startups Archives - Page 5 of 117

When to resist technology

Posted on April 7, 2016 by Steve Sammartino

My readers know that I love technology – I literally rub my face in it.

But technology is not always the answer. Sometimes it pays to resist the use of it. This is especially true when technology lacks differentiation or is the lazy option. A hand written letter has far more value today than an email, tweet or whatsapp message does. We know you care more, we know you made more of a concerted effort with a pen and a post box.

It comes down to swimming against the tide. Music is one industry that has been impacted incredibly by new technology. Every laptop is a world class studio, opening up the music making to everyone regardless of their budget. But prized musician David Byrne (of Talking Heads fame) has some interesting views on why this might not be the answer to make great music. Watch the video below, and think about the work you do and how it applies. If you listen close enough you’ll come up with some new anti-tech ways to both make a difference and a better product. Enjoy!

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The greatest pricing hack of all time

Posted on April 6, 2016 by Steve Sammartino

Before I tell you this story, you need to understand a couple surprising facts about airlines.

Fact 1: The airline industry is a ‘net loss’ industry. If you add up all the profits and all the losses of airlines since commercial aviation began it’s around $60 billion in the red.

Fact 2: The profit margin on a 1 hour flight is around $2 per passenger. (around 1 GBP)

Now for the greatest pricing hack of all time.

When a low cost carrier like Ryan Air sells 10 pound fares, or 1 pound fares for that matter – they make more money then we’d imagine. The reason is simple: around half of the travellers who bought these ultra cheap tickets don’t turn up.

They buy the tickets as a kind of ‘future travel insurance’ – a ticket in case they want to go to Prague… I mean they intend on going, but the tickets are often bought very long in advance, and so cheap, life gets in the way and they decide to not go. It’s only a small amount of money, the cost of a coffee….

Ryan Air CEO

Crazy Michael (The Ryan Air CEO) keeps the money. The ‘no show’ money is 100% pure profit, and often more than what they’d make with an actual passenger. But here’s the kicker, there is no refund or changing of dates, so he gets to sell those ‘no show’ tickets again. After a period of time Ryan Air have worked out an algorithm of how many forgo their cheap tickets. They then over sell the flights by that amount of passengers. They know the percentages, and they’re nailing it.

This hack will keep on working, so long as they don’t get greedy. If the special is on too often, it will reframe price expectations, and change the ‘no show’ ratios. If they can resist temptation, they have a winning formula.

It’s another great example as to why price should never be an afterthought. The price is something every startup should be hacking daily.

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Learning and knowing for sure

Posted on April 4, 2016 by Steve Sammartino

Hanging tent

If we’ve done something – we’ve most likely learned about it as well.

If we’ve learned something – we can’t be certain we know how to do it, yet. We could still be in theory land.

When in doubt, have a crack at it and find out for sure.

The economic future of the Western World

Posted on April 2, 2016 by Steve Sammartino

The economic future of the Western World is bright, so long as it doesn’t squander its opportunities. So long as it remains open to the growth of developing nations and we manage to collaborate cross borders. Isolation and protectionism is not the answer, just ask China before it reopened to the world. Yet, all we ever hear is about the impending doom of the middle class and the end of manufacturing.

Abandoned factory USA

While reading my Quora feed I came across a brilliant answer to this question by Balaji Viswanathan:

About a decade ago, I was chatting with my buddy who was working at Windows Mobile. He was lamenting how the mobile industry was racing to the bottom where everyone was trying to produce $10 phones. Industry experts thought that the future of telephony was ultra cheap commodity.

A year after that conversation, an American company came with a nice gadget named iPhone that started at around $500 [without contract]. And another company in the same city brought a great competitor in Android. In a matter of months, it was clear that the future of phone market was not down, but up. Apple went on to be the biggest the most profitable company ever. Android became the biggest ever mobile OS.

