Timing Your Startup to be Relevant.

I couple days ago I provided five filters that every founder should apply to a potential business idea as an indicator of potential success.

Today, I would like to add an additional criteria for assessing your next business: Timing or relevancy.

Your startup has to be relevant and timely in order to gain traction.

Felix Dennis, the founder of Maxim magazine, gives an excellent example of this in his book, How to Get Rich. (silly title, excellent reviews.)

“My own suspicion is that many failures are merely a matter of timing. What used to fail now succeeds. What once was a sure thing no longer works.

Take the invention of the fax. Fax technology existed for decades before fax machines were universally adopted. One day my office manager in the US walked me out in the hall to show me how to use our shiny new fax machine.

‘Why do we need one?’
‘Because everyone is getting one.’
‘OK, but why is everyone getting one?’
‘I don’t know. They just are.’

As far as I could see, the technology had not improved much from the prototype I’d inspected a few years back. But now ‘everyone’ was getting one.

Failure had transmogrified into success. The fax had reached critical mass.

Take another example. In 1977 (after years of arm wrestling with the powers that be), Sir Freddie Laker launched his transatlantic Skytrain service, an airline offering a no-frills service at about one third of the prices of his competitors – notably British Airways. It was a huge success for a while, then failed, collapsing into bankruptcy in 1982 with debts of over £250 million. Conventional wisdom in the City and on Wall Street labelled cheap airlines a flop.

All of a sudden, here in the first decade of the 21st century, bingo! Cheap airlines are all the rage again and turning over billions of dollars of business around the globe. A failure one minute, a success the next. It was just a question of timing.”

Felix Dennis knew the importance of timing. In May 1994, Loaded Magazine was launched in Britian by a competing publisher and as Dennis described it, it was the first of the lads magazines. He also described the founding editor’s timing as impeccable.

In 1995 Felix Dennis launched Maxim Magazine, which we all know was a huge home run. Dennis gives some brilliant advice to aspiring founders.

If you want to be rich then watch your rivals closely and never be ashamed to emulate a wining strategy.

Maxim Magazine is a great example of the power in recognizing brilliant timing. Better to emulate a winning strategy than to poorly time something and fail to gain traction because of it.

Caveat: When timing a startup it’s also important to be aware of temporary trends and fads. Courting a trend or a fad in the market can be profitable but the window of opportunity is invariably going to be much shorter.

Edit: I just came across a great blog post about choosing a startup idea using a market approach.

Here is an excerpt from the article.

Market-driven approach to finding startup ideas that make money

The market-driven approach is quite simple. It essentially means:

Find a startup idea that: a) is already making money for someone else in a growing industry; b) interests you; c) aligns with your skill sets. Once you find such an idea, simply carve out a niche within the industry by a) addressing pains of an under-served segment within that industry; b) or, making it much easier to use than existing solutions; c) or, disrupting the market by making your product accessible to masses at a much affordable price. And once you dominate a particular niche, expand from your niche with your eyes set on the largest player in the market.

The rest of the article can be read here. Great advice.

My Journey as a Young Entrepreneur: Raw and Uncut.

I recently added an answer to a question on Quora, What is your most memorable founder experience?

My answer was:

Being embarrassed to park my beat up old Volvo 240DL next to the Porsche Cayenne one of my new sales hires was driving. I wasn’t even drawing a salary yet.

This got me thinking about all the memorable experiences I’ve had as an entrepreneur and it prompted me to write this blog post recounting my story, because frankly – the entire process of starting a company is one of the most memorable things you will ever do.

I didn’t set out originally to found an internet company. It happened in a roundabout way.

My first experience as an entrepreneur began at the age of 20, buying and selling designer jeans on ebay. This lasted until I discovered the jeans were of ‘questionable origin’. So much for my career in fashion.

Then I discovered began importing in-dash car DVD players from China and selling them on ebay back in 2006. This ended when I had a large order filled with the wrong (much cheaper) product and I was left holding the bag.

After that, I attempted to start my own boutique mortgage company and after leasing and remodeling office space – I mean literally prying up asbestos floor tiles, repainting, and spending weeks sweating my ass off, I ended up having to hand back the keys to the leasing agent just after the new carpet went in, because I had drained my finances in the process.

I remember walking by a couple weeks later and seeing that she had rented it to a new tenant  (presumably at a higher price: ). She got a free remodel and I learned the concept of making sure I gave a business enough runway. Even at the time, I wasn’t upset. I knew that I had gotten carried away with accent walls and carpet samples, instead of paying attention to the shit that actually mattered.

