Category Archives: Forbes

How This Low-Tech Founder Got A High-Tech Startup To House $150M In Transactions

This post originally appeared on Forbes.com.

In a market like this where it’s relatively easy to raise capital at higher valuations, it can be tempting to spend big on customer acquisition. This environment has led to recent conversations around high burn rates and the relationship between “Capital and Success.” But some startups are realizing that overspending on customer acquisition may not lead to the return they are looking for and are instead finding different, more cost-effective growth strategies.

In just two years, Sweeten, a New York City-based virtual matchmaking service for homeowners and renovation experts, hit $150M in projects posted on their marketplace driven by one of the cheapest forms of customer acquisition: content marketing.

sweeten homepage

Under enormous pressure to post gains in the $12B NYC renovation space, Sweeten CEO and founder, Jean Brownhill Lauer, was initially tempted to spend on obvious advertising purchases. Surely, targeted advertising would bring homeowners looking for hand-selected general contractors and designers to the site. Instead, Lauer has bet big on a different approach: creating in-house content that gets serious traction with zero customer acquisition costs. Adhering to a strict no-paid-advertising model, Lauer’s team is using original content to drive social media activity and partnerships with widely-viewed shelter and design sites, drawing prospective customers to the site more organically.

In-house content over paid advertising

“We started with big ideas but severely limited capital,” Lauer said. “When we looked at our budget and tried to envision parting with funding to cover advertising costs, we knew we could get clicks and site visits but probably not much else. Instead, we’ve watched as our investment in high quality and highly visual in-house content has drawn those same clicks and site visits through collaborations with industry leaders, and at the same time, has been a particularly powerful tool in establishing relationships and trust with customers.”

For a company trying to bring trust and structure to an unwieldy market, this outcome is in many ways more important than page views.

Regular, reliable content

Sweeten’s blog features two key categories of regular content.

The first is fairly typical “before and after” photos that show how the site connects homeowners to contractors who are uniquely suited to a project’s budget, location, and style. The second is content that digs deeply into questions around the renovation process that most homeowners face.

This combination of content is attractive to both a design-savvy urban audience as well as actual homeowners who are desperately looking for reliable information before spending significant money on their own home renovations. In both cases, this content is relatively cheap to create and has a high return on prospective customers and users of the site.

Content partnerships and social conversations

In today’s world of Instagram, Pinterest and other ‘photo-first’ platforms, users continue to demonstrate an increasing demand for quality content. As Lauer said, “We’ve learned that quality writing and photos seem to be constantly in demand – there is this insatiable appetite for design gorgeousness and trustworthy information.”

And to prove it, Sweeten’s photography has generated a not-insignificant social presence with 160K followers on Instagram.

“The Instagram crowd loves our design perspective and actual homeowners are coming back to our site for guides to renovation pricing and regulatory insight that they need to feel ready to start a transformative renovation.”

Lauer is now focused on getting the most out of the content: tailoring it across social media platforms and building it into the site so that customers are getting personalized information as they use the marketplace.

Lauer is also seeing that investors are paying attention to the content cycle; “Our investors want to see site traffic and transaction growth, and they love the fact that we’re able to garner this kind of volume with zero acquisition costs. When you pay for a click, you might get that one click and then the interaction is over. When you create great content, you can get thousands of clicks and use that piece over and over again.”

More and more companies are beginning to realize the value of content over paid advertising.  Sweeten is just one example of a startup that is realizing this and for them, the result is over $150M in transactions.

How To Deal With Company Growing Pains

This post originally appeared on Forbes.com.

