Archive for category E-Commerce

Pursue massive scale: And other startup lessons from my corporate life

After more than 24 years working in corporate marketing and PR positions that have inspired me, humbled me and taken me to four continents and countless industries below are my “short” notes on lessons from those days as I fight to scale my current start up.  I hope some of these are helpful to other founders and folks working at early stage companies.

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Focus on massive scale. In the fairly limited time spent working with Jeff Weiner when I was at LinkedIn I learned something from him in each and every interaction that is of value in what I’m doing now. One of his mantras back then was to focus on “massive scale.” In 2009, it meant having a LinkedIn member base that was in the hundreds of millions, densely interconnected and very active on the platform.  I joined when we were at 30 million members so it was still very much aspirational and clearly has hit massive scale since.  My takeaway on that now is for startup co-founders to plan for and anticipate bringing their business to a massive scale, because as I’ve learned, there’s a force multiplier effect on every aspect of the business when you go from 30 million customers to 300 million customers. And, if you can recruit someone to your team or board of advisors who has taken a start up from nothing to massive scale you must do it.  That experience is invaluable and will help you anticipate the potholes that lie ahead while giving you immeasurable street cred.

The other thing Jeff used to say in meetings was “there’s always a downstream” impact. He’s right of course.  Within a product environment like LinkedIn if you change something over here, something over there will be effected — maybe immediately or maybe six months from now.  But, there is always an impact — intended or otherwise.  Now that I am back in a consumer-facing startup, early in product development I have stapled that message to my forehead. It reminds me to go into every decision with eyes wide open — even if I don’t have a contingency for every consequence, I know to be ready to react. It echoes the Lean lessons to test, test, test your product before rolling out to a mass market.

Act like an owner. I’m not one for corporate missions statements. In fact, for the first 16 years of my career I used to roll my eyes at clients who spent time and money on these. When I got to eBay company values were everywhere. The one that stuck was: act like an owner.  It works universally for whatever you do and especially within a startup. Something magical happens when an employee knows its his company, too.  Suddenly, every detail matters and relationships with co-workers are worth building and protecting.  Startups need to be generous and open minded about how to structure early employee compensation and hire people who fit the demands of that stage of the company.  Being employee number 3 is very different than being employee number 3,000.

Your true self is revealed in the politics.  At some point you will be faced with making a decision based on what’s right for the customer or business and what the internal politics want.  Screw Myers-Briggs and all the personality tests, nothing reveals your true character more profoundly and swiftly than this moment. Someone asked me very recently and very bluntly why I had so many 2-year long jobs. Here’s your answer, pal. I made the decision very early on in my career that I was okay with losing a job for being unpopular with management, because I am not okay with losing a job because my programs or teams were underperforming.  For founders looking to build a team that will be tasked with making the impossible possible and facing the 98% failure rate of all start ups, I ask: who are you picking first for your kickball team?

Managers run operations, investors manage their money. In the mid- and late-90s I did investor relations for a many micro- and small-cap technology companies (in a wide range of industries) during the first tech boom.  I worked with some of the smartest CEO’s and CFO’s I’ve ever been around and prepared countless investor-facing materials and many Q&A’s for quarterly meetings and earnings calls. What I learned is that investors are in the business of managing ROI of their money. Period. While some were very knowledgeable and had good suggestions about how to make improvements that could drive growth and profitability — they never could see the full picture. Ever. In repositioning an equipment supplier to the then still burgeoning fiber optics market that would eventually serve this thing we call the Internet, a client’s investors were roiled about the change in strategy and positioning to capital markets.  Management was very smart to stick to its guns because this new strategy turned a $10 a share stock into a $500 a share stock on a split adjusted basis — within 18 months. For startup teams who take on investors the lesson is really clear — screen your investors as thoroughly as they are screening you.  Pick the ones who fit the stage of your business and have expectations in line with those of your company. For really early stage companies, listen very closely if a prospective investor wants to run operations or just provide capital.

Sometimes PR and marketing doesn’t matter.  I once had a very heated run in with a product manager who got in my grill and stated “PR doesn’t matter” as it relates to an upcoming launch.  I think my carotid just about exited my neck when he enunciated the m in matter.  Turns out, though, he was more right than wrong.  And this product manager has gone on to found a hugely successful company and probably could’ve retired four or five years ago.  In the years since I’ve more than once uttered to another marketing person a quote I saw that said “at some point, the product is the PR.” I remind myself of this lesson all the time and that if the product truly adds value to the customer’s life it will get adoption. Solving for that first and foremost trumps any marketing or go to market strategy you and any consultant can cook up.  When you’re sitting with your small team wondering if it’s time to turn on the marketing spigot — put your big boy pants on first and ask if it matters. Ask if you’ve proven yet that what you’re building is in fact a value add.

