The tech sector has always been hyper-competitive, and never has this been truer than in 2013. For the likes of Twitter, Samsung and Google, the harvest of 2013 was bountiful. However, from the perspective of Nokia, Microsoft, BlackBerry or the PC industry, it was a year to forget. Here’s a look back at 10 of the big events and trends that shaped the tech sector in 2013. 1. One billion smartphones sold this year – and counting The most important tech story of 2013 didn’t take place with a major product announcement or a Steve Jobs-style keynote speech. Instead, it took place without fanfare at an ordinary mobile phone retailer somewhere deep in suburbia. It was there that a consumer decided to purchase the one billionth smartphone to be sold during 2013. To put that number in perspective, it is projected that 227.3 million tablets shipped worldwide during 2013, 158 million television sets, 180.9 million portable PCs and 134.4 million desktop PCs. Meanwhile, figures from market analysts IDC show smartphones also outsold featurephones worldwide for the first time in history during the first quarter of 2013. What this means is that while smartphones now account for more than half of the 418.6 million mobile phones shipped worldwide each quarter, there are still millions of old-fashioned featurephones being sold each year. Especially in the low-end of the market and in emerging economies, that means there’s plenty of extra room for growth in the future – especially at the low-end of the market. Make no mistake about it. The smartphone industry is big – far bigger than the PC or TV business. And it’s only going to get bigger in 2014. 2. Google Android and Samsung: The juggernaut rolls on The biggest winners from the spectacular, ongoing growth of the smartphone market have been Samsung and Google. Last year, smartphones running Google Android outsold Apple. In 2013, that trend morphed into total industry domination. For example, of the 261.1 million smartphones shipped worldwide during the third quarter of 2013, 211.6 million or over 80% ran Google’s Android operating system. That compares to just 33.8 million iPhones, representing around 12.9% of the market, and a measly 3.6% for Windows Phone. Samsung managed to ship 72.4 million smartphones during the second quarter of 2013 alone, representing around 30.4% of the market – more than double Apple’s sales during the same period. Those device sales also mean increased component orders flowing through the various divisions of the South Korean tech conglomerate, which manufactures everything from semiconductors to batteries and smartphone displays. The growing strength of the South Korean electronics behemoth is demonstrated by its advertising and marketing budget, which has been estimated at around $US14 billion worldwide. To put that figure into perspective, as of 2011, North Korea’s entire national economy was estimated to stand at $US12.385 billion. 3. The PC industry bloodbath While Google and Samsung have had a stellar year in 2013, the same certainly can’t be said for the PC industry. The September quarter was the sixth consecutive quarter of falls, according to Gartner, with shipments falling to 80.2 million units for the quarter from 87.8 million a year earlier. Figures released by IDC forecast PC shipments for the full year to fall 9.7% in 2013. More alarmingly, it appears the emerging middle class in China, India and Brazil aren’t keen on buying computers, with total PC shipments in emerging markets expected to drop from 205.2 million to 185 million this year. Australia and New Zealand led the trend, with a massive 21% year-on-year fall in shipments for first quarter in Australia, along with a more astounding 27% fall in New Zealand. The implosion of the PC market was disastrous for a number of PC makers, including Dell, HP and Acer. In August, HP announced a major shake-up of its senior management team after announcing a large 15% year-on-year drop in net earnings and a 22% drop in revenue from consumer devices during its quarterly results. That same month, Dell reported a massive 72% year-on-year collapse in quarterly earnings, while a consortium including founder Michael Dell, Silver Lake Capital and Microsoft successfully fought off high-profile investor Carl Icahn’s bid for control of the company. And at Acer, founder Stan Shih made a surprise return as interim chairman and president, following the resignation of former chief executive JT Wang and president Jim Wong after the company recorded a record third-quarter loss. The resignations came after Acer announced its consolidated revenues for the third-quarter of 2013 fell 11.8% year-on-year to $US3.11 billion, resulting in an operating loss of $US86.6 million. 4. Surface falls flat On top of falling PC sales and 3.6% Windows Phone market share, the news was dire for Microsoft on another front in 2013. Late last year, Microsoft launched its Surface series of tablets as a first step towards making devices, with the company believed to have manufactured around six million units. The release of the Surface instantly made Microsoft a direct competitor to many of its already struggling PC partners, straining relations in the process. Fast forward to July of this year when Microsoft announced a massive $US900 million writedown on its inventory of unsold tablets. The writedown came less than a week after Microsoft announced a large price cut of $US150 for the struggling product line. Adding insult to injury, Microsoft also revealed it has spent $US898 million advertising the tablets, while only generating $US853 million in sales. According to many leading analysts, the company was believed to have sold just 1.7 million of the six million tablets it had built. To put those numbers in perspective, Apple sells around 14.6 million iPads each quarter, while Samsung sells around 8.8 million. 5. Steve Ballmer resigns During the 1990s, Microsoft was undeniably the 800-pound gorilla of the tech industry. Then, in January 2000, founder Bill Gates stood aside as chief executive, in favour of Steve Ballmer, in order to focus on his philanthropic efforts. Since then, the company has lost much of its former dynamism, and has failed to become the dominant player in a range of new technologies that have emerged since then, including search, tablets, smartphones or social media. In August last year, Vanity Fair magazine journalist Kurt Eichenwald ran a feature exploring why Microsoft fell behind its rivals. A management technique called stack ranking was almost universally blamed. “If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review,” a former software developer told Eichenwald. “It leads to employees focusing on competing with each other rather than competing with other companies.” Add the low market share for Windows Phone, poor sales of the Surface and the PC industry bloodbath, and it became clear something had to give at Microsoft. In July, the company announced a major management restructure, with the company’s strategy shifting to focus on “devices and services”. Then, just one month later, Ballmer resigned as chief executive, with stack ranking dumped as a management technique soon after. The Redmond, Washington-based tech giant is currently searching for his replacement. Story continues on page 2. Please click below. 6. Nokia sold for a song Soon after Ballmer’s resignation, the news was overshadowed by an even bigger story. In September, Microsoft announced it was buying Nokia’s smartphone and devices businesses for $US7.2 billion, with the Finnish telecommunications company retaining its Nokia-Siemens services network equipment business and the Nokia brand name. The deal came after Nokia announced its smartphone sales had slumped 27% year-on-year during the second quarter of 2013, with an overall loss of €115 million ($A190 million) for the quarter. The sales plunge was led by the company’s Windows Phone-based Lumia smartphone unit, where shipments fell 27% from 10.2 million units during the second quarter of 2012 to just 7.4 million for the same quarter in 2013. To put that number into perspective, it was a little over one-tenth the number of smartphones sold by Samsung during the same quarter. It was an inglorious end to a company that absolutely dominated the mobile industry through the 1990s and 2000s. As recently as 2010, when Apple sold 47 million smartphones, Nokia managed to sell 104 million. According to prominent industry analysts, such as former Nokia executive Tomi Ahonen, the fateful moment came in February 2011, when then chief executive Stephen Elop made the decision to switch its smartphones to the Windows Phone operating system. Soon after, a leaked internal letter from Elop known as the “burning platform” memo likened the company’s situation in the mobile phone market to a person standing on a burning oil platform. After the takeover was announced, Elop was named as one of the top contenders for the position of Microsoft chief executive. 