The 5 C’s of Clairvoyant Companies

6 03 2016

Keys to successNo one is psychic at TechCoastAngels.  Yet, we believe there are keys to success for start-ups.  For the past couple of weeks, myself and 6 other angel investors from TechCoastAngels of Orange County have screened more than 120 entrepreneurs in preparation for the  “finals” of our fast pitch competition at TCA’s upcoming Celebration of Entrepreneurship event to be held on March 10.  We have listened to these entrepreneurs’ 60 second pitches which would be provoking enough to take a meeting with them and listen to their pitch decks. In my last blog, I shared the early pitch decks of 7 Unicorns courtesy of CB Insights.

For this blog, I want to put it all together and share what I see are the common themes that came out of the pitches and the pitch decks.  Now, while we have been focusing on start-ups, the principles enumerated in my 5 C’s of Clairvoyant Companies are equally applicable to on-going companies, large and small.

1.       Conveying the story.   The first “C” relates to conveying a story of what problem(s) the company is solving and telling a succinct story to entice the listener to ask for more information.   If it is a start-up, the entrepreneur has to put the listener in the shoes of the person having the problem and convey the solutions.  In the pitch deck (or business plan), the CEO (or presenter) provides the details on how he or she will execute on the plan and drive financial results.  Conveying the story clearly applies to ongoing companies as well, particularly if the company wants to attract new customers and brand itself in the market as something special.  Just think about the stories being conveyed by Nike and Under Armour or your favorite consumer or business product.

2.       Customer Clarity.   The second “C” relates to the target customers.  Who is the ideal customer?  Can you describe them and how do you find them?   If you think about Airbnb, the customers are both the person wanting to rent his property for a short period of time, to the other customer, a person wanting to rent a room or house.   The marketing and business plan should clearly indicate the problem the customer is facing and the solution offered.  Additionally, the company needs to present a cogent case for their marketing tactics to drive awareness, adoption and use.  Without clarity on the customer and how to find them and motivate them to action, financial success will not be achieved.

3.       Competencies of the Company.   This third “C” relates to the existing or needed competencies within the organization that can drive the financial results.  It also relates to the intellectual property (IP) that is required to support the business or product.    How do you acquire and sustain the competencies that are needed for success?  Do you hire software developers on your team to build the product or can you outsource that skill?   What is critical based on your strategy and your competition?

For an on-going company, this is equally as critical.   A competitive analysis and environmental scan may lead to the conclusion that skill sets that were once required are no longer required and new skills must be added.  That may lead the company to a training program, a partnership, or replacement of existing resources with new ones.

4.       Competitive Advantage and Moat.   This fourth “C” is pretty evident.  No company operates in a vacuum.  Both startups and on-going companies need to be aware of the existing and potential competition that exists.   A competitor in the future may not be apparent  today but may have the competencies, technology, leadership and resources to compete in a new and growing market.   Five years ago would GM or Lexus have considered that Tesla would be a competitor or that Google would enter the realm of cars with their automated car program?  A few short years ago, who would have thought that Red would be the camera of choice and used in three of the Academy Award nominees for best film?

With technology and apps changing so quickly, competition can change just as fast.  Technology is the new enabler helping young entrepreneurs compete with established companies and with each other.  Recall what Andy Grove, former Chairman of Intel said:  Only the Paranoid Survive.  Whether you are a startup or an established company, be paranoid and keep your eyes open.

5.       CEO vision and passion.    We at TechCoastAngels say that we have to like the horse (the business concept) but must LOVE the CEO (the jockey and her team.)  As we screened the candidates for our upcoming event, we looked for a CEO with passion and vision and who can relate to us, the investor.  We wanted to find someone who had a history of success, was decisive, yet approachable and coachable.   We believe we found those characteristics in each of the 12 finalists.

Think back to the great leaders of on-going businesses or coaches and CEOS of sports teams.   Who is your model for a CEO with vision and passion?  I personally thought Lee Iacocca was great when he resurrected Chrysler.  Jack Welch turned GE into a world class company with his vision to be #1 or #2 in his markets.   Steve Jobs showed the world a new vision for technology. And Alan Mullaly took Ford after the great recession to a new level of respect and performance.

What else did these CEO’s have in common?  They had the ability to execute a plan.  They were also the keys to establishing a culture in a company that was hard to replicate.  In many ways, they became the icon for their brands.  And they were highly regarded by their employees and feared by their competition.   In a startup it is perhaps hard to discern whether the CEO can execute, yet we can judge their past successes with other companies and who they select as operational execs, advisory board members, and board of directors.

