarts to learn your product’s use cases and specifications.

If there is any doubt as to the importance of identifying the right talent, check out this cost of failure calculator put together by salestestonline.com

29. July 2014 · Comments Off · Categories: Leadership, Startups

The belief that startups are a young person’s game is completely erroneous. Digital natives, born and raised in the world of social, mobile and Internet, may have had a first mover advantage in launching some of today’s high-profile tech startups, but that means little absent the ageless ability to think in the abstract, challenge accepted norms and persevere through the creative process..

The question thus becomes, how do we create and how has this contributed to the misconception that you have to be young to launch a startup? 6a00d83452989a69e200e5503cec7e8833-800wi

The most influential article I have read on the subject was Malcolm Gladwell’s 2008 piece in the New Yorker, “Late Bloomers“. Once I got past his rather loquacious back story of Picasso and Cézanne (and forgave him for following up Outliers with Blink), his insightful hypothesis became clear, society easily recognizes individuals who possess a creative vision (think Jobs, Zuckerberg, Mozart or Picasso). We label these individuals prodigies and we try to emulate them – even though we do not (and cannot) create in the same way they do. The vast majority of us, are more like Cézanne – we create through an experimental process which can span years or even decades. The challenge is that, before success is achieved, the work of the experimental creative, or late bloomer, cannot be distinguished from the average and, therefore, potential goes unrecognized..

Before sympathy for the late bloomer overwhelms you, check out my SlideShare presentation at the end of this post which highlights ten disruptors, media tycoons and titans of tech that found success well into their 30’s and 40’s.

A hypothesis and anecdotal evidence is one thing, quantifiable data is another.  “Is There A Peak Age for Entrepreneurship?“, a 2011 TechCrunch article by Adeo Ressi (founder of the Founder Institute) is the best piece I have read on the issue of age correlating to startup success. In order to identify the traits of successful entrepreneurs, the Founder Institute conducted over 3,000 personality and aptitude tests on applicants worldwide, and then carefully tracked the progress of almost 1,000 enrolled founders and 350 graduates..

The result? Older age has shown in the data to correlate with more successful entrepreneurs up to the age of 40, after which it has limited or no impact. Ressi concluded in full:

Age is only one factor among many to predict the success of entrepreneurs, and anybody at any age can break any molds put forward by “experts.” However, it’s clear that the stories of a few “college-dropout turned millionaire” (or billionaire) startup founders have clouded both the mass media and the tech industry from reality. We have romanticized the idea of a young founder because, well, it’s a great story, but these stories are not the norm. In the end, classic biases of gender, race, and age need to be discarded for a real science of success.

The lesson to be learned?  If you create through trial and error, as most of us do, you’re just hitting your stride by 40 so go conquer the world!

22. July 2014 · Comments Off · Categories: Early Stage Companies, Partnerships

If you run an early stage tech or Internet company, you might relate to Lando Calrissian. Lando was running his small cloud-based business when the Empire (insert your favorite $100B plus market cap player) showed up and made him an offer he couldn’t refuse. Reluctantly Lando agreed to their terms, but the deal just kept getting worse and worse.

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Don’t give into your anger – after all, if you strike down negotiations, you will never sell more than you can possibly imagine!

Although you will not be able to dictate terms to a much larger prospective channel partner, being aware of six key items will limit your risk and enhance your upside:

1) Non-Compete vs. Non-Disclosure – As a preamble to entering into negotiations, you will be asked to sign a non-disclosure agreement (NDA). It is tempting to sign this quickly and proceed to doing a demo and negotiating a deal, but make sure you review the document for non-compete language. Non-compete terms can be overly restrictive and are generally not applicable to a channel partnership. Non-compete terms may not ultimately be enforceable, but save yourself potential headaches and only agree to non-disclosure.

2) Indemnities and Warranties – If your new partnership goes well, indemnities and warranties may never come into play, but; a contract is there every bit as much to protect against downside as it is to enable upside. When you enter into negotiations with a much larger prospective partner, they will almost certainly provide you with their standard boilerplate contract. Every time I have received such a contract, the indemnities and warranties were written largely to the benefit of the partner who did the drafting. You will have a high success rate if you inform the channel partner that you require indemnities and warranties to be mutual as it is generally difficult to justify doing otherwise.

