Thursday, July 28, 2011

The fallacy of restaurants

While I was travelling Europe in the summer of 08 I had the chance to eat in some really great restaurants. One in particular I happened to walk by had a line of people wrapped down the street before they even opened. La Relais de Venise they call it. This restaurant sells only steak and fries for dinner. You sit down, you are then brought a salad followed by steak and fries. Choice is only available for wine (which is limited) and the dessert menu. They kept it simple.

Too many restaurants have too many choices. Restaurants have naturally low margins as it is but once you throw in too many entries it spells disaster. The restaurant with too many dishes plagues itself with inefficiencies and margins so low that the restaurant will go nowhere if it doesn’t fail.

Some problems I see with having a large menu.

1)It’s hard to manoeuvre customers to the most profitable items.

2)It’s hard to create a menu that reduces inefficiencies by having complimenting food in different dishes.

3)It’s hard to have and maintain quality on all aspects of your food.

Like any industry it’s good to specify. It’s ok to choose one theme with 5 different entries and master them. The thing about customers is when they try something really good in a restaurant once, they’ll generally come back and order the same thing – because the risk of buying food and it being mediocre outweighs the risk of knowing the food they had last time kicks ass.

Shorten the menu, reduce inefficiencies and create higher margins. Quality food is better than too much food or too many choices.

Question of the day. What’s your favourite restaurant?

Tuesday, July 26, 2011

Risk being different.

One shoe company released their latest in a series of Kenny Powers advertising campaigns – the latest in the pursuit of going viral. It’s vulgar, hilarious and in my opinion advertising genius.

This commercial might not speak to everyone – but it succeeds in every way they wanted it to. It went viral and has over 500,000 views since being released July 11th – it’s given all their other commercials a huge increase in views. The media and blogging community has started talking about it – they’ve created so much buzz and publicity I cannot wait to see their quarterly revenues. K-Swiss has positioned itself as a cool shoe company for the younger generation and with all eyes on them, they just need to follow up to make big things happen.

Take risks like K-Swiss and sooner or later you will strike gold.

Saturday, July 23, 2011

Be objective

“Be Objective” is a way of thinking any business leader should have installed on their biological hard-drive. Leaders cannot let their own prejudice get in the way of making the right decision. Let me give you a famous example of personal prejudice getting in the way.

Thomas Edison is known as many things to many people – an inventor, a scientist, a businessman and in this case an enemy. I want to talk about the War of Currents he so famously lost. It all begins when Nikola Tesla invented AC current while working for Edison. Thomas Edison dismissed it for the ramblings of a mad-man supporting what he thought was much superior – his own invention DC current. Had Edison been objective he would of recognized the potential of AC and made millions partnering with Tesla – instead he made an enemy out of him. Edison wasted millions of dollars publicly slandering AC and in order to showcase it’s deadliness he commissioned employees to invent the electric chair. Edison took extreme measures to try and fight an enemy he never should of had.


Small businesses need to be objective or they risk being mediocre. Everyday you need to ask yourself what are my competitors doing that I can learn from? What am I doing that I can do differently? What is not really working? Sometimes you’ll find the best answer is changing the entire way you do business – if your selling mexican food and pizza in your restaurant – recognize that it will better for the business to specialize. 

Be objective and you run the risk of being great. Choose not to be objective and you’ll surely flounder.

Wednesday, July 20, 2011

Position makes sense.

Does it make sense to have a Christmas wrapping paper fixture positioned just inside the entrance? Not really. People don’t buy wrapping paper until they buy gifts.

There’s many little things a store can do to increase sales – you just need know where to start.

Friday, July 15, 2011

Using the crowd

Business is changing. Thomas Malone an MIT professor points out that “Kids who grew up with running water wouldn’t know how to work a hand-pump and in this new world we’re entering a lot of what’s familiar will go the way of the hand pump.” For example, companies that specialize in website design or graphic design may go the way of the hand pump. Why? Because as more and more digital natives come of age – designing websites will continue to get easier and easier. There will be more and more demand for the army of amateur website designers with no coding background, and less and less demand for the expensive website designers we know today. How do you harness the power of this big crowd? By organizing them and facilitating them.