7. BlackBerry’s failed comeback and takeover attempt It wasn’t just Nokia that had a tough time in the smartphone market at the hands of Samsung and Google. In January, BlackBerry launched its new, all-touch BlackBerry 10 smartphone operating system. The platform, originally scheduled for late 2011, had been delayed by a year, preventing the company launching a flagship phone in 2012. The Australian launch for the first smartphone to run the new platform, the Z10, came in March at a gala event in Sydney hosted by Adam Spencer. A second device using a traditional BlackBerry keyboard, called the Q10, came soon after. While the reviews were generally positive, the new devices failed to be the big comeback success the company’s then-chief executive, Thorsten Heins, had hoped for. By August, the company formed a special five-member panel to examine takeover options after director and Canadian investment guru Prem Watsa quit the board. In its September quarter results, the full carnage was laid bare. The Canadian smartphone maker reported just $US1.6 billion in revenues for the quarter, down 45% year-on-year and 49% quarter-on-quarter. The company also revealed it sold just 3.7 million smartphones for the quarter – and less than half of those ran BlackBerry 10. Total losses came in at $US965 million, including a massive $US934 million inventory writedown against unsold stock of the company’s Z10 smartphone. The company announced more than 4500 staff layoffs, representing nearly 40% of its global workforce, while Heins bought a new private jet. Meanwhile, the company’s rollout of its Messenger app for Android and iOS was frozen due to technical issues with its release. In early November, with banks uncertain of the company’s long-term future, Watsa failed to raise the requisite $4.7 billion for a buyout, instead lending the company $US1 billion. As part of the deal, Heins stood aside as chief executive, replaced by former Sybase chief executive John Chen, with Watsa rejoining the board. Heins received a $US22 million golden parachute for his efforts, significantly less than the $US55.6 million he would have received had the sale gone through. 8. The Twitter IPO Last year, Facebook’s disastrous IPO ended in tears – followed by lawsuits. Thankfully, the outcome was not repeated when its social media rival, Twitter, listed on the New York Stock Exchange in November. After opening at $US26 per share, the company’s share price surged 72.69% in its first trading session. It closed at $US44.90 per share, before dropping slightly to $US44.44 in after-hours trading. Making the result even more amazing was the state of its balance sheet. While the tech giant has revenues of $US534.46 million and around 230 million users worldwide, it has never posted a profit. Despite this, the company now has a market capitalisation north of $US20 billion, with chief executive Dick Costolo claiming the company’s long-term investment strategy has prevented it from chasing profits in the short term. 9. iOS7, iPhones and iPads For Apple, 2013 was a solid if somewhat unspectacular year. In June, the company released a redesigned version of its smartphone and mobile operating system, iOS7, alongside a new version of its Mac OS X desktop operating system, known as Mavericks. It was the year that Apple finally unveiled a low-cost version of its iPhone, known as the iPhone 5c, alongside a new 64-bit flagship smartphone called the iPhone 5s, complete with a 64-bit processor and a fingerprint sensor. Then, in October, the company unveiled a lighter version of its iPad, known as the iPad Air. None of the products had the industry-shaking impact of the unveiling of the Macintosh, iPod, iPhone or iPad. That said, with billions in profits each quarter, a solid second place in the smartphone market and the world’s biggest selling tablet, solid and unspectacular for Apple is better than most companies could dream of. 10. Xbox One and PlayStation 4 launch Last, but certainly not least for gamers, 2013 marked the introduction of next generation games consoles from both Sony and Microsoft. Coming a year after Nintendo launched its Wii U system, Sony announced one million first-day sales of its PlayStation 4 system, but the launch was marred by a number of angry consumers taking to social media to complain about non-functional systems. Sony’s first-day sales were soon matched by the first-day sales of Microsoft’s new Xbox One system. So how will the two new devices perform over the long term? We’ll have to wait until next year to find out! This story first appeared on SmartCompany.
As Taskmaster readers will know, earlier this week your humble correspondent went for a sales meeting at a busy suburban shopping centre. After visiting one customer, Old Taskmaster trundled through the now narrow corridors to a second store. Slowly. The once wide corridors have been narrowed down by a series of mobile phone store kiosks, meaning a single elderly gentleman with a walking stick and five-year-old granddaughter in tow can now single-handedly slow a whole row of shoppers to a crawl. Seriously, centre management, it might boost revenue per square metre, but it’s a practice that really annoys your shoppers! Anyway, the second sales call was a franchisee of a national chain. During a discussion about the newest widget models from Taskmaster Enterprises, they revealed their biggest business regret. Apparently, part of their franchise agreement states that they have an exclusive ‘territory’ in terms of the location of physical stores. Unfortunately for them, any revenues from sales through the chain’s website or its mobile app go to the franchisor, even if the customer is within the same suburb as an existing store. So if a customer visits their local store on Sunday, looks at an item, and then goes home before ordering it online a couple of days later, the value of that sale goes entirely to the franchisor. As you might imagine, this creates all manner of perverse incentives. For example, the franchisee views the website as a competitor with the same merchandise rather than an asset for their business. Why encourage your loyal customers to purchase their goods from a competitor? As a result, since the company’s Twitter and Facebook accounts are geared to get people to buy online rather than in store, what incentive is there for the sales staff to promote them? As a result, Old Taskmaster was amused to note the sales staff consistently “forget” to ask the customers to follow the chain on Twitter and Facebook – even when the owner or manager is within earshot. The franchisee’s big regret with all of this is to fail to ask the question of how online sales revenues (or profits) are distributed. After all, who wants a franchisor who feels like a rival rather than a partner? Well, Old Taskmaster says this: If you’re looking to become a franchisee, make sure you ask about how online revenues are distributed. It’s always better to ask ahead of time than to find yourself in a business dispute. As for franchisors, be aware that the way you treat your online sales and web presence can create perverse incentives for your franchisees. If a sale can be traced to near a physical franchisee’s store, consider some sort of profit sharing agreement with your franchisees. Get it done – today.
What kind of offers work on social media? Giveaways on Twitter? Competitions on Facebook? I'm not quite sure how to approach this.
Twitter listed on the New York Stock Exchange overnight, with shares in the social networking giant immediately surging by 80.7%. The company has lost over $US440 million since 2010, but claims its user base of 232 million has put it on track to reach profitability through sponsored tweets. “We have a lot of work ahead of us. All the capital raised by this is going into the company,” chief executive Dick Costollo says. “It’s all about making it very simple and easy for new users to come to the platform ... we all have examples of why this service can be useful to everyone on the planet.” ABS September unemployment rate revised upwards The official unemployment rate for September has been revised upwards slightly to 5.7%, despite the participation rate standing at a seven-year low. The participation rate was also revised down from 64.9% to 64.8%, with many job seekers giving up looking for work. Meanwhile, youth unemployment fell 0.5% during the month, but still remains at a relatively high 17.1%. Hunt says carbon tax repeal will immediately cut power bills Environment Minister Greg Hunt has claimed repealing the carbon tax will lead to an immediate reduction in power bills. “It should happen immediately,” Hunt says. “We'll look through our discussions with the electricity suppliers, but the statement from the Electricity Supply Association yesterday was clear and categorical, so I think their words are the strongest words.” Hunt’s comments come despite a warning from the Business Council of Australia, which says any price cut will take time to filter through to consumers. Overnight The Dow Jones Industrial Average is down 0.95% to 15596.74. The Aussie dollar is down to US94.49 cents.
