Ian Cleary RazorSocial

Growing blog traffic is easier said than done, however, especially for small, bootstrapped startups. We went in search of wisdom from those who know what they’re talking about, so we contacted established blogger Ian Cleary founder of RazorSocial who kindly agreed to share his expertise. Ian is a social media tools and social media technology specialist.  He is a recognized social media speaker and his blog was recently named as one of the top blogs in the annual Social Media Examiner blog awards.  To learn more about social media tools and technology, follow Ian’s blog on RazorSocial or connect with Ian on Google plus. We asked him for practical tips on how to juice up your blog:

Eoghan: What kind of strategy did you devise before founding your blog? What kind of target market did you aim for, and what did you take into account to convert page views to sales?

Ian: I identified the top 100 most influential people in social media and analysed them to see what area they focussed on. I found that very few had a technology background and even though most talked about tools on some of their posts none of them focussed on tools.  With a background in technology and social I decided to focus on tools and technology for social media.  There was a clear opportunity to own this niche.

The target market for my blog is Digital Marketing Professionals and Small Business owners.  In the US a small business owner is someone with revenue of less than $300 million per year so it’s a lot different than Europe.  Although it’s an online site and we have subscribers from 75 different countries our main focus is the US market and this is where we have most subscribers.

Our initial focus has been e-mail subscribers and we strategically place an test our e-mail subscription boxes on our site.  On our home page we get 8% conversion rate for visitors to our site.  We will be launching services over the next couple of months.

 

Eoghan: Your blog has managed to carve out a substantial following from the already over-saturated market of social media blogs. What was your focus in the early stages of your blog when faced with such stiff competition? Did you seed your content with other blogs? Did you pay for traffic?

Ian: Although there are thousands of social media blogs, there is no competitor directly in our niche.  We focus on all the management tools and technology issues related social media and don’t write posts on the platforms (facebook, twitter etc).  Carving out this niche has made a huge difference.  Within 6 months of launching the blog we won a major award in the US for one of top 10 social media blogs in the world.  This gave us huge credibility globally.

We have never paid for traffic on the blog.  One of our many ways of driving traffic and building our profile is writing for some of the largest social media blogs in the world.  We write a monthly post for Social Media Examiner which goes to over 210k subscribers and they get huge traffic on their site.  We’ve also written many other guest posts for sites such as convinceandconvert.com, jeffbullas.com, businessesgrow.com.  Our blog posts have also been distributed to many other online sites with recent references to a post on New York Times.

 

Eoghan: Featured blog posts and cross-posting is a collaborative trend that we see a lot. In fact, our blog posts at Bullet are featured on other great sites like DigitalMinistry and Viralblog. Strangely, the exact same one of our posts on one of those sites will garner 10-20x more views than the version posted on our blog. Do you have any advice for people dealing with this issue?

Ian: Getting your blog posts on other larger sites can lead to increased exposure and can help build up your profile.

 

Eoghan: Could you take us through the practical steps you take when writing a post, from idea to creation to promotion? What timeframe do you allocate to each step?

Ian: This is pretty much the process I follow.

- I write all my ideas down in divvyhq.com which is an editorial calendar
- I write the post in WordPress
- I find pictures for the post in photopin.com
- I optimize the posts for SEO using SEOMoz
- I then pass the posts to Colette who is our editor
- I then schedule them out.
- When writing the posts here are some things I consider:
- The headline is extremely important so I’ll spend some time focussing on this.
- I write short sentences, simply language, use bullet points a lot and short paragraphs
- We include a lot of images and screenshots to break up the content and help people that need the visuals.
- I use a traditional newspaper approach for the structure of the blog post – Lede (what’s going to grab attention),  Nut Graf (What’s the angle or premise),  Context (Try to include some research),  Scene, scene, scene (the body of the content), Walk off (what I want the reader to remember.)
- I then promote the blog post which is where the real work comes in.  On a recent post about Facebook competition apps I reached out to everyone I mentioned in the post and also reached out to competition providers that I didn’t mention.  This lead to a lot of sharing and a lot of commenting on the post.  I then post in many places.
- For example, LinkedIn, LinkedIn groups, twitter personal and business, Facebook personal and business, Google +, Pinterest, BizSugar, Inbound.org, Scoop.it and many more!

Eoghan: What are your top 5 blogs?
Ian: www.socialmediaexaminer.com
www.copyblogger.com
www.businessesgrow.com
www.jeffbullas.com
www.thesaleslion.com

We don’t cover articles on all of social media but if you want information on social media tools and technology we are one of the best resources around.  We provide a free social media tools guide which is available on our site and this will be very useful to your business.

Well, there you have it! Is your blog operation as smart as Ian’s? It takes time and effort, but when executed properly a good blog can be a reliable (and cost-effective) asset to your startup’s marketing arsenal.

This pursuit of measurement often leads founders to fall prey to distinctly un-lean (fat?) thinking when confronted by the proliferation of types of metrics available. This usually involves time-and-cash strapped founders getting bogged down in tracking too many data points and being distracted by vanity metrics.

