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Archive for the ‘Strategy’ Category

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Article Author: Matt Moore.

I [matt moore] postulate that every single successful technology company has had a winning distribution model.

Success of a product, and any business for that matter, can be measured by two simple rates:

  1. usage, how much a customer/user comes back and use your product again and again, and
  2. user growth (a.k.a customer acquisition), how many new users are finding and using your product

Obviously, both are important areas that products must have a successful strategy for – but user growth is at the heart of measuring success of distribution.

In fact, distribution is one of the most amazing aspects of the internet – it’s revolutionized distribution. It’s now able to be faster, broader, and more targeted all at the same time. Directories, and email started this revolution. It moved to search engines, advertising, and simple syndication. And it will continue to revolutionize, as we are seeing through social means (e.g. Digg & Facebook).

Famous Examples

Not sure if you believe me yet? Let’s take a look at some great examples from the past… and even the present!

gates-centerfold.jpgMicrosoft > IBM
Microsoft was paid $50,000 by IBM to put its operating system on every IBM PC that was sold. Killer distribution for a startup!

google50.jpgGoogle > Yahoo!
Yahoo chose Google for providing its search results, before it decideded to try to compete with them in search. Not before Google milked this distribution, obviously, and people went directly to google.com.

ipodphones.jpgApple iPod > Viral
Although I believe Apple started with a viral product (particularly because they were bad at partnering), the iPod is an even better example. A keynote and ads started the iPod revolution, but the genius was that they built viral distribution into a physical device: the white headphones – make any product a (fashion) statement, and it can be viral.

ppal.jpgPayPal > EBay
It was way easier then check & money orders, and the acquisition proved it. Product and network affect were important players as well, but initial distribution went a long way.

chad_n_steve_of_youtube_tn.jpgYouTube > Viral – blogs & email
Clearly the big winner of the acquired companies recently. It made sharing via blog embedding and emailing so easy, people couldn’t help but show their friends how to waste time too.

scribd.gifScribd > Digg
A much more recent example, at least from what I’ve heard, a great portion of Scribd’s traffic comes from the fact that its documents frequently get dugg. Obviously, there are similarities to YouTube as well, so viral distribution is also at play.

logo_beta.gifiLike > Facebook
The power of the newest form of distribution on the web, social sites like Digg & Facebook. Facebook apps, can get more than a million installs in 3 months. And it’s all due to the power of the social graph. Something to keep an eye on.

So How do I Distribute My Startup Product?

This begs the question of how to follow in the footsteps of these companies and design a successful model for distributing your product. Big companies have it easy – they typically rely on money to solve their distribution problems. They can easily afford large marketing budgets and big partnership/distribution deals.

But the internet is the great equalizer, and it will only continue to become more that way. The most popular, but incredibly difficult to pull off explosively well, is viral marketing. It’s still hard because it has to be inherent to the product – people have to intrinsically want to share the use of your product. Only then do the features that enable viral distribution matter, as Andrew Chen explains in Viral Marketing is Not a Marketing Strategy (talk about link-bait!). His tip: don’t think about what viral features you can add, but rather how your product fits into an intrinsic, viral loop. Another way to think about it is why will your user contact their friends about your product, strictly for their own selfish reasons? This could include being perceived as being intelligent, fashionable, fun, or humorous.

Even for viral applications, it can help to use a viral distribution product (and/or platform) that already has traction, like Digg or Facebook. Almost any truly viral applications can exploit the use of these networks, and quite easily at that.

Of course, not all products can be inherently viral. But, of course, you do NOT want to be selling to one customer or user at a time. Aside from the normal online distribution methods, like SEO & link-building, you *have* to find a distributor. Online distributors are typically easiest to find, whether it be the expensive Google AdWords, or some other online advertising. What might be more interesting, depending on your market is affiliate networks – where you pay someone every time they generate a sale for you, on (and even offline). I’ve always thought that college students would make great affiliate marketers, if implemented correctly (I mean, painting, for god’s sake? there has to be something more interesting – not that I want to upset paul)!

Other strategies including partnerships with real businesses require true salesmanship. There are lots of companies out there looking for a partner to do exactly what you’re doing (more than likely), so you just have to go to relevant industry events (a LOT of them) and meet the people in the companies you want to make relationships with. Amazing things can happen just by talking to a lot of people. Of course, this takes time, and you have to love it. At least, someone on your team has to. And be sure to practice spinning your product and company.

But I believe something better will be built out there for distribution of products, using social-like distribution strategies, but for products that aren’t inherently viral. I mean, searching for something you need after you know you need it is so 2002. The next stage in distribution is when great products are put in front of people who need it so they stumble upon it — before they even heard of it, and before they knew they needed it.