Emerging tech companies may be high risk but when they take off, every nervous moment was worth it. Jonathan Teo knows this firsthand, having been part of the venture capital teams that backed Twitter, Instagram and a host of other tech start-ups before they really began to get noticed. Teo says early stage investment is primarily about relationships, and both the investor and entrepreneur need to be committed to the long haul. “When I’m evaluating a company, it’s far more useful and efficient to start to engage with what’s the vision and to work out if it’s aligned with how I see the world. I ask is this entrepreneur someone who is able to execute on this idea, and is the approach they’re taking the right one,” he says. In the video below, Teo tells StartupSmart why investing in start-ups is worth the risk: In Melbourne for a series of events with investor network Investor Org, Teo told StartupSmart his focus on identifying and exploring the right metrics, and developing relationships has steered his investment decisions, and success, so far. “What I look for are entrepreneurs who really understand a human need, and are able to create a product that can catalyse that and actually fulfil it,” Teo says. “There is a lot of noise in the start-up industry so it’s all about execution. The key determinant of success at the really early stage is survivability. As an investor, that’s gleaned from how they execute each task and their personal resilience.” Teo says he’s especially focused on engagement metrics when assessing start-up ideas, adding these metrics will be different depending on the start-ups goals and growth stage. “Everyone looks at traction, but the big investment question is about which traction are they looking at? Is this start-up’s strength to be spotted in about engagement, growth or even user numbers? Traction takes on different meanings for different investors at each stage.” Knowing exactly what you’re going to build can be a red flag for investors Teo adds the power and value of entrepreneurs is their ideas, commitment and drive, but they need to be open to constantly evolving their ideas to fit the market. “You need to have a big visionary idea around what the world needs and ideas about a product to fit that. But I don’t think entrepreneurs actually know what the best way is to get there, as so much of it is based on the iterative process of what resonates with users.” He adds company growth journeys, market and environment factors are too hard to predict, so founders need to stay focused on the idea they’re trying to solve and building the right foundations for any future changes they’ll need to make. Start-ups should focus on growth to boost capital raising opportunities He says while some start-ups value can come from engagement rather than user numbers, all start-ups should aim to grow in order to generate greater interest in their start-up. “As an investor, you want to care about products that have active network effects and growth, with a sustained engagement models,” Teo says. “Growth itself is something everyone pays up for as the valuation of a company grows, so every start-up needs to be concerned about growth because it’s what drives leverage in terms of raising capital and hiring people. He adds start-ups with strong user engagement metrics and potential for network effect growth can approach investors early, as smart tech investors want to get in on the action before a start-up gets real traction. “Once a start-up has traction it’s almost too late from an investment stand-point. That’s only because by that time it’s obvious to other investors that the start-up is doing well so valuations creep up,” Teo says. “Private valuations are a lagging indicator of the public market’s interest.”
Customer service is instrumental in growing a company, especially for young start-ups. Fiona Adler, founder of online review site WOMO, told StartupSmart innovative start-ups can face the biggest challenges in closing sales and keeping their customers happy. “If the start-up is a brand new concept, there is a lot more indecision and perhaps also people who don’t really understand what’s being offered, which means the business owners need to do a lot of education,” Adler says. Work closely with the indecisive customer Customers who show interest but aren’t motivated are good ones to focus on if you have limited time. According to Adler, they need to be talked the whole way through the process. “This customer needs to be led to a decision and handheld the whole way. You will have to be the leader in this relationship, but if you can earn their trust, they can be very valuable,” Adler says. “Talk them through their decision-making process and find out if there were similar decisions they made in the past that either worked out well, or that they now regret. Be compassionate and remind them what the lack of making a decision can cost them. Demonstrate your trustworthiness with credentials, examples of past work, or customer reviews.” Learn to spot the difference between an indecisive customer and a tyre kicker When you’re dealing with a customer who keeps returning with questions or concerns, you need to assess if it’s because they’re indecisive or if it’s another issue. “Time spent with these individuals is like throwing money (your time) away. Be ready with solid probing questions, especially early in the process, to help you qualify if they will be an actual buyer. This will help weed out the time-waster before you spend hours on follow up and research,” Adler says. Pick your moment and be engaging to close a sale with the distracted customer Adler says the distracting customer can be spotted easily, their smart-phone in hand and a million things to do. The key to closing these sales is realising you’re competing with everything from their family to Twitter for attention. “Speak to them about the various positive features of the products or service, so that they develop a sense of interest and urgency. Strike up a conversation with them, but make sure that you listen to what they actually want – and don’t waste their time. If you can quickly grasp their needs, queries, aspirations and any concerns about what you offer, you can successfully service them – despite having only part of their attention,” Adler says. Handling the know-it-all customer While an informed customer can be great, how they wield that information can create challenges for founders, especially if they’ve misunderstood your offering or their problem. “Rather than spending time answering questions, ask questions. The big problem with this customer is that they’re not very receptive to what you might have to say. In fact, often what they’re looking for is your respect – so give it to them,” Adler says. “Use this rapport and ego-booster to introduce new ideas to them and convince them about your product or service.” Give grumpy customers the time to change their mind Any business will have its share of customers who recognise you offer a solution but may be already pessimistic about your capacity to help. “The first thing to remember is to stay calm and listen to their concerns. Ask questions so they know that you are listening and are genuinely focused on solving their problem,” Adler says. “Make the decision process easy for them by highlighting the benefits of the product or service. At the same time, give them plenty of time and space to express themselves and don’t make them feel pressured into doing something.”
There’s plenty of conversation happening on Twitter. So much that it can be hard to get your words noticed. That’s where hashtags can help. If you use the right hashtag that others are following, you can reach them without them being one of your followers. And as an entrepreneur, there’s a few you should consider using. Social Caffeine has compiled this infographic that lists the best hashtags for entrepreneurs.