This problem is the focus of the book “Lean Analytics” by Alistair Croll and Ben Yoskovitz, which explains how the right approach to analytics can be the deciding factor between success and failure. At Bullet, we’re focussed on making startups better at what they do, so we were dying to get some insight from Alistair around early-stage growth metrics. He was kind enough to answer some questions we came up with after watching an interview he did with Software Advice. Our Q+A is below, but first here’s the video:

As you can see, Alistair has a lot of experience with startup metrics and has a lot of expertise to share. Here are the 4 burning questions about metrics he answered for us:

                                                                                                                                                                                                                                                                                       This is valuable advice for any founder. Are you pivoting based upon tested assumptions? Are you building a product you’re certain people will pay for? Do you know what your “one metric that matters” is? Do your decisions strike a balance between sales and product metrics? Does your “one metric that matters” fit with the stage of growth you’re at?

If you answered no to any of the above questions, you’re doing it wrong. Data is good, but drowning yourself in a sea of useless information is going to confound your search for product/market fit. This is particularly important for young, bootstrapped startups, who need to be extra-judicious about where they allocate their limited resources.

Who better to ask than the guys at Lockitron. They shot to fame last year and managed to snag over $2 million in pre-orders without much investment (and after being turned down by Kickstarter). While they started with a cool idea (really cool, check it out), they also made the right moves to get traction. All startup founders could learn a thing or two from their example, so we interviewed them…

The main ingredient in their success was how they went about crowdfunding. They had been turned down by Kickstarter (their hardware product fell foul of new “software-only” rules), so they created their own crowd-funding site called Selfstarter. They’ve released the code so anyone can use it, so take a look. I asked co-founder Cameron to explain the practical steps they took to go from Selfstarter to $1.5 million in pre-orders in just 5 days:

Eoghan: You mentioned to other sites that you observed the behaviour of other startups on Kickstarter and the Kickstarter operation itself to get an idea of best practices in crowdfunding. Could you explain what lessons you learned from this and how you applied them to Lockitron?

Cameron: We looked very closely at what other crowdfunded projects with technology products had done on Kickstarter, both to understand the success stories like the Pebble watch as well as why certain projects failed or only barely met their goal. Besides reaching out directly to the folks behind these successful projects, we began to categorize them based on the strength of their Kickstarter page – how long was their video, was it professionally made, how many photos did they include, what points about the products did they talk about.

We quickly learned that there were several things great Kickstarter pages have in common: they have a strong narrative selling the benefits of the product  (rather than the technical features); their videos are upbeat, concise and organized in a logical fashion; and the overall project presents a strong emotional appeal. Conversely, we noted that their videos were not necessarily professionally made.

E: How did you achieve the phenomenal growth of Lockitron? A great idea goes a long way, but getting your message out to hundreds of thousands of people in 5 days is quite a promotional effort. You open-sourced the Selfstarter code so any startup can use it; what practical tips do you have for these startups that may be considering selfstarting?

C: We’re no PR experts. We reached out a number of outlets, however, none of them were interested with the story except for TechCrunch. We launched with TechCrunch and our social channels and that was about it. But there were a number of things that went incredibly well. After our first launch of the original Lockitron in 2011, we knew that hosting your video on YouTube was critical because of their community. Our video was picked up by sites like Reddit and 9GAG which help to propel it to over 2.7 million views in a matter of days. We also managed to foster a tremendous amount of social traffic by giving every one who reserved Lockitron a “backer number” which they could easily Tweet, giving folks a sense of ownership in the broader Lockitron launch.

I would recommend that folks who are considering launching a Selfstarter carefully weigh all of their options with regards to traditional crowdfunding platforms like Kickstarter and IndieGoGo vs. doing it on their own. We’ve had to build quite a few tools on the fly to compensate for not having the weight of a mature platform behind us, however, at the end of the day we have been able to tailor the crowdfunding experience exactly the way we want to.

E. On that note, to what extent did you rely on traffic from social networks? For example, did you start out with your personal networks from work and college and move from there? Did you target key influencers, and if so were they personal or press contacts or both?

C: Apart from our backer number trick, we didn’t reach out to many key influencers. There are a few folks with a large number of followers who we certainly put on notice before our launch, however, I believe getting hundreds of everyday folks tweeting about their Lockitron was more important than one person with a massive Twitter following. We certainly pushed hard on our own personal networks between Facebook and Twitter, however, we didn’t send out a mass mailing.

E: Over the course of those first 5 days could you see what was driving traffic to your site? Things must have caught on at quite a pace, but what publicity/promotion did you see making a big impact? Conversely, what things did you expect to get a bump from but didn’t? Getting Techcrunched would provide an obvious spike, but what else got the word out there?

C: While our initial launch went incredibly well, it was very challenging for us to keep the traffic coming as one might expect with a Kickstarter. The initial traffic was pretty well split between social media and the blogosphere. We still managed to gain a large number of backers through the end of the campaign, however, we didn’t have the tools we needed to send out mass email updates to our backers from day one. We had an update near the end of our campaign which was far too little, too late. Although we were announcing some incredible things – like controlling Lockitron from your Pebble smart watch – none of the press caught on.

E:. A lot of founders understate their marketing savvy, and some startups looking to selfstart may lack in marketing skills. How good a marketer did you need to be? Or was it all thanks to the product?

C: I certainly would not qualify us as great marketers, however, we understand that we need to convey just enough information about the benefits of Lockitron without boring folks with technical details to garner the interest of everyday people.