As we near our Celebration of Entrepreneurship, I trust that these blogs and the ideas herein will help executives of start-ups be successful and also be used by executives of on-going companies to help them guide their companies to business success.  I would be glad to continue the dialog on what makes a successful company.  Feel free to reach me at dfriedman@clevelpartners.net and if you enjoyed this blog please like it, repost, and retweet it.

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Confessions of a Successful Entrepreneur: Dan Rodrigues

10 02 2016

Kareo 2The other night I was asked by a colleague who had a question from a reporter at INC Magazine what are some success tips for entrepreneurs and additionally what are some tips when you run into trouble.   I have written about tips for budding entrepreneurs in my blog on The Business of Business in the past and have written on behalf of the TechCoastAngels as well.

Serendipitously, the day after I wrote my comments to the reporter, I had the opportunity to listen to an interview by Andrew Bermudez of Digsy (www.getdigsy.com, www.meetup.com/OCfounders), of Dan Rodrigues, CEO and founder of Kareo (www.kareo.com).   Dan’s company, Kareo, has raised more than $100 million and is the fastest and largest growing company in Orange County, CA.  His company provides a cloud-based platform for independent medical practices and currently has more than 35000 providers served by more than 500 employees.

I want to share Dan’s perspective on how he grew his company and the road he had to travel.  Let’s lay out the journey in three chapters: Genesis and Euphoria; Reality of Funding and Growth: and the Path to Success.   And in each chapter there are lessons to be learned and tips for the entrepreneur.

Genesis and Euphoria

After Dan sold his first company, Scour, he started a software development consulting business.  During this time, he worked on a project for a client in the healthcare space. Through this project, he learned about healthcare IT.  Yet he also applied his knowledge of the consumer, gained from his stints at Vizeo and Real Networks, to the business.   He took the knowledge and the project and built the beginnings of Kareo and the first customer was the company for whom the original project was designed.

Lessons  learned:

  1. An inquisitive mind can yield interesting insights into new ideas. In this case, Dan used an inductive process to define the requirement to serve one customer and used that platform as a base of expansion to other similarly situated companies.  Entrepreneurs can take a custom project and move it to a generalized solution which might give you an immediate customer base.
  2. Integrate different perspectives to develop your business. Dan leveraged his prior experience in a different market space and was able to apply that knowledge to make Kareo different than other software companies in the same space. In a later chapter, Dan directed Kareo to be an online provider of SaaS services to this market.
  3. Build relationships as they will be valuable for funding as well as support and resources. Dan was able to use past relationships built over time to get to VCs on Sand Hill Road and High Net Worth individuals to help provide the initial funding.

Reality of Funding and Growth

Initially, Dan bootstrapped Kareo and now with some funding and the opportunity to gain more, the business seemed off to a solid start. And while you might read about Dan’s story thinking that it was all wine and roses, the truth is that Dan had some tough days early on with Kareo. In 2008, Dan received a difficult call from an investor who was unable to deliver a promised next round of funding. With no time to find another investor and significant bills to pay, Dan made a very tough decision. He reduced the company from 35 employees to 7, and found a new path for Kareo. During the entire year after, Dan did not take a salary as CEO so that others could be paid.  The goal was now survival and the focus was getting customers, reducing product expenditures, and finding more efficient ways to support existing customers to reduce cash burn.

Lessons Learned:

  1. Never take anything for granted. An investor can change his mind and funding may no longer a certainty.  The business environment might change too and entrepreneurs need to be fast, fluid, and flexible.
  2. Spend wisely and carefully. Kareo built a company and moved into expensive office space.  How many of the readers can relate to the euphoria of getting funded and spending lavishly with those funds?  I know I have been in companies that did not spend wisely and had to retrench.
  3. Learn the way to manage the business in the most efficient manner.
    1. Develop good solid cash management and make that a core competency
    2. Build a support infrastructure in synch with the services your company provides and find ways, at least initially for minimizing spending on infrastructure. Try to build a solid online help solution, provide excellent documentation, a good knowledge base.  But also have an additional second layer of support if needed.  Train people to do double duty.
  4. Learn to sell online. Other software in the healthcare market was sold through VARS.  Selling online gave Kareo an edge and reduced the cost of acquisition.

