March 22, 2006

Pickle Theory - Proof and Perceived Value

As marketing people we have often emphasized the power of proof. As venture capitalists, one of our jobs is assessing the value of companies that do not have a public market (and hopefully also maximizing that "value" in the final return to our investors). Interestingly it seems these two don't always mesh. What do I mean?

A collegue of mine who runs a start up (and who is in the business of maximizing the perceived value of his company) pointed out what he called the Pickle Theory of Value. It goes like this.

When you first start your company, you generally have NO concrete evidence that it will ever make money. No customers, no product, no revenue and quite the opposite of profits. Yet, if you do a good job of positioning the vision, the market opportunity and the team, you get an incredible amount of credit for the future value the company could create.

Then as you start going, you still get pretty much credit if you actually ship your product/launch your site etc. And it works (regardless of whether this really generates any real money). But you get hammered if it doesn't.

Then this horrible thing happens. You actually get out there in the market. You start generating the initial evdience. You start to generate money. You actually have financial statements. And guess what, once you have something to look at, people look at it. And with this scrutiny the amount of credit you get for your progress is likely to go down. That's the bottom part of the pickle.

Here's the hopeful part. If you keep growing and keep making progress with some consistency, people start giving you credit for it continuing long into the future and the value you can command relative to the evidence you have goes back up again. (Witness Google's PE).

The trick is to try to keep your company from having a long pickle.

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August 26, 2005

Vision, Starting Point, Roadmap

Jon Roberts

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May 25, 2005

"He Said, She Said" - Rashômon in Marketing and in the Office

If you haven't already seen the amazing Akira Kurosawa film Rashômon (starring Toshirô Mifune), hurry up and see it.

The film is set in medieval Japan and proceeds as follows (thanks to James Berardinelli:

The story told by Rashomon is both surprisingly simple and deceptively complex. The central tale, which tells of the rape of a woman (Machiko Kyo) and the murder of a man (Masayuki Mori), possibly by a bandit (Toshiro Mifune), is presented entirely in flashbacks from the perspectives of four narrators. The framing portions of the movie transpire at Kyoto's crumbling Rashomon gate, where several people seek shelter from a pelting rain storm and discuss the recent crime, which has shocked the region. One of the men, a woodcutter (Takashi Shimura), was a witness to the events, and, with the help of a priest (Minoru Chiaki), he puzzles over what really happened, and what such a horrible occurrence says about human nature. In each of the four versions of the story, the characters are the same, as are many of the details. But much is different, as well. In the first account, that of the bandit, the criminal accepts culpability for the murder but refutes the charge of rape, saying that it was an act of mutual consent. The woman's story affirms that the bandit attacked her, but indicates that she may have been the murderess. The dead man's tale (told through a medium) claims rape and suicide. The only "impartial" witness, the woodcutter, weaves a story that intertwines elements of the other three, leaving the viewer wondering if he truly saw anything at all.

Aside from being a marvelous film in its own right (cinemantography, acting, script etc.), it is enduring because its themes - of subjectivity, of perception vs. reality, of the bias of personal interest, of how hard it is to know the truth, of the difficulties of being on the same page - are so deeply felt by all of us in so many aspects of our lives.

Other blogs have commented on the relevance of this movie as a metaphor for these issues in fields ranging from global economics to truth in journalism to baseball umpires, even a whole blog dedicated to the idea. So I reflected that the same applies to what I have seen in marketing and in everyday office politics.

We constantly harp on the importance of positioning, of getting your basic logic and arguement down and down consistently before you go off and spend money on all kinds of sales and marketing tactics. Way too often folks don't do this. Way too often the team is not in synch - not just on what the marketing tactics ought to be - but not in synch on the basics. Even in companies so small that the whole team is rubbing elbows all day it is easy to see opinions on the fundamentals of their business reality as those of the bandit, the lady, the dead man and the woodcutter of Rashomon.

In one very typcial company I talked to the exec team all agreed that the website was no good and needed to be changed. But when you asked them a few simple questions:

• what does your company do?
• who does it do this for?
• why is it better?

the answer you got from the CEO was very different from the head of sales, which was different from the CTO, which was different from the head of marketing. Before they went off to try to tell their story to people outside the company they really needed to get and agree to those answers. Otherwise they would leave their customers very confused.

And honestly think how true this dynamic is when it comes to office politics - rating employee performance, dealing with disagreements. There always seems to be a variance of opinion, even amongst the smartest, most well-intended people.

The answer. Not to give up and despair. Two things seem to help me. In the marketing case - talk to customers - up close and personally. They usually do a better job telling you what they want and what they think of you than anyone inside will. In terms of office politics - try to find real data - and always stick to your values (assuming you know what they are).

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May 05, 2005

Great input on the ABCs

9 to 5 and otherwise had some very insightful comments about our ABC and Yes, But, So gap analysis approach.

For all the usefulness of being really simple and breaking things down - into A = Situation B = Destination C = Gap - you still need to be careful that this becomes actionable and not just a nice theoretical pitch:

• is your team, are your people the right ones to cross that gap? are there personal gaps?
• have you done your homework sufficiently to understand the gap and what you can do about it?
• and once you have identified this gap, can you break down your actions into doable chunks rather than simply trying to pole-vault over it?

Great thoughts. Thanks for sharing.

PS: We think you have to break the gap analysis into several dimensions. The overall industry at the high level to understand possible mission/vision gaps, the customer/market next to understand offering gaps, the competition to understand relative positioning gaps, and your own competencies/resources to identify the realistic action plan.

