Tag Archives: business

Bored vs. Tired

I met with a friend and seasoned entrepreneur turned academia recently, Aaron Cohen.  For those of you who know him, he’s been around the block and has seen a lot in his days of being a successful executive at digital media companies.    He walked in the room and asked, how I was doing?

I am doing great, I replied.

He said I looked tired, which isn’t the first time someone has told me that.

We then dove into a discussion of being tired vs. bored.

It’s ok to be tired.
It’s not ok to be bored.

Lets discuss this here.

Tired.
Athletes train a lot.  Olympic athletes basically spend their life training.  But even at peek performance, athletes do get tired.  It’s ok to walk off the soccer pitch after a match and be tired.  It’s ok to drop the 400lbs of weights and lie down.  Why?  Because in most cases, you gave it your all.  You put everything you had into the sport.

Business is no different.  More often than not, founders get fat.  I put on weight.  I know plenty more who did as well.  Why?  Tireless persistence to achieve a goal left going to the gym, proper diet, and sleep all secondary and tertiary needs.

If you are giving it (whatever you are pursuing) your all, then tired is in your cards.  That’s good.  Make sure a vacation or time-off is planned to recoup, re-energize and reset.  Without this, you will run yourself down to the point of system failure.  If you get to that point, you’ve gone too far.

Bored.
There is a big difference between being tired and bored.  Boredom comes from not being mentally challenged and leads to complacency.  Boredom is not good because it causes negative attributes and tends to spread to people around you.  It’s like a negative-vibe-virus.

If you are bored, do something about it.  A vacation will not solve boredom.  You need to first analyze why you are bored and then talk to your superior to do something about it.  If there is no room within the organization to move, then get out.  Plain and simple.  You are not being fulfilled and I’m going to guess that your output is not up to standard because you are not mentally there.  You suffer.  The company suffers.

I have met plenty of people who are bored in their jobs.  Being bored is fine as naturally, your learning comes to an end in each role you take.  The smart people then move on to a role that’s fulfilling.  It’s a hard conversation to have with your employers but one that at the end of the day, is mutually beneficial.

I might be tired, but I’m certainly not bored.  I still wake up each day to new and fun challenges.  Some I dislike but they grow me professionally and personally.

Going Upstream & Downstream as a Point Solution

I’ve been thinking about point solutions recently because much of the innovation we are seeing in the advertising and marketing technology space starts out this way.  It’s also not uncommon in the advertising world when agencies are first started:  they start out as a point solution servicing a certain trend such as “social media” and because of this, they become well known specialists.

When point solutions emerge, they tend to be the deepest in knowledge in that particular area.  It’s usually a founding team that recognized the opportunity while working somewhere larger and wanted to create a very specialist company dealing with this new space.  We are seeing examples of this today within the spaces around Pinterest, Path, YouTube, and mobile amongst other areas.

There is a problem with point solutions.  Once your customers get comfortable on your platform, they will ultimately will want more.  They will want service a bit above and below your solution and as a company, you need to make a decision whether or not you want to service this business or someone else (competitor) will come in and service this need.

In the advertising agency world, I see this all the time.  It was especially prevalent with the initial social media boutiques which popped up.  Their clients are now asking them for paid media, creative, and offline work.  Very quickly, these social media boutiques become less “boutique-y” and more like full service agencies.  And overnight, the social media agency is no more and it’s back to being a fully integrated agency.

Pros of being a point solution:

  • You’re a specialist and you’re genuinely good at what you are doing
  • Free from distractions surrounding the areas around your product

Cons of being a point solution:

  • You are looked at less strategically and more tactically in many cases (not all)
  • You might get commoditized quickly by larger entrants who will give away your portion of whatever “stack” you are playing in

It’s OK to be a point solution and if you are taking investment dollars from venture-type investors, make sure to keep the capitalization low (and valuation), in order to drive meaningful outcomes for your shareholders.  We’ve been seeing a flurry of acquihires of point solutions and no real big exits.

2012 Silicon Alley Golf Invitational

I’m about a month behind planning for this year’s 2012 Silicon Alley Golf Invitational, but rest assured, by Friday, I’ll have the date and venue which will get sent out to all of the players from last year to reserve their spot at some point over the weekend.

If you’d like to add your name to the list of potential players, please click here and sign up.  This does not guarantee you a spot, but does get you on a list that will be notified if there is extra availability.  Requirement to participate in the event is that you must be an active senior participant of the Silicon Alley ecosystem as either a founder/executive/partner/etc of a start-up, venture firm, technology company, or other type of organization.  I hand pick every attendee at the event.