Path to Success

With revenue ramping to $3 million, and cash flow positive, Kareo was on the path to success.  During this phase, the goal was to grow the business through disciplined growth using the lessons learned during the prior chapter.   Over time, Kareo started adding back employees, expanding its product set, and increasing sales.

Lessons Learned:

  1. Maintain the discipline of cash management. Remember the lessons from when growth and cash flow were hard to come by.
  2. Define metrics for success. Share these metrics with your team and manage them religiously. Metrics used by Kareo included cost/customer, payback on margin, return on cost of customer acquisition, churn rate, and lifetime value of a customer.  Note: these are very similar to other SaaS and technical service companies that use subscription services as their business model.
  3. Hire the right talent. It is difficult in some ways for a small company to recruit good technical talent in Orange County vs. in San Jose.  There is frankly more talent there by virtue of the number of companies in the tech space.  Don’t let that be a daunting task.  Dan created a culture in Kareo and a solid reputation of being a progressive company which attracted talented individuals.  On the flip side, retention might be easier in OC and probably is for Kareo given their culture, the fact that the smaller company can provide a solid platform for growth of its employees, and Dan’s vision and leadership style.

According to Dan, when the company had fewer than 50 people it was easy to attract a great talent pool because of the excitement.  When the company had between 50-200 people, Kareo started to compete for talent as employees looked for other exciting opportunities or felt they had the ability to move out on their own.  After growth to 200 employees, Kareo had established its reputation and talented individuals wanted to work there.

Lessons learned:

  1. Recruit a top level executive team. Building the team is critical to any company and is especially true for start-ups and growing companies.  Some of the executives were recruited from outside of Orange County and complemented those from the OC.
  2. Find leaders who know others and can attract talent and capital. This makes it easier to sustain growth.
  3. Change the culture with changes in the business. Dan indicated that culture changes at different stages of growth.  When you have between 1-10 people you are in survival mode.  As his company grew, it felt more like a family.  At a certain point as additional employees were on-boarded and new geographic locations were opened, the culture changed because not everyone knew each other nor worked with each other on continual basis.
  4. The company is a platform for growth for its employees. Reinforce and support educating employees, building their skills, and adding to an employee’s competencies.  I know many executives who don’t want to invest in employees because they are fearful of losing them to competitors.   I personally believe Dan’s approach is the better one and creates a culture and brand that ensures talent will stay with Kareo.

Dan was asked what he would do differently if he could do it over again.   After reflecting Dan accepted that there were mistakes and missed opportunities.  So let’s frame them.

Additional tips and lessons:

  1. Build a business first and a product second. This means don’t normally chase individual customer requests and spend money on unique features and services for different customers.
  2. You need to keep the lights on even if the product stands still for a while.
    1. Under invest in the product and invest in the business side. From my viewpoint, this is a difficult lesson for many engineer-founders.  Therefore make sure you have a good solid business partner as the ying to your yang.
  3. Companies need to be agile and reorganize at transition points and at changing stages of growth.
  4. Companies need the right advisors and investors. While the CEO is focused on growth and getting the product into the market, advisors and investors have the opportunity to look forward and may see minefields ahead.  The CEO needs to heed them.

On behalf of TechCoastAngels, Andrew Bermudez, and Dan Rodrigues, I trust you find this blog and its contents useful for entrepreneurs in their own quest for success.  Please share and forward to others.

Let’s work together to build a strong entrepreneurial eco-system in Orange County.   And if you want to talk further feel free to contact me at dfriedman@clevelpartners.net.  Hope to see you at our March 10 event on celebrating entrepreneurship at the Segerstrom (www.techcoastangelscelebration.com.)





Building Differentiation into a Product or Service: Creating a Sustainable Moat.

4 02 2016

product differentiationThis is a particularly interesting subject as we, investors, think about investing in a company.  And while this blog is directed to those potential entrepreneurs, the ideas suggested in this blog are equally applicable to new products and services developed by a business to increase their revenue, replace existing products/services, or compete in the market.

Many entrepreneurs – and investors alike- think that differentiation is based on the Intellectual Property underlying the product.   That may be true if the IP is really unique.  Yet, as one knows patent protection only goes so far.  If a new smaller company has a patent that “infringes” on a larger company’s business, for example, the larger better financed company can sue for infringement and cause the smaller company to lose focus on their end game.

