Confessions of a Successful Entrepreneur: Dan Rodrigues

The 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.)

Celebrating Entrepreneurship

I 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.

The New 7Ps of Marketing: Disregard at Your Own Risk!

I was reading an article in the recent Forbes online CMO Network by Kimberly Whitler entitled: What are the top predictions for marketers heading into 2016?   Ms. Whitler surveyed some experts, including CEOs, Presidents/GMs, CMOs, authors and executive recruiters.  In a different but recent article, Forbes CMO also ranked the top 50 CMOs.  To me, I would have rather heard their predictions.

I always enjoy reading “predictions” because they keep me on my toes- maybe I missed something- and makes me challenge what I believe are the upcoming trends.  As a businessman and marketer I certainly don’t want to be caught short.

I found the article very interesting and certain worthy of consideration.  I feel after reading the comments that each person is looking at the “elephant” from their unique vantage point.  And frankly, I am not sure they are predictions or wishful thinking based on the viewpoints of the interviewee. Nevertheless, they are certainly food for thought.

From a holistic view, my prediction – or wishful thinking – is that marketers need to start with the customer and realize that marketing has become multi-channel and multi-dimensional.   The smart CMO must orchestrate the new marketing mix. That means they need to simplify messages sent to consumers through whatever channel is relevant to them i.e. digital, small screen, large screen, Point-of-Purchase.  And they need to determine which is most relevant for the target personas.   Moreover, the smart marketer should consider all the tools in his/her toolbox and select those tools that are most effective for getting the right message and INTERACTION with the customer.

When I put this together, i find that the old model of 4P’s is antiquated.  I believe the new prediction is that good CMOs are now considering 7Ps in a holistic view: the original 4 (product including product/service development, price, promotion, placement (digital or traditional), and the new three consisting of process (including customer engagement, referral and loyalty), people as brand messengers at point of purchase or via customer care, and personalization (through technology).

The “traditional” 4Ps of marketing are well known.    In the day, marketing was about creating demand, and to a large degree it still is today.  But the focus was on selling a product to meet a need.   In general, promotion was based on advertising push.  The marketer’s mantra was to shout out the virtues of the product by mass advertising. To some who read the history books, the “soaps” on TV were called that because the consumer goods manufacturers such as Tide, All, and Fab were sponsoring and advertising on the TV shows aimed at the housewives and other stay at home folks.

Pricing was simple.  Manufacturer’s set price and used a price point philosophy of good, better, best. Placement represented where the consumer could buy the product i.e. at the neighborhood store or a mass retailer or even door-to-door sales and home delivery.

Because of technology such as the internet, and the movement away from a manufacturing to a service company, even the original 4 P’s have changed.

FROM                             TO

Product         –>       Solution

Promotion    –>       Information

Price               –>       Value

Place               –>       Access

 

Consumers and businesses want solutions to their problems and want to understand how the product/service will perform.  Due to the internet, both as catalogs of information and online reviews that are omnipresent through a myriad of sources, information has replaced pure promotion.   Certainly consumers and businesses want to find the right product at the right price, yet price by itself has been replaced by value with the value add sometimes being generated by service agreements and extended warranties.  And primarily due to the internet, place (distribution) has increased to a multi-channel access.  Think about the changes from the 1990s when e-commerce was first getting started to today.  Consumers and businesses now have electronic exchanges and other online venues from which to buy goods and services.   And now, coming full circle, we see Amazon opened its first brick and mortar store in Seattle.

Now let’s add the new three elements to the marketing mix.  First is the element of PEOPLE.    When I was head of marketing at US Cellular, we changed our brand and positioned our company using the tag line “the way people talked around here.”   Why did we do that?  In part, we recognized from our research in the late 90s and early 2000s that customers in our market wanted something more than what other cellcos offered.  We were not going to be the most technologically advanced (although our network and engineering were superb), nor were we going to cover the most customers in the country.  What our customers wanted was a relationship with our company, represented by our front line sales and customer service people.  They wanted a company they could trust.  At that point, we realized that people were the brand messengers and in our touchpoint marketing system, represented a way to affect the relationship and alter the buying habits of our consumers.  And it worked.  Our retention rate i.e. loyalty, was the best in the in the business.

