Essential. Non-Essential. Everything in between.

I have a lot of friends that own businesses.   In the last four years, each of them (myself included) has had good times and bad.  We’ve each had months or quarters where business is booming and months or quarters where there simply seems like there is no business to be had.  However, one thing has been consistent with each of our struggles and successes:  being non-essential makes you expendable.  

(Frightened Rabbit – The Woodpile.  Dig it.  (although it is a little disturbing…sorry))

Janet has owned a dog-walking and dog-poop-yard-pickup service for a while.  She didn’t buy a franchise but rather started from scratch on her own.  First she signed up neighbors and eventually started doing some light advertising in the local paper.  There are times when Janet spends four or five hours in the morning and three hours in the evening walking dogs and cleaning yards.  No, it’s not glamorous but she owns the business, sets her schedule, and makes a lot more money than you might imagine.   Two summers ago an odd thing happened: she started getting a lot of cancellations, primarily for the yard cleanup (typically done once or twice a month depending on the number of dogs and their size).   People were saying, “We’ll have you keep walking Fido each morning but let’s cancel the yard stuff for a while, okay?”   They didn’t want to clean the dog-doo out of their yards if they didn’t have to, but they would do it in a pinch.   However, walking the dog when they were at work or on a business trip?  That HAD to be done.  Janet was smart enough to recognize this and quickly redoubled her dog-walking efforts and focused on that.   Now she primarily walks dogs and house-sits for their owners.  And she doesn’t clean many yards at all.   She recognized what part of her business was “essential” and what part wasn’t.

My friend David has an HVAC repair business.  His work is essential where he lives in the south because most offices can’t have their employees working without proper air-conditioning.   He’s never seen a drastic downturn due to being non-essential.  But right now his business is slow.  Why?  Because smaller companies are putting off the repair until it starts to heat up outside.  They’d rather tolerate a little bit of discomfort then spend the money right now.  His business will no doubt pick up as winter thaws in to spring.  And by summer he’ll no doubt be putting in 10 hour days like he does every year when it warms up.  But for now he’s working for big customers and getting very few bites from small businesses and landlords of vacant commercial properties.

When things get tight financially, people first look at what they can put off.   Let’s get a swimming pool next year.  Let’s not get the yard service started just yet.   The main reason cable companies tie customers in to annual contracts is so they have leverage in negotiating with content providers.   The second – and nearly equally important reason – is because when people decide to reduce their home expenses the main “Disposable” item that stands out is the cable bill.   So the cable companies are smart enough to make it nearly impossible to cancel DirectTV or Dish or ATT “for a couple of months” until things get better at home.  

****

The best way to build a business is to offer something unique and essential or scarce.  Caskets are pretty recession proof.  Ranch land doesn’t often go down in price even when the broader housing market is collapsing.  Having a product or good that is not easily replicated is a great way to make money.  Yes, it’s also the most capital intensive.

The next best way is to offer a service that is essential.  HVAC repair or tax-preparation services.   A customer might be able to do these things themselves but most people know they won’t get the desired results without a professional helping them.  Offering a specialized service is another great way to start a business, although you can’t just wake up one morning and be “specialized”; you will likely need some training along the way that isn’t readily available to everyone else.   

Next is offering something unique and non-essential.  No one NEEDS a Mercedes, but the uniqueness and quality of the product mean that sales will continue even in a bad economic climate.  If you are the only person making an adapter that converts an iPad to a guitar amp then you will have cornered a market….just be prepared for market demand to be out of your control.   (*Note – a lot of companies make this product, but it was a quick example I thought of).

The worst business to have is offering a service that is non-essential.   If you offer a service that serves to save only time or money for the customer (which is basically the definition of  ”service”) then you had better be damn sure that you are saving them either a LOT of time or a LOT of money.  It’s nice to have a detailed car, clean and shiney and good as new.  But when people tighten their purse strings it’s easy for them to justify buying some Armour All and washing it on their own instead of paying someone else $30 to do it.  If you are in the enterprise space and offering engineering services, for example, then you need to make sure your price is low enough or your quality superior enough that your customer doesn’t go hire their own in-house engineer to save money.  

