startups Archives - Page 99 of 117

The deception of history

Posted on September 6, 2009 by Steve Sammartino

Reading about Craigs list the other day I started thinking about business history and strategy. As entrepreneurs we often get fooled by the deception of history. And it’s easy to see why. All the business books and articles we read on success are based on what someone or some company we respect did. The problem with this is that the world lives in a state of flux, and what worked then, most certainly wont work now. This is where the Craig’s list example comes to the fore.

Would a 3 color page of hyperlinks which looks like the internet did in 1994 work today? Highly unlikely. Craigslist works now, because it worked well then. It had things working in it’s favour like the ‘in crowd’ in the Bay area spreading the word. That it was first to market with an on-line classified. Now these legacy issues become a strategic proposition which is worth maintaining. What it doesn’t mean is that it’s a strategic template worth copying for Startup X. It’s also less likely we’ll get the support needed from the web community or the investors needed.

The same can be said for pretty much any startup with an interesting history.

A social networking site which is set up for alumni of an Ivy League University probably wouldn’t work.

A trading website where auctions are used to develop the perfect market place probably wouldn’t work.

An on-line retailer which aims to sell every book available in the world probably wouldn’t work.

As entrepreneurs, what we are better off understanding is the insights into why things worked, and try and leverage human behavior in developing a strategic direction to launch our business.

Inventing Demand

Posted on September 4, 2009 by Steve Sammartino

It’s no secret I own and run www.rentoid.com – but here’s a story you don’t know. The story of how I got it off the ground and got people to use the website.

Rentoid had a classic chicken and egg problem when it first got launched. People wont list items until we have willing customers waiting to rent their stuff. Conversely, people couldn’t rent things until people willing to rent their items put them up for rent. It’s a bit like asking two people who don’t know each other to fall in love. To solve this problem I decided to ‘Invent Demand’. This is how I did it.

I went out and got myself a copy of the Harvey Norman and all the major department store catalogs. Scan through and them and picked off what items I thought would be suitable to rent. For the purposes of rentoid that meant items that were ‘hot‘ in market (their placement in the catalogue was proof enough of that), items which had a purchase value of over at least $200, and had a low likelyhood of damage. I then proceeded to gather photos of the specific items off Google images and listed each of them on rentoid. The rental prices I placed at 5% of item value for a week, and 10% of item value for a month. The bond I made 50% of the cost. I made sure I listed items from varying categories. I did it in 3 suburbs across Melbourne (North, West & East). The listings also said ‘as new, never used’ – how true. It also assisted with our SEO because people do ‘item & location’ specific searches.

When people rented the items, I went out and bought them, first hunting for the lowest price on line. Then rented it to the new rentoid member in good faith and gave them an exceptional user experience. After the rental I sold the item on ebay for around about 80% of the retail price. I pretty much re-couped my costs doing this. Some items kept renting out often enough for me to keep them including my Nintendo Wii and Guitar Hero which have paid themselves off more than 3 times over. The cool thing is the experience I gave people and the live demonstration it gave me to the system I built. It really helped me iron out many of the bugs in the system when it comes to usability and transacting on-line.

You may think this is slightly deceptive, but it isn’t, simply because the rentoid member got what they wanted from the site and the process was completely transparent. When they’d come over the pick up the item up for rent I’d tell them I own www.rentoid.com. I’d ask questions like how they found the site and what they think. In fact, they loved the idea and were stoked to transact with the founding entrepreneur.

It was a great process to not only to invent demand, but also gain some brand evangalists and supporters. And yes, I still list a lot of items on rentoid – espeically if it’s new and cool and we don’t have it on the site yet.

As entrepreneurs, we need not be afraid of how we can build demand and momentum with our start up. We must do this because action creates reaction and often people simply liking our idea isn’t enough. Instead we must show leadership and belief in our own product and embrace it and use it as our own ‘in house evangelist’. If we don’t believe, how can we expect them to?

Usability defined

Posted on September 2, 2009 by Steve Sammartino

If you want to know what a true consumer insight looks like. What it is to have the ‘user in mind’, then take a look at this picture below. It’s one of the simplest and best innovations I’ve seen in a while. The key question is this:

‘Why did it take the industry more than 100 years to think of it?’

electric plug

Startups: What simple user centric innovations are waiting to happen in your industry?

Quote from Warren Buffett

Posted on September 1, 2009 by Steve Sammartino

Here’s a quote for Warren Buffett – who has been consistently among the few richest people in the world for the past 20 years or so.

“To invest successfully over a lifetime does not require a stratospheric IQ, unusual insights, or inside information. What’s needed is sound intellectual framework for making decisions and to keep emotions from eroding that framework.”

buffett-cartoon

Firstly let’s define investing as something which we we see as worth putting a consistent effort into to achieve a long term result.