The second new element is PROCESS. Many companies loathe the word process because they feel it is bureaucratic.  To me, process is the mechanism for repeatability. We want processes to help the customer in building its relationship with the company and also empower the employees to do their job to satisfy the customer.  Clearly, it is a tricky balance!   The processes today – mostly enabled by technology- relate to tools that help the company serve the customer.    There is a dizzying array of tools that the marketer has to understand and use.  See Marketing Technology Landscape by Scott Brinker or some of the Lumascapes by Luma Partners.  Some of these tools include ways to mass customize a product or service to the customer needs.  Witness the new companies entering the market to build relationships with consumers and business buyers.  There are processes enabled by digital and web technologies that enable social engagement and the marketers use these new tools to build and maintain relationships with their customers.   This improves value through new services and interactive engagement in the eyes of the buyer.

The final area is PERSONALIZATION. Several of the interviewees pointed out that understanding the customers’ persona is critical to segmentation.  Once you understand who they are, the company has to satisfy their unique requirements.  I have always been a fan of mass customization (read Joe Pines original work) or macro-niching as I use to call it 5 years before mass customization became vogue.   Personalization is easy today with technology.  You can see it when you buy a car.  Go into a BMW or Jaguar dealer in their store or online and the system will build the car for you.  Buy a house from Toll Brothers and you get a platform and options to tailor the house to your needs.   Go on the web and find a case for your smart phone and you can easily customize it with your school logo and colors.   Consumers want to feel special and that ensures a solid on-going relationship with their customers.

Marketing has changed and will continue to evolve over the next several years.  Clearly there will be a natural bonding between the CIO and CMO as marketing technology has become more important in defining the marketing mix.  While Ms. Whitler did not ask my prediction for 2016, I will share it with my readers.    I predict that marketing will be more about the customer and the great marketer will find the right combination of the 7 elements to build and sustain relationships with that customer.  At least I hope so.

I would be glad to continue the dialog or share additional thought.  Feel free to visit us on our web at www.clevelpartners.net or contact me at dfriedman@clevelpartnes.net.

The iWATCH is coming! Innovation continues at Apple in a classic way.

I collect watches and I have a nice selection.  The watches I collect are the “classic” styles.   Among those watches, I have a fondness for an old gold Longines that my father wore when he married my mom in the early 40s, a few Omegas (I like Speedmaster), a Rado, Cyma, and my favorite, a Tutima FX-UTC two time zone.  I liken the watches to jewelry for men and while many younger people have shed their watches because they can tell time (assuming they have to) with their smartphones.

Enter the i-Watch.  Let me say this- I want one.  And unfortunately I have to wait for a few months to get one.   I already told my son that he can buy it for me for my birthday.   I want the stainless steel black with Milanese band.  What I like about it is the simplicity and elegance.  It sort of looks like my Rado watches which I like- simple elegance with functionality.  See the following pictures.

 

iWATCH

Rado Square

Rado Ceramic

 

 

 

 

 

 

 

 

I don’t need edginess per se.  The functionality, the ability to mate it with my IPhone 5s and my iPad make it perfectly suited for me.  I like the fact that I can adjust the face to the persona I have each day.  For example, during the work week I would like to have a face that shows time and next appointments.  On the weekend, when the amateur athlete kicks in, I want to show energy and heart rate as I play tennis, swim, or workout.    And did I mention, it looks good too!!

I am an Apple shareholder and I really like where Apple is going.  What is next for them? I don’t know but I trust that they won’t relax on their laurels and I believe this product will continue to evolve.  Just for kicks, and thinking about the art of the possible, perhaps Apple will come out with a new i-Pen, a fountain pen (my preference since I collect classic fountain pens too) or gel pen that links with your iPad or iPhone or iMac so what you write is transcribed into a document and stored.  All voice commands by the way.   How about an i-Home, a totally home automation system a la NEST with more options?   And with Apple buying Beats, why not a series of i-MEDIA for total entertainment and control in your house?  Google has their car so why not have an Apple i-Car or maybe a manufacturer works with Apple to embed the i-Car concept into their new automobiles?  All this is possible Mr. Cook.  I believe that the smart people at Apple are already thinking about these ideas.  And that bodes well for their stock and for this economy.  Very exciting times indeed.

Good CMO. Bad CMO.

In CMO.com in August there was an interview with Wharton’s Dr. David Reibstein.  The question addressed was:

Why are some CMOs losing ground when it comes to playing a significant role in setting firm strategy? At a more basic level, why are CMOs even excluded from the strategic discussions to begin with?