Threadless is a  Chicago based t-shirt company founded in 2000 by Jake Nickell and Jacob Dehart. At threadless they’ve figured out the secret of the crowd and as Jake says, “we just think about how we can create an environment that is very conducive to social and sharing independently of what the current tools are.” Threadless enables the crowd to design and vote on t-shirts with the chance of earning some money. Other threadless users meet-up, talk and design stuff together. Threadless is cool and their members love being a part of the community.

Why is threadless so successful at crowdsourcing? Aside from two very passionate and altruistic founders they’ve picked the right model. They’ve chosen to create a crowd from people they knew on Dreamless (a forum where they first started). They then chose to allow people to vote on designs, which essentially sources the crowd to advertise for them. Lastly they use crowd-funding, the model of voting they use allows them to know which designs are winners and  how many people want them. The result – every t-shirt since the conception of threadless has sold out.

Check out my interview with Jake Nickell below.    

When you were in school, you were working full time and starting what is now threadless. How did you manage your time?

Yea, I was working full time, going to school part time and starting Threadless.  I actually spent a lot of my time at work actually working on Threadless... it was good and bad, sure my boss probably wasn't happy about it, but I learned how to program that way and then I started programming at work as well.  I'm a very fast worker so I was able to get my work done, manage school and still spend good chunks of time on Threadless.  I was young and it was fairly easy to code till 3am and still make it to class in the morning :)

When skinnycorp was created, you and Dehart decided to leverage Threadless to advertise your websites design and marketing business. Did skinnycorp’s marketing/ website design business start to fall on the backburner when you realized Threadless was going to be this monumental winner?

Unfortunately I think Threadless was actually what was on the back burner!  We set it up to basically run itself.  Eventually (2004) we realized we were spending 90% of our time on client work but Threadless was paying all the bills.  So we fired all our clients and gave Threadless our full attention!

How have you taken the term “user innovation” and applied it to threadless?

We learned about "user innovation" in the summer of '04 and thought it described Threadless very well.  But we haven't really done anything differently because of that.

What have you learned about taking on the right business partners like Insight Venture Partners?

In the case of VC partners, try to maintain as much control as you can and try to find people who can offer you more help than just money.  In our case, Insight helped us figure out a lot of our logistic issues like shipping and international and has also helped us with a few key hires.

Knowing what you know now about crowdsourcing and community involvement, how do you approach new business ventures?

I'm very interested in businesses that see talented, passionate communities of people and provide some sort of value to them to make those communities even more meaningful and productive.  I think that's a powerful place to be as a business because you become a part of something with a lot of built-in energy already.

Threadless was started before twitter and facebook – how have you used social media to build your business?

I see twitter and facebook as tools... "social" and sharing and all that has been around forever.  Threadless started on a forum, which was one of the main social tools of the time.  Psychologically, Threadless works very well socially ... if you are going to spend 6 hours as an artist, you are going to want to share what you created whether facebook and twitter exist or not.  So we just think about how we can create an environment that is very conducive to social and sharing independently of what the current tools are.  That said, there is minutia within the available tool sets that needs to be considered, so don't forget the details.  But start with having awesome content.

How do you facilitate organic growth among your community/customers?

The previous answer gets to that a lot ... the best thing you can do is simply have content or a product worth sharing.

What are you most curious about?

What motivates people and how I can help people get motivated to create cool things that they are proud of.

There’s a shifting economy of business towards user innovation and crowdsourcing. Threadless is just one example of many other businesses that are attempting to source the crowd. It’s hard, don’t over complicate it and make sure your attracting the people you want to your website. Know your crowd, and know that they have time constraints. Learn from threadless - where people can contribute six hours by creating a design or contribute 10 seconds by voting.

Got an example of crowdsourcing from other companies? Share it below. 

Thursday, July 14, 2011

Embrace your competition.

Competition is ubiquitous with business and for customers this means if we’re determined we’ll shop around. Instead of losing people to the act of shopping around, aim to make them a happier customer in the process, so next time they’ll come back to you.