****

Interesting is the case of Dell.   I’m of the opinion that Dell went from being a unique/essential company to a non-essential company.  Years ago, buying a Dell computer meant a product 100% specific to you.   Choose your processor, swap out the memory, add a bigger hard-drive…presto.   Add in extremely good customer service and competitive prices and there was a time a decade-or-so ago that buying a computer OTHER than a Dell was a questionable choice if you had time to wait for Dell to build what you wanted.  However, for some reason Dell started in to the commodity battle with IBM and HP/Compaq.  Gaining market-share trumped being unique.  They made computers that were not customized and fought with the competition in a race to the bottom on price.  Suddenly buying a Dell was not special; it was a decision motivated by availability, aesthetics  and price.  As a result, the dream of being a $100B company vanished in to thin air.  To the company’s credit, they appear to be moving back to essential/unique by offering total solutions in the enterprise space like IBM does.  I’m optimistic about the company’s future but imagine there are a number of people in-house who wonder where the company would be if it hadn’t taken a detour from what made is special in the first place.

****

If you were starting a business tomorrow I’d suggest you build something unique.  It doesn’t have to be “new” or a better mousetrap or a machine that turns sand in to oil.  But the people and companies that MAKE things are in substantially better shape then those that resell what others make.   Unique is always better than common.  Essential is always better than not.

A Million Ways to Die

Hey look…it’s Elisha Cuthbert….and Brian Fallon doing his thing.

“I packed up my things and left all my doubts…you know I think I will grow my hair back out”

I had a dream last night that I got a job again at Dell. I worked there during the day and used my lunch break and after hours to run my business. In the dream, I worked somewhere else and ran the business on the side.

Worst dream ever. My world was upside down a hundred ways. Customers calling, family wondering what was going on. Good grief…It seems like such a simple idea: work at the reliable, safe job and build “your business” on the side. One day it will be big and you can quit your job. Yea! The perfect plan.

When you run a business, there are a million ways to die. That actually might be on the low side; there might be five gillion ways to die.

No customers
No money
No products
No credit
No profitability
No scaleability
No reputation
No innovation
No employees
No way to grow
No way to shrink
No time because you are busy working your other job.

On and on and on. Combine each little piece of each little thing and there are a million quadrillion kazillion ways to die.

But there is good news: There are just as many ways to live. Just as many paths out of the mire to get you on the way to winning. Each lever can be pulled or pushed. Each challenge can be massaged or moved. Each piece of the puzzle creates an infinite number of ways to move this here, push that there and BOOM you have found the code.

One day you’ll have the right formula. One day there will be ducks and a row and organization and growth and profitability for you if only you will keep tweaking the levers.

And it will be awesome. “I didn’t say it would be easy. I said it would be worth it.”

Free startup idea – mobile Turk

Mechanical Turk is awesome. I use it to get tasks done i can’t be bothered to do, like creating spreadsheets of customer leads.

I also use it to make a few bucks when I have free time. A penny here, a dime there. A couple hundred bucks a month in spending money for the free 10 or 15 hours I have is worth the trouble.

You know when I could really profit from mechanical Turk? Right now. When I’m on my phone watching sports center and doing nothing of consequence.

So build a mobile skin for mechanical Turk. Charge me 5 or 10 bucks a month for access. We both print money.

Consumption

The internet is getting smaller.  Well, to me it is.   I am usually finished reading the internet before 8am.   Everything I want to read for the day has been read and I’m off to do more productive things.  

I used to have dozens of sites bookmarked and RSS feeds and saved links.   It used to take me all day to consume the internet.  Years ago, I had days at work where I could literally go a full 8 hours without getting a single thing done because I was surfing the web.  Don’t lie – you’ve done it too.

ESPN.com….CNN.com…DrudgeReport….BoxOfficeMojo…Tyler….on and on and on.  There’s lots of internet out there to read so you’d better get started.