The ARTICLE HIGHLIGHTS the following three points.

• “Marketers may be able to talk about awareness, trial, or loyalty, but they are generally unable to connect these metrics to financial statements.”
• “Conceptually, marketers should be included in the firm’s strategic discussions.”
• “Marketing…can step forward and lead the effort to create measures for key firm assets, such as brand value and customer value.”

After reading the interview and thinking about it, I took the liberty to post a comment which I want to share with my readership. I know many of my marketing friends will agree with me yet other colleagues will probably disagree as well. I welcome that debate.  Here are my comments.

I agree, in part, with the interview.   Many CMOs – especially from the CPG industries or those heavily dependent on advertising, don’t think as strategically as they could.   I have seen many of these purported CMOs focus on advertising and awareness vs. the real drivers of the business.  And, as the article points out, CMOs have the ability to understand the customer and make that translation to the internal departments.  I don’t know why that doesn’t happen although I believe it could be fear or complacency or perhaps even more simplistically, these CMOs are not quant or metric driven. 

On the other hand, I have seen many of the tech CMOs think about customers and become good strategic advisers to the CEO. I have been that way as a tech CMO in my career.   From my vantage point, I see the CMOs being involved in setting the strategic agenda by leveraging customer information by determining what is important and how well the company performs on these attributes.   I have seen CMOs in the tech world talk about average revenue per customer, cost of acquisition, lifetime value, margin, % revenue from new products, incremental increase in order size by customer, and other similarly situated metrics.  

I have seen CMOs manage the new product, commercialization, and innovation processes.  Unfortunately, I have seen other CMOs manage and be accountable for strictly tactical areas such as managing social media or PR or communications or other “softer” elements of the marketing process. 

 

It is unfortunate as well, that when companies today recruit for CMOs they don’t understand what they really want. I have seen job specs for a CMO that, to me, meant that they wanted a tactician to implement Google Adwords, or Facebook pages.  It is a shame that this puts the incumbent in a no win situation as they are not “full blooded” CMOs but just have a title as the “senior” marketing person in the company.  The article describes this predicament too.

What is needed from the CMOS?  They have to actively determine how their efforts affect sales, margins, cash flow and explain and show it to the other execs.  They need to be more proactive in sharing information on customers and being the linking pin between the outside world of the customer and the inside world of manufacturing, production and technology.   They need to think more technical and work hand in hand with the CIO and CTO because good marketing and business success today will depend on technology. Frankly, they need to think and act as a CEO or at least his or her alter-ego.  

What can a company do?  Companies need to be realistic in hiring CMOs vs. marketing executives who are much narrower in their focus.   They need to hold the CMOs accountable to produce results in line with the business plan. 

A good CMO adds tremendous value to a company.  A poor one gives the CMO category a bad name and reputation.

The Bottom Line for Marketing

Sometimes I wonder if Marketing Execs should wear a helmet!!!  Many CEOs whom I know want marketing to be successful (in essence moving the cheese) but complain that marketing execs have no accountability.    And I think that is a shame and the crux of why many marketing people are not as highly regarded as they should be and why many are not invited as a C-level sitting at the table with other senior executives.

The funny thing is that I hear more and more that start-ups as well as more mature companies want marketing.  Notwithstanding the fact that many of these companies are not exactly sure what they exactly want, it is clear that all companies desire good brand positioning and messaging as well as demand generation.  As an aside, I am part of TechCoastAngels in California and entrepreneurs are always asked about their marketing and sales efforts and the positive answers are required prior to funding companies.

In the old world of marketing, we had the push marketing i.e. promoting the product to the sales people and the distribution channel for them to “push” the product to consumers and businesses, and pull marketing, i.e.  promotion, and free samples coupled with  heavy-up radio and TV advertising.     As many realize, though the world has changed and the customer is extremely capable today.  Technology, primarily through social media (Facebook, Yelp, and YouTube) and the internet (via special portals, clubs, and exchanges) has been the driving force.  This is the era of customer enlightenment, engagement, and emancipation.  Marketing, today, deals more with the content that the company (as championed by the marketing executive) provides, the ability to be found by the customer, and the clear use of analytics and tools to manage the marketing process.

