The Cheap Revolution

Grass-roots, The Great Disruption and Sandcastle Corporations

The corporate sandcastles we've built are crumbling fast as the waves wash them away.  Some have called our existing system a "Ponzi Scheme".  Throwing billions of dollars to rebuild them may not be the answer.  Maybe its time for some creative destruction?  But what will replace the sandcastles?  The answer may be right under our feet.  How can we create new competencies for building effective grassroots organizations that can solve many of the emerging problems?

For the impatient reader, I have put together a brief list of some of the competencies that seem to be necessary for the grassroots organizations of tomorrow. Afterwards, I outline some of the root causes and possible solutions in more detail.

New competencies for new organizations

So we need to build new competencies.  I don't profess to know all of what these competencies are, but I'm getting busy studying the grassroots organizations that have worked to see what we can replicate.  Here are my early learnings from this journey...

1) Effective Grassroots organizations must be grounded in people gathering around a specific, common interest.  The more specific, the better. Its all about getting traction. A tight definition helps.

2) You need a BHAG (Big-Hairy-Audacious-Goal).   As Jim Collins tells us in Good to Great, big goals set our souls on fire.

3) People need to be passionate in the topic.  Passion drives personal investment and volunteerism.  These organizations thrive on self-fulfilling human energy (which is a renewable resource!)

4) Specific governance practices are key.  I'm sure there are many ways to do it.  My favorite is Holacracy. 

5) Specific processes help.  Some may find prescribed processes to be too rigid, but the most effective grass-roots organizations I've seen have specific protocols, that are kept simple and understandable.

6) Provide multiple communication channels... and allow easy participation.  Whether it's by email, a forum, a blogging platform or Twitter, you need to enable full contribution from the members.

What have you found to be effective in building grassroots organizations that can make real change?

The Great Disruption

The New York Times columnist and "World is Flat" author Thomas Friedman posted a recent column called "The Inflection is Near".  He highlighted the convergence of our economic crisis and environmental crisis and suggested that we may have hit a wall.  Joe Romm of climateprogress.org calls our current system for creating wealth 'a Ponzi scheme".  

Our institutions were created to convert exploited resources into wealth.  For hundreds of years, most of our marketplaces, exchanges, financial institutions, corporations and governments have been built on the backs of slavery, deforestation, burning fossil fuels and vast ghettos of human poverty.  If you need to see how we got here in more detail, check out the apocalyptic Internet movie Zeitgeist Addendum.

The Sandcastles are crumbling...

My good friend Valeria Maltoni of Conversation Agent and I were talking about this.  We observed that the institutions (banks, corporations, etc.) we've built over the past 50 years or so are like so many sandcastles laid out along a coastline.  And the waves are coming in higher and higher and washing them away.  And our government... actually most governments, are throwing money into rebuilding the sandcastles!

Grassroots to the rescue?

Could the answer be growing right under our feet?  I believe that Grassroots organizations are emerging to supplant the role of these depleted institutions with vibrant clusters of activity.  Passionate individuals are self-organizing into collectives which plugin into the economic grid. 

There is no greater example of a successful grassroots effort than the work of President Obama's Presidential campaign.  The folks at Blue State Digital, the team that built the popular My.BarackObama.com platform, report that the Obama campaign mobilized over 3 million individual donors to contribute over $500 million online, sent 2 billion email messages, motivated over 2 million social networking participants who wrote 400,000 blog posts and created and promoted more than 200,000 offline events across the country.  If this isn't a testament to the potential of grassroots organizations, then I don't know what is!  (BTW - I have the honor of introducing Blue State Digital CTO Jascha Franklin-Hodge in this week's Emerging Technology Enterprise conference.  Come if you can!)

To further illustrate the point, I was recently at an advisory board meeting for The Founders Factory, a grassroots-based event put together to support the Philadelphia Entrepreneurial Ecosystem. This eco-system, it turns out, was recently re-invigorated by another grassroots organization called PSL (Philly Startup Leaders).  During the meeting, the board members rattled off several new organic organizations supporting the Philly entrepreneurial and creative community without batting an eye.    (Philly Startup Leaders, Founders Factory, PANMA, Mobile Mondays, IgnitePhilly, ...)