At a board meeting this morning, I couldn't help reflecting on our awesome group. A good start-up board helps in many ways but can hinder in others. I've probably experienced the best and worst of what they can do. Creating a board is serious and should be approached with caution. When I started Posse I didn't know much about company boards. A family lawyer helped establish our companies. He suggested I set up a board and try to find some impressive-sounding people to join it. His objective was to make the 'team' list in my fundraising presentation look more appealing to prospective investors. So off I went on a mission to meet big name folks who'd look good on my deck. It didn't seem to matter how many, the more the better. Within a month I'd assembled a board of eight, including myself, and we called a meeting. A friend lent me his board room, a big office in the city. I expected a casual, friendly affair where we'd chat about business and strategy and they'd agree to introduce me to some potential investors. I was in for a surprise. First of all they wanted to know everything. How much money did we have in the bank? What were the liabilities, the budget, how many people had visited the site last week, last month, how long did they stay for, how much money had we made? And so on. I wasn't prepared and it was overwhelming. After a couple of hours of grilling, I gained a sense of what a board expects from a founder. I'd run my own business for eight years and didn't report to anyone. In time I came to appreciate the rigour of reporting. For the next meeting, I made sure I sent out the cash-flow report, budget, metrics, and a presentation outlining what I wanted to talk about – all in advance of the meeting. Six months in, our group hit its first challenge. The business had started well; we'd raised some money and gained traction. Everyone became excited; then, out of the blue, one director presented us with a proposal involving a full-time job and a lot of equity. The group wasn't sure how to react. He left the room while we discussed his proposal, and when we rejected it he was hurt and embarrassed. He quit the board and sent us a huge invoice for his time, which we spent a year fighting and eventually settled. Some members of our original board were excellent and are still active in various capacities today. Others drifted off: they had an expectation that we'd be a huge hit within months and when hard work set in they disappeared. Some stuck around and were destructive when things didn't go their way. I learnt the hard way how bad things become when you have the wrong board. I've also learnt how powerful it can be to have the right board behind you. Here are five tips for start-up founders looking to build and run an effective board of directors. 1. Set expectations up front It's easy to procrastinate about finalising deals with advisors and directors. Everyone is there to be helpful, and at the start it doesn't seem worth negotiating to pay them a share of nothing. The problems kick in after few months when things start going well, and you realise you and they have different expectations about payment. Most start-up directors will expect to receive equity rather than cash, and in my experience the standard rate is 0.5% to 2% vesting over two years. You must determine what you expect of the director. How will they help with fundraising, strategy, introductions and the like? If appropriate, you might want to agree on how much time they'll commit to your business – although when you have the right people on-board it's likely they'll be bugging you with ideas and suggestions for how they can help. 2. Be transparent and organised Your board should be the one group of people with whom you can be completely transparent. It's their job to help you work through challenges; so they must understand those challenges if they're going to add value. I remember at one of the first meetings of our new board, I announced that the product we'd created wouldn't scale. We had to go back to the drawing board and try something else before we ran out of money. No one flinched. We put a process in place that would devise a better strategy. I've also found that board meetings are much more effective when I've put time into thinking through the agenda and have written a presentation to talk through. 3. Make sure your directors have the right experience My original board sounded impressive, but many were impressive in the wrong industries. They had no experience of the challenges of a start-up like ours. So I received bad advice which led us to hire the wrong team and spend too much too quickly. A couple of our early directors had never used Facebook or Twitter and wouldn't even join Posse. Everyone on our current board has incredible expertise in different areas of early stage companies in our space. They know what other businesses are doing to grow, engage users, monetize, save costs and much more. Almost every day, one emails me with an idea or opportunity that I wouldn't have thought of. And through them, we can access almost anyone we'd need to help our business anywhere in the world. 4. Keep the numbers small We have four directors on our current board, including me, and one regular observer who acts like a director except he doesn't vote. It's a tight group: everyone knows the others' strengths; everyone is committed to making Posse a hit. I've heard that the reason to keep boards small is to ensure that as a founder you won't be outvoted. I suggest that if you even think this, you either have the wrong board or you're the wrong founder. For me, the benefit of having a small board is that I can spend time with each person regularly. Everyone is in touch with what's happening and can contribute. 5. Make sure you like and trust people before inviting them to join Directors have much more influence than I originally thought. They decide who leads the company, what deals to do and when to exit, so you must make sure you all share the same vision upfront. You must know they'll do the right thing, and that they'll stick around and support you when you hit tough times. I've heard many stories from founders whose advisors and directors vanished when it looked like the company might fail. We've had hard times and I can honestly say that our group pulls together and digs in, no matter what the circumstances. At my first board meeting I learned what directors expect from a founder. It took me quite a while to work out what founders should expect from their directors. Our board helps me refine our strategy and operation plans; they're constantly suggesting new ideas and making introductions; they've been involved in fundraising; they hold me to account and oversee the governance of the company. The names on our board are impressive but that's not why they're there. I've learned that a top notch board of great people with relevant experience and a shared vision is a wonderful advantage and has made my founder's journey easier and more fun.
Big ideas, big markets and billion dollar problem areas were the key topics at this week’s edition of the Next start-up development program. Entrepreneur and Next mentor Nic Hodges told StartupSmart Australian start-ups seeking investment needed to work out if they could create a business that would be pulling in $100 million in revenue by their third year. “If you’re after investment, either here or especially in the United States, you need to be talking about billion dollar markets,” Hodges says. “I think the big question for Australian start-ups is to aim for $100 million by year three because it’s an achievable but also global goal.” While the big goals can sound intimidating, Hodges says the key thing founders need to know is if they’re creating a solution for a real problem in a big enough market. “You need to discover a problem exists at a high enough frequency and level for your customers, which you can build a product to solve,” Hodges says. “At the very early stages, understanding how you’re going to make revenue is an optimisation problem, but knowing if you‘ll make revenue in a big enough market is the major one.” Using multiple sources to pull data from to estimate the size of your market is critical, and it is the place where many start-ups falter. “It’s easy to get carried away with numbers that aren’t validated or accurate. I see a lot of pitches where someone will say the global market is so many billion, and you do the quick mental maths and realise that they’re off by an order of magnitude,” Hodges says. He adds that it’s very unlikely your product is targeted at a completely new market, so it’s a question of understanding which market you’ll be looking to segment. “Most people who think they are creating a new market are actually re-segmenting a current one, and that’s where today’s most interesting start-ups are operating. Very rarely are you convincing people to pay you money that wasn’t already allocated elsewhere,” Hodges says. Hodges lists Uber cars, App.io and Twitter as among the start-ups chipping away at massive markets successfully. “They’re new products, but they’re not generating revenue that didn’t exist before, they’re taking a slice of revenue that was going elsewhere before,” Hodges says. “Twitter sees themselves as re-segmenting the TV ad business, and going after that revenue. They’re making a decent chunk from advertising, but it’s not new money.” Given the fact start-ups will inevitably be competing with others for revenue, Hodges says mastering how to validate an idea and understand a problem is key. “There is a big difference between asking someone if something sounds like a cool idea and finding out if they’d realise they needed your product naturally,” Hodges says. “If you ask the questions in the right way, then what you can really uncover is the problem.” Several of the 27 start-ups involved in the program have already pivoted from their original idea. “Already after the first week we’ve had the teams come back and realise what they were planning isn’t what was actually wanted by their ideal customers. But most also discovered a real need they could focus on,” Hodges says.
More and more businesses rely on social media to advertise their products and services. Many now use their employees to promote their businesses through their blogs, Twitter accounts, LinkedIn and on Facebook. The pluses to this are great as it is essentially free advertising, having employees engage on another level with clients and to have employees more actively and directly involved in the promotion of the business. But beware: there are risks that go with the benefits. 1. Plus: Social Media can be inexpensive effective advertising Employees are good ambassadors for promoting your business. They can give your business both personality and a human face. Businesses have been using employees more and more as a means of promoting and advertising their products. They primarily do this through their personal social media accounts such as Facebook and LinkedIn. It has proven to have some great success and the benefits can be enormous. But you need to be aware of the potential problems with this. 2. Minus: Impact of social media personal accounts For the benefits that businesses are seeing with their employees promoting the company through their social media accounts and interacting with clients, there are also potential negatives: Time wasted on social media for non-work, non-productive activity Inappropriate use of social media for personal negative comments such as defamation, harassment, etc causing reputational impact as well as other legal implications for the company. Management of social media risks is becoming an increasingly critical area to maintain control over the numerous consequences that arise from the unrestricted and undefined use of social media by employees. But this is not the only major consideration that businesses have to deal with. It can get worse. 3. Problem: What happens when the employee leaves? What do you do if your employee who is leaving your company has LinkedIn, Twitter and other personal social media accounts which they use to communicate with clients? Who actually owns the account and the correspondence on the employee’s personal social media account? These social media accounts often contain business information and client contacts. This is an increasing area of litigation with it being more difficult as the regulations have not yet caught up. In addition, there has been very little to no judicial commentary in Australia regarding the ownership of social media accounts. There has always been clear law that client lists belong to employers when their employees leave the company but there is no clear direction of precedent cases either in Australia or other countries to follow. It is now clearly under the microscope, with companies attempting to terminate employees for inappropriate comments about the company on social media but there has been no clear direction as yet and each has been determined on a case-by-case basis involving other external factors which sets no clear guidelines. So how can businesses minimize their risk? Here is what businesses can do: Ensure you have a social media policy for work. Otherwise it’s difficult to show its use at work/during work hours (even excessive) as grounds for dismissal. The social media policy should define the scope of “acceptable use” and ownership of content. This means employers specify that any social media used during hours of or in the course of employment is owned by the employer and indicate that social media accounts are given up or terminated when the employee leaves the business. Ensure all your employees are aware of company policy in relation to social media and that they are enforced within the company. And keep up with the latest developments - they, like social media, are a moving feast!