A few months later I decided that I had it all wrong with my brick and mortar failure, and that I was going to start an online mortgage company. I ordered one copy of Dreamweaver from Craigslist NY (definitely of questionable origin) and I was soon spending 10 hours a day building a website.

When I finally got it up, traffic trickled. Plus I knew NOTHING about SEO and marketing at the time, and I finally decided I just didn’t have the money to compete with the ‘big guys’. Plus begging my one mortgage applicant a week to refinance his house was a little less awesome than I had imagined and a little hard on my self respect.

My next business venture was an awning cleaning company. This idea came via a friend who had just gotten out of the business following a divorce and after buying a used Ford Ranger and spending about a thousand dollars on supplies, I was out visiting local businesses and handing out the 3×5 cards I had printed up at the local Staples.

I remember striking out horribly at my firsts sales attempts. I would sheepishly walk into a business and passively mention that I had a business that cleaned awnings and if they needed theirs cleaned, they should call me. They didn’t call.

This is when I learned one of my most important lessons as an entrepreneur – re-pivot your sales pitch until it works. Luckily for me I am a very strong willed, never give-up type of guy, so pretty soon I was walking in with confidence, wearing the remainder of my ‘designer’ jeans along with a polo shirt – looking very much like a small business owner, and my pitch was more like this:

Hi, I’m Lawrence, I own windnsea awning cleaning. I noticed your awning outside and it’s definitely showing some wear from the smog and the salty coastal rain and I’d love to make it look brand new again – it’s one of the first impressions your customers have of your business. My crew will be in the area this Thursday evening if you’d like to schedule a time.

Boom. Sales. It was that easy. Unfortunately, there was no crew. So, I would show up Thursday after ALL the local businesses had closed and I would pop my hood, connect my floodlights to the inverter, wrestle with 100 feet of hose and a 10 foot ladder, and spend about 45 minutes to clean one awning. You can do the math, I was finishing at sunup, and I had to wake up at a respectable hour to do more sales.

This carried on until I eventually became so burnt out that I abandoned the business altogether. Hell, there had to be an easier way than only getting 3 hours of sleep a day.

I admit to feeling a bit deflated at this point on the whole concept of entrepreneurship. My girlfriend at the time must have felt the same way too because I was soon single and living with mom. :/

After awhile, I sold my truck and used the money to move to Santa Barbabra and live like a college dropout for the summer. I was working as a barback, getting drunk and not knowing what the hell I was going to do in life. It was pretty fun!

But that eventually ran its course and I was back at mom’s feeling like a major loser. But, I was writing goals and I hadn’t given up on my dream. Reality however dictated that I pay my way, so I got a job at a restaurant downtown bussing tables and soon I was promoted to waiter! My increase in pay went solely to Nordstroms so I could at least not look like a loser which made me feel better.

After 6 months or so of this, I decided ‘you know what – fuck it, I am going to follow my passion as a writer!’ And voila, I got lucky and got a writing job. Well – sort of. I was hired as a Chief Blogger for an internet marketing startup.

I loved that job. There were about 8 people in the office and we got to drink beer and watch family guy. I spent most of my time writing ad and landing page copy. After a 10-12 hour day, I would come home and read internet marketing blogs until it was bedtime.

Unfortunately, the CEO didn’t like me and I was soon fired along with a young female web designer – in front of the entire company. I cried – in front of the entire company. I think I cried out of sheer embarrassment. He was a real asshole. As she drove me home, I told her that I was going to start a company and I asked if she would wanted to be my business partner. It was my Jerry Maguire moment. She didn’t think so though, so I was on my own.

I had only worked there for a little over a month, but I definitely knew I liked the culture – both of a small startup, and of internet marketing.

I was borrowing a laptop from the girl I was dating at the time and it wasn’t a very founderly. So, I went to FRY’s Electronics in search of the machine that would make me feel like a proper tech founder.

There were laptops there that would have suited me in the five hundred dollar range, but the one I wanted was around eight hundred. It was like the one the guy who fired me had. It had a big screen and it looked like it meant business. I only had about three grand in the bank, but I bought it anyway because I knew it would make me feel confident in my new venture.

So, I went home and spent the next 8 or 9 days building a website and creating a business model. I developed some landing pages and started an adwords account. When I say I spent 8 or 9 days, I mean days. I would work 18 hours a day, no joke. Sometimes I wouldn’t even sleep. At times, I would get up in the morning and immediately start working, only finally stopping hours later because I had to pee so bad that I couldn’t hold it any longer.

Eventually my friends pried me out of the house for dinner and drinks. Well, after just two moderately strong Belgian beers, I was WASTED. The lack of food and sleep coupled with the fatigue and I was no match for a couple glasses of Chimay. I definitely remember the waitress not liking me at that point.

