My wife Debbie and I caught the premiere of NBC’s The Biggest Loser the other night. For those that follow the show, Jillian Michaels returns as the senior screamer on the show. I like watching the show because of its use of embedded product placements and am always curious what they’re going to do next.

This year, The Biggest Loser has a totally redesigned fitness center, with all of the equipment provided by Planet Fitness, a low cost, neighborhood gym model, available as a franchise. They appear to be out lifting 24 Hour Fitness, the previous equipment sponsor on the show.

As the premier was airing with Bob, Jillian and Dolvett beaming over the new gym equipment by Planet Fitness, I decided to visit http://www.planetfitness.com/ to see if anyone had purchased the rights for Central Oregon, where I live. I’ve been a gym goer since I was 14 and have thought about owning a neighborhood gym for the past 20 years. But that is another blog post, I digress.

When I attempted to go to Planet Fitness, their site crashed. The premier had over 1 million viewers; I suspect this was a spike the Planet Fitness IT team may have not expected. I'm sure the sales and marketing team were happy their product placement created demand, yet immediately went into shock when their web site crashed.  I want to suggest a better way. If Planet Fitness would have moved their website to Microsoft Windows Azure Cloud Platform, they could have easily adjusted the amount of computing resources around their original air dates on both east and west coast premiers. Once their website and member portal is converted to take advantage of Windows Azure elasticity, it’s really as easy as logging onto the Azure management portal and moving a slider up and down to allocate more or fewer server instances.  You have the advantage of extra computing resources when you need them without paying for a maximum build out of a datacenter only to be fully utilized when the Biggest Loser airs.

If your business is a B2C (Business to Consumer), and you’re approaching the tipping point, your IT staff should be moving your customer facing web properties into the cloud. IT staff are always resistant to change, especially outside their comfort zone.  This is when you need a team of skills-based consultants who have been there and done that, successfully.

Nimble Development - Windows Azure Experts

Bend, Oregon, based Nimble Development (www.NimbleDev.com) is a team you can trust. They have deployed websites, web applications, tablet applications and mobile applications on Windows Azure. In fact, they were one of the first Microsoft Gold Certified Partners for Windows Azure, working through very early and ever changing Azure SDKs (Software Developer Kits). Nimble Development is competent at Window’s Azure and also has friendships and strong ties to the Windows Azure development team.

Add the fact they’re an Agile development shop, skilled in short SCRUM sprints with results, they move quicker and bill less time. In a word, they’re Nimble. If you’re a growing B2C company, there is no reason you should be hosting your website in a traditional hosting environment that can’t add computing resources when you need them and shrink back down during non-peak periods. This is what Microsoft Azure was designed to do and Nimble Development is the team to help you. I know this sounds like a commercial, it isn’t. I hate to not offer real solutions to my web visitors. If any of you have worked with other teams to move your site to a true cloud platform, please use the comment field below to share your details.

As for Planet Fitness, congratulations on opening your 600th franchise. Now make sure your IT strategy will support it.

…Jim

This is an exceptional episode on ThisWeekInStartups featuring Nolan Bushnell. Nolan is know for many things, including founding Atari, being Steve Jobs' boss, starting the restaurant chain Chuck E. Cheese's and, most recently, creating the educational startup Brainrush.

If you're an educator or interested in education, online education or distant learning, this is an excellent podcast to watch. You'll get to learn about brain decay and other cool things.

If you're just old enough to have used an Atari 2600 or played Combat or Pac-Man for countless hours, this is a great podcast to watch.

Finally, if you're 50, 60 or 70 years of age and still courous about the future and what can be, instead of focusing on what is, this podcast is worth your time.

A letter dated July 12, 2012 from Christy Susman, a senior attorney for Jack Daniel's has gone viral throughout the Internet.  Twitter, LinkedIn, Facebook, Reddit, Digg, StumbleUp - it's being read by hundreds of thousands of people.  Why?  Because it breaks ranks with the typical harsh, "I'm going to bring you a lot of pain", tone that attorney's learn in law school.  Ms. Susman writes with professionalism, humility and a tone of class which is being dubbed:

The Nicest Ceast-And-Desist Letter Ever Written.

I think you'll agree with me, most corporations would probably cring to see one of their cease-and-desist letters out on the world wide web. Several months ago I had this exact same discussion with an attorney on the other side who justified his asshole tone by saying:

"No hostility intended, but, sometimes I have to wear the hat as the company's counsel."

"No, you're just a prick and have no class Jason," is what I thought and moved on. For some of us, life is simply too short to engage in 7th grade behavior. I think most attorneys, especially outside counsel, immediately go hostile because they want to fight. They're incentivize to fight. Unlike a real fight, they have nothing to lose because they get to run up their client's bill.