Every company goes through growing pains. They suck. And no matter the company size these problems will always exist. It’s just that the pains will be different as the business grows. A 300 person organization feels the same pressure that a 10 person organization does, but early stage companies don’t have the resources that a later stage company does. As a result, it’s often very easy to get caught up “in the business” without ever thinking about how to work “on the business.” So here are some easy tips that can be used to work “on the business” that I’ve found to be helpful for early stage companies:

Create and write down roles, responsibilities, and goals and then review these goals. Do it over and over again.  Each week, team leaders should have one on one’s to talk about what is working and what is not, and why. If the team members can’t provide answers with data and facts, that means they are not doing the hard work of getting their hands dirty. Goals and documented responsibilities will hold everyone accountable. Without accountability, there will be complacency and complacency will lead to a slow death.

Look at the data. Spend time to segment your best customers by your most important metrics. Try to identify what the overlap looks like between those top metrics. Consider including and also removing the outliers to see what that might mean, if anything. See if the results align with any hypothesis that you might of had. And then once you have your answer, stop, and go execute. Don’t get bogged down with analysis paralysis but do enough to make you feel confident in your course of action and then aggressively attack. Stick with your instincts and if the data supports it, then great! If not, try to figure out why. I heard a story once of a company who thought all of their customers would be located in the densely populated US cities like New York and San Francisco. It turned out their customers were all in India and so they relocated the entire company.

Sell. It’s great to try to optimize the inbound and outbound marketing funnels of your business but sometimes a quick sales hack to sell something is to simply get in front of the person you want to sell and to close them. Often times old fashion ‘hustle’ is the most critical part of a business and as  Mark Cuban says, “Sales Cures All,” which brings me to my next point.

Prospect and get referrals. Take time to create your top 100 customer list. Figure out who the decision makers are at those organizations. Then figure out who knows those people and can provide you with a warm introduction. This requires hustle but often times this tactic yields the highest ROI. For B2B businesses, LinkedIn is a powerful tool here. For B2C businesses, Facebook and Twitter can be pretty powerful.

Create urgency in the organization. One of my favorite business stories is when the founder of Intel Israel created an artificial war. He knew that for his semi-conductor factory to stay operational, in a region torn with chaos and doubt, he would have to exponentially outperform his peers and competitor. What did he do? He put up a black pirates flag with the motto “$0.66 or die” meaning that if they did not figure out how to hit a specific $0.66 price point for their semi-conductors, their organization would be out of business. Well, they hit their goals and became one of the highest revenue generators for the early days of Intel. What can you do to get the team fired up and operating like they need to win?

So those are just a few ideas that might be helpful to a growing organization. Perhaps they aren’t the most revolutionary, but sometimes easy tweaks is all that’s needed to make a difference.

The $2.3 Billion Business Model – How Content, Community and Commerce are fueling these companies.

This post originally appeared on Forbes.com.

A new breed of business model is emerging which combines content, community and commerce to dramatically improve the consumer discovery and shopping experience online. Sites like Houzz, Polyvore, and Motoroso are putting themselves at the center of their industries using this “Trifecta,” a moniker applied by Mary Meeker of KPCB in her 2014 Trend Report.

Why is this?

Consumers rely on three factors when making purchasing decisions: content, community, and commerce. Content for inspiration and information; Community for social validation and recommendations; and Commerce for making the purchase. Today the landscape of the web serves all of these needs from every imaginable angle and from millions of fragmented sources. This results in a lengthy and frustrating experience for the consumer. Amplified by the massive adoption of mobile, consumers are increasingly demanding seamlessly integrated experiences that combine these 3 C’s.

This concept seems to be working well. Five years into its life, Houzz recently made news by fetching a $2.3 Billon valuation and appears to have become the definitive online resource that combines design inspiration, products, and service providers in the $300B home remodeling industry. Polyvore has revolutionized fashion by enabling community contributors to curate and drive sales of fashion, propelling it into the limelight and attracting over $22 Million in venture capital.