Differentiation can enable a company to create a moat around their business that would make it difficult for a competitor to penetrate.   At best, it protects the company for the long term.  At worse, it enables protection for a period of time so the new company can establish their brand and get first mover advantage.  And, in the best case, the new company has such an advantage with their product that the larger company buys the smaller company for $1 billion or more and the founders feel pleased that they created a unicorn!!!   (We can all dream, right?)

Differentiation can take place on several levels.  The following diagram shows and input/output schematic for product/service differentiation.  In the diagram, there are 11 different areas where differentiation can take place.    The entrepreneur can focus on one or several of these areas keeping in mind that they are competing for a customer’s mind share relative to what either direct competitors can offer or other solutions that the customer may find acceptable.  For example, when I was commercializing Wi-Fi on airplanes we initially thought that the competition was the on-board entertainment system.  In fact, that was only one competitor; the other “competition” that competed for the customers’ attention included eating, sleeping or reading!!  It was evident in the rear view mirror.

Product Service Architecture for Differentiation

Differentiation can take place at one or several of the components of the product or service.  In this diagram there are 11 different areas where the entrepreneur can focus.  Most of the time, the focus is on the main platform or product and its features.  Yet differentiation can take place in the following areas as well:

  1. Accessibility: How a customer finds the product or service.  This includes channels of distribution, online, door to door, word of mouth and is part of the input process.
  2. Interactivity: Does the product or service require input from the customer? Is this input active requiring the customer to input information or is it more passive, with the input process providing the input by reaching out to other databases?
  3. Input process: Is there a unique way that the product or service uses the data to and integrates or converts the data into elements which can be acted upon by the platform?
  4. The platform: this is the core of the product and the essence of the technology. It is the engine to drive applications and features.
  5. Features: the specific features that provide benefits to the customer and are inherent in the platform.
  6. Applications: the specific uses for the product that the customer may or may not realize. These applications can be developed by the company or by partners.
  7. Maintenance and customer support: Is the product self-testing or do customers have to provide some input into testing and maintenance?  Is customer support online only or a combination of online and human interaction?  Maybe I am old-school, but occasionally I would like to speak with a human and the documentation and self-help guides are not necessarily very clear.
  8. Output process: What is the output process necessary to translate and provide an output to the customer? Can the output process be linked to another product or service from one of the company’s partners or another provider?  For example, if the product/service is a new CRM system for the small business, can that system be integrated into a marketing automation or e-commerce system from Salesforce or Marketo?
  9. Reports and Results: This is what the customer actually sees as an output and is usable.  Maybe this is a timeline, a report, a database, a social interaction, a picture or a posting, or even a data (Think of Match.com.)

In each of these elements, the entrepreneur has a few choices.  We use the concept of PPT: people, process (automated), and technology to look at ways the element is enabled, used and managed.  It is up to the entrepreneur how he/she wants to balance each of these three components because they will affect effectiveness and efficiency.

I want to point out one other way to differentiate and develop a moat for your company and product.  In a book called Profit Zone, authors Adrian Slywotsky and David Morrison point out ways that a company can protect its profit and revenue stream.  In developing and commercializing a new product the entrepreneur can think about the following elements as well.  Strategic control points are normally industry specific yet we can general from most protective to least protective:

  1. Owning the standard through technology and IP
  2. Managing the value chain- including channels of distribution, input materials, shelf space etc.
  3. Developing a super dominant position by dint of their market share in specific markets, through specific channels, or with specific products. This is probably less likely for a start-up.  Yet, perhaps the technology originated in a university and by dint of that they are super dominant in that market and want to expand beyond the university.
  4. Process including a unique way to provide information to a customer. Think Amazon
  5. People including the relationship of their customer support team to addressing issues. Think Nordstrom or Zappos.
  6. Own the customer relationship by focusing and understanding the unique preferences of a well-defined niche.
  7. Brand and trademarks. Think McDonalds, IBM, Google, Snapchat.
  8. Development lead time enabling the company to be first to market and build up first mover advantage.
  9. Cost advantage or cost parity enabling the company to compete should there be a price reaction from a competitor.

I trust this blog- perhaps a little lengthy- can provide some useful information for the budding entrepreneur and even those in corporate America engaged in developing and commercializing new products, services, or businesses.  There is no easy answer; yet having a framework or two and breaking a complex problem into smaller manageable components can perhaps lead to success………. and the next unicorn.