That is the future of American manufacturing and middle class, if they can focus on out-innovating the world, rather than constantly whining about cheap countries. And the US is still a world leader in manufacturing with the likes of GE, Caterpillar, Dow, 3M, Boeing etc [see more: How does the USA make money despite much less manufacturing?]

There is a whole range of exciting new technology ahead of us – Virtual reality revolution, a 3d printing revolution, autonomous vehicles on land, air and water, robotics revolution, clean energy revolution, space exploration revolution and so on. Just like how Apple changed everything in a span of mere months, there could be enormous new innovations that are to come in the next few years.

This is probably like being in the 1950s – where everything is exciting and every field is getting rapidly changed. US has all the energy sources, a large market, the biggest labs, the most innovative companies & the best of universities. If you cannot win with all these advantages, there must be something wrong.

Do you want to build that tomorrow or keep complaining about losing the yesterday?

It’s worth reading twice. And here’s a few more of the so ons:

Internet of things, quantified self, nano technology, molecular manufacturing, genetic engineering, vertical farming, crypto currencies, block chain technology, crowd funding and fintech, wearables, quantum computing, augmented knowledge…. I could continue, but we all know that there’s enough opportunity in this list for every industry known to humanity, and the prices of all of them are dropping – which means the cost of innovating with them is low and the opportunity for value creation is high.

Now lets get excited and lets get going.

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What we can learn from street hawkers

Posted on April 2, 2016 by Steve Sammartino

I was in Shanghai China last week and had another experience with street vendors or ‘Hawkers’. The hot item that week seemed to be light flashing rolling heels for kids shoes. I lost count how many times I was approached to buy some. It got me thinking about what we can learn from their hustle.

Hawker China

Lessons for Startups from Street Hawkers:

It’s a numbers game. They approach every single tourist. (I stand out in China). Even though we may or may not want the toy they are selling, they don’t let their perception ruin the chance for a sale. They’d rather get a ‘No’, than miss a potential yes.

They take rejection with a smile. They don’t get upset when you say no thank you. Especially if you say it nicely. They understand that you are not rejecting them, but the offer. It’s not personal and they know it.

They go through the range. If one product isn’t right, they pivot and offer another from their range. They give every prospect a few options and work out what they might need. They try and solve your ‘gift or memento’ problem.

They are proactive in retail. If you’re looking, they ask questions and interact with you. They don’t wait at the counter for you to bring an item up to buy. They don’t sit and ignore you looking at their smart phone – like some retail workers do in western markets. They know how to sell in retail. And here’s why, they live on commission, not hourly rates – no sale, no money. What a difference that makes for sales people.

Make an offer: They often let you make an offer. Your price is probably higher than the minimum they’d accept. (Something we could do more often in B2B selling).

They Negotiate: They have flex in their pricing, let the customer have a perceived win through negotiating on price. A large part of what we buy is how we feel when we buy it. They know this and make it fun.

They know the rates: They’re great international marketers, they know the exchange rates of every country and give you the numbers immediately. They live in the customers world.

They are thankful: When you buy, they thank you for your custom. Appreciate your support and do business with a smile.

If we ever want to learn how to sell, then we should pay attention to people whose livelihood depends on it, not those who get a wage for doing it.

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It's the value we create that matters

Posted on March 31, 2016 by Steve Sammartino

Sad little boy

It is possible to earn a lot of money and create very little value for society.

It is possible to earn very little money and create incredible value for society.

So how to do we know when we have it right, for a startup or even life? Here’s my measure – how much would people miss you if you didn’t turn up? And how long would it take for them to notice after you stopped turning up? The more our not being there gets noticed, the more valuable we know our work is. I’m pretty sure the world wouldn’t notice if Wall St took a year a two off. While I’m sure most children will notice the day their mum and dad didn’t come home.

How long would it take for customers to reach out to your startup once you stopped shipping or your software stopped working? It’s an interesting question. And while we often hope to attract a large quantum of customers and scale, I’d rather have 100 people who really cared if I wasn’t there, than a million people who clicked elsewhere the moment I disappeared.

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