In my mind, “product” is the embodiment of your narrative for how people will benefit from the thing you are giving them, not an assembly of plastic or metal. Good marketing is telling that narrative as concisely as possible. For instance, I could accurately describe Lockitron as a device with Bluetooth, WiFi and 4AA batteries that turns door locks, however, that tells you nothing about why you should have a Lockitron. Rather, if I explain that Lockitron will save you time because you no longer need to leave work to let someone into your home, you instantly understand what why you might buy a Lockitron.

At the end of the day this means that the narrative of your product needs to stand on its own two feet. Any great product serves a purpose, delights users and delivers on expectations. That’s exactly what we’re trying to do with Lockitron.

The guys at Lockitron are clearly very smart guys, and there is a lot to be learned from my chat with Cameron:

• When crowd-funding (or marketing in general), research what has worked for others. Cam & Co. figured out that successful Kickstarter videos (concise, emotive call-to-action videos focussed on user problems, not necessarily professionally made) make all the difference.

• Getting exposure is hard. Getting TechCrunched got them a huge amount of traffic, but other media outlets weren’t interested. While their product wasn’t viral (and most products aren’t) they leveraged sites like Reddit and Youtube with clever ploys (like their “backer number” system). Drive down your customer acquisition cost as much as possible, but anticipate to need to try many channels (and get creative).

• Re: social media, Lockitron succeeded without plugs from “influencers”. Despite the buzz about online “influence”, the guys just went for an organic social media strategy. And it worked.

• Traffic is fickle, so be prepared to jump on it when it comes. The Lockitron founders felt they could have engaged interested users a bit better if they had been more prepared.

• Sell the customer what they want, not what you think they want. Product/market fit all comes down to being strategic with your feature set and message. The Lockitron video is a masterclass of a sales pitch (and done on a budget, too). The guys are experts in weaving their product into their customer’s lives, and they understand the power of narrative we mentioned earlier. I don’t think anyone could watch that video without feeling the urge to give the product a try!

Growthhacking has become a bit of a buzzword these days, but there’s a lot of marketing wisdom out there if you ask the right people and avoid the BSers. If you’re half as smart as the Lockitron guys you’ll have the first gazillion in the bank in no time.

Every startup founder has heard this mythical term; experts like Andrew Chen, Ben Horowitz and Eric Ries have discussed it at length. There’s more to it than meets the eye, so we’ve broken it down for you:

What is product market fit?

With an important topic like this, the simpler the definition, the better. Marc Andreessen’s definition works well:

Product market fit means being in a good market with a product that can satisfy that market.

- Marc Andreessen

So we can see that having market penetration isn’t enough on it’s own. Selecting a good market isn’t enough either. Having a “great product” isn’t even enough. Success is contingent on the whole equation.

What’s a “good market”?

There are a lot of different things to look for in a market. Monetisation is important, and profit formula is a big consideration. The competition is also important, and “blue ocean” thinking is worth taking into account. According to Andrew Chen, however, three main factors define the attractiveness of a market for tech products: “a large number of potential users, high growth in numbers of potential users, ease of user acquisition”.
These three criteria should be to the forefront of your decision making when evaluating a market. You’re looking for a big, growing market that you can feasibly sink your teeth into. In order to judge a market, however, you need to know what a market is…

So, what’s a market then?

The roadmap to product market fit becomes clearer when we look at the concept of what a market really is. Our buddy Andrew Chen again has the answer:

A market consists of all the consumers who can search for and compare products for a use  case they already have in mind.

- Andrew Chen

Your market is not based on the segments you have conceptualised, or where suppliers are clustered. The crucial point about markets is that they are collections of people looking for a solution to a problem they have. Get rid of any preconceived assumptions you have made about where demand for your product lies. No one cares about your product. You should be solving customer’s problems for them, not pushing your solution. Here Brant Cooper explains how important it is to make everything your startup does “problem-focussed”, as opposed to “solution-focussed”. Entrepreneurs have analytical minds, which leads them to focus on the solutions they have come up with for problems the customer has. This is the wrong approach because the customer doesn’t care about how great you are. “Solution focus” also leads entrepreneurs to underestimate and misunderstand the customer’s problems. This is the antithesis of product market fit. If the market is defined as users with a problem then focus your product on the problem, anything else offered by your product not desired by the market. This is another reason why a big, growing market is of value: it’s easier to figure out what the customer wants because the market will “suck” the product out of the company by providing you with more opportunity for feedback and testing.

What product?

At this stage it should be clear what a good product should look like: less is more. This is a paradoxical concept for an entrepreneur to wrap their head around. “How could offering the customer less make my product more attractive?”. Put simply, adding features always costs something. This is the fundamental lesson from the Lean Startup Methodology, anything not needed is waste:

• Adding features is a time-consuming and distracting exercise. Bloated feature sets cost resources, and one-off additions usually incur costly design debt. Des Traynor has excellent advice on how to prioritise features to avoid becoming the swiss-army knife of software.

• Your product should focus on a core problem, and solutions you offer to other problems distract from your message. A jack-of-all-trades image will hurt your marketing efforts.

• Adding features makes you lose sight of your ideal market, which should consist of a specific customer problem. The bigger your feature set, the closer you creep towards trying to solve universal problems.