It’s not unimaginable that companies like these will rise to become powerful forces at the center of many different industries. One such business focused on the automotive industry is Motoroso. Released in beta just 2 months ago, Motoroso features over 100 official brand profiles from leading auto and motorcycle brands, including Ducati North America, Porsche, and Volvo.  Ducati North America Online Marketing Manager Patrick Flynn says: “Motoroso is an excellent online platform for Ducati as it allows the distinctive designs of our products to speak for themselves. It’s a welcome addition to our online marketing strategy.” Volvo Cars of North America’s Head of Social Media, Rahul Mahtani states “Volvo is in the process of a major brand transformation and Motoroso provides a unique channel to showcase the evolution of our products visually, as well as demonstrate our commitment to innovation.”

Porsche 911 GT3RS
Porsche 911 GT3RS (Photo credit: Axion23)

I sat down with Motoroso CEO Alex Littlewood, he says “We live this lifestyle, so we know how painful it is to discover and shop. We’re here to create a better experience for everyone in this industry.” In regards to launching Motoroso he adds “We’re starting with enthusiast niches and lifestyles, because they’re the influencers that drive the larger industry trends.”

While Houzz, Polyvore, and Motoroso seem poised to become powerhouse companies in their respective industries, it will be exciting to see which other major verticals or lifestyles will see similar business models applied. Sports, travel, food, outdoor, education, and pets could all benefit from sites that serve their industry this way.

How This Former Internet Entrepreneur Is Building A Wine Empire

This post originally appeared on Forbes.com.

In 2008 Michael Dorf opened his first combination music and wine venue in NYC called City Winery. In 2013 the brand generated over $1 million in profits for his investors. Compared to his previous media and technology company called Knit Media, parent company of the Knitting Factory, Michael generated more profit with City Winery in the first year than all of his years combined at his internet company. The business now has locations in NYC, Chicago, and Napa. This fall will see the opening of the fourth location in Nashville with more expansions to be announced by the end of 2014.

Here are some lessons from a former technology entrepreneur on how to build a rapidly growing business in the old fashion world of food and hospitality, using technology as a catalyst for growth.

You can’t digitize wine, but you can music. Marc Andreessen famously said “software is eating the world” however there are just some things that will never go digital. Food, wine, and live music are just a few examples. So when Michael looked at his business, he asked himself “what is impossible to copy?” For him, live music was at the top of this list because as he said, “even the best high def surround sound Imax films can’t capture the magic of a musician performing live.”  Thus, the opportunity around the live concert business was the side of the music industry he wanted to focus on. Michael isn’t the only one to capitalize on this opportunity. From 2009 to 2013 “the rock band Phish has generated over $120 million in ticket sales, handily surpassing more well known artists like Radiohead, The Black Keys, and One Direction.” Michael and Phish focused on live music as their point of difference.

User Interface (UI) is not only important for computer screens. It’s also important for physical space. In the world of software, User Interface (UI) and User Experience (UX) are both critically important. It is how a customer navigates a website, what they see when they enter, how they are greeted, treated and ultimately served. A physical room is no different so when Michael designed his first venue, he strongly considered the material choices and the design elements of what a customer can touch and feel. Danny Meyer calls it “enlightened hospitality” to look at all of these elements. With the mindset of user interface, you can improve customer experience by thinking about the various movements in the physical spaces of your store, restaurant or office.

Technology is a tool to make your simple tasks, even simpler. Michael wanted a ticketing system that could allow his customers to pick their seat at a particular table, visualize it on a map, and see who was where in their 300 seat room. This capability would enable City Winery to perfectly scale the room with different pricing options and configurations. This solution however did not exist, so they spent some resources to build a custom ticketing solution for their business. Now, people can show up an hour before an event or 20 minutes late and they will still have their seats available. This created a much more luxurious approach to seating and tickets thereby creating a much better overall experience. According to Michael, “this in fact, gives people back a little time, something that has gotten more scarce and valuable in an overly digitized, super fragmented, and fast paced high tech world.”

Direct Marketing is cheaper today. Years ago, marketers would have to send a piece of snail mail to their customers. Today, emails and social media enables real time, cost efficient marketing. Sending direct emails that get through junk filters and to the radar of City Winery’s customers is a tremendously inexpensive way to stay in close touch with their community. By combining this with social media platforms, Michael and his team are able to get the attention they need in an overly saturated world of media.