This is one of my favorite events as it brings together a fantastic group of business executives and puts us all in a neutral setting to have a good time and celebrate our industry.  It’s nice to remove yourself from the day to day streets of NYC and set foot on the 6,300+ yard courses of Westchester, Rockland, and Northern New Jersey.  We change the course up each year and I spent all of Saturday touring different golf clubs trying to pick the right atmosphere.

A lot of coordination goes into this day as it’s a labor of love and there is no “business” behind it to get things done.  I might change a few things up from the previous years but it’s still too early to tell.  Either way, the 2012 Silicon Alley Golf Invitational is going to be special and I’m looking forward to seeing you on the course.

Business Plan Competitions Don't Reward Business

I recently judged a business plan competition at Skidmore College and it was a fantastic experience.  The college and organizers did a fantastic job putting it together and making it all happen.  Here is a recap video that has been posted to YouTube.

I got back to the office yesterday and was catching up with Taylor about the competition and we got talking about the overall topic of business plan competitions.  While business plan competitions are fun and exciting, they actually do not reward business; they focus purely on the idea of a particular business.

One of the pieces of advice I always give out is that a mediocre idea executed great is better than a fantastic idea that’s poorly executed.  Execution is the key term.  Business plan competitions don’t reward execution, they just reward ideation and that’s a dime a dozen.

Something to think about.

An Annecdote about Entrepreneurship Education

I was fortunate to be asked back to my alma matter, Skidmore College, to judge a business plan competition that was open to all students at the college.  I drove up last Thursday eve and spent all day Friday with alumni judges and students.  It was phenomenal and blew away my expectations.  The students had obviously prepped hard for this day and it showed.   We saw 10 presentations that ranged from non-profit dance troupes thru iOS apps for customer service.

I loved the passion for entrepreneurship.  But candidly, even though I’ve been back to Skidmore numerous times to speak to college students, it was weird to be back sitting at a business plan competition.  Let me explain.

When I was a student at Skidmore, I tried to push the entrepreneurial/business vision forward but was met with much resistance from the school.  It was known internally that the business department was necessary but not a place where Skidmore placed many resources.   I started the first entrepreneurial get together (appropriately named Skidbiz) on campus in 2000, but could not get it sanctioned as an official club as it was too business focused.  I pitched it multiple times to the Student Government Association and college administrators to no luck.  My adviser, who was the head of the business department couldn’t believe it and found funding for the get-togethers from a local alumnus and it helped pay for the pizza and donuts for our events.  We never were “legit” but this allowed us to operate under our own freedom.  The club grew and had a great following.   True story.

What’s the moral of this story?  Entrepreneurs don’t understand boundaries.  If things are going to happen, they will.  I’m glad Skidmore recognized this and got behind it, and look forward to participating with them in the future of entrepreneurial education.

btw – Skidmore’s website currently is running a feature story about me on entrepreneurial thinkingFunny the way it is.

Marketing Wednesday: Media

We’ve covered some pretty fundamental topics here for Marketing Wednesdays including The Chief Marketing Officer, The Marketing Plan, and previously, the Agency 101.  Today, we’re going to cover a very broad topic:  media.

History

Way back when, we used to divide media between Above the Line and Below the Line (ATL/BTL).  Above the Line was typically “brand” advertising which included print and television amongst others.  Below the Line was the non-sexy stuff such as direct mail and even today, most of the Internet.

We then went into an offline/online world; this was primarily from the 1990s thru today.

And now, we talk about media within the POEM construct:  paid, owned, and earned media.

  • Paid media is what you buy.  It’s a big billboard.  A 300X250 on Buzzfeed.  A captcha via solvemedia.
  • Owned media is what you own.  It’s your brand’s website.  It’s your Facebook page.  It’s your store windows.
  • Earned media is what gets amplified.  It’s the re-tweets.  It’s the check-ins.  It’s the word of mouth referrals.

Todays modern communications plans require thinking across the entire media landscape.  If you view slide 15 of our public Media Kitchen credentials presentation, you’ll see how we talk about this thinking.

I believe that the best marketing experiences play to POEM all in one.  It’s the future.  However, to deliver on tomorrow’s media opportunities, many folks will have to re-tool and re-structure.

I also believe that the way we purchase media will be re-tooled, to go from a human led and optimized process to a hybrid process of using technology where possible, not just for procurement but for optimization and insights.  We have invested in many of those companies here, but the entire media space is ripe for innovation.  This post is not about marketing technology, but about media, so I’ll stop there from a tech speak.