Social networking giant Twitter has filed papers with the US Securities and Exchanges Commission ahead of an IPO in which it seeks to raise $US1 billion. The company revealed that it had 218 million users as of June 30, compared to around 1.2 billion for Facebook and 240 million for LinkedIn. Twitter also revealed it lost $US69.3 million during the first half of 2013, compared to a $US49.1 million loss for the same time last year, but revenues grew to $US254 million from $US122 million. Turnbull names Switkowski as new NBN chairman Communications Minister Malcolm Turnbull has named former Telstra and Optus chief executive Ziggy Switkowski as the chairman of NBN Co. The German-born nuclear physicist replaces current NBN chairwoman Siobhan McKenna, while also temporarily replacing Mike Quigley as chief executive until a full-time replacement is appointed. “In appointing Dr Switkowski to the board as chairman, we're appointing one of the most experienced telecom executives in Australia ... someone who's been the CEO of not just Telstra but Optus as well, a very distinguished company director and chairman," Turnbull says. Retailers renew calls for GST threshold cut as online shopping figures are released The Australian Bureau of Statistics has released figures showing consumers spent more than $7.6 billion on online retailers on purchases below the $1000 GST threshold, prompting calls to remove the low-value threshold. Australian Retailers Association executive director Russell Zimmerman says the higher than expected sales point to an uneven playing field in the sector between local retailers and overseas-based online retailers. “The concern isn't that people are spending money online – either locally or overseas. The concern is that it's not a level-playing field,” Zimmerman says. “We believe that the firm of online [shopping] generally will grow, and as that figure grows, there will be a bigger loss of income to the states and territories if they don't do something about the low-value threshold.” Overnight The Dow Jones Industrial Average is down .9% to 14996.48. The Aussie dollar is at US93.96 cents.
Australian start-ups are increasingly attractive to international investors as the technology and start-up sector evolves, especially if they’re leveraging their geographical location and have solid plans to go global, says internationally renowned venture capital investor Bill Tai. Tai is in Australia as part of the OzAPP roadshow, giving a series of talks about big data and entrepreneurialism around the country. He told StartupSmart it mattered less and less where tech start-ups were based. “In the past, it wasn’t really viable to have start-ups that were competitive with those in the USA because the kind of start-ups that are happening generally speaking today are different,” Tai says. The first few overlapping waves of start-ups (from the late 70s to the early 90s, and the late 80s the late 90s) usually required more than $50 million in start-up funding and required larger teams of specialised skills. “These waves laid the foundation for the kind of start-ups that are possible now, because now everything start-up is essentially a user interface (UI) for data from the cloud. So LinkedIn, Facebook, Twitter, they’re just UIs. And you can start UI companies anywhere,” Tai says. “So now the big question is can you scale it into a big company or not.” Two of Tai’s Australian investments have been design software Canva and customisable online fashion site Shoes of Prey. Tai says both jumped out as unique, well-timed ideas with global potential. “Because the market here is small, the start-up companies that succeed will have to be players in the broader English language markets,” he says. “Shoes of Prey was amazing because the people were fantastic and had a good heritage as they had been very successful at what they had done in the past and had a very unique business model at the time and proof that they could execute because they had already developed revenue without any venture money,” Tai says, adding Shoes of Prey had a competitive advantage over US-based start-ups with similar ideas given Australia’s proximity to China. “Shoes of Prey is in a geographic position to leverage heavy manufacturing assets in China on the same timezone. If you tried to execute the same business in the USA, and had your team having to work in the middle of night, it’s just not workable so they had a natural competitive advantage,” Tai says. Tai says his questions for Shoes of Prey before signing the cheque were about how much venture capital they would need to scale to a point where they would become self-sufficient. Tai says both Shoes of Prey and Canva stood out because both founder teams had business experience. “I’ve funded many, many extraordinarily smart entrepreneurs in the United States with basically valuable outcomes that have never made a penny before, but these two had built a business and knew what it meant,” Tai says. He adds the educational system, well developed gross domestic product, a high standard of living, and mobile phone penetration means Australia is a good test market for software and tech start-ups. “There is proof you can scale companies from Australia, such as Atlassian, which is a world-class leader in its space but started here,” Tai says. “Now we’re in a world where if the cloud infrastructure really becomes commoditised, then it really is possible for Australian start-ups.” Given the need for Australian start-ups to go global from day one, Tai says aspiring founders should stop wasting their time not going for big markets. “It takes the same amount of time to build an app for five family members as it does to build one that will serve a billion people,” Tai says. “Because if it works you’ll have a shot at a really big outcome rather than a huge success in a small market, so I’d encourage Australian start-ups to think big.”
When it comes to business advice, embattled smartphone maker BlackBerry is like the Kevin Rudd of smartphones: study it closely and then do the opposite. Their latest fiasco? This past weekend, the company was going to launch a version of its BlackBerry Messenger app for Android and iPhone. This launch is crucial for the company. If their mobile phone business goes under, at least they’ll have a cross-platform messaging app and some services to sell. Sure, the company probably should have released it six years ago. Still, better late than never. Now, if you had a crucial product launch coming up, what sort of press release would you issue the day before? If you’re BlackBerry, the answer is obvious. You pre-announce nearly $US1 billion in losses for the current quarter, along with the fact you’re slashing 4500 jobs or 40% of your global workforce. You know, just to make your consumers feel secure. Worse, most of those losses came from write-downs on unsold inventory of their touchscreen-based ‘comeback’ product, the Z10 smartphone. Basically, if this company is going to lose a billion bucks, this is possibly the worst way it could have happened. Now, before anyone accuses Old Taskmaster of being a BlackBerry hater, read this. Your humble correspondent is firmly of the opinion that the Z10 could have been a success – if the phone was marketed properly. It wasn’t. Or if BlackBerry communicated the fact it used a new operating system. It didn’t. And now there’s a $US1 billion worth of unsold Z10 smartphones sitting in a warehouse somewhere, gathering dust and getting ready to be dumped in a New Mexico landfill. This is on top of the existing uncertainty over the company’s future ownership. Apparently, co-founder Mike Lazaridis is now circling like a shark, and so is Canadian investment guru Prem Watsa. But whether they want the company whole or just pieces of it is anyone’s guess at this point. Well, a day after all this bad news, with no clear air, the big launch weekend comes. The Android version is supposed to be launched on the Saturday, and the iPhone version on the Sunday. There’s an official BlackBerry Twitter account to let users know when the app is available in their country. Well, Saturday comes around and the app launches in a few different countries – for iPhone rather than Android. It launches in three or four countries. Then the notices stop, with no warning or explanation. Several hours go by. Finally, there’s a message from the official Twitter feed: “Pausing #BBM4All rollout to fix issues caused by unreleased BBM for Android app.” The company also issues a statement explaining that issues caused by the Android version of the app are to blame. A few more hours go by, then this: “We will provide you with an update on timing as soon as we can. Teams are working non-stop.” From then on, it’s been radio silence. Now, anyone who’s dealt with a big tech product launch knows anything that can go wrong will. Which is why companies like Google have, in the past, made new product launches invitation only. Alternatively, instead of staggering out a launch over a weekend, they’ve staggered it over a week or a month. That way, you slowly build up the traffic on your servers instead of having a sudden load of people trying to access your service all at once. Likewise, make sure you have clear air in the media before a major product launch. There is a time and a place to announce bad news – and the day before a major product launch is never that time or that place. In short, if you want your business to succeed, look at what BlackBerry have done lately – and do the opposite! Get it done – today!
