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Döhler’s Latest Line of Candy Caters to Manufacturers Targeting Health-Conscious Consumers

Döhler’s Latest Line of Candy Caters to Manufacturers Targeting Health-Conscious Consumers

The company recently promoted healthy snacks at the ProSweets supplier fair

The company’s wellness products align with the growing interest of sugar reduction and premium ingredients.

Natural ingredient company Döhler has launched a new line of candy, including chocolate and gummies, for manufacturers looking to sweeten up a healthy lifestyle.

The products, which were debuted at the ProSweets Cologne 2017 international supplier show in Germany, comprise ingredients from fruit including pectin from apple, juice concentrate, and fruit sugars, according to Confectionery News.

Some of the new products featured at the supplier show were the cactus pear-kiwi gummy and popped quinoa chocolate. The gummy is a soft and sweet candy that contains fructose rather than regular sugar; the chocolate has hints of honeybush extract and strawberry granulates to add a fruity taste.

“The functionality gum is enriched with guarana extract as well as cactus pear juice concentrate and kiwi juice concentrate,” said Antonia Kauter, product manager at Döhler.

“If you eat one serving size of 20 g of this gum it is equivalent to one-and-a-half cups of espresso. So for those of you who do not like energy drinks, or coffee you should go for these kinds of gums to keep you awake.”


NPD Test #2

1. Don't do it alone. Be smart, find some help, and "ride horses" to the bank.

2. Look for a love-group and empower the group to help promote and gain market access for your new product.

-find the sort of horses that you can ride to the bank

-a good horse will be a champion for your competitive angle

-identify and partner with people who have the skills, energy, and influence you need to succeed with your product and target market
(after all, with startups and other types of ventures, "it's not what you know, but who you know" that determines success or failure.)

2. Evangelists
-I'll prepare the way by stirring interest and awareness

3. Patrons
-you pat my back and I'll pat yours

-they desire recognition
-they want credibility among peers
-stock to increase their social equity
-being part of a winning team

2. Trade Association President
-angles with "wow factors" put them on the cutting edge

3. Local Expert in your State
-looking credible because he/she is a "thought leader." Experts love to jump on a winning bandwagon

-makes bath time easy for mom and makes baby feel comfortable

-warm to the touch
-non-slip
-hangs in storage: flat
-doesn't absorb water
-folds easily
-fits into bathroom sink
-comfortable to baby
-makes it a bonding experience and there are no distractions

Who would be a Horse for this product?
-Ellen!!

Ride Horses-Evangelists & Patrons
-PUJ Tub and Rachael Ray & Kelly Ripa guessing game

-BIC pens "for her" (pink and purple) designed to fit a woman's hand

-very important to growing a startup business

(also known as product advocates, or the Love Group)

Ex: think of them as a huge herd of wild stallions that jump to action at your command and set a positive, enthusiastic tone for everyone that sees them.

-DDS developed the first management software to connect the operators to the front desk, minimizing billing loss and confusion.
(but even after successfully developing the software and addressing a sizable pain-point, the venture would fail unless it found a way to persuasively and efficiently reach the target market--dentists)

-DDS at first thought they had only 2 choices:
1. hire a company sales force or
2. outsource the selling to independent sales agents such as dental product distributors or value-added resellers.

but Dentrix had a third option when they started looking for leverage

Kimball's hard work in uncovering and solving everyday pain for dentists gave Dentrix a sharp competitive angle
-it wasn't difficult to find experienced and credible dental-industry salespeople that believed in Dentrix and wanted to take a chance on selling it for a commission and stake in the company rather than for a fixed salary

Dentrix leveraged their leverage and found salespeople to help them do what they couldn't do or afford to do on their own

-learned hot noble gases are used as insulators inside of dry suits to keep divers warm
-envisioned how the "dry suit" technology could be adapted to insulate winter gear
-while insulated clothing is nothing new, using thermostat-valve-controlled linings in clothing to regulate temperature is new
-no bulk, no layering, just turn the dial up and down
(if the skier is cold, add a little argon gas to the jacket lining if a skier is hot, open the valve and release some argon to cool down)

-from the outset, he understood how to network and recruit product advocates.
-his biggest successes have been with a local mayor that wants to make his city the skiing Mecca of the US, who has introduced him to a number of leading outdoor companies and investors.
(one company is not a primary development partner and several others helped fund the business)
-he was also introduced to an industry "graybeard" (someone w/ decades of experience in the outdoor markets) who began assisting the company as a consultant
-he featured this industry insider whenever pitching Klymit to investors

-don't use time and energy to fight cynics and hecklers. learn to focus on the love and take your product to the market through the eyes of those that love it

-"Who is in your Love Group?"
>> most startup marketers, similar to most Big Business marketers, can't identify who faithfully purchases their products beyond offering up a few Demographics like average age, gender split, and regional sales percentages
(startups can't afford to be that unobservant)

-The Love Group is their lifeblood. Just like a political candidate, startups must know and retain their Love Group while at the same time helping the fence-sitters see their product through the eyes of the Love Group

-New companies don't need 50% of the popular vote to succeed, but do need a strong group of core customers that they thoroughly understand. By thoroughly understand, we are talking about drawing together a profile that looks more like an ethnographic Mona Lisa than a demographic stick figure. What do customers look like, how do they express themselves, what do they read and watch, where do they live, what vehicles do they drive, what are their hopes and aspirations, and most important, which of our product features and benefits really get them going?

-Special interest groups were successfully encouraging legislation to reduce, phase out, and even ban the use of plastic packaging and products. The American Plastics Council (APC) came to the rescue with a flashy advertising campaign to inform the public about the substantial efforts the industry was making toward recycling and reuse, and that products and packaging made of plastic actually saved resources compared to other alternatives such as paper or metal. Millions of advertising dollars were spent, expectations were high, but success was nowhere to be found.

>> Directly attacking the concerns of the Hate Group didn't convince anyone and ultimately led to the APC being ordered by a dozen or so state Attorneys General to desist in their "false" advertising claims about the availability of plastics recycling.

-The APC failed because managers ignored the Love Group in favor of attacking the Hate Group, but they learned their lesson. The next round of advertising built on the beliefs of plastics advocates. These messages highlighted the noble qualities of plastics - personal safety and health - that researchers had identified in personal interviews with the plastics Love Group. This time the positive results were staggering.

- They raise an important point and put themselves on the threshold of discovering what really sets a successful startup marketer apart from a frustrated would-be entrepreneur.

-Successful startup marketers don't expect their Love Group to find them they aggressively seek out their Love Group. >> "Build it and they will come" rarely works in today's world of information overload and product proliferation

-Realizing we don't know our Love Group is the first step in beginning to prospect to find a Love Group.

-There are many ways to prospect for a Love Group, but we suggest bringing eight to twelve people together that may benefit from the new product, feeding them pizza, and soliciting their impressions.

-After explaining the product concept, ask questions like, "Who would love this product? What would they love about it? Where and how would they use it?"

- Listen and note the responses, but more importantly, observe the participants and look for those few who are completely engaged and articulate.
-Ask them back to another session so that you can find out more, because they are your Love Group.

-One prospecting session will not be enough to establish a detailed profile for the Love Group. In our experience, about three to five prospecting sessions are needed, and they should be spread across a variety of geographic regions.

-At the time, executives wanted to branch out into new areas of clothing over concerns that too high a percentage of their sales came from jeans.

-They wanted to grow by penetrating new markets. Levi Strauss did their homework. They examined suit-buying preferences, shopping practices, lifestyles, and demographics for 2,000 men.

-They uncovered five distinct segments in the market: the traditionalist, the classic independent, the utilitarian, the trendy casual, and the price shopper.

-The marketing quickly focused in on the "classic independent" as the target, i.e., the tailored suit Love Group.

-The segment accounted for 21% of male shoppers. They purchased about one-half of men's natural-fiber clothing products, were not price-sensitive, generally shopped for clothes in specialty stores, and strongly preferred tailored clothing rather than buying it off the rack.

-The Levi Tailored Classics marketing team put together focus groups of the classic independents to prove the new product concept.

-The focus group testing went well until it was suggested that (1) the suits would be sold off the rack, and (2) the suits would be manufactured by Levi Strauss.

-At that point objections flew hot and heavy.
-Behind the mirror in the focus group facility, the marketing team had answers for every objection.

-The marketing team pushed forward, even though the product was completely inconsistent with everyone's existing belief about the brand and because of it, trounced every physical and emotional benefit these customers wanted from the Levi's brand.

-But again and again we see the same behavior from entrepreneurs dead set on selling to a particular type of customer.
>> They settle for fool's gold rather than prospecting for real gold.

Ex:
-To make the point, consider the case of an entrepreneur who had invented a device to measure the curvature and other features of human spinal columns.

-His technology could give doctors the lowdown on backbones.

-Medical doctors, however, are a skeptical group. They are highly educated, opinionated, and slow to revise best practices.

-This didn't stop our entrepreneur.
-MDs would love his invention, he just knew it. -He aggressively pursued them. He pushed hard. They pushed back. They preferred X-rays.

-In the meantime, chiropractors discovered the new back-measuring device and loved it. It was just what they needed to get a quick read on a new patient's spinal column and to provide feedback on the progress being made by on-going patients.

-The entrepreneur, however, didn't want to sell to chiropractors. He felt they weren't professionals and that their involvement would diminish the seriousness and significance of his invention.

-He ignored the Love Group, unsuccessfully tried over and over again to sell his invention to the Hate Group, and ultimately squandered hundreds of thousands in venture capital. His business went bankrupt.

1. Recruit early adopters to provide capital to develop your new product.

2. Learn the keys to selling innovators and how they differ from selling imitators.

3. Give innovators what they want the next big thing at a bargain price. But make sure to offer a bargain price that keeps your startup in business.

-Consider mining for gold with the early adopters the customers that will get your startup out of the gate and running!

-Pete Seeger wrote the lines, "Oh, had I a golden thread and a needle so fine, I'd weave a magic strand of rainbow design."

-Beta Customers fund your R&D activities

-Getting the first person to buy is unbelievably expensive. Getting the second person to buy is unbelievably cheap

-Software products usually have an alpha stage, that is, a stage in which features are added a beta stage, in which flaws are removed and a market-ready stage, in which the product is fully groomed and broadly released to potential buyers.

-The beta version is the first version of a product that gets released outside the business.

-Beta versions help developers evaluate their products in real-world settings.

-Beta versions are evaluated by beta testers.

-Beta testers can be current or prospective customers. In the software industry, beta testers receive the beta version of a product for free or at a "bargain" price.

-Consequently, when looking for beta testers to transform into beta goldmines, picking customers with a strong need to believe is a key success factor.

-In other words, the pain-point must be particularly painful for beta goldmines or the need for market leadership must be particularly strong.

>> Give innovators what they want the next big thing at a bargain price.

>> "Build it and they will come," is just a Field of Dreams

1. product development
2. alpha test
3. beta test
4. release

-the number of innovator-buyers can be very small, sometimes as small as 2-3% of the total number of people that will ultimately make purchases in the product category.

-Consider the Dvorak keyboard. Back in 1936, Dr. Dvorak patented a simplified and much improved typewriter keyboard layout to solve the fatigue and inefficiency problems created by the gold-standard QWERTY keyboard layout.

-In today's world, the use of computers makes the streamlined Dvorak keyboard available to anyone who wants it however, the old QWERTY keyboard introduced back in the 1860s continues to dominate.

-Beta-products suffer when people see them as complex to understand or just plain difficult to use.

-The IBM PCjr of the mid-1980s provides an interesting example.

-High price and limited software aside, the product was DOA because of its tiny "Chiclet" keyboard, which made typing almost impossible.

-Evidently, when developing the PCjr, IBM hired usability testers with some mighty tiny fingers.

-Beta-test customers become beta goldmines when they become reference points for future customers, provide funding for product R&D, are top prospects for upgraded products, and supply easy access to in-the-field reactions regarding value-in-use, product fit with current practices, and product usability.

-When it comes to purchasing behavior, innovators
(1) want to buy the next new thing before having to pay full price,
(2) believe they deserve special consideration because they are taking extra time and effort to test an unproven product, and
(3) refuse to sit back and watch anyone else have something new that they don't have.

-Knowing a little bit about the buying culture of innovators can go a long way in helping entrepreneurs sell to them.

-First, innovators believe that new technology initially costs more than the old way of doing things, but that costs will come down with time.

(Ex: After all, ENIAC, the first large-scale computer, cost $500,000 back in 1946 and only performed 5,000 operations per second. Today's home computers perform billions of operations per second at less than a hundredth of ENIAC's price tag.)

-Second, innovators apparently can't say no to new technology even when they know it falls way behind on the bang-for-buck buying curve.

>> Innovators crave new technology, but fear they can't afford to buy new technology.

> Entrepreneurs to the rescue! Entrepreneurs can attract innovators by asking innovators for their help.

> By recruiting innovators as product-development partners, startups can offer opportunities for innovators to move quickly and buy new technology at bargain prices before it is introduced to the general public at nosebleed skim-the-cream prices.

1. An Anchor is your "stamp of approval." It provides "I have arrived" credibility.
(your core customers. your best friends)

2. Anchor customers pay the bills. Every business needs a steady flow of revenue even if it is low margin revenue.

-Finding anchor customers must be a top priority.

-For a moment, imagine that different kinds of businesses are like different kinds of ships.

-The Big Business ship likes to drop anchor in a calm and sunny harbor. The heavy anchor and calm waters make everyone on board the Big Business ship feel safe and secure.

-The startup ship is like a pirate sailing the open sea.
-The captain of the startup business ship doesn't like to drop anchor. The captain knows the ship only moves once the anchor is on board. Startup businesses must get an anchor on board before they can start sailing.
(with an anchor on board, you can start sailing!)

Make Partnerships
-give discounts in exchange for being a reference
-test the "newest things" on them
-make them feel like a partner

-Take a look at their customer list. There is Toyota, Cadillac, Ford, Microsoft, HP, Oracle, VISA, Ameritrade, ADP, Xerox, Siemens, Tyco, HBO, Fox, CBS, Walmart, Mary Kay, eBay, and it goes on.

-Omniture always had great products and talented employees, but their success story really got started with two anchor customers, Microsoft and eBay.

-According to their CEO, before landing these anchor customers, the Omniture sales cycle was a long and painful nine months. Prospective clients had lots of questions about Ominiture's financial stability, technology, and Service Quality.

-With the anchors on board, however, most of the prospective clients' questions were answered with two words: Microsoft and eBay. The sales cycle shrank to a manageable three months.

-For example, a local bakery got its start by providing low-priced, high-quality bread and other baked goods such as impossible-to-resist giant cookies to area restaurants, cafeterias, and catering services.

-These businesses were their anchor customers.

-With the anchors established, the bakery could make their brick-and-mortar retail store a success, charging premium prices for their tried-and-true products, and even were able to add a few new products not offered through other marketing channels.

-Anchor customers get your startup going and keep paying the operating bills through good times and bad.

-Once the factory is rolling, design engineers and marketers start looking for opportunities to swap out the manufacture of low-margin goods with high-margin goods.

-Not every manufacturer, however, has the good sense to bring anchor customers on board before investing millions of dollars in product development and/or building a new factory. Recall DuPont's cautionary tale of Kevlar.

-DuPont spent $500 million to develop and commercialize Kevlar as a replacement for nylon as tire cord, but did not lock-up tire manufacturers. The tire manufacturers decided on steel as a better alternative and took a pass on Kevlar.

-This left DuPont with a very expensive product in search of a market a market they never found. Startups can't afford this type of misstep.

Big anchors don't always suit small startups.

1. Payment Practices
-bigger anchors pay slower
2. Vetting Practices
-smaller and growing anchors set lower hurdles
3. Distribution Practices
-online and TV shopping channels may make it easier to manage inventory

-An important decision point for a startup is whether the potential anchor is more likely to foster a startup business or let it flounder and sink under the weight of their way of doing business.

-Unfortunately, we have seen far too many examples of the latter rather than the former.

-A startup the size of a dinghy goes down fast when they take on an anchor fit for an ocean liner.

-The national retailer declined to reschedule a pickup and told the new business to wait another year before trying again.

-Yet another new business shipped inventory worth hundreds of thousands of dollars to a national retailer notorious for paying vendors slowly.

-The entrepreneurs, having taken out second mortgages and maxed-out their credit cards, got nervous and tried to pressure the retailer into paying with aggressive, bordering on rude and unprofessional, phone calls and letters.

-In response, the national retailer returned the entire inventory. The entrepreneurs were then left with lots of debt, lots of inventory, and few prospects for earning any revenue.

1. A benefactor is a company with complimentary products and/or services that win if your startup wins.

2. Entrepreneurs can find benefactors in the value-chain, in the local community, and in the same industry.

3. Benefactors can help out a startup with cash as well as non-cash benefits.

-Think through the question carefully, because the answer will help you find initial investors, key strategic partners, and perhaps anchor customers.

-Learning to ask the right questions is fundamental to startup success!

-Dorothy needs to seek out benefactors and she keeps an eye open for anyone that will also greatly benefit from a trip to the Emerald City.

-At the journey's outset, Dorothy runs across a scarecrow at a crossroads. She removes a nail to take the scarecrow down from his post and finds out the scarecrow desperately wants a brain. Dorothy suggests that the scarecrow can get a brain from the Wizard in the Emerald City. The scarecrow joins Team Dorothy.

-Next, the two stumble on a rusted tin man. Dorothy liberally applies some oil from an old oil can and finds out the tin man desperately wants a heart. Dorothy suggests that the tin man can get a heart from the Wizard in the Emerald City. The tin man is now part of the crew.

- Not long afterwards, the little group is startled by a lion who attacks the travelers and tries to bite Dorothy's little dog Toto. Dorothy, heedless of the danger, swats the lion on the nose to protect her dog. Dorothy then has to comfort the lion as he whimpers about his nose, and finds out the lion is cowardly and desperately wants courage. Dorothy suggests that the cowardly lion can get courage from the Wizard in the Emerald City. The lion completes the team, and then the three benefactors successfully get Dorothy to the Emerald City.

-But the story does not all go in Dorothy's favor. Turns out, the Wizard also needs a few benefactors. He needs someone to kill the Wicked Witch of the West. When Dorothy and her team arrive, the Wizard gives everyone the royal treatment. He then gives Team Dorothy an audience and finds out Dorothy desperately wants to return home, the scarecrow desperately wants a brain, the tin man desperately wants a heart, and the lion desperately wants courage. The Wizard promises to give each benefactor what they want most if and when Dorothy brings him the broomstick of the Wicked Witch of the West. Like Dorothy, the Wizard is a born entrepreneur. He really understands how to spot benefactors.

-Products are part of a value chain that extends from components to customers.

-Understanding the value chain and where your startup fits in can be a powerful tool to give your new business legs.

-DuPont manufactures the nylon and stain-release sauce that other manufacturers and carpet mills process to make the carpeting we have in our homes and businesses.

-DuPont found benefactors to transform the carpet industry from a narrow-margin heartbreaker to a high-flying profit maker.

-DuPont managers fought commodity nylon prices for generations, but then decided to fight back by offering something that every player in the carpet industry wanted most.

-Every carpet manufacturer and retailer wanted a premium-priced carpet that consumers would recognize and trust.

-Everyone in the industry wanted a profitable product that would sell itself.

-Before Stainmaster, all carpeting looked pretty much the same to consumers.

-Since all carpeting looked the same, consumers bought on price - bad news for the entire value chain.

-Over the past decade, it has grown rapidly into one of the Internet's top 20 properties.

-To accelerate their growth, MyFamily raised more than $75 million in funding from benefactors.

-MyFamily looked at their value chain and asked the question, "Who will benefit if I succeed?"

-The answers company managers came up with were Intel, Compaq, AOL, and Kodak. Intel benefits because family-history buffs want fast computer processes to digest their mountains of digital photos.

-Compaq benefits because family-history buffs want new computers with lots of hard drive space, up-to-date memory, and Ethernet connections to access and post online genealogical information.
-AOL benefits by providing a value-added service to its growing base of family-history buff Internet subscribers.
-Kodak benefits by repositioning itself in the digital photography sector by building on the traditional strength of family photography.

-My-Family increases the need for Intel, Compaq, AOL, and Kodak products. In addition to capital raised from these investors, My-Family also received publicity from their association with these companies.

-Agilix is a software company that specializes in programs for Tablet PCs.

-In this high-tech product category, Agilix needs capital to fund R&D, but also needs access to programming code and computer hardware technology.

-To address the first need, Agilix approached Franklin Covey. Franklin Covey promotes personal planning and saw Agilix as a means to move forward in the electronic planner product space.

-Agilix got their funding and Franklin Covey got a winning product.

-Reviewers refer to Agilix-developed TabletPlanner software as marvelous, brilliant, and empowering. Competing with heavyweights like Microsoft, HP, and Corel, TabletPlanner is one of the top 10 best Tablet PC applications.

-To address needs beyond R&D capital, Agilix has gone to Microsoft and key computer hardware manufactures.

-They have become strategic partners that have provided Agilix with access to key technologies, allowing them to be on the cutting edge of this emerging field.

-As a result of these benefactor alliances, Agilix was able to be one of two software companies to have their software applications ready for the launch of Windows-based operating systems for Tablet PCs.

1. For a startup, advisory boards are more important than a board of directors.

2. Don't limit advisory boards to just include businesspeople.

3. Invite advisory board members that love your product, have a stake in staying on the leading edge of your industry, and/or people with regional, national or industry-wide name recognition.

-An advisory board can extend your social network of influence to increase its effectiveness in attracting investors, customers, and top employees.

-No new venture is too small or too large to benefit from an advisory board.

-Leveraging advisory board experience, expertise, credibility, and connections is the best way to succeed in today's competitive markets.

-A startup gains a big boost from building a national or at least a regional reputation.

-Perhaps one of the best-kept secrets of successful ventures is they know that reputation and experience counts, but that it doesn't have to be their own reputation and experience.
We can't emphasize enough what we stated earlier about finding and leveraging advocates.

-Successful entrepreneurs know that hard work, i.e., working 90+ hours a week, rarely leads to a successful new venture.

-It is the smart work of yourself and others, especially a credible and supportive advisory board, which leads to new venture success.

-Many startups make the mistake of developing their board of directors instead of beginning with an advisory board.

-Whenever you start a new venture, leverage the experience, wisdom, and creativity of advisory members to accelerate your growth and time to money.
(also connections to create your network)
>> Advisory board members should not be limited to people who have simply done things, but people who can get things done.
>> Also include people who possess local, regional, or national name recognition.
(For example, prominent politicians, retired executives or managers, and industry gurus make great advisory board members.)

2. Advisory board members can't be sued for their advice because they do not have any fiduciary responsibility to stockholders as do members of the board of directors. Thus, advisory boards are usually made up of nonpolitical, fun, and creative professionals who have a genuine interest and sincere desire to see the startup succeed.

informal
-serve only as long as needed

not liable
-not accountable if things go wrong

advise team
-give advice

2. Encourage honest feedback, i.e., stay away from friends

3. Be professional to get professional behavior

4. Shouldn't cost them anything to participate

5. Listen and take advice or they will leave

Horses for the Product: Dr. Oz??

Advisory Board: Shark Tank QVC Lady

2. NTB: need to believe
-large addressable market with large addressable pain(need)

3. DTS: dominate the situation
-deliver genuine delight in a specific usage situation

4. RTB: reason to believe
-easy to demonstrate and verify the distinction and benefit

5. QTS: quantifiable support
-quantitative evidence of product superiority

2. What is the right level of experience?
-Bring in people that are beyond, but just beyond, where you want to be.

3. How do I get them aboard?
-Provide two-page prospectus of the business, the issues the board will address, how the board will operate, and compensation.

4. What is the compensation?
-Travel, meals, perhaps some entertainment, opportunity to work with smart people on an interesting problem.
-Modest compensation after and extended period of service comparable to their hourly rate in their full-time job.

-enhance the Need to Believe

-enhance the Reason to Believe

-enhance the Unique Product Claim

Sharpening the Angle
-Unique Product Claim
-Large Addressable Need
-Dominate the Situation
-Reason to Believe
-Quantifiable Support

Leveraging Leverage
-Ride Horses
-Prospect for Beta-Goldmines
-Land an Anchor
-Seek Out Benefactors
-Build an Advisory Board

Think Big and Act Big
-Puff it Up
-Grow with Borrowed Interest
-Master Social Media & Publicity
-Get Your Swagger On
-Reach Out with Crowdfunding
-Dominate Trade Shows

-How to market on a budget?

-How to gain credibility when you are a new brand?

Don't act small
-Potential Customers want stable and reliable

-Business Advisors want vital and growing

-Suppliers and Employees want dependable and industry leaders

-Partners and Investors want blue chip and reputation builders

But you are not established, still unproven, a niche player, and don't have a track record

1. Use the elevator pitch to advance the sale and not to make a final sale.

2. An elevator pitch must hit hard and be brief. If at all possible, grab attention with a memorable product demonstration.

-the 30 second to 2 minute elevator ride.
-It is the amount of time that VCs will spare to identify good ideas and successful business teams that have promise and eliminate those that are not ready for funding

-When putting together an elevator pitch, we want to hit hard with the most important information up front.
-We want investors to get interested enough to invite us back to make a bigger, more detailed presentation.

2. Opportunity
-Describe the customers, competitors, how the product or service makes the competitors irrelevant, and how the product makes money. Investors want to see the potential for big revenues and big returns. Remember that if there are no competitors, then there usually are no customers, which in turn means that there is little or no money to be made.

3. Status
-Present clear financials and make note of market traction. Highlight letters of intent, product orders, and better yet, product sales.

4. Ask
-Make a case for your valuation of the startup and ask for an investment to accomplish the next set of important goals such as manufacturing products to fill orders, hiring staff to expand the sales or service organization, or expanding into new locations. Balance investment with reward.

5. Remember
-Demonstrate how the product is validated with interested customers. Highlight the contributions of business team members to the startup. Close with a short "pump up" reminder with an industry opinion leader weighing in on the broad appeal of the product.

1. Social Media empowers small players to think and act big. SIze and money are no longer barriers to starting a successful business.

2. Facebook, Twitter, Youtube, Product Blogs, and Google each have their own rules for success. Informed use of all five is needed to beat Big Business at the Social Media game.

-In this new era of Internet and social media, everyone can be a star everyone can have a voice everyone has market access.

>> Startups can wear very big adult shoes even when they have very tiny baby feet.

Think big and act big, but don't spend money like you are big. DON'T try to buy success. Learn to earn success. DON'T bring in corporate marketers that haven't worked with small budgets. DO use new technology and tactics that level the playing field.

-Technologies such as social media and SMS communications, as well as low-barrier-of-entry market channels such as the Internet now give businesses of every size an opportunity to successfully compete locally and globally.

-Knowing how to think big and act big without stumbling around can make or break a startup.

Startup Location Examples: where would you meet with your potential client? your dirty closet office space? NO. rent an office space for a day. Leverage your contacts (putting plaque on the front entrance with all other company names in the building have the secretary be in on it too)

-When startups go where the money is, and they must, their competitors will be big in terms of money, resources, personnel, and image.
-Customers and investors often equate big with safe. "It's safe to do business with Big Blue because, well, they're big." IBM, aka Big Blue, made a living on this line of reasoning for years.
-Unlike the happy thoughts that come to mind when doing business with a large, well known company, many unhappy thoughts may come to mind when doing business with a startup.
-Potential customers prefer buying from a stable, dependable company, but this business is not established.
-Business advisors prefer working with a viable, ongoing company, but this business is unproven.
-Suppliers and employees prefer teaming up with industry leaders, but this business is a niche player.
-Partners and Investors prefer throwing support behind a reputation builder, but this business doesn't have a blue chip track record and may even harm one's reputation.

New businesses are stressed. When they swim frantically around like little fish or bite off more spending than they can chew, they will choke and fail. When they puff up like a puffer fish they often succeed. One way to puff up is to dominate a vertical market where you have a natural advantage before expanding to other markets.

Ex:
Francois Lane, serial entrepreneur and co-founder of CakeMail a whitelabel email marketing service, insists that new businesses "must select one vertical market and focus on complete world domination of this specific market." He also points out that new businesses are best off when selecting markets that have their own network of trade shows and industry publications. When you are small, it is important to attack a market where it is easy to identify and connect with marketing channels.

Social media provides a spectacular way to puff up your market presence. For many startups, your website is your company. Build a look and feel for your website that is equivalent to an IBM. Show real people. Show a brick and mortar location. Include a telephone number. Learn what makes a productive splash page. Highlight awards, accomplishments, notable customers, and interesting product stories. Blog the victories. Twitter the fun. Facebook for friends. Get involved with a cause popular with social media followers. Bring your pitch to life with YouTube.

Ex: Puff it Up: Phone Service
-BJ's brother's wife acting as his secretary and having all calls forwarded to her number and then saying "please hold Ill connect you with ____ or ____" but really it's still her playing those roles


NPD Test #2

1. Don't do it alone. Be smart, find some help, and "ride horses" to the bank.

2. Look for a love-group and empower the group to help promote and gain market access for your new product.

-find the sort of horses that you can ride to the bank

-a good horse will be a champion for your competitive angle

-identify and partner with people who have the skills, energy, and influence you need to succeed with your product and target market
(after all, with startups and other types of ventures, "it's not what you know, but who you know" that determines success or failure.)

2. Evangelists
-I'll prepare the way by stirring interest and awareness

3. Patrons
-you pat my back and I'll pat yours

-they desire recognition
-they want credibility among peers
-stock to increase their social equity
-being part of a winning team

2. Trade Association President
-angles with "wow factors" put them on the cutting edge

3. Local Expert in your State
-looking credible because he/she is a "thought leader." Experts love to jump on a winning bandwagon

-makes bath time easy for mom and makes baby feel comfortable

-warm to the touch
-non-slip
-hangs in storage: flat
-doesn't absorb water
-folds easily
-fits into bathroom sink
-comfortable to baby
-makes it a bonding experience and there are no distractions

Who would be a Horse for this product?
-Ellen!!