Buying

Many vendors sell media.  The way that agencies or marketers purchase media from vendors are on different cost basis:  CPM (cost per thousand impressions), CPC (cost per click), CPL (cost per lead), CPE (cost per engagement), ratings points (for TV), CPA (cost per acquisition), and others.  Each cost basis can “back into” others and savvy media buyers know how to work the numbers to make them work for individual clients.

If a vendor fails to deliver whatever is contracted, it’s common for make-goods to be delivered.  These make-goods are essentially exactly what they sound like: additional inventory to make up for missed performance.

When purchasing media, sometimes media properties bundle in “added value” which is essentially additional opportunities surrounding a core purchase that helps make the idea bigger and/or bring down the cost.  When a media vendor sells a package, the purchaser buys the specific package at a specific rate, but the added value is on top of it, which brings down the final cost-per metrics.  This is very common in the offline world and I’ve seen it often when buying site-direct sponsorship opportunities (online).

Media is also a big part of the agency world.  There are buying agencies, planning agencies, and integrated agencies.  I happen to work at an integrated agency where planning & buying are together (I can’t imagine them separate).  Agencies charge clients largely based on planning fees (based on time & materials) and buying commissions (relative to the media channel they are purchasing).  Some agencies put a % of their fee at risk so they can get a bonus based on performance.

Many people believe that the media agency model need to change, but I’ve not seen another model put forth which is the “golden” model.  All of the new models I’ve seen put too much risk on any one side of the equation.

2 Key Questions to Ask a Management Team

I went to a conference recently put on by a friend and colleague of mine, Pip Coburn.  He organized about 150 entrepreneurs, investors, analysts and the like to attend and we discussed Monumental Change.  Some of the topics I attended and participated in were around Facebook vs. Google, Operating Systems, Future of Television, Education,  and Decision Making without Enough Data.

During our recap at the end of the day, one of the questions we had to answer was, “If you are going to meet with the management of a company to assess them, what 2 questions would you ask?”   We all had to think and participate with our answers.

While I contributed two, I didn’t feel that mine were best.  Here are the two that I favorited along with most other people which were given to us by a well known CEO of 2 publicly traded companies.

  1. What is holding you back?
  2. What is your business model and how did it and will it change over time?

What is holding you back?

I like this question a lot.  Everyone has wants and needs.  I’m sure that if someone asked you what was holding you back, you can rattle off a list of things.  You can tell a  lot from someone’s list.  The goal here is to weed out what is systematic or foundational vs. temporal tactics which are born out of politics or laziness.  If you can isolate the latter, then you can work with the management team to get thru the easier than say a foundational issue which is much harder to change.

What is your business model?

Seems like a trivial question but to many, its not.  Within the media agency landscape, our model is to sell our time to clients and we make a commission on the respective media we purchase.  Will this have to change in the future?  Maybe… But think about larger corporations (or even mid size), their models aren’t that easy to figure out.  Apple has how many revenue sources?  Google?  Facebook?  Instagram?

While this was a public company CEO who shared this information with us as this is what many investors ask him, I look to leverage these questions with startups we are looking at investing in thru kbsp Ventures.

(btw, this was my 1,000th post.  Woo hoo)

Marketing Wednesdays: Agency 101

This post is part of my Marketing Wednesday‘s series which was originally inspired by Fred Wilson’s MBA Mondays and Albert Wenger’s Technology Tuesdays.  This is my 3rd post – the first being on the Chief Marketing Officer and the second being about the Marketing Plan.

There are two ways to handle marketing:  you can perform all the marketing functions inside the brand (client side) or you can hire an agency to handle some or all of the marketing functions.  Today, we’ll cover reasons why you would and should hire an agency.  Note, I currently work for an agency which rolls up to a larger integrated agency.  So with that said, my answer is inherently skewed by the nature of where I work, but this is my own thoughts and not necessarily thoughts of my employer.  OK, the disclaimer is out of the way, so let’s begin.

The Role of an Agency

There are different types of agencies and those agencies come in all shapes and sizes.  There are marketing agencies, creative agencies, media agencies, buying agencies, planning agencies, social media agencies, mobile agencies, search engine marketing agencies, pr agencies, digital agencies, product innovation agencies, production agencies, analytics agencies, and many more.  So yeah, there are lots of types of agencies.   The agencies role is to act as an independent view, but an extension of the client, to create strategy, research, and work and liaison with the vendors and partners needed to carry out with whatever the output might be.  When an agency/client relationship is going well, the agency is essentially an extension of the client, but is just different “enough” to push the thoughts and boundaries of the clients.