Across business-people, spiritual seekers, hobbyists/enthusiasts and any other group that has a center of gravity around a common passion, new groups are springing up.  How many new, organic groups are you involved with?

Can the government help?

One last thought.  You may wonder if the government is going to be able to get with the program.  I was pointed to an article co-authored by incoming SBA (Small Business Association) Administrator Karen Mills.  Ms. Mills recognizes that 70% of business is generated by small businesses.  In a paper authored in 2008 on Industry Clusters, Ms. Mills and colleagues advocate fostering a system of regionally grown clusters that share in a common industry focus.  Sounds like a great opportunity for some grassroots development to help rebuild our failing economy.

Where do you stand on this?  Will it be business as usual as we rebuild or are we ready for some Creative Destruction... with new, grassroots organizations that grow to dynamically meet the needs of tomorrow?

A 14-year-olds view on Value Propositions

My 14 year old son, Nick, is going skiing with a friend.  He laments, “I wish we were going to Jack Frost, though.”  I’m surprised because he is going to a bigger mountain.  So I ask, “Why?”

Nick adeptly comments, “You pointed out that Jack Frost makes its name by talking about their great snow-making. “

“Their value proposition,” I point out.

“Whatever.  So I checked it out online.  Jack Frost DOES have better snow-making.  They have these big fans that churn up the snow as it comes out of the hoses.  That makes it more realistic.”

“I’m impressed, Nick.  So you see how they set themselves apart!”

“Yeah … and Camelback has the best terrain,  Blue Mountain has the highest vertical drop and Elk Mountain is … I dunno … customer service.  Whatever.  They charge a lot of money.”

I have a good laugh. 

Then I realize that it only makes sense that a tight eco-system like the Pocono Ski Areas would naturally break into such distinct value propositions.   It affects who they go after, how they craft their messages and where you invest your efforts in growing your operations.   I’m sure that they end up with a tighter connection with their audiences. 

To illustrate, earlier today I saw the Jack Frost billboard with a giant snow-gun and a muscle-bound brute, referencing the “Big Guns.” Its all about the snowmaking.  A little farther on, Camelback had a custom billboard with two parallel ski-tracks whipping ten feet over the top of the billboard and down into the copy which read, “Feel the rush.” Think terrain that runs like a roller-coaster.

Sometimes the student teaches the teacher.

What about your eco-system?   Do you know where you stand?  You should… it can affect which customers you talk to… and what you say to them.

By: Skip Shuda

www.teamandadream.com

The Long Tail and Internet Startups

Photo By: Seth Godin

8/10/2008 Update: As I was writing this post, a storm had erupted based on a study by Harvard Professor Anita Elberse reportedly disputing some of the assertions by the Long Tail book.  I think the overview that I wrote here still applies - and the post distinguishes between pure long-tail strategies and the "1000 fan" strategy of niche-marketing.  A good overview of the dispute can be found at The Marginal Revolution. 

The Long Tail by Chris Anderson redefines the economics of selling as we know it.  For the past 50,000 years or so, our economics have been defined by assumptions so ingrained into our thinking that we have taken them as givens.  Some of these mythical givens are:

• "You need a blockbuster hit to win in business."
  
• "The top 20 percent of the products generate 80 percent of the profits."
• "Mass appeal is the key to business success."
  

Understanding The Long Tail provides an important strategic edge for Internet Startups. Where you choose to play in the tail defines how you should approach your market.

Imagine a roaring campfire. You and your family sit around, staring into the flames, watching the them lick the energy away from the shrinking wood. I like to call it “The Caveman’s TV.”  One channel, same show - all the time.

When I was a kid, we had about six channels to choose from. At school, you could generally find at least a handful of kids to talk about the latest episode of “Lost in Space” or “Gilligan’s Island” (two of my favorites). Our selection was dictated to us by the broadcast media giants.   The limited “shelf space” of television required that only the hits with the broadest appeal would make it on air. Even today, off-line stores like Walmart and Blockbuster focus on providing the biggest sellers due to limited shelf-space.