Only now I don’t open my Twitter feed.  I’ve never been big on Facebook.  I skip the news sites.  I take in the occasional Grantland article or read the headlines on Hacker News when I’m walking to the car.  But no more Boy Genius or TechCrunch or Altucher Confidential.   No more Engadget or TUAW or SI.com.   I don’t open ClutchFans or The Atlantic or The Economist or whatever.

For some reason, it all started to run together.   And it all seemed unimportant.   I reached a tipping point where it didn’t seem to matter so much what someone else thought about the Foxconn plant in China or the Yankees decision to bench A-Rod.    There is just so much of “it” that none of it sticks out.   Lots of noise, very little signal.  

You know what?   I don’t miss it much.  And I don’t feel uninformed or unentertained.   I didn’t become dumb by ignoring vast parts of the internet.  In fact, I’m probably a bit smarter for doing so.  

So now I’m going to work, and then this evening I’ll probably go outside and do something non-internety.   And I’m sure if I have seller’s remorse and return, the internet will be  waiting for me with entirely new content tomorrow.  Until I get back, enjoy Delta Spirit doing “White table”

Free Startup Idea – Friendly Smoke Detectors

As I was trying to put our daughter to bed Saturday night, an infrequent but extremely annoying thing happened: a smoke detector began to let out its *chirp* that it was in need of a fresh set of batteries. The thing would chirp, our dog would bark for 45 seconds, there would be 15 seconds of silence, and then the whole thing would happen again. Finally, after a few cycles of this I abandoned any hope of Operation Child Sleep. I put the dog in the closet and grabbed the ladder to change the batteries. It could be worse – the guy who lives in the house around the corner broke his leg in three places last summer when he fell of a chair while changing smoke detector batteries in the middle of the night.

Which got me thinking: I can’t remember the last time a smoke detector in my house needed to new batteries in the middle of the day. It always seems to happen at night, usually when everyone is asleep and in no condition to go to the garage for the ladder and a 9 volt.

So why not add a feature to smoke detectors that prevents the “middle of the night chirping noise” problem?

How about an internal clock that registers what time it is? Too complicated/expensive? Ok, how about a light sensor that knows to chirp if it senses light (a room light is on or sunlight is coming in the window) and one that stays quiet if its dark? What about a chirp that grows progressively louder starting when the battery has 10% of its life left – so it’s almost inaudible at first and SLIGHTLY increases volume every hour until it is changed? That way if it starts chirping at 2am, it might not be loud enough to notice until later the next evening when you are home from work sipping a beer and watching Sportscenter.

The tradeoff is minimal – my house has 13 smoke detectors. The odds that I will be turned in to embers because the ONE night I didn’t change the batteries my house catches on fire and the other 12 smoke detectors don’t work is a risk I’m willing to take.

Is it a huge problem that smoke detectors go off at night when they need new batteries? No, but it is a problem that is solvable that would make people a little happier, even if they never knew it.

So have at it…

An Observation about Photos

My iPhone was running slow yesterday.   And I didn’t have enough room to update to iOS6.  So I started deleting photos.  And then deleted some more.  And some more.  And the next thing I knew I had deleted 926 photos off of my phone and still had about 1,000 to go.

That’s a lot of photos.  Most of mine are of my daughter and/or wife.  They all make me smile (I have them saved to a computer, so I wasn’t really “deleting” them).  To go through all of the photos and remember the time of each one would take days.  There were good photos, blurry photos, fifteen photos of the same thing…The magnitude of special moments captured was a little overwhelming (although there is something to be said for the diligence required to take 48 different pictures of a two year old watching cartoons).

But because of the sheer number of photos I had, it made it easier to take some of them off of the phone.  There are still hundreds to look at.   And there will be more tomorrow and the next day and the next day.

The photos my parents have from my childhood are abundant but its nothing like now.   You used to have to get out the camera, take the photo, take the film to the developer, wait a few days, and then you got your pictures back.  There was a process to being able to remember the moments.  Maybe they ended up categorized in an album like “Trip to Disneyland ’85″ or they ended up in the bottom of a drawer.   But it was different because it took time to make the whole thing happen and that in itself made each photo special.  I still remember my mother at the Fox Photo, going over every roll and deciding which ones to keep and which to toss.