• The more one-off features you add, the more you drift from your strategic strengths. Michael Karnjanaprakorn has some useful advice here on the importance of strategic competitive advantage for product market fit.

The moral of the story

Customers only care about their problems, and customers who share a common problem make up a market. Enough of these customers together (ie a large market) represents a great business opportunity. In order for your startup to fit with this business opportunity, you need unwavering focus on the problem they share, with no distractions. When a startup solves this problem well for a lot of customers they are said to have achieved “product market fit”.

And that, boys and girls, is how to become rich and famous.

Who’s Oisin

I’ve known Oisin for a number of years now, having spotted his earlier CSS work like Twequency. I always liked his simple but bold approach to the web, strong colours, lots of Parallax and not to mention unicorns. In 2010 Oisin launched My Artists App a clever app that linked your music library to wikipedia so you could learn about the artist or band. He’s now partnered up with Padraig Kennedy and has launched UseTokens.com token application to help fellow App Developers.

When did you and Padraig set up Use Tokens and what was the trigger to start the business?

We started discussing Tokens in April 2012. We were both ready to start something new and, having worked on a few client projects together, decided to try and conceive an app we were both excited to work on. We went through a lot of ideas but Tokens was the one that stuck. The initial concept was for a much broader app that would be a front for the entire iTunes Connect web interface. We realised we could create a much more compelling product if we focussed on one particular task and created an optimum interface for that.

What can App Developers do with the product?

App Developers use Tokens to manage promo codes for their apps. Apple allow developers 50 promo codes for each version of their app, to use when for giving free copies to bloggers, journalists, industry influencers, or in competitions. The process is fraught with inconvenience though, which is where Tokens comes in.

To start, generating a promo code is no mean feat. We outlined the steps involved at UseTokens.com/ wrangle. Tokens takes care of this awkward process and make generating promo codes simple and painless.

When contacting reviewers, developers need to make it as easy as possible for them to try out their app. With Tokens, they send tokn.co links (like http://tokn.co/sample) so their press contacts can skip the manual redemption process and focus on the app. It’s a great way to make that critical good first impression.

Traditionally, developers have been left in the dark wondering whether their promo codes have ever actually been redeemed. With Tokens, as soon as the recipient clicks Redeem the developer receives a notification. Developers can clearly see which tokens have been redeemed and when the remaining ones expire. This helps make their limited supply of promo codes go further by allowing developers identify and reuse unredeemed tokens.

What has the reaction been like so far?

We’ve been delighted by the amount of positive press and feedback we’ve received since launching in November. We’ve also had a flood of feature requests so we’re hard at work on new features. We just released 1.1 with some big design changes. We put a huge effort into the UI during development, but once the app was being used by developers we began to see things that could be improved upon. (http://blog.usetokens.com/post/41201132893/design-decisions)

Many of the biggest names in iOS and Mac development are using Tokens now. It’s been fantastic to see our product embraced by so many in the community whose work we respect and admire.

What key things did you learn from launching your privous app MyArtist?

On a technical level, My Artists was the first app I developed for Apple’s platforms so I had to learn Cocoa and Objective-C. My Artists was an iOS app so I had to pick up some new skills to develop for the Mac, but much of what I learned from developing for iOS was applicable.
My Artists also showed me first hand that developing quality software is remarkably time consuming. In my experience once you reach a point where an application is 90% feature complete, getting everything polished and ready for release will take just as long again.

On a personal level, the most important thing I learned was that this is the kind of work I am passionate about and love doing. That certainly makes it easier to get through the tough days (and nights) of debugging. Scratching my own itch, so to speak, and successfully developing the music app that I wanted to use gave me the confidence to seek out and develop solutions to other problems I encountered.

What have been the noticeable differences between this success of this app and previous. In that you did different?

My Artists is a music app with very broad appeal. Tokens on the other hand has a very narrow target audience. That effected how we went about marketing it, the price point we chose, etc. In many ways having a smaller target audience helps you focus your software and your message.

Also, My Artists was a solo project, whereas now I’m working with Padraig Kennedy. Having someone else to bounce ideas off and share development responsibilities with has been a great catalyst for getting quality work done.

What is your own background?

My background is web development client services, mostly front-end, some back-end, and a little bit of design thrown in for the more unfortunate clients.

While traveling in Latin America a few years ago I started looking for an alternative to client services, where I could work even more independently that I was at the time. That lead me to iOS development, and I haven’t looked back since!

Did you bootstrap the business, if so how did you find that process?

Our main investment in Tokens has been our time. We self-funded some costs like server fees and hired a designer, Darran Morris (http://app-bits.com), to help with the app icon and the UI. We never considered looking for external funding, we were happier to keep full control of the business and we had the resources off the back of our other products to commit time to Tokens.

The main difficulty was that the development process did take longer than we had expected, I personally managed to eat my way through more of my savings than I would have preferred, but I’ve no regrets now that the app is launched, I’m glad we didn’t rush to release an inferior product.

What are your targets for 2013?

The uptake has been good since launch but we still have some work to do to make the business profitable and sustainable this year. We’re developers, and we have some idea about design, but we have a lot to learn about marketing and sales. We’ve lots of exciting features planned for Tokens but we’ll also be pushing ourselves to focus on the business side of things, so we can keep making software we love.