Authors Blog.  Due Credit to Matt Mooree

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Author: Douglyss Giuliana

 

Owner-managers of start-ups and small businesses have a long hill to climb. In order for the business to generate sufficient revenues let alone be successful managers must get the word out to the buying public. The entrepreneur must creatively marshal limited resources to promote, sell, and distribute the product. This is clearly a challenge for the small business for a number of reasons.

First, start-ups and small businesses have limited capital to spend on marketing campaigns. The capital they do have must be split between product development, personnel, operations, sales, and marketing. In addition, the battle for consumers attention from the growing number of companies and brands has driven up marketing costs. Managers must find ways to make the most of the marketing funds available, often relying on inexpensive and even free marketing vehicles.

Second, traditional marketing techniques have become less effective. Television, newspaper, and magazine advertising have simply become noise. Consumers are bombarded with so much advertising that they often tune it out, change the channel, or fast forward past it. In addition, consumers have become more and more skeptical of and insensitive to traditional broadcast advertising.

Third, these traditional techniques may not reach the target market. More people are heading to blogs for their news, satellite for radio, MP3s for music, and the Internet for entertainment. These media are, for the most part, beyond the reach of traditional marketing.

This post digs in to a number of alternative marketing techniques appropriate for entrepreneurs and owner-managers engaged in business-to-consumer venutres.

The Challenge of Entrepreneurial Marketing Start-ups and entrepreneurial ventures suffer from very limited resources, including personnel, time, and money. Yet, every business large and small must learn to cope with less, especially during times of downsizing, cost cutting, and reorganization. Even Fortune 500 enterprises wish for larger budgets and bigger departments.

Marketing also plays a key role in attracting other critical assets employees and capital. The start-up or small business must be visible, attractive, and look like a winner; these are things that customers, employees, and investors all look for.

The start-up or small business must be visible, attractive, and look like a winner; these are things that customers, employees, and investors all look for.

 

The Owner-Manager Difference:Decisions are made almost exclusively by the owner-manager in a small business or entrepreneurial venture; there is little if any delegation of tasks involving strategy, finance, control, and marketing. Therefore, any marketing activities will rely heavily on the owner-manager’s experience, expertise, and knowledge.

 

Marketing Strategy for the Entrepreneur
The small business owner-manager must often focus so much on daily operations that strategy is something left for much larger companies. In fact, entrepreneurs often start with an innovative product but little understanding of the target market. They are content to use their intuition, throw the product into the market, and see who buys. As customers start rolling in, the entrepreneur simply tries to find more of the same. This is quite the opposite of traditional marketing techniques where the target market is identified, a message is crafted, and a strategy to reach the target is developed. The traditional top-down approach of segmentation, targeting, and positioning is replaced by a bottom-up approach that starts with identifying an opportunity, attracting initial customer, and expanding by finding similar customers.

 

Marketing Mix
In choosing methods of communication, it is important to use as many methods as can be executed successfully. Multiple methods will reach a broader audience, and different consumers will be affected by different techniques. The investment in marketing is a bet on future returns. Much like an investment portfolio, you should spread the investment around to different vehicles. The trade-off is that spreading too thin might dilute each piece to be ineffective. Also like an investment portfolio, understand the potential cost and return of each option and craft a mix that maximizes that return.

 

The Offer
While most entrepreneurial ventures are based on an innovative and therefore differentiated product, it is important to understand why this is the case and the subsequent responsibility of marketing. Simply because of their limited reach and capacity, small firms perform best with a narrow focus. While the narrow scope allows the small business to cater to a specific market, it is also likely that the small market is not enough to attract the attention of larger competition, allowing the small firm to fly under the radar.

 

Market Research
It is rather common for an entrepreneur to start the business with only a limited understanding of the product, the market, the plan, and the competition. They go with their gut; they use intuition. They sense a need rather than rely on analyst reports or detailed competitive analysis. In fact, many entrepreneurs start with only a product or service idea, and then try to find a market for it. They focus on developing a great product and only later shop it around, then focus on the market that had the strongest response. Indeed it is innovation and creativity that propels the small business to success, but this contrasts the customer orientation that lies at the heart of marketing.