 

Now, if you want a picture you can have one in a moment.  You can tweet it or share it or keep it to yourself.  

The number of photos that exist of my grandparents before the age of 18 can be counted on two hands.  The number of photos that exist me before the age of 18 probably number in the hundreds.  That includes photos Mom took and yearbooks and everything in between.  And to think that yesterday I had 1900 photos on my phone, most of them of a child that just woke up and wants to watch “toons.”   

On Facebook and their IPO

Some of this discussion shows a fundamental misunderstanding of online advertising and data collection. I’ll explain shortly, but first, my thoughts on the IPO.

I’m actually fairly bullish on FB stock, just not at this price level. 100x earnings and 100 billion dollars? Essentially the stock offering priced out at least 2 or 3 years of growth. Good for those that already had options, but there is a ceiling on what the stock can do for a while. IMO they could triple their revenue/earnings and the stock might not move at all. If it gets down to 23-25 or so I’ll be buying as much as I can.

Anyway, the discussion about paying for the service or charging for business pages is silly. Similarly silly are all of the recent articles about people not seeing any return from FB ads. This should come as a surprise to no one – for ads to work, the person viewing them has to be complicit in receiving the message. Ads work on Google because when people go to Google they are almost always LOOKING FOR SOMETHING. Google’s ad platform monetizes them finding what they need. Facebook does no such thing. Visitors to FB do not go to FB to shop, they go to stalk ex-girlfriends and post pictures of their pets or whatever.

I don’t think anyone (including the FB people) think that their on-site ad platform is ever going to generate much revenue. But the point of the on-site ad platform may not be to generate revenue but rather to dial in the ad platform itself. The FB-based ad platform is a testbed/sandbox for FB to match ads to people and test algorithms and such….

…which leads to how FB is going to make a zillion dollars.

Recently, FB changed their ToS to allow FB to track you when you are not on the FB site. THis means that when you go to another browser window or a different site, FB has the ability to follow you. So everywhere you go on the internet, FB is able to go with you and the treasure trove of data they have is with them. Which is why they will be launching an AdWords/AdSense competitor in the not too distant future. They don’t care about making money off of you while you’re on FB (outside of teenagers buying virtual goods in games). Rather, they give you the FB platform to use for FREE so they can collect scores of information about you. Eventually they will have a platform for publishers that delivers on site revenue to publishers like Google does, only the ads they serve will have higher conversion rates because they are REALLY atuned to you and your likes and dislikes, more so than Google.

The challenge FB faces is time of engagement on the site, not so you might click on an ad but so they have time to collect more info about you. They need “horizontal” engagement….right now that average FB user is on the site less than 4 minutes a day IIRC. The longer you are on FB, the longer your friends are on, the more data they can collect about what ads to serve you on their new ad platform. By creating the app store a couple weeks ago, they are opening the door up for the same creative types that made the Apple app store so successful to come in and make the FB ecostystem full of new games and business services and tools and other stuff…..all things intended to make you come to facebook more often so they can collect more data and thus make more money when you leave FB.

People talk about their challenge in mobile being about monetizing a mobile site, which is silly. They don’t need to run ads on a FB app…they just need to make it full featured enough that you interact with it the same way you interact with FB on the desktop. They bought Instragram for this reason. They will continue buying properties that people engage with. Not so they can run ads on those properties, but so they can get more info about you.

The stock will slowly slide for the next 6-18 months. And when the ad platform is announced the stock will double in a week. Black dot it, put it ink.

Check us out at Signature-Electronics.com

Need a kit of board level components, ready for production? Check us out at Signature-Electronics.com. We supply full, production ready kits of material at the lowest total-cost-of-ownership anywhere. Save time and money by having your supply chain managed by our expert team!

How Blackberry can Save Itself

Today is the start of Blackberry Jam, which is RIM’s big kubaya with developers and such. If you know the pain RIM has dealt with in the last three years then you know that the company is likely less than a year away from being sold for parts. A quick summary…

Everyone used to use Blackberries (“Crackberry”). The iPhone came out. RIM’s leaders sat around thinking that the iPhone was a fad and wouldn’t live up to the hype. They continued with this belief for the next two years as Apple gobbled up market share. Android does the same. Nokia gets in bed with Microsoft and POOF, the world’s former King smartphone brand is now a punchline.