Ride Horses-Evangelists & Patrons
-PUJ Tub and Rachael Ray & Kelly Ripa guessing game

-BIC pens "for her" (pink and purple) designed to fit a woman's hand

-very important to growing a startup business

(also known as product advocates, or the Love Group)

Ex: think of them as a huge herd of wild stallions that jump to action at your command and set a positive, enthusiastic tone for everyone that sees them.

-DDS developed the first management software to connect the operators to the front desk, minimizing billing loss and confusion.
(but even after successfully developing the software and addressing a sizable pain-point, the venture would fail unless it found a way to persuasively and efficiently reach the target market--dentists)

-DDS at first thought they had only 2 choices:
1. hire a company sales force or
2. outsource the selling to independent sales agents such as dental product distributors or value-added resellers.

but Dentrix had a third option when they started looking for leverage

Kimball's hard work in uncovering and solving everyday pain for dentists gave Dentrix a sharp competitive angle
-it wasn't difficult to find experienced and credible dental-industry salespeople that believed in Dentrix and wanted to take a chance on selling it for a commission and stake in the company rather than for a fixed salary

Dentrix leveraged their leverage and found salespeople to help them do what they couldn't do or afford to do on their own

-learned hot noble gases are used as insulators inside of dry suits to keep divers warm
-envisioned how the "dry suit" technology could be adapted to insulate winter gear
-while insulated clothing is nothing new, using thermostat-valve-controlled linings in clothing to regulate temperature is new
-no bulk, no layering, just turn the dial up and down
(if the skier is cold, add a little argon gas to the jacket lining if a skier is hot, open the valve and release some argon to cool down)

-from the outset, he understood how to network and recruit product advocates.
-his biggest successes have been with a local mayor that wants to make his city the skiing Mecca of the US, who has introduced him to a number of leading outdoor companies and investors.
(one company is not a primary development partner and several others helped fund the business)
-he was also introduced to an industry "graybeard" (someone w/ decades of experience in the outdoor markets) who began assisting the company as a consultant
-he featured this industry insider whenever pitching Klymit to investors

-don't use time and energy to fight cynics and hecklers. learn to focus on the love and take your product to the market through the eyes of those that love it

-"Who is in your Love Group?"
>> most startup marketers, similar to most Big Business marketers, can't identify who faithfully purchases their products beyond offering up a few Demographics like average age, gender split, and regional sales percentages
(startups can't afford to be that unobservant)

-The Love Group is their lifeblood. Just like a political candidate, startups must know and retain their Love Group while at the same time helping the fence-sitters see their product through the eyes of the Love Group

-New companies don't need 50% of the popular vote to succeed, but do need a strong group of core customers that they thoroughly understand. By thoroughly understand, we are talking about drawing together a profile that looks more like an ethnographic Mona Lisa than a demographic stick figure. What do customers look like, how do they express themselves, what do they read and watch, where do they live, what vehicles do they drive, what are their hopes and aspirations, and most important, which of our product features and benefits really get them going?

-Special interest groups were successfully encouraging legislation to reduce, phase out, and even ban the use of plastic packaging and products. The American Plastics Council (APC) came to the rescue with a flashy advertising campaign to inform the public about the substantial efforts the industry was making toward recycling and reuse, and that products and packaging made of plastic actually saved resources compared to other alternatives such as paper or metal. Millions of advertising dollars were spent, expectations were high, but success was nowhere to be found.

>> Directly attacking the concerns of the Hate Group didn't convince anyone and ultimately led to the APC being ordered by a dozen or so state Attorneys General to desist in their "false" advertising claims about the availability of plastics recycling.

-The APC failed because managers ignored the Love Group in favor of attacking the Hate Group, but they learned their lesson. The next round of advertising built on the beliefs of plastics advocates. These messages highlighted the noble qualities of plastics - personal safety and health - that researchers had identified in personal interviews with the plastics Love Group. This time the positive results were staggering.

- They raise an important point and put themselves on the threshold of discovering what really sets a successful startup marketer apart from a frustrated would-be entrepreneur.

-Successful startup marketers don't expect their Love Group to find them they aggressively seek out their Love Group. >> "Build it and they will come" rarely works in today's world of information overload and product proliferation

-Realizing we don't know our Love Group is the first step in beginning to prospect to find a Love Group.

-There are many ways to prospect for a Love Group, but we suggest bringing eight to twelve people together that may benefit from the new product, feeding them pizza, and soliciting their impressions.

-After explaining the product concept, ask questions like, "Who would love this product? What would they love about it? Where and how would they use it?"

- Listen and note the responses, but more importantly, observe the participants and look for those few who are completely engaged and articulate.
-Ask them back to another session so that you can find out more, because they are your Love Group.

-One prospecting session will not be enough to establish a detailed profile for the Love Group. In our experience, about three to five prospecting sessions are needed, and they should be spread across a variety of geographic regions.

-At the time, executives wanted to branch out into new areas of clothing over concerns that too high a percentage of their sales came from jeans.

-They wanted to grow by penetrating new markets. Levi Strauss did their homework. They examined suit-buying preferences, shopping practices, lifestyles, and demographics for 2,000 men.

-They uncovered five distinct segments in the market: the traditionalist, the classic independent, the utilitarian, the trendy casual, and the price shopper.

-The marketing quickly focused in on the "classic independent" as the target, i.e., the tailored suit Love Group.

-The segment accounted for 21% of male shoppers. They purchased about one-half of men's natural-fiber clothing products, were not price-sensitive, generally shopped for clothes in specialty stores, and strongly preferred tailored clothing rather than buying it off the rack.

-The Levi Tailored Classics marketing team put together focus groups of the classic independents to prove the new product concept.

-The focus group testing went well until it was suggested that (1) the suits would be sold off the rack, and (2) the suits would be manufactured by Levi Strauss.

-At that point objections flew hot and heavy.
-Behind the mirror in the focus group facility, the marketing team had answers for every objection.

-The marketing team pushed forward, even though the product was completely inconsistent with everyone's existing belief about the brand and because of it, trounced every physical and emotional benefit these customers wanted from the Levi's brand.

-But again and again we see the same behavior from entrepreneurs dead set on selling to a particular type of customer.
>> They settle for fool's gold rather than prospecting for real gold.

Ex:
-To make the point, consider the case of an entrepreneur who had invented a device to measure the curvature and other features of human spinal columns.

-His technology could give doctors the lowdown on backbones.

-Medical doctors, however, are a skeptical group. They are highly educated, opinionated, and slow to revise best practices.

-This didn't stop our entrepreneur.
-MDs would love his invention, he just knew it. -He aggressively pursued them. He pushed hard. They pushed back. They preferred X-rays.

-In the meantime, chiropractors discovered the new back-measuring device and loved it. It was just what they needed to get a quick read on a new patient's spinal column and to provide feedback on the progress being made by on-going patients.

-The entrepreneur, however, didn't want to sell to chiropractors. He felt they weren't professionals and that their involvement would diminish the seriousness and significance of his invention.

-He ignored the Love Group, unsuccessfully tried over and over again to sell his invention to the Hate Group, and ultimately squandered hundreds of thousands in venture capital. His business went bankrupt.

1. Recruit early adopters to provide capital to develop your new product.

2. Learn the keys to selling innovators and how they differ from selling imitators.

3. Give innovators what they want the next big thing at a bargain price. But make sure to offer a bargain price that keeps your startup in business.

-Consider mining for gold with the early adopters the customers that will get your startup out of the gate and running!

-Pete Seeger wrote the lines, "Oh, had I a golden thread and a needle so fine, I'd weave a magic strand of rainbow design."

-Beta Customers fund your R&D activities

-Getting the first person to buy is unbelievably expensive. Getting the second person to buy is unbelievably cheap

-Software products usually have an alpha stage, that is, a stage in which features are added a beta stage, in which flaws are removed and a market-ready stage, in which the product is fully groomed and broadly released to potential buyers.

-The beta version is the first version of a product that gets released outside the business.

-Beta versions help developers evaluate their products in real-world settings.

-Beta versions are evaluated by beta testers.

-Beta testers can be current or prospective customers. In the software industry, beta testers receive the beta version of a product for free or at a "bargain" price.

-Consequently, when looking for beta testers to transform into beta goldmines, picking customers with a strong need to believe is a key success factor.

-In other words, the pain-point must be particularly painful for beta goldmines or the need for market leadership must be particularly strong.

>> Give innovators what they want the next big thing at a bargain price.

>> "Build it and they will come," is just a Field of Dreams

1. product development
2. alpha test
3. beta test
4. release

-the number of innovator-buyers can be very small, sometimes as small as 2-3% of the total number of people that will ultimately make purchases in the product category.

-Consider the Dvorak keyboard. Back in 1936, Dr. Dvorak patented a simplified and much improved typewriter keyboard layout to solve the fatigue and inefficiency problems created by the gold-standard QWERTY keyboard layout.

-In today's world, the use of computers makes the streamlined Dvorak keyboard available to anyone who wants it however, the old QWERTY keyboard introduced back in the 1860s continues to dominate.

-Beta-products suffer when people see them as complex to understand or just plain difficult to use.

-The IBM PCjr of the mid-1980s provides an interesting example.

-High price and limited software aside, the product was DOA because of its tiny "Chiclet" keyboard, which made typing almost impossible.

-Evidently, when developing the PCjr, IBM hired usability testers with some mighty tiny fingers.

-Beta-test customers become beta goldmines when they become reference points for future customers, provide funding for product R&D, are top prospects for upgraded products, and supply easy access to in-the-field reactions regarding value-in-use, product fit with current practices, and product usability.

-When it comes to purchasing behavior, innovators
(1) want to buy the next new thing before having to pay full price,
(2) believe they deserve special consideration because they are taking extra time and effort to test an unproven product, and
(3) refuse to sit back and watch anyone else have something new that they don't have.

-Knowing a little bit about the buying culture of innovators can go a long way in helping entrepreneurs sell to them.

-First, innovators believe that new technology initially costs more than the old way of doing things, but that costs will come down with time.

(Ex: After all, ENIAC, the first large-scale computer, cost $500,000 back in 1946 and only performed 5,000 operations per second. Today's home computers perform billions of operations per second at less than a hundredth of ENIAC's price tag.)

-Second, innovators apparently can't say no to new technology even when they know it falls way behind on the bang-for-buck buying curve.

>> Innovators crave new technology, but fear they can't afford to buy new technology.

> Entrepreneurs to the rescue! Entrepreneurs can attract innovators by asking innovators for their help.

> By recruiting innovators as product-development partners, startups can offer opportunities for innovators to move quickly and buy new technology at bargain prices before it is introduced to the general public at nosebleed skim-the-cream prices.

1. An Anchor is your "stamp of approval." It provides "I have arrived" credibility.
(your core customers. your best friends)

2. Anchor customers pay the bills. Every business needs a steady flow of revenue even if it is low margin revenue.

-Finding anchor customers must be a top priority.

-For a moment, imagine that different kinds of businesses are like different kinds of ships.

-The Big Business ship likes to drop anchor in a calm and sunny harbor. The heavy anchor and calm waters make everyone on board the Big Business ship feel safe and secure.

-The startup ship is like a pirate sailing the open sea.
-The captain of the startup business ship doesn't like to drop anchor. The captain knows the ship only moves once the anchor is on board. Startup businesses must get an anchor on board before they can start sailing.
(with an anchor on board, you can start sailing!)

Make Partnerships
-give discounts in exchange for being a reference
-test the "newest things" on them
-make them feel like a partner

-Take a look at their customer list. There is Toyota, Cadillac, Ford, Microsoft, HP, Oracle, VISA, Ameritrade, ADP, Xerox, Siemens, Tyco, HBO, Fox, CBS, Walmart, Mary Kay, eBay, and it goes on.

-Omniture always had great products and talented employees, but their success story really got started with two anchor customers, Microsoft and eBay.

-According to their CEO, before landing these anchor customers, the Omniture sales cycle was a long and painful nine months. Prospective clients had lots of questions about Ominiture's financial stability, technology, and Service Quality.

-With the anchors on board, however, most of the prospective clients' questions were answered with two words: Microsoft and eBay. The sales cycle shrank to a manageable three months.

-For example, a local bakery got its start by providing low-priced, high-quality bread and other baked goods such as impossible-to-resist giant cookies to area restaurants, cafeterias, and catering services.

-These businesses were their anchor customers.

-With the anchors established, the bakery could make their brick-and-mortar retail store a success, charging premium prices for their tried-and-true products, and even were able to add a few new products not offered through other marketing channels.

-Anchor customers get your startup going and keep paying the operating bills through good times and bad.

-Once the factory is rolling, design engineers and marketers start looking for opportunities to swap out the manufacture of low-margin goods with high-margin goods.

-Not every manufacturer, however, has the good sense to bring anchor customers on board before investing millions of dollars in product development and/or building a new factory. Recall DuPont's cautionary tale of Kevlar.

-DuPont spent $500 million to develop and commercialize Kevlar as a replacement for nylon as tire cord, but did not lock-up tire manufacturers. The tire manufacturers decided on steel as a better alternative and took a pass on Kevlar.

-This left DuPont with a very expensive product in search of a market a market they never found. Startups can't afford this type of misstep.

Big anchors don't always suit small startups.

1. Payment Practices
-bigger anchors pay slower
2. Vetting Practices
-smaller and growing anchors set lower hurdles
3. Distribution Practices
-online and TV shopping channels may make it easier to manage inventory

-An important decision point for a startup is whether the potential anchor is more likely to foster a startup business or let it flounder and sink under the weight of their way of doing business.

-Unfortunately, we have seen far too many examples of the latter rather than the former.

-A startup the size of a dinghy goes down fast when they take on an anchor fit for an ocean liner.

-The national retailer declined to reschedule a pickup and told the new business to wait another year before trying again.

-Yet another new business shipped inventory worth hundreds of thousands of dollars to a national retailer notorious for paying vendors slowly.

-The entrepreneurs, having taken out second mortgages and maxed-out their credit cards, got nervous and tried to pressure the retailer into paying with aggressive, bordering on rude and unprofessional, phone calls and letters.

-In response, the national retailer returned the entire inventory. The entrepreneurs were then left with lots of debt, lots of inventory, and few prospects for earning any revenue.

1. A benefactor is a company with complimentary products and/or services that win if your startup wins.

2. Entrepreneurs can find benefactors in the value-chain, in the local community, and in the same industry.

3. Benefactors can help out a startup with cash as well as non-cash benefits.

-Think through the question carefully, because the answer will help you find initial investors, key strategic partners, and perhaps anchor customers.

-Learning to ask the right questions is fundamental to startup success!

-Dorothy needs to seek out benefactors and she keeps an eye open for anyone that will also greatly benefit from a trip to the Emerald City.

-At the journey's outset, Dorothy runs across a scarecrow at a crossroads. She removes a nail to take the scarecrow down from his post and finds out the scarecrow desperately wants a brain. Dorothy suggests that the scarecrow can get a brain from the Wizard in the Emerald City. The scarecrow joins Team Dorothy.

-Next, the two stumble on a rusted tin man. Dorothy liberally applies some oil from an old oil can and finds out the tin man desperately wants a heart. Dorothy suggests that the tin man can get a heart from the Wizard in the Emerald City. The tin man is now part of the crew.

- Not long afterwards, the little group is startled by a lion who attacks the travelers and tries to bite Dorothy's little dog Toto. Dorothy, heedless of the danger, swats the lion on the nose to protect her dog. Dorothy then has to comfort the lion as he whimpers about his nose, and finds out the lion is cowardly and desperately wants courage. Dorothy suggests that the cowardly lion can get courage from the Wizard in the Emerald City. The lion completes the team, and then the three benefactors successfully get Dorothy to the Emerald City.

-But the story does not all go in Dorothy's favor. Turns out, the Wizard also needs a few benefactors. He needs someone to kill the Wicked Witch of the West. When Dorothy and her team arrive, the Wizard gives everyone the royal treatment. He then gives Team Dorothy an audience and finds out Dorothy desperately wants to return home, the scarecrow desperately wants a brain, the tin man desperately wants a heart, and the lion desperately wants courage. The Wizard promises to give each benefactor what they want most if and when Dorothy brings him the broomstick of the Wicked Witch of the West. Like Dorothy, the Wizard is a born entrepreneur. He really understands how to spot benefactors.

-Products are part of a value chain that extends from components to customers.

-Understanding the value chain and where your startup fits in can be a powerful tool to give your new business legs.

-DuPont manufactures the nylon and stain-release sauce that other manufacturers and carpet mills process to make the carpeting we have in our homes and businesses.

-DuPont found benefactors to transform the carpet industry from a narrow-margin heartbreaker to a high-flying profit maker.

-DuPont managers fought commodity nylon prices for generations, but then decided to fight back by offering something that every player in the carpet industry wanted most.

-Every carpet manufacturer and retailer wanted a premium-priced carpet that consumers would recognize and trust.

-Everyone in the industry wanted a profitable product that would sell itself.

-Before Stainmaster, all carpeting looked pretty much the same to consumers.

-Since all carpeting looked the same, consumers bought on price - bad news for the entire value chain.

-Over the past decade, it has grown rapidly into one of the Internet's top 20 properties.

-To accelerate their growth, MyFamily raised more than $75 million in funding from benefactors.

-MyFamily looked at their value chain and asked the question, "Who will benefit if I succeed?"

-The answers company managers came up with were Intel, Compaq, AOL, and Kodak. Intel benefits because family-history buffs want fast computer processes to digest their mountains of digital photos.

-Compaq benefits because family-history buffs want new computers with lots of hard drive space, up-to-date memory, and Ethernet connections to access and post online genealogical information.
-AOL benefits by providing a value-added service to its growing base of family-history buff Internet subscribers.
-Kodak benefits by repositioning itself in the digital photography sector by building on the traditional strength of family photography.

-My-Family increases the need for Intel, Compaq, AOL, and Kodak products. In addition to capital raised from these investors, My-Family also received publicity from their association with these companies.

-Agilix is a software company that specializes in programs for Tablet PCs.

-In this high-tech product category, Agilix needs capital to fund R&D, but also needs access to programming code and computer hardware technology.

-To address the first need, Agilix approached Franklin Covey. Franklin Covey promotes personal planning and saw Agilix as a means to move forward in the electronic planner product space.

-Agilix got their funding and Franklin Covey got a winning product.

-Reviewers refer to Agilix-developed TabletPlanner software as marvelous, brilliant, and empowering. Competing with heavyweights like Microsoft, HP, and Corel, TabletPlanner is one of the top 10 best Tablet PC applications.

-To address needs beyond R&D capital, Agilix has gone to Microsoft and key computer hardware manufactures.

-They have become strategic partners that have provided Agilix with access to key technologies, allowing them to be on the cutting edge of this emerging field.

-As a result of these benefactor alliances, Agilix was able to be one of two software companies to have their software applications ready for the launch of Windows-based operating systems for Tablet PCs.

1. For a startup, advisory boards are more important than a board of directors.

2. Don't limit advisory boards to just include businesspeople.

3. Invite advisory board members that love your product, have a stake in staying on the leading edge of your industry, and/or people with regional, national or industry-wide name recognition.

-An advisory board can extend your social network of influence to increase its effectiveness in attracting investors, customers, and top employees.

-No new venture is too small or too large to benefit from an advisory board.

-Leveraging advisory board experience, expertise, credibility, and connections is the best way to succeed in today's competitive markets.

-A startup gains a big boost from building a national or at least a regional reputation.

-Perhaps one of the best-kept secrets of successful ventures is they know that reputation and experience counts, but that it doesn't have to be their own reputation and experience.
We can't emphasize enough what we stated earlier about finding and leveraging advocates.

-Successful entrepreneurs know that hard work, i.e., working 90+ hours a week, rarely leads to a successful new venture.

-It is the smart work of yourself and others, especially a credible and supportive advisory board, which leads to new venture success.

-Many startups make the mistake of developing their board of directors instead of beginning with an advisory board.

-Whenever you start a new venture, leverage the experience, wisdom, and creativity of advisory members to accelerate your growth and time to money.
(also connections to create your network)
>> Advisory board members should not be limited to people who have simply done things, but people who can get things done.
>> Also include people who possess local, regional, or national name recognition.
(For example, prominent politicians, retired executives or managers, and industry gurus make great advisory board members.)

2. Advisory board members can't be sued for their advice because they do not have any fiduciary responsibility to stockholders as do members of the board of directors. Thus, advisory boards are usually made up of nonpolitical, fun, and creative professionals who have a genuine interest and sincere desire to see the startup succeed.

informal
-serve only as long as needed

not liable
-not accountable if things go wrong

advise team
-give advice

2. Encourage honest feedback, i.e., stay away from friends

3. Be professional to get professional behavior

4. Shouldn't cost them anything to participate

5. Listen and take advice or they will leave

Horses for the Product: Dr. Oz??

Advisory Board: Shark Tank QVC Lady

2. NTB: need to believe
-large addressable market with large addressable pain(need)

3. DTS: dominate the situation
-deliver genuine delight in a specific usage situation

4. RTB: reason to believe
-easy to demonstrate and verify the distinction and benefit

5. QTS: quantifiable support
-quantitative evidence of product superiority

2. What is the right level of experience?
-Bring in people that are beyond, but just beyond, where you want to be.

3. How do I get them aboard?
-Provide two-page prospectus of the business, the issues the board will address, how the board will operate, and compensation.

4. What is the compensation?
-Travel, meals, perhaps some entertainment, opportunity to work with smart people on an interesting problem.
-Modest compensation after and extended period of service comparable to their hourly rate in their full-time job.

-enhance the Need to Believe

-enhance the Reason to Believe

-enhance the Unique Product Claim

Sharpening the Angle
-Unique Product Claim
-Large Addressable Need
-Dominate the Situation
-Reason to Believe
-Quantifiable Support

Leveraging Leverage
-Ride Horses
-Prospect for Beta-Goldmines
-Land an Anchor
-Seek Out Benefactors
-Build an Advisory Board

Think Big and Act Big
-Puff it Up
-Grow with Borrowed Interest
-Master Social Media & Publicity
-Get Your Swagger On
-Reach Out with Crowdfunding
-Dominate Trade Shows

-How to market on a budget?

-How to gain credibility when you are a new brand?

Don't act small
-Potential Customers want stable and reliable

-Business Advisors want vital and growing

-Suppliers and Employees want dependable and industry leaders

-Partners and Investors want blue chip and reputation builders

But you are not established, still unproven, a niche player, and don't have a track record

1. Use the elevator pitch to advance the sale and not to make a final sale.

2. An elevator pitch must hit hard and be brief. If at all possible, grab attention with a memorable product demonstration.

-the 30 second to 2 minute elevator ride.
-It is the amount of time that VCs will spare to identify good ideas and successful business teams that have promise and eliminate those that are not ready for funding

-When putting together an elevator pitch, we want to hit hard with the most important information up front.
-We want investors to get interested enough to invite us back to make a bigger, more detailed presentation.

2. Opportunity
-Describe the customers, competitors, how the product or service makes the competitors irrelevant, and how the product makes money. Investors want to see the potential for big revenues and big returns. Remember that if there are no competitors, then there usually are no customers, which in turn means that there is little or no money to be made.

3. Status
-Present clear financials and make note of market traction. Highlight letters of intent, product orders, and better yet, product sales.

4. Ask
-Make a case for your valuation of the startup and ask for an investment to accomplish the next set of important goals such as manufacturing products to fill orders, hiring staff to expand the sales or service organization, or expanding into new locations. Balance investment with reward.

5. Remember
-Demonstrate how the product is validated with interested customers. Highlight the contributions of business team members to the startup. Close with a short "pump up" reminder with an industry opinion leader weighing in on the broad appeal of the product.

1. Social Media empowers small players to think and act big. SIze and money are no longer barriers to starting a successful business.

2. Facebook, Twitter, Youtube, Product Blogs, and Google each have their own rules for success. Informed use of all five is needed to beat Big Business at the Social Media game.

-In this new era of Internet and social media, everyone can be a star everyone can have a voice everyone has market access.

>> Startups can wear very big adult shoes even when they have very tiny baby feet.

Think big and act big, but don't spend money like you are big. DON'T try to buy success. Learn to earn success. DON'T bring in corporate marketers that haven't worked with small budgets. DO use new technology and tactics that level the playing field.

-Technologies such as social media and SMS communications, as well as low-barrier-of-entry market channels such as the Internet now give businesses of every size an opportunity to successfully compete locally and globally.

-Knowing how to think big and act big without stumbling around can make or break a startup.

Startup Location Examples: where would you meet with your potential client? your dirty closet office space? NO. rent an office space for a day. Leverage your contacts (putting plaque on the front entrance with all other company names in the building have the secretary be in on it too)

-When startups go where the money is, and they must, their competitors will be big in terms of money, resources, personnel, and image.
-Customers and investors often equate big with safe. "It's safe to do business with Big Blue because, well, they're big." IBM, aka Big Blue, made a living on this line of reasoning for years.
-Unlike the happy thoughts that come to mind when doing business with a large, well known company, many unhappy thoughts may come to mind when doing business with a startup.
-Potential customers prefer buying from a stable, dependable company, but this business is not established.
-Business advisors prefer working with a viable, ongoing company, but this business is unproven.
-Suppliers and employees prefer teaming up with industry leaders, but this business is a niche player.
-Partners and Investors prefer throwing support behind a reputation builder, but this business doesn't have a blue chip track record and may even harm one's reputation.

New businesses are stressed. When they swim frantically around like little fish or bite off more spending than they can chew, they will choke and fail. When they puff up like a puffer fish they often succeed. One way to puff up is to dominate a vertical market where you have a natural advantage before expanding to other markets.

Ex:
Francois Lane, serial entrepreneur and co-founder of CakeMail a whitelabel email marketing service, insists that new businesses "must select one vertical market and focus on complete world domination of this specific market." He also points out that new businesses are best off when selecting markets that have their own network of trade shows and industry publications. When you are small, it is important to attack a market where it is easy to identify and connect with marketing channels.

Social media provides a spectacular way to puff up your market presence. For many startups, your website is your company. Build a look and feel for your website that is equivalent to an IBM. Show real people. Show a brick and mortar location. Include a telephone number. Learn what makes a productive splash page. Highlight awards, accomplishments, notable customers, and interesting product stories. Blog the victories. Twitter the fun. Facebook for friends. Get involved with a cause popular with social media followers. Bring your pitch to life with YouTube.

Ex: Puff it Up: Phone Service
-BJ's brother's wife acting as his secretary and having all calls forwarded to her number and then saying "please hold Ill connect you with ____ or ____" but really it's still her playing those roles


NPD Test #2

1. Don't do it alone. Be smart, find some help, and "ride horses" to the bank.

2. Look for a love-group and empower the group to help promote and gain market access for your new product.

-find the sort of horses that you can ride to the bank

-a good horse will be a champion for your competitive angle

-identify and partner with people who have the skills, energy, and influence you need to succeed with your product and target market
(after all, with startups and other types of ventures, "it's not what you know, but who you know" that determines success or failure.)

2. Evangelists
-I'll prepare the way by stirring interest and awareness

3. Patrons
-you pat my back and I'll pat yours

-they desire recognition
-they want credibility among peers
-stock to increase their social equity
-being part of a winning team

2. Trade Association President
-angles with "wow factors" put them on the cutting edge

3. Local Expert in your State
-looking credible because he/she is a "thought leader." Experts love to jump on a winning bandwagon

-makes bath time easy for mom and makes baby feel comfortable

-warm to the touch
-non-slip
-hangs in storage: flat
-doesn't absorb water
-folds easily
-fits into bathroom sink
-comfortable to baby
-makes it a bonding experience and there are no distractions

Who would be a Horse for this product?
-Ellen!!

Ride Horses-Evangelists & Patrons
-PUJ Tub and Rachael Ray & Kelly Ripa guessing game

-BIC pens "for her" (pink and purple) designed to fit a woman's hand

-very important to growing a startup business

(also known as product advocates, or the Love Group)

Ex: think of them as a huge herd of wild stallions that jump to action at your command and set a positive, enthusiastic tone for everyone that sees them.

-DDS developed the first management software to connect the operators to the front desk, minimizing billing loss and confusion.
(but even after successfully developing the software and addressing a sizable pain-point, the venture would fail unless it found a way to persuasively and efficiently reach the target market--dentists)

-DDS at first thought they had only 2 choices:
1. hire a company sales force or
2. outsource the selling to independent sales agents such as dental product distributors or value-added resellers.

but Dentrix had a third option when they started looking for leverage

Kimball's hard work in uncovering and solving everyday pain for dentists gave Dentrix a sharp competitive angle
-it wasn't difficult to find experienced and credible dental-industry salespeople that believed in Dentrix and wanted to take a chance on selling it for a commission and stake in the company rather than for a fixed salary

Dentrix leveraged their leverage and found salespeople to help them do what they couldn't do or afford to do on their own

-learned hot noble gases are used as insulators inside of dry suits to keep divers warm
-envisioned how the "dry suit" technology could be adapted to insulate winter gear
-while insulated clothing is nothing new, using thermostat-valve-controlled linings in clothing to regulate temperature is new
-no bulk, no layering, just turn the dial up and down
(if the skier is cold, add a little argon gas to the jacket lining if a skier is hot, open the valve and release some argon to cool down)

-from the outset, he understood how to network and recruit product advocates.
-his biggest successes have been with a local mayor that wants to make his city the skiing Mecca of the US, who has introduced him to a number of leading outdoor companies and investors.
(one company is not a primary development partner and several others helped fund the business)
-he was also introduced to an industry "graybeard" (someone w/ decades of experience in the outdoor markets) who began assisting the company as a consultant
-he featured this industry insider whenever pitching Klymit to investors

-don't use time and energy to fight cynics and hecklers. learn to focus on the love and take your product to the market through the eyes of those that love it

-"Who is in your Love Group?"
>> most startup marketers, similar to most Big Business marketers, can't identify who faithfully purchases their products beyond offering up a few Demographics like average age, gender split, and regional sales percentages
(startups can't afford to be that unobservant)

-The Love Group is their lifeblood. Just like a political candidate, startups must know and retain their Love Group while at the same time helping the fence-sitters see their product through the eyes of the Love Group

-New companies don't need 50% of the popular vote to succeed, but do need a strong group of core customers that they thoroughly understand. By thoroughly understand, we are talking about drawing together a profile that looks more like an ethnographic Mona Lisa than a demographic stick figure. What do customers look like, how do they express themselves, what do they read and watch, where do they live, what vehicles do they drive, what are their hopes and aspirations, and most important, which of our product features and benefits really get them going?