You can hear and see entrepreneurs pitch their products at the TechCoastAngels Celebration of Entrepreneurship at the Segerstrom in Costa Mesa on March 10.  Check out http://www.techcoastanagelscelebration.com to get tickets.  Also, feel free to continue the dialog or contact David Friedman at dfriedman@clevelpartners.net or via phone at 949 4394503.  Or retweet this to people who would like a good read.





Celebrating Entrepreneurship

10 01 2016

EntrepreneurshipI was sitting at lunch with a few of my friends and thinking about the start of the New Year.  Of course, we all made resolutions to eat better, exercise more, and to enjoy life by having more balance and more fun. As we start this New Year, we wish people success and prosperity.

Wishing and hoping are not strategies for success.   A clear purpose and course of action properly executed is essential.  I mentioned TechCoastAngels’ upcoming conference on Celebration of Entrepreneurship (www.techcoastangelscelebration.com)  in March, 2016 at the Segerstrom in Orange County.   As a member of TechCoastAngels, entrepreneurship and start-ups are part of my daily life.  But why should this be important to everyone, particularly entrepreneurs and others in the entrepreneurial eco-system?   And is it entrepreneurship only that is critical or should corporate venture, i.e. internally generated new products and business funded by larger corporations, be considered critical as well?

First, entrepreneurship in the OC is happening.  While not at the scale of Silicon Valley, the OC/LA area and the San Diego area are pretty high on the list of both VC and angel funded companies.    Here are some examples.  In the OC, we have accelerators/incubators (for example KF, FastStart Studios, EvoNexus, Octane); University supported entrepreneur programs (Chapman’s Leatherby Center and UCI), angel groups (TechCoastAngels, Kieretsu), and a newly formed Institute for Innovation aka The Cove at the tech campus of the University of California at Irvine.   Clearly,  the infrastructure is in place for the entrepreneurial companies to flourish.

While invention and innovation are sometimes accorded to startups and venture investment, there is another area which cannot be shortchanged.   Corporate Venture, those companies funded by corporations who have accepted a strategy of growing by new products and services, is also rampant in the OC.  Witness the growth of Broadcom which focused on internal investments in wireless and mobility technologies.  Or Vizio, which has migrated from a big screen TV company to a broader consumer platform.    Or Edwards Life Sciences which continues to innovate in the medical device field.   And there are countless others.

Between innovation through start-ups and innovation from existing companies, Orange County has the pieces in place to become a hub of innovation.    From what we have seen, medical device, social media, software, and consumer services are being developed by many young entrepreneurs still in college and supported by the college community, yet there is a new group of “older generation” entrepreneurs that are also getting into the act by developing products and services.    Many of these new entrepreneurs are driven by the economy to strike out on their own after leaving corporate life.   Grandpad, a hardware and software platform funded in part by TechCoastAngels, is led by Scott Lien who left the corporate world to focus on helping seniors use technology in a more personal manner.   Parcel Pending, founded by Lori Torres, is focusing on automating the package delivery system and has traction in several geographic markets.  It’s another company funded by angel money in the OC.

Innovation and the ability to grow business are critical for the long term success of our national and local economy.   At our upcoming event you will be able to hear about how ideas were generated, ways companies have been able to grow, and hear from entrepreneurs and investors alike in how to build their companies or portfolios.  If you are an investor, it will be an eye opening venue for networking and hearing the investment pitches from more than X outstanding new companies. If you are an entrepreneur, perhaps the conference and discussions during the conference will spark some new ideas or help gel some of your thoughts on your existing business.

For others who might attend, consider this.   Entrepreneurship and intrapreneurship  are exciting.  You are never too old to feel the urge to create something new.   Innovation is infectious and fun.  Sure, it is very challenging and sometimes gut wrenching but as they say, the glory goes to those that try.  In that vein, I want to leave you with this inspirational poem called “if you think you can” by Walter Wintle, which epitomizes the ethos of the entrepreneur or intrapreneur.

If you think you are beaten, you are,
If you think you dare not, you don’t.
If you like to win, but you think you can’t,
It is almost certain you won’t.

If you think you’ll lose, you’re lost,
For out in the world we find,
Success begins with a fellow’s will.
It’s all in the state of mind.

If you think you are outclassed, you are,
You’ve got to think high to rise,
You’ve got to be sure of yourself before
You can ever win a prize.

Life’s battles don’t always go
To the stronger or faster man.
But soon or late the man who wins,
Is the man who thinks he can.