M&A gets done for one reason: Their growth, not yours. Specifically, the growth of the acquiring company. I’ve been involved on the investor relations or corporate communications side of well over 100 acquisitions and this is not a warm and fuzzy endeavor.  The acquiring company’s agenda isn’t to give the owners of the other company a soft exit, it’s to grow their company by 1) buying revenue and customers 2) acquiring technology or IP they can’t build themselves 3) buying talent that won’t otherwise go to work for them.  If you’re running a startup and your projected exit is via acquisition you better think through this now or you’re probably running a lifestyle business and don’t know it.

Lawyer up. In utopia there isn’t a need for lawyers, but this isn’t utopia it’s corporate America and if you’re building something with contractors and partners that is worth selling to the market it’s worth protecting your ass with strong legal counsel. LegalZoom is a start but soon after you fork over your $500 to get your LLC set up you’re going to need to sign on a contractor or investor and that will require a lawyer who understands your business, its risks and your objectives.  Having the conversation with counsel about who owns the kernel to software many years after it was built with millions of users on the platform is an intensely stressful conversation — been there and it sucks.

Higher education PR and marketing people are rock stars. The demands of doing marketing and PR within a university are unparalleled. I tell my former colleagues who work in corporate and consumer roles that it’s a lot like having 10,000 of your customers living in your building with their parents right around the corner.  If you’re looking for a marketing person to join your startup, look in higher ed. These folks tend to go under-appreciated but have the mettle to deal with unthinkable crises and have current experience engaging with the largest and most digital savvy generation in the history of the world — teens and young adults.

Customers buy what they want. If I had to list the companies I’ve worked with who promised a full suite of solutions to customers so that they can buy from a single vendor, I’d get a several dozen cease and desist letters and a bill from GoDaddy for the space I ate up on this blog. Its mind numbing how many companies — startup or mature — build their differentiation on the single solution provider value proposition.  Meanwhile, I can’t remember more than 10 case studies when a customer actually said “Screw it, we’re firing all of our other vendors and going with just you!” Most businesses in the U.S. are small- to medium-sized businesses and most of those companies aren’t organized in a way to buy from and manage a single provider.  So they tend to buy a la carte. Accounting buys bookkeeping services from a vendor of its choice while sales picks the CRM application it wants.  It’s the reality of the market.  For a startup — particularly a services company — looking to compete on this plane, I’d encourage you to think through this and focus first on the killer app, feature or product that could be your cash cow. Once you’ve proven that, build or buy adjacencies out over time. Google didn’t launch with Maps, Android OS, the Nexus phone, Gmail and ChromeBook on Day 1. It took them a couple of years to achieve world domination, so it might take you a little longer.

– Jose Mallabo

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Most visited tiles on Mosaic

In the few weeks since we put Mosaic into beta testing at DiscoverMosaic.com it’s easy to see our user base has a palate for visual curation and design. The most visited tiles on the site are:

  • Alexandra Spencer (@4THANDBLEEKER)
  • Miranda Kerr (@MirandaKerr)
  • Dolce & Gabbana (@DolceGabbana)

We curate content from three major areas: brands, fashion influencers and celebrities — and Alexandra is clearly a fashionable celebrity with influence.

So, what does this tell you about consumers and social content? Great visuals matter. The days of 140 text characters are dead like the Boston Red Sox. And I’d be willing to bet that if I looked at the least visited tiles on Mosaic – they’d all look like what happens when you cat stands on your keyboard.

Take a look at each of these handles and you’ll see commonalities. All of them create a steady flow of content often times posting updates five to 10 times a day. At least half of these tweets are pictures or videos. But what’s probably most important is that these are taken from a personal perspective. Even Dolce & Gabbana, obviously a company handle, pushes tweets out in a voice that makes it feel like a personal conversation. It’s an approach every social media pro aspires but often gets lost in execution.

Corporate speak: Boo!

Personalized visual content: Bring it. Yay.

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You’re soooo good lookin’!

Discover Mosaic

 

 

 

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The best time to buy stuff

Need an oil change? Get up early.