Read the letter Jack Daniel's Attorney sent to Patrick Wensink, author of Broken Piano for President.

Lessions Learned From Jack Daniel's

• Kill Them With Kindness - Nice guys, or in this case, gals, can finish first.  Attorney Christy Susman took the high road, explained her reasons and offered a helping hand. She was respectful and very much, a gentlewoman.  It demonstrates professional maturity with a mix of citizenship, yes citizenship, as in being a good neighbor.  I hope you'll agree with me when I say, the world can use a little more citizenship and less pricks.
• Write every letter as if all your cusomers are going to read it - This letter has gone viral.  It also has gone in the history books.  It will forever live on the internet. Choose your words wisely as Christy did.  It speaks to the corporate culture and character of the author and corporate brand.  In this case, I hope you'll agree with me that both Jack Daniel's and Christy Susman are each a class act.
• Everyone is in Sales & Marketing, even your legal team - As I write this, I'm monitoring the Twitter Stream for "Jack Daniel's". It is streaming at 20 new tweets every 15 seconds.  This act of professionism has likely generated more press than a full page ad in Cigar Aficionado magazine. You can't pay for this type of advertising, good will or brand association.

This story does have a happy ending. Patrick Wensink, the recipient of the letter said he was going to indeed compile with the letter and change the cover when his inventory runs out - which according to his website will be any minute.  Seems there is a lot more interest in Broken Piano for President now. You can check out his full blog post by clicking here.

I hope all of you will join me to toast Christy Susman with a Jack on the rocks tonight!  Please share this with your friends.

...Jim

You could say I’m an old dog in terms of technology. I started my first business in 1986, back when a Hayes 2400 baud modem was the hot ticket. Fast forward 25 years later, president of two public companies (Mustang and Starbase), a couple corporate turnarounds (Web Associates, Starbase and Alchemy) and two startups (Mustang and EventMingle), you could say I’ve earned my battle scars.

For those of you who have been following my blog know, I have recently been working with 7 startups though our VentureBox business accelerator here in Bend, Oregon. Startups live in the constant state of thinking of ways to disrupt competitors and pivot business plans to grow rapidly in order to increase cash or traction. This week, I had a lot of time to think a lot about the differences between startups and well established businesses. One of the questions that came to mind was: “When is it ok for an older company to stop focusing on cash and traction?" I tried to pick my words carefully. Note, I didn’t say stop altogether, I said stop focusing.

Businesses, as they mature, develop large customer bases they have to support. They have infrastructure in place. They have made decisions about their back office systems such as accounting, CRM, work flow, servers, operating systems, technology partners, etc. Next thing you know, years have gone by, you have tens of thousands of customers and 1,000 employees. Cash and traction may no longer be a focus. Every decision needs to take into account, how will it affect my customers? How does the change impact my back office? Next thing you know, your company is not as agile as before and you ask yourself, "How did we get here?"

Each of the turnarounds I led had major back-office issues. Web Associates built web content for HP, Apple and other companies, yet didn’t build the internal controls to track the cost of producing those pages. They assumed we made money because it was a six-figure sale. You can't improve margins if you don't know - to the dollar - what the margin is. Just like in a startup, find metrics you can easily track in a graph.

Starbase’s accounting system didn’t talk with the customer support ticket system, which resulted in customers getting support even if they never actually paid for the software, which resulted in longer DSOs then we had to have.  We couldn't easily inform customers when the defect was fixed by engineering because the CRM app didn't talk to the defect tracking system and version control. These disconnects cost us margin and didn't help us build raving fan customers.

As your business grows, your IT strategy and vision MUST keep up. If it doesn't, your IT costs will erode into your margins resulting in making you less competitive. This can have disastrous effects when you’re challenged by a low cost competitor. Let me put it this way, if a competitor has established a price ceiling and your product or service is similar, then the main weapon you have against that competitor is better customer service and a lower cost basis – through technology innovation. This will allow you to maintain margins if prices move lower. Each time a customer calls or emails support, your profit margin is hit with a cost. Look for ways to eliminate the call or email all together.

When I arrived at Alchemy we were using two different CRM packages because one system couldn't do everything. This resulted in placing orders and registration keys in multiple systems, with a lot of cut and paste. It was awful. It would take 20-30 minutes to enter an order and errors would occur if during the order entry process the rep got a phone call and disrupted them. The previous leadership thought this was acceptable. No one tracked the total average cost per order. No one tracked how many orders went in the system wrong, resulting in unhappy customers and terrible first impressions. These are all costs that need to be faced. If we had a system to enter an order in say 10 minutes, without cutting and pasting, we could process more orders per day, with fewer errors and have more profit per order. Also, consider the cost of training. The more duplicate entry you perform the harder it is to train people to do it, which leads to higher costs and, you guessed it, lower profits.