-Special interest groups were successfully encouraging legislation to reduce, phase out, and even ban the use of plastic packaging and products. The American Plastics Council (APC) came to the rescue with a flashy advertising campaign to inform the public about the substantial efforts the industry was making toward recycling and reuse, and that products and packaging made of plastic actually saved resources compared to other alternatives such as paper or metal. Millions of advertising dollars were spent, expectations were high, but success was nowhere to be found.

>> Directly attacking the concerns of the Hate Group didn't convince anyone and ultimately led to the APC being ordered by a dozen or so state Attorneys General to desist in their "false" advertising claims about the availability of plastics recycling.

-The APC failed because managers ignored the Love Group in favor of attacking the Hate Group, but they learned their lesson. The next round of advertising built on the beliefs of plastics advocates. These messages highlighted the noble qualities of plastics - personal safety and health - that researchers had identified in personal interviews with the plastics Love Group. This time the positive results were staggering.

- They raise an important point and put themselves on the threshold of discovering what really sets a successful startup marketer apart from a frustrated would-be entrepreneur.

-Successful startup marketers don't expect their Love Group to find them they aggressively seek out their Love Group. >> "Build it and they will come" rarely works in today's world of information overload and product proliferation

-Realizing we don't know our Love Group is the first step in beginning to prospect to find a Love Group.

-There are many ways to prospect for a Love Group, but we suggest bringing eight to twelve people together that may benefit from the new product, feeding them pizza, and soliciting their impressions.

-After explaining the product concept, ask questions like, "Who would love this product? What would they love about it? Where and how would they use it?"

- Listen and note the responses, but more importantly, observe the participants and look for those few who are completely engaged and articulate.
-Ask them back to another session so that you can find out more, because they are your Love Group.

-One prospecting session will not be enough to establish a detailed profile for the Love Group. In our experience, about three to five prospecting sessions are needed, and they should be spread across a variety of geographic regions.

-At the time, executives wanted to branch out into new areas of clothing over concerns that too high a percentage of their sales came from jeans.

-They wanted to grow by penetrating new markets. Levi Strauss did their homework. They examined suit-buying preferences, shopping practices, lifestyles, and demographics for 2,000 men.

-They uncovered five distinct segments in the market: the traditionalist, the classic independent, the utilitarian, the trendy casual, and the price shopper.

-The marketing quickly focused in on the "classic independent" as the target, i.e., the tailored suit Love Group.

-The segment accounted for 21% of male shoppers. They purchased about one-half of men's natural-fiber clothing products, were not price-sensitive, generally shopped for clothes in specialty stores, and strongly preferred tailored clothing rather than buying it off the rack.

-The Levi Tailored Classics marketing team put together focus groups of the classic independents to prove the new product concept.

-The focus group testing went well until it was suggested that (1) the suits would be sold off the rack, and (2) the suits would be manufactured by Levi Strauss.

-At that point objections flew hot and heavy.
-Behind the mirror in the focus group facility, the marketing team had answers for every objection.

-The marketing team pushed forward, even though the product was completely inconsistent with everyone's existing belief about the brand and because of it, trounced every physical and emotional benefit these customers wanted from the Levi's brand.

-But again and again we see the same behavior from entrepreneurs dead set on selling to a particular type of customer.
>> They settle for fool's gold rather than prospecting for real gold.

Ex:
-To make the point, consider the case of an entrepreneur who had invented a device to measure the curvature and other features of human spinal columns.

-His technology could give doctors the lowdown on backbones.

-Medical doctors, however, are a skeptical group. They are highly educated, opinionated, and slow to revise best practices.

-This didn't stop our entrepreneur.
-MDs would love his invention, he just knew it. -He aggressively pursued them. He pushed hard. They pushed back. They preferred X-rays.

-In the meantime, chiropractors discovered the new back-measuring device and loved it. It was just what they needed to get a quick read on a new patient's spinal column and to provide feedback on the progress being made by on-going patients.

-The entrepreneur, however, didn't want to sell to chiropractors. He felt they weren't professionals and that their involvement would diminish the seriousness and significance of his invention.

-He ignored the Love Group, unsuccessfully tried over and over again to sell his invention to the Hate Group, and ultimately squandered hundreds of thousands in venture capital. His business went bankrupt.

1. Recruit early adopters to provide capital to develop your new product.

2. Learn the keys to selling innovators and how they differ from selling imitators.

3. Give innovators what they want the next big thing at a bargain price. But make sure to offer a bargain price that keeps your startup in business.

-Consider mining for gold with the early adopters the customers that will get your startup out of the gate and running!

-Pete Seeger wrote the lines, "Oh, had I a golden thread and a needle so fine, I'd weave a magic strand of rainbow design."

-Beta Customers fund your R&D activities

-Getting the first person to buy is unbelievably expensive. Getting the second person to buy is unbelievably cheap

-Software products usually have an alpha stage, that is, a stage in which features are added a beta stage, in which flaws are removed and a market-ready stage, in which the product is fully groomed and broadly released to potential buyers.

-The beta version is the first version of a product that gets released outside the business.

-Beta versions help developers evaluate their products in real-world settings.

-Beta versions are evaluated by beta testers.

-Beta testers can be current or prospective customers. In the software industry, beta testers receive the beta version of a product for free or at a "bargain" price.

-Consequently, when looking for beta testers to transform into beta goldmines, picking customers with a strong need to believe is a key success factor.

-In other words, the pain-point must be particularly painful for beta goldmines or the need for market leadership must be particularly strong.

>> Give innovators what they want the next big thing at a bargain price.

>> "Build it and they will come," is just a Field of Dreams

1. product development
2. alpha test
3. beta test
4. release

-the number of innovator-buyers can be very small, sometimes as small as 2-3% of the total number of people that will ultimately make purchases in the product category.

-Consider the Dvorak keyboard. Back in 1936, Dr. Dvorak patented a simplified and much improved typewriter keyboard layout to solve the fatigue and inefficiency problems created by the gold-standard QWERTY keyboard layout.

-In today's world, the use of computers makes the streamlined Dvorak keyboard available to anyone who wants it however, the old QWERTY keyboard introduced back in the 1860s continues to dominate.

-Beta-products suffer when people see them as complex to understand or just plain difficult to use.

-The IBM PCjr of the mid-1980s provides an interesting example.

-High price and limited software aside, the product was DOA because of its tiny "Chiclet" keyboard, which made typing almost impossible.

-Evidently, when developing the PCjr, IBM hired usability testers with some mighty tiny fingers.

-Beta-test customers become beta goldmines when they become reference points for future customers, provide funding for product R&D, are top prospects for upgraded products, and supply easy access to in-the-field reactions regarding value-in-use, product fit with current practices, and product usability.

-When it comes to purchasing behavior, innovators
(1) want to buy the next new thing before having to pay full price,
(2) believe they deserve special consideration because they are taking extra time and effort to test an unproven product, and
(3) refuse to sit back and watch anyone else have something new that they don't have.

-Knowing a little bit about the buying culture of innovators can go a long way in helping entrepreneurs sell to them.

-First, innovators believe that new technology initially costs more than the old way of doing things, but that costs will come down with time.

(Ex: After all, ENIAC, the first large-scale computer, cost $500,000 back in 1946 and only performed 5,000 operations per second. Today's home computers perform billions of operations per second at less than a hundredth of ENIAC's price tag.)

-Second, innovators apparently can't say no to new technology even when they know it falls way behind on the bang-for-buck buying curve.

>> Innovators crave new technology, but fear they can't afford to buy new technology.

> Entrepreneurs to the rescue! Entrepreneurs can attract innovators by asking innovators for their help.

> By recruiting innovators as product-development partners, startups can offer opportunities for innovators to move quickly and buy new technology at bargain prices before it is introduced to the general public at nosebleed skim-the-cream prices.

1. An Anchor is your "stamp of approval." It provides "I have arrived" credibility.
(your core customers. your best friends)

2. Anchor customers pay the bills. Every business needs a steady flow of revenue even if it is low margin revenue.

-Finding anchor customers must be a top priority.

-For a moment, imagine that different kinds of businesses are like different kinds of ships.

-The Big Business ship likes to drop anchor in a calm and sunny harbor. The heavy anchor and calm waters make everyone on board the Big Business ship feel safe and secure.

-The startup ship is like a pirate sailing the open sea.
-The captain of the startup business ship doesn't like to drop anchor. The captain knows the ship only moves once the anchor is on board. Startup businesses must get an anchor on board before they can start sailing.
(with an anchor on board, you can start sailing!)

Make Partnerships
-give discounts in exchange for being a reference
-test the "newest things" on them
-make them feel like a partner

-Take a look at their customer list. There is Toyota, Cadillac, Ford, Microsoft, HP, Oracle, VISA, Ameritrade, ADP, Xerox, Siemens, Tyco, HBO, Fox, CBS, Walmart, Mary Kay, eBay, and it goes on.

-Omniture always had great products and talented employees, but their success story really got started with two anchor customers, Microsoft and eBay.

-According to their CEO, before landing these anchor customers, the Omniture sales cycle was a long and painful nine months. Prospective clients had lots of questions about Ominiture's financial stability, technology, and Service Quality.

-With the anchors on board, however, most of the prospective clients' questions were answered with two words: Microsoft and eBay. The sales cycle shrank to a manageable three months.

-For example, a local bakery got its start by providing low-priced, high-quality bread and other baked goods such as impossible-to-resist giant cookies to area restaurants, cafeterias, and catering services.

-These businesses were their anchor customers.

-With the anchors established, the bakery could make their brick-and-mortar retail store a success, charging premium prices for their tried-and-true products, and even were able to add a few new products not offered through other marketing channels.

-Anchor customers get your startup going and keep paying the operating bills through good times and bad.

-Once the factory is rolling, design engineers and marketers start looking for opportunities to swap out the manufacture of low-margin goods with high-margin goods.

-Not every manufacturer, however, has the good sense to bring anchor customers on board before investing millions of dollars in product development and/or building a new factory. Recall DuPont's cautionary tale of Kevlar.

-DuPont spent $500 million to develop and commercialize Kevlar as a replacement for nylon as tire cord, but did not lock-up tire manufacturers. The tire manufacturers decided on steel as a better alternative and took a pass on Kevlar.

-This left DuPont with a very expensive product in search of a market a market they never found. Startups can't afford this type of misstep.

Big anchors don't always suit small startups.

1. Payment Practices
-bigger anchors pay slower
2. Vetting Practices
-smaller and growing anchors set lower hurdles
3. Distribution Practices
-online and TV shopping channels may make it easier to manage inventory

-An important decision point for a startup is whether the potential anchor is more likely to foster a startup business or let it flounder and sink under the weight of their way of doing business.

-Unfortunately, we have seen far too many examples of the latter rather than the former.

-A startup the size of a dinghy goes down fast when they take on an anchor fit for an ocean liner.

-The national retailer declined to reschedule a pickup and told the new business to wait another year before trying again.

-Yet another new business shipped inventory worth hundreds of thousands of dollars to a national retailer notorious for paying vendors slowly.

-The entrepreneurs, having taken out second mortgages and maxed-out their credit cards, got nervous and tried to pressure the retailer into paying with aggressive, bordering on rude and unprofessional, phone calls and letters.

-In response, the national retailer returned the entire inventory. The entrepreneurs were then left with lots of debt, lots of inventory, and few prospects for earning any revenue.

1. A benefactor is a company with complimentary products and/or services that win if your startup wins.

2. Entrepreneurs can find benefactors in the value-chain, in the local community, and in the same industry.

3. Benefactors can help out a startup with cash as well as non-cash benefits.

-Think through the question carefully, because the answer will help you find initial investors, key strategic partners, and perhaps anchor customers.

-Learning to ask the right questions is fundamental to startup success!

-Dorothy needs to seek out benefactors and she keeps an eye open for anyone that will also greatly benefit from a trip to the Emerald City.

-At the journey's outset, Dorothy runs across a scarecrow at a crossroads. She removes a nail to take the scarecrow down from his post and finds out the scarecrow desperately wants a brain. Dorothy suggests that the scarecrow can get a brain from the Wizard in the Emerald City. The scarecrow joins Team Dorothy.

-Next, the two stumble on a rusted tin man. Dorothy liberally applies some oil from an old oil can and finds out the tin man desperately wants a heart. Dorothy suggests that the tin man can get a heart from the Wizard in the Emerald City. The tin man is now part of the crew.

- Not long afterwards, the little group is startled by a lion who attacks the travelers and tries to bite Dorothy's little dog Toto. Dorothy, heedless of the danger, swats the lion on the nose to protect her dog. Dorothy then has to comfort the lion as he whimpers about his nose, and finds out the lion is cowardly and desperately wants courage. Dorothy suggests that the cowardly lion can get courage from the Wizard in the Emerald City. The lion completes the team, and then the three benefactors successfully get Dorothy to the Emerald City.

-But the story does not all go in Dorothy's favor. Turns out, the Wizard also needs a few benefactors. He needs someone to kill the Wicked Witch of the West. When Dorothy and her team arrive, the Wizard gives everyone the royal treatment. He then gives Team Dorothy an audience and finds out Dorothy desperately wants to return home, the scarecrow desperately wants a brain, the tin man desperately wants a heart, and the lion desperately wants courage. The Wizard promises to give each benefactor what they want most if and when Dorothy brings him the broomstick of the Wicked Witch of the West. Like Dorothy, the Wizard is a born entrepreneur. He really understands how to spot benefactors.

-Products are part of a value chain that extends from components to customers.

-Understanding the value chain and where your startup fits in can be a powerful tool to give your new business legs.

-DuPont manufactures the nylon and stain-release sauce that other manufacturers and carpet mills process to make the carpeting we have in our homes and businesses.

-DuPont found benefactors to transform the carpet industry from a narrow-margin heartbreaker to a high-flying profit maker.

-DuPont managers fought commodity nylon prices for generations, but then decided to fight back by offering something that every player in the carpet industry wanted most.

-Every carpet manufacturer and retailer wanted a premium-priced carpet that consumers would recognize and trust.

-Everyone in the industry wanted a profitable product that would sell itself.

-Before Stainmaster, all carpeting looked pretty much the same to consumers.

-Since all carpeting looked the same, consumers bought on price - bad news for the entire value chain.

-Over the past decade, it has grown rapidly into one of the Internet's top 20 properties.

-To accelerate their growth, MyFamily raised more than $75 million in funding from benefactors.

-MyFamily looked at their value chain and asked the question, "Who will benefit if I succeed?"

-The answers company managers came up with were Intel, Compaq, AOL, and Kodak. Intel benefits because family-history buffs want fast computer processes to digest their mountains of digital photos.

-Compaq benefits because family-history buffs want new computers with lots of hard drive space, up-to-date memory, and Ethernet connections to access and post online genealogical information.
-AOL benefits by providing a value-added service to its growing base of family-history buff Internet subscribers.
-Kodak benefits by repositioning itself in the digital photography sector by building on the traditional strength of family photography.

-My-Family increases the need for Intel, Compaq, AOL, and Kodak products. In addition to capital raised from these investors, My-Family also received publicity from their association with these companies.

-Agilix is a software company that specializes in programs for Tablet PCs.

-In this high-tech product category, Agilix needs capital to fund R&D, but also needs access to programming code and computer hardware technology.

-To address the first need, Agilix approached Franklin Covey. Franklin Covey promotes personal planning and saw Agilix as a means to move forward in the electronic planner product space.

-Agilix got their funding and Franklin Covey got a winning product.

-Reviewers refer to Agilix-developed TabletPlanner software as marvelous, brilliant, and empowering. Competing with heavyweights like Microsoft, HP, and Corel, TabletPlanner is one of the top 10 best Tablet PC applications.

-To address needs beyond R&D capital, Agilix has gone to Microsoft and key computer hardware manufactures.

-They have become strategic partners that have provided Agilix with access to key technologies, allowing them to be on the cutting edge of this emerging field.

-As a result of these benefactor alliances, Agilix was able to be one of two software companies to have their software applications ready for the launch of Windows-based operating systems for Tablet PCs.

1. For a startup, advisory boards are more important than a board of directors.

2. Don't limit advisory boards to just include businesspeople.

3. Invite advisory board members that love your product, have a stake in staying on the leading edge of your industry, and/or people with regional, national or industry-wide name recognition.

-An advisory board can extend your social network of influence to increase its effectiveness in attracting investors, customers, and top employees.

-No new venture is too small or too large to benefit from an advisory board.

-Leveraging advisory board experience, expertise, credibility, and connections is the best way to succeed in today's competitive markets.

-A startup gains a big boost from building a national or at least a regional reputation.

-Perhaps one of the best-kept secrets of successful ventures is they know that reputation and experience counts, but that it doesn't have to be their own reputation and experience.
We can't emphasize enough what we stated earlier about finding and leveraging advocates.

-Successful entrepreneurs know that hard work, i.e., working 90+ hours a week, rarely leads to a successful new venture.

-It is the smart work of yourself and others, especially a credible and supportive advisory board, which leads to new venture success.

-Many startups make the mistake of developing their board of directors instead of beginning with an advisory board.

-Whenever you start a new venture, leverage the experience, wisdom, and creativity of advisory members to accelerate your growth and time to money.
(also connections to create your network)
>> Advisory board members should not be limited to people who have simply done things, but people who can get things done.
>> Also include people who possess local, regional, or national name recognition.
(For example, prominent politicians, retired executives or managers, and industry gurus make great advisory board members.)

2. Advisory board members can't be sued for their advice because they do not have any fiduciary responsibility to stockholders as do members of the board of directors. Thus, advisory boards are usually made up of nonpolitical, fun, and creative professionals who have a genuine interest and sincere desire to see the startup succeed.

informal
-serve only as long as needed

not liable
-not accountable if things go wrong

advise team
-give advice

2. Encourage honest feedback, i.e., stay away from friends

3. Be professional to get professional behavior

4. Shouldn't cost them anything to participate

5. Listen and take advice or they will leave

Horses for the Product: Dr. Oz??

Advisory Board: Shark Tank QVC Lady

2. NTB: need to believe
-large addressable market with large addressable pain(need)

3. DTS: dominate the situation
-deliver genuine delight in a specific usage situation

4. RTB: reason to believe
-easy to demonstrate and verify the distinction and benefit

5. QTS: quantifiable support
-quantitative evidence of product superiority

2. What is the right level of experience?
-Bring in people that are beyond, but just beyond, where you want to be.

3. How do I get them aboard?
-Provide two-page prospectus of the business, the issues the board will address, how the board will operate, and compensation.

4. What is the compensation?
-Travel, meals, perhaps some entertainment, opportunity to work with smart people on an interesting problem.
-Modest compensation after and extended period of service comparable to their hourly rate in their full-time job.

-enhance the Need to Believe

-enhance the Reason to Believe

-enhance the Unique Product Claim

Sharpening the Angle
-Unique Product Claim
-Large Addressable Need
-Dominate the Situation
-Reason to Believe
-Quantifiable Support

Leveraging Leverage
-Ride Horses
-Prospect for Beta-Goldmines
-Land an Anchor
-Seek Out Benefactors
-Build an Advisory Board

Think Big and Act Big
-Puff it Up
-Grow with Borrowed Interest
-Master Social Media & Publicity
-Get Your Swagger On
-Reach Out with Crowdfunding
-Dominate Trade Shows

-How to market on a budget?

-How to gain credibility when you are a new brand?

Don't act small
-Potential Customers want stable and reliable

-Business Advisors want vital and growing

-Suppliers and Employees want dependable and industry leaders

-Partners and Investors want blue chip and reputation builders

But you are not established, still unproven, a niche player, and don't have a track record

1. Use the elevator pitch to advance the sale and not to make a final sale.

2. An elevator pitch must hit hard and be brief. If at all possible, grab attention with a memorable product demonstration.

-the 30 second to 2 minute elevator ride.
-It is the amount of time that VCs will spare to identify good ideas and successful business teams that have promise and eliminate those that are not ready for funding

-When putting together an elevator pitch, we want to hit hard with the most important information up front.
-We want investors to get interested enough to invite us back to make a bigger, more detailed presentation.

2. Opportunity
-Describe the customers, competitors, how the product or service makes the competitors irrelevant, and how the product makes money. Investors want to see the potential for big revenues and big returns. Remember that if there are no competitors, then there usually are no customers, which in turn means that there is little or no money to be made.

3. Status
-Present clear financials and make note of market traction. Highlight letters of intent, product orders, and better yet, product sales.

4. Ask
-Make a case for your valuation of the startup and ask for an investment to accomplish the next set of important goals such as manufacturing products to fill orders, hiring staff to expand the sales or service organization, or expanding into new locations. Balance investment with reward.

5. Remember
-Demonstrate how the product is validated with interested customers. Highlight the contributions of business team members to the startup. Close with a short "pump up" reminder with an industry opinion leader weighing in on the broad appeal of the product.

1. Social Media empowers small players to think and act big. SIze and money are no longer barriers to starting a successful business.

2. Facebook, Twitter, Youtube, Product Blogs, and Google each have their own rules for success. Informed use of all five is needed to beat Big Business at the Social Media game.

-In this new era of Internet and social media, everyone can be a star everyone can have a voice everyone has market access.

>> Startups can wear very big adult shoes even when they have very tiny baby feet.

Think big and act big, but don't spend money like you are big. DON'T try to buy success. Learn to earn success. DON'T bring in corporate marketers that haven't worked with small budgets. DO use new technology and tactics that level the playing field.

-Technologies such as social media and SMS communications, as well as low-barrier-of-entry market channels such as the Internet now give businesses of every size an opportunity to successfully compete locally and globally.

-Knowing how to think big and act big without stumbling around can make or break a startup.

Startup Location Examples: where would you meet with your potential client? your dirty closet office space? NO. rent an office space for a day. Leverage your contacts (putting plaque on the front entrance with all other company names in the building have the secretary be in on it too)

-When startups go where the money is, and they must, their competitors will be big in terms of money, resources, personnel, and image.
-Customers and investors often equate big with safe. "It's safe to do business with Big Blue because, well, they're big." IBM, aka Big Blue, made a living on this line of reasoning for years.
-Unlike the happy thoughts that come to mind when doing business with a large, well known company, many unhappy thoughts may come to mind when doing business with a startup.
-Potential customers prefer buying from a stable, dependable company, but this business is not established.
-Business advisors prefer working with a viable, ongoing company, but this business is unproven.
-Suppliers and employees prefer teaming up with industry leaders, but this business is a niche player.
-Partners and Investors prefer throwing support behind a reputation builder, but this business doesn't have a blue chip track record and may even harm one's reputation.

New businesses are stressed. When they swim frantically around like little fish or bite off more spending than they can chew, they will choke and fail. When they puff up like a puffer fish they often succeed. One way to puff up is to dominate a vertical market where you have a natural advantage before expanding to other markets.

Ex:
Francois Lane, serial entrepreneur and co-founder of CakeMail a whitelabel email marketing service, insists that new businesses "must select one vertical market and focus on complete world domination of this specific market." He also points out that new businesses are best off when selecting markets that have their own network of trade shows and industry publications. When you are small, it is important to attack a market where it is easy to identify and connect with marketing channels.

Social media provides a spectacular way to puff up your market presence. For many startups, your website is your company. Build a look and feel for your website that is equivalent to an IBM. Show real people. Show a brick and mortar location. Include a telephone number. Learn what makes a productive splash page. Highlight awards, accomplishments, notable customers, and interesting product stories. Blog the victories. Twitter the fun. Facebook for friends. Get involved with a cause popular with social media followers. Bring your pitch to life with YouTube.

Ex: Puff it Up: Phone Service
-BJ's brother's wife acting as his secretary and having all calls forwarded to her number and then saying "please hold Ill connect you with ____ or ____" but really it's still her playing those roles


NPD Test #2

1. Don't do it alone. Be smart, find some help, and "ride horses" to the bank.

2. Look for a love-group and empower the group to help promote and gain market access for your new product.

-find the sort of horses that you can ride to the bank

-a good horse will be a champion for your competitive angle

-identify and partner with people who have the skills, energy, and influence you need to succeed with your product and target market
(after all, with startups and other types of ventures, "it's not what you know, but who you know" that determines success or failure.)

2. Evangelists
-I'll prepare the way by stirring interest and awareness

3. Patrons
-you pat my back and I'll pat yours

-they desire recognition
-they want credibility among peers
-stock to increase their social equity
-being part of a winning team

2. Trade Association President
-angles with "wow factors" put them on the cutting edge

3. Local Expert in your State
-looking credible because he/she is a "thought leader." Experts love to jump on a winning bandwagon

-makes bath time easy for mom and makes baby feel comfortable

-warm to the touch
-non-slip
-hangs in storage: flat
-doesn't absorb water
-folds easily
-fits into bathroom sink
-comfortable to baby
-makes it a bonding experience and there are no distractions

Who would be a Horse for this product?
-Ellen!!

Ride Horses-Evangelists & Patrons
-PUJ Tub and Rachael Ray & Kelly Ripa guessing game

-BIC pens "for her" (pink and purple) designed to fit a woman's hand

-very important to growing a startup business

(also known as product advocates, or the Love Group)

Ex: think of them as a huge herd of wild stallions that jump to action at your command and set a positive, enthusiastic tone for everyone that sees them.

-DDS developed the first management software to connect the operators to the front desk, minimizing billing loss and confusion.
(but even after successfully developing the software and addressing a sizable pain-point, the venture would fail unless it found a way to persuasively and efficiently reach the target market--dentists)

-DDS at first thought they had only 2 choices:
1. hire a company sales force or
2. outsource the selling to independent sales agents such as dental product distributors or value-added resellers.

but Dentrix had a third option when they started looking for leverage

Kimball's hard work in uncovering and solving everyday pain for dentists gave Dentrix a sharp competitive angle
-it wasn't difficult to find experienced and credible dental-industry salespeople that believed in Dentrix and wanted to take a chance on selling it for a commission and stake in the company rather than for a fixed salary

Dentrix leveraged their leverage and found salespeople to help them do what they couldn't do or afford to do on their own

-learned hot noble gases are used as insulators inside of dry suits to keep divers warm
-envisioned how the "dry suit" technology could be adapted to insulate winter gear
-while insulated clothing is nothing new, using thermostat-valve-controlled linings in clothing to regulate temperature is new
-no bulk, no layering, just turn the dial up and down
(if the skier is cold, add a little argon gas to the jacket lining if a skier is hot, open the valve and release some argon to cool down)

-from the outset, he understood how to network and recruit product advocates.
-his biggest successes have been with a local mayor that wants to make his city the skiing Mecca of the US, who has introduced him to a number of leading outdoor companies and investors.
(one company is not a primary development partner and several others helped fund the business)
-he was also introduced to an industry "graybeard" (someone w/ decades of experience in the outdoor markets) who began assisting the company as a consultant
-he featured this industry insider whenever pitching Klymit to investors

-don't use time and energy to fight cynics and hecklers. learn to focus on the love and take your product to the market through the eyes of those that love it

-"Who is in your Love Group?"
>> most startup marketers, similar to most Big Business marketers, can't identify who faithfully purchases their products beyond offering up a few Demographics like average age, gender split, and regional sales percentages
(startups can't afford to be that unobservant)

-The Love Group is their lifeblood. Just like a political candidate, startups must know and retain their Love Group while at the same time helping the fence-sitters see their product through the eyes of the Love Group

-New companies don't need 50% of the popular vote to succeed, but do need a strong group of core customers that they thoroughly understand. By thoroughly understand, we are talking about drawing together a profile that looks more like an ethnographic Mona Lisa than a demographic stick figure. What do customers look like, how do they express themselves, what do they read and watch, where do they live, what vehicles do they drive, what are their hopes and aspirations, and most important, which of our product features and benefits really get them going?

-Special interest groups were successfully encouraging legislation to reduce, phase out, and even ban the use of plastic packaging and products. The American Plastics Council (APC) came to the rescue with a flashy advertising campaign to inform the public about the substantial efforts the industry was making toward recycling and reuse, and that products and packaging made of plastic actually saved resources compared to other alternatives such as paper or metal. Millions of advertising dollars were spent, expectations were high, but success was nowhere to be found.

>> Directly attacking the concerns of the Hate Group didn't convince anyone and ultimately led to the APC being ordered by a dozen or so state Attorneys General to desist in their "false" advertising claims about the availability of plastics recycling.

-The APC failed because managers ignored the Love Group in favor of attacking the Hate Group, but they learned their lesson. The next round of advertising built on the beliefs of plastics advocates. These messages highlighted the noble qualities of plastics - personal safety and health - that researchers had identified in personal interviews with the plastics Love Group. This time the positive results were staggering.

- They raise an important point and put themselves on the threshold of discovering what really sets a successful startup marketer apart from a frustrated would-be entrepreneur.

-Successful startup marketers don't expect their Love Group to find them they aggressively seek out their Love Group. >> "Build it and they will come" rarely works in today's world of information overload and product proliferation

-Realizing we don't know our Love Group is the first step in beginning to prospect to find a Love Group.