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Social media complements search and email marketing (for now)

Looking at this Forrester post almost a year later feels a lot like going back to high school after your first year in college. You thought it was a good idea to visit but then you realize by the end of it — not so much.

The blog post’s conclusion is to draw your own conclusion about social media’s impact on holiday purchasing. The post meanders from having an opinion that the ForeSee research was limited to having no point of view whatsoever. How am I going to join a conversation or rebut your point of view if you don’t have one?

While there are no official rules to blogging – the universal and unspoken rule is to have an opinion.

Here’s mine: The idea of social commerce (buying stuff on Facebook) is still a pipe dream. Rather, social media can drive brand, product and deal awareness and therefore serve as a complement to a retailer’s larger search and email marketing programs.

Since this post in late 2010, LinkedIn and Groupon have gone public. Facebook’s IPO has been delayed – but will be the biggest one in the history of ever. The point being, these companies are all well capitalized, have hundreds of millions of subscribers and are not going anywhere. So industry pundits and luddites alike need to bite down on the reality that marketers will continue to throw marketing dollars at them to hock their wares regardless of whether we have any proof of a causal relationship between the social media consumption and clicking the “buy” button on a shopping site.

At 2.9% e-commerce conversion rates there is no proof needed.

While this question of “Was social media a big factor in holiday purchases?” will come up again and again over the next few weeks and months, I encourage marketers and PR people to do one thing:   challenge the question.

As Augie Ray correctly points out social media is a mere infant and it will take time to prove its correlation with purchasing behavior. In the meantime it serves a lot of other organizational needs that are no less important than shopping cart clicks. Don’t get suckered into the conversation about social media and its impact on transactions because you’ve got more to attend to with your 2012 social and media dollars such as:

  • Reputation management
  • Product and corporate branding
  • Influencer relations
  • Partner relations
  • Customer service
  • SEO
  • Issues management and crisis communications
  • Recruitment and workforce engagement

While the analyst community continues to look under the hood for purchase conversion evidence, what they’re missing is that the owners of these social media programs may not at all be focused on driving holiday (or non-holiday for that matter) transactions.

Pause.

Bite down. Chew. Gulp.

And therefore, there might be some reason why the transactional or purchase conversion evidence is not to be found.

In fact, most brands and retailers I know are still investing more in tried and true search and email marketing initiatives to drive transactions and conversion online and in stores –- while using Facebook and Twitter as complements to those initiatives and for all of the other communications objectives listed above. That explains why search and promotional email remain the primary drivers for purchasing behavior for the holidays.

There. I said it.

Don’t go back to high school. But do take my poll on LinkedIn

-Jose Mallabo

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Because your back pack should not break your back: A gift for me

I have a lot of bags.

Travel bags for travel.

Travel bags for my motorcycles.

Backpacks, messenger bags and traditional laptop bags that get stuffed with my laptop, iPad, Kindle, Motorola Droid and BlackBerry and all of their individual chargers whenever I go more than 100 miles away from home. (It’s 2011 and still no universal chargers on our horizon – I sigh with Martha Stewart’s 2006 vent.)

As I sit here with a crick in my neck from falling asleep while reading my Kindle, I know full well I’ll be buying a slim, light back pack as a Christmas gift for myself this year. By far this back pack from Alpinestars is my favorite in my current fleet of bags.

Its shoulder straps and chest harness are ergonomically correct and keep your all of your junk in place. It holds a 15” laptop with ease and is fairly water resistant. I road 400 miles on my Triumph through the entrails of Hurricane Irene with my laptop and gear in there – they stayed drier than the rest of me. The best part is the contoured and padded backing that makes wearing it feel like a gentle hug from your grand mom.

The drawback: You kind of look like a character from “Mad Max: Beyond Thunderdome” when you’re not on your bike.

No doubt people will be going to Best Buy and Apple to find gifts for their families this Christmas and holiday season. How about a bag for that gear instead? Check out this round up of slim bags. The site loads rather slowly so you might want to pour a cup of coffee and come back.

I really like the look of this Everki back pack largely because of its dedicated slot for a Kindle or iPad. But, alas Everki.com doesn’t want to load . . . to the Amazon!

-Jose Mallabo

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E-Mail Commerce: An Old School Beast

Look at this.

Source: Forrester

Not only is e-commerce growing – projected to hit almost $300 billion by 2015 – it is growing as a percentage of overall retail.

How? The easy and obvious answer is that people are finding shopping online easier and more convenient than going to the store.