The Marketing Leadership Council and Marketing Roundtable of the Corporate Executive Board defined 23 attributes of a world class marketing organization.  I know that not all companies – except for the largest companies- cover all attributes. Even if they do, the emphasis is on only a few.  This is particularly true if the company is a startup or small.  Yet, regardless of the size and the attributes which the company considers the most pressing, there are some common items that the marketing executive needs to consider.

A marketing executive today, in my opinion, needs to have the following characteristics to be successful.  Here are my prescriptions:

• Accountability:  Gone are the days of making something “pretty” or merely creative.   Most of my friends and colleagues know me for saying this is “fluff and stuff.”  And I don’t mean to denigrate anyone who is creative and artsy.  I think those areas are necessary but not sufficient to assuage the CEO and be part of the team.  The marketing executive (CMO or Head of Marketing) needs to be accountable for top line revenue growth as well as MARGIN (bottom line) growth.  If you are not accountable you don’t belong in the C-suite.
• Innovation:  If I have one idea and you have one idea, we each now have at least two.  We have more because layered ideas may propagate.  Since technology and ideas proliferate almost at the speed of the internet, marketing execs need to remain focused on innovation.  I don’t believe fast followership works today because customers want to be associated with a leader.  Innovation doesn’t have to mean product innovation.  It could be the way the product is merchandised, distributed or otherwise marketed.  And it can certainly affect the way that sales enablement is developed to support the sales team.
• Customer passion:  Marketing executives need to be out in the field supporting sales peoples in front of customers and be talking to customers to see and listen to how customers use their products.  How many marketing executives do mystery shopping?  (How many executives actually play the role of Undercover Boss?)  It is critical not only to be in the field but to use technology such as Twitter, Yelp, Facebook, LinkedIn Groups, and online “clubs,” to listen to what customers are saying.  The tools exist and the marketing executive needs these listening posts.  Then, more importantly, the exec needs to be the linking pin from the outside world of the customer to the inside world of manufacturing and production.
• Analytics:  I have to admit I am an engineer and have a business degree in economics.   I love quant!!!  The marketing executives today must be able to measure nearly everything to show that an investment in dollars will provide a clear return.   This goes a long way towards accountability.   Analytics represents the tools to provide the numbers. They can include tools from your CRM system or Google Analytics. More importantly, though, the analytics have to measure the right thing that makes the business run.  Metrics may include cost per gross addition, average revenue per user, order size, return rate, and even some customer satisfaction and loyalty metrics.
• Business perspective:  Above all, the marketing executive needs to have a solid business perspective.  The marketing plan and the marketing team are there to support the overall strategic and business plans of the business.   As the linking pin between the outside world of the customer and the internal production and operations world of the company, the marketing executive can contribute significant knowledge that can help generate profitable revenue.  The best complement a marketing executive can obtain is when the CEO says that you are a good business person.

Marketing is an interesting and complex discipline not well understood by many CEOs. I do believe that some of the above prescriptions can help put our discipline in a new light and that we won’t have to wear our helmets when we try to move the cheese.

Marketing Secrets 101

One of the members of the CMO Newtwork on LinkedIn asked the question “what is the biggest marketing secret you’ve discovered over the course of your career?

Needless to say there were lots of answers. What I found interesting was the wide variety of answers, some bordering on the tactical, others on the strategic, and others on the interpersonal.  Some focused on customers, some on the concept of samples and giving things away for “free trials,” while others suggested that organizational alignment was critical.  All the answers make sense.  Clearly everyone’s perspective is colored by their unique position in an organization as well as what has brought them success in the past.  As a CMO and C-level executive, I have my perspective.  Here are my three “secrets” which when you think about it, are nothing more than commonsense put in perspective of my company’s goals.

I always believed that the CMO is the linking pin from the outside (customer) world to the inside (production) world of the company.   This is a vital role.  Therefore my first secret is:  listen to your customer!!!! Make sure you understand what your customers want – and yes, even if they change their mind you will know it- and develop a product and product architecture to solve those needs.  Be visible with to your customers.

Second, surround yourself with energy- the energy and intelligence of others – in marketing or outside marketing- that can contribute to an innovation mindset.  Ideas are the lifeblood of marketing and you should continue to press for new ideas.  You don’t have to act on them all but you should at least catalog them and act on those with the highest priority.