And maybe you, too will be the founder of a Unicorn or be an investor in a unicorn company and have a private island next door to Larry Ellison.   Hope to see you at the Segerstrom in March.





StreetSavvy Marketing Predictions for 2016

21 12 2015

prediction-forecast-crystal-ball-future-ss-1920-800x450It’s that time again when just about everyone has predictions for the New Year. In November, Forbes contributor Kimberly Whitler posted predictions from the C-suite.   Adam Davidi, from the Guardian, posted predictions on branding based on conversations with “experts.”   I am sure we will see predictions from Forrester, Gartner and others as well.

As a Managing Director at C-Level Partners, I don’t want us to be left out.  My colleague, Vince Ferraro, and I have been C-level executives in marketing and general management for many years. We now consult with companies on marketing and their go-to-market strategies.   We decided to look at “Big M” marketing, relating to predictions for how companies and brands go to market and how they interact with customers.  So without fanfare and any biased perspective, we share these predictions for Marketing for 2016.

Let me be candid.  While most of these are predictions based on our work with clients, with start-ups and in talking with our marketing colleagues, there are also some “aspirational trends” that we hope come true for the profession as well as we believe they are important for marketing professionals and the businesses they manage.  Some of these trends overlap and leverage each other.   To us, that will represent the power of good marketing.  In no particular order, our top sweet 16 are:

  1. Cognitive Commerce has begun. Marketers will use information on customers from their databases, the internet, and other sources to build stronger relationships, build predictive algorithms, personalize content, and deliver products and services to meet their specific needs.
  2. The distinction between offline and online will disappear as real time analytics will unite both camps. Marketers will consider all (omni) marketing channels to optimize their marketing programs based on cost, effectiveness, ROI and the satisfaction quotient from building relationships with customers.
  3. Branding will be from the inside out. Companies will not push the brand but the brand will be built on trust, engagement, referrals, authentic dialog, and transparency.
  4. Digital Marketing will cease to exist as a standalone part of marketing. There isn’t a need for separation anymore. World class marketers will know how to market in a digital world. Traditional and online marketing not only will coexist, but one will leverage the other and work better together.
  5. Advances in video broadcasting and continued growth in mobile devices will change TV marketing forever. Marketers will use new technologies to enable a more immersive experience and TV and other broadcast video usage will expand on all screens – laptops, desktops, tablets, smartphones, HDTVs and even screens in cars,( i.e. telematics).
  6. Content will be created specifically with video channels in mind. Further, there will continue to be a migration to mobile video which will become de rigor on a company’s website, in blogs, in training, and on Youtube.  Youtube channels for marketers will continue to expand.  In addition, the use of video podcasting and live streaming are also in a growth mode.  The world is clearly digital and going video and marketers will take advantage of that.
  7. Personalization will grow as its ROI is measured and as customers come to expect to be treated as individuals. We, at C-Level Partners, have written that there are now 7Ps of marketing and personalization is one of them.  Technology and marketing automation will enable this to happen.  This personalization will improve company branding and the ability to build stronger relationships with customers.
  8. Marketers will get back to basics. Solid, well planned marketing will trump the sexy marketing in the past.  The CMO and business leaders will focus on marketing as a strategic investment to generate profitable revenue.
  9. The human touch will return to marketing. How many of you love to listen to an automated customer service system saying that “your call is important to us…”  That’s bull!  Companies will realize that you are important and will show it by having more touch than tech or at least do a better job of integrating the two.  Being human will also apply to helping customers understand the value of the company’s products and determining what motivates buying behavior.  This is like getting back to the future… and I love it.
  10. Employee experience (EX) will be as important as customer experience (CX). Engaged employees are critical because at the front line – in retail, sales and customer service- they ARE the brand, or at least a fair representation of it.   Engaged employees also feel part of the company, behave like owners, and will be promoters of the company’s products and services.  According to our anecdotal evidence, only about 30% are engaged today.  Think Zappos, Starbucks, 1and1, and Jet for companies who provide both good EX and CX.
  11. Marketing and Data Science will be the new dynamic duo. This will be key to understanding the customer persona from many angles – demographics, psychographics, sentiments, and buying behavior.  Vince and I, both being engineers, can relate and understand this dynamic.  We expect to see the CIO and CMO becoming BFF’s.
  12. As a corollary to #11, data will be the new currency for the younger generation. Data will enable the ability to personalize the marketing message and make that message more meaningful and differentiated for a particular customer. But it doesn’t only apply to the younger generation; big data will be used to help understand buying behavior of all customers and couple that information with the dynamics of profitable revenue growth for the corporation.   The new marketer will be, must be, a datahead or recruit the right people in his/her organization who have the skills to analyze the myriad of data available from business and marketing systems.
  13. Marketers will provide more original insights into business. Marketers will not be mere curators of data and content.  The key word is  By having more insight into business, the CMO will be able to justify his/her seat at the executive table.  (This is a belief and expectation!)
  14. Customer success will be determined by a combination of satisfaction, retention, and referral. We have always believed that the combination of the three components will yield the most loyal customers.   In conjunction with this, customers themselves, through social media, will become the company’s best sales people. Technology to help build customer engagement will continue to evolve and become more sophisticated.
  15. Marketing and selling will be in an omni-channel world. Marketing execs will understand the buying persona of their customers and will use math and analytics to optimize the sales and distribution channels.  But the key here is that it will not be one channel vs. the other.  The marketer will blend online and offline, retail and wholesale, third party distribution and direct to ensure the buying experience matches the customer and to improve the profitability of the company.
  16. Chief Marketing Officers will evolve to become strategic businesspeople first and “marketing” executives second. This is our wish and expectation; therefore, we took the liberty to include it as one of our predictions.  The CMO will be the linking pin from the outside world of the customer to the inside world of production, manufacturing and operations.  He/she will have a unique view on building and capturing valued.  In the past, we have not seen this from most of our traditional marketing colleagues as many have been focused on one area e.g. advertising, digital, brand, and product.  The new marketing executive will be a generalist, a businessperson with a focus on top and bottom line growth, steeped in data analytics, change management, and growth levers, coupled with creative and innovative bent.  We may be wrong about this one for 2016, but we believe it will eventually take root over time.