Anyway, a few days later I began cold calling clients to sell them leads, but my pitch was BAAAD. I don’t even remember how bad, but I couldn’t even keep them on the phone.

But, like I had learned with my awning business, I had to re-pivot my sales pitch. So, pretty soon it was more like this:

Hi, my name is Lawrence Black and I have a boutique internet marketing firm. I generate wholesale leads for other companies to resell, but I’m looking to increase my margins by establishing some direct relationships.

Boom. Sales. Pretty soon, there wasn’t a single question I couldn’t answer. I actually only had to spend about a week doing sales because I soon had buyers for all my volume.

Then I got the call. It was the guy who fired me in front of the whole company. It went something like this: ‘I’m going to fucking bury you! You better watch your back.!..etc.’ He accused me of taking proprietary information, but it was totally untrue. I didn’t take a single keyword or client. Although I sure as hell could have.

(I really suspect he was just threatened on some personal ego related level, which I also suspect is why he fired me in the first place – but that’s neither here nor there.)

Anyway, then I got the letter from his massive downtown law firm and I had a meltdown. I thought it was over. Thankfully, I consulted an attorney at the recommendation of a friend. He reviewed the letter, told me it had no legs, made one phone call to the other attorney and that was squashed.

I continued running the business and working like crazy. I had no CRM at the time to send out leads, so I had to individually email them and manually keep track of what clients got which leads. But, my bottom line was going up and to the right. Things were good.

I began receiving calls from referrals and pretty soon I got a call that changed the game. It was another lead shop and they wanted to meet with me. So, I took a cab down to the local Rock Bottom to meet with their CEO and one of his managers.

Unlike myself, the title suited him. He had the top of the line Lexus, the 5 million dollar home, the high paid managers and the sales staff. He was a real CEO.

He said that he was impressed with what I was doing and he wanted to work with me. To cut to the chase, I ended up partnering with him about 6 weeks later. I bought a beater Volvo 240DL to commute to our new office and we worked our asses off.

I would often stay till midnight or later. Between my leads and his clients, we were putting up some pretty good numbers. My laptop incubated business soon had a handful of employees and even though they all drove nicer cars then I did, I felt in awe of what was going on.

Unfortunately discrepancies in our accounting practices eventually ended our business partnership. As I’ve learned since, this is what a lot of partnerships tend to do, they get messy. My attorney had warned me beforehand but I didn’t listen. My former partner is a great guy and I was very fortunate to work with him, but it just didn’t work out.

Before I knew it, I gave him back his clients and I left the big baller office. I was sitting back at my mom’s kitchen table with my laptop. But, it didn’t take long for me to get on my Blackberry and establish a fairly decent passive income for myself that lasted another solid year.

However, things eventually wound down as the marketplace became over-saturated. Click costs went up while the market pushed the prices down.

I wrote about some of the other factors that contributed to this business no longer being viable for me in a post entitled: Lessons from My Previous Business.

I am thankful that I have derived benefit from every experience I have had as an entrepreneur. Studying Journalism after high school made me a great copywriter. Trying to build an online mortgage company gave me valuable web development experience. My awning cleaning business made me a good salesperson. Working at an internet marketing startup opened the door to a new opportunity. Founding my last business gave me a incredible amount of experience.

I’m more prepared then ever to crush it and I’m presently getting ready for my next and hopefully most significant journey. Stay hungry my friends.

A Litmus Test For Your Next Business.

As someone who has founded and run a profitable company, I am a very critical when it comes to people giving out advice and selling books on the topic of success. Especially when the title is The Millionaire Fastlane.

However,  this evening I came across an interview from Mixergy with MJ Demarco, founder of limos.com and the author of The Millionaire Fastlane. As Andrew Warner of Mixergy tells Demarco:

“I went to your website once and I saw a big Lamborghini on there. And I saw the word millionaire somewhere and I said, this guy is probably a get-rich-quick guy. I got to stay away and I’ll pass on the interview, and I made a mistake by doing it. Now that I’ve read the book and gotten to know you, I can see I made a big mistake.”

Thankfully Andrew Warner caught this mistake because The interview is a complete diamond in the rough.

My personal favorite is what Demarco calls NECST: Need, Entry, Control, Scale, and Time. He describes this framework as a path or litmus test to determine if a business is in the fast lane.

Here are some excerpts on NECST from the interview transcript.

Need:

MJ: The commandment of need, I believe, is basically you want to start a business that solves a fundamental need in the marketplace. And when I say need, I don’t mean it’s never being done before. I think a lot of entrepreneurs, they think, I have to go find something that’s never been done. It’s rarely usually about that. It’s usually about just doing something a lot better or putting a spin on something different. I mean, when I started my company, there was 12 other companies already doing a similar thing. I just did it better, so sometimes the need is just about being a better executor and not necessarily finding or inventing the new segway or something groundbreaking.