The final marketing secret has to do with the real role of the senior marketing executive e.g. CMO, and in turn, other marketing colleagues.  That secret, which has to be continually on the mind of the CMO specifically, is to think strategically – be an alter ego to your CEO- and execute tactically.  That means thinking about EBITA as well as top line growth.  EBITA is the lifeblood of all companies from the largest to even the smallest.

In reviewing the dialog, I developed the following framework in which to think about marketing secrets.   The “secrets” can be catalogued into one of four quadrants and depending on the company, its goals and objectives, different secrets.

There are many more “secrets” to being a successful marketing exec but hopefully these will start stimulating discussion.We can use this framework to catalog the different secrets.    If you are finding    too many secrets in one area, then assume that you are missing something in an overall plan.  Again, the answer will vary based on the company, the context and to which marketing level you are speaking.

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Conjuring Up Relevance Through New Beliefs and Reinvention.

When I graduated from engineering school, the professor told me that the half-life of my education was about 10 years. (I believe it might be less today!!).  Notwithstanding the time and energy I put into school and the cost of the education, I realized that my relevance to the companies for which I would work would decline over time unless I reinvested in learning and continued to challenge my own paradigms.  This would keep me fresh. 

We bandy about the word relevance fairly regularly yet that word, for me at least, has taken on new significance in the recent past.   This is not a mental exercise or philosophical debate like we use to have in college.  Being relevant will affect our lives and the lives of our progeny.    Being relevant will require everyone us to continually reinvent ourselves.   And that reinvention is nearly a continuous process.  The good news is that TEDxOC (www.tedxorangecoast.com ) contains a full day of speakers and interaction on the subject of redefining relevance because no one can do the subject justice in a brief blog, an article, or even a book. 

From Wikipedia, “something is relevant … if it increases the likelihood of accomplishing the goal.”  Since everyone has different goals, the term relevance has to be put into CONTEXT. What is relevant to me might not be relevant to you because of my personal life, my desires, my fears, my job, or my family.  That relevance will necessarily change over time as well.  People in their early careers were immediately relevant to their companies.  They had new ideas coming out of school and they were still assimilating ideas from new sets of friends, travel, and being exposed to the diversity of ideas from college classmates from different backgrounds.   In the go-go 80s, everyone was relevant and the times were much simpler.   Today, because of the smart phones, touch pads, expansive internet and the new social media, relevancy is continually redefined and reinvention – or the opportunity for reinvention- occurs daily.   And everyone has to continue to challenge themselves for improvement because of the economy and the devastation caused by the major recession in 2007/2008 where many people became unemployed and their relevance severely challenged.

Relevance may be triggered by a concept, a person, a thing, a process, a technology, or just information that can be used to help improve “the world” or your slice of the world.  And while something may be relevant to you, it is also suggested that redefining relevance means that you become more relevant to the world today and maintain that relevance in the future.

Most of us watched the Olympics in London a few weeks ago.  The world became aware of Oscar Pistorius, the Olympic athlete with the infectious smile and personality.  What makes Oscar relevant?  He displays that there are no limitations and no excuses.  Think about the trials and tribulations he faced and his belief that he can succeed in the world of competitive athletics.  He became relevant to millions of able bodied as well as physically challenged athletes by his courage and willpower.  So the first concept in my opinion in defining relevance is your belief in yourself…. That you can make a difference and you want to make a difference by example.  Without this belief system, I believe we will be like a deer in headlights- frozen into acting the same as in the past.   Jesse Owens once said: Don’t look back; someone may be gaining on you.  Rather, we must look back, look at the changes in the environment and make changes to our game plan. 

Let’s consider time in the concept of relevance.  What is relevant today may not have been relevant at a different time.   Hip-hop music is relevant today as it tells stories from a different perspective.  Today it is relevant.  Twenty years ago it was unknown to the masses.   Similarly Rock n Roll and the messages in songs became more relevant in the 50s, 60s and 70s as the economy and political climate changed after World War II and the Korean War.   And that continued in the music and its messages today.   In fact, music may be one of the prime media that displays changes in relevance and changes our paradigms.

As a technologist, I believe that technology redefines relevance.   Consider the iPhone and the ipad.  When Steve Jobs developed these tools and the eco-system surrounding them (iTunes and the app store), he enabled this technology to be more relevant to hundreds of millions of people.  Apps are relevant to people and people can choose from millions of apps to help them improve the world or their slice of the world.   Miniaturization of technology, artificial intelligence, “big data,” wireless technologies, and virtualization technologies, to name a few, have become more relevant for the masses and in turn help each individual make their lives or jobs more relevant to their companies or to others.

