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Monthly Archives: September 2013
Getting Struck by Lightning
Posted by on September 28, 2013
Small business owners often feel the pressure to hit it big quickly. That feeling can come from any of several places. Rapid successes tend to be what we read about, so that’s the model we’re given to emulate. In some cases small business owners are insecure, and quick success will quiet the doubters and provide validation. Some people are reluctant to toil away for years with modest success, and others may be driven by a desire to get rich quick.
The problem with this is that hitting it big quickly is by far the exception, not the rule. So many try to hit the home run, but only a few actually do hit it…and only then through some combination of skill, effort and, largely, luck. The vast majority fall short, and falling short can feel like failure and be highly de-motivating. But assuming we’re doing things the right way—working hard to develop a good idea*—this is entirely a function of inappropriate expectations, and easily within our control. There is nothing wrong with thinking big, but we’re misguided if our only acceptable outcome is instant success.
While speaking with entrepreneurs, I typically hear one of two contrasting approaches. One of these is swinging for the fences; focusing on that lightning strike that will make their business. It always sounds like this: If I can get “x” to happen, then people will find us and we’ll be set. As in, “If I can just get on Oprah, then people will know about us and we’ll be set.” Or, “If I can just get this to go viral, we’ll get the exposure we need.” Or, “If Seth Godin mentions me, I’ll have credibility.”
Conjuring a lightning strike like this is really, really hard. You can stand out there and wave your arms all you want, but the chance that you’ll be the one picked is pretty darn small. And if you spend all your time trying and the lightning doesn’t come, then you have nothing.
Instead of running around trying to get hit by lightning (the good kind), it’s far more sensible to focus on building a quality franchise that people care enough to engage with and refer to other people. It’s important to keep your head up…have a vision, put yourself out there and don’t get lost in the weeds**…but concentrate on building value over time. Eventually, lightning may strike, perhaps even multiple times.
Ask a successful entrepreneur how they hit it big, and you’ll probably hear something like this: “It took me twenty years to become an overnight success.” There is no shortcut. It takes a lot of hard work.
And if you don’t put in the work, you may be left with nothing.
As an investor, we look at it like this. A good business will accrue value, and this value will compound over time. This compounding value protects against downside (i.e., you won’t be left with nothing) and makes money over time.
The lightning strikes, then, are gravy…what is called optionality. Optionality on top of a steadily compounding business is called upside opportunity. Optionality without a solid underlying business foundation is called speculation, and speculation requires a lot of luck and leaves a lot of folks empty-handed.
My advice is this. Always be thinking about the optionality in your business. The optionality makes it exciting and is a powerful motivator. But do not neglect the blocking and tackling (aka hard work) that goes into building a sustainable franchise and compounds value. Success will come, but you have to do the right things right.
* An externally validated good idea. Good ideas are not developed in a vacuum, but that’s a topic for another post.
** The lost-in-the-weeds type is the second approach; instead of having their heads in the clouds, these folks keep their heads down, working hard but not building value.
Big Acting Small
Posted by on September 22, 2013
One of the downsides to big business is the inability to treat customers as individuals. People become collectives within demographics, as only scale moves the needle. This has a dark downside, masked as operational efficiency, which ignores the specific interests of any single customer. We’ve all been there.
Some companies have worked hard to prevent this. Starbucks, for example, is said to hire its baristas to preserve that one-to-one feeling and avoid the industrialization of the neighborhood coffee shop.
I recently stumbled across two great examples of big companies acting small. A few weeks ago I was in New York on business and visited the Park Avenue headquarters of JPMorgan Chase. Here’s a massive company that has gotten a lot of negative press recently for regulatory missteps, and I’ve experienced its big bank bureaucracy firsthand. However, as I approached the building on Park Avenue and braced for the sterile-but-necessary security admittance process, I received one of the warmest welcomes I’ve gotten anywhere, at any business. The gentleman monitoring the perimeter gates saw me coming, made eye contact, shook my hand, and proceeded to enthusiastically welcome me like I was their most important visitor of the day. “We are so glad you’re here today!” he told me. And on the way out, he again shook my hand, this time expressing gratitude for my visit, wishing me well and encouraging me to return. I was blown away. Huge company in the heart of Manhattan and one individual made a huge difference in the quality and feeling about my experience there that day.
Sometimes big companies are known for their emphasis on customer service, but they can still impress. Friday was my mother’s birthday, and we had a family dinner in the New York suburbs. My brother had purchased a gift for her online at Nordstrom and arranged for in-store pickup. He planned to take the train out from the city, swing by the store to get the gift, and then scoot over to his son’s soccer game. However, the store didn’t have the gift when he got there. At that point his options were limited, and all were suboptimal. Miss the soccer game? Not give the gift? As one might expect, Nordstrom tried to fix the situation, by calling around and even running over to check a competitor. But it was the next step that blew my brother away. While he went to the soccer game and then on to dinner, the customer service rep drove 30 miles in rush hour traffic to another store, got the gift, and then drove another 35 miles to the restaurant to hand deliver the gift in time for dinner. At dinner, instead of complaining about how Nordstrom’s cross-channel ordering system is screwed up, my brother raved about their service, and he’ll probably do so for the next week.
My wife runs a small online personalized baby gift company, Baby Be Hip. Great customer service is how her business differentiates itself from her big competitors. It’s one of the only ways a small company can out-maneuver a big one. But it’s equally possible for big companies to think small and make a huge impression. I love stories like these, because they put the customer first and illustrate an understanding—at least by the JPMorgan greeter and the Nordstrom customer service rep—that acting small and treating customers as individuals makes a big difference.
The Importance of Course Correction
Posted by on September 14, 2013
A big underlying principle in my life is incrementalism. I often explain this as the single footstep phenomenon, where putting one foot in front of the other over time covers a lot of ground. This is true literally…I run, and once in a while look over my shoulder and am surprised at the ground I’ve covered…as well as figuratively. Stringing school days together educates children. Stringing productive workdays together builds a successful career. Stringing workouts together creates fitness.
It’s important, however, to keep an eye on the big picture. This can be hard to do if you’ve always got your head down focusing on the task at hand. This is commonly known as “getting lost in the weeds”, and is usually followed by that “Oh crap, how did I end up over here” moment. The key is to pick up your head along the way once in a while to keep some context and gauge the appropriateness of your daily activities. If you see you’re off track, course correct and head in the right direction…before the cost of recovery is too high.
Yesterday we had a breakthrough course correction at Baby Be Hip, and it was awesome. Not so much realizing that we had been marching in the wrong direction (no one likes to waste effort or money, especially when we should have known better), but identifying the mistake and heading in the right direction was empowering. Now, with the help of a promising new partner (shout out to Mark Kennedy of SEOM Interactive, who is helping us pivot our search marketing strategy), we know we’ll be in a better position to increase our relevant traffic and drive more revenue.
Take a few moments this weekend or in the week ahead to make sure your daily activities are aligned with your bigger goals. If they are, forge ahead! If not, take the opportunity to redirect them so they point to your objective. While the winding road may be interesting, it is not the most efficient. After all, the shortest distance between two points is a straight line.
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