When push comes to shove, as an entrepreneur you’re going to be selling something online eventually. The good news is you don’t need to become a jerk. 1. Firstly, forget social media! For selling, social media is going to disappoint you. Social media is ‘social’ – it allows you to humanise your business and chat amongst your friends and prospective customers. It’s great for nurturing relationships, building trust and growing your audience, which are definitely important. But it won’t drive sales. It’s not the right place. It’s like trying to close a business deal at a birthday party – it’s nearly always inappropriate. You want to close deals in a business setting. Email. 2. Email marketing is where the action is No joke, when it comes to making sales, email is at least 20 times more effective than Twitter, Facebook and LinkedIn combined. You’re building your permission email list aren’t you? But the big question that remains is how do you sell online, without being an obnoxious jerk? Here’s how. 3. Keep your same voice Your tribe of followers will be familiar with your tone of voice and personality. If you suddenly go from Mr Friendly Trusted Advisor to Obnoxious Slimy Salesman, you’ll lose your audience in droves. Unfortunately, too many people suffer from a personality transplant when they decide to sell. They start pressuring you with hard-sell techniques. Lots of CAPITALS, exclamation marks, hype-filled headlines, yellow highlighter and red font. The transformation is frightening! 4. Remember you’ll be back tomorrow I understand why some people become sleazy and pushy. Historically marketers have only had one chance to close (think infomercials, advertorials and long copy sales websites) so they crank up the pressure to buy and make you feel guilty or ashamed if you don’t. They’ll never see you again, so they don’t care. But you’re in a different boat. You have a relationship with your audience, and you’ll be back. 5. Be yourself Scarcity, urgency, a value proposition and honest promises are still critical ingredients to a successful online sale, but you don’t need to be slimy. Follow the same principles, but just be yourself and ease up on the pressure, okay? Definitely explain the value, tell us how long your offer lasts, the reasons why we should buy it, share your testimonials and your guarantee, but do it like you are telling your best friend, not a stranger you’ll never see again. Honestly. 6. Serve first, sell next To succeed online, you need to genuinely put the interests of your audience ahead of your own agenda. The key is relentless generosity. If you haven’t built up trust by serving your tribe with loads of great value, you cannot expect to extract any value for yourself. Not only is it greedy to expect it, but it is a damaging exercise. People who feel that their trust has been violated won’t be back. Ever. 7. Give freely nine times out of 10 and sell once Remember when you’re selling, it’s really not much different to usual, except your customer is giving you money as well as their attention. The only real difference is you need to deliver significantly more value when you want people to type in their credit card number! 8. Selling online shouldn’t strike fear into your soul What I find is that we often underestimate people’s willingness to pay a fair price for something of value from someone we trust. And your tribe should trust you, so give it a go! To explore these ideas further, feel free to download the free Content Marketing Promotion Template to help you share the love with your tribe.
The Melbourne and Sydney start-up communities have united to fund the creation of a full-size car made entirely of Lego by a Romanian teenage hardware hacker. The “super awesome micro project” was launched in April last year, after the Romanian entrepreneur Raul Oaida reached out to Melbourne-based serial entrepreneur Steve Sammartino, who raised tens of thousands of dollars from 40 entrepreneurs via Twitter to support the project. Sammartino told StartupSmart the project was to show the world what was possible in the era of digital entrepreneurialism. “This project is so we show the world the Australian start-up industry can match it with anyone,” Sammartino says. “We can go beyond the keyboard, we can make real things via the internet and opportunities that didn’t exist before.” They’re currently seeking a “Silk Road Patron” to chip in $25,000 to fly Oaida and the vehicle from Deva, a small town in Romania, to Australia for its international launch via YouTube. “Then we’ll adopt Raul and never let him go back, because we need him in our start-up culture. He’s a hardware hacker, and that’s where innovation is headed, hardware via software,” Sammartino says. The car, which Oaida and Sammartino estimates weighs just over 500kg, can carry two people at between 40km/h and 70km/h. The engine is apparently air-powered. Sammartino and Oaida have worked together on earlier projects, including sending a toy Lego space shuttle high into the atmosphere using a helium balloon. “He found me. He’s a social media stalker, and he was reading my blog and we connected that way,” Sammartino says, explaining Oaida wanted to be connected to an investor in Sammartino’s network. “He’d built a rocket, and wanted someone to fund his space scientific project. But I explained I can’t just connect some kid from the internet if I didn’t know he could actually do it.” The super awesome micro project was conceived by Sammartino and Oaida. “He wanted to a build a normal car from his village, but I said he could do better than that to show off his skills, so we hatched this idea,” Sammartino says. Describing the project as running late and over budget, Sammartino says he’s spent 50 times more than he planned to, and didn’t want to crowdsource the final transit amount from the community. “I can’t keep asking people for favours as this has been longer and more expensive than we’d planned,” Sammartino says. “We need a Silk Road Patron to pay to get him here. Historically, bringing things from lands afar has taken humans to the next level. It’s about sharing information and learnings. It was spices and tea, but now it’s technology.” Describing the patron as a modern-day Medici, Sammartino says it’s likely this person will come from the start-up community. “This is a gift to the start-up community. When people all over the world can see the car, and the kid, and get amazed by the video, everyone can know the Australian scene is amazing.”
Leading US investor Jonathan Teo will visit Melbourne next month to meet local start-ups and entrepreneurs and speak at an event hosted by investor group Investors’ Org. Adrian Stone, chairman of Investors’ Org, which organised Teo’s visit, said in a statement the group was “super excited” that Teo was visiting and checking out Melbourne’s start-up sector. “In recent years Melbourne has been home to a number of very successful start-ups, including 99designs, Kaggle and Catch of the Day, and RetailMeNot,” Stone says. RetailMeNot recently listed on the Nasdaq stock exchange in the US. Teo is the managing director of venture capital firm General Catalyst Partners and was involved with Twitter, which is estimated to be worth around $11 billion, Instagram, which was sold to Facebook for $1 billion and Snapchat, a photo-sharing platform valued at $800 million. While in Melbourne, Teo is also due to meet government innovation officials. Teo has a Bachelor of Science in electrical engineering from Sydney University, a Masters from Stanford University in the US and managed several engineering teams at Google. His profile on the General Catalyst Partners website says his areas of investment interest are consumer internet services and infrastructure. In a recent interview with Forbes, Teo said while he didn’t know what the next big thing in consumer applications would be, he has been focusing his efforts “on culture and its enablement in the digital realm”. “My job is not to read the future, but to see the needs of people all around the world (thus all the international interest) and find the common threads of need and desire that can be expressed through product,” he told Forbes.