So, can it be saved? Yes. Can it be saved without being bought? Er…maybe.

For all its troubles, RIM has three four things going for it:

1. Security. In today’s IT environment there are still purchasing managers who wake up in cold sweats after dreaming that the company servers were hacked via a mobile breach. It’s not that iOS, Windows Phone, or ANdroid are EASY to hack…but RIM has a long reputation of providing top-notch enterprise security on its devices.

2. Enterprise footprint – Because of #1, there are a LOT of people that wear collared shirts to work that still carry Blackberries. Granted, most of them hate the experience but the device is still on the company log nonetheless. These devices will be refreshed eventually, and while the current state of affairs indicates that most of them WON’T be new Blackberries, it never hurts to be the incumbent.

3. Keyboard. Once upon a time RIM made really SLICK hardware. My BB Bold 8900 is my all time favorite phone in terms of hardware. The keyboard was large and the texture of it made typing an absolute breeze. I could type without looking on my Bold as well as I can type without looking on a laptop.

4. Email. Even with the advancements iOS and ANdroid have made in their email systems, Blackberry still has the BEST mobile email. It syncs, it works correctly, it can be filed easily, it saves, it discards, it does everything you would ever want.

So, what does this mean for the future of RIM? FOr starters, RIM needs to cling to its strengths (above) and abandon any ideas of being a “cool” brand like Apple. The “we can be like APple!” thing nearly killed Dell 4 years ago and it is probably going to kill RIM. But until it does, RIM (and Dell, and HP, and HTC, etc) need to quit behaving like their products should carry a price premium like Apple. Next, RIM needs to find some friends….FAST. Finally, RIM needs to build a developer ecosystem ASAP.

In the past year or so, RIM has released crummy devices with crummy software and had no luck getting developers to make Apps for the BB App World Store Zone whatever its called. So its not like my ideas above are new….but how to accomplish them is.

1. Don’t issue any phone without a physical keyboard. As much as I love my iPhone I greatly miss the keyboard of my 8900. There are people out there that carry an iPhone or Android device AND a Blackberry just because of the BB keyboard making it so much easier to type. The fact that someone would carry two phones because of a single-feature that the 2nd phone is superior at (the keyboard of a BB) speaks volumes.

2. Partner up with Dell. I have advocated that Dell buy RIM for some time. Even without an outright purchase, the two brands could work well together. Dell has moved hardcore in to enterprise service sales. They sell storage and hosting and tons of services with fancy words like “Cloud” and “integrations” (plural) and “synergy”. It wouldn’t be hard for Dell to start adding mobile offerings to those huge “solutions” they are selling to enterprise. For all my sniping about Dell, they have a top-notch sales force that is adept at getting lots of different products in to lots of different places. I have no doubt that Dell’s SMB and Enterprise teams could sell the hell out of mobile IF they could sell it as part of a robust package.

3. Partner up with Microsoft. Now we’re getting somewhere. Microsoft’s investment in Nokia is likely going to pay off. By all accounts, the new Windows Phone (and Metro UI) along with Nokia’s new devices are beginning to resonate with customers. Microsoft is also getting a lot more traction with the developer community than RIM ever did. Ditch the crummy Blackberry OS with its crummy browser and crummy app selection. Go with Windows Phone.

With these partnerships, RIM will no longer be an autonomous brand with complete vertical integration of hardware and software. And that’s FINE. A device with the best keyboard available, using top-notch software that integrates with the desktop, a growing app ecosystem, and a sales force capable of getting RIM’s existing enterprise customers to re-up with a new generation of RIM devices.

Startups and Rock N Roll – Part 4 – How we got here

I’ve written four other posts linking starting a business and programming and being a musician. Scroll down to find them.