Which brings me back to the main topic. When you’re in startup mode you’re focused on efficiency. You have to be, you don’t have a large staff. So you look at every single touch point to make sure your UX and work flow is nice and tidy. You look for cloud solutions versus on-premise servers you need to constantly maintain. You look at package software solutions for accounting, CRM and work flow instead of spending time to code it yourself. As your business grows, I urge you to think like an entrepreneur when it comes to your Information Technology and Back-Office needs. Each time a customer calls or emails, ask, “How could this have been avoided?” Conduct annual IT audits and track things like order entry to see how many they enter per day, per person. This is similar to knowing revenue and or cost per employee and tracking it over time, but you're doing it by department or task.

Look at your customer's experience across all functions and see how you stack up with your competitor. For example, if your competitor allows their customers to go online, change their profile, order products or contact support, and you don't, then they're likely doing a better job managing the overall customer experience and business efficiency. 

In my experience, you’re usually competing on more than just price alone. When you’re a startup you spend a great deal of time ripping apart the competition. If it’s been awhile since you’ve done a deep dive, put on your startup hat and give it a go.

…Jim

The work with our startups intensifies this week as we continue to work on Customer Development and The Lean User Experience. As our Founders move closer to defining their Minimal Viable Products (MVP), they have gone out in the market and interviewed potential customers of their products. As a result, some of our startups have made pivots in their business plan.

I like to celebrate these pivots with our startups. We're six weeks into the process, we've saved monthes of development time by not building software no one will purchase. We're learning more and more about their market segment each and every day. One interesting observation is, with each pivot, the founders are becoming even more passionate about their business. I contribute this to the fact the nine founders are going through this together\, and they're gaining positive energy from the team. This is another benefit of an accelerator; you push through the challenges at a much faster pace.

The importance of WHY, before HOW and WHAT.

Simon Sinek, an adjunct staff member of the RAND Corporation, one of the most highly regarded think tanks in the world. He wrote a best seller, "Start with Why: How Great Leaders Inspire Everyone to Take Action". Yes, his principles focus on leaders and the importance of communicating "why". I could write about this topic for pages, but I want to stay on point for this post, so...

Sinek believes you should communicate to your customers: WHY your product/solution matters, than HOW it does it and finish with WHAT it does. We believe most companies do this in reverse. Starting with what features the product has, how it does it so well and finishing with why you should but it.

"Sell to people who believe what you believe." Says Sinek. "People don't buy what you do, they purchase why you do it."

He spoke at a TED talk back in September 2009, it has been viewed by over 4 million people on YouTube.

He does a nice job of explaining his point and connecting it with Geoffrey Moore's Crossing The Chasm principles that help you understand the importance of getting wide spread adoption of your product by the early and late majorities, which is where the "big" sales come from.

Here is his presentation at TED, enjoy!

...Jim

Our VentureBox founders have finished week 5 of our 12-week Venture Launch program. The pitches continue to get better each week.  Feedback is critical to the learning process, so after each pitch we give the founder a breakdown of what we've heard, what worked and what didn't.

TechStars, a popular high-tech accelerator, has a great video series called "This Week in TechStars". This past week they did a breakdown of Flixmaster's pitch.

Enjoy!

I recently sat down with one of the VentureBox startups I'm coaching, and we were reviewing their short term goals, over the next 30 days. They had a lot on their plate; it was time to groom the list. So I asked them a simple question:

Does it create Cash or Traction?

The moment of clarity helped force them into critical thinking. Entrepreneurs need to remain focused on moving the company forward every single day. Time is a scarce resource, use it wisely.

For each decision you face, ask if it will bring your company cash or traction. If the answer is no, then ask yourself why you're spending time on it? Is it really that important?

If you're overwhelmed with your to-do list, give it a try and let me know how it works for you.

...Jim

I was talking to someone about Apple today. Yes, they appear unstoppable and blew the doors off their most recent quarter. I decided to do a SWOT (Strength, Weaknesses, Opportunities and Threats) Analysis for my blog. Please comment below and let me know if you agree or disagree with any of my bullet points. I had a tough time coming up with more weaknesses. I would really like to review this post in two years and see what we got right, and what we may have missed. So please, comment today!