The same analyst firm that projected this growth also did a study recently (with my current employer GSI Commerce) looking at holiday 2010 shopping data from 15 online retailers representing about $1 billion in gross merchandise sales.

One of the primary takeaways is that email and search remain the most influential channel to moving shoppers from browsing to buying.  Yes, you read that right – old school e-mail can still bring it.

Source: Forrester

That inflamed a huge tidal wave of boos from the Mashable and social media faithful (I consider myself both) – but when you really dig into the numbers, study and where we are as a social media using country it really makes sense.  Think about it.  Most people who are the breadwinners and decision makers on discretionary spending in the U.S. have been on e-mail for 15 to 20 years.   The early adopters of that group mayyyybe have been on social media networks for a 2-3 years.   When you factor in the difference in dynamics between these two mediums it really makes a lot of common sense why email is still more powerful in e-commerce than social.

E-mail is very private.  It’s a true 1:1 medium that we’ve been conditioned for most of our adult lives to keep to ourselves and guard with legal disclaimers like “this transmission is meant solely for the recipient and is confidential” blah, blah, blah.  Email has spent the greater part of the last generation becoming the closest thing to our digital identity or our virtual Social Security Number.  So, if a retailer can get to me there – odds are I’m primed to buy from them.

Social networks on the other hand are very public.  Every major social network’s product settings are defaulted to share everything you do on the network.  Most people rarely ever switch those settings to something other than that.  So, while finding and sharing good deals on underwear, vacations and massages is great fun.  It doesn’t seem likely that people like my father or middle aged buddies would show the world they’re buying these things.

This is my semi-professional opinion.  I live in e-commerce and make a living as a social media guy.  But kick my tires.  Walk across the building in your office and show a total stranger your Facebook wall.  Then hand the him your BlackBerry or iPhone and ask him to thumb through your email.

It’s this sense of intimacy with our emails that explains why Groupon and LivingSocial are growing so fast while true social networks like Facebook and Twitter are still finding their legs in e-commerce.  I get into cold sweat at just the idea of even my mother reading my emails.  Groupon and LivingSocial aren’t so much social commerce companies but at their core are email marketing geniuses that buy and sell local deals with the leverage of their members (that’s the social part) to push down prices for the individual consumer.

E-mail commerce.  Maybe it’s not a popular headline, but email still works and will likely remain a big part of that $300 billion market.  It’s no wonder why all favorite social networking sites update me on new features, product news and privacy updates on my email.  I still read them.

– Jose Mallabo

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Social vs. professional graph: Are the days of separate online identities numbered?

About 6 months ago I posted something on my Facebook account that had nothing to do with work.   It was a rant about a sales guy trying to sell me something completely unnecessary for my motorcycle.  Two days later, a friend on Facebook and superior at work asked me about it at work – the implication being that I was ranting about the workplace – where we ironically extolled that the social graph (or identity/profile) was and should be separate from the professional graph.

Facebook CEO Mark Zuckerberg has been emphatic about a singular online identity – which obviously paves the way for Facebook Connect to be the way people log in anywhere online.  He’s quoted three times in The Facebook Effect saying: “You have one identity.”

And that…“The days of you having a different image for your work friends or co-workers and for the other people you know are probably coming to an end pretty quickly.” Further challenging the current separation of the social and professional graphs by saying: “Having two identities for yourself is an example of a lack of integrity.”

Well, we know how he feels about it.

In turn, LinkedIn CEO Jeff Weiner has maintained that the separation between social and professional graphs is vital to professionals and to LinkedIn.  At last fall’s Web 2.0 Summit in San Francisco — in his “keg stand” interview — he told John Batelle:

“While many of us in college probably were at parties having a good time, doing things like keg stands, or being exposed to keg stands, I don’t know that many of us would look forward to having a prospective employer have access to picture of those events.”

Who’s right? I’m less confident in the separation between the two than I was just 24 hours ago.

At a recent Ragan social media conference I attended, Shel Holtz echoed Facebook’s stance in his own inimitable and convincing way.  Of course, I Tweeted at him about this while he was presenting.

If I’m answering Shel literally, I’d say “see the first paragraph of this post.”

But I had to test this just a liiiiittle bit more.  The attendees of this conference were a better cross section of U.S. professionals than the early-adopting, Banana Republic-wearing, all technology-loving dot.com crowds that populated the early social media conferences. Insurance. Federal and municipal governments. Universities. Healthcare organizations. And, even the country’s largest cemetary.