Last night, as I sat around a campfire with my 12 year daughter, her 12 year old friend and my 14 year old son, I asked them about what they liked to watch or do for entertainment. My computer-hopping daughter likes to interact at Meebo.com, which allows her to Instant Message her friends without downloading the AIM software. Her friend enjoys playing with SmartMusic, software that enables her to jam with an imaginary band on her clarinet. My son surfs YouTubefor funny video (funny to a 14 year old that is). Personally, I spent time recently surfing martial arts sites looking for a good weapon’s bag to hold my Aikido sword (Bokken) and staff (Jo).

The Long Tail has provided us with a wide range of opportunities as consumers. No longer restricted by shelf-space or a fixed set of consumers in a local geography, the Web has created the ability to provide an enormous range of products – hits and niche products alike, without the limitations of shelf-space, geography, customer base that merchants have worked with for most of human history.

But what does this mean for Internet Startups?  If you want to bring a new offering or product to market, how does that impact your ability to sell?  

From the trenches, three virtual teams that worked

Last month, I had the opportunity to blog in HP's Small Business blog. I recently posted an entry on ten considerations to make in building virtual teams.    

Virtual Team #1 – Home Banking development project 

I assembled my first truly virtual team in 1995 and 1996 to create one of the world's first online banking systems.  Two of us (project manager, chief architect) were operating out of a basement in the middle of 5,000 acres of Pennsylvania state game lands. We also had programmers in NJ, Southern Pa, Maryland and a client developer in San Francisco, Ca.   The product specs were provided by the client in San Francisco and they managed all of the User Experience/Design work.  They had a team of three key employees heading up that effort with an outside design consultant.   

For the geeks in the audience: This system ran on a custom created language environment that was completely dynamic, like Java.  It had its own object oriented, extensible language environment. All of the online banking flow and processing logic was written in "RSL" (resource scripting language).  We first heard of Sun's Java project about half-way into its development.  

In hindsight, this was a pretty amazing feat and we were damn lucky that we pulled it off.  It took about 9 months to deployment.  We did the whole thing for $300K.  This was pretty much a 0% profit margin project, but it put my new company on the map.  Credit is due to the client in their filling out the key elements of a new system that too many teams skimp on – and we were ill-prepared to deliver on.  You must have strong product, requirements and design capabilities on any development team – virtual or not.  Russell Holt, the Chief Architect, and those developers pulled off a miracle that ran the banking system until 2000, when the product was sunset.  

Starting about a year ago, Yasmine and I started deploying custom virtual teams for startups.  Here is a list of teams that worked.  (If there is interest, maybe I'll outline the ones that didn't work – and why I think that was so). 

Virtual Team #2: - Social Media Buzz Building 

The client is an expert non-profit.  The project is for social media buzz-building that focused on content distribution.  Our team consisted of a marketing strategist, a marketing manager and an intern.  The strategist led the messaging and positioning while working with the client.  They generated press releases and articles.  The marketing manager scanned for the best social media outlets for the message – and directed the intern on related research.  Besides finding sites, the intern set up accounts, posted press releases, blog entries and set up alerts for monitoring results.  The client – AND THIS IS IMPORTANT – did the blogging and responded to comments in blogs that the team discovered.  It's important that only the domain expert (usually the client) is responding as a content expert. The Web 2.0 world has a great BS detector that you want to steer clear of.  Allow for 2-4 months for investments like this to take hold and to begin yielding results.  For this client, site traffic grew and positive awareness in the market increased leading to some major media placements and increased sales of their core product.  

What is “Grown Up” Internet?

When we were little children, the world was all about us. "Gimme, gimme, gimme" was our mantra. 

Eventually, our parents might have agreed to give us a puppy or goldfish to take care of (depending on how risk averse our folks were). 

We gradually took on more responsibility as kids... from goldfish to little brothers or sisters to our chores to our extended family to our community ... and so on. 

Despite the fact that some people never get beyond "gimme, gimme, gimme," a healthy progression can be seen in most of us as we mature.   Some people keep on moving up that curve until - like Gandhi, Mother Teresa or Martin Luther King Jr. - they feel responsible to most or all of humanity. 