3) Understand how long it will take to get paid – You would be surprised how many early stage partners I’ve heard express surprise (and dismay) at how long it takes to get payment from their channel partner. Assuming your deal is structured as a royalty split between the two parties, most enterprises will want to report royalties to you on a quarterly basis. Once reported, you may have to issue a purchase order to your channel partner and their standard payment terms could add another 30 to 90 days before you receive payment. Understand how this impacts your cash flow and make sure you can absorb delays.

4) Know the Channel Partner’s EULA – An end user license agreement (EULA) is the contract under which your channel partner will sell your product to their customers. Early in the negotiations, request a copy of the EULA as well as any referenced handbooks or documents. You will not likely be able to affect any changes to these documents during the course of negotiations, but it is critical that you can work with the terms and conditions contained within them. Pay particular attention to support obligations as most big tech companies will want to provide their customers with 24/7 support.

5) Term and Termination – Your early stage company will never be in a weaker position than when you negotiate the initial channel partner deal. The term of an agreement and termination clauses contained within it don’t necessarily dictate when the partnership will end, they also provide opportunities for business terms to be re-negotiated. Make best efforts to align the initial term of the agreement to a planned milestone in your product roadmap – if you have a significant upgrade or new product release timed around termination, you will be better positioned to negotiate new revenue opportunities (and maybe even a better royalty split).

6) R&D Tax Credits – Most governments offer tax credits for eligible R&D work done within their jurisdiction..These credits can be very meaningful for early stage tech or Internet companies and predicated upon conditions such as ownership of the intellectual property or having an exclusive license. If you are licensing technology to your channel partner, make sure you understand the impact that license will have on tax credit eligibility.

Of course, the best advice I can offer you is to engage legal counsel when negotiating any contract, but if you give consideration to the six items above, you will be off to a good start to getting a deal you can grow your company with.

17. July 2014 · Comments Off · Categories: WEM

Ever since Napster opened the digital door to sharing and downloading music and movies, content producers have been fighting one battle after another in a war to slow the inevitable disruption of their industry.

While some point to iTunes and other legal downloading sites as proof that content can capitalize on online distribution,industry financials paint a clear picture to the contrary. In 2013, digital track sales fell 5.7% and album sales fell 8.4%, according to Billboard. Total U.S. music industry revenues were $7B in 2013, compared to $18.5B in 1997 adjusted for inflation (thanks Yahoo!).

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Today, the most successful content creators actually don’t make their money through their “art” – they, leverage it to build cross branding licensing opportunities. Bobby Kotick, the chief executive of Activision recently announced that Aerosmith made far more in revenue off of its Guitar Hero: Aerosmith video game than from any of their albums.  LeBron James may have just signed a new $21M annual deal in Cleveland, but he made more than double that in endorsements last year ($53M to be precise). Oprah – the women who leveraged an engaging on air persona to go from Chicago morning show host to the “queen of all media” is worth an estimated $2.9B.  She has her own television network and magazine,has created best selling authors just by mentioning a book on air and even has her own line of tea at Starbucks.

The value of affiliating brands and products, clear for so long with celebrity and amplified by digital disruption, has impacted the way companies market to consumers online.

Content marketing (attracting and retaining customers by creating and curating relevant, valuable content) is not an entirely new trend, but it is an expanding one and an area where many startups are developing products.  Two interesting companies which I have looked at in this space are TruCentric (recently acquired by Acquia) which tracks user behavior to offer highly customized content experiences (even to anonymous users) and ThisMoment.  ThisMoment is particularly noteworthy as it integrates socially generated content in real time to create what it believes consumers will see as a more authentic brand experience.

Selling content in a digital world is a tough value proposition with many challenges and threats, but content has also never been more important to building a successful brand. Technologies which allow brands to scale, automate the marketing process and more accurately deliver engaging content are onto something big.