They were all in the house — represented by professionals from every generation in the workforce today.

These are people working for really big, very regulated, widely and deeply impactful organizations from never-go-away industries — all there trying to figure out where to place their social media bets and budgets.  Shel’s point may be the most thought provoking point made out of all the sessions.  Because none of us are over-staffed or walking around with extra dollars pouring out of our back pockets, picking one may be a choice we’re forced to make.

So I put the question to the attendee group to see what they thought about the separation or blurring of social and professional graphs.  That group was on Facebook.  I’ll post the comments as they come in.

I’m not a Dead Head, but as I sit here during business hours while at the dealer getting my car repaired working on a post that has benefits to both my professional and personal brand, it’s hard not to think that maybe Shel has spoken for many of us.

My car is ready.  Back to the work.

– Jose Mallabo

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Social Exuberance

I’ve lived through a couple of bubbles in my time – dot.com and housing come to mind, anyone?  And something tells me the longer I’m around the more I’m going to have to live through.

Is social media another one of them? Maybe. Is a market cap of $80 billion for Facebook rational? Alan Greenspan must be trying his damnedest to make those old thumbs Tweet #social-exuberance.

Exuberant smile? Greenspan retired a while ago.

It strikes me that my framed Pets.com certificates and my wall have more than a nail in common – both were worth a hell of a lot more when I bought them (yeah, that was a stretch, thanks for sticking with me on that one). So now that I’ve said it, let me compare the stock market bubble to the housing market bubble to see what these bubbles might have in common.

There are basically three ways to value a stock, and they are pretty much the same as how the real estate market valued my wall.

My house:

  • Price per square foot (adjusted for how nice the stuff in my square footage is)
  • How much an identical house in my neighborhood sold for
  • Make shit up

A stock:

  • Discounted cash flows (predictions of how much money a company will make in future years, adjusted for how fast they will grow and how long they might last)
  • What comparable “peer” companies are trading at (adjusted for cash, debt (including options), assets and risks)
  • Make shit up

Both Facebook and Amazon have market caps of around $80 billion ($82.9 billion secondary market estimate for Facebook on 1/28, $76.8 billion actual market cap for Amazon on 1/28).  So if they were houses, and I was pre-qualified for an $83 billion mortgage, I could take my pick (well, my wife would, let’s stay grounded here).

As far as revenues go, estimates for Facebook for 2010 are around $2 billion while Amazon is on track for something north of $30 billion. In housing terms, Facebook is listing a very funky two bedroom loft conversion while Amazon is listing a 30-bedroom ancestral estate. So, there are either some really, really nice upgrades in that loft or there are 28 secret bedrooms priced into the deal.

Yes, an $80 billion estimate for Facebook is likely high. And yes, Facebook and Amazon don’t have identical business models.  But yes, the same people who sold me Pets.com shares are the same people who collateralized my mortgage and are the same people selling Facebook shares to foreign investors to avoid SEC regulations.

That must be one amazing loft.  I need to go check it out, I do need more wall space.

-Reid Cox

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If my George Foreman grill could order meat it would be a Kindle

If my George Foreman grill could order meat, it would be as important to kitchen appliances as the Kindle is to the book and e-commerce industries.  In June, this ZDNet blogger said he felt the Kindle’s days were numbered because of the iPad.  But just this month ZDNet posted a story that outlines wall street analyst projections that Amazon sold 4 million Kindles in the fourth quarter alone — and is projected to sell 10 million more in 2011.  I just got my Kindle this past Christmas and love it like the year 1987 and the 2002 World Series. (That’s a hyperbole.)

My two favorite Christmas presents

Since getting the Kindle, I’ve spent $475 on Amazon.com (about double what the typical Amazon customer spends per year) — only $20 for e-books. Obviously, the Kindle is my personal gateway drug back to Amazon.com. And it’s far easier to clean than my George Foreman grill.  See smashed left thumb.

Dear Jeff Bezos, You now have 121 122 million customers. I’m back.

Everyone wants to talk iPad vs. Kindle.  Not so fast. The Kindle is different than my iPad.  It replaces paper books while my iPad seems to replace part of my laptop, TV, MP3 player and portable DVD player that I never did buy. The beauty of the Kindle is that it doesn’t pretend to be something it’s not. Like the Cadillac CTS-V Coupe that tries to be a BMW 6 Series and a Corvette at the same time.

The book is dead.  Long live the Kindle.

– Jose Mallabo

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