This Monday I spent my time in Victoria looking at rental units. What I found was a landlord who knows her customers. The prospective landlord knew I was walking, knew that I had six other places to look at and drove me to my next destination 4 km away. Elaine sensed I was determined to look at all of the rental units, and instead of letting me walk away she embraced the competition and aimed to put me first (an important relationship for tenant – landlord).

Elaine and Jeff Bezos the founder of amazon share an uncanny similarity - by embracing their competition they are putting their customers first. One facet of Jeff’s monumental success is his ability to embrace competition. When he allowed 3rd parties to sell on Amazon many Wall Street analysts criticised the short term, but Jeff stuck to his guns and continued to put customers first. Word spread that amazon cares about you and today amazon is worth 95 billion dollars and holds the title as the most reputable company of 2011 in the world.


No matter your business – you need to understand consumers shop around, so think of ways to make an impression. If they do choose someone cheaper they’ll soon realise that they’re sacrificing too much of something else ie… customer service. They’ll immediately think of the way you put them first and do business with you.

Jeff and Elaine have found the secret sauce for success – learn from them.

Friday, July 8, 2011

Freedom to think.

George Patton said, “Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.”

Being a business leader is more than starting a business and having employees work for you. You need to facilitate your employees natural ingenuity, set goals – and allow them to reach those goals in their own ways.

Let go a little bit and you and your employees will both be a lot happier.

Wednesday, July 6, 2011

Using social media to create desire.

Social media is here and more prevalent than ever. Everyday more and more businesses make the decision to go “social. If your planning on going social ask yourself and your business a few questions:

What do my customers want? Do they want to learn more about the services I offer, or do they want to be updated on weekly deals etc.

How can talking to them through social media help solve problems? Can they be used to help improve your business. Starbucks uses crowdsourcing (more on this next week) in the form of an independent website.

What venue of social media do I use?  Foursquare? Twitter? Facebook? Blogging?

If I communicate through social media am I building loyalty or destroying it?

Make sure your aware of the responsibility that comes with going social. Seth Godin talks about permission marketing for when people join your facebook group or give you their email to use – they are giving you permission to talk to them. Don’t waste it and don’t overdo it. Over-spamming someone’s email with non-relevant information will ultimately result in your customers unsubscribing. Not updating or providing relevant information weekly/ bi weekly results in wasted potential.

Lastly as a small business owner with limited resources – choose to start with one venue. Don’t do them all, do one of them really well. If you blog – know what you’re blogging about and how it’s relevant to your customers. If you’re using foursquare set up a scavenger hunt to build loyalty etc. Just stay committed to doing one of them really well and once you own one platform, then spread among the other social media platforms.

Question of the day. What social media platform do you personally use?

Friday, July 1, 2011

Always keep asking questions

Of all people, from all walks of life – it’s the entrepreneurs who question things and take action to improve them. Entrepreneurs are the employees and self-employed who constantly question if there are more efficient ways of doing things, they are those who challenge the impossible with action: like this guy, and this guy. Look at an entrepreneur and you’ll see someone with a passion for the unknown and a need to question and improve it.

The reason we choose to build great companies is because we want to achieve the impossible. To build on earlier models, to make them greater and more efficient, to leave our mark on society (hopefully in a good way). So we create things like the razor-blade model of business or a chain of highly successful discount stores.

Once a business forgets to ask questions it falls towards mediocrity, and mediocrity has an infallible force. Businesses start with a vision from the founder(s) to build the impossible and to turn the impossible into reality. Unfortunately many companies continue to do what worked really well for them in the past, sometimes they realize their mistake and sometimes they don’t. It’s why IBM wasn’t the first to build personal computers, or why Henry Ford lost market share to GM and Chevrolet - “Any customer can have a car painted any colour that he wants so long as it is black”.  Customers clearly wanted more variety.

Never forgot to ask questions. The moment you and your company forgets to ask questions is the moment you begin to be mediocre. It’s why many of the fortune 500 companies from 1955 are no longer fortune 500 companies today.

Ask questions. Never settle with mediocre.