Wrong!
Here’s the problem: there are very specific attributes that an online marketplace must have to succeed. These alone will still not guarantee success, as the execution of even the best ideas is fraught with particular risks. In other words, good marketplace ideas are rare, and successful execution is rarer.

How did Airbnb do it? Here’s what the experts think…

Your idea:

As we mentioned earlier, your idea for an online marketplace may not be as good as you think it is. Fortunately, there are constructive ways to evaluate whether or not a particular industry is suited to going online. Bill Gurley’s excellent blog post on how to score potential online marketplaces gives an in-depth analysis of the factors involved. Here’s a rundown of these factors, and why it worked for Airbnb:

These are the 10 questions you need to ask yourself before you go ahead with your online marketplace idea

1. New Experience vs. the Status Quo

Does your online marketplace enhance the experience offered to users? Airbnb offers plenty of “Wow” moments (wish lists, sorting accommodation by description etc.) that would not be possible in the conventional B&B marketplace.
Will your digital marketplace confer advantages to user experience not offered by the conventional marketplace?

2. Economic advantages vs. the Status Quo

Creating a marketplace that can offer economic advantages to both the customer and supplier is a big plus. In Gurley’s post he explains how Airbnb scored well on this: the price is made lower for the customer by allowing more suppliers to enter the marketplace.
Are there economic advantages for suppliers and customers offered by your digital marketplace?

3. Opportunity for Technology to Add Value

This one should be a no-brainer. You need to leverage tech as much as possible to add to the “Wow” moments we mentioned. Airbnb, for example, allows users to check in/out and pay online, services that may not be offered by many conventional B&B’s.
Will your digital marketplace be able to leverage significant additional benefits from technology?

4. High Fragmentation

Is the market dominated by a small number of suppliers? This will hinder the success of your marketplace, and a fragmented supplier base is desirable. This is the beauty of Airbnb, anyone can enter the marketplace as a supplier (provided you have a house, of course).
Will your digital marketplace have a concentrated supplier base?

5. Friction of Supplier Sign-Up

Some sites, such as OpenTable, will find it harder to sign suppliers up (to sign up to Opentable a restaurant needs to have a computer and internet connection). Airbnb, on the other hand, is much easier to sign up for.
Will your digital marketplace involve a difficult supplier signup process, and are their any major barriers to signing up?

6. Size of the market opportunity

How big is the potential market, and how big a chunk of it can you realistically penetrate? Don’t fall for the large market fallacy. Airbnb scored well in this regard.
What is the total size of the conventional marketplace you intend to bring online, and how much of that market would resist going online?

7. Potential for market expansion

The holy-grail of marketplace creation is being able to facilitate market expansion. Airbnb does this in two ways. Firstly, it increased the popularity of house-renting. It also expanded the range of prices and kinds of accommodations offered
Will your digital marketplace expand the market in an appreciable way in comparison to the status-quo?

8. Frequency of use

Another no-brainer: the more market interactions that will occur on you site the better. You need customers and suppliers that use the product frequently and keep coming back. Airbnb have a “sticky” product that encourages loyalty.
How long will the purchasing cycle be in your digital marketplace, and will your customers re-enter the market often?

9 How will you get paid?

Gurley explains how it’s better to charge your fee as part of the market transaction, which softens the blow to the supplier. Fees appear more acceptable when they’re taken from the supplier’s payment, no one likes a nasty bill after the deal has been done!
Where in the payment process will your fee be charged?

10. Possible network effects

Will more customers and suppliers make the market inherently more advantageous? Positive network effects mean that the more users you have, the happier they’ll be. Airbnb cracked this with their rating system, improving their service offering as more users sign up.
Will your digital marketplace be able to leverage any appreciable network effects?

Score your idea on these categories, and be honest. Gurley says you’re chances of success are a lot higher if you do well in 7 or 8 categories, if you’re 4 or below then you might be out of luck.

How to execute your idea:

Instead of giving you a laundry-list of meaningless business truisms like a lot of blogs, we’ll spell it out for you:

Growing an online marketplace takes persistence and trust.

Persistence:

Building a marketplace takes way longer than other startup projects. Ebay, Airbnb and Etsy all took the guts of 3 years to really take off. Momentum is key in a marketplace; suppliers and customers have to feel that they are better served on your site than elsewhere. If this becomes the case then the price of acquiring incremental users is reduced. Unfortunately, this takes ages.
Boris Wertz has some advice on how to survive this long wait. If you truly believe in the viability of your idea then stick to your guns. Don’t pivot too early, it can take a long time to test your assumptions about your marketplace business-model. This makes cashflow of particular importance to digital marketplace startups: control your burn to lengthen your runway as much as possible. Airbnb found this out the hard way; with money running out they hatched an ingenious plan to sell Obama and McCain themed cereal boxes, which kept their dream alive.

Trust:

Trust can be a bit of a buzzword at times on business blogs, but it’s very relevant when it comes to online marketplaces. People won’t use your site if they think they might get screwed, it’s that simple. Ebay had their fair share of bad press around trust, and our friends at Airbnb have had their own problems too: the negative publicity from one incident was highly damaging to the brand. Make the users feel as safe as possible, uncertainty and economic exchange never go well together. Here are a few tricks that make your users more at ease, all of which have been put into practice by Airbnb.