They’re nimble, young and brimming with innovation – they’re the innovators on the Crowe Horwath–SmartCompany Smart50 list of 2013. The current breed of companies has been through a baptism of fire. Many lived through the global financial crisis, and can tell how it wreaked havoc on their businesses; but plenty saw the chaos as an opportunity – and it’s paid off big time. To read the entire list, you can visit our page here. Some key statistics are available here, but needless to say – they’re extremely impressive. In a year when businesses have struggled to stay afloat, the Smart50 have grown at an average rate of 92%. They are collectively turning over $595 million and have created 1750 jobs. At the top of the list is technology company Plan B, which is built on the idea of making travel agents redundant. It’s working – the company has grown at a massive 210% over the past three years, and turned over $28 million in the last 12 months. But the list is filled with plenty of stories like this. In fact, there are plenty of lessons entrepreneurs can take from the success stories on the 2013 Smart 50. Here are just a few: Keep your customers close It’s been a few years now since retail king Gerry Harvey dared online retailers to sell bulky goods online. And now, companies like Winning Appliances have taken up that challenge with gusto. But it isn’t a snappy website or a cool checkout system that has Appliances Online placed at 36th with $130 million in revenue – it’s good old-fashioned customer service. Chief executive John Winning was brought into the business by his father, who taught him a crucial lesson – treat your customers right and they’ll stay with you forever. It’s an important maxim for a company that may only see its customers once every few years. So how does it do it? One way is by handwriting thank-you letters to every customer. “Our customers are king ,” Winning says. “Exceptional customer service has been the driving force behind Appliances Online’s success and the company is the first Australian online retailer with an Australian-based customer support team that's available 24/7, every day of the year.” Stay independent if you need to Selling your start-up to a massive online retailer could be a winning scenario for many entrepreneurs. And for the founders of wine site Vinomofo, it was – for a time. But a year after selling to wine site Catch of the Day, the founding trio decided it was better for the company to remain independent. So they bought their shares back, and sold to some private investors. They’re happier as a result. “We’re revelling in our independence,” says founder Andre Eikmeier. The lesson is simple. Selling your company as an exit strategy can often bring lucrative rewards. But it’s not always the best move for your company’s future. Knowing when to sell and when to work on the company is a skill worth learning quickly. Make others redundant The top company on the list grew tired of dealing with travel agents. So it decided to make them completely redundant. Plan B, a software company founded by Philip Weinman and Clive Sher, has grown a massive 210% in the past three yours and had revenue of over $28 million last year. The business’s success is built on that fundamental ideal of solving a problem. The founders were sick of dealing with agents, so they created technology to do the job better. As they point out, “The need for traditional travel agents with high fees is now becoming less relevant.” Recognising an opportunity is important, but seeing a business and being able to do it even better? That’s what great businesses are made of. Research and development is key The Australian market is filled with finance lenders, so it takes a giant leap to stand out. Nimble, which reached 42nd on the list with revenue of $19 million, took the slow and steady approach – and built its own technology over seven years. The tech allows the company to more quickly determine which customers are ready to apply for financial products. But more than that, it more quickly detects fraud and has the ability to weed out riskier borrowers. While the company has built a strong brand, it’s the technology that has played a big part in the company’s success. And founders Greg Ellis and Sean Teahan realise how important it is – so much so the R&D team has increased to nine staff. They even have a mathematician. “Thanks to that investment and the efforts of the world-class R&D team, the Nimble platform is now recognised as the most advanced credit-risk assessment and fulfilment technology in the country,” Ellis said. The key lesson here? Investing in your company’s future is never a mistake. Story continues on page 2. Please click below. Restructure when necessary The supermarket price wars have taken down more than a supplier or two, and the surviving companies have to battle it out. Baby products retailer GoToddler was threatened when Coles and Woolworths started reducing the price of nappies back in 2010 – by 20%. Given there was limited support from the supplier, founder Francesco Percopo said the environment soon became hostile. Unfortunately, a restructure was necessary and the small team had to be downsized. But the company survived by doubling its focus on customer service – and creating loyalty. The strategy has proven successful. "At GoToddler we have always believed that our business model has to be based on loyal customer support, and by offering better service and range. This has proved to be true." Leverage social media for returns So many companies fail to win a return on their social media, simply because they don't know how. But one savvy Smart50 finalist has taken the social media platform and turned it into a lucrative source for business. Exactus Homes, founded by Ralph and Sandra Brewer, started building relationships on design blogs, providing advice and generally showing themselves as thought leaders in the industry. The offers soon followed, and on Twitter as well. "From our social media efforts we can identify $408,000 of confirmed work, and a further $480,000 currently in the planning phase," they say. This is just one example of the Smart50 harnessing social media for growth – if you use it the way it was meant to be used, it can be a good source of growth. Deal with problems head on Finance companies are often put under intense regulatory scrutiny, and it's been no different for PAID International. The company, which ranked 5th on this year's list with revenue of $8.3 million, ran into trouble earlier this year when Western Australian laws were changed. Overnight, it became a requirement for all short-term lenders to request 90 days worth of banking transactions from applications, in order to assess suitability. While the process wasn't totally new to the company, there were processing issues which increased the company's workload. It's easy to see how such a situation would turn customers away. But founder Tim Dean was simply upfront with his customers and told them what had happened. "We also introduced new ways for the customer to provide the required information more simply and with fewer burdens for them," he says. PAID International is a good example of how the Smart50 survive – by staying nimble and adapting. Change your model when you have to Changing your business model on the fly is never easy, but Plus Fitness didn’t really have a choice. When the company, which ranked 9th on this year’s list, was faced with customers that wanted 24-hour access, it had no choice but to comply. “Originally we had a small number of traditional health clubs (big box clubs) in Sydney. Over time we recognised that our consumers’ demands were changing,” says founder John Fuller. It was the right strategy – the company is turning over $13 million a year and growing at over 100%. Changing models isn’t easy, but sometimes, it’s the hard – and necessary – choice. This story first appeared on SmartCompany.
I often encounter business owners who are paralysed by their anxiety. They have so much on their mind and so much to do that they don’t know how to move forward. This week, two of my clients were showing the classic signs. From the moment I said hi, I could see, feel and hear their anxiety. They were talking fast, were jittery, weren’t really listening and didn’t really seem to be engaging in our conversation. Anxiety, unfortunately, is hugely unproductive. While nervousness is natural, and can sharpen performance, anxiety if left unchecked can be debilitating. We all have times where we find it difficult to separate our personal and business lives. In my experience it’s crucial to tackle anxiety on both the home and the business front to ensure that we can get back on track. We are all busy most of the time, so why do we get overwhelmed at certain points? It’s often when people feel like they are not in control. Of course we can’t control everything (as much as we’d love to), but if everything feels as though it’s spinning out of our control, anxiety can magnify it; in many cases, unnecessarily. My solution sounds too simple. You need to get back in control. How is that even possible when everything seems to be spinning out of control? I’ve set out the following “control checklist” in order to break down anxiety by identifying rational and achievable steps towards a solution. 1. Assess the reality – what really is the worst case scenario? Time for a reality check. First – identify your fear. What is the one thing on your mind that wakes you up at the witching hour? While there can be multiple worst case scenarios, there is usually one thing that sticks out above anything else. Work out what it is. Second – write it down. The very act of externalising your fear rationalises it and can make you realise the actual problem is not actually as bad as it might feel, emotionally. Third – share it. Find a mentor or a trusted colleague or friend who can help you contextualise your anxiety and provide objective guidance. Identifying the worst case scenario gives you the opportunity to avoid it. Look at it as reverse engineering your anxiety – it exists for a reason, but you can work backwards to find a way out of it. It is fair to say that most business owners have felt this at some point. The crucial skill you need is to be able to stay calm and work your way out of the problem. 2. The to-do list Yeah right, I hear you say! Everyone has a to-do list. Here is a question though, do you have more than five things on your to do list? If you do, change the title to Project/Action Plan. The only things that get on the to-do list are the tasks that need to be completed immediately (i.e. today). Look over your Project/Action Plan. What tasks do you need to perform in order to avoid your worst case scenario? Let’s look at the situation of one of my clients. He was feeling incredibly daunted by a project where he was unable to deliver his services to his clients. He was rightfully worried about long term damage to his reputation, losing existing and potential business, which of course threatens cash flow and profit. The simple solution was to employ more people to deliver on the promise to his client. However, he had inadequate space available on his premises to accommodate more staff. So he was forced to contemplate acquiring more space – an immediate financial burden and a huge upheaval. Once again, the simple solution to move and employ a virtual workforce was not possible. We discussed the options, and it became clear to me that there was another “stressor” at play. I asked him what would make more sense financially. He didn’t know the answer. Why? Because he had not completed his budget for the year! Guess what was number one on the to-do list? Not worrying about moving premises; that could wait. He needed to complete his budget! All of his future decisions would flow from knowing his financial position. The satisfying element of this process was that the client instantly started to relax because he now had a plan which would put him in more control based on fact rather than fear. He had instantly eliminated his fear of the unknown. 3. Assess what is possible Be realistic with your goal-setting. Many people say they don’t complete things on their to-do list because they get too many distractions. Distraction is such a negative word, and it’s one that I like to avoid. My business manager often says that she gets nothing done. I know that this is not true because I see the evidence of her output. When I told her that, it emerged that she only rates herself against her to-do list. From my perspective, her role is to keep the business operating smoothly. This means that I need her to deal with the issues that arise during the day which might stop our team from delivering to our clients. Until I pointed this out to her, she had seen these issues as distractions. I requested that she keep a diary for a couple of weeks to work out what she spends her time on each day, to determine her workload. Patterns became swiftly evident! Once we had established this knowledge, we could then work out how much of her day could be allocated to her ongoing to-do list and determine realistic deadlines for these tasks. 4. Watch out for time traps We employ people to assist us in our business to get the job done so we can deliver more products and services to our clients than we can do alone. But if our staff are not managed effectively they can become time traps. A really simple thing to do to avoid your team sucking every last minute out of your day is to teach them the Urgent/Important prioritisation of tasks. Before they request your time they must ask themselves, is this an important task for the business that needs urgent attention? This will stop them badgering you to get something completed immediately without regard to its importance in the bigger picture of the company. If you are a business owner and find it hard to focus and prioritise, find a mentor that can help you with managing the workload and help you achieve success. Share your start up thoughts with us at #startupstress on Twitter or post a question on our Facebook page.