-There are many ways to prospect for a Love Group, but we suggest bringing eight to twelve people together that may benefit from the new product, feeding them pizza, and soliciting their impressions.

-After explaining the product concept, ask questions like, "Who would love this product? What would they love about it? Where and how would they use it?"

- Listen and note the responses, but more importantly, observe the participants and look for those few who are completely engaged and articulate.
-Ask them back to another session so that you can find out more, because they are your Love Group.

-One prospecting session will not be enough to establish a detailed profile for the Love Group. In our experience, about three to five prospecting sessions are needed, and they should be spread across a variety of geographic regions.

-At the time, executives wanted to branch out into new areas of clothing over concerns that too high a percentage of their sales came from jeans.

-They wanted to grow by penetrating new markets. Levi Strauss did their homework. They examined suit-buying preferences, shopping practices, lifestyles, and demographics for 2,000 men.

-They uncovered five distinct segments in the market: the traditionalist, the classic independent, the utilitarian, the trendy casual, and the price shopper.

-The marketing quickly focused in on the "classic independent" as the target, i.e., the tailored suit Love Group.

-The segment accounted for 21% of male shoppers. They purchased about one-half of men's natural-fiber clothing products, were not price-sensitive, generally shopped for clothes in specialty stores, and strongly preferred tailored clothing rather than buying it off the rack.

-The Levi Tailored Classics marketing team put together focus groups of the classic independents to prove the new product concept.

-The focus group testing went well until it was suggested that (1) the suits would be sold off the rack, and (2) the suits would be manufactured by Levi Strauss.

-At that point objections flew hot and heavy.
-Behind the mirror in the focus group facility, the marketing team had answers for every objection.

-The marketing team pushed forward, even though the product was completely inconsistent with everyone's existing belief about the brand and because of it, trounced every physical and emotional benefit these customers wanted from the Levi's brand.

-But again and again we see the same behavior from entrepreneurs dead set on selling to a particular type of customer.
>> They settle for fool's gold rather than prospecting for real gold.

Ex:
-To make the point, consider the case of an entrepreneur who had invented a device to measure the curvature and other features of human spinal columns.

-His technology could give doctors the lowdown on backbones.

-Medical doctors, however, are a skeptical group. They are highly educated, opinionated, and slow to revise best practices.

-This didn't stop our entrepreneur.
-MDs would love his invention, he just knew it. -He aggressively pursued them. He pushed hard. They pushed back. They preferred X-rays.

-In the meantime, chiropractors discovered the new back-measuring device and loved it. It was just what they needed to get a quick read on a new patient's spinal column and to provide feedback on the progress being made by on-going patients.

-The entrepreneur, however, didn't want to sell to chiropractors. He felt they weren't professionals and that their involvement would diminish the seriousness and significance of his invention.

-He ignored the Love Group, unsuccessfully tried over and over again to sell his invention to the Hate Group, and ultimately squandered hundreds of thousands in venture capital. His business went bankrupt.

1. Recruit early adopters to provide capital to develop your new product.

2. Learn the keys to selling innovators and how they differ from selling imitators.

3. Give innovators what they want the next big thing at a bargain price. But make sure to offer a bargain price that keeps your startup in business.

-Consider mining for gold with the early adopters the customers that will get your startup out of the gate and running!

-Pete Seeger wrote the lines, "Oh, had I a golden thread and a needle so fine, I'd weave a magic strand of rainbow design."

-Beta Customers fund your R&D activities

-Getting the first person to buy is unbelievably expensive. Getting the second person to buy is unbelievably cheap

-Software products usually have an alpha stage, that is, a stage in which features are added a beta stage, in which flaws are removed and a market-ready stage, in which the product is fully groomed and broadly released to potential buyers.

-The beta version is the first version of a product that gets released outside the business.

-Beta versions help developers evaluate their products in real-world settings.

-Beta versions are evaluated by beta testers.

-Beta testers can be current or prospective customers. In the software industry, beta testers receive the beta version of a product for free or at a "bargain" price.

-Consequently, when looking for beta testers to transform into beta goldmines, picking customers with a strong need to believe is a key success factor.

-In other words, the pain-point must be particularly painful for beta goldmines or the need for market leadership must be particularly strong.

>> Give innovators what they want the next big thing at a bargain price.

>> "Build it and they will come," is just a Field of Dreams

1. product development
2. alpha test
3. beta test
4. release

-the number of innovator-buyers can be very small, sometimes as small as 2-3% of the total number of people that will ultimately make purchases in the product category.

-Consider the Dvorak keyboard. Back in 1936, Dr. Dvorak patented a simplified and much improved typewriter keyboard layout to solve the fatigue and inefficiency problems created by the gold-standard QWERTY keyboard layout.

-In today's world, the use of computers makes the streamlined Dvorak keyboard available to anyone who wants it however, the old QWERTY keyboard introduced back in the 1860s continues to dominate.

-Beta-products suffer when people see them as complex to understand or just plain difficult to use.

-The IBM PCjr of the mid-1980s provides an interesting example.

-High price and limited software aside, the product was DOA because of its tiny "Chiclet" keyboard, which made typing almost impossible.

-Evidently, when developing the PCjr, IBM hired usability testers with some mighty tiny fingers.

-Beta-test customers become beta goldmines when they become reference points for future customers, provide funding for product R&D, are top prospects for upgraded products, and supply easy access to in-the-field reactions regarding value-in-use, product fit with current practices, and product usability.

-When it comes to purchasing behavior, innovators
(1) want to buy the next new thing before having to pay full price,
(2) believe they deserve special consideration because they are taking extra time and effort to test an unproven product, and
(3) refuse to sit back and watch anyone else have something new that they don't have.

-Knowing a little bit about the buying culture of innovators can go a long way in helping entrepreneurs sell to them.

-First, innovators believe that new technology initially costs more than the old way of doing things, but that costs will come down with time.

(Ex: After all, ENIAC, the first large-scale computer, cost $500,000 back in 1946 and only performed 5,000 operations per second. Today's home computers perform billions of operations per second at less than a hundredth of ENIAC's price tag.)

-Second, innovators apparently can't say no to new technology even when they know it falls way behind on the bang-for-buck buying curve.

>> Innovators crave new technology, but fear they can't afford to buy new technology.

> Entrepreneurs to the rescue! Entrepreneurs can attract innovators by asking innovators for their help.

> By recruiting innovators as product-development partners, startups can offer opportunities for innovators to move quickly and buy new technology at bargain prices before it is introduced to the general public at nosebleed skim-the-cream prices.

1. An Anchor is your "stamp of approval." It provides "I have arrived" credibility.
(your core customers. your best friends)

2. Anchor customers pay the bills. Every business needs a steady flow of revenue even if it is low margin revenue.

-Finding anchor customers must be a top priority.

-For a moment, imagine that different kinds of businesses are like different kinds of ships.

-The Big Business ship likes to drop anchor in a calm and sunny harbor. The heavy anchor and calm waters make everyone on board the Big Business ship feel safe and secure.

-The startup ship is like a pirate sailing the open sea.
-The captain of the startup business ship doesn't like to drop anchor. The captain knows the ship only moves once the anchor is on board. Startup businesses must get an anchor on board before they can start sailing.
(with an anchor on board, you can start sailing!)

Make Partnerships
-give discounts in exchange for being a reference
-test the "newest things" on them
-make them feel like a partner

-Take a look at their customer list. There is Toyota, Cadillac, Ford, Microsoft, HP, Oracle, VISA, Ameritrade, ADP, Xerox, Siemens, Tyco, HBO, Fox, CBS, Walmart, Mary Kay, eBay, and it goes on.

-Omniture always had great products and talented employees, but their success story really got started with two anchor customers, Microsoft and eBay.

-According to their CEO, before landing these anchor customers, the Omniture sales cycle was a long and painful nine months. Prospective clients had lots of questions about Ominiture's financial stability, technology, and Service Quality.

-With the anchors on board, however, most of the prospective clients' questions were answered with two words: Microsoft and eBay. The sales cycle shrank to a manageable three months.

-For example, a local bakery got its start by providing low-priced, high-quality bread and other baked goods such as impossible-to-resist giant cookies to area restaurants, cafeterias, and catering services.

-These businesses were their anchor customers.

-With the anchors established, the bakery could make their brick-and-mortar retail store a success, charging premium prices for their tried-and-true products, and even were able to add a few new products not offered through other marketing channels.

-Anchor customers get your startup going and keep paying the operating bills through good times and bad.

-Once the factory is rolling, design engineers and marketers start looking for opportunities to swap out the manufacture of low-margin goods with high-margin goods.

-Not every manufacturer, however, has the good sense to bring anchor customers on board before investing millions of dollars in product development and/or building a new factory. Recall DuPont's cautionary tale of Kevlar.

-DuPont spent $500 million to develop and commercialize Kevlar as a replacement for nylon as tire cord, but did not lock-up tire manufacturers. The tire manufacturers decided on steel as a better alternative and took a pass on Kevlar.

-This left DuPont with a very expensive product in search of a market a market they never found. Startups can't afford this type of misstep.

Big anchors don't always suit small startups.

1. Payment Practices
-bigger anchors pay slower
2. Vetting Practices
-smaller and growing anchors set lower hurdles
3. Distribution Practices
-online and TV shopping channels may make it easier to manage inventory

-An important decision point for a startup is whether the potential anchor is more likely to foster a startup business or let it flounder and sink under the weight of their way of doing business.

-Unfortunately, we have seen far too many examples of the latter rather than the former.

-A startup the size of a dinghy goes down fast when they take on an anchor fit for an ocean liner.

-The national retailer declined to reschedule a pickup and told the new business to wait another year before trying again.

-Yet another new business shipped inventory worth hundreds of thousands of dollars to a national retailer notorious for paying vendors slowly.

-The entrepreneurs, having taken out second mortgages and maxed-out their credit cards, got nervous and tried to pressure the retailer into paying with aggressive, bordering on rude and unprofessional, phone calls and letters.

-In response, the national retailer returned the entire inventory. The entrepreneurs were then left with lots of debt, lots of inventory, and few prospects for earning any revenue.

1. A benefactor is a company with complimentary products and/or services that win if your startup wins.

2. Entrepreneurs can find benefactors in the value-chain, in the local community, and in the same industry.

3. Benefactors can help out a startup with cash as well as non-cash benefits.

-Think through the question carefully, because the answer will help you find initial investors, key strategic partners, and perhaps anchor customers.

-Learning to ask the right questions is fundamental to startup success!

-Dorothy needs to seek out benefactors and she keeps an eye open for anyone that will also greatly benefit from a trip to the Emerald City.

-At the journey's outset, Dorothy runs across a scarecrow at a crossroads. She removes a nail to take the scarecrow down from his post and finds out the scarecrow desperately wants a brain. Dorothy suggests that the scarecrow can get a brain from the Wizard in the Emerald City. The scarecrow joins Team Dorothy.

-Next, the two stumble on a rusted tin man. Dorothy liberally applies some oil from an old oil can and finds out the tin man desperately wants a heart. Dorothy suggests that the tin man can get a heart from the Wizard in the Emerald City. The tin man is now part of the crew.

- Not long afterwards, the little group is startled by a lion who attacks the travelers and tries to bite Dorothy's little dog Toto. Dorothy, heedless of the danger, swats the lion on the nose to protect her dog. Dorothy then has to comfort the lion as he whimpers about his nose, and finds out the lion is cowardly and desperately wants courage. Dorothy suggests that the cowardly lion can get courage from the Wizard in the Emerald City. The lion completes the team, and then the three benefactors successfully get Dorothy to the Emerald City.

-But the story does not all go in Dorothy's favor. Turns out, the Wizard also needs a few benefactors. He needs someone to kill the Wicked Witch of the West. When Dorothy and her team arrive, the Wizard gives everyone the royal treatment. He then gives Team Dorothy an audience and finds out Dorothy desperately wants to return home, the scarecrow desperately wants a brain, the tin man desperately wants a heart, and the lion desperately wants courage. The Wizard promises to give each benefactor what they want most if and when Dorothy brings him the broomstick of the Wicked Witch of the West. Like Dorothy, the Wizard is a born entrepreneur. He really understands how to spot benefactors.

-Products are part of a value chain that extends from components to customers.

-Understanding the value chain and where your startup fits in can be a powerful tool to give your new business legs.

-DuPont manufactures the nylon and stain-release sauce that other manufacturers and carpet mills process to make the carpeting we have in our homes and businesses.

-DuPont found benefactors to transform the carpet industry from a narrow-margin heartbreaker to a high-flying profit maker.

-DuPont managers fought commodity nylon prices for generations, but then decided to fight back by offering something that every player in the carpet industry wanted most.

-Every carpet manufacturer and retailer wanted a premium-priced carpet that consumers would recognize and trust.

-Everyone in the industry wanted a profitable product that would sell itself.

-Before Stainmaster, all carpeting looked pretty much the same to consumers.

-Since all carpeting looked the same, consumers bought on price - bad news for the entire value chain.

-Over the past decade, it has grown rapidly into one of the Internet's top 20 properties.

-To accelerate their growth, MyFamily raised more than $75 million in funding from benefactors.

-MyFamily looked at their value chain and asked the question, "Who will benefit if I succeed?"

-The answers company managers came up with were Intel, Compaq, AOL, and Kodak. Intel benefits because family-history buffs want fast computer processes to digest their mountains of digital photos.

-Compaq benefits because family-history buffs want new computers with lots of hard drive space, up-to-date memory, and Ethernet connections to access and post online genealogical information.
-AOL benefits by providing a value-added service to its growing base of family-history buff Internet subscribers.
-Kodak benefits by repositioning itself in the digital photography sector by building on the traditional strength of family photography.

-My-Family increases the need for Intel, Compaq, AOL, and Kodak products. In addition to capital raised from these investors, My-Family also received publicity from their association with these companies.

-Agilix is a software company that specializes in programs for Tablet PCs.

-In this high-tech product category, Agilix needs capital to fund R&D, but also needs access to programming code and computer hardware technology.

-To address the first need, Agilix approached Franklin Covey. Franklin Covey promotes personal planning and saw Agilix as a means to move forward in the electronic planner product space.

-Agilix got their funding and Franklin Covey got a winning product.

-Reviewers refer to Agilix-developed TabletPlanner software as marvelous, brilliant, and empowering. Competing with heavyweights like Microsoft, HP, and Corel, TabletPlanner is one of the top 10 best Tablet PC applications.

-To address needs beyond R&D capital, Agilix has gone to Microsoft and key computer hardware manufactures.

-They have become strategic partners that have provided Agilix with access to key technologies, allowing them to be on the cutting edge of this emerging field.

-As a result of these benefactor alliances, Agilix was able to be one of two software companies to have their software applications ready for the launch of Windows-based operating systems for Tablet PCs.

1. For a startup, advisory boards are more important than a board of directors.

2. Don't limit advisory boards to just include businesspeople.

3. Invite advisory board members that love your product, have a stake in staying on the leading edge of your industry, and/or people with regional, national or industry-wide name recognition.

-An advisory board can extend your social network of influence to increase its effectiveness in attracting investors, customers, and top employees.

-No new venture is too small or too large to benefit from an advisory board.

-Leveraging advisory board experience, expertise, credibility, and connections is the best way to succeed in today's competitive markets.

-A startup gains a big boost from building a national or at least a regional reputation.

-Perhaps one of the best-kept secrets of successful ventures is they know that reputation and experience counts, but that it doesn't have to be their own reputation and experience.
We can't emphasize enough what we stated earlier about finding and leveraging advocates.

-Successful entrepreneurs know that hard work, i.e., working 90+ hours a week, rarely leads to a successful new venture.

-It is the smart work of yourself and others, especially a credible and supportive advisory board, which leads to new venture success.

-Many startups make the mistake of developing their board of directors instead of beginning with an advisory board.

-Whenever you start a new venture, leverage the experience, wisdom, and creativity of advisory members to accelerate your growth and time to money.
(also connections to create your network)
>> Advisory board members should not be limited to people who have simply done things, but people who can get things done.
>> Also include people who possess local, regional, or national name recognition.
(For example, prominent politicians, retired executives or managers, and industry gurus make great advisory board members.)

2. Advisory board members can't be sued for their advice because they do not have any fiduciary responsibility to stockholders as do members of the board of directors. Thus, advisory boards are usually made up of nonpolitical, fun, and creative professionals who have a genuine interest and sincere desire to see the startup succeed.

informal
-serve only as long as needed

not liable
-not accountable if things go wrong

advise team
-give advice

2. Encourage honest feedback, i.e., stay away from friends

3. Be professional to get professional behavior

4. Shouldn't cost them anything to participate

5. Listen and take advice or they will leave

Horses for the Product: Dr. Oz??

Advisory Board: Shark Tank QVC Lady

2. NTB: need to believe
-large addressable market with large addressable pain(need)

3. DTS: dominate the situation
-deliver genuine delight in a specific usage situation

4. RTB: reason to believe
-easy to demonstrate and verify the distinction and benefit

5. QTS: quantifiable support
-quantitative evidence of product superiority

2. What is the right level of experience?
-Bring in people that are beyond, but just beyond, where you want to be.

3. How do I get them aboard?
-Provide two-page prospectus of the business, the issues the board will address, how the board will operate, and compensation.

4. What is the compensation?
-Travel, meals, perhaps some entertainment, opportunity to work with smart people on an interesting problem.
-Modest compensation after and extended period of service comparable to their hourly rate in their full-time job.

-enhance the Need to Believe

-enhance the Reason to Believe

-enhance the Unique Product Claim

Sharpening the Angle
-Unique Product Claim
-Large Addressable Need
-Dominate the Situation
-Reason to Believe
-Quantifiable Support

Leveraging Leverage
-Ride Horses
-Prospect for Beta-Goldmines
-Land an Anchor
-Seek Out Benefactors
-Build an Advisory Board

Think Big and Act Big
-Puff it Up
-Grow with Borrowed Interest
-Master Social Media & Publicity
-Get Your Swagger On
-Reach Out with Crowdfunding
-Dominate Trade Shows

-How to market on a budget?

-How to gain credibility when you are a new brand?

Don't act small
-Potential Customers want stable and reliable

-Business Advisors want vital and growing

-Suppliers and Employees want dependable and industry leaders

-Partners and Investors want blue chip and reputation builders

But you are not established, still unproven, a niche player, and don't have a track record

1. Use the elevator pitch to advance the sale and not to make a final sale.

2. An elevator pitch must hit hard and be brief. If at all possible, grab attention with a memorable product demonstration.

-the 30 second to 2 minute elevator ride.
-It is the amount of time that VCs will spare to identify good ideas and successful business teams that have promise and eliminate those that are not ready for funding

-When putting together an elevator pitch, we want to hit hard with the most important information up front.
-We want investors to get interested enough to invite us back to make a bigger, more detailed presentation.

2. Opportunity
-Describe the customers, competitors, how the product or service makes the competitors irrelevant, and how the product makes money. Investors want to see the potential for big revenues and big returns. Remember that if there are no competitors, then there usually are no customers, which in turn means that there is little or no money to be made.

3. Status
-Present clear financials and make note of market traction. Highlight letters of intent, product orders, and better yet, product sales.

4. Ask
-Make a case for your valuation of the startup and ask for an investment to accomplish the next set of important goals such as manufacturing products to fill orders, hiring staff to expand the sales or service organization, or expanding into new locations. Balance investment with reward.

5. Remember
-Demonstrate how the product is validated with interested customers. Highlight the contributions of business team members to the startup. Close with a short "pump up" reminder with an industry opinion leader weighing in on the broad appeal of the product.

1. Social Media empowers small players to think and act big. SIze and money are no longer barriers to starting a successful business.

2. Facebook, Twitter, Youtube, Product Blogs, and Google each have their own rules for success. Informed use of all five is needed to beat Big Business at the Social Media game.

-In this new era of Internet and social media, everyone can be a star everyone can have a voice everyone has market access.

>> Startups can wear very big adult shoes even when they have very tiny baby feet.

Think big and act big, but don't spend money like you are big. DON'T try to buy success. Learn to earn success. DON'T bring in corporate marketers that haven't worked with small budgets. DO use new technology and tactics that level the playing field.

-Technologies such as social media and SMS communications, as well as low-barrier-of-entry market channels such as the Internet now give businesses of every size an opportunity to successfully compete locally and globally.

-Knowing how to think big and act big without stumbling around can make or break a startup.

Startup Location Examples: where would you meet with your potential client? your dirty closet office space? NO. rent an office space for a day. Leverage your contacts (putting plaque on the front entrance with all other company names in the building have the secretary be in on it too)

-When startups go where the money is, and they must, their competitors will be big in terms of money, resources, personnel, and image.
-Customers and investors often equate big with safe. "It's safe to do business with Big Blue because, well, they're big." IBM, aka Big Blue, made a living on this line of reasoning for years.
-Unlike the happy thoughts that come to mind when doing business with a large, well known company, many unhappy thoughts may come to mind when doing business with a startup.
-Potential customers prefer buying from a stable, dependable company, but this business is not established.
-Business advisors prefer working with a viable, ongoing company, but this business is unproven.
-Suppliers and employees prefer teaming up with industry leaders, but this business is a niche player.
-Partners and Investors prefer throwing support behind a reputation builder, but this business doesn't have a blue chip track record and may even harm one's reputation.

New businesses are stressed. When they swim frantically around like little fish or bite off more spending than they can chew, they will choke and fail. When they puff up like a puffer fish they often succeed. One way to puff up is to dominate a vertical market where you have a natural advantage before expanding to other markets.

Ex:
Francois Lane, serial entrepreneur and co-founder of CakeMail a whitelabel email marketing service, insists that new businesses "must select one vertical market and focus on complete world domination of this specific market." He also points out that new businesses are best off when selecting markets that have their own network of trade shows and industry publications. When you are small, it is important to attack a market where it is easy to identify and connect with marketing channels.

Social media provides a spectacular way to puff up your market presence. For many startups, your website is your company. Build a look and feel for your website that is equivalent to an IBM. Show real people. Show a brick and mortar location. Include a telephone number. Learn what makes a productive splash page. Highlight awards, accomplishments, notable customers, and interesting product stories. Blog the victories. Twitter the fun. Facebook for friends. Get involved with a cause popular with social media followers. Bring your pitch to life with YouTube.

Ex: Puff it Up: Phone Service
-BJ's brother's wife acting as his secretary and having all calls forwarded to her number and then saying "please hold Ill connect you with ____ or ____" but really it's still her playing those roles


NPD Test #2

1. Don't do it alone. Be smart, find some help, and "ride horses" to the bank.

2. Look for a love-group and empower the group to help promote and gain market access for your new product.

-find the sort of horses that you can ride to the bank

-a good horse will be a champion for your competitive angle

-identify and partner with people who have the skills, energy, and influence you need to succeed with your product and target market
(after all, with startups and other types of ventures, "it's not what you know, but who you know" that determines success or failure.)

2. Evangelists
-I'll prepare the way by stirring interest and awareness

3. Patrons
-you pat my back and I'll pat yours

-they desire recognition
-they want credibility among peers
-stock to increase their social equity
-being part of a winning team

2. Trade Association President
-angles with "wow factors" put them on the cutting edge

3. Local Expert in your State
-looking credible because he/she is a "thought leader." Experts love to jump on a winning bandwagon

-makes bath time easy for mom and makes baby feel comfortable

-warm to the touch
-non-slip
-hangs in storage: flat
-doesn't absorb water
-folds easily
-fits into bathroom sink
-comfortable to baby
-makes it a bonding experience and there are no distractions

Who would be a Horse for this product?
-Ellen!!

Ride Horses-Evangelists & Patrons
-PUJ Tub and Rachael Ray & Kelly Ripa guessing game

-BIC pens "for her" (pink and purple) designed to fit a woman's hand

-very important to growing a startup business

(also known as product advocates, or the Love Group)

Ex: think of them as a huge herd of wild stallions that jump to action at your command and set a positive, enthusiastic tone for everyone that sees them.

-DDS developed the first management software to connect the operators to the front desk, minimizing billing loss and confusion.
(but even after successfully developing the software and addressing a sizable pain-point, the venture would fail unless it found a way to persuasively and efficiently reach the target market--dentists)

-DDS at first thought they had only 2 choices:
1. hire a company sales force or
2. outsource the selling to independent sales agents such as dental product distributors or value-added resellers.

but Dentrix had a third option when they started looking for leverage

Kimball's hard work in uncovering and solving everyday pain for dentists gave Dentrix a sharp competitive angle
-it wasn't difficult to find experienced and credible dental-industry salespeople that believed in Dentrix and wanted to take a chance on selling it for a commission and stake in the company rather than for a fixed salary

Dentrix leveraged their leverage and found salespeople to help them do what they couldn't do or afford to do on their own

-learned hot noble gases are used as insulators inside of dry suits to keep divers warm
-envisioned how the "dry suit" technology could be adapted to insulate winter gear
-while insulated clothing is nothing new, using thermostat-valve-controlled linings in clothing to regulate temperature is new
-no bulk, no layering, just turn the dial up and down
(if the skier is cold, add a little argon gas to the jacket lining if a skier is hot, open the valve and release some argon to cool down)

-from the outset, he understood how to network and recruit product advocates.
-his biggest successes have been with a local mayor that wants to make his city the skiing Mecca of the US, who has introduced him to a number of leading outdoor companies and investors.
(one company is not a primary development partner and several others helped fund the business)
-he was also introduced to an industry "graybeard" (someone w/ decades of experience in the outdoor markets) who began assisting the company as a consultant
-he featured this industry insider whenever pitching Klymit to investors

-don't use time and energy to fight cynics and hecklers. learn to focus on the love and take your product to the market through the eyes of those that love it

-"Who is in your Love Group?"
>> most startup marketers, similar to most Big Business marketers, can't identify who faithfully purchases their products beyond offering up a few Demographics like average age, gender split, and regional sales percentages
(startups can't afford to be that unobservant)

-The Love Group is their lifeblood. Just like a political candidate, startups must know and retain their Love Group while at the same time helping the fence-sitters see their product through the eyes of the Love Group

-New companies don't need 50% of the popular vote to succeed, but do need a strong group of core customers that they thoroughly understand. By thoroughly understand, we are talking about drawing together a profile that looks more like an ethnographic Mona Lisa than a demographic stick figure. What do customers look like, how do they express themselves, what do they read and watch, where do they live, what vehicles do they drive, what are their hopes and aspirations, and most important, which of our product features and benefits really get them going?

-Special interest groups were successfully encouraging legislation to reduce, phase out, and even ban the use of plastic packaging and products. The American Plastics Council (APC) came to the rescue with a flashy advertising campaign to inform the public about the substantial efforts the industry was making toward recycling and reuse, and that products and packaging made of plastic actually saved resources compared to other alternatives such as paper or metal. Millions of advertising dollars were spent, expectations were high, but success was nowhere to be found.

>> Directly attacking the concerns of the Hate Group didn't convince anyone and ultimately led to the APC being ordered by a dozen or so state Attorneys General to desist in their "false" advertising claims about the availability of plastics recycling.

-The APC failed because managers ignored the Love Group in favor of attacking the Hate Group, but they learned their lesson. The next round of advertising built on the beliefs of plastics advocates. These messages highlighted the noble qualities of plastics - personal safety and health - that researchers had identified in personal interviews with the plastics Love Group. This time the positive results were staggering.

- They raise an important point and put themselves on the threshold of discovering what really sets a successful startup marketer apart from a frustrated would-be entrepreneur.

-Successful startup marketers don't expect their Love Group to find them they aggressively seek out their Love Group. >> "Build it and they will come" rarely works in today's world of information overload and product proliferation

-Realizing we don't know our Love Group is the first step in beginning to prospect to find a Love Group.

-There are many ways to prospect for a Love Group, but we suggest bringing eight to twelve people together that may benefit from the new product, feeding them pizza, and soliciting their impressions.

-After explaining the product concept, ask questions like, "Who would love this product? What would they love about it? Where and how would they use it?"

- Listen and note the responses, but more importantly, observe the participants and look for those few who are completely engaged and articulate.
-Ask them back to another session so that you can find out more, because they are your Love Group.

-One prospecting session will not be enough to establish a detailed profile for the Love Group. In our experience, about three to five prospecting sessions are needed, and they should be spread across a variety of geographic regions.

-At the time, executives wanted to branch out into new areas of clothing over concerns that too high a percentage of their sales came from jeans.

-They wanted to grow by penetrating new markets. Levi Strauss did their homework. They examined suit-buying preferences, shopping practices, lifestyles, and demographics for 2,000 men.

-They uncovered five distinct segments in the market: the traditionalist, the classic independent, the utilitarian, the trendy casual, and the price shopper.

-The marketing quickly focused in on the "classic independent" as the target, i.e., the tailored suit Love Group.

-The segment accounted for 21% of male shoppers. They purchased about one-half of men's natural-fiber clothing products, were not price-sensitive, generally shopped for clothes in specialty stores, and strongly preferred tailored clothing rather than buying it off the rack.

-The Levi Tailored Classics marketing team put together focus groups of the classic independents to prove the new product concept.

-The focus group testing went well until it was suggested that (1) the suits would be sold off the rack, and (2) the suits would be manufactured by Levi Strauss.

-At that point objections flew hot and heavy.
-Behind the mirror in the focus group facility, the marketing team had answers for every objection.

-The marketing team pushed forward, even though the product was completely inconsistent with everyone's existing belief about the brand and because of it, trounced every physical and emotional benefit these customers wanted from the Levi's brand.

-But again and again we see the same behavior from entrepreneurs dead set on selling to a particular type of customer.
>> They settle for fool's gold rather than prospecting for real gold.

Ex:
-To make the point, consider the case of an entrepreneur who had invented a device to measure the curvature and other features of human spinal columns.

-His technology could give doctors the lowdown on backbones.

-Medical doctors, however, are a skeptical group. They are highly educated, opinionated, and slow to revise best practices.