Most agencies bill their clients on time and labor based on an overall relationship deliverable or a particular project deliverable.  This is then written into a Scope of Work (and sometimes an MSA) and signed off by both parties.  This is sometimes negotiated by the client’s procurement department to put pressure to bring down the agency cost.  More on this here.

Media agencies will bill based on time & labor for the planning components and will then charge a buying commission based on the media channel which is purchased.

Depending on the agency, they might move to a performance compensation model where they might put a % of their fee or commission at risk for sharing in the upside.  These types of models are becoming more popular but are fundamentally flawed because agencies don’t touch many of the factors that go into a clients product/service, so they could be in a very high risk situation which is very much in favor of the client.

The fee a client pays an agency covers everything from a team dedicated (or semi-dedicated) to a client as well, as, the infrastructure that the agency has invested in (research, tools & technology, processes, overhead).  Many times, the blended rate an agency charges could be less than hiring a marketing staff on the client side with tools & research at parity.

Conflicts

Advertising agencies have to manage for conflicts.  In the USA, advertising agencies cannot work with clients who happen to be competitors.  This goes without saying, clients wouldn’t appreciate that.  Agencies essentially give partial or full category exclusivity when they sign up a client.

Additionally, in the USA, advertising agencies do not markup the cost of media.  Agencies act as “agents” and pass along the cost of media to the client with a pre-defined commission rate bundled on top of it (net/gross).  The commission rates are pre-defined as noted and changes based on the media type (i.e. Television has one commission rate and SEM has another).

Finding the Right Agency

There are thousands of agencies in the USA, let alone tens of thousands across the world.  How do you find an agency that’s right for you?  There are agency “search consultants” who help brands create a list of agencies to talk to and lead the agency RFP and pitch process, there are online sites that have agencies listed, and of course, there are always referrals.  Much of the business we see at the agency are through referrals and search consultants.  Finding the right fit with an agency is important so generally the first meeting is what we like to call, a “chemistry check.”  Having a positive relationship with your agency is like having a positive relationship with your spouse.  You need to make sure chemistry is there and sometimes it takes dating around to find the right place.

A Few Reasons To Hire

1.  Evolved Thinking
Agencies and their staff generally don’t sit within the walls of clients.  Sometimes we do however, though this is not the norm.  This is a major plus because we can help evolve our clients thinking in different capacities because we do not suffer from knowing their artificial constraints (based on politics, budgetary, knowledge, etc).  Since we are in the business of big ideas (or many good small ones), we are constantly ideating and can bring these ideas to our clients.

2.  Multi-Discipline Thinking
When you do the same thing over and over again, you start to think a similar way.  Agencies have many types of clients – you can be working on an automotive account, a juice account, a pharma account and a fashion account.  Thinking across all of these accounts can help bring new ideas that can break through a particular category.

3.  Someone to Blame/Buffer
It’s true, we’ve seen this happen before.  Our car breaks down, we through the automotive brand under the bus.  Of course, it had nothing to do with our driving.  Similar to marketing.  If marketing isn’t working, fire the agency.  Don’t fire anyone at the client side, just fire the agency.  It’s a safety net that has worked for years and Wall Street accepts it, at least for the most part.

Ownership

Depending on the size of the brand/client, they might have one or many agencies.  Agencies might be broken down by discipline (search, social, pr, etc) or by product, or even both.  The overall decision maker for agencies is made by the Chief Marketing Officer of the brand but they might delegate the agency choice to their team depending on the organization they work for.  We have clients where the CMO has chosen us and we have clients where Brand Managers have (and clients in between).

Future Posts

In future posts about agencies, we’ll break down roles within the creative & media agency, discussions around compensation models, sequential liability, USA vs. EMEA contracts and more.  I hope you enjoyed this Marketing Wednesday installment.

I Graduated TechStars, Now What?

I was away on vacation for the past 4 days and had some time to actually think and reflect instead of act and respond to the day to day. I’ve participated in the TechStars NYC program for the past two years and have to say that David Tisch has really created something special. When I walk around their space, the teams absolutely respect him and all he’s done for them. He’s done a great job.

Basically, TechStars lines you up for an intensive ~100 day program in which the unspoken goal is to raise funds at the end.  For many of the startups, the introductions made throughout the TechStars program are top notch.  But, what if you pivoted half way through the program and only have 40-50 days as your “new” entity?  Chances are, you probably won’t get funded at that point.