We would be interested in hearing your thoughts on your sweet 16 predictions for 2016.  Let’s keep the dialog going at www.clevelpartners.net.   And feel free to contact me at dfriedman@clevelpartners.net or Vince at vferraro@clevelpartners.net for a complimentary discussion on how we can help you achieve value creation and profitable revenue growth.





The 7 Attributes of a Highly Successful Start-up CEO.

11 08 2015

I met Kirsten Mangers several years ago after she successfully sold her startup, Webvisible.   And over the years I have gained a strong appreciation for her abilities and most important, her style.   Kirsten is the founder of ChickLabs, an incubator that focuses on helping primarily women entrepreneurs.  She is also the CEO of Immunogum, a start-up in Newport, CA and one in which TechCoastAngels invested.entrepreneurial CEO

I was invited to a meeting at an entrepreneurial office called the VINE which is off the UC Irvine campus because I am an angel investor with TCA and one who works with startup CEOS in my consulting practice.   The key- and only- speaker, though, was Kirsten and she shared her thoughts on what makes a successful start-up CEO with a large cadre of young aspiring entrepreneurs.

I thought I would share some of those thoughts with my readers.  Clearly, the CEO is THE most important role in a company.  She is the quarterback of the business.  I want to point out, as well, that angel investors are looking at the CEO, his/her characteristics, trustworthiness, and credibility as a critical and sometimes the most important decision factor in making an investment.

Here are Kirsten’s Magnificent Seven attributes and roles for an entrepreneurial CEO.

  1. Chief sales person. Selling is required whether it is for sales of the company’s products or selling the business idea to investors. Pure and simple, it is the number one attribute.  If a CEO cannot get comfortable selling then he/she needs to find a strong complement or a replacement CEO.
  2. Culture Maven. The culture of a company attracts and retains great people.   Think about the culture of Google or Apple and you get somewhat different impressions.   But culture will help you succeed and be one of the differentiators to also-rans.
  3. Chief Strategist. As Louis Carroll said in Alice and Wonderland:  “if you don’t know where you are going, any road will take you there.”  CEOs need to set the direction and if necessary make the decisions to pivot the company.  Early startups will go through false starts and pivoting will be essential.
  4. Teacher, tutor, and mentor. Kirsten claimed to be a whiteboard fanatic.  Where there is a whiteboard, she could share ideas and interact with the staff on a regular basis and even get others to critique, comment, and debate those ideas.   This goes along with the concept that the CEO needs to be a visible leader and wander about with the team.
  5. You have to challenge yourself and others even with ideas that seem outrageous.   Why?  You stay fresh and there may be a kernel of insight into the new idea or someone else may see another path to success buried in that idea. Someone may say: that’s crazy but what if we did this?  Challenging prevailing wisdom and valuing the diversity of though among people is critical to engage your team.
  6. Chief Reporter and Scribe. This is the issue of transparency.   The CEO of a start-up needs to create an environment where everyone on the team feels that they understand and can contribute to the business’s success.   With normally smallish teams and fewer people, such discussions keep the team engaged and motivated.  I have personally witnessed employees banding together to find solutions to seemingly unsolvable problems.
  7. Chief Recruiter. To be successful, a strong team needs to be assembled and nurtured.  As Kirsten said, it all starts with people and finding the best people is the biggest challenge.  When she interviews someone, she has asked some interesting questions to probe the character, drive, and attitudes of the recruit.   One question I like is: if you were on a three hour flight and could sit next to one person, who would that person be and why?   From this answer you can determine motivation and quest for learning, both of which are critical in a start-up