-This didn't stop our entrepreneur.
-MDs would love his invention, he just knew it. -He aggressively pursued them. He pushed hard. They pushed back. They preferred X-rays.

-In the meantime, chiropractors discovered the new back-measuring device and loved it. It was just what they needed to get a quick read on a new patient's spinal column and to provide feedback on the progress being made by on-going patients.

-The entrepreneur, however, didn't want to sell to chiropractors. He felt they weren't professionals and that their involvement would diminish the seriousness and significance of his invention.

-He ignored the Love Group, unsuccessfully tried over and over again to sell his invention to the Hate Group, and ultimately squandered hundreds of thousands in venture capital. His business went bankrupt.

1. Recruit early adopters to provide capital to develop your new product.

2. Learn the keys to selling innovators and how they differ from selling imitators.

3. Give innovators what they want the next big thing at a bargain price. But make sure to offer a bargain price that keeps your startup in business.

-Consider mining for gold with the early adopters the customers that will get your startup out of the gate and running!

-Pete Seeger wrote the lines, "Oh, had I a golden thread and a needle so fine, I'd weave a magic strand of rainbow design."

-Beta Customers fund your R&D activities

-Getting the first person to buy is unbelievably expensive. Getting the second person to buy is unbelievably cheap

-Software products usually have an alpha stage, that is, a stage in which features are added a beta stage, in which flaws are removed and a market-ready stage, in which the product is fully groomed and broadly released to potential buyers.

-The beta version is the first version of a product that gets released outside the business.

-Beta versions help developers evaluate their products in real-world settings.

-Beta versions are evaluated by beta testers.

-Beta testers can be current or prospective customers. In the software industry, beta testers receive the beta version of a product for free or at a "bargain" price.

-Consequently, when looking for beta testers to transform into beta goldmines, picking customers with a strong need to believe is a key success factor.

-In other words, the pain-point must be particularly painful for beta goldmines or the need for market leadership must be particularly strong.

>> Give innovators what they want the next big thing at a bargain price.

>> "Build it and they will come," is just a Field of Dreams

1. product development
2. alpha test
3. beta test
4. release

-the number of innovator-buyers can be very small, sometimes as small as 2-3% of the total number of people that will ultimately make purchases in the product category.

-Consider the Dvorak keyboard. Back in 1936, Dr. Dvorak patented a simplified and much improved typewriter keyboard layout to solve the fatigue and inefficiency problems created by the gold-standard QWERTY keyboard layout.

-In today's world, the use of computers makes the streamlined Dvorak keyboard available to anyone who wants it however, the old QWERTY keyboard introduced back in the 1860s continues to dominate.

-Beta-products suffer when people see them as complex to understand or just plain difficult to use.

-The IBM PCjr of the mid-1980s provides an interesting example.

-High price and limited software aside, the product was DOA because of its tiny "Chiclet" keyboard, which made typing almost impossible.

-Evidently, when developing the PCjr, IBM hired usability testers with some mighty tiny fingers.

-Beta-test customers become beta goldmines when they become reference points for future customers, provide funding for product R&D, are top prospects for upgraded products, and supply easy access to in-the-field reactions regarding value-in-use, product fit with current practices, and product usability.

-When it comes to purchasing behavior, innovators
(1) want to buy the next new thing before having to pay full price,
(2) believe they deserve special consideration because they are taking extra time and effort to test an unproven product, and
(3) refuse to sit back and watch anyone else have something new that they don't have.

-Knowing a little bit about the buying culture of innovators can go a long way in helping entrepreneurs sell to them.

-First, innovators believe that new technology initially costs more than the old way of doing things, but that costs will come down with time.

(Ex: After all, ENIAC, the first large-scale computer, cost $500,000 back in 1946 and only performed 5,000 operations per second. Today's home computers perform billions of operations per second at less than a hundredth of ENIAC's price tag.)

-Second, innovators apparently can't say no to new technology even when they know it falls way behind on the bang-for-buck buying curve.

>> Innovators crave new technology, but fear they can't afford to buy new technology.

> Entrepreneurs to the rescue! Entrepreneurs can attract innovators by asking innovators for their help.

> By recruiting innovators as product-development partners, startups can offer opportunities for innovators to move quickly and buy new technology at bargain prices before it is introduced to the general public at nosebleed skim-the-cream prices.

1. An Anchor is your "stamp of approval." It provides "I have arrived" credibility.
(your core customers. your best friends)

2. Anchor customers pay the bills. Every business needs a steady flow of revenue even if it is low margin revenue.

-Finding anchor customers must be a top priority.

-For a moment, imagine that different kinds of businesses are like different kinds of ships.

-The Big Business ship likes to drop anchor in a calm and sunny harbor. The heavy anchor and calm waters make everyone on board the Big Business ship feel safe and secure.

-The startup ship is like a pirate sailing the open sea.
-The captain of the startup business ship doesn't like to drop anchor. The captain knows the ship only moves once the anchor is on board. Startup businesses must get an anchor on board before they can start sailing.
(with an anchor on board, you can start sailing!)

Make Partnerships
-give discounts in exchange for being a reference
-test the "newest things" on them
-make them feel like a partner

-Take a look at their customer list. There is Toyota, Cadillac, Ford, Microsoft, HP, Oracle, VISA, Ameritrade, ADP, Xerox, Siemens, Tyco, HBO, Fox, CBS, Walmart, Mary Kay, eBay, and it goes on.

-Omniture always had great products and talented employees, but their success story really got started with two anchor customers, Microsoft and eBay.

-According to their CEO, before landing these anchor customers, the Omniture sales cycle was a long and painful nine months. Prospective clients had lots of questions about Ominiture's financial stability, technology, and Service Quality.

-With the anchors on board, however, most of the prospective clients' questions were answered with two words: Microsoft and eBay. The sales cycle shrank to a manageable three months.

-For example, a local bakery got its start by providing low-priced, high-quality bread and other baked goods such as impossible-to-resist giant cookies to area restaurants, cafeterias, and catering services.

-These businesses were their anchor customers.

-With the anchors established, the bakery could make their brick-and-mortar retail store a success, charging premium prices for their tried-and-true products, and even were able to add a few new products not offered through other marketing channels.

-Anchor customers get your startup going and keep paying the operating bills through good times and bad.

-Once the factory is rolling, design engineers and marketers start looking for opportunities to swap out the manufacture of low-margin goods with high-margin goods.

-Not every manufacturer, however, has the good sense to bring anchor customers on board before investing millions of dollars in product development and/or building a new factory. Recall DuPont's cautionary tale of Kevlar.

-DuPont spent $500 million to develop and commercialize Kevlar as a replacement for nylon as tire cord, but did not lock-up tire manufacturers. The tire manufacturers decided on steel as a better alternative and took a pass on Kevlar.

-This left DuPont with a very expensive product in search of a market a market they never found. Startups can't afford this type of misstep.

Big anchors don't always suit small startups.

1. Payment Practices
-bigger anchors pay slower
2. Vetting Practices
-smaller and growing anchors set lower hurdles
3. Distribution Practices
-online and TV shopping channels may make it easier to manage inventory

-An important decision point for a startup is whether the potential anchor is more likely to foster a startup business or let it flounder and sink under the weight of their way of doing business.

-Unfortunately, we have seen far too many examples of the latter rather than the former.

-A startup the size of a dinghy goes down fast when they take on an anchor fit for an ocean liner.

-The national retailer declined to reschedule a pickup and told the new business to wait another year before trying again.

-Yet another new business shipped inventory worth hundreds of thousands of dollars to a national retailer notorious for paying vendors slowly.

-The entrepreneurs, having taken out second mortgages and maxed-out their credit cards, got nervous and tried to pressure the retailer into paying with aggressive, bordering on rude and unprofessional, phone calls and letters.

-In response, the national retailer returned the entire inventory. The entrepreneurs were then left with lots of debt, lots of inventory, and few prospects for earning any revenue.

1. A benefactor is a company with complimentary products and/or services that win if your startup wins.

2. Entrepreneurs can find benefactors in the value-chain, in the local community, and in the same industry.

3. Benefactors can help out a startup with cash as well as non-cash benefits.

-Think through the question carefully, because the answer will help you find initial investors, key strategic partners, and perhaps anchor customers.

-Learning to ask the right questions is fundamental to startup success!

-Dorothy needs to seek out benefactors and she keeps an eye open for anyone that will also greatly benefit from a trip to the Emerald City.

-At the journey's outset, Dorothy runs across a scarecrow at a crossroads. She removes a nail to take the scarecrow down from his post and finds out the scarecrow desperately wants a brain. Dorothy suggests that the scarecrow can get a brain from the Wizard in the Emerald City. The scarecrow joins Team Dorothy.

-Next, the two stumble on a rusted tin man. Dorothy liberally applies some oil from an old oil can and finds out the tin man desperately wants a heart. Dorothy suggests that the tin man can get a heart from the Wizard in the Emerald City. The tin man is now part of the crew.

- Not long afterwards, the little group is startled by a lion who attacks the travelers and tries to bite Dorothy's little dog Toto. Dorothy, heedless of the danger, swats the lion on the nose to protect her dog. Dorothy then has to comfort the lion as he whimpers about his nose, and finds out the lion is cowardly and desperately wants courage. Dorothy suggests that the cowardly lion can get courage from the Wizard in the Emerald City. The lion completes the team, and then the three benefactors successfully get Dorothy to the Emerald City.

-But the story does not all go in Dorothy's favor. Turns out, the Wizard also needs a few benefactors. He needs someone to kill the Wicked Witch of the West. When Dorothy and her team arrive, the Wizard gives everyone the royal treatment. He then gives Team Dorothy an audience and finds out Dorothy desperately wants to return home, the scarecrow desperately wants a brain, the tin man desperately wants a heart, and the lion desperately wants courage. The Wizard promises to give each benefactor what they want most if and when Dorothy brings him the broomstick of the Wicked Witch of the West. Like Dorothy, the Wizard is a born entrepreneur. He really understands how to spot benefactors.

-Products are part of a value chain that extends from components to customers.

-Understanding the value chain and where your startup fits in can be a powerful tool to give your new business legs.

-DuPont manufactures the nylon and stain-release sauce that other manufacturers and carpet mills process to make the carpeting we have in our homes and businesses.

-DuPont found benefactors to transform the carpet industry from a narrow-margin heartbreaker to a high-flying profit maker.

-DuPont managers fought commodity nylon prices for generations, but then decided to fight back by offering something that every player in the carpet industry wanted most.

-Every carpet manufacturer and retailer wanted a premium-priced carpet that consumers would recognize and trust.

-Everyone in the industry wanted a profitable product that would sell itself.

-Before Stainmaster, all carpeting looked pretty much the same to consumers.

-Since all carpeting looked the same, consumers bought on price - bad news for the entire value chain.

-Over the past decade, it has grown rapidly into one of the Internet's top 20 properties.

-To accelerate their growth, MyFamily raised more than $75 million in funding from benefactors.

-MyFamily looked at their value chain and asked the question, "Who will benefit if I succeed?"

-The answers company managers came up with were Intel, Compaq, AOL, and Kodak. Intel benefits because family-history buffs want fast computer processes to digest their mountains of digital photos.

-Compaq benefits because family-history buffs want new computers with lots of hard drive space, up-to-date memory, and Ethernet connections to access and post online genealogical information.
-AOL benefits by providing a value-added service to its growing base of family-history buff Internet subscribers.
-Kodak benefits by repositioning itself in the digital photography sector by building on the traditional strength of family photography.

-My-Family increases the need for Intel, Compaq, AOL, and Kodak products. In addition to capital raised from these investors, My-Family also received publicity from their association with these companies.

-Agilix is a software company that specializes in programs for Tablet PCs.

-In this high-tech product category, Agilix needs capital to fund R&D, but also needs access to programming code and computer hardware technology.

-To address the first need, Agilix approached Franklin Covey. Franklin Covey promotes personal planning and saw Agilix as a means to move forward in the electronic planner product space.

-Agilix got their funding and Franklin Covey got a winning product.

-Reviewers refer to Agilix-developed TabletPlanner software as marvelous, brilliant, and empowering. Competing with heavyweights like Microsoft, HP, and Corel, TabletPlanner is one of the top 10 best Tablet PC applications.

-To address needs beyond R&D capital, Agilix has gone to Microsoft and key computer hardware manufactures.

-They have become strategic partners that have provided Agilix with access to key technologies, allowing them to be on the cutting edge of this emerging field.

-As a result of these benefactor alliances, Agilix was able to be one of two software companies to have their software applications ready for the launch of Windows-based operating systems for Tablet PCs.

1. For a startup, advisory boards are more important than a board of directors.

2. Don't limit advisory boards to just include businesspeople.

3. Invite advisory board members that love your product, have a stake in staying on the leading edge of your industry, and/or people with regional, national or industry-wide name recognition.

-An advisory board can extend your social network of influence to increase its effectiveness in attracting investors, customers, and top employees.

-No new venture is too small or too large to benefit from an advisory board.

-Leveraging advisory board experience, expertise, credibility, and connections is the best way to succeed in today's competitive markets.

-A startup gains a big boost from building a national or at least a regional reputation.

-Perhaps one of the best-kept secrets of successful ventures is they know that reputation and experience counts, but that it doesn't have to be their own reputation and experience.
We can't emphasize enough what we stated earlier about finding and leveraging advocates.

-Successful entrepreneurs know that hard work, i.e., working 90+ hours a week, rarely leads to a successful new venture.

-It is the smart work of yourself and others, especially a credible and supportive advisory board, which leads to new venture success.

-Many startups make the mistake of developing their board of directors instead of beginning with an advisory board.

-Whenever you start a new venture, leverage the experience, wisdom, and creativity of advisory members to accelerate your growth and time to money.
(also connections to create your network)
>> Advisory board members should not be limited to people who have simply done things, but people who can get things done.
>> Also include people who possess local, regional, or national name recognition.
(For example, prominent politicians, retired executives or managers, and industry gurus make great advisory board members.)

2. Advisory board members can't be sued for their advice because they do not have any fiduciary responsibility to stockholders as do members of the board of directors. Thus, advisory boards are usually made up of nonpolitical, fun, and creative professionals who have a genuine interest and sincere desire to see the startup succeed.

informal
-serve only as long as needed

not liable
-not accountable if things go wrong

advise team
-give advice

2. Encourage honest feedback, i.e., stay away from friends

3. Be professional to get professional behavior

4. Shouldn't cost them anything to participate

5. Listen and take advice or they will leave

Horses for the Product: Dr. Oz??

Advisory Board: Shark Tank QVC Lady

2. NTB: need to believe
-large addressable market with large addressable pain(need)

3. DTS: dominate the situation
-deliver genuine delight in a specific usage situation

4. RTB: reason to believe
-easy to demonstrate and verify the distinction and benefit

5. QTS: quantifiable support
-quantitative evidence of product superiority

2. What is the right level of experience?
-Bring in people that are beyond, but just beyond, where you want to be.

3. How do I get them aboard?
-Provide two-page prospectus of the business, the issues the board will address, how the board will operate, and compensation.

4. What is the compensation?
-Travel, meals, perhaps some entertainment, opportunity to work with smart people on an interesting problem.
-Modest compensation after and extended period of service comparable to their hourly rate in their full-time job.

-enhance the Need to Believe

-enhance the Reason to Believe

-enhance the Unique Product Claim

Sharpening the Angle
-Unique Product Claim
-Large Addressable Need
-Dominate the Situation
-Reason to Believe
-Quantifiable Support

Leveraging Leverage
-Ride Horses
-Prospect for Beta-Goldmines
-Land an Anchor
-Seek Out Benefactors
-Build an Advisory Board

Think Big and Act Big
-Puff it Up
-Grow with Borrowed Interest
-Master Social Media & Publicity
-Get Your Swagger On
-Reach Out with Crowdfunding
-Dominate Trade Shows

-How to market on a budget?

-How to gain credibility when you are a new brand?

Don't act small
-Potential Customers want stable and reliable

-Business Advisors want vital and growing

-Suppliers and Employees want dependable and industry leaders

-Partners and Investors want blue chip and reputation builders

But you are not established, still unproven, a niche player, and don't have a track record

1. Use the elevator pitch to advance the sale and not to make a final sale.

2. An elevator pitch must hit hard and be brief. If at all possible, grab attention with a memorable product demonstration.

-the 30 second to 2 minute elevator ride.
-It is the amount of time that VCs will spare to identify good ideas and successful business teams that have promise and eliminate those that are not ready for funding

-When putting together an elevator pitch, we want to hit hard with the most important information up front.
-We want investors to get interested enough to invite us back to make a bigger, more detailed presentation.

2. Opportunity
-Describe the customers, competitors, how the product or service makes the competitors irrelevant, and how the product makes money. Investors want to see the potential for big revenues and big returns. Remember that if there are no competitors, then there usually are no customers, which in turn means that there is little or no money to be made.

3. Status
-Present clear financials and make note of market traction. Highlight letters of intent, product orders, and better yet, product sales.

4. Ask
-Make a case for your valuation of the startup and ask for an investment to accomplish the next set of important goals such as manufacturing products to fill orders, hiring staff to expand the sales or service organization, or expanding into new locations. Balance investment with reward.

5. Remember
-Demonstrate how the product is validated with interested customers. Highlight the contributions of business team members to the startup. Close with a short "pump up" reminder with an industry opinion leader weighing in on the broad appeal of the product.

1. Social Media empowers small players to think and act big. SIze and money are no longer barriers to starting a successful business.

2. Facebook, Twitter, Youtube, Product Blogs, and Google each have their own rules for success. Informed use of all five is needed to beat Big Business at the Social Media game.

-In this new era of Internet and social media, everyone can be a star everyone can have a voice everyone has market access.

>> Startups can wear very big adult shoes even when they have very tiny baby feet.

Think big and act big, but don't spend money like you are big. DON'T try to buy success. Learn to earn success. DON'T bring in corporate marketers that haven't worked with small budgets. DO use new technology and tactics that level the playing field.

-Technologies such as social media and SMS communications, as well as low-barrier-of-entry market channels such as the Internet now give businesses of every size an opportunity to successfully compete locally and globally.

-Knowing how to think big and act big without stumbling around can make or break a startup.

Startup Location Examples: where would you meet with your potential client? your dirty closet office space? NO. rent an office space for a day. Leverage your contacts (putting plaque on the front entrance with all other company names in the building have the secretary be in on it too)

-When startups go where the money is, and they must, their competitors will be big in terms of money, resources, personnel, and image.
-Customers and investors often equate big with safe. "It's safe to do business with Big Blue because, well, they're big." IBM, aka Big Blue, made a living on this line of reasoning for years.
-Unlike the happy thoughts that come to mind when doing business with a large, well known company, many unhappy thoughts may come to mind when doing business with a startup.
-Potential customers prefer buying from a stable, dependable company, but this business is not established.
-Business advisors prefer working with a viable, ongoing company, but this business is unproven.
-Suppliers and employees prefer teaming up with industry leaders, but this business is a niche player.
-Partners and Investors prefer throwing support behind a reputation builder, but this business doesn't have a blue chip track record and may even harm one's reputation.

New businesses are stressed. When they swim frantically around like little fish or bite off more spending than they can chew, they will choke and fail. When they puff up like a puffer fish they often succeed. One way to puff up is to dominate a vertical market where you have a natural advantage before expanding to other markets.

Ex:
Francois Lane, serial entrepreneur and co-founder of CakeMail a whitelabel email marketing service, insists that new businesses "must select one vertical market and focus on complete world domination of this specific market." He also points out that new businesses are best off when selecting markets that have their own network of trade shows and industry publications. When you are small, it is important to attack a market where it is easy to identify and connect with marketing channels.

Social media provides a spectacular way to puff up your market presence. For many startups, your website is your company. Build a look and feel for your website that is equivalent to an IBM. Show real people. Show a brick and mortar location. Include a telephone number. Learn what makes a productive splash page. Highlight awards, accomplishments, notable customers, and interesting product stories. Blog the victories. Twitter the fun. Facebook for friends. Get involved with a cause popular with social media followers. Bring your pitch to life with YouTube.

Ex: Puff it Up: Phone Service
-BJ's brother's wife acting as his secretary and having all calls forwarded to her number and then saying "please hold Ill connect you with ____ or ____" but really it's still her playing those roles


NPD Test #2

1. Don't do it alone. Be smart, find some help, and "ride horses" to the bank.

2. Look for a love-group and empower the group to help promote and gain market access for your new product.

-find the sort of horses that you can ride to the bank

-a good horse will be a champion for your competitive angle

-identify and partner with people who have the skills, energy, and influence you need to succeed with your product and target market
(after all, with startups and other types of ventures, "it's not what you know, but who you know" that determines success or failure.)

2. Evangelists
-I'll prepare the way by stirring interest and awareness

3. Patrons
-you pat my back and I'll pat yours

-they desire recognition
-they want credibility among peers
-stock to increase their social equity
-being part of a winning team

2. Trade Association President
-angles with "wow factors" put them on the cutting edge

3. Local Expert in your State
-looking credible because he/she is a "thought leader." Experts love to jump on a winning bandwagon

-makes bath time easy for mom and makes baby feel comfortable

-warm to the touch
-non-slip
-hangs in storage: flat
-doesn't absorb water
-folds easily
-fits into bathroom sink
-comfortable to baby
-makes it a bonding experience and there are no distractions

Who would be a Horse for this product?
-Ellen!!

Ride Horses-Evangelists & Patrons
-PUJ Tub and Rachael Ray & Kelly Ripa guessing game

-BIC pens "for her" (pink and purple) designed to fit a woman's hand

-very important to growing a startup business

(also known as product advocates, or the Love Group)

Ex: think of them as a huge herd of wild stallions that jump to action at your command and set a positive, enthusiastic tone for everyone that sees them.

-DDS developed the first management software to connect the operators to the front desk, minimizing billing loss and confusion.
(but even after successfully developing the software and addressing a sizable pain-point, the venture would fail unless it found a way to persuasively and efficiently reach the target market--dentists)

-DDS at first thought they had only 2 choices:
1. hire a company sales force or
2. outsource the selling to independent sales agents such as dental product distributors or value-added resellers.

but Dentrix had a third option when they started looking for leverage

Kimball's hard work in uncovering and solving everyday pain for dentists gave Dentrix a sharp competitive angle
-it wasn't difficult to find experienced and credible dental-industry salespeople that believed in Dentrix and wanted to take a chance on selling it for a commission and stake in the company rather than for a fixed salary

Dentrix leveraged their leverage and found salespeople to help them do what they couldn't do or afford to do on their own

-learned hot noble gases are used as insulators inside of dry suits to keep divers warm
-envisioned how the "dry suit" technology could be adapted to insulate winter gear
-while insulated clothing is nothing new, using thermostat-valve-controlled linings in clothing to regulate temperature is new
-no bulk, no layering, just turn the dial up and down
(if the skier is cold, add a little argon gas to the jacket lining if a skier is hot, open the valve and release some argon to cool down)

-from the outset, he understood how to network and recruit product advocates.
-his biggest successes have been with a local mayor that wants to make his city the skiing Mecca of the US, who has introduced him to a number of leading outdoor companies and investors.
(one company is not a primary development partner and several others helped fund the business)
-he was also introduced to an industry "graybeard" (someone w/ decades of experience in the outdoor markets) who began assisting the company as a consultant
-he featured this industry insider whenever pitching Klymit to investors

-don't use time and energy to fight cynics and hecklers. learn to focus on the love and take your product to the market through the eyes of those that love it

-"Who is in your Love Group?"
>> most startup marketers, similar to most Big Business marketers, can't identify who faithfully purchases their products beyond offering up a few Demographics like average age, gender split, and regional sales percentages
(startups can't afford to be that unobservant)

-The Love Group is their lifeblood. Just like a political candidate, startups must know and retain their Love Group while at the same time helping the fence-sitters see their product through the eyes of the Love Group

-New companies don't need 50% of the popular vote to succeed, but do need a strong group of core customers that they thoroughly understand. By thoroughly understand, we are talking about drawing together a profile that looks more like an ethnographic Mona Lisa than a demographic stick figure. What do customers look like, how do they express themselves, what do they read and watch, where do they live, what vehicles do they drive, what are their hopes and aspirations, and most important, which of our product features and benefits really get them going?

-Special interest groups were successfully encouraging legislation to reduce, phase out, and even ban the use of plastic packaging and products. The American Plastics Council (APC) came to the rescue with a flashy advertising campaign to inform the public about the substantial efforts the industry was making toward recycling and reuse, and that products and packaging made of plastic actually saved resources compared to other alternatives such as paper or metal. Millions of advertising dollars were spent, expectations were high, but success was nowhere to be found.

>> Directly attacking the concerns of the Hate Group didn't convince anyone and ultimately led to the APC being ordered by a dozen or so state Attorneys General to desist in their "false" advertising claims about the availability of plastics recycling.

-The APC failed because managers ignored the Love Group in favor of attacking the Hate Group, but they learned their lesson. The next round of advertising built on the beliefs of plastics advocates. These messages highlighted the noble qualities of plastics - personal safety and health - that researchers had identified in personal interviews with the plastics Love Group. This time the positive results were staggering.

- They raise an important point and put themselves on the threshold of discovering what really sets a successful startup marketer apart from a frustrated would-be entrepreneur.

-Successful startup marketers don't expect their Love Group to find them they aggressively seek out their Love Group. >> "Build it and they will come" rarely works in today's world of information overload and product proliferation

-Realizing we don't know our Love Group is the first step in beginning to prospect to find a Love Group.

-There are many ways to prospect for a Love Group, but we suggest bringing eight to twelve people together that may benefit from the new product, feeding them pizza, and soliciting their impressions.

-After explaining the product concept, ask questions like, "Who would love this product? What would they love about it? Where and how would they use it?"

- Listen and note the responses, but more importantly, observe the participants and look for those few who are completely engaged and articulate.
-Ask them back to another session so that you can find out more, because they are your Love Group.

-One prospecting session will not be enough to establish a detailed profile for the Love Group. In our experience, about three to five prospecting sessions are needed, and they should be spread across a variety of geographic regions.

-At the time, executives wanted to branch out into new areas of clothing over concerns that too high a percentage of their sales came from jeans.

-They wanted to grow by penetrating new markets. Levi Strauss did their homework. They examined suit-buying preferences, shopping practices, lifestyles, and demographics for 2,000 men.

-They uncovered five distinct segments in the market: the traditionalist, the classic independent, the utilitarian, the trendy casual, and the price shopper.

-The marketing quickly focused in on the "classic independent" as the target, i.e., the tailored suit Love Group.

-The segment accounted for 21% of male shoppers. They purchased about one-half of men's natural-fiber clothing products, were not price-sensitive, generally shopped for clothes in specialty stores, and strongly preferred tailored clothing rather than buying it off the rack.

-The Levi Tailored Classics marketing team put together focus groups of the classic independents to prove the new product concept.

-The focus group testing went well until it was suggested that (1) the suits would be sold off the rack, and (2) the suits would be manufactured by Levi Strauss.

-At that point objections flew hot and heavy.
-Behind the mirror in the focus group facility, the marketing team had answers for every objection.

-The marketing team pushed forward, even though the product was completely inconsistent with everyone's existing belief about the brand and because of it, trounced every physical and emotional benefit these customers wanted from the Levi's brand.

-But again and again we see the same behavior from entrepreneurs dead set on selling to a particular type of customer.
>> They settle for fool's gold rather than prospecting for real gold.

Ex:
-To make the point, consider the case of an entrepreneur who had invented a device to measure the curvature and other features of human spinal columns.

-His technology could give doctors the lowdown on backbones.

-Medical doctors, however, are a skeptical group. They are highly educated, opinionated, and slow to revise best practices.

-This didn't stop our entrepreneur.
-MDs would love his invention, he just knew it. -He aggressively pursued them. He pushed hard. They pushed back. They preferred X-rays.

-In the meantime, chiropractors discovered the new back-measuring device and loved it. It was just what they needed to get a quick read on a new patient's spinal column and to provide feedback on the progress being made by on-going patients.

-The entrepreneur, however, didn't want to sell to chiropractors. He felt they weren't professionals and that their involvement would diminish the seriousness and significance of his invention.

-He ignored the Love Group, unsuccessfully tried over and over again to sell his invention to the Hate Group, and ultimately squandered hundreds of thousands in venture capital. His business went bankrupt.

1. Recruit early adopters to provide capital to develop your new product.

2. Learn the keys to selling innovators and how they differ from selling imitators.

3. Give innovators what they want the next big thing at a bargain price. But make sure to offer a bargain price that keeps your startup in business.

-Consider mining for gold with the early adopters the customers that will get your startup out of the gate and running!

-Pete Seeger wrote the lines, "Oh, had I a golden thread and a needle so fine, I'd weave a magic strand of rainbow design."

-Beta Customers fund your R&D activities

-Getting the first person to buy is unbelievably expensive. Getting the second person to buy is unbelievably cheap

-Software products usually have an alpha stage, that is, a stage in which features are added a beta stage, in which flaws are removed and a market-ready stage, in which the product is fully groomed and broadly released to potential buyers.

-The beta version is the first version of a product that gets released outside the business.

-Beta versions help developers evaluate their products in real-world settings.

-Beta versions are evaluated by beta testers.

-Beta testers can be current or prospective customers. In the software industry, beta testers receive the beta version of a product for free or at a "bargain" price.

-Consequently, when looking for beta testers to transform into beta goldmines, picking customers with a strong need to believe is a key success factor.

-In other words, the pain-point must be particularly painful for beta goldmines or the need for market leadership must be particularly strong.

>> Give innovators what they want the next big thing at a bargain price.

>> "Build it and they will come," is just a Field of Dreams

1. product development
2. alpha test
3. beta test
4. release

-the number of innovator-buyers can be very small, sometimes as small as 2-3% of the total number of people that will ultimately make purchases in the product category.

