Category: entrepreneurship

The 2 simple questions all successful startups have answered

Posted on by Steve Sammartino

Here’s two great questions to ask when starting a business endeavour:

  1. Is there a gap in the market?
  2. Is there a market in the gap?

Question 1 is about needs being unmet or not fully satisfied. In the realm of disruptive technology, you may be able to solve customers problems a better way. The gap in the market could even live at the emotional level – $200k Hermes handbag anyone?

Question 2 is about whether we can make money filling it. Until we have real revenue and real costs, outside of a VC funding cycle the question remains unanswered. Users alone, do not a market make – just ask Fab.com. The cool thing about being small is that previously unprofitable segments for big players can now become a super efficient money spinners. Legacy infrastructure is the enemy of today.

These questions are not new, but we’ve got new tools to ask them with. We can know about the market gaps quicker, and maybe even change what they answers are.

You should totally read my book – The Great Fragmentation.

Your startup is a restaurant

Posted on by Steve Sammartino

Startup restaurant

Yes, your startup is pretty much a restaurant. Which means there are a few things you should know about new restaurants:

  • A domestic kitchen is different to a commercial one.
  • A successful dinner party does not translate into a successful restaurant.
  • Most restaurants can’t afford a janitor, a book keeper, advertising or…
  • A restaurant can never please all tastes.
  • You’ll need to experiment with dishes and scale.
  • Small menus work better than extensive ones.
  • The meal the customer sees is a small part of what makes it all work.
  • The margins are always smaller than you expect.
  • Working hours always exceed opening or revenue generating hours.
  • Customers can be wrong, but we need to look after regulars.
  • Regulars come back for the consistency or experience.
  • Customer perception from the outside determines if they’ll come in the door.
  • Recommendation from friends matters more than anything.
  • There is no chance of annual leave until customers will really miss you.
  • If you want to be successful enough to go big, you can’t run the kitchen.
  • 95% of new restaurants close within the first year.
  • 99% of new restaurants close within three years.

Sounds a bit difficult, with a low probability of success. Doesn’t mean you shouldn’t try. It does mean you should know it might be one of many tries to get one that works.

A learning curve only happens when you are prepared to push up hill.

You should totally read my book – The Great Fragmentation.

The simple truth about Virtual & Augmented Reality

Posted on by Steve Sammartino

Tony Stark Augmented Reality

There’s no doubt these two technologies will start to intersect our lives and therefore business. Startups and big tech co’s are manoeuvring to find ways to plug the technology into how we work, live and entertain ourselves. But Virtual and Augmented Reality sound more complex for a consumer perspective than they really are. Here’s how I like to think about these two technologies to simplify how they can be used.

Virtual Reality: Takes me to places where I am not.

Augmented Reality: Helps me understand and interact in ways I cannot.

They help us do more than we can on our own. Virtual helps us escape and hide. Augmented helps us interact and create more efficiently. Neither is about replacing us.

Virtual Reality isn’t that much different to TV –  taking us to another place, it’s just far more immersive. We could even compare it to a novel or a movie – it’s just that more senses are involved.

Augmented Reality could be compared to signs and instruction manuals. Our smart phone is also used this way, like when we use google maps. Augmented reality is about telling us more about our immediate environment than we could guess on our own. But it can be far more personal, immediate and immersive.

Sometimes the best way to understand new technologies is to compare it to technology we already understand and use. It is very rare indeed for new technology to be more than an evolution of what we already have.

I really think you’ll like my book – The Great Fragmentation.

Why burning the boats is terrible advice

Posted on by Steve Sammartino

Burning the boats at the shore

You’ve heard the story about burning the boats right? Legend has it that the Spanish conquistador Hernan Cortes told his 600 men to ‘Burn the boats’ when they arrived in Mexico in 1519. He wanted to ensure his men had no option but to succeed in plundering the riches of the Aztec empire.