******

With surprising frequency I find myself arguing/discussing the end of glam rock with other people. I am an unashamed hair metal enthusiast and marvel at how easily people dismiss a ~10 year period between 1982 and 1992 where bands in spandex, makeup, and hairspray ruled the rock world. Musically most of the songs written by everyone from Night Ranger to Trixter consist of the same chord progressions you hear today from the Black Keys and Jack White, so I find it odd that many people universally say Poison, Skid Row, Cinderella and the like “suck” while new music is awesome. Its really the exact same music, just packaged and processed differently.

Anyway, the prevailing argument from most people is that “Smells Like Teen Spirit” and the accompanying success of Nirvana “killed” hair metal. This statement is partially true at best and extremely revisionist. The reality is that three things killed hair metal:

1. The Fender Mustang guitar.
2. James Hetfield’s haircut.
3. Vince Neil quitting Motley Crue.

People who point to Nirvana’s (and Pearl Jam’s) huge debut successes conveniently forget that metal was exploding at the same time. Metallica, Ozzy Osbourne, Anthrax, and Megadeth all crossed over to the mainstream and had their most commercially successful records and tours at the same time. Guns N Roses was filling arenas and stadiums (with Metallica). While MTV was inarguably playing more “grunge” videos, they had not at all backed off playing traditional hair-metal artists. If anything, the genre suffering at the time was pop music as the New Kids on the Block were long gone and NSync was yet to be. There was a near even mix of “Seattle grunge” and “LA metal” on the airwaves between 1991 and 1993.

So what changed things? Simple: new artists and new bands no longer had to focus on the visual component of performance. Kurt Cobain played a Fender Mustang in Nirvana’s videos. The Mustang was a cheap, entry-level guitar that could be had at most pawn shops for under $150. Instead of saving up $800 for a Les Paul, BC Rich, or Ibanez guitar a person interested in learning how to play could get a guitar for $150 that was socially acceptable as “cool.” When James Hetfield cut his hair for the Black Album it represented another turning point; it was no longer necessary to have long hair to be in a rock band. If James Hetfield could lead Metallica with short hair then it was acceptable for high school kids to start bands in their garage without worrying about having long hair. The rest of the pagentry and costumes soon followed in a fall out of style. Suddenly a band could wear shorts and T-shirts like Pearl Jam or Hootie and the Blowfish.

So what was the final death knell for glam rock and hair metal? Simple – the natural order of things dictated that bands released records every two years. When GNR was taking a break then Van Halen had a record. When they were taking a break it was Bon Jovi or Poison. For nearly 12 years between 1980 and 1992, fans could count on one of the 5 or 6 biggest rock bands being on the road and on MTV supporting a record. In the summer of 1992, it was Motley Crue’s turn in the rotation…and they didn’t release an album. Suddenly there was a void in the “name” hair-metal bands in the music-fan consciousness. This void was filled by the Lollapalooza which owned the summer of 1992 with a tour featuring Pearl Jam, Soundgarden, and the Red Hot Chili Peppers.

And the rest, as they say, is history.

ALl in all, the death of hair metal was not the advent of grunge but something much simpler: the barrier to entry had been lowered substantially. A band could play the same chord progressions they always had but no longer needed to dress up like girls in leather pants and have lasers at their shows and play $1000 guitars. It became cheaper to have the equipment needed to start a band and it became simpler to “look” like a performing musician.

******

Technology startups followed the same path a decade later. It used to be that it was expensive to start a software business. It required a specialized knowledge set, access to expensive equipment, money to pay hosting costs and marketing costs. Now the barrier has been lowered. A reasonable business idea can be launched with a few hundred dollars and some passion. No longer do CEO’s need to be 50 year olds in suits but rather can be 22 year olds in hoodies and flip flops.

An argument can made that rock music started going downhill when it became easy for everyone to participate. The same argument can be made about the internet and the app store: there are a LOT of bad websites and bad apps out there. That said, it’s important to realize that more people participating in the creation of things, whether it be music or websites, should be applauded as a good thing as it advances the overall culture around us. Zuckerberg probably couldn’t have started facebook in 1990 just as Radiohead might have never gotten on radio in 1990. Sometimes lowering the barrier to entry is a good thing.