-Consider the Dvorak keyboard. Back in 1936, Dr. Dvorak patented a simplified and much improved typewriter keyboard layout to solve the fatigue and inefficiency problems created by the gold-standard QWERTY keyboard layout.

-In today's world, the use of computers makes the streamlined Dvorak keyboard available to anyone who wants it however, the old QWERTY keyboard introduced back in the 1860s continues to dominate.

-Beta-products suffer when people see them as complex to understand or just plain difficult to use.

-The IBM PCjr of the mid-1980s provides an interesting example.

-High price and limited software aside, the product was DOA because of its tiny "Chiclet" keyboard, which made typing almost impossible.

-Evidently, when developing the PCjr, IBM hired usability testers with some mighty tiny fingers.

-Beta-test customers become beta goldmines when they become reference points for future customers, provide funding for product R&D, are top prospects for upgraded products, and supply easy access to in-the-field reactions regarding value-in-use, product fit with current practices, and product usability.

-When it comes to purchasing behavior, innovators
(1) want to buy the next new thing before having to pay full price,
(2) believe they deserve special consideration because they are taking extra time and effort to test an unproven product, and
(3) refuse to sit back and watch anyone else have something new that they don't have.

-Knowing a little bit about the buying culture of innovators can go a long way in helping entrepreneurs sell to them.

-First, innovators believe that new technology initially costs more than the old way of doing things, but that costs will come down with time.

(Ex: After all, ENIAC, the first large-scale computer, cost $500,000 back in 1946 and only performed 5,000 operations per second. Today's home computers perform billions of operations per second at less than a hundredth of ENIAC's price tag.)

-Second, innovators apparently can't say no to new technology even when they know it falls way behind on the bang-for-buck buying curve.

>> Innovators crave new technology, but fear they can't afford to buy new technology.

> Entrepreneurs to the rescue! Entrepreneurs can attract innovators by asking innovators for their help.

> By recruiting innovators as product-development partners, startups can offer opportunities for innovators to move quickly and buy new technology at bargain prices before it is introduced to the general public at nosebleed skim-the-cream prices.

1. An Anchor is your "stamp of approval." It provides "I have arrived" credibility.
(your core customers. your best friends)

2. Anchor customers pay the bills. Every business needs a steady flow of revenue even if it is low margin revenue.

-Finding anchor customers must be a top priority.

-For a moment, imagine that different kinds of businesses are like different kinds of ships.

-The Big Business ship likes to drop anchor in a calm and sunny harbor. The heavy anchor and calm waters make everyone on board the Big Business ship feel safe and secure.

-The startup ship is like a pirate sailing the open sea.
-The captain of the startup business ship doesn't like to drop anchor. The captain knows the ship only moves once the anchor is on board. Startup businesses must get an anchor on board before they can start sailing.
(with an anchor on board, you can start sailing!)

Make Partnerships
-give discounts in exchange for being a reference
-test the "newest things" on them
-make them feel like a partner

-Take a look at their customer list. There is Toyota, Cadillac, Ford, Microsoft, HP, Oracle, VISA, Ameritrade, ADP, Xerox, Siemens, Tyco, HBO, Fox, CBS, Walmart, Mary Kay, eBay, and it goes on.

-Omniture always had great products and talented employees, but their success story really got started with two anchor customers, Microsoft and eBay.

-According to their CEO, before landing these anchor customers, the Omniture sales cycle was a long and painful nine months. Prospective clients had lots of questions about Ominiture's financial stability, technology, and Service Quality.

-With the anchors on board, however, most of the prospective clients' questions were answered with two words: Microsoft and eBay. The sales cycle shrank to a manageable three months.

-For example, a local bakery got its start by providing low-priced, high-quality bread and other baked goods such as impossible-to-resist giant cookies to area restaurants, cafeterias, and catering services.

-These businesses were their anchor customers.

-With the anchors established, the bakery could make their brick-and-mortar retail store a success, charging premium prices for their tried-and-true products, and even were able to add a few new products not offered through other marketing channels.

-Anchor customers get your startup going and keep paying the operating bills through good times and bad.

-Once the factory is rolling, design engineers and marketers start looking for opportunities to swap out the manufacture of low-margin goods with high-margin goods.

-Not every manufacturer, however, has the good sense to bring anchor customers on board before investing millions of dollars in product development and/or building a new factory. Recall DuPont's cautionary tale of Kevlar.

-DuPont spent $500 million to develop and commercialize Kevlar as a replacement for nylon as tire cord, but did not lock-up tire manufacturers. The tire manufacturers decided on steel as a better alternative and took a pass on Kevlar.

-This left DuPont with a very expensive product in search of a market a market they never found. Startups can't afford this type of misstep.

Big anchors don't always suit small startups.

1. Payment Practices
-bigger anchors pay slower
2. Vetting Practices
-smaller and growing anchors set lower hurdles
3. Distribution Practices
-online and TV shopping channels may make it easier to manage inventory

-An important decision point for a startup is whether the potential anchor is more likely to foster a startup business or let it flounder and sink under the weight of their way of doing business.

-Unfortunately, we have seen far too many examples of the latter rather than the former.

-A startup the size of a dinghy goes down fast when they take on an anchor fit for an ocean liner.

-The national retailer declined to reschedule a pickup and told the new business to wait another year before trying again.

-Yet another new business shipped inventory worth hundreds of thousands of dollars to a national retailer notorious for paying vendors slowly.

-The entrepreneurs, having taken out second mortgages and maxed-out their credit cards, got nervous and tried to pressure the retailer into paying with aggressive, bordering on rude and unprofessional, phone calls and letters.

-In response, the national retailer returned the entire inventory. The entrepreneurs were then left with lots of debt, lots of inventory, and few prospects for earning any revenue.

1. A benefactor is a company with complimentary products and/or services that win if your startup wins.

2. Entrepreneurs can find benefactors in the value-chain, in the local community, and in the same industry.

3. Benefactors can help out a startup with cash as well as non-cash benefits.

-Think through the question carefully, because the answer will help you find initial investors, key strategic partners, and perhaps anchor customers.

-Learning to ask the right questions is fundamental to startup success!

-Dorothy needs to seek out benefactors and she keeps an eye open for anyone that will also greatly benefit from a trip to the Emerald City.

-At the journey's outset, Dorothy runs across a scarecrow at a crossroads. She removes a nail to take the scarecrow down from his post and finds out the scarecrow desperately wants a brain. Dorothy suggests that the scarecrow can get a brain from the Wizard in the Emerald City. The scarecrow joins Team Dorothy.

-Next, the two stumble on a rusted tin man. Dorothy liberally applies some oil from an old oil can and finds out the tin man desperately wants a heart. Dorothy suggests that the tin man can get a heart from the Wizard in the Emerald City. The tin man is now part of the crew.

- Not long afterwards, the little group is startled by a lion who attacks the travelers and tries to bite Dorothy's little dog Toto. Dorothy, heedless of the danger, swats the lion on the nose to protect her dog. Dorothy then has to comfort the lion as he whimpers about his nose, and finds out the lion is cowardly and desperately wants courage. Dorothy suggests that the cowardly lion can get courage from the Wizard in the Emerald City. The lion completes the team, and then the three benefactors successfully get Dorothy to the Emerald City.

-But the story does not all go in Dorothy's favor. Turns out, the Wizard also needs a few benefactors. He needs someone to kill the Wicked Witch of the West. When Dorothy and her team arrive, the Wizard gives everyone the royal treatment. He then gives Team Dorothy an audience and finds out Dorothy desperately wants to return home, the scarecrow desperately wants a brain, the tin man desperately wants a heart, and the lion desperately wants courage. The Wizard promises to give each benefactor what they want most if and when Dorothy brings him the broomstick of the Wicked Witch of the West. Like Dorothy, the Wizard is a born entrepreneur. He really understands how to spot benefactors.

-Products are part of a value chain that extends from components to customers.

-Understanding the value chain and where your startup fits in can be a powerful tool to give your new business legs.

-DuPont manufactures the nylon and stain-release sauce that other manufacturers and carpet mills process to make the carpeting we have in our homes and businesses.

-DuPont found benefactors to transform the carpet industry from a narrow-margin heartbreaker to a high-flying profit maker.

-DuPont managers fought commodity nylon prices for generations, but then decided to fight back by offering something that every player in the carpet industry wanted most.

-Every carpet manufacturer and retailer wanted a premium-priced carpet that consumers would recognize and trust.

-Everyone in the industry wanted a profitable product that would sell itself.

-Before Stainmaster, all carpeting looked pretty much the same to consumers.

-Since all carpeting looked the same, consumers bought on price - bad news for the entire value chain.

-Over the past decade, it has grown rapidly into one of the Internet's top 20 properties.

-To accelerate their growth, MyFamily raised more than $75 million in funding from benefactors.

-MyFamily looked at their value chain and asked the question, "Who will benefit if I succeed?"

-The answers company managers came up with were Intel, Compaq, AOL, and Kodak. Intel benefits because family-history buffs want fast computer processes to digest their mountains of digital photos.

-Compaq benefits because family-history buffs want new computers with lots of hard drive space, up-to-date memory, and Ethernet connections to access and post online genealogical information.
-AOL benefits by providing a value-added service to its growing base of family-history buff Internet subscribers.
-Kodak benefits by repositioning itself in the digital photography sector by building on the traditional strength of family photography.

-My-Family increases the need for Intel, Compaq, AOL, and Kodak products. In addition to capital raised from these investors, My-Family also received publicity from their association with these companies.

-Agilix is a software company that specializes in programs for Tablet PCs.

-In this high-tech product category, Agilix needs capital to fund R&D, but also needs access to programming code and computer hardware technology.

-To address the first need, Agilix approached Franklin Covey. Franklin Covey promotes personal planning and saw Agilix as a means to move forward in the electronic planner product space.

-Agilix got their funding and Franklin Covey got a winning product.

-Reviewers refer to Agilix-developed TabletPlanner software as marvelous, brilliant, and empowering. Competing with heavyweights like Microsoft, HP, and Corel, TabletPlanner is one of the top 10 best Tablet PC applications.

-To address needs beyond R&D capital, Agilix has gone to Microsoft and key computer hardware manufactures.

-They have become strategic partners that have provided Agilix with access to key technologies, allowing them to be on the cutting edge of this emerging field.

-As a result of these benefactor alliances, Agilix was able to be one of two software companies to have their software applications ready for the launch of Windows-based operating systems for Tablet PCs.

1. For a startup, advisory boards are more important than a board of directors.

2. Don't limit advisory boards to just include businesspeople.

3. Invite advisory board members that love your product, have a stake in staying on the leading edge of your industry, and/or people with regional, national or industry-wide name recognition.

-An advisory board can extend your social network of influence to increase its effectiveness in attracting investors, customers, and top employees.

-No new venture is too small or too large to benefit from an advisory board.

-Leveraging advisory board experience, expertise, credibility, and connections is the best way to succeed in today's competitive markets.

-A startup gains a big boost from building a national or at least a regional reputation.

-Perhaps one of the best-kept secrets of successful ventures is they know that reputation and experience counts, but that it doesn't have to be their own reputation and experience.
We can't emphasize enough what we stated earlier about finding and leveraging advocates.

-Successful entrepreneurs know that hard work, i.e., working 90+ hours a week, rarely leads to a successful new venture.

-It is the smart work of yourself and others, especially a credible and supportive advisory board, which leads to new venture success.

-Many startups make the mistake of developing their board of directors instead of beginning with an advisory board.

-Whenever you start a new venture, leverage the experience, wisdom, and creativity of advisory members to accelerate your growth and time to money.
(also connections to create your network)
>> Advisory board members should not be limited to people who have simply done things, but people who can get things done.
>> Also include people who possess local, regional, or national name recognition.
(For example, prominent politicians, retired executives or managers, and industry gurus make great advisory board members.)

2. Advisory board members can't be sued for their advice because they do not have any fiduciary responsibility to stockholders as do members of the board of directors. Thus, advisory boards are usually made up of nonpolitical, fun, and creative professionals who have a genuine interest and sincere desire to see the startup succeed.

informal
-serve only as long as needed

not liable
-not accountable if things go wrong

advise team
-give advice

2. Encourage honest feedback, i.e., stay away from friends

3. Be professional to get professional behavior

4. Shouldn't cost them anything to participate

5. Listen and take advice or they will leave

Horses for the Product: Dr. Oz??

Advisory Board: Shark Tank QVC Lady

2. NTB: need to believe
-large addressable market with large addressable pain(need)

3. DTS: dominate the situation
-deliver genuine delight in a specific usage situation

4. RTB: reason to believe
-easy to demonstrate and verify the distinction and benefit

5. QTS: quantifiable support
-quantitative evidence of product superiority

2. What is the right level of experience?
-Bring in people that are beyond, but just beyond, where you want to be.

3. How do I get them aboard?
-Provide two-page prospectus of the business, the issues the board will address, how the board will operate, and compensation.

4. What is the compensation?
-Travel, meals, perhaps some entertainment, opportunity to work with smart people on an interesting problem.
-Modest compensation after and extended period of service comparable to their hourly rate in their full-time job.

-enhance the Need to Believe

-enhance the Reason to Believe

-enhance the Unique Product Claim

Sharpening the Angle
-Unique Product Claim
-Large Addressable Need
-Dominate the Situation
-Reason to Believe
-Quantifiable Support

Leveraging Leverage
-Ride Horses
-Prospect for Beta-Goldmines
-Land an Anchor
-Seek Out Benefactors
-Build an Advisory Board

Think Big and Act Big
-Puff it Up
-Grow with Borrowed Interest
-Master Social Media & Publicity
-Get Your Swagger On
-Reach Out with Crowdfunding
-Dominate Trade Shows

-How to market on a budget?

-How to gain credibility when you are a new brand?

Don't act small
-Potential Customers want stable and reliable

-Business Advisors want vital and growing

-Suppliers and Employees want dependable and industry leaders

-Partners and Investors want blue chip and reputation builders

But you are not established, still unproven, a niche player, and don't have a track record

1. Use the elevator pitch to advance the sale and not to make a final sale.

2. An elevator pitch must hit hard and be brief. If at all possible, grab attention with a memorable product demonstration.

-the 30 second to 2 minute elevator ride.
-It is the amount of time that VCs will spare to identify good ideas and successful business teams that have promise and eliminate those that are not ready for funding

-When putting together an elevator pitch, we want to hit hard with the most important information up front.
-We want investors to get interested enough to invite us back to make a bigger, more detailed presentation.

2. Opportunity
-Describe the customers, competitors, how the product or service makes the competitors irrelevant, and how the product makes money. Investors want to see the potential for big revenues and big returns. Remember that if there are no competitors, then there usually are no customers, which in turn means that there is little or no money to be made.

3. Status
-Present clear financials and make note of market traction. Highlight letters of intent, product orders, and better yet, product sales.

4. Ask
-Make a case for your valuation of the startup and ask for an investment to accomplish the next set of important goals such as manufacturing products to fill orders, hiring staff to expand the sales or service organization, or expanding into new locations. Balance investment with reward.

5. Remember
-Demonstrate how the product is validated with interested customers. Highlight the contributions of business team members to the startup. Close with a short "pump up" reminder with an industry opinion leader weighing in on the broad appeal of the product.

1. Social Media empowers small players to think and act big. SIze and money are no longer barriers to starting a successful business.

2. Facebook, Twitter, Youtube, Product Blogs, and Google each have their own rules for success. Informed use of all five is needed to beat Big Business at the Social Media game.

-In this new era of Internet and social media, everyone can be a star everyone can have a voice everyone has market access.

>> Startups can wear very big adult shoes even when they have very tiny baby feet.

Think big and act big, but don't spend money like you are big. DON'T try to buy success. Learn to earn success. DON'T bring in corporate marketers that haven't worked with small budgets. DO use new technology and tactics that level the playing field.

-Technologies such as social media and SMS communications, as well as low-barrier-of-entry market channels such as the Internet now give businesses of every size an opportunity to successfully compete locally and globally.

-Knowing how to think big and act big without stumbling around can make or break a startup.

Startup Location Examples: where would you meet with your potential client? your dirty closet office space? NO. rent an office space for a day. Leverage your contacts (putting plaque on the front entrance with all other company names in the building have the secretary be in on it too)

-When startups go where the money is, and they must, their competitors will be big in terms of money, resources, personnel, and image.
-Customers and investors often equate big with safe. "It's safe to do business with Big Blue because, well, they're big." IBM, aka Big Blue, made a living on this line of reasoning for years.
-Unlike the happy thoughts that come to mind when doing business with a large, well known company, many unhappy thoughts may come to mind when doing business with a startup.
-Potential customers prefer buying from a stable, dependable company, but this business is not established.
-Business advisors prefer working with a viable, ongoing company, but this business is unproven.
-Suppliers and employees prefer teaming up with industry leaders, but this business is a niche player.
-Partners and Investors prefer throwing support behind a reputation builder, but this business doesn't have a blue chip track record and may even harm one's reputation.

New businesses are stressed. When they swim frantically around like little fish or bite off more spending than they can chew, they will choke and fail. When they puff up like a puffer fish they often succeed. One way to puff up is to dominate a vertical market where you have a natural advantage before expanding to other markets.

Ex:
Francois Lane, serial entrepreneur and co-founder of CakeMail a whitelabel email marketing service, insists that new businesses "must select one vertical market and focus on complete world domination of this specific market." He also points out that new businesses are best off when selecting markets that have their own network of trade shows and industry publications. When you are small, it is important to attack a market where it is easy to identify and connect with marketing channels.

Social media provides a spectacular way to puff up your market presence. For many startups, your website is your company. Build a look and feel for your website that is equivalent to an IBM. Show real people. Show a brick and mortar location. Include a telephone number. Learn what makes a productive splash page. Highlight awards, accomplishments, notable customers, and interesting product stories. Blog the victories. Twitter the fun. Facebook for friends. Get involved with a cause popular with social media followers. Bring your pitch to life with YouTube.

Ex: Puff it Up: Phone Service
-BJ's brother's wife acting as his secretary and having all calls forwarded to her number and then saying "please hold Ill connect you with ____ or ____" but really it's still her playing those roles


NPD Test #2

1. Don't do it alone. Be smart, find some help, and "ride horses" to the bank.

2. Look for a love-group and empower the group to help promote and gain market access for your new product.

-find the sort of horses that you can ride to the bank

-a good horse will be a champion for your competitive angle

-identify and partner with people who have the skills, energy, and influence you need to succeed with your product and target market
(after all, with startups and other types of ventures, "it's not what you know, but who you know" that determines success or failure.)

2. Evangelists
-I'll prepare the way by stirring interest and awareness

3. Patrons
-you pat my back and I'll pat yours

-they desire recognition
-they want credibility among peers
-stock to increase their social equity
-being part of a winning team

2. Trade Association President
-angles with "wow factors" put them on the cutting edge

3. Local Expert in your State
-looking credible because he/she is a "thought leader." Experts love to jump on a winning bandwagon

-makes bath time easy for mom and makes baby feel comfortable

-warm to the touch
-non-slip
-hangs in storage: flat
-doesn't absorb water
-folds easily
-fits into bathroom sink
-comfortable to baby
-makes it a bonding experience and there are no distractions

Who would be a Horse for this product?
-Ellen!!

Ride Horses-Evangelists & Patrons
-PUJ Tub and Rachael Ray & Kelly Ripa guessing game

-BIC pens "for her" (pink and purple) designed to fit a woman's hand

-very important to growing a startup business

(also known as product advocates, or the Love Group)

Ex: think of them as a huge herd of wild stallions that jump to action at your command and set a positive, enthusiastic tone for everyone that sees them.

-DDS developed the first management software to connect the operators to the front desk, minimizing billing loss and confusion.
(but even after successfully developing the software and addressing a sizable pain-point, the venture would fail unless it found a way to persuasively and efficiently reach the target market--dentists)

-DDS at first thought they had only 2 choices:
1. hire a company sales force or
2. outsource the selling to independent sales agents such as dental product distributors or value-added resellers.

but Dentrix had a third option when they started looking for leverage

Kimball's hard work in uncovering and solving everyday pain for dentists gave Dentrix a sharp competitive angle
-it wasn't difficult to find experienced and credible dental-industry salespeople that believed in Dentrix and wanted to take a chance on selling it for a commission and stake in the company rather than for a fixed salary

Dentrix leveraged their leverage and found salespeople to help them do what they couldn't do or afford to do on their own

-learned hot noble gases are used as insulators inside of dry suits to keep divers warm
-envisioned how the "dry suit" technology could be adapted to insulate winter gear
-while insulated clothing is nothing new, using thermostat-valve-controlled linings in clothing to regulate temperature is new
-no bulk, no layering, just turn the dial up and down
(if the skier is cold, add a little argon gas to the jacket lining if a skier is hot, open the valve and release some argon to cool down)

-from the outset, he understood how to network and recruit product advocates.
-his biggest successes have been with a local mayor that wants to make his city the skiing Mecca of the US, who has introduced him to a number of leading outdoor companies and investors.
(one company is not a primary development partner and several others helped fund the business)
-he was also introduced to an industry "graybeard" (someone w/ decades of experience in the outdoor markets) who began assisting the company as a consultant
-he featured this industry insider whenever pitching Klymit to investors

-don't use time and energy to fight cynics and hecklers. learn to focus on the love and take your product to the market through the eyes of those that love it

-"Who is in your Love Group?"
>> most startup marketers, similar to most Big Business marketers, can't identify who faithfully purchases their products beyond offering up a few Demographics like average age, gender split, and regional sales percentages
(startups can't afford to be that unobservant)

-The Love Group is their lifeblood. Just like a political candidate, startups must know and retain their Love Group while at the same time helping the fence-sitters see their product through the eyes of the Love Group

-New companies don't need 50% of the popular vote to succeed, but do need a strong group of core customers that they thoroughly understand. By thoroughly understand, we are talking about drawing together a profile that looks more like an ethnographic Mona Lisa than a demographic stick figure. What do customers look like, how do they express themselves, what do they read and watch, where do they live, what vehicles do they drive, what are their hopes and aspirations, and most important, which of our product features and benefits really get them going?

-Special interest groups were successfully encouraging legislation to reduce, phase out, and even ban the use of plastic packaging and products. The American Plastics Council (APC) came to the rescue with a flashy advertising campaign to inform the public about the substantial efforts the industry was making toward recycling and reuse, and that products and packaging made of plastic actually saved resources compared to other alternatives such as paper or metal. Millions of advertising dollars were spent, expectations were high, but success was nowhere to be found.

>> Directly attacking the concerns of the Hate Group didn't convince anyone and ultimately led to the APC being ordered by a dozen or so state Attorneys General to desist in their "false" advertising claims about the availability of plastics recycling.

-The APC failed because managers ignored the Love Group in favor of attacking the Hate Group, but they learned their lesson. The next round of advertising built on the beliefs of plastics advocates. These messages highlighted the noble qualities of plastics - personal safety and health - that researchers had identified in personal interviews with the plastics Love Group. This time the positive results were staggering.

- They raise an important point and put themselves on the threshold of discovering what really sets a successful startup marketer apart from a frustrated would-be entrepreneur.

-Successful startup marketers don't expect their Love Group to find them they aggressively seek out their Love Group. >> "Build it and they will come" rarely works in today's world of information overload and product proliferation

-Realizing we don't know our Love Group is the first step in beginning to prospect to find a Love Group.

-There are many ways to prospect for a Love Group, but we suggest bringing eight to twelve people together that may benefit from the new product, feeding them pizza, and soliciting their impressions.

-After explaining the product concept, ask questions like, "Who would love this product? What would they love about it? Where and how would they use it?"

- Listen and note the responses, but more importantly, observe the participants and look for those few who are completely engaged and articulate.
-Ask them back to another session so that you can find out more, because they are your Love Group.

-One prospecting session will not be enough to establish a detailed profile for the Love Group. In our experience, about three to five prospecting sessions are needed, and they should be spread across a variety of geographic regions.

-At the time, executives wanted to branch out into new areas of clothing over concerns that too high a percentage of their sales came from jeans.

-They wanted to grow by penetrating new markets. Levi Strauss did their homework. They examined suit-buying preferences, shopping practices, lifestyles, and demographics for 2,000 men.

-They uncovered five distinct segments in the market: the traditionalist, the classic independent, the utilitarian, the trendy casual, and the price shopper.

-The marketing quickly focused in on the "classic independent" as the target, i.e., the tailored suit Love Group.

-The segment accounted for 21% of male shoppers. They purchased about one-half of men's natural-fiber clothing products, were not price-sensitive, generally shopped for clothes in specialty stores, and strongly preferred tailored clothing rather than buying it off the rack.

-The Levi Tailored Classics marketing team put together focus groups of the classic independents to prove the new product concept.

-The focus group testing went well until it was suggested that (1) the suits would be sold off the rack, and (2) the suits would be manufactured by Levi Strauss.

-At that point objections flew hot and heavy.
-Behind the mirror in the focus group facility, the marketing team had answers for every objection.

-The marketing team pushed forward, even though the product was completely inconsistent with everyone's existing belief about the brand and because of it, trounced every physical and emotional benefit these customers wanted from the Levi's brand.

-But again and again we see the same behavior from entrepreneurs dead set on selling to a particular type of customer.
>> They settle for fool's gold rather than prospecting for real gold.

Ex:
-To make the point, consider the case of an entrepreneur who had invented a device to measure the curvature and other features of human spinal columns.

-His technology could give doctors the lowdown on backbones.

-Medical doctors, however, are a skeptical group. They are highly educated, opinionated, and slow to revise best practices.

-This didn't stop our entrepreneur.
-MDs would love his invention, he just knew it. -He aggressively pursued them. He pushed hard. They pushed back. They preferred X-rays.

-In the meantime, chiropractors discovered the new back-measuring device and loved it. It was just what they needed to get a quick read on a new patient's spinal column and to provide feedback on the progress being made by on-going patients.

-The entrepreneur, however, didn't want to sell to chiropractors. He felt they weren't professionals and that their involvement would diminish the seriousness and significance of his invention.

-He ignored the Love Group, unsuccessfully tried over and over again to sell his invention to the Hate Group, and ultimately squandered hundreds of thousands in venture capital. His business went bankrupt.

1. Recruit early adopters to provide capital to develop your new product.

2. Learn the keys to selling innovators and how they differ from selling imitators.

3. Give innovators what they want the next big thing at a bargain price. But make sure to offer a bargain price that keeps your startup in business.

-Consider mining for gold with the early adopters the customers that will get your startup out of the gate and running!

-Pete Seeger wrote the lines, "Oh, had I a golden thread and a needle so fine, I'd weave a magic strand of rainbow design."

-Beta Customers fund your R&D activities

-Getting the first person to buy is unbelievably expensive. Getting the second person to buy is unbelievably cheap

-Software products usually have an alpha stage, that is, a stage in which features are added a beta stage, in which flaws are removed and a market-ready stage, in which the product is fully groomed and broadly released to potential buyers.

-The beta version is the first version of a product that gets released outside the business.

-Beta versions help developers evaluate their products in real-world settings.

-Beta versions are evaluated by beta testers.

-Beta testers can be current or prospective customers. In the software industry, beta testers receive the beta version of a product for free or at a "bargain" price.

-Consequently, when looking for beta testers to transform into beta goldmines, picking customers with a strong need to believe is a key success factor.

-In other words, the pain-point must be particularly painful for beta goldmines or the need for market leadership must be particularly strong.

>> Give innovators what they want the next big thing at a bargain price.

>> "Build it and they will come," is just a Field of Dreams

1. product development
2. alpha test
3. beta test
4. release

-the number of innovator-buyers can be very small, sometimes as small as 2-3% of the total number of people that will ultimately make purchases in the product category.

-Consider the Dvorak keyboard. Back in 1936, Dr. Dvorak patented a simplified and much improved typewriter keyboard layout to solve the fatigue and inefficiency problems created by the gold-standard QWERTY keyboard layout.

-In today's world, the use of computers makes the streamlined Dvorak keyboard available to anyone who wants it however, the old QWERTY keyboard introduced back in the 1860s continues to dominate.

-Beta-products suffer when people see them as complex to understand or just plain difficult to use.

-The IBM PCjr of the mid-1980s provides an interesting example.

-High price and limited software aside, the product was DOA because of its tiny "Chiclet" keyboard, which made typing almost impossible.

-Evidently, when developing the PCjr, IBM hired usability testers with some mighty tiny fingers.

-Beta-test customers become beta goldmines when they become reference points for future customers, provide funding for product R&D, are top prospects for upgraded products, and supply easy access to in-the-field reactions regarding value-in-use, product fit with current practices, and product usability.

-When it comes to purchasing behavior, innovators
(1) want to buy the next new thing before having to pay full price,
(2) believe they deserve special consideration because they are taking extra time and effort to test an unproven product, and
(3) refuse to sit back and watch anyone else have something new that they don't have.

-Knowing a little bit about the buying culture of innovators can go a long way in helping entrepreneurs sell to them.

-First, innovators believe that new technology initially costs more than the old way of doing things, but that costs will come down with time.

(Ex: After all, ENIAC, the first large-scale computer, cost $500,000 back in 1946 and only performed 5,000 operations per second. Today's home computers perform billions of operations per second at less than a hundredth of ENIAC's price tag.)

-Second, innovators apparently can't say no to new technology even when they know it falls way behind on the bang-for-buck buying curve.

>> Innovators crave new technology, but fear they can't afford to buy new technology.

> Entrepreneurs to the rescue! Entrepreneurs can attract innovators by asking innovators for their help.

> By recruiting innovators as product-development partners, startups can offer opportunities for innovators to move quickly and buy new technology at bargain prices before it is introduced to the general public at nosebleed skim-the-cream prices.

1. An Anchor is your "stamp of approval." It provides "I have arrived" credibility.
(your core customers. your best friends)

2. Anchor customers pay the bills. Every business needs a steady flow of revenue even if it is low margin revenue.

-Finding anchor customers must be a top priority.