Know who your customers are by measuring and analyzing data. In a larger scale organization, the ability to have a maître-de remember everyone who walks in and what their favorite wine is, simply will not work. However, by using a membership program which is tied to a POS system, Michael is able to track what kind of wine people are consuming and is therefore able to see patterns in their consumption. Their “virtual sommelier” can send suggested wines for the customers to try on their next visit. Like great sommelier with a tremendous memory, this is terrific service perk, especially the more regular a customer is. As Michael said, “this was a classic old world dining trick which we used new technology to reapply in a tangible way. If it was purely a digital suggestion box, it would not work as effectively.” When you think about your business, think about how you are keeping track of who your customers are and what they like. There are newer tools out there that can help you do this more efficiently then pen and paper.

City Winery is not just using technology, but the best of the new media’s thinking, in delivering a unique, profitable and real world experience. Besides locations around the globe, if anyone is going to be able to digitize wine, chances are good that it will be Michael.

The Band
The Band (Photo credit: tr.robinson)

Do You Hate Your Job? 5 Tips To Change That

This post originally appeared on Forbes.com.

“I knew I had to quit when I couldn’t get out of bed in the morning to go to work.”

Those words stuck with me. I heard them from a successful entrepreneur and I think about them almost every day. It’s a quick gut check against the happiness and balance in your professional and personal life.

Over the past few weeks I’ve heard similar words from countless friends and colleagues.

The lawyer that started a legal career because it was a safe and steady job.

The financier that went to wall street because of the big bonuses.

The doctor that attended medical school because the parents said they should.

The consultant that joined a big named firm because of the prestige associated with it.

To the outside world these jobs are normal. In fact, they are celebrated. But to the individual they can sometimes feel like a cage with no escape. However the good news is that I’ve seen people successfully make the switch from a career they hate to a career they love. In all of these situations, there were at least five common themes that enabled these people to make the leap of faith and recalibrate their life for a happier, more successful career.

Hone in on your transferable skills. A friend recently described his job to me. He does “platform sales to financial institutions and hedge funds.” When I asked him what that meant he said, “I’m basically a waiter. My tables are my clients. My dishes are my financial products. My tips are my commission. And my job, is to basically keep my tables happy and answer any questions that the customers may have.” A waiter on wall street. Pretty simple. But a good waiter must have good people skills and good people skills are transferable to any industry. However, it’s not just people skills that are valuable. Organization, communication, and leadership are also very important. We sometimes take these intangibles for granted, but if you can hone in on your strongest transferable skills then you can figure out where else they might be applied in a setting that you enjoy.

Leverage your transferable knowledge.  Another friend of mine has been working in commercial real estate for the past few years. When he took a sales leadership position at a new technology startup, someone asked me, “what does a commercial real estate broker know about startups?” I said, “not much. But he knows more about real estate sales than anyone I know and for a technology startup that is focused on the real estate market, that’s a pretty big asset to have.” Sometimes a career change isn’t as big of a change as you think it is. If you have deep industry knowledge it’s likely that there are multiple opportunities and jobs that could benefit your experiences.

Try something new. I recently saw a Facebook status that said “Learning how to code. I’m a nerd and I love it.” In a million years I would have never guessed this person to learn to code or to even know what “ruby on rails” means. In school, you’re required to take classes in different disciplines. But just because school is over it doesn’t mean you should stop exploring new horizons. Take chances. Open new doors. Learn something new because you might actually enjoy it and it may very well lead to a new, professional path.

Ask for help. There is absolutely no shame in asking for help when help is needed. Sometimes it’s easy to let pride get in the way but as someone once told me, “ducks that quack get fed.” If you want to make some changes but don’t know how then simply pick up the phone, write an email and share your thoughts with someone. It’s human nature for people to help one another but no one can help you unless they know you are looking for it. So don’t be shy. Ask for help.