The bottom line:

Online marketplaces are hard to get off the ground, so critically evaluate your idea before you go rushing in to it. If it still seems worth it, you’ll need a long runway to get going, and to build momentum you’ll need trust on both the supply and demand sides.

You should consider promissory notes when you have invoices that have been overdue, and overdue, and overdue. What can you do? If you decide to turn it over to a collection agency or solicitor you may wind up paying more in fees; but if you wait too long you run the risk of it becoming uncollectable.

Billy O’Dwyer, of Chapman Cooper, argues for the left field solution: the promissory note. We love left-field solutions here at Bullet, so we were intrigued.

What are promissory notes?

“A promissory note is a little known and lesser used device. Essentially, it is a signed document containing a written promise to pay a stated sum to a specified person or the bearer at a specified date.”

“A collection manager I worked with would personally evaluate the status of outstanding invoices once they hit 60 days.  They had a diverse mix of clients and each one operated according to different factors. At the 60 day stage he tried to figure out if a client is just a slow payer or a serious problem.

Once he flagged an overdue account as risky, he aimed to convert the invoice to a promissory note of his own design.  He would try to get the director to personally commit to a note that spells out: the amount owed (including late payment interest charges); the date that payment will be made; a description of what the money is owed for; and a statement of what steps he would take if the note is not paid on time.  He keeps a stack of blank promissory notes in his files for easy use.

Converting the invoices to promissory notes takes bad debts and turns them into current obligations, which look much better in your accounts.  It also eliminates room for confusion. Instead of a whole mess of outstanding invoices, there’s just one outstanding note; which has already been approved in advance by the person who signed it. Additionally, thanks to a clause I asked him to add, the debtor agrees to pay any legal or collection fees if the promissory note is defaulted on.

If the customer is willing to commit their personal resources to guarantee payment, and many are, then the collection officer gets s a good indication of the customer’s confidence about their company’s future. But when they refuse to sign the note he views it as a sure sign of trouble.  That account will be with his solicitors immediately, because it’s the only other way to protect the outstanding balance.”

So, what are promissory notes? A great way to ensure that you eventually see those magic words.

Billy O’Dwyer is the principle consultant at Chapman Cooper credit management consultants who provide practical credit management services to the Irish SME market. Chapman Cooper helps their clients to improve their cash flow and profitability by analysing the companies entire order to cash process and linking it to client care.

If you’d like some advice on sources of finance, check out a previous post here. If you’d like to read more posts in the future, please subscribe to our blog to get free email updates.

There has been a lot of buzz lately about the success of Dropbox, and how other startups might learn from it. They now have over 100 million users, and their excellent “space race” referral offer played a big part. A lot of startups would have seen this as another example of the superiority of the viral marketing model, and sought how to replicate it…

Not so fast! Before you go making viral marketing your #1 priority, take a closer look. There’s every chance that viral marketing will be useless to you, so take the following things into account.

Dropbox wasn’t viral, and you probably aren’t either: AxBxCxD=K

First of all, it wasn’t viral growth alone that led to Dropbox’s massive growth. Andrew Chen and Des Traynor have explained how Dropbox’s “K-factor” didn’t come near the viral threshold of >1 (in fact it was more like .1), meaning they never got near “viral growth”. What does this “K-factor” refer to? Des elaborates on the K-factor in this post, where you can see that the K-factor of a product is determined by

(A: what percentage of your users share virally)
(B: how many shares those users publish)
(C: how many new users you get per share)
X (D: how many of those new users become full users)

= Your K-factor

A K-factor of >1 would mean that your users will effectively do your marketing for you and acquire new users themselves. Despite the talk of Dropbox’s “viral” success, chances are your K-fact (like that of Dropbox) is well below 1. Don’t despair though, because…

There’s a good reason for that

Most tech startups’ products can’t and won’t go viral because of the type of products they are. There’s nothing wrong with this, and you should be analytical when judging the viral potential of your product. Chen describes 5 main criteria that determine a product’s viral potential:

1. The product should target extroverts.
2. The product needs an inherently social dimension.
3. There needs to be high retention and usage of the product.
4. It should be a product that anyone can use.
5. There needs to be a complling pitch for users referred from social media

If your product doesn’t match these criteria then going viral will be hard. SaaS products usually don’t. A product needs to be inherently social by its very nature, and how often it’s used and your churn rate will have a big impact too. The whole thing presupposes that you have a good product-market fit, which is also easier said than done!

Never fear… there are alternatives:

In our blog post on the lean startup methodology we outlined the other growth models to target. The simplest would be the Paid model, the standard means of growing a business. This means that you use the revenue accrued from one customer to acquire the next customer. This will work if your Lifetime Customer Value (LCV) is greater than your Customer Acquisition Cost (CAC). This obviously works best with a low CAC.
The Sticky growth model is a trickier concept, and like the Viral growth model, is often misunderstood. The key ingredient to it’s success is retention rate. If your product is good at holding onto customers (usually after a customer has invested a lot of time in the product which increases switching costs: think World of Warcraft or eBay) then you don’t have to worry about losing traction. Even if you have a high CAC you know that users will stick around and keep spending money, so you won’t mind paying for new users.
Eric Ries recommends picking one of the three models and sticking with it, which is great advice. Although Dropbox exhibited characteristics of all three models, it still relied primarily on Sticky growth.