-For a moment, imagine that different kinds of businesses are like different kinds of ships.

-The Big Business ship likes to drop anchor in a calm and sunny harbor. The heavy anchor and calm waters make everyone on board the Big Business ship feel safe and secure.

-The startup ship is like a pirate sailing the open sea.
-The captain of the startup business ship doesn't like to drop anchor. The captain knows the ship only moves once the anchor is on board. Startup businesses must get an anchor on board before they can start sailing.
(with an anchor on board, you can start sailing!)

Make Partnerships
-give discounts in exchange for being a reference
-test the "newest things" on them
-make them feel like a partner

-Take a look at their customer list. There is Toyota, Cadillac, Ford, Microsoft, HP, Oracle, VISA, Ameritrade, ADP, Xerox, Siemens, Tyco, HBO, Fox, CBS, Walmart, Mary Kay, eBay, and it goes on.

-Omniture always had great products and talented employees, but their success story really got started with two anchor customers, Microsoft and eBay.

-According to their CEO, before landing these anchor customers, the Omniture sales cycle was a long and painful nine months. Prospective clients had lots of questions about Ominiture's financial stability, technology, and Service Quality.

-With the anchors on board, however, most of the prospective clients' questions were answered with two words: Microsoft and eBay. The sales cycle shrank to a manageable three months.

-For example, a local bakery got its start by providing low-priced, high-quality bread and other baked goods such as impossible-to-resist giant cookies to area restaurants, cafeterias, and catering services.

-These businesses were their anchor customers.

-With the anchors established, the bakery could make their brick-and-mortar retail store a success, charging premium prices for their tried-and-true products, and even were able to add a few new products not offered through other marketing channels.

-Anchor customers get your startup going and keep paying the operating bills through good times and bad.

-Once the factory is rolling, design engineers and marketers start looking for opportunities to swap out the manufacture of low-margin goods with high-margin goods.

-Not every manufacturer, however, has the good sense to bring anchor customers on board before investing millions of dollars in product development and/or building a new factory. Recall DuPont's cautionary tale of Kevlar.

-DuPont spent $500 million to develop and commercialize Kevlar as a replacement for nylon as tire cord, but did not lock-up tire manufacturers. The tire manufacturers decided on steel as a better alternative and took a pass on Kevlar.

-This left DuPont with a very expensive product in search of a market a market they never found. Startups can't afford this type of misstep.

Big anchors don't always suit small startups.

1. Payment Practices
-bigger anchors pay slower
2. Vetting Practices
-smaller and growing anchors set lower hurdles
3. Distribution Practices
-online and TV shopping channels may make it easier to manage inventory

-An important decision point for a startup is whether the potential anchor is more likely to foster a startup business or let it flounder and sink under the weight of their way of doing business.

-Unfortunately, we have seen far too many examples of the latter rather than the former.

-A startup the size of a dinghy goes down fast when they take on an anchor fit for an ocean liner.

-The national retailer declined to reschedule a pickup and told the new business to wait another year before trying again.

-Yet another new business shipped inventory worth hundreds of thousands of dollars to a national retailer notorious for paying vendors slowly.

-The entrepreneurs, having taken out second mortgages and maxed-out their credit cards, got nervous and tried to pressure the retailer into paying with aggressive, bordering on rude and unprofessional, phone calls and letters.

-In response, the national retailer returned the entire inventory. The entrepreneurs were then left with lots of debt, lots of inventory, and few prospects for earning any revenue.

1. A benefactor is a company with complimentary products and/or services that win if your startup wins.

2. Entrepreneurs can find benefactors in the value-chain, in the local community, and in the same industry.

3. Benefactors can help out a startup with cash as well as non-cash benefits.

-Think through the question carefully, because the answer will help you find initial investors, key strategic partners, and perhaps anchor customers.

-Learning to ask the right questions is fundamental to startup success!

-Dorothy needs to seek out benefactors and she keeps an eye open for anyone that will also greatly benefit from a trip to the Emerald City.

-At the journey's outset, Dorothy runs across a scarecrow at a crossroads. She removes a nail to take the scarecrow down from his post and finds out the scarecrow desperately wants a brain. Dorothy suggests that the scarecrow can get a brain from the Wizard in the Emerald City. The scarecrow joins Team Dorothy.

-Next, the two stumble on a rusted tin man. Dorothy liberally applies some oil from an old oil can and finds out the tin man desperately wants a heart. Dorothy suggests that the tin man can get a heart from the Wizard in the Emerald City. The tin man is now part of the crew.

- Not long afterwards, the little group is startled by a lion who attacks the travelers and tries to bite Dorothy's little dog Toto. Dorothy, heedless of the danger, swats the lion on the nose to protect her dog. Dorothy then has to comfort the lion as he whimpers about his nose, and finds out the lion is cowardly and desperately wants courage. Dorothy suggests that the cowardly lion can get courage from the Wizard in the Emerald City. The lion completes the team, and then the three benefactors successfully get Dorothy to the Emerald City.

-But the story does not all go in Dorothy's favor. Turns out, the Wizard also needs a few benefactors. He needs someone to kill the Wicked Witch of the West. When Dorothy and her team arrive, the Wizard gives everyone the royal treatment. He then gives Team Dorothy an audience and finds out Dorothy desperately wants to return home, the scarecrow desperately wants a brain, the tin man desperately wants a heart, and the lion desperately wants courage. The Wizard promises to give each benefactor what they want most if and when Dorothy brings him the broomstick of the Wicked Witch of the West. Like Dorothy, the Wizard is a born entrepreneur. He really understands how to spot benefactors.

-Products are part of a value chain that extends from components to customers.

-Understanding the value chain and where your startup fits in can be a powerful tool to give your new business legs.

-DuPont manufactures the nylon and stain-release sauce that other manufacturers and carpet mills process to make the carpeting we have in our homes and businesses.

-DuPont found benefactors to transform the carpet industry from a narrow-margin heartbreaker to a high-flying profit maker.

-DuPont managers fought commodity nylon prices for generations, but then decided to fight back by offering something that every player in the carpet industry wanted most.

-Every carpet manufacturer and retailer wanted a premium-priced carpet that consumers would recognize and trust.

-Everyone in the industry wanted a profitable product that would sell itself.

-Before Stainmaster, all carpeting looked pretty much the same to consumers.

-Since all carpeting looked the same, consumers bought on price - bad news for the entire value chain.

-Over the past decade, it has grown rapidly into one of the Internet's top 20 properties.

-To accelerate their growth, MyFamily raised more than $75 million in funding from benefactors.

-MyFamily looked at their value chain and asked the question, "Who will benefit if I succeed?"

-The answers company managers came up with were Intel, Compaq, AOL, and Kodak. Intel benefits because family-history buffs want fast computer processes to digest their mountains of digital photos.

-Compaq benefits because family-history buffs want new computers with lots of hard drive space, up-to-date memory, and Ethernet connections to access and post online genealogical information.
-AOL benefits by providing a value-added service to its growing base of family-history buff Internet subscribers.
-Kodak benefits by repositioning itself in the digital photography sector by building on the traditional strength of family photography.

-My-Family increases the need for Intel, Compaq, AOL, and Kodak products. In addition to capital raised from these investors, My-Family also received publicity from their association with these companies.

-Agilix is a software company that specializes in programs for Tablet PCs.

-In this high-tech product category, Agilix needs capital to fund R&D, but also needs access to programming code and computer hardware technology.

-To address the first need, Agilix approached Franklin Covey. Franklin Covey promotes personal planning and saw Agilix as a means to move forward in the electronic planner product space.

-Agilix got their funding and Franklin Covey got a winning product.

-Reviewers refer to Agilix-developed TabletPlanner software as marvelous, brilliant, and empowering. Competing with heavyweights like Microsoft, HP, and Corel, TabletPlanner is one of the top 10 best Tablet PC applications.

-To address needs beyond R&D capital, Agilix has gone to Microsoft and key computer hardware manufactures.

-They have become strategic partners that have provided Agilix with access to key technologies, allowing them to be on the cutting edge of this emerging field.

-As a result of these benefactor alliances, Agilix was able to be one of two software companies to have their software applications ready for the launch of Windows-based operating systems for Tablet PCs.

1. For a startup, advisory boards are more important than a board of directors.

2. Don't limit advisory boards to just include businesspeople.

3. Invite advisory board members that love your product, have a stake in staying on the leading edge of your industry, and/or people with regional, national or industry-wide name recognition.

-An advisory board can extend your social network of influence to increase its effectiveness in attracting investors, customers, and top employees.

-No new venture is too small or too large to benefit from an advisory board.

-Leveraging advisory board experience, expertise, credibility, and connections is the best way to succeed in today's competitive markets.

-A startup gains a big boost from building a national or at least a regional reputation.

-Perhaps one of the best-kept secrets of successful ventures is they know that reputation and experience counts, but that it doesn't have to be their own reputation and experience.
We can't emphasize enough what we stated earlier about finding and leveraging advocates.

-Successful entrepreneurs know that hard work, i.e., working 90+ hours a week, rarely leads to a successful new venture.

-It is the smart work of yourself and others, especially a credible and supportive advisory board, which leads to new venture success.

-Many startups make the mistake of developing their board of directors instead of beginning with an advisory board.

-Whenever you start a new venture, leverage the experience, wisdom, and creativity of advisory members to accelerate your growth and time to money.
(also connections to create your network)
>> Advisory board members should not be limited to people who have simply done things, but people who can get things done.
>> Also include people who possess local, regional, or national name recognition.
(For example, prominent politicians, retired executives or managers, and industry gurus make great advisory board members.)

2. Advisory board members can't be sued for their advice because they do not have any fiduciary responsibility to stockholders as do members of the board of directors. Thus, advisory boards are usually made up of nonpolitical, fun, and creative professionals who have a genuine interest and sincere desire to see the startup succeed.

informal
-serve only as long as needed

not liable
-not accountable if things go wrong

advise team
-give advice

2. Encourage honest feedback, i.e., stay away from friends

3. Be professional to get professional behavior

4. Shouldn't cost them anything to participate

5. Listen and take advice or they will leave

Horses for the Product: Dr. Oz??

Advisory Board: Shark Tank QVC Lady

2. NTB: need to believe
-large addressable market with large addressable pain(need)

3. DTS: dominate the situation
-deliver genuine delight in a specific usage situation

4. RTB: reason to believe
-easy to demonstrate and verify the distinction and benefit

5. QTS: quantifiable support
-quantitative evidence of product superiority

2. What is the right level of experience?
-Bring in people that are beyond, but just beyond, where you want to be.

3. How do I get them aboard?
-Provide two-page prospectus of the business, the issues the board will address, how the board will operate, and compensation.

4. What is the compensation?
-Travel, meals, perhaps some entertainment, opportunity to work with smart people on an interesting problem.
-Modest compensation after and extended period of service comparable to their hourly rate in their full-time job.

-enhance the Need to Believe

-enhance the Reason to Believe

-enhance the Unique Product Claim

Sharpening the Angle
-Unique Product Claim
-Large Addressable Need
-Dominate the Situation
-Reason to Believe
-Quantifiable Support

Leveraging Leverage
-Ride Horses
-Prospect for Beta-Goldmines
-Land an Anchor
-Seek Out Benefactors
-Build an Advisory Board

Think Big and Act Big
-Puff it Up
-Grow with Borrowed Interest
-Master Social Media & Publicity
-Get Your Swagger On
-Reach Out with Crowdfunding
-Dominate Trade Shows

-How to market on a budget?

-How to gain credibility when you are a new brand?

Don't act small
-Potential Customers want stable and reliable

-Business Advisors want vital and growing

-Suppliers and Employees want dependable and industry leaders

-Partners and Investors want blue chip and reputation builders

But you are not established, still unproven, a niche player, and don't have a track record

1. Use the elevator pitch to advance the sale and not to make a final sale.

2. An elevator pitch must hit hard and be brief. If at all possible, grab attention with a memorable product demonstration.

-the 30 second to 2 minute elevator ride.
-It is the amount of time that VCs will spare to identify good ideas and successful business teams that have promise and eliminate those that are not ready for funding

-When putting together an elevator pitch, we want to hit hard with the most important information up front.
-We want investors to get interested enough to invite us back to make a bigger, more detailed presentation.

2. Opportunity
-Describe the customers, competitors, how the product or service makes the competitors irrelevant, and how the product makes money. Investors want to see the potential for big revenues and big returns. Remember that if there are no competitors, then there usually are no customers, which in turn means that there is little or no money to be made.

3. Status
-Present clear financials and make note of market traction. Highlight letters of intent, product orders, and better yet, product sales.

4. Ask
-Make a case for your valuation of the startup and ask for an investment to accomplish the next set of important goals such as manufacturing products to fill orders, hiring staff to expand the sales or service organization, or expanding into new locations. Balance investment with reward.

5. Remember
-Demonstrate how the product is validated with interested customers. Highlight the contributions of business team members to the startup. Close with a short "pump up" reminder with an industry opinion leader weighing in on the broad appeal of the product.

1. Social Media empowers small players to think and act big. SIze and money are no longer barriers to starting a successful business.

2. Facebook, Twitter, Youtube, Product Blogs, and Google each have their own rules for success. Informed use of all five is needed to beat Big Business at the Social Media game.

-In this new era of Internet and social media, everyone can be a star everyone can have a voice everyone has market access.

>> Startups can wear very big adult shoes even when they have very tiny baby feet.

Think big and act big, but don't spend money like you are big. DON'T try to buy success. Learn to earn success. DON'T bring in corporate marketers that haven't worked with small budgets. DO use new technology and tactics that level the playing field.

-Technologies such as social media and SMS communications, as well as low-barrier-of-entry market channels such as the Internet now give businesses of every size an opportunity to successfully compete locally and globally.

-Knowing how to think big and act big without stumbling around can make or break a startup.

Startup Location Examples: where would you meet with your potential client? your dirty closet office space? NO. rent an office space for a day. Leverage your contacts (putting plaque on the front entrance with all other company names in the building have the secretary be in on it too)

-When startups go where the money is, and they must, their competitors will be big in terms of money, resources, personnel, and image.
-Customers and investors often equate big with safe. "It's safe to do business with Big Blue because, well, they're big." IBM, aka Big Blue, made a living on this line of reasoning for years.
-Unlike the happy thoughts that come to mind when doing business with a large, well known company, many unhappy thoughts may come to mind when doing business with a startup.
-Potential customers prefer buying from a stable, dependable company, but this business is not established.
-Business advisors prefer working with a viable, ongoing company, but this business is unproven.
-Suppliers and employees prefer teaming up with industry leaders, but this business is a niche player.
-Partners and Investors prefer throwing support behind a reputation builder, but this business doesn't have a blue chip track record and may even harm one's reputation.

New businesses are stressed. When they swim frantically around like little fish or bite off more spending than they can chew, they will choke and fail. When they puff up like a puffer fish they often succeed. One way to puff up is to dominate a vertical market where you have a natural advantage before expanding to other markets.

Ex:
Francois Lane, serial entrepreneur and co-founder of CakeMail a whitelabel email marketing service, insists that new businesses "must select one vertical market and focus on complete world domination of this specific market." He also points out that new businesses are best off when selecting markets that have their own network of trade shows and industry publications. When you are small, it is important to attack a market where it is easy to identify and connect with marketing channels.

Social media provides a spectacular way to puff up your market presence. For many startups, your website is your company. Build a look and feel for your website that is equivalent to an IBM. Show real people. Show a brick and mortar location. Include a telephone number. Learn what makes a productive splash page. Highlight awards, accomplishments, notable customers, and interesting product stories. Blog the victories. Twitter the fun. Facebook for friends. Get involved with a cause popular with social media followers. Bring your pitch to life with YouTube.

Ex: Puff it Up: Phone Service
-BJ's brother's wife acting as his secretary and having all calls forwarded to her number and then saying "please hold Ill connect you with ____ or ____" but really it's still her playing those roles


NPD Test #2

1. Don't do it alone. Be smart, find some help, and "ride horses" to the bank.

2. Look for a love-group and empower the group to help promote and gain market access for your new product.

-find the sort of horses that you can ride to the bank

-a good horse will be a champion for your competitive angle

-identify and partner with people who have the skills, energy, and influence you need to succeed with your product and target market
(after all, with startups and other types of ventures, "it's not what you know, but who you know" that determines success or failure.)

2. Evangelists
-I'll prepare the way by stirring interest and awareness

3. Patrons
-you pat my back and I'll pat yours

-they desire recognition
-they want credibility among peers
-stock to increase their social equity
-being part of a winning team

2. Trade Association President
-angles with "wow factors" put them on the cutting edge

3. Local Expert in your State
-looking credible because he/she is a "thought leader." Experts love to jump on a winning bandwagon

-makes bath time easy for mom and makes baby feel comfortable

-warm to the touch
-non-slip
-hangs in storage: flat
-doesn't absorb water
-folds easily
-fits into bathroom sink
-comfortable to baby
-makes it a bonding experience and there are no distractions

Who would be a Horse for this product?
-Ellen!!

Ride Horses-Evangelists & Patrons
-PUJ Tub and Rachael Ray & Kelly Ripa guessing game

-BIC pens "for her" (pink and purple) designed to fit a woman's hand

-very important to growing a startup business

(also known as product advocates, or the Love Group)

Ex: think of them as a huge herd of wild stallions that jump to action at your command and set a positive, enthusiastic tone for everyone that sees them.

-DDS developed the first management software to connect the operators to the front desk, minimizing billing loss and confusion.
(but even after successfully developing the software and addressing a sizable pain-point, the venture would fail unless it found a way to persuasively and efficiently reach the target market--dentists)

-DDS at first thought they had only 2 choices:
1. hire a company sales force or
2. outsource the selling to independent sales agents such as dental product distributors or value-added resellers.

but Dentrix had a third option when they started looking for leverage

Kimball's hard work in uncovering and solving everyday pain for dentists gave Dentrix a sharp competitive angle
-it wasn't difficult to find experienced and credible dental-industry salespeople that believed in Dentrix and wanted to take a chance on selling it for a commission and stake in the company rather than for a fixed salary

Dentrix leveraged their leverage and found salespeople to help them do what they couldn't do or afford to do on their own

-learned hot noble gases are used as insulators inside of dry suits to keep divers warm
-envisioned how the "dry suit" technology could be adapted to insulate winter gear
-while insulated clothing is nothing new, using thermostat-valve-controlled linings in clothing to regulate temperature is new
-no bulk, no layering, just turn the dial up and down
(if the skier is cold, add a little argon gas to the jacket lining if a skier is hot, open the valve and release some argon to cool down)

-from the outset, he understood how to network and recruit product advocates.
-his biggest successes have been with a local mayor that wants to make his city the skiing Mecca of the US, who has introduced him to a number of leading outdoor companies and investors.
(one company is not a primary development partner and several others helped fund the business)
-he was also introduced to an industry "graybeard" (someone w/ decades of experience in the outdoor markets) who began assisting the company as a consultant
-he featured this industry insider whenever pitching Klymit to investors

-don't use time and energy to fight cynics and hecklers. learn to focus on the love and take your product to the market through the eyes of those that love it

-"Who is in your Love Group?"
>> most startup marketers, similar to most Big Business marketers, can't identify who faithfully purchases their products beyond offering up a few Demographics like average age, gender split, and regional sales percentages
(startups can't afford to be that unobservant)

-The Love Group is their lifeblood. Just like a political candidate, startups must know and retain their Love Group while at the same time helping the fence-sitters see their product through the eyes of the Love Group

-New companies don't need 50% of the popular vote to succeed, but do need a strong group of core customers that they thoroughly understand. By thoroughly understand, we are talking about drawing together a profile that looks more like an ethnographic Mona Lisa than a demographic stick figure. What do customers look like, how do they express themselves, what do they read and watch, where do they live, what vehicles do they drive, what are their hopes and aspirations, and most important, which of our product features and benefits really get them going?

-Special interest groups were successfully encouraging legislation to reduce, phase out, and even ban the use of plastic packaging and products. The American Plastics Council (APC) came to the rescue with a flashy advertising campaign to inform the public about the substantial efforts the industry was making toward recycling and reuse, and that products and packaging made of plastic actually saved resources compared to other alternatives such as paper or metal. Millions of advertising dollars were spent, expectations were high, but success was nowhere to be found.

>> Directly attacking the concerns of the Hate Group didn't convince anyone and ultimately led to the APC being ordered by a dozen or so state Attorneys General to desist in their "false" advertising claims about the availability of plastics recycling.

-The APC failed because managers ignored the Love Group in favor of attacking the Hate Group, but they learned their lesson. The next round of advertising built on the beliefs of plastics advocates. These messages highlighted the noble qualities of plastics - personal safety and health - that researchers had identified in personal interviews with the plastics Love Group. This time the positive results were staggering.

- They raise an important point and put themselves on the threshold of discovering what really sets a successful startup marketer apart from a frustrated would-be entrepreneur.

-Successful startup marketers don't expect their Love Group to find them they aggressively seek out their Love Group. >> "Build it and they will come" rarely works in today's world of information overload and product proliferation

-Realizing we don't know our Love Group is the first step in beginning to prospect to find a Love Group.

-There are many ways to prospect for a Love Group, but we suggest bringing eight to twelve people together that may benefit from the new product, feeding them pizza, and soliciting their impressions.

-After explaining the product concept, ask questions like, "Who would love this product? What would they love about it? Where and how would they use it?"

- Listen and note the responses, but more importantly, observe the participants and look for those few who are completely engaged and articulate.
-Ask them back to another session so that you can find out more, because they are your Love Group.

-One prospecting session will not be enough to establish a detailed profile for the Love Group. In our experience, about three to five prospecting sessions are needed, and they should be spread across a variety of geographic regions.

-At the time, executives wanted to branch out into new areas of clothing over concerns that too high a percentage of their sales came from jeans.

-They wanted to grow by penetrating new markets. Levi Strauss did their homework. They examined suit-buying preferences, shopping practices, lifestyles, and demographics for 2,000 men.

-They uncovered five distinct segments in the market: the traditionalist, the classic independent, the utilitarian, the trendy casual, and the price shopper.

-The marketing quickly focused in on the "classic independent" as the target, i.e., the tailored suit Love Group.

-The segment accounted for 21% of male shoppers. They purchased about one-half of men's natural-fiber clothing products, were not price-sensitive, generally shopped for clothes in specialty stores, and strongly preferred tailored clothing rather than buying it off the rack.

-The Levi Tailored Classics marketing team put together focus groups of the classic independents to prove the new product concept.

-The focus group testing went well until it was suggested that (1) the suits would be sold off the rack, and (2) the suits would be manufactured by Levi Strauss.

-At that point objections flew hot and heavy.
-Behind the mirror in the focus group facility, the marketing team had answers for every objection.

-The marketing team pushed forward, even though the product was completely inconsistent with everyone's existing belief about the brand and because of it, trounced every physical and emotional benefit these customers wanted from the Levi's brand.

-But again and again we see the same behavior from entrepreneurs dead set on selling to a particular type of customer.
>> They settle for fool's gold rather than prospecting for real gold.

Ex:
-To make the point, consider the case of an entrepreneur who had invented a device to measure the curvature and other features of human spinal columns.

-His technology could give doctors the lowdown on backbones.

-Medical doctors, however, are a skeptical group. They are highly educated, opinionated, and slow to revise best practices.

-This didn't stop our entrepreneur.
-MDs would love his invention, he just knew it. -He aggressively pursued them. He pushed hard. They pushed back. They preferred X-rays.

-In the meantime, chiropractors discovered the new back-measuring device and loved it. It was just what they needed to get a quick read on a new patient's spinal column and to provide feedback on the progress being made by on-going patients.

-The entrepreneur, however, didn't want to sell to chiropractors. He felt they weren't professionals and that their involvement would diminish the seriousness and significance of his invention.

-He ignored the Love Group, unsuccessfully tried over and over again to sell his invention to the Hate Group, and ultimately squandered hundreds of thousands in venture capital. His business went bankrupt.

1. Recruit early adopters to provide capital to develop your new product.

2. Learn the keys to selling innovators and how they differ from selling imitators.

3. Give innovators what they want the next big thing at a bargain price. But make sure to offer a bargain price that keeps your startup in business.

-Consider mining for gold with the early adopters the customers that will get your startup out of the gate and running!

-Pete Seeger wrote the lines, "Oh, had I a golden thread and a needle so fine, I'd weave a magic strand of rainbow design."

-Beta Customers fund your R&D activities

-Getting the first person to buy is unbelievably expensive. Getting the second person to buy is unbelievably cheap

-Software products usually have an alpha stage, that is, a stage in which features are added a beta stage, in which flaws are removed and a market-ready stage, in which the product is fully groomed and broadly released to potential buyers.

-The beta version is the first version of a product that gets released outside the business.

-Beta versions help developers evaluate their products in real-world settings.

-Beta versions are evaluated by beta testers.

-Beta testers can be current or prospective customers. In the software industry, beta testers receive the beta version of a product for free or at a "bargain" price.

-Consequently, when looking for beta testers to transform into beta goldmines, picking customers with a strong need to believe is a key success factor.

-In other words, the pain-point must be particularly painful for beta goldmines or the need for market leadership must be particularly strong.

>> Give innovators what they want the next big thing at a bargain price.

>> "Build it and they will come," is just a Field of Dreams

1. product development
2. alpha test
3. beta test
4. release

-the number of innovator-buyers can be very small, sometimes as small as 2-3% of the total number of people that will ultimately make purchases in the product category.

-Consider the Dvorak keyboard. Back in 1936, Dr. Dvorak patented a simplified and much improved typewriter keyboard layout to solve the fatigue and inefficiency problems created by the gold-standard QWERTY keyboard layout.

-In today's world, the use of computers makes the streamlined Dvorak keyboard available to anyone who wants it however, the old QWERTY keyboard introduced back in the 1860s continues to dominate.

-Beta-products suffer when people see them as complex to understand or just plain difficult to use.

-The IBM PCjr of the mid-1980s provides an interesting example.

-High price and limited software aside, the product was DOA because of its tiny "Chiclet" keyboard, which made typing almost impossible.

-Evidently, when developing the PCjr, IBM hired usability testers with some mighty tiny fingers.

-Beta-test customers become beta goldmines when they become reference points for future customers, provide funding for product R&D, are top prospects for upgraded products, and supply easy access to in-the-field reactions regarding value-in-use, product fit with current practices, and product usability.

-When it comes to purchasing behavior, innovators
(1) want to buy the next new thing before having to pay full price,
(2) believe they deserve special consideration because they are taking extra time and effort to test an unproven product, and
(3) refuse to sit back and watch anyone else have something new that they don't have.

-Knowing a little bit about the buying culture of innovators can go a long way in helping entrepreneurs sell to them.

-First, innovators believe that new technology initially costs more than the old way of doing things, but that costs will come down with time.

(Ex: After all, ENIAC, the first large-scale computer, cost $500,000 back in 1946 and only performed 5,000 operations per second. Today's home computers perform billions of operations per second at less than a hundredth of ENIAC's price tag.)

-Second, innovators apparently can't say no to new technology even when they know it falls way behind on the bang-for-buck buying curve.

>> Innovators crave new technology, but fear they can't afford to buy new technology.

> Entrepreneurs to the rescue! Entrepreneurs can attract innovators by asking innovators for their help.

> By recruiting innovators as product-development partners, startups can offer opportunities for innovators to move quickly and buy new technology at bargain prices before it is introduced to the general public at nosebleed skim-the-cream prices.

1. An Anchor is your "stamp of approval." It provides "I have arrived" credibility.
(your core customers. your best friends)

2. Anchor customers pay the bills. Every business needs a steady flow of revenue even if it is low margin revenue.

-Finding anchor customers must be a top priority.

-For a moment, imagine that different kinds of businesses are like different kinds of ships.

-The Big Business ship likes to drop anchor in a calm and sunny harbor. The heavy anchor and calm waters make everyone on board the Big Business ship feel safe and secure.

-The startup ship is like a pirate sailing the open sea.
-The captain of the startup business ship doesn't like to drop anchor. The captain knows the ship only moves once the anchor is on board. Startup businesses must get an anchor on board before they can start sailing.
(with an anchor on board, you can start sailing!)

Make Partnerships
-give discounts in exchange for being a reference
-test the "newest things" on them
-make them feel like a partner

-Take a look at their customer list. There is Toyota, Cadillac, Ford, Microsoft, HP, Oracle, VISA, Ameritrade, ADP, Xerox, Siemens, Tyco, HBO, Fox, CBS, Walmart, Mary Kay, eBay, and it goes on.

-Omniture always had great products and talented employees, but their success story really got started with two anchor customers, Microsoft and eBay.

-According to their CEO, before landing these anchor customers, the Omniture sales cycle was a long and painful nine months. Prospective clients had lots of questions about Ominiture's financial stability, technology, and Service Quality.

-With the anchors on board, however, most of the prospective clients' questions were answered with two words: Microsoft and eBay. The sales cycle shrank to a manageable three months.

-For example, a local bakery got its start by providing low-priced, high-quality bread and other baked goods such as impossible-to-resist giant cookies to area restaurants, cafeterias, and catering services.

-These businesses were their anchor customers.

-With the anchors established, the bakery could make their brick-and-mortar retail store a success, charging premium prices for their tried-and-true products, and even were able to add a few new products not offered through other marketing channels.

-Anchor customers get your startup going and keep paying the operating bills through good times and bad.

-Once the factory is rolling, design engineers and marketers start looking for opportunities to swap out the manufacture of low-margin goods with high-margin goods.

-Not every manufacturer, however, has the good sense to bring anchor customers on board before investing millions of dollars in product development and/or building a new factory. Recall DuPont's cautionary tale of Kevlar.

-DuPont spent $500 million to develop and commercialize Kevlar as a replacement for nylon as tire cord, but did not lock-up tire manufacturers. The tire manufacturers decided on steel as a better alternative and took a pass on Kevlar.