This progression or increased world view and responsibility doesn't just show up in humans.  It shows up in the groups that we form.  With the help of the Internet and the Web, I would suggest that the business world is finally "growing up".  Read on for ten tips you can use to help your internet business "grow up"...

Following the ten tips, we discuss more about how this change came to be and some of the pioneers in this kind of thinking.

Cheap Resources from Entrepreneur.com

Not sure if you want to pursue your Internet idea? Or maybe you don’t have the funding for it? If you’re like me, you also don’t want to work in a big corporation while you try to hit it big. So how do you make money to fund your own idea but not work for someone else?

A great resource for ideas is Entrepreneur.com. They offer 18 different start-up guides for those looking to start part-time businesses in their spare time. These range from specialized services like consulting to general services such as starting your own eBay store.

These step-by-step startup guides provide you with everything you need to start your own business. They even include software with business calculators, ready-made business forms and sample business plans to simplify the process. Don’t have enough time to read through the guides? Get the audio version and listen to it while you’re on the go!

Let’s take a startup guide and check out the contents. I chose the eBay store guide at random. The site provides a product description outlining the contents including a Table of Contents and an excerpt of first chapter. The guide starts by providing the reader an introduction to eBay. It moves on to talk about who the sellers are on eBay, what successful eBay sellers have in common, turning your hobby or special interest into a business on eBay, eBay businesses you can purchase, buying before selling – and that’s just the first chapter.

I also noticed from the excerpt that the guide introduces you to successful eBay sellers, highlighting what they did right as well as the mistakes they made along the process – a huge benefit! There is a lot of information you can find online about selling on eBay, the nice thing about this guide is that it provides it to you all in one place.

What else does Entrepreneur.com offer? The site also provides start-up guides for those looking to start a small business in areas such as business services, computer services, food businesses, personal services and retail businesses. This section also offers the same features as the part-time business guides such as software, a product description, a Table of Contents and an excerpt of the first chapter.

While I was doing research for this post, I was surprised to learn that Entrepreneur.com also offers logo design through a partnership with LogoYes. We’ve had successful results with another logo company called Logoworks (Read our “An Evaluation of Logoworks” post for more details). However, LogoYes is cheaper and the turnaround seems faster. It’s a site that we’ll try and recommend to our clients if we are happy with the results.

I also saw that Entrepreneur.com had a “State Startup Series”. These are guides on starting a business in your state that contains information on your state’s demographic and economic data, tax strategies, employment information, safety and health laws and regulations, and more. This is another avenue to pursue if you’re looking to launch an Internet site as well as a brick and mortar location.

In addition, I noticed that Entrepreneur.com recently launched a new website for women entrepreneurs. The site features articles, columns, blogs, success stores, news and resources to help women succeed in small business. Check it out at www.womenentrepreneur.com.

Hopefully, these guides will be useful in your quest to obtain additional funds for your startup. If there are other beneficial resources that Entrepreneur.com offers that we didn’t see, please let us know!

By: Yasmine Mustafa

Does SEO work? See for yourself!

Raef Lee from WineInvestor.com was looking to increase traffic and build links to his site. With a partner and some online research, we at Team and a Dream completed an online marketing package with him and learned a lot about search engine optimization in the process. In fact, here are the results we obtained in the early stages:

0.00% - Change in Google PageRank. This measures the link popularity of a page. Note: This changes once a quarter. Update: Less than a year later, WineInvestor.com's PageRank increased to 4.  

165.06% - Increase in Alexa Rank. This measures the traffic of the site over a three month period. For more information, visit www.alexa.com. Update: A more reliable source of tracking traffic is now available at Compete.com.

15.38% - Increase in Incoming Links. (This is found by typing “link:www.yoursite.com” in your Google or Yahoo search box). This number is actually higher but all the links were not visible yet. 

20.00% - Increase in Monthly Traffic to Site. (This was determined using Google Analytics).

652.00% - Increase in traffic from search engines. (Also determined using Google Analytics).