So it is fair to say we invest in many things such as family, health, finances and business ideas. The key interpretation from the above quote is that it’s not about being an intellectual guru, rather our success will be a function of having a robust framework to work towards. That this information is available to everyone, and if we have to the discipline to stick to it our investments will yield results far beyond our expectation.

The importance of health

Posted on August 31, 2009 by Steve Sammartino

Today I can hardly move. I injured my back severely while surfing on the weekend, and pretty much had to crawl out of bed to get myself to a physician.

More than anything I deserve it. I have been neglecting my health recently. Finding a reason not to go to the gym, putting off exercise and doing that little bit of extra work. Putting ‘that’ above ‘me’ is a bad mistake. It’s an immediate reminder of this: Without your health you have nothing. No amount of money or success can replace it.

vitruvian-man

If you want to start anything worth doing, start looking after yourself. Your health should be number 1 on the priority list at all times. Above any goal, any project or any material desire. And that means scheduling in exercise and eating well, regardless of what it must replace. If your job or startup is impacting your health, then you need to to quit and start something which is more complimentary to long term living.

Stay healthy.

Transaction Friction

Posted on August 28, 2009 by Steve Sammartino

I’m currently in the midst of improving the usability of rentoid.com. We are quite certain that it will improve things dramatically from where we are today. easy to follow steps and visuals to first time users.

But in truth it really won’t be enough to be game winning. After this website improvement, we’ll need to continuously iterate what we have. And if I am to tell you all a secret here on startup blog it’s this… Some the new changes will need to be replaced in a couple of months, and so on in perpetuity. The reason is that I get phone calls all too often which sound like this:

Customer: ‘Hi I’m ring up about renting that double bed you have listed on rentoid.com’

Me: ‘Sure, are you new to rentoid? If so let me explain very quickly how it works…..

(I say we don’t own items, rather have a website that people use to rent items to and from each other. I tell her how to join / transact)

Customer: So it’s some random person?

Me: Usually things like beds are rental business – it will be identified as such saying’rentoid business partner’

Customer: Ah, no sorry… It sounds just too hard sorry…. thanks.’ Hangs up phone.

* If the first contact was with the owner, things may have been very different.

There’s too much friction. As a little reminder this is the definition of friction as it pertains to physics:

A force that resists the relative motion or tendency to such motion of two bodies or substances in contact.

The bodies in this case are the customers and the website. And transaction friction occurs whenever these bodies interact.

Currently, there are too many interactions before a transaction can happen. The reason the system has been designed this way has been to ‘protect revenue’, as all my readers will know I don’t believe that “Free” is a business model. But the question I am seriously asking myself is ‘How much revenue are we losing because of friction?’

It is free to join and list on rentoid.com and we take 5% revenue of each rental. Which means both the renter and the rentee need to do quite a few clicks before the transaction is complete. Both parties have to deal with significant fraction in order to transact with each other.

The owner has a lot of friction listing the item

The person renting also has a bit of friction when paying the 5 % deposit on rentoid to get the owners details.

This process protects our revenue, but slows things down and is painful.

There is no doubt it that turns many people away – how many we just can’t know. Don’t get me wrong, I’m not about to make it ‘free’ – but maybe it’s time to make people pay to list. Which we have avoided to reduce barriers to entry for listers, as listings (having the most items for rent in one place) is game winning. That said, listing already has a lot of friction in any case…. it takes time & effort, maybe asking for a few dollars up front isn’t really a problem? Maybe people wont mind if it creates more rentals for them because their phone number is on display for the renter to call them immediately and get renting? There is only 1 way to find out the answer to this question and that is to implement it. But friction has to be balanced. We need the minimal amount of friction to to move things forward, but enough friction to make so money as well.

The other benefit of changing the system is that it will bring the money forwards and reduce complexity of the site mechanics. But it does open to other competitive risks like screen scrapping, and listings being stolen.

I’ll let you know which way we go…. In the mean time think about this in relation to your business or startup:

“How can I reduce transaction friction in my business?’

David Elsewhere – 20 years in the making

Posted on August 26, 2009 by Steve Sammartino

You may have heard the name David Elsewhere, he’s an incredible dancer who has a style all his own. I wanted to feature him here on start up blog for a few reasons.

There is nothing more niche than what he does (a dance style called liquiding)
He’s been doing it for 20 years
He didn’t stop when rap dancing went out of fashion
He does it because he loves it. No other reason.
He has now made a career out of it, and is an internet superstar. (Just youtube his name)

His major collaboration video has been viewed more than 200 million times. But the internet and youtube didn’t make him famous. His dancing did, it just so happens that the vehicles to promote his amazing stuff came along some 15 years after his preparation began. So here’s an interview to pay homage to staying the course, passion activities and the uber niche. Big ups from startup blog.

[youtube=http://www.youtube.com/watch?v=6V4H9RbbalA]

Patience pays.