 

Word of Mouth and Buzz
Word of mouth is the direct person-to-person communication in which one person describes the attributes or experience of a product or service to another person. It occurs when we tell a friend about a great movie or when we brag to a colleague about a new car or a fabulous vacation. However, word of mouth is just as likely, maybe even more likely, to occur when we tell someone about a terrible meal we had at a restaurant or a new computer that constantly crashes. Good or bad, the word spreads. Word of mouth spreads from those who know about your product, typically existing customers, to those who are unfamiliar or maybe familiar but not yet convinced or sold. Many start-ups rely on word of mouth to attract that initial critical mass of customers, and many small businesses count on the recommendations for all of their new business. In either case, the high effectiveness and low cost of this marketing method makes it a staple for any resource-constrained venture. According to a 2001 McKinsey report, 54% of sales in the United States are affected by word of mouth.

 

Viral Marketing
Viral marketing is a special case of buzz in which the product itself is the way that word spreads. This term was coined by Steve Jurvetson who was one of the venture financiers of Hotmail. At the bottom of every email sent through Hotmail was the line Get your private, free email from Hotmail at http://www.hotmail.com By using the product, customers were passively spreading the word. This small start-up, with no spending on large media advertising, grew and grew until it was acquired by Microsoft.

 

 

 

Customer Evangelism
A customer evangelist tells your story and tells it to everyone. He purchases your product, believes in your business, recommends it to friends and colleagues, supports you even when you make a mistake, and provides feedback even before you ask. He wants you to succeed. This action and belief is based on an emotional connection the customer has with your product, service, or company. Customers become evangelists when they are so pleased with their experience with the product or service that they want to tell others and even want to help the business succeed. People love to talk about their experience with products and especially like to be the one that pointed out a great product that everyone subsequently adopts.

Building Brand
While strong brands are typically associated with larger, established companies that have had years to build a reputation and become widely known, a strong brand can also be successfully built by the small business. The purpose of developing a strong brand is in its ability to communicate the value proposition easily and effectively.

Partnerships
There are two types of partnerships that small businesses can take advantage of. First, by partnering with another small business, the two can join forces and their limited resources to promote, package, or distribute their products together. Beyond simply sharing the bills, the two businesses can split up the work and offer expertise that the other business might lack. Second, a small business can partner with a larger, established company. While this is typically much more difficult to accomplish, if a relationship can be forged, the small business can benefit greatly.

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Code(ing) is the Heart of Any Modern Startups.

The business ideas, new utilities for society and the next big thing all boil down to code. If the code is good, the startup has a chance. If the code is bad, no matter how brilliant the business people are the startup is not going to get far.

Alex from Adaptiveblue has explained the bottom line of what one needs to Start Engineering Startup.

Here are the Following Slants:

1. Must have Code.

2. Must have Technical Co-Founder.

3. Hire A+ Engineers who love coding.

4. Keep the Engineering team Small and do not outsource.

5. Ask tough question during interview.

6. Avoid hiring managers.

7. Instill Agile Culture.

8. Don’t Re-Invent the Wheel.

Cary on the Detail Here.

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99% Startups in the World are formed by Stumble upon problems. Those who stumbled upon a problem wants to solve the real pain problem. Google Founders Frustrated with Alta vista and other search engines. Google was the 9th Search Engine in the world, no one expected its massive growth with the pace Google currently moving.

One should not start startup emotionally. There should be something missing solution to the problem of the mass.

The above images are Box.net [online file storage] Startup Office.
Image Credit: SFGate

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It is our opinion that Google (GOOG) has designed and deployed home-grown 10GbE switches as part of a secret internal initiative that was launched when it realized commercial options couldn’t meet the cost and power consumption targets required for their data centers.

This decision by Google, while small in terms of units purchased, is enormous in terms of the disruptive impact it should have on 10GbE switching equipment providers and their component supply chains. It is as if a MACHO just arrived in the Enterprise networking business and the orbits of the existing satellites have begun to shift without observers knowing why – until now.

Through conversations with multiple carrier, equipment, and component industry sources we have confirmed that Google has designed, built, and deployed homebrewed 10GbE switches for providing server interconnect within their data centers. This is very similar to Google’s efforts to build its own server computers (excellent article here). Google realized that because its computing needs were very specific, it could design and build computers that were cheaper and lower power than off the shelf alternatives. The decision to do so had a profound impact on server architecture and influenced the market’s move to lower power density solutions that Sun (JAVA) , Intel (INTC) and AMD (AMD) now embrace.

Through our[Nyquist] investigative research, Nyquist Capital reached the conclusion  that 12 months ago Google took a look at the state of the art in 10GE switching equipment and decided that it could do better. The reasons behind this decision will have a large impact on how the small but rapidly growing 10GbE equipment and component market evolves.

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Facebook CEO Mark Zuckerberg last week unveiled the social network’s new ad program to 250 marketers at a much-hyped Manhattan event with this bold proclamation: “The next hundred years will be different for advertising, and it starts today.”  Total hype — or at least hyperbole.