What are the lessons to be learned?  Relevance is unique to each individual.   Relevance changes over time.   An idea, a thought, a person, a technology injected at the right time may change your perspective.  That great “ah ha” may lead to a new view of the world, a new business, a new way to deal with people, a new way to view your own character, or a new way to relate to people (think social media for example).  

And that is the power of TEDxOC.   What if you were able to have an idea discussed at the seminar trigger a unique thought? What if that thought redefined your view of the future?  What if these ideas or things presented or technologies discussed or inspirations by the presenters enabled and encouraged you to challenge prevailing wisdom?  The ability to open our minds to the reality of a new future state will provide us with new tools to help us all to remain relevant.

Think. Reflect. React. Change the world for the better.  See you at TEDxOC in October.

Product Managers: Become your own Steve Jobs!

I am a big fan of Steve Jobs- for what he has done for a broad range of customers, for the tech market, and for innovation in general. He has shown emotional resilience (remember he was exited from AAPL but then formed Pixar and then came back), fortitude, willpower, vision and an eye for detail. To say he is a model leader is an understatement. He is THE icon of tech leadership.

Enough plaudits for Steve. The question that I want to address is how does a product manager become “Steve Jobs” for his/her product line? First, let’s make an assumption that acting as Steve Jobs – evangelist, leader, innovator, and stickler for detail- is good. Can you learn to be exactly like Steve? Not at all. Yet, that doesn’t mean you can model his leadership. And, how can a product manager do that? What are some of the key elements that the product manager should focus on?

Here’s a checklist of items for the product manager to consider. How many of these attributes do you display?
1. Think customer. Walk in their shoes. Find out who are the lead users. Talk with your technologists and dialog with them on the art of the possible – of what the technology could do for customers.
2. Make products and services easy to use. Put the complexity behind the hardware, the software and the interface. Make it intuitive for people to use. Consider integration of mobile apps with online applications and the ability to enter information via a traditional laptop.
3. Embrace technology. Take a techie to lunch. Attend tech sessions. Share your plans with them and have them share their new technology discussions with you. Ask questions how the technology can apply to different markets, uses.
4. Respond to market changes. Some of this will come from the technology side as new technology will yield drastic changes in functions and features and even entirely new applications. However, the key is making technology relevant to the customers. Use a new product advisory board to glean input.
5. Become friends with the vendors, suppliers and others in the supply chain. Be demanding of them as you are to yourself and to your team. Yet ideas coming from these partners can help you and your products stay ahead of the competition. Perhaps there is a technology they know that you can embed in your product and get an exclusive for a period of time.
6. Build a strong integrated technical, marketing, and sales team. This will ensure success. Be demanding of each group and set a standard modeled after your own attitude and work ethic.
7. Be an evangelist both inside and outside the company. Build excitement and suspense. Become a showman so to speak, making the product exciting and building suspense before the actual release. Use Beta tests; get the product into the hands of the technical analyst community. Find lead users and innovators to try the product and provide testimonials. Many product managers are reserved and introverted focusing on the development of PRDs and MRDs. As the “owner” of the P&L for the product line, the product manager has to be evangelist or find someone on his team to assume that role.

I have known many product managers that have several of these qualities and the best ones display all of them and more. What are your thoughts on the skills and capabilities of product managers that will make a difference in the success or failure of a product?

A Template for Evaluating a Business Case and a Prescript for Good Marketing

Many of those who follow me through LinkedIn or who have heard me speak, know that I am part of the TechCoastAngels of Orange County. And as a TCA member, we evaluate investing opportunities. Over the past four months I have listened to many presentations and tried to understand whether the investment made sense to me. It always struck me that the focus of most of these meetings is on the financials and metrics such as EBITA. Why? We, as angel investors, are taking a risk and therefore want to make sure the return compensates us for that risk.

The entrepreneurs who present normally have a wealth of information and mostly a solid technical understanding of their products and services. Yet, I have found that the entrepreneur sometimes doesn’t understand how to make a case for the investment. Ergo, this blog is intended to help the entrepreneur or business person by providing a template for analyzing and presenting a good business opportunity. It is far from complete though. This format and template can also be applied by business people in companies who are evaluating a new product, a new service, and even potential partners.