Is there an accelerator post-TechStars NYC where companies go to literally accelerate.  If TechStars is to help get to an initial (or secondary) funding state, is there an accelerator opportunity to get companies business development traction, hiring, strategy, and sales help?  I’d envision these types of accelerators as being niche:  focused on marketing tech, bio tech, automotive tech, etc.

Maybe there is something here?  Or it might already be here and I’m not privvy to it.

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YCombinator Ad Innovation Conference Keynote Breakdown

Today’s opening keynote was given by Paul Graham, at the YCombinator Ad Innovation Conference in Mountain View.  I attended along with @tdavidson and @barryl530 to see the early stage innovation that’s happening in the ad tech space.  We were certainly impressed not just with the innovation but with the amount of great agencies in attendance such as AKQA, Goodby, Sapient, Omnicom, Cadreon, VivaKi, and Jess3 amongst others.  We were in good company, to say the least.

Paul admitted he wasn’t an advertising guy, but knows technology enough to understand how tech will influence advertising in the next few years.  The data he used to back his claims were based on the thousands of applications YCombinator receives and is able to forecast and see trends in where innovation is happening.

Here is a summation of the 9 trends that’s pushing advertising, per Paul, but I tend to agree as well.

1. Tablets are important and might call for their own unique advertising platforms to take advantage of the user interface.  Apple and Android will dominate the market and Apple will dictate the ad formats.   Tablets are genuinely a big deal and we aint seen nothing yet.  My take:  Yes, he’s spot on.  Tablets penetrate and are both a content consumption device but increasingly, a content creation device, as long as we can innovate and create good input devices.

2.  All data lives in the cloud. All data about a consumer, transaction, records, etc will live in the cloud and ostensibly, be located in one database that can be used.  What will hold this back will not be technology, but will be government and policy.  My take:  Totally.  We’re seeing this today.  I’m all about data.

3.  More stuff happens peer 2 peer.  Paul used an analogy that I don’t know if I agree with, but he claims that hotels exist because consumers couldn’t find any other way of staying in a remote city or town, so hotels were built to meet this demand.  Now with services like airbnb, hotels could cease to exist as we know them.  My take:  I like what he’s trying to say, but don’t know if I buy the entire analogy.  Not everyone wants to stay in someone else’s home.

4.  There are going to be a lot more startups.   I liked where Paul went with this.  He basically said that engineers had 2 choices after college:  go to graduate school or join a big company.  Now, they have 3.  The third oppty is to create a startup.  Paul threw out the 1% number which was how many developers/engineers start companies… and if this increases 10%, then that’s 10x the amount of startups in the ecosystem.  Again, we aint seen nothing yet with the volume of startups out there… there are going to be many.

5.  Facebook is already a big deal.   Paul said that the $1.6bln from Facebook is quick and simple money and they haven’t really began monetizing yet.  They are focused on growth and even have a Facebook Growth Group, which is one of the most powerful groups in Facebook.  He thinks that when they start monetizing, they can seriously move into markets and kill competitors such as PayPal or Wepay.  My take:  I agree with Paul, but they have to be careful in how they approach this as to not alienate developers and users.  I don’t want Facebook to be 100% of the services I use as a consumer.

6.  Software eating the world.  Don’t be an advertising company that does software.  Be a software company that does ads.  Having this mentality is obviously valley-driven, but allows you to scale a business and think more product focused, which theoretically, should have better outcomes.

7. Target Ads Precisely.  Google could target their ads much more precise but they don’t have to yet, as the market isn’t necessarily requiring it or does it make economic sense for Google to do it until they must.  Paul said a great quote:  “Assume you can read someone’s mind, what ad would you give them.”  My take:  This is one of our investment thesis at kbs+p Ventures – application of data to drive advertising decisioning.

8.  More things will be done by numbers.  If an investor had to place a bet on quantitative measurement/analytics of creative, bets should be placed on measurement.  Numbers will/can/do drive decisioning and with ROI driven world, we need to quantify it.  My take:  Spot on, another investment thesis of kbs+p Ventures as well as what we apply at VMM and The Media Kitchen.  Couldn’t agree more.  I even treat my fantasy football teams this way.. and I want 2-1 this past weekend!

9.  Creative.  Creative will begin to become “generated.”  Paul essentially argued that the best creative in the “future” world will have to be generated because of all the varieties that are needed.  My take:  I think he’s onto something if we’re able to deliver the right creative to the right person at the right time.

I loved Paul’s opening.  This wasn’t 100% of everything, but was a lot of it.  My friend Roger of IA Venturesc also talks about similar trends on his blog, in a post titled, changing polarity in advertising, if you want to continue being inspired…

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