Your product and viral: never meant to be?

Should you go for viral growth? Chen puts it bluntly: don’t bother. Or rather, you have three options:

1. Don’t bother. If your product doesn’t fit with viral then that’s that.

2. Use it to drive down your CAC. While Dropbox never went viral, they did use some viral ploys to get some customers on board and reduce their CAC. This is of value in both a Sticky and Paid model. However, resources must be devoted to increasing your viral capacity and a bolt-on widget probably won’t cut it.

3. Go for it. If viral growth seems like a runner then proceed, but be smart about it. Intercom have some excellent advice on how to maximise the viral growth of your app.

This post in a nutshell:
Company culture is important; your values will define the “unwritten ground rules” and atmosphere of your startup. It can’t be controlled, but if you communicate a smart message consistently (especially when recruiting) you’ll be on track for success. Jeff Bezos made Amazon a success by infusing the workplace with his values of customer-focus, low margins and long-term orientation.

What?

What is culture?

Consider this: two identical twins with the same educational background graduate from the same course. One goes to work in a tech startup and the other in an investment bank. Two years later, for fun, they decide to switch jobs for a week. Do you think they would fit seamlessly into each other’s workplaces?

Consider this: Korean Air had the highest accident rate in the world in the latter half of the 1990’s, despite having state-of-the-art equipment and training. Why was this? As Malcolm Gladwell explains, it was because of the hierarchical nature of Korean culture, where subordinate co-pilots felt uncomfortable correcting errors of their superior head pilots.

Whether a particular behaviour is acceptable or not often depends on the setting. Criticising one’s superiors might be more acceptable in a Dutch workplace (where egalitarianism is valued) than in a more respectful, hierarchical Korean workplace. In terms of organisations, certain pay systems might be more acceptable to investment bankers than to NGO workers.

Psychologists such as Geert Hofstede and the GLOBE Project have helped figure this out. They have studied how people develop shared norms and values when they interact with each other over time. It’s not just a case of aggregated personality types (picture a bus full of investment bankers that don’t know each other: they may all share certain traits but there is no culture specific to that bus)- a culture is a shared meaning system;  over time group interaction shapes how the individuals operate in the group. The shared nature of culture can be likened to organisational memory: a group of people with shared experiences will be able to recall more about those experiences together, meaning that their collective memory is greater than the sum of it’s parts.

Different environmental influences shape how this plays out. One reason for the high collectivism in Asian societies has to do with climate: it’s better suited to rice growing, and successful cultivating a rice paddy requires a large group effort. So different organisational and national cultures have different norms: they have different values which affect the more tangible differences in practices that can be observed.

(measured different cultural traits by interviewing large numbers of each nationality. Below is an example of his results for Holland and South Korea.)

In more practical terms, culture can be thought of simply as the unwritten ground rules that evolve in a company, a feeling that “this is the way we do things here”. The more intense the interaction between people in a company, the more entrenched a culture will be.

Why?

Why should startups care?

While it’s not going to be in your business plan, company culture shouldn’t be ignored. Startups evolve quickly, and one of the advantages of a healthy company culture is that it helps the founders keep the company infused with their vision during expansion. While good culture won’t be a substitute for a good team, it can help enhance the resources you do have. As legendary management guru Peter Drucker said:

“Management by objectives tells a manager what he ought to do. The proper organization of his job enables him to do it. But it is the spirit of the organization that determines whether he will do it. It is the spirit that motivates, that calls upon a man’s reserves of dedication and effort, that decides whether he will give his best or do just enough to get by.”

The flip side of this is that culture can constrain a founder’s efforts. Introducing a new strategy or work process won’t work well if the company culture values the opposite, as Drucker went on to say: “Culture eats strategy for breakfast”. Sloppy practices will be harder to weed out down the line! At Amazon, Jeff Bezos aimed to revolutionise bookselling with technology. He knew this would require an outlandishly customer-centric focus. From the outset he made it clear to staff that messing up an order by half a day could result in the Amazon team having to work late on a Friday night, which was in keeping with his customer-focussed philosophy.

Another advantage of the right culture is that it can make the workplace fun. The atmosphere here at Bullet is imbued with the founders’ sense of oafish humour, and nothing makes the day fly by than a bit of oafish humour! An enjoyable atmosphere can also help a startup attract top talent. You won’t be able to compete with Google or Facebook’s pay, so make your company seem like a cool place to work.~

Which?

Which kind of culture should you aim for?

It’s up to you. The values of your startup will reflect those of the founders, and culture will evolve in it’s own way. There’s not much point in trying to micromanage your company culture, but successful startup culture usually have certain ingredients (as described by Stephen Cohen). Firstly, a long-term culture with long-term goals will keep people invested in your vision. Amazon’s culture is the paragon of long-term, where Bezos has been able to attract and keep top talent with stock options despite relatively low salaries. Secondly, all startups should foster an innovative culture that emphasises creativity. Lastly, a culture that nurtures talent as much as possible will enhance your assets (and help bring top hires to your company).

Aside from this, your company culture is a blank canvas. Pick a vibe and run with it. For example, PayPal had a very homogenous hacker-like culture to begin with, which allowed for good communication and rapid group coding. Pick a vibe that fits with your business goals and stick with it!

How?