Before the marketing plan i.e. the “go to market” plan, can be implemented, the content of this basic template is necessary to understand what to market. This template and consists of four fundamental questions and a raft of supporting questions. Feel free to add as you see fit:

1. Is there a market? This sounds so simple but it is probably the most difficult item to classify. How many times have you heard: “If I only get 1% of all the Chinese people in X province, I will have a billion dollar business in two years? Were it so simple! The answers have to come from the following supporting questions.

a. Who is the target market? What is the specific need or pain point you are trying to solve? Can you specifically identify your customers so you can market or sell directly to them, e.g. are they small businesspeople in a geography or businesses that need to improve their accounts receivable? The former is easier to identify. The more specific and easier to identify, the better. Interestingly, the more precise the definition, the broader the market!!

b. Is the market stagnant or growing? Will you be looking to increase the size of the market or take share from the competitor and which competitor are you aiming at? (My personal opinion is to go after the expansion of the market and go after the leader in some way, and if not directly, by outflanking that leader.)

c. Consider the juncture of three elements as you consider positioning  the product and service in the market:  customer, competitor and competencies (within the company). Do you want to position your product more towards the customer i.e. a custom product or a series of products? Or do you want to position it against the competition because it is better, faster, larger, smarter or any of the other ways to differentiate? Do you want to position the product relative to special competencies that are inherent in the company today or ones you intend to add to the company over time? In defining the market, the use of this simple paradigm helps determine if in fact there is enough of a market to claim.

 2. Can you make the product or service? This question relates to the ease of which the product can be made, the raw materials to make it, the talent necessary to manufacture, and the intellectual property that can sustain a differential advantage. Specific questions to address include:

a.  What is the Intellectual property and will you be able to patent that IP? Just as importantly, is the IP sustainable? What are the unique advantages of the product or the management teams that can help make the product unique? Maybe it is their creativity and if so, how will you sustain the creativity or keep the team intact? Or is it the interface, ease of use, customer service, support, processes? Do you have the human capital and talent to build the product, specifically the technical skills on board now and in the future? Do you have a ready source for technical experts?

b. How easy is the product to build? Do you need new processes? New equipment? New delivery systems? New materials? Or can you use existing processes and materials? If you use existing processes and materials and IP, will a larger competitor come in and get to market before you will?

c. How fast can you bring the service or product to market? Is first mover advantage critical? Or is getting it right with a quality product more critical. Does anyone remember the first portable computer and who made it? It certainly had first mover advantage but neither it nor the company survived. (The answer: the Osborne computer.)

3. Can you make money? Clearly this is the operative question whether you are an entrepreneur or intrapreneur (an entrepreneur within a corporate setting). Some specific supporting questions include:

a. What is the revenue growth? Sales growth (number of units)? Is this growth realistic? (How many times have you seen business cases that went from zero revenue in year one to $200 million in year 3? How many of those companies have achieved that type of explosive success?)

b. What is the EBITA and how does it compare to other competitors at the same stage of their lives? What is the cash flow and when does the business case turn cash flow positive? To me, cash is king!!

c. What is the cost of goods? How does that cost change relative to the sales unit and revenue growth? What are the ways you are looking to improve the cost e.g. by vertically integrating, sourcing, partnerships, or other means?

d. What is the growth path, or as I like to say, ROUTES TO REVENUIE, over time that will continue to grow the business and make it flourish and minimize the risk of being a one trick pony? Have you mapped out the product and service architecture that enable you to provide more products to the market segments you targeted or find more market segments in which to sell? And while we are talking about selling, have you considered all the selling expenses and the distribution costs?

4. Can you support it? This is particularly true in a service business but equally true in a software business or a complex product. Some additional questions include:

a. Will there be online service and support? Will stores in which the product is sold support the product or will there be an 800 lines or self service on the web? How easy is it to service the product, service or software via a knowledge ware system on the web? How many of you have actually tried to solve a problem with Microsoft software by using their tech support and knowledge base?

b. Do you have an adequate training program for those on the front line, in customer service, or account support? Is the product so complex you need to have technical sales experts and if so do you have the wherewithal to hire, train, and pay them?

Let’s not assume that these are all the questions to address. Yet, this is a reasonable start in getting a good handle on whether the business will make sense. And more interestingly, by answering these questions, the marketing team will have a better understanding of “how to go to market.” And by so doing, they will have the opportunity to be successful.