Entry:

MJ: Entry basically states that as the lower the barrier entries are to any particular business, the worse the opportunity becomes. Meaning, if you can just go to a website, fill out a form, and then wham you’re in business, it’s probably something you don’t want to be doing. But if you fill out a distributor kit, and then wham, you’re in business, that’s probably something you don’t want to be doing. Because as a marketplace becomes more saturated, obviously the profitability or the margins of that particular space go down. So we want to have businesses that have to be started or created as a process, not as an event. And by process, I mean it usually takes weeks, sometimes months.

Control:

MJ: Control is having complete control of everything in your business that is humanly possible, meaning you don’t want to be outsourcing something where somebody can slip out the rug from under you and instantly kill your business or instantly kill your revenue stream. The example I give in my book is I used Google Ad Sense on my forum, and someone made a post on there about, I don’t remember what it was, but Google looked at that post and said, that violates our terms. And they immediately canceled the ads. Now I wasn’t making a lot of money on it. That wasn’t my breadwinner, but in a moment, that revenue stream disappeared. So I was thinking, God, what if I was making 10, 20, $30,000 a month off this revenue and then wham, instantly someone can slip out the rug from under you and take it away. That’s a violation of control. I mean, we want to be in a position where we control our financial plan, and we don’t want to be putting ourselves in a position where somebody or some board of governors or some board of directors or some hierarchal entity can slip out the rug.

Scale:

MJ: Scale is, again, that wealth equation I talked about earlier. You want to be involved in a business you can scale to the masses. And I don’t mean it has to be that everyone can use it. It can be a niche. The little business is a $6 billion industry. Pretty big but still a small niche, but everyone can use it around the world. So scale is about having a business you can scale the the masses, meaning if you have an apartment building or a single-family house at Main and Elm, that’s not very scalable. I can tell you unequivocally that business will not scale to $20 million dollar evaluation or $5 million or whatever. If you own a deli franchise at the corner, again that’s a business that isn’t going to scale to a huge evaluation. You’re not going to sell a thousand sandwiches in one day. So scale is about having a business that has the potential, meaning a wealth equation or a speed limit, that can reach the masses.

Time:

MJ: Time basically says, are you building a company that can turn into a money tree? Can it turn into an autonomous system that will work while you’re away? And time is probably the least important but is also the hardest as well. I mean, it took me years to get my company automated. Selling a book certainly isn’t automated, but at some point, we want to detach from our time, because time is the most important. Can we have a business that is going to work for us while we’re not working? And I think a lot of business have an implicit time component. I mean, the Internet is number 1 because Internet is 24 hours a day, 7 days a week.

I highly recommend watching the entire interview and checking out MJ Demarco’s book, The Millionaire Fastlane. Watch the full video interview at Mixergy, here.

Character Development; The Godfather and Three Events That Changed Me Forever.

As a writer I am a big fan of character development. Whenever a narrative or plot reveals to us that the character has grown or changed it’s amazing watching them evolve. Michael Corleone in The Godfather is a perfect example. But sometimes it’s a lot more subtle and sometimes it’s even the ending to a story, as is the case in George Orwell’s Nineteen-Eighty Four.

I’ve personally undergone some major character development in my own life. Here are three personal examples and their corresponding catalysts.

I became someone who was much more disciplined, and paid more attention to detail. More masculine. {Joined U.S. Navy at age 17.}

I became much more guarded and a hell of a lot less wet behind the ears in general when it came to trusting people. {Bad ending to a long relationship.}

I became much more humble, grounded and reserved. {A rise and a fall; I Made some tough mistakes, lost my business, and relocated out of CA to the Midwest.}

So, those are three really major things that drastically altered me.

I wouldn’t trade those experiences for anything in the world and I wouldn’t trade myself for anyone in the world. I am a firm believer in serendipity and I believe that I’m on my path and I’m right here for a reason. And I’m not just saying this above stuff, it’s shit that I actually mean. 

I also believe that the right interactions, people, messages, signs and lessons always have a way of finding you if you are looking for them – and my eyes are wide open.

Here is a great montage of Michael Corleone, following his character’s development.

And as an afterthought, sometimes character development is simply a product of habit or a result of cultivating yourself and working to become a certain way. Working to be that ‘perfect’ version of yourself; however, I’ve also seen character development go sour. People becoming shallow, arrogant, etc.,

P.S. I’m looking forward to watching the movie Limitless. I already read the script and there is definitely some MAJOR character development in that story.