How do I tend to my startups’ culture when recruiting?

Recruiting is the most important part of creating a world-beating company culture. Here are 3 practical tips from the experts:

1. Dogs and pizza ovens in the office are not culture, but can be good story-tellers. You hear a lot about of the cool perks that come with working for a startup. These are good for a healthy workplace, but have little to do with company culture. However, office quirks can be great for signaling what you want your culture to be. For example, the desks at Amazon’s offices used to be made from second hand doors as cheaply as possible. If anyone asked why, Jeff Bezos would explain how they’re all about handing back value to the customer. Similarly, Andreesen Horowitz wanted to be a VC that showed respect to startup founders (unlike many most VC’s) so they made it a rule that all employees had to pay $10 per minute they were late for meetings with startups. These tricks help communicate your values to potential employees.

2. Be honest about your company’s culture. This one’s pretty straightforward: don’t project a false image to potential hires about what your company’s like. Just because you really want to hire someone doesn’t mean you should tailor you value message to fit the candidate. They’ll find the truth pretty quick, and lose respect and enthusiasm for your company in the process.

3. Indoctrinate new hires, especially older people. We’ve already explained that culture can’t be fully controlled and must be let evolve on it’s own, but you need to communicate a consistent vision to new hires. This is particularly true during expansion, when you might be hiring experienced businesspeople to manage. These guys have been around the block with other companies, and won’t be as malleable as a recent graduate. All the more reason to communicate a consistent vision to each one, and try get them up to speed on the unwritten ground rules we mentioned earlier. You don’t have to be a cult, but it’s good to get everyone singing from the same hymn sheet!

The important role innovation can play in a company’s current and future success has been well established. However, developing this capability within the firm and maintaining it is no easy task for the SME. This blog post will discuss the two main elements needed to develop an innovative capacity within a firm:

(1) People
(2) Leadership

Examples of different qualities and traits that leaders need to have in order to be successful in the business world today will also be discussed later on. These qualities and traits are areas that you too can develop to become a better leader.

People

Fundamentally, innovation involves learning new knowledge, then creating and introducing something new and different from that knowledge. People are the essential ingredient in this process with highly skilled, highly motivated, creative and intelligent men and women a much sought after asset.

Attracting the right type of employee to your firm can be difficult but what is even more difficult is retaining them. People, especially the current generation of graduates, want to feel that the work that they are doing matters, that their contribution to the company is valued and they want a certain level of autonomy in carrying out their job. There are many examples of companies attracting highly skilled workers only to stifle any real engagement from them through too much management control and a risk adverse environment. Having poorly engaged employees, especially in times of recession, can be hazardous to a firm’s future health.

For a firm to develop a high innovative capacity, all its employees need to be fully engaged and working to their full potential. Employees must to be giving the challenges they are looking for. This can only be achieved through the appropriate leadership behaviours that instil trust among management and employees and develop a safe learning environment where people are willing to openly share information and ideas.

Leadership

Two theorists, Neil Anderson and Michael West identify a number of steps that can help leaders develop work group innovation capabilities in their firms.

One of the first things a leader must do is communicate a compelling vision of the direction the company is heading in. This vision must be understood and perceived as attainable by employees. It must gain widespread acceptance by the group and the vision’s future outcome
must hold some value to individuals in the group. If all four elements are present employee motivation and commitment to company goals will increase.

Secondly, leaders need to create a safe environment with high participation from employees. To do this, leaders need to involve more people in decision making through interaction, increasing employee influence and sharing information around the company. This will increase employee commitment to the outcomes of these decisions and increase their input of new ideas for improving existing processes. The leader’s main role here is to create an atmosphere that is non-threatening, with a high level of thrust and support among all staff that results in higher employee contribution.

The next step for the leader is to employ a shared commitment to excellence among all employees. This approach involves reflecting on current work processes, individual and group performance, putting in place feedback and performance appraisal mechanisms,
encouraging the sharing of advice and ideas among teams, and openly discussing opposing views with the overall aim of maximising quality of policies and procedures.

Finally, leaders need to communicate that they want employees to continuously look to improve or introduce new ways of doing things in the workplace. They must show their support by communicating approval for these attempts and by allocating the resources needed. The leader must show their openness to risk and the value of learning from previous failed attempts. They need to communicate the importance of a more long term view, rather than a short term focus, on the company’s operations.

These steps will help create an innovative culture in your company which is characterised by:

• Encouraging participation of employees in decision making
• Questioning conventional wisdom
• Risk taking

A firm with an innovative culture is thrilling and energising to work for. It is a place rife with risks and challenges. A place where highly sought after highly skilled workers seek out as a place they want to work and help play an important role in the future success of the firm.
In an article discussing the qualities and traits of successful leaders in the world today, Robert Safian interviewed CEO’s of very successful companies such as Nike, Intuit and Foursquare. He identified certain qualities and traits these leaders possessed that, he felt, helped them
to rise to their current positions. I have listed them here to show how certain behaviours of leaders can lead to great success.

Qualities and Traits:

• Efficiency and openness to ideas
• Being open to people closest to a problem suggesting ways to fix it
• A high level of ambition
• Ability to empower people to be proactive about solving problems
• Ability to build trust with employees, supporting experimentation and encouraging
failure
• Agility / Open to constant change
• Thrift