What do Keyser Soze, Dave McClure and my LA rental car have in common? There are all on my path to inspiration leadership…
In my last post I eluded to 3 things that I have learned over the last year-ish. Its been awesome and amazing so far. We’ve hit many milestones but the hard part is still ahead: building the team. Technology is cheap and easy enough that if you are willing to work hard and learn you can build an MVP on your own.
I thought I would share not the content of the well-known course on Managing Growing Enterprises at Stanford GSB, but rather the inspiration quotes that were shared with us on the white board at the start of every class. Hopefully they will inspire current and future entrepreneurs.
“The easiest kind of relationship for me is with 10,000 people. The hardest is with one.” – Joan Baez
“We do not do great things. We do only small things with great love.” – Mother Theresa
“People might remember what you said, they may remember what you did, but they will always remember how you made them feel.” – Anonymous
“There is no shortcut to any place worth going.” – Beverly Sills
“Character is like a tree and reputation like its shadow. The shadow is what we think of it; the tree is the real thing.” – Abraham Lincoln
Excited to share with you my recent talk on Lend & Save, a company being developed to create an information technology infrastructure that can take microfinance and small loans to next level.
Holiday shopping is always an adventure for consumers. Yet, it is really an adventure for e-commerce startups. There is a flurry of buying, partying, exploring, and just countless hours spent on the internet somehow related to the holidays. It’s not wonder that Google’s annual report always cites a spike in “commercial queries” in the fourth quarter. So if you’re an e-commerce startup, what better time to capitalize on growth than the holidays?
I was reminded a few days back about the dangers of the holiday season for the startup world. People have a mission – look great for the holiday parties and get great gifts for the ones they love. The stories of fights in the store over the last Tickle Me Elmo don’t quite translate over to the internet, but there is much to be noted about the way people behave or act during these times. They are simply wound up! They need to be treated extra well.
The answer here of course lies in customer service. I brought up the holidays to underscore a point when customers need extra love and amazing service, but there is no doubt excellent customer service is critical throughout the year. A lot has been discussed about the stellar service at Zappos and a lot has been criticized about the costly nature of providing such service. The right formula will depend on the category, the customer base, and nature of the business, but there is one aspect that seems to resonate true – being proactive.
I’ve often heard the wisdom from friends and strangers here in Silicon Valley that if you’re launching a new e-commerce website, don’t even think about holding inventory! Look at the margins that companies like Zappos and Amazon have compared to other tech start-ups. Think about the capital investment you’ll have to make upfront. Think about the operational nightmare of warehousing and delivering product.
It often brings a smile to my face when I see comments like that. Having spent a significant period of time inside of a warehouse, boxing products, creating pallets, and shipping orders, I can safely advise – don’t be scared to hold inventory. Without a doubt, for every business this will be a different analysis, but let’s walk through the thought process needed in decided whether or not to hold inventory.
1. Determine how important control of the customer experience is to your business
The number one question is to ask what value holding inventory brings to your business. While you could be like Etsy, operating at gross margins over 90%, why would you possibly decide to buy and sell items yourself. This comes back to the consumer experience and the level of control that is important to the business. You want to ask yourself, at what stage do you want your consumer to say “wow!” This will determine exactly how important controlling your consumer’s experience from discovery all the way through enjoyment actually is. Compare two scenarios: a consumer discovers Zappos, interacts with the website, places an order on Zappos.com, talks to Zappos customer service to become a VIP and get overnight shipping for free (yes this actually works just by calling), receives a Zappos box, and is singing the tune of Zappos the whole way. On the other hand, imagine a website that lists shoe options from many small shoe retailers around the United States. The consumer can shop and pay for the product on the website, but the shipping, the customer service, and the product experience are completely disjointed from the website from which the consumer shopped for that product. Here we’ve lost the ability for the consumer to truly connect that positive product experience with your website’s brand so that they keep coming back for repeated and larger orders. This is precisely why large consumer packaged goods companies (like my former employer, Mars Chocolate), care not just about how many products are sold at the grocery store, but what your enjoyment of that product is once you take it home (if you have a doubt look at their budgets on Nielsen HomeScan surveys).
A couple months back I had the pleasure of listening to Cyriac Roeding speak about his company, Shopkick. Few will disagree with me when I say that Cyriac is very sharp and impressive. Shopkick has the potential to create a unique bridge between offline and online, one that our brick-and-mortar stores have been craving for quite some time. The reality is that 96% of our shopping still takes place offline and that isn’t going to change overnight. We love going shopping! It’s an American thing to do!
But we need to step back and ask, who else is trying to bridge the divide between offline and online? Groupon! Groupon revolutionized the local business opportunity, providing small shops dramatic exposure in the online marketplace and a slew of customers walking in the door. Yet, Groupon has received major complaints from these stores. The real excitement for a small business participating in Groupon comes from coupling its deal with other products and more importantly repeat purchases. Yet, the local business knows very little about the consumers that are walking in. There may be volume coming in through the door, but loyalty becomes impossibly difficult to track. As with major companies, promotions that simply drive volume will be very costly and often will not be entirely incremental. Repeat brand building and customer loyalty is key here.