Start-ups striving to make excellent products need to disrupt the standard start-up methodologies and create a hybrid that works for their goals and their customers, according to a start-up consultant who specialises in product development. Abie Hadjitarkhani is a partner at Hotel Delta, a San Francisco-based consulting company, and is in Australia for the first international edition of start-up conference Products are Hard, to be held in Melbourne in October. Hadjitarkhani told StartupSmart that the two leading start-up methodologies – lean and agile – are useful approaches that need to be expanded to create optimal products. “Both agile and lean are absolutely necessary correctives to the shortcomings of making products,” Hadjitarkhani says, adding most product development thinking has sprung from the waterfall approach from factory manufacturing. Lean is a customer-driven consultative method which uses as few resources as possible that delivers quickly. Agile is an iterative process of small developments discussed and reviewed by teamwork. “Agile was a response to the shortcomings of the waterfall process as applied to software, as software is not the same as manufacturing. Similarly, lean was a reminder that customer development is important for start-ups and software companies, for these companies who had got away from their customers that needed to ‘get outside the building’,” he says. He adds that relying on one corrective approach can diminish innovation and both run the risk of simply becoming a label for inflexible approaches that don’t make full use of your team. “If you get too lean you can run the risk of losing the innovation and coming up with some totally random new idea. Being exclusively lean really does mean you’re running the risk of coming up with a product not by committee, but by survey,” he says. “The most interesting products can be those no one knew they wanted, or anticipated. Like Twitter, no one wanted a service to send short messages, no one knew what to do with it and you never would have got there with lean.” He says the drawback of agile is that it can become “ritual without reason” if the collaboration focus isn’t understood. “The pitfalls are more about implementation. What we’ve seen is so many groups using the right words, right kind of meetings and workflow charts but you’ve still got the same overly long meetings, excessive documentation and inflexible roadmaps, and end up with products you may not have wanted or your customers don’t,” he says. “One of the great benefits of agile is that is has given a lot of power back to those who make the stuff, develops and designers have a much bigger voice.” Hadjitarkhani adds that the shortcomings of lean and agile can be avoided by creating your own human-centric approach to design that takes the customer development insights of lean and the flexible team work of agile. “As professionals, and especially today when work is so specialised, you need to get so deep in your field and you can lose sight of the big picture,” he says. Comparing this trend towards specialisation for business managers, developers and designers to academics, he says start-ups need to recognise this trend and step back. “It’s fine for an academic, but we can’t do that with products intended for general consumers. So we need to situate agile and lean in a larger context.” For founders and developers building a start-up, Hadjitarkhani says a lot of good development comes down to self-control and empathy. “If I’m an engineer or designer and have a great idea, I’m going to want to put it in. That’s natural, but that may not be the best combination or addition to the product. That call is your job. Step back and remember the person on the other end using this thing for the first time,” he says. “You need to step right out of it, and remember no one’s goal is to use your product. They want to get something done. Does your product do that in the best, most efficient way possible?”
Businesses relying on MailChimp to deliver their marketing and sales emails are caught up in a battle between online service providers that could mean their emails are only reaching a fraction of their intended audience. In an email to StartupSmart’s publisher Private Media, MailChimp confirmed it had been experiencing domain name server issues with .au based domains. “After investigation, we are aware that TTP Wholesale, one of Australia's service providers, does have some sort of block in place against our DNS servers,” the email says. “Since this block was discovered, we have been proactively working with this provider specifically to get our DNS IPs unblocked, and trying to provide as much assistance to them to demonstrate how these blocks are in turn affecting their customers.” MailChimp says they are already working with the company involved, adding the best thing Australian users can do is reach out to their hosting company to explain how the blocks are affecting their businesses. TTP Wholesale is owned by Net Registry. Net Registry chief executive Larry Bloch told StartupSmart that the issue could only be solved by MailChimp, as MailChimp has been added to CASA CBL, an independently maintained “real time black lists” (RTBL) based in China. Bloch says Net Registry’s ISPs won’t deliver mail from servers listed on RTBLs. The servers on the RTBLs are those which have sent emails that have been marked by users as spam. “What we do, as mail providers do around the world, we just respect those lists. If someone gets listed, we refuse to receive emails from that service provider. MailChimp sends out a lot of emails, but will occasionally, knowingly or unknowingly, have users who are sending spam through their system.” Bloch says they are unable to ignore these lists, as they are a key part of a community approach to beating spam that has been very effective. “We support hundreds and thousands of mail users on our systems. We have an anti-spam regime in place to protect our users, and one of the key planks is independently maintained lists of blacklisted mail senders,” Bloch says, adding MailChimp would be able to fix this issue, as it’s one it must face often with many users. “When that happens, it filters through global networks. So the problem is ultimately one for MailChimp, they must have this all the time,” Bloch says. Fi Bendall, director of digital strategy and marketing agency Bendalls Group, described the MailChimp blocks as a nightmare for small businesses. “I don’t want to overstate it, but this is really a bit of a mini-crisis,” Bendall says. “MailChimp is hugely popular, everyone is using it now.” Bendall says the ISP companies involved and MailChimp need to stop passing the buck and solve the problem as quickly as possible. “This is a real problem. If your newsletter gets stuffed up, you’ll probably need to find another solution quickly,” Bendall says, adding many small business owners would struggle to learn a new system. UPDATE: MailChimp told StartupSmart via Twitter that this issue has been resolved. They’ve also posted a comment below. For an update on this story, click here.