Here’s the thing – Hernan was kind of like Google or Apple with an incredible amount of resources at his disposal. And us? Well, we are not Hernan. We are probably living a comfortable existence in a developed country. We would probably not die for startup success. We, in the modern world should probably be smart enough to ignore this advice.

Personally, I’ve had a lot of startups, more than ten. I’ve also had a lot of projects. The large majority have failed in financially. I’ve had two startups in which I succeeded in selling the business. I never burned the boats once. I always had some boats hidden away under the bushes by the shore for a quick and painless escape. Once I even joined another army (went back into a corporate role). I always had some form of investment to fall back on, safety cash, shares and housing. I even continued to make passive investments while I was bootstrapping my startups. And it is this reason alone I could keep on playing the game. I could keep going back into another startup and try again. I’ve got friends and colleagues who went all in, and now have very little to fall back on. Sure, we all approach things in different ways, but for me startups are an infinite game that I want to keep playing, therefore, I always keep a few boats by the shore.

See the amazing reviews of my book – The Great Fragmentation.

The simple marketing mistake that opens the door for climate change deniers

Posted on by Steve Sammartino

Climate change denial

Here’s the headline from an article recently about climate change:

Rising global temperatures: when will climate change deniers throw in the towel.

Firstly, I’m not an expert, but I believe the experts – the 99% of scientists who informs us of the climate change reality. I also think it is an amazing startup and financial opportunity to decarbonise our economies and invent new revenue regimes around renewable energy sources.

The article I refer to above talks about last year being the hottest on record. But, whenever reports like this one refer to very recent weather events, they make a mistake that climate deniers can feed on. Through focusing on recent weather events, it allows deniers to use similar data from recent extreme cold events as a form of counter evidence. ‘Well, last year we had record snow falls in Colorado.’ While anyone with limited knowledge can see through this counter claim, it can create doubt in the less knowledgable and fearful. The same people who generally hate change. Remember change is bad! [sic]

Yes, the article does go into detail about the longer term trends (which is what really matters), but through focusing on recency, so can the deniers. They can sow a seed of doubt. I’m not suggesting that the facts should be ignored. But given climate change has moved beyond a scientific debate, and into the marketing realm it should be less about all the facts, and more about the shifts we need.

Sometimes the best marketing is about the facts you leave out. When we want to motivate people to believe and act, it isn’t just about getting the facts out there. Instead it is about using facts our competitors can’t counter and winning the mind games instead.

You should totally read my book – The Great Fragmentation.

Sneakers – The age of the global niche

Posted on by Steve Sammartino

I came across this great TED talk – which is almost rare these days… about an underground economy for Sneakers. Yep, those things, runners, sports shoes…. but mostly Nikes. It turns out that this market of buying and selling special edition shoes is not small fry. The secondary market for collectors edition shoes is estimated to be $1.2 billion a year. And the net value growth in these shoes is greater than that of the S&P 500.

For me this is another great reminder that in a connected world – what seems like a tiny niche can become real business, for real people to earn a real living. What seems like a passion you enjoy on your own might be shared by hundreds of thousands around the globe. But most of all it reminds us to reassess what we believe to be true as technology makes micro and weird possible.

You should totally read my book – The Great Fragmentation.

 

Why I already trust you

Posted on by Steve Sammartino

lost of faces

People often talk about earning someones trust. Which is a bit like saying, I think you’re a jerk until you prove otherwise. My approach is the opposite. I trust you from the outset. The moment we meet you have my trust. Occasionally this means I get burnt. Probably around 5% of the time, it turns out to be a bad policy. Which then gives you a clear indication of why I choose to trust first. Most humans are good, and will honour the trust given to them. Which means that 95% of the time it works out well.

The problem is that most companies make policies to account for the 5% of bad apples. The few that take advantage of things. They punish the majority to account for minority. A better option is to have a business model with the robustness to account for those we who do the wrong thing. By doing this we respect the humanity of our most important customers, the majority. They also happen to be the trustworthy ones.

You should totally read my book – The Great Fragmentation.