Mark Zuckerberg
Photo: Steve Maller

Facebook CEO Mark Zuckerberg has unveiled a new ad program that relies on user recommendations.

Like any new advertising venue, Facebook’s ad system merits a look. But don’t be fooled by the grandiose rhetoric around its revolutionary powers. In fact, out of everything Facebook unveiled last week, the part that’s most interesting may not be the advertising at all. Instead, it’s the way the site is amplifying the myriad unpaid user recommendations and brand affiliations that already go on inside the social network.

“The more you enable person-to-person communication, the more opportunities there are for individuals to influence each other,” said Rob Norman, CEO of Group M Interaction. “This phenomenon already existed. [Mr. Zuckerberg] just poured gas on the fire.”

Peer review
That “new way to advertise online,” as the unveiling of the ad system was billed, is a user-recommendation system and hyper-targeted advertising play that, when combined, creates something Facebook is calling SocialAds. Under the system, actions users take when they’re not on Facebook, such as renting movies on Blockbuster.com or selling products on eBay, can be broadcast to their Facebook friends. Brands also can create Facebook pages users can interact with, and those interactions are relayed to their networks.

Smart marketers are already starting to recognize the frequency with which people report their affinities for brands on social nets, blogs and personal web pages — and they understand that consumer reviews and trusted recommendations are increasingly important marketing factors. (This has not been lost on the application developers who have been innovating on top of the social network; already there are Facebook applications devoted to displaying people’s favorite brands, purchases and tastes.) And whether or not Facebook is the advertising game changer many thought it would be, its recent moves only amplify that trend.

Facebook has managed to “put the power of recommendation and referrals into a systematic environment,” said Chamath Palihapitiya, VP-product marketing and operations at Facebook. That’s a pretty interesting proposition for marketers but not one they have to purchase. (And that’s perhaps worrisome for Facebook, which needs to prove it can make money through ads to justify its recent $15 billion valuation.)

Meanwhile Facebook’s plans for hyper-targeting paid ads based on user interest and activities were received as, well, kind of obvious. MySpace is sorting its users into interest and activity categories marketers can buy. Both sites introduced self-serve ad systems last week that could greatly expand advertising to smaller, more local businesses. Unlike MySpace, Facebook plans to marry its targeted ads with user-initiated brand references.

Article from Advertising Age, Read More…

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The concern about the Mozilla-Google relation is more focused on what would happen if Google walked away and chose to create its own browser, or back another. Their agreement is set to expire next November, the foundation announced within its financial statements

Only a couple of years ago, Firefox was the little browser that could – an open-source program created by thousands of contributors around the world, without the benefit of a giant company like Microsoft to finance it.

 

Today, Firefox, which has prospered under the nonprofit Mozilla Foundation, has grown to be the largest rival to Microsoft’s Internet Explorer, with 15 percent of the browser market worldwide and higher percentages in Europe and among tech-savvy users. It has about three times as many users as the Apple Safari, whose new version is the first to work on PCs.

 

In trying to build on this success, the Mozilla Foundation has come to resemble an investor-backed Silicon Valley start-up more than a scrappy open-source project. Using a for-profit subsidiary, the Mozilla Corporation, the foundation has generated tens of millions of dollars in revenue in royalties from search engine companies that want prominent placement on the browser. As a result, the foundation has built a war chest to compete against the giants and has, at least temporarily, moved away from the typical activities of a nonprofit organization.

 

Looming over all of this competitive planning is Google, the search engine giant that has been writing most of the royalty checks that finance Firefox. That contract expires next year and no one knows whether Google will continue as an ally – or possibly emerge as a challenger.

 

There are many examples of businesses that have been created to help service open-source projects – like Red Hat was for Linux – but Siobhan O’Mahony, an assistant professor at the University of California, Davis, School of Management, calls Mozilla “the first corporate open-source project.”

 According to Mozilla’s 2006 financial records, which were recently released, the foundation had $70 million in assets, largely invested in mutual funds, and last year collected $66 million in revenue. 85% came from a single source – Google. But, despite a pledge to use Firefox revenue to support new open-source projects, the foundation gave away less than $100,000 in grants, according to the audited statement, or $287,000, according to Mozilla, in 2006. In the same year, it paid its chief executive, Mitchell Baker, more than $500,000 in salary and benefits.

 

The rise of Firefox can be seen as an extension of the Netscape-Microsoft battle of the mid-1990s. After Microsoft had largely wrested control of the market, Netscape decided in 1998 to release its code to the public, and immediately developers took up the challenge.