These sage words of wisdom from Kirsten will help the aspiring entrepreneur be successful and potentially be as successful as Kirsten.

Let me know your thoughts.

david





Successful Management in Two Words.

3 04 2015

Rudyard Kipling in his poem, “IF,” (see http://www.poetryfoundation.org/poem/1757720) said:  “If you can keep you head about you while all about you are losing theirs…… then you will be a Man, my son!”

Management

I was talking with one of my mentees today regarding his question of how to stay on top of projects and tasks and making sure he doesn’t get overwhelmed, i.e. keeping his head about himself.  Clearly there is a relationship and an opportunity to quote Kipling.  My mentee is a student who is working with a team to develop a new product/service and is doing this through the Center for Entrepreneurship at Chapman University where I am a lead mentor.    Since I have many more years of experience, I shared some of my learnings and some of the tools I have used and developed.

I was taught in my early career about good management by a disciple of the late Harold Geneen who was the architect of the rise of ITT Corporation as a successful conglomerate. Over time, I developed my own spin and teach this and consult with others who want a simple powerful system to implement.  The basic principle is simply stated in two words:  FOCUS and PODFU.

Focus is pretty simple.  Make sure you know the two or three most important things to do.  Simple to say yet sometimes hard to do.   In fact, as an executive you should be even more myopic and focus on the ONE key thing that needs to get done.  When that is complete move on to the next item.   The reality is that you cannot get overwhelmed by trying to tackle too many tasks at one time.  This also entails discipline and priority setting.

Second, as a young entrepreneur, my mentee is working with other young entrepreneurs and has to learn leadership and management.  Leadership means that he needs to convey his vision and excite the team so they can be engaged and successful. Management means the ability to ensure what needs to get done, gets done and gets done on time.  And this is where PODFU comes in. The acronym is Plan, Organize, Delegate, and Follow-up. It sounds so simple yet is also surprising how many fail at this.

I suggested a few tools that he can use in his regularly scheduled project meetings.  This tool can be repurposed for operational and dashboard reviews as well. The tool is shown in the following Excel spreadsheet with the listed columns.

PODFU Chart

In the example there are four main objectives and supporting tasks to be completed by a variety of people.  In this case my mentee is trying to get a new product/service into the market and this template displays the format and the kinds of activities he and his team might undertake.  (Note:  this is notational only and not representative of his project.)  There is clarity in the metrics to determine if the milestone/task was complete, a time period, a person accountable (if you use the RACI system, the is the “A” in RACI), and a color chart indicating if the task is on target (GREEN), potentially may miss date (YELLOW), or will miss or has missed the due date (RED.)

In each meeting, those tasks due at the meeting date and ones that are due at the next meeting date are discussed. If the task is “green” then there is little reason to discuss it unless there is something that must be brought to the attention of the team.  If the task is yellow, the comments should summarize what will be done to get back on target.  If the task is red, the discussion might go deeper- we call this a deep dive- to see how we can complete the task and if the completion affects other tasks, how might the team get back on schedule.

Of course, there is more to managing and leadership than just a chart.  Yet this template presents a very powerful way to manage using only these two words:   FOCUS and PODFU.  This system can help managers be successful.

If you or your company wants to explore how this tool can be adapted to your unique needs, please contact me at dfriedman@prodigy.net, visit my LinkedIn profile at www.linkedin.com/in/davidfriedman, or call me at 949 439-4503.