Apple Inc. designs, manufactures, and markets personal computers, mobile communication devices, and portable digital music and video players. The company also sells various related software, services, peripherals, and networking solutions.

The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells various third-party Macintosh, iPhone, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and various other accessories and peripherals through its online and retail stores, and digital content and applications through the iTunes Store.

The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative customers. As of March 1, 2012, it had 361 retail stores, including 246 stores in the United States and 115 stores internationally. The company, formerly known as Apple Computer, Inc., was founded in 1976 and is headquartered in Cupertino, California.

Apple’s Strengths

• iTunes Online Store is an excellent source of revenue derived from sales of music and applications for Apple’s iPhone, iPad and iPod touch devices.
• Excellent brand loyalty by its customers. Many own multiple products (Mac, iPhone, etc.)
• No debt, excellent cash flow. $13bn Net Income in most recent quarter. (Dec 2011).
• Excellent Research & Development division that is able to deliver (premium) products that customers will stand in line to buy.
• Global reach, Apple’s brand is strong around the globe.
• They own their own Operating System (iOS), which is used across their entire product line allowing them to sell a complete product without paying large royalty payments to their competitors.
• Apple is an innovator and technology leader.
• Apple’s first time customers, buying iPhone, iPods and iPads, are buying other Apple products, including Apple’s desktop and laptop computers based on the most recent quarter.

Apple’s Weaknesses

• Weak integration with Microsoft Office makes their product line less attractive to business enterprises.
• Google’s Android Operating system is slowing Apple’s growth rate in the mobile phone market.
• High price. Apple’s products are typically higher in price than its competitors. Price sensitive consumers tend to not consider Apple in buying decisions.
• Apple tends to lead innovation and then watch other companies control the market once it has reached the tipping point and wider consumer adoption.

Apple’s Opportunities

• iTunes will continue to generate sales from music and applications, however I believe in the next two years Applications for the iPhone, iPod touch and iPad will generate more revenue than music downloads. Apple receives a 40% gross margin on all application sales.
• Cross product sales will continue to increase as more and more people choose Apple.
• Product development cycles have shortened in the mobile phone market, giving Apple a bigger opportunity in upgrade sales. Excellent iPhone 4 sales are an excellent example. Consumers are willing to update their phone hardware every two years.
• A new release of Apple’s iPod touch, featuring video chat, will likely be a huge revenue generator.
• A new release of Apple’s iPad, featuring video chat, will also likely be a huge revenue generator.
• Apple’s direct online sales channel will continue to grow, helping improve their already impressive gross margins.
• Apple new iAd advertising platform for Applications designed for the iPhone, iPad and iPod touch could be a significant revenue generator.

Apple’s Threats

• Mobile Phones based on Google’s Android Operating System.
• Mobile Phones based on Microsoft’s new Mobile 7 Operating System.
• Cheaper laptop computers from Dell, Toshiba, HP, Sony and IBM.
• New Tablet computers based on Kingle Fire or Google’s Android Operating System could hurt their iPad sales.
• Online Music Stores from Amazon, Yahoo! and Wal-Mart offering music cheaper.
• New online music models that including renting the entire music library for a low monthly rate could change how consumers pay for music.
• Technology moves quickly, new threats from new startups are likely.

So there you have it.  If you're a student, using this blog for your research, I would appreciate it if you would support our advertisers by clicking either the ad above or below this post before you leave the page. Your support will encourage me to update this post each Fall.

Finally, I would love to hear from you.  Go on record now, use the comment below (on my blog) and we’ll see how we did in a year or so.

…Jim

Here we go again.

I took my blog down a year ago when I decided to accept the role as President of Alchemy Solutions. I just didn't think I would have time to maintain it. Now that the Alchemy gig is behind me, I decided it was time to fire the blog back up.

The truth is, I miss writing.  Well, that isn't entirely truthful. I actually hate writing because I suck at it. As I get older I find myself fighting more and more brain farts where my thoughts get ahead of my typing and the next thing you know, I don't complete a sentence, or worse, finish my thought.  Writing is work for me, so please bare with me if I ramble a bit.

Since I'm working with the VentureBox Business Accelerator in Bend, Oregon, I plan on writing about startups and the journey from an idea to market. I'm passionate about lean startup principles, customer development over product development and the importance of focus and executing with a sense of urgency.

I also love product development, so expect me to write about products from time to time. I'm an investor, so expect me to write about the businesses that excite me. I'm a certified ScrumMaster and love program development and agile development using the SCRUM framework, so you'll be reading some of my rambings in this area as well.

I hope you enjoy it, please comment often so I know you're out there.

Thanks for stopping by.

...Jim

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