When the extent of the financial connection between Mozilla – which proudly points to its community of tens of thousands of voluntary developers, testers and “evangelizers” – and Google was first revealed about a year ago, the question was whether Mozilla was acting as a Google proxy in its larger wars with Microsoft and others.

 Wladimir Palant, a longtime contributor to Firefox who administers the popular Adblock Plus add-on that removes ads from Web pages, said he was pleased that the foundation had so much money saved up. He advised that it “save some of the money for later.”

A Google spokesman issued a statement saying: “Mozilla is a valued business partner because many users utilize Firefox to access Google products and services.”

.

“We’re living in a cold war between open and closed systems, and Google is happy to lend support to entities that it sees as allies,” he said.

Source(IHT)  via Slashdot written by eldavojohn.

 

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Born into a small trading family, India’s retail czar, Kishore Biyani, replaced conventional wisdom with “guts and instincts” to create Future Group, a $1 billion company that includes Pantaloon Retail, a department store group; Big Bazaar, the company’s name for hypermarkets; Food Bazaar supermarkets, and Central Mall, a more upscale aggregation of merchandise. Known for his insights into Indian consumer behavior, Biyani also represents an enigma to the country’s emerging retail players, both domestic and foreign. He offers some glimpses into what makes him tick in his recent biography titled, It Happened in India: The Story of Pantaloons, Big Bazaar, Central and the Great Indian Consumer, co-authored with Dipayan Baishya. The book has sold some 100,000 copies, more than any other business book published in India so far. In an interview with India Knowledge@Wharton, Biyani, who has often been called “the Sam Walton of India,” talked about leadership, the Indian retail market and why he would never consider collaborating with Wal-Mart, among other topics. Excerpts from the interview follow.

India Knowledge@Wharton: What does leadership mean to you?

Biyani: In the last six months, I have read many articles on leadership and met a couple of experts on that subject. But I still could not find an answer to what, exactly, leadership means.

There are two types of leadership. The first is all about thought leadership, which is original thought, believing in it and making things happen based on those thoughts. The second type is skills leadership, which refers to doing things consistently and in your own style.

India Knowledge@Wharton: What part of leadership is inborn and what can be developed?

Biyani:For me, leadership is all about thought leadership, not skills leadership.Skills leadership can be developed even after the age of 24 or 25, but thought leadership cannot be developed after a certain age.

India Knowledge@Wharton: How do you define thought leadership?

Biyani: Thought leadership is about building scenarios and making them happen. I believe everybody is a victim of systemic thinking and has their own mental syntax. First things come first, and everything else is a reflection of where you started on that first thing. If you change that syntax, things change. If you have a business school orientation, your syntax of thinking will be in a particular direction. I am a businessman and entrepreneur, so my syntax of thinking will be in a different direction. Each has a unique method of sequencing to arrive at answers.

One would have to change everything to look at things differently. That is a very difficult thing to do as we have our own mental maps. We are not trained to change mental models. Business schools also have not been trained to do that. Business schools work on creating efficiencies, creating productivity and managing consistency. But life is not like that. Life is chaotic.

….

India Knowledge@Wharton: How have you developed leadership in your organization?

Biyani: We have developed a very different style of leadership. We run a seamless organization. We don’t have structures; it is a non-hierarchical organization that works with people coming together to do things.

It is also a very design-driven organization. We believe the structure has to be broken up to change; the design has to be altered to change things. A design-driven organization has flexibility and maneuverability. It is an amorphous organization that can be given any shape and any direction anytime.

India Knowledge@Wharton: Can you give an example of how that works?

Biyani: We can chop and change anything we do, anytime. Nothing is constant for us. Nothing is constant here. We believe in destroying what we have created.

India Knowledge@Wharton: In your book, you have described three types of entrepreneurs. You say your father and uncles were “preservers” and you call yourself a “creator” and a “destroyer.”

Biyani: Most people are trained to be preservers. It is great to be a preserver. But for us, whoever has to create has to destroy. Without destroying, you cannot create anything new.

That is also the law of nature. Look at the seasons. Everything gets destroyed to create something new. But unfortunately, business does not take any cues from nature. None of the business schools takes anything from nature. One cannot go against the flow of nature. In our group, we don’t follow business principles. We follow the principles of nature.

One of the biggest principles we follow, as I have said in the book, is to go with the flow. We never do anything against the flow of nature. And when you follow the principles of nature, ideas will get destroyed and recreated.

If you look at nature, human beings have not changed over a period of so many years. Love, hate and all the other emotions are still the same. But we all complicate things. We create segments, psychographics and other indices. It is a simple world, but we break it up and start looking at it through lenses that are very different. You will find all the answers in nature.

Continue here India Knowledge Wharton.

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