Recognize the difference between quitting and recalibrating. I wonder what Bill Gates or Mark Zuckerburg’s parents thought when they decided to drop out of school. Is that considered quitting? If it is then I plan to quit something as often as possible. There is a big difference between giving up and realigning your goals and objectives. Sometimes people are afraid to “quit their job” because it’s viewed as just that, quitting. But the thing is, it’s not. If you have a game plan and a strategy in place then you owe it to yourself to “quit” so that you can recalibrate your path to success and happiness.

Follow me on Twitter at @DanReich.

The Mobile Startup That Almost Shutdown Is Now On Nearly 1 Billion Devices. How Did They Do It?

This post originally appeared on Forbes.com.

For every mobile app valued at over $16B, there are hundreds if not thousands of their failed counter parts. But while some of these apps die off, some of their companies figure out a way to survive and in some cases, create real value by reinventing their businesses. Andrew Levy, Rob Kwok and Jeeyun Kim are one of the best examples of this transformation, and this is how they went from a broken mobile app to a dominant player in the mobile enterprise space. Here is a 6 part breakdown of how they went through that transition and attracted some of the best investors, customers, and ultimately achieved market penetration of nearly 1B devices worldwide (and counting).

Now for some disclosure(s): #1. I am a shareholder of Crittercism. #2. I’ve known Andrew my whole life.

Part 1. The Beginning And The End
In 2010, Andrew, Rob and Jeeyun started out by building their own mobile apps however they quickly realized that those apps had their own set of performance problems. They were slow, they were laggy, and they had a smorgasbord of bad reviews in the app store. Certainly not a great way to start a company. Like any good engineer would do, they problem-solved and asked a simple question: how do we fix and diagnose these issues more easily?

Part 2. The Pivot
They decided to build a lightweight version of a crash reporting tool that they desperately needed for themselves and after speaking at a few meetups about their new tool, they began to validate their idea with others people in similar shoes. They realized that the lack of transparency for understanding mobile app performance was a very big and far reaching problem.  Although they knew they were on to something, they wanted to be sure they were solving a “hair on fire” problem.

Part 3. Proving The Pivot Is Worth It
In order to prove that this opportunity was really worth their time, they also created a landing page with a beta signup list that attracted a significant number of signups. This validation was important because they were bootstrapping and running out of money. Andrew told me that he literally had a spreadsheet with a list of jobs on it and was contemplating the end of the business altogether.

Part 4. Getting The Right Resources
Once they had a working product, Andrew and the team applied to an incubator called AngelPad, which was founded by a bunch of ex-Googlers. As a result of their quick iterations and early traction, they were able to get into the program. This provided the team with some much needed capital and social proof which helped them focus and lay the foundation for a much bigger business.

Part 5. Focusing
The first version of Crittercism was focused on two things: crash reporting and user feedback (you can think of it like an in-app support forum). They thought this solution was one product but after a closer look, they realized it was actually two separate offerings. The crash reporting side was growing much quicker then the support side, and the fact that Andrew, Rob and Jeeyun come from engineering backgrounds made it even more evident that this is where they should be focusing their time and energy. Again, the team shutdown part of their business and it freed them up to focus on their core strengths.

Part 6. Scaling
By building out a solid crash reporting tool, the team was able to wedge themselves into the mobile enterprise market. But now they are going after a much broader opportunity for mobile app performance management (mobile APM). It was the most visible, relatable problem that every one of their potential customers faced. As a result, the team was able to quickly attract large enterprise customers like Netflix, and parlay those initial use cases into a portfolio of new customers.  Today that portfolio is growing by leaps and bounds. The Crittercism software is now installed on approximately 1 billion devices and analyzes all aspects of a mobile app’s performance.

That’s not bad for a company that almost closed up shop and it serves as a good reminder that not everyone needs to be the next WhatsApp, and that pivoting, if done correctly, can lead to big opportunities.