104.00% - Increase in Google Indexed Pages. (Found by using a tool offered by many SEO sites - one site to try is www.selfseo.com).

1267.00% - Increase in Yahoo Indexed Pages. (Note: Use the same tool before and after to ensure accuracy).

500.00% - Increase in MSN Indexed Pages. 

Chapter 2: Four Steps to using Different Kinds of Cheap (revisited)

Previous blogbook entries:

    Announcing the Cheap Revolution Blogbook

    Chapter 1 - Introduction: Why we need a Revolution

A while ago I posted a blog entry on "Different Kinds of Cheap." This posting discussed the difference between articles/books/templates, open source and cheap software, freelance services and packaged business expertise as parts of the Cheap Revolution.  I also touched upon the role of specialists in working with a startup. 

In this post, I'd like to discuss how to decide if you should use a specialist or an offering from the Cheap Revolution.  Many clients that I work with have already made the choice of using a "Cheap" offering or a specialist and are in over their heads!  Here are some simple guidelines designed to help you avoid these costly mistakes.

Build a Web 2.0, Long-Tail, Social Media site for $12K?! Whats missing?

Guy Kawasaki tells us how he built his new site, Truemors, for just $12,107.09 in his recent blog post.  I am urging all of my clients to read this posting.  It is a great example of how you can quickly get a site up and running and begin testing a concept.  Guy also makes a great point at the end of creating traction that investors can see.  Finally, the blog entry is a great example of communicating a story coherently and quickly.  Guy is a master at this!

But here is my question for Guy...

How much would I have to pay you (Guy) to project manage the creation of a site for one of my clients? 

That means choosing the vendors, making decisions about UI/designs, etc., working out the details, testing the site, arguing with the programmers and deciding where to spend those precious dollars?  My guess is that your hourly rate would bump my $12K price tag a bit!

The formula I use is:

Executive level expertise (here Guy Kawasaki + legal specialist)
+
Templatized wisdom (here Wordpress)
+
Affordable muscle (here Logoworks, ElectricPulp)

My experience in helping to create these types of sites is that the $12K price tag for legal specialist and the 2nd two items is spot on. 

However, how much for seven weeks of Guy Kawasaki's time to be my General Contractor???  For Guy Kawasaki, his time is free (if you don't take opportunity cost into account).  If you can afford the time - and have the depth of industry knowledge that Guy has, you can follow this path as well.  If not, you probably need some professional help.

Thanks for the great post, Guy.  It goes a long way to outlining the value in The Cheap Revolution... let's just make sure that all the pieces are clearly laid out!

For more information on how to launch a business without spending too much money, check out http://www.lifehack.org/articles/management/how-to-launch-a-business-without-spending-a-dime.html

Natpal's Nate Stevens talks about recent venture raise

Earlier today I spoke with Nate Stevens, CEO of Natpal of some big news for this Philly-born Tech Startup.  Natpal helps drive leads and traffic to local businesses like restaurants, spas and opticians using their "track and enhance" online marketing methodology. 

I met Nate a couple of years back while acting as his advisor through the Wharton SBDC.   At that point, Nate had a dream and not much else.  He was assembling a team from the UPenn student body.  I remember talking to Nate about the best way to test out his idea ... get it out there and see what people say.   He listened and quickly signed up his first five clients.  When the clients suddenly started getting real traffic through Natpal's offering, they were more than willing to give testimonials on their results.

I was thrilled to learn about Natpal's raising $5 million in a combined equity/debt deal with Bessemer Venture Partners.  I asked Nate what the keys were to getting Natpal ready to raise money  and VCs ready to invest.  He rattled off three things right away.

1. They got good at the roadshow.  Communicating their vision effectively was an iterative process that yielded results once it was tuned
2. They reached critical mass. Once Natpal crossed the $1mm annual revenue mark with a lot of forward momentum, investors became interested
3. They spent time making sure they had good answers to the hard questions.  For Natpal that meant they had good answers to questions about margin, building their sales team and scaling the business

If you are interested in movers and shakers, keep an eye on Nate Stevens and Natpal.  If you are interested in driving traffic to your favorite local business, have them give Natpal a call.