Solid advice – David Clarke, Webjet founder

I was lucky enough to be on a judging panel at Melbourne University with David Clarke the CEO of Webjet. A $500m company which he founded, floated and built. After the students gave their business pitches (the subject was Internet Marketing) he gave a simple closing speech with some poignant insights. Here’s a snippet.

“The internet is very seductive and has the capacity to hijack rational thought. There is a real disconnect between the on-line and real world. The trick is to connect the two. And the way that is usually done is through speed and cost advantage.”

Amen.

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Why iterations matter

When it comes to startups iterations matter a lot. They are evidence of the business pulse. They mean we are progressing and building momentum.

But there are some deeper reasons why iterations matter so much. Iterations give us a reason to go back.  To go back to the market ‘our people’ and re-engage in a conversation. It gives us something to talk about,  stimulate interest and demand. To glean feedback from, regardless of who this conversation happens to be with. Our business is essentially a large complex set of conversations, and the changes we make facilitate them.

So who can we go back to with our iterations?

– Our customers who want to know how these iterations help them out

– Our employees who can get excited about the cool stuff they have been / will be working on

– Our suppliers who can get excited about the prospect of more business

– The media want to report on innovation, updates and the industry

Nintendo EvolutionPic via Alex Figueroa

All of these conversations stimulate our business, our industry and ultimately the market place. Our iterations have a much bigger impact than we think. It’s far more macro.

Iterations are social, and we are social creatures. If nothing has changed or improved, then we move on. It is human nature.


the 5% rule

5% of our customers wont pay on time

5% of our customers wont pay at all

5% of our employees wont deliver what they are paid to

5% of our employees will steal and or damage company property

5% of business partners will break contracts and even worse, not keep their word

5% the people we meet will be genuinly dishonest and painful to deal with

It’s the 5% rule. In fact quite often business discussion are too often focused on the 5% of times the business model will break down and we will get cheated in some way. The amount of strategy, board room and agency discussions I’ve had about the 5% of people who make business models and ideas imperfect are countless. The point for startups, no less any business, is to accept the fact that all models have gaps. And more often than not these gaps the doing of the 5% rule.

the 5% rule

The problems with trying to remove the 5% is that we build gates and protections which often stuff up the 95% which is working. We create unnecessary friction. What we are better off doing is thinking about the problem like water evaporation. It’s going to happening, no matter what we try. But we must remember that the very large majority of people are good.

My advice is simple. Know that it exists, and forge ahead anyway.

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Industrial Tourism

Industrial Tourism is big business. It’s a little know fact the Boeing factory in Seattle has over  180,000 visitors a year.  At $15 a ticket that is approx $2.7 million in high margin revenue.

boeing 787 dreamliner

Local Australia firm fosters brewing has a popular brewery tour at their Melbourne plant (you get a free beer at the end of it) as does Media conglomerate NBC in the Rockerfella Centre in New York. None of this is free, and they are all fully booked pretty much every day.  The thing that is almost as powerful as the cash such Industrial Tourism generates, is the relationship it builds with the brand.

It is pretty cool to be taken into the ‘secret back room’, even though we can all be pretty sure that Boeing or any large conglomerate are not about to give away any secrets on said tours. But this is where startups and SME’s can do it even better. We can let our early adopters into our Factory, Alpha testing, Retail back room, Warehouse, New Product Development session. We can let them expose our secret goodness to the market for us. Especially if we do something awesome like make great software, use recycled materials or anything creative.

So the question for startups is this: How can we let our early adopters and brand evangalists into our secret world to spread our world?

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Delayed Revenue Model vs Free (DRM)

I know I am being a bit of a dog with a bone here. But we really need to put this ‘Free’ stupidity to rest once and for all. Sure it’s semantics, but this is what the Free model really is:

Delayed Revenue Model

If we have a so called ‘Free’ model, we are simply providing resources (at out cost) in order to extract revenue through alternative means later, or via a trade sale to incumbents who see value in what we have created. In both cases the ultimate goal is Revenue.

delayed

In many ways it’s riskier to go down the free track, simple because time and money are inextricably linked. If we don’t end up ‘Monetizing’ (another word I hate) then we are simply in the wealth transfer business.

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Community overload

Today I had a discussion about an entrepreneur who runs a well know business in Australia. He commented about building a community, then working out how to extract revenue later.

Seems everyone is trying to build on line communities these days. How many auto generated emails are you getting? My inbox is full of them. Sure we know it works, we know it’s crucial, we know its all about the community. Interestingly when we say community we don’t really mean it. We mean bunch of people who we can do direct selling to. But here’s a thought:

There are only so many communities we can all belong to.

People are suffering from ‘Community Overload’.

The law of diminishing returns is not excluded from community participation. We only have 24 hours a day – something the internet hasn’t been able to revolutionize just yet. And just maybe some of our people / customers / community don’t care as much about what we do as we’d like to think.

It just might be time to flip our thinking a little here. Maybe we can just sell something instead. Maybe create a great product or service which people value – and just leave them alone. The ultimate community which matters is family and friends, and the best way we can serve that group is by not stealing time from it.

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