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April 05, 2005

It's not just for marketing anymore...

Last week I had breakfast with a very old friend of mine, Ray Ziganto. He is head of marketing/sales for Bi-Link and a fan of the Bi-Link and a fan of the marketing playbook.">marketing playbook. Anyway, in the course of long, pleasant, wide-ranging set of conversations, Ray shed some interesting different light on a number of the playbook ideas and their application.

Bi-Link is the leading global contract metal stamping provider of metal parts, subassemblies in mobile phones, laptops, and other electronics devices (i.e. they make all the metal stuff in your Blackberry). This is not what you would normally think of as a classic "marketing" company. But hey, Ray has a lot of marketing DNA, and he felt excited (i.e. obligated) to figure out a way to use the concepts in book his friend wrote in practical way in his business.

Well, most of the people Ray works with are either mechanical/process engineering or straight-up-the-hill sales types. ABCs, Plays, Positiong/Messaging had to be practical to this business and to these people. So in the process of brainstorming he hit on a few things that are really of note:

• Doing your ABC/Gap analysis is not just a big, strategic, abstract analysis of the "landscape"/"playing field", it is actually a way for you, as a sales person, to empathize with your customer and better manage the account. Understanding A) their situation B) their goals and C) the challenges they face in reaching them is just a plain simple way of making sure your sales people are in synch with their INDIVIDUAL customers
• A customer = a market. Your individual customer can actually be the best way to get educated on the market anyway. Rather than commissioning "market" research across the whole market, start with a customer you have or already close with and get them to walk you through their ABCs and their view of the competition. Their view is in many ways more important anyway - they are paying you money.
• Working with A customer = marketing. Beyond just using them to understand the market, sometimes working more closely with a strong "enabling" customer will help you break into a market a lot more than doing what we normally think of as "marketing." Sales people often look to "marketing" as sales support and lead generation. Ray asked the obvious but critical question "Should we spend $200K on a tradeshow booth or give $200K more in resources to our most strategic customer to kickstart a project in an area new for them?" What will be more strategic in the long run, another media outlet for making claims or real value creation that lends proof of your abilities in a new market?

Damn good question and good way for companies to think about marketing - not just as this abstract input and output but as the right way to acquire, leverage and extract value from customers, even if the people doing it are not "marketing people" but sales, product, engineering, receptionists, you name it.

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January 21, 2005

Twin Brothers - Viability and Contibution

Yesterday, Rich and I had lunch with a most extraordinary person, Sidney Rittenberg. Calling him a China expert would be a most inaccurate and ungracious understatement of the scope, depth and significance of his experience and of his sagacity. (See his fascinating autobiography, The Man Who Stayed Behind, and also recent stories in the LA Times and New York Times for background.)

Amidst our wide-ranging conversations on business, technology, history and politics, we talked about the importance of culture and values in building great, long lasting companies, about how important it was, not just to be focused on the money but on a real vision of how what you do will make something better and on what kind of people you hire and what motivates them. Sidney then said something that really stuck in my head:

"Yes, the twin brothers of viability and contribution. Unless what you are doing is set up and made to be a viable enterprise, it won't survive. But unless what you are doing makes a real contribution it won't attract people, won't stay vibrant and won't last over the long run"

Great input for any endevour, including starting a company, running an existing one or even managing a government government.

Here's some links to more interesting Sidney Rittenberg material: a good short bio, another book, a transcript of an interesting speach about contemporary China, and an audio of a talk he gave at University of Washington about the Cultural Revolution and its subsequent effects upon Chinese society.

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January 17, 2005

Microsoft, Build Hugh a Tricorder

Great dialogue between Hugh of Gaping Void and Robert Scoble about what's missing in Microsoft in both technology and marketing. If you like either to bash or defend Microsoft, you ought to give it a read.

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January 14, 2005

Open Marketing and Other Positions

Bogle's Blog: Jobster is hiring!

Very cool company of Ignition's is looking. Check it out.

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November 02, 2004

Headphones.com - Deep vs. Broad Again

In our continuing quest for examples of deep and cool vs. broad and big, another set of sites/services hits the radar. Headphones.com is a great site. If you want to find the right set of headphones for your needs this is the place. Aside from truly intelligent assessments and comparison tools, they have great service. Same is true for their sisters, headsets.com and conferencers.com. Sometimes really niche = focused on areas where you really know what you're talking about. Compare that to BestBuy.

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August 30, 2004

Values

Most of the time when people talk about values what comes to mind is either disingenuous politicians or laminated cards that big corporations stick in their benefits folders and annual reports and then forget about.

But we believe that values are critical. Who you really are and what you believe in should embue everything you do and everything you say. This is especially true in your marketing and in developing a real brand. No matter how slick and well produced your ads and sales pitches, if you don't walk the talk in the long run people will stop believing and those ads and pitches will be shoved back in your face.

So what are your values? Really? Think about it.

We did - long and deeply - at our company, Ignition. And while we're sure we're biased we think they're pretty darn good. And most importantly, we really do ask ourselves - when looking at a deal, when talking to investors, when helping our companies - are we being true to these values. Click here to take a look at the Ignition values.

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August 08, 2004

No Buck Fifty No Picnic?

Not long ago we praised WaMu's customer service too. But now a Fortune article says they're stuggling. See BusinessPundit: WaMu - A One Trick Pony? for a summary. Too bad. Still like the lollypops.

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