-This left DuPont with a very expensive product in search of a market a market they never found. Startups can't afford this type of misstep.

Big anchors don't always suit small startups.

1. Payment Practices
-bigger anchors pay slower
2. Vetting Practices
-smaller and growing anchors set lower hurdles
3. Distribution Practices
-online and TV shopping channels may make it easier to manage inventory

-An important decision point for a startup is whether the potential anchor is more likely to foster a startup business or let it flounder and sink under the weight of their way of doing business.

-Unfortunately, we have seen far too many examples of the latter rather than the former.

-A startup the size of a dinghy goes down fast when they take on an anchor fit for an ocean liner.

-The national retailer declined to reschedule a pickup and told the new business to wait another year before trying again.

-Yet another new business shipped inventory worth hundreds of thousands of dollars to a national retailer notorious for paying vendors slowly.

-The entrepreneurs, having taken out second mortgages and maxed-out their credit cards, got nervous and tried to pressure the retailer into paying with aggressive, bordering on rude and unprofessional, phone calls and letters.

-In response, the national retailer returned the entire inventory. The entrepreneurs were then left with lots of debt, lots of inventory, and few prospects for earning any revenue.

1. A benefactor is a company with complimentary products and/or services that win if your startup wins.

2. Entrepreneurs can find benefactors in the value-chain, in the local community, and in the same industry.

3. Benefactors can help out a startup with cash as well as non-cash benefits.

-Think through the question carefully, because the answer will help you find initial investors, key strategic partners, and perhaps anchor customers.

-Learning to ask the right questions is fundamental to startup success!

-Dorothy needs to seek out benefactors and she keeps an eye open for anyone that will also greatly benefit from a trip to the Emerald City.

-At the journey's outset, Dorothy runs across a scarecrow at a crossroads. She removes a nail to take the scarecrow down from his post and finds out the scarecrow desperately wants a brain. Dorothy suggests that the scarecrow can get a brain from the Wizard in the Emerald City. The scarecrow joins Team Dorothy.

-Next, the two stumble on a rusted tin man. Dorothy liberally applies some oil from an old oil can and finds out the tin man desperately wants a heart. Dorothy suggests that the tin man can get a heart from the Wizard in the Emerald City. The tin man is now part of the crew.

- Not long afterwards, the little group is startled by a lion who attacks the travelers and tries to bite Dorothy's little dog Toto. Dorothy, heedless of the danger, swats the lion on the nose to protect her dog. Dorothy then has to comfort the lion as he whimpers about his nose, and finds out the lion is cowardly and desperately wants courage. Dorothy suggests that the cowardly lion can get courage from the Wizard in the Emerald City. The lion completes the team, and then the three benefactors successfully get Dorothy to the Emerald City.

-But the story does not all go in Dorothy's favor. Turns out, the Wizard also needs a few benefactors. He needs someone to kill the Wicked Witch of the West. When Dorothy and her team arrive, the Wizard gives everyone the royal treatment. He then gives Team Dorothy an audience and finds out Dorothy desperately wants to return home, the scarecrow desperately wants a brain, the tin man desperately wants a heart, and the lion desperately wants courage. The Wizard promises to give each benefactor what they want most if and when Dorothy brings him the broomstick of the Wicked Witch of the West. Like Dorothy, the Wizard is a born entrepreneur. He really understands how to spot benefactors.

-Products are part of a value chain that extends from components to customers.

-Understanding the value chain and where your startup fits in can be a powerful tool to give your new business legs.

-DuPont manufactures the nylon and stain-release sauce that other manufacturers and carpet mills process to make the carpeting we have in our homes and businesses.

-DuPont found benefactors to transform the carpet industry from a narrow-margin heartbreaker to a high-flying profit maker.

-DuPont managers fought commodity nylon prices for generations, but then decided to fight back by offering something that every player in the carpet industry wanted most.

-Every carpet manufacturer and retailer wanted a premium-priced carpet that consumers would recognize and trust.

-Everyone in the industry wanted a profitable product that would sell itself.

-Before Stainmaster, all carpeting looked pretty much the same to consumers.

-Since all carpeting looked the same, consumers bought on price - bad news for the entire value chain.

-Over the past decade, it has grown rapidly into one of the Internet's top 20 properties.

-To accelerate their growth, MyFamily raised more than $75 million in funding from benefactors.

-MyFamily looked at their value chain and asked the question, "Who will benefit if I succeed?"

-The answers company managers came up with were Intel, Compaq, AOL, and Kodak. Intel benefits because family-history buffs want fast computer processes to digest their mountains of digital photos.

-Compaq benefits because family-history buffs want new computers with lots of hard drive space, up-to-date memory, and Ethernet connections to access and post online genealogical information.
-AOL benefits by providing a value-added service to its growing base of family-history buff Internet subscribers.
-Kodak benefits by repositioning itself in the digital photography sector by building on the traditional strength of family photography.

-My-Family increases the need for Intel, Compaq, AOL, and Kodak products. In addition to capital raised from these investors, My-Family also received publicity from their association with these companies.

-Agilix is a software company that specializes in programs for Tablet PCs.

-In this high-tech product category, Agilix needs capital to fund R&D, but also needs access to programming code and computer hardware technology.

-To address the first need, Agilix approached Franklin Covey. Franklin Covey promotes personal planning and saw Agilix as a means to move forward in the electronic planner product space.

-Agilix got their funding and Franklin Covey got a winning product.

-Reviewers refer to Agilix-developed TabletPlanner software as marvelous, brilliant, and empowering. Competing with heavyweights like Microsoft, HP, and Corel, TabletPlanner is one of the top 10 best Tablet PC applications.

-To address needs beyond R&D capital, Agilix has gone to Microsoft and key computer hardware manufactures.

-They have become strategic partners that have provided Agilix with access to key technologies, allowing them to be on the cutting edge of this emerging field.

-As a result of these benefactor alliances, Agilix was able to be one of two software companies to have their software applications ready for the launch of Windows-based operating systems for Tablet PCs.

1. For a startup, advisory boards are more important than a board of directors.

2. Don't limit advisory boards to just include businesspeople.

3. Invite advisory board members that love your product, have a stake in staying on the leading edge of your industry, and/or people with regional, national or industry-wide name recognition.

-An advisory board can extend your social network of influence to increase its effectiveness in attracting investors, customers, and top employees.

-No new venture is too small or too large to benefit from an advisory board.

-Leveraging advisory board experience, expertise, credibility, and connections is the best way to succeed in today's competitive markets.

-A startup gains a big boost from building a national or at least a regional reputation.

-Perhaps one of the best-kept secrets of successful ventures is they know that reputation and experience counts, but that it doesn't have to be their own reputation and experience.
We can't emphasize enough what we stated earlier about finding and leveraging advocates.

-Successful entrepreneurs know that hard work, i.e., working 90+ hours a week, rarely leads to a successful new venture.

-It is the smart work of yourself and others, especially a credible and supportive advisory board, which leads to new venture success.

-Many startups make the mistake of developing their board of directors instead of beginning with an advisory board.

-Whenever you start a new venture, leverage the experience, wisdom, and creativity of advisory members to accelerate your growth and time to money.
(also connections to create your network)
>> Advisory board members should not be limited to people who have simply done things, but people who can get things done.
>> Also include people who possess local, regional, or national name recognition.
(For example, prominent politicians, retired executives or managers, and industry gurus make great advisory board members.)

2. Advisory board members can't be sued for their advice because they do not have any fiduciary responsibility to stockholders as do members of the board of directors. Thus, advisory boards are usually made up of nonpolitical, fun, and creative professionals who have a genuine interest and sincere desire to see the startup succeed.

informal
-serve only as long as needed

not liable
-not accountable if things go wrong

advise team
-give advice

2. Encourage honest feedback, i.e., stay away from friends

3. Be professional to get professional behavior

4. Shouldn't cost them anything to participate

5. Listen and take advice or they will leave

Horses for the Product: Dr. Oz??

Advisory Board: Shark Tank QVC Lady

2. NTB: need to believe
-large addressable market with large addressable pain(need)

3. DTS: dominate the situation
-deliver genuine delight in a specific usage situation

4. RTB: reason to believe
-easy to demonstrate and verify the distinction and benefit

5. QTS: quantifiable support
-quantitative evidence of product superiority

2. What is the right level of experience?
-Bring in people that are beyond, but just beyond, where you want to be.

3. How do I get them aboard?
-Provide two-page prospectus of the business, the issues the board will address, how the board will operate, and compensation.

4. What is the compensation?
-Travel, meals, perhaps some entertainment, opportunity to work with smart people on an interesting problem.
-Modest compensation after and extended period of service comparable to their hourly rate in their full-time job.

-enhance the Need to Believe

-enhance the Reason to Believe

-enhance the Unique Product Claim

Sharpening the Angle
-Unique Product Claim
-Large Addressable Need
-Dominate the Situation
-Reason to Believe
-Quantifiable Support

Leveraging Leverage
-Ride Horses
-Prospect for Beta-Goldmines
-Land an Anchor
-Seek Out Benefactors
-Build an Advisory Board

Think Big and Act Big
-Puff it Up
-Grow with Borrowed Interest
-Master Social Media & Publicity
-Get Your Swagger On
-Reach Out with Crowdfunding
-Dominate Trade Shows

-How to market on a budget?

-How to gain credibility when you are a new brand?

Don't act small
-Potential Customers want stable and reliable

-Business Advisors want vital and growing

-Suppliers and Employees want dependable and industry leaders

-Partners and Investors want blue chip and reputation builders

But you are not established, still unproven, a niche player, and don't have a track record

1. Use the elevator pitch to advance the sale and not to make a final sale.

2. An elevator pitch must hit hard and be brief. If at all possible, grab attention with a memorable product demonstration.

-the 30 second to 2 minute elevator ride.
-It is the amount of time that VCs will spare to identify good ideas and successful business teams that have promise and eliminate those that are not ready for funding

-When putting together an elevator pitch, we want to hit hard with the most important information up front.
-We want investors to get interested enough to invite us back to make a bigger, more detailed presentation.

2. Opportunity
-Describe the customers, competitors, how the product or service makes the competitors irrelevant, and how the product makes money. Investors want to see the potential for big revenues and big returns. Remember that if there are no competitors, then there usually are no customers, which in turn means that there is little or no money to be made.

3. Status
-Present clear financials and make note of market traction. Highlight letters of intent, product orders, and better yet, product sales.

4. Ask
-Make a case for your valuation of the startup and ask for an investment to accomplish the next set of important goals such as manufacturing products to fill orders, hiring staff to expand the sales or service organization, or expanding into new locations. Balance investment with reward.

5. Remember
-Demonstrate how the product is validated with interested customers. Highlight the contributions of business team members to the startup. Close with a short "pump up" reminder with an industry opinion leader weighing in on the broad appeal of the product.

1. Social Media empowers small players to think and act big. SIze and money are no longer barriers to starting a successful business.

2. Facebook, Twitter, Youtube, Product Blogs, and Google each have their own rules for success. Informed use of all five is needed to beat Big Business at the Social Media game.

-In this new era of Internet and social media, everyone can be a star everyone can have a voice everyone has market access.

>> Startups can wear very big adult shoes even when they have very tiny baby feet.

Think big and act big, but don't spend money like you are big. DON'T try to buy success. Learn to earn success. DON'T bring in corporate marketers that haven't worked with small budgets. DO use new technology and tactics that level the playing field.

-Technologies such as social media and SMS communications, as well as low-barrier-of-entry market channels such as the Internet now give businesses of every size an opportunity to successfully compete locally and globally.

-Knowing how to think big and act big without stumbling around can make or break a startup.

Startup Location Examples: where would you meet with your potential client? your dirty closet office space? NO. rent an office space for a day. Leverage your contacts (putting plaque on the front entrance with all other company names in the building have the secretary be in on it too)

-When startups go where the money is, and they must, their competitors will be big in terms of money, resources, personnel, and image.
-Customers and investors often equate big with safe. "It's safe to do business with Big Blue because, well, they're big." IBM, aka Big Blue, made a living on this line of reasoning for years.
-Unlike the happy thoughts that come to mind when doing business with a large, well known company, many unhappy thoughts may come to mind when doing business with a startup.
-Potential customers prefer buying from a stable, dependable company, but this business is not established.
-Business advisors prefer working with a viable, ongoing company, but this business is unproven.
-Suppliers and employees prefer teaming up with industry leaders, but this business is a niche player.
-Partners and Investors prefer throwing support behind a reputation builder, but this business doesn't have a blue chip track record and may even harm one's reputation.

New businesses are stressed. When they swim frantically around like little fish or bite off more spending than they can chew, they will choke and fail. When they puff up like a puffer fish they often succeed. One way to puff up is to dominate a vertical market where you have a natural advantage before expanding to other markets.

Ex:
Francois Lane, serial entrepreneur and co-founder of CakeMail a whitelabel email marketing service, insists that new businesses "must select one vertical market and focus on complete world domination of this specific market." He also points out that new businesses are best off when selecting markets that have their own network of trade shows and industry publications. When you are small, it is important to attack a market where it is easy to identify and connect with marketing channels.

Social media provides a spectacular way to puff up your market presence. For many startups, your website is your company. Build a look and feel for your website that is equivalent to an IBM. Show real people. Show a brick and mortar location. Include a telephone number. Learn what makes a productive splash page. Highlight awards, accomplishments, notable customers, and interesting product stories. Blog the victories. Twitter the fun. Facebook for friends. Get involved with a cause popular with social media followers. Bring your pitch to life with YouTube.

Ex: Puff it Up: Phone Service
-BJ's brother's wife acting as his secretary and having all calls forwarded to her number and then saying "please hold Ill connect you with ____ or ____" but really it's still her playing those roles


NPD Test #2

1. Don't do it alone. Be smart, find some help, and "ride horses" to the bank.

2. Look for a love-group and empower the group to help promote and gain market access for your new product.

-find the sort of horses that you can ride to the bank

-a good horse will be a champion for your competitive angle

-identify and partner with people who have the skills, energy, and influence you need to succeed with your product and target market
(after all, with startups and other types of ventures, "it's not what you know, but who you know" that determines success or failure.)

2. Evangelists
-I'll prepare the way by stirring interest and awareness

3. Patrons
-you pat my back and I'll pat yours

-they desire recognition
-they want credibility among peers
-stock to increase their social equity
-being part of a winning team

2. Trade Association President
-angles with "wow factors" put them on the cutting edge

3. Local Expert in your State
-looking credible because he/she is a "thought leader." Experts love to jump on a winning bandwagon

-makes bath time easy for mom and makes baby feel comfortable

-warm to the touch
-non-slip
-hangs in storage: flat
-doesn't absorb water
-folds easily
-fits into bathroom sink
-comfortable to baby
-makes it a bonding experience and there are no distractions

Who would be a Horse for this product?
-Ellen!!

Ride Horses-Evangelists & Patrons
-PUJ Tub and Rachael Ray & Kelly Ripa guessing game

-BIC pens "for her" (pink and purple) designed to fit a woman's hand

-very important to growing a startup business

(also known as product advocates, or the Love Group)

Ex: think of them as a huge herd of wild stallions that jump to action at your command and set a positive, enthusiastic tone for everyone that sees them.

-DDS developed the first management software to connect the operators to the front desk, minimizing billing loss and confusion.
(but even after successfully developing the software and addressing a sizable pain-point, the venture would fail unless it found a way to persuasively and efficiently reach the target market--dentists)

-DDS at first thought they had only 2 choices:
1. hire a company sales force or
2. outsource the selling to independent sales agents such as dental product distributors or value-added resellers.

but Dentrix had a third option when they started looking for leverage

Kimball's hard work in uncovering and solving everyday pain for dentists gave Dentrix a sharp competitive angle
-it wasn't difficult to find experienced and credible dental-industry salespeople that believed in Dentrix and wanted to take a chance on selling it for a commission and stake in the company rather than for a fixed salary

Dentrix leveraged their leverage and found salespeople to help them do what they couldn't do or afford to do on their own

-learned hot noble gases are used as insulators inside of dry suits to keep divers warm
-envisioned how the "dry suit" technology could be adapted to insulate winter gear
-while insulated clothing is nothing new, using thermostat-valve-controlled linings in clothing to regulate temperature is new
-no bulk, no layering, just turn the dial up and down
(if the skier is cold, add a little argon gas to the jacket lining if a skier is hot, open the valve and release some argon to cool down)

-from the outset, he understood how to network and recruit product advocates.
-his biggest successes have been with a local mayor that wants to make his city the skiing Mecca of the US, who has introduced him to a number of leading outdoor companies and investors.
(one company is not a primary development partner and several others helped fund the business)
-he was also introduced to an industry "graybeard" (someone w/ decades of experience in the outdoor markets) who began assisting the company as a consultant
-he featured this industry insider whenever pitching Klymit to investors

-don't use time and energy to fight cynics and hecklers. learn to focus on the love and take your product to the market through the eyes of those that love it

-"Who is in your Love Group?"
>> most startup marketers, similar to most Big Business marketers, can't identify who faithfully purchases their products beyond offering up a few Demographics like average age, gender split, and regional sales percentages
(startups can't afford to be that unobservant)

-The Love Group is their lifeblood. Just like a political candidate, startups must know and retain their Love Group while at the same time helping the fence-sitters see their product through the eyes of the Love Group

-New companies don't need 50% of the popular vote to succeed, but do need a strong group of core customers that they thoroughly understand. By thoroughly understand, we are talking about drawing together a profile that looks more like an ethnographic Mona Lisa than a demographic stick figure. What do customers look like, how do they express themselves, what do they read and watch, where do they live, what vehicles do they drive, what are their hopes and aspirations, and most important, which of our product features and benefits really get them going?

-Special interest groups were successfully encouraging legislation to reduce, phase out, and even ban the use of plastic packaging and products. The American Plastics Council (APC) came to the rescue with a flashy advertising campaign to inform the public about the substantial efforts the industry was making toward recycling and reuse, and that products and packaging made of plastic actually saved resources compared to other alternatives such as paper or metal. Millions of advertising dollars were spent, expectations were high, but success was nowhere to be found.

>> Directly attacking the concerns of the Hate Group didn't convince anyone and ultimately led to the APC being ordered by a dozen or so state Attorneys General to desist in their "false" advertising claims about the availability of plastics recycling.

-The APC failed because managers ignored the Love Group in favor of attacking the Hate Group, but they learned their lesson. The next round of advertising built on the beliefs of plastics advocates. These messages highlighted the noble qualities of plastics - personal safety and health - that researchers had identified in personal interviews with the plastics Love Group. This time the positive results were staggering.

- They raise an important point and put themselves on the threshold of discovering what really sets a successful startup marketer apart from a frustrated would-be entrepreneur.

-Successful startup marketers don't expect their Love Group to find them they aggressively seek out their Love Group. >> "Build it and they will come" rarely works in today's world of information overload and product proliferation

-Realizing we don't know our Love Group is the first step in beginning to prospect to find a Love Group.

-There are many ways to prospect for a Love Group, but we suggest bringing eight to twelve people together that may benefit from the new product, feeding them pizza, and soliciting their impressions.

-After explaining the product concept, ask questions like, "Who would love this product? What would they love about it? Where and how would they use it?"

- Listen and note the responses, but more importantly, observe the participants and look for those few who are completely engaged and articulate.
-Ask them back to another session so that you can find out more, because they are your Love Group.

-One prospecting session will not be enough to establish a detailed profile for the Love Group. In our experience, about three to five prospecting sessions are needed, and they should be spread across a variety of geographic regions.

-At the time, executives wanted to branch out into new areas of clothing over concerns that too high a percentage of their sales came from jeans.

-They wanted to grow by penetrating new markets. Levi Strauss did their homework. They examined suit-buying preferences, shopping practices, lifestyles, and demographics for 2,000 men.

-They uncovered five distinct segments in the market: the traditionalist, the classic independent, the utilitarian, the trendy casual, and the price shopper.

-The marketing quickly focused in on the "classic independent" as the target, i.e., the tailored suit Love Group.

-The segment accounted for 21% of male shoppers. They purchased about one-half of men's natural-fiber clothing products, were not price-sensitive, generally shopped for clothes in specialty stores, and strongly preferred tailored clothing rather than buying it off the rack.

-The Levi Tailored Classics marketing team put together focus groups of the classic independents to prove the new product concept.

-The focus group testing went well until it was suggested that (1) the suits would be sold off the rack, and (2) the suits would be manufactured by Levi Strauss.

-At that point objections flew hot and heavy.
-Behind the mirror in the focus group facility, the marketing team had answers for every objection.

-The marketing team pushed forward, even though the product was completely inconsistent with everyone's existing belief about the brand and because of it, trounced every physical and emotional benefit these customers wanted from the Levi's brand.

-But again and again we see the same behavior from entrepreneurs dead set on selling to a particular type of customer.
>> They settle for fool's gold rather than prospecting for real gold.

Ex:
-To make the point, consider the case of an entrepreneur who had invented a device to measure the curvature and other features of human spinal columns.

-His technology could give doctors the lowdown on backbones.

-Medical doctors, however, are a skeptical group. They are highly educated, opinionated, and slow to revise best practices.

-This didn't stop our entrepreneur.
-MDs would love his invention, he just knew it. -He aggressively pursued them. He pushed hard. They pushed back. They preferred X-rays.

-In the meantime, chiropractors discovered the new back-measuring device and loved it. It was just what they needed to get a quick read on a new patient's spinal column and to provide feedback on the progress being made by on-going patients.

-The entrepreneur, however, didn't want to sell to chiropractors. He felt they weren't professionals and that their involvement would diminish the seriousness and significance of his invention.

-He ignored the Love Group, unsuccessfully tried over and over again to sell his invention to the Hate Group, and ultimately squandered hundreds of thousands in venture capital. His business went bankrupt.

1. Recruit early adopters to provide capital to develop your new product.

2. Learn the keys to selling innovators and how they differ from selling imitators.

3. Give innovators what they want the next big thing at a bargain price. But make sure to offer a bargain price that keeps your startup in business.

-Consider mining for gold with the early adopters the customers that will get your startup out of the gate and running!

-Pete Seeger wrote the lines, "Oh, had I a golden thread and a needle so fine, I'd weave a magic strand of rainbow design."

-Beta Customers fund your R&D activities

-Getting the first person to buy is unbelievably expensive. Getting the second person to buy is unbelievably cheap

-Software products usually have an alpha stage, that is, a stage in which features are added a beta stage, in which flaws are removed and a market-ready stage, in which the product is fully groomed and broadly released to potential buyers.

-The beta version is the first version of a product that gets released outside the business.

-Beta versions help developers evaluate their products in real-world settings.

-Beta versions are evaluated by beta testers.

-Beta testers can be current or prospective customers. In the software industry, beta testers receive the beta version of a product for free or at a "bargain" price.

-Consequently, when looking for beta testers to transform into beta goldmines, picking customers with a strong need to believe is a key success factor.

-In other words, the pain-point must be particularly painful for beta goldmines or the need for market leadership must be particularly strong.

>> Give innovators what they want the next big thing at a bargain price.

>> "Build it and they will come," is just a Field of Dreams

1. product development
2. alpha test
3. beta test
4. release

-the number of innovator-buyers can be very small, sometimes as small as 2-3% of the total number of people that will ultimately make purchases in the product category.

-Consider the Dvorak keyboard. Back in 1936, Dr. Dvorak patented a simplified and much improved typewriter keyboard layout to solve the fatigue and inefficiency problems created by the gold-standard QWERTY keyboard layout.

-In today's world, the use of computers makes the streamlined Dvorak keyboard available to anyone who wants it however, the old QWERTY keyboard introduced back in the 1860s continues to dominate.

-Beta-products suffer when people see them as complex to understand or just plain difficult to use.

-The IBM PCjr of the mid-1980s provides an interesting example.

-High price and limited software aside, the product was DOA because of its tiny "Chiclet" keyboard, which made typing almost impossible.

-Evidently, when developing the PCjr, IBM hired usability testers with some mighty tiny fingers.

-Beta-test customers become beta goldmines when they become reference points for future customers, provide funding for product R&D, are top prospects for upgraded products, and supply easy access to in-the-field reactions regarding value-in-use, product fit with current practices, and product usability.

-When it comes to purchasing behavior, innovators
(1) want to buy the next new thing before having to pay full price,
(2) believe they deserve special consideration because they are taking extra time and effort to test an unproven product, and
(3) refuse to sit back and watch anyone else have something new that they don't have.

-Knowing a little bit about the buying culture of innovators can go a long way in helping entrepreneurs sell to them.

-First, innovators believe that new technology initially costs more than the old way of doing things, but that costs will come down with time.

(Ex: After all, ENIAC, the first large-scale computer, cost $500,000 back in 1946 and only performed 5,000 operations per second. Today's home computers perform billions of operations per second at less than a hundredth of ENIAC's price tag.)

-Second, innovators apparently can't say no to new technology even when they know it falls way behind on the bang-for-buck buying curve.

>> Innovators crave new technology, but fear they can't afford to buy new technology.

> Entrepreneurs to the rescue! Entrepreneurs can attract innovators by asking innovators for their help.

> By recruiting innovators as product-development partners, startups can offer opportunities for innovators to move quickly and buy new technology at bargain prices before it is introduced to the general public at nosebleed skim-the-cream prices.

1. An Anchor is your "stamp of approval." It provides "I have arrived" credibility.
(your core customers. your best friends)

2. Anchor customers pay the bills. Every business needs a steady flow of revenue even if it is low margin revenue.

-Finding anchor customers must be a top priority.

-For a moment, imagine that different kinds of businesses are like different kinds of ships.

-The Big Business ship likes to drop anchor in a calm and sunny harbor. The heavy anchor and calm waters make everyone on board the Big Business ship feel safe and secure.

-The startup ship is like a pirate sailing the open sea.
-The captain of the startup business ship doesn't like to drop anchor. The captain knows the ship only moves once the anchor is on board. Startup businesses must get an anchor on board before they can start sailing.
(with an anchor on board, you can start sailing!)

Make Partnerships
-give discounts in exchange for being a reference
-test the "newest things" on them
-make them feel like a partner

-Take a look at their customer list. There is Toyota, Cadillac, Ford, Microsoft, HP, Oracle, VISA, Ameritrade, ADP, Xerox, Siemens, Tyco, HBO, Fox, CBS, Walmart, Mary Kay, eBay, and it goes on.

-Omniture always had great products and talented employees, but their success story really got started with two anchor customers, Microsoft and eBay.

-According to their CEO, before landing these anchor customers, the Omniture sales cycle was a long and painful nine months. Prospective clients had lots of questions about Ominiture's financial stability, technology, and Service Quality.

-With the anchors on board, however, most of the prospective clients' questions were answered with two words: Microsoft and eBay. The sales cycle shrank to a manageable three months.

-For example, a local bakery got its start by providing low-priced, high-quality bread and other baked goods such as impossible-to-resist giant cookies to area restaurants, cafeterias, and catering services.

-These businesses were their anchor customers.

-With the anchors established, the bakery could make their brick-and-mortar retail store a success, charging premium prices for their tried-and-true products, and even were able to add a few new products not offered through other marketing channels.

-Anchor customers get your startup going and keep paying the operating bills through good times and bad.

-Once the factory is rolling, design engineers and marketers start looking for opportunities to swap out the manufacture of low-margin goods with high-margin goods.

-Not every manufacturer, however, has the good sense to bring anchor customers on board before investing millions of dollars in product development and/or building a new factory. Recall DuPont's cautionary tale of Kevlar.

-DuPont spent $500 million to develop and commercialize Kevlar as a replacement for nylon as tire cord, but did not lock-up tire manufacturers. The tire manufacturers decided on steel as a better alternative and took a pass on Kevlar.

-This left DuPont with a very expensive product in search of a market a market they never found. Startups can't afford this type of misstep.

Big anchors don't always suit small startups.

1. Payment Practices
-bigger anchors pay slower
2. Vetting Practices
-smaller and growing anchors set lower hurdles
3. Distribution Practices
-online and TV shopping channels may make it easier to manage inventory

-An important decision point for a startup is whether the potential anchor is more likely to foster a startup business or let it flounder and sink under the weight of their way of doing business.

-Unfortunately, we have seen far too many examples of the latter rather than the former.

-A startup the size of a dinghy goes down fast when they take on an anchor fit for an ocean liner.

-The national retailer declined to reschedule a pickup and told the new business to wait another year before trying again.

-Yet another new business shipped inventory worth hundreds of thousands of dollars to a national retailer notorious for paying vendors slowly.

-The entrepreneurs, having taken out second mortgages and maxed-out their credit cards, got nervous and tried to pressure the retailer into paying with aggressive, bordering on rude and unprofessional, phone calls and letters.

-In response, the national retailer returned the entire inventory. The entrepreneurs were then left with lots of debt, lots of inventory, and few prospects for earning any revenue.

1. A benefactor is a company with complimentary products and/or services that win if your startup wins.

2. Entrepreneurs can find benefactors in the value-chain, in the local community, and in the same industry.

3. Benefactors can help out a startup with cash as well as non-cash benefits.

-Think through the question carefully, because the answer will help you find initial investors, key strategic partners, and perhaps anchor customers.

-Learning to ask the right questions is fundamental to startup success!

-Dorothy needs to seek out benefactors and she keeps an eye open for anyone that will also greatly benefit from a trip to the Emerald City.

-At the journey's outset, Dorothy runs across a scarecrow at a crossroads. She removes a nail to take the scarecrow down from his post and finds out the scarecrow desperately wants a brain. Dorothy suggests that the scarecrow can get a brain from the Wizard in the Emerald City. The scarecrow joins Team Dorothy.

-Next, the two stumble on a rusted tin man. Dorothy liberally applies some oil from an old oil can and finds out the tin man desperately wants a heart. Dorothy suggests that the tin man can get a heart from the Wizard in the Emerald City. The tin man is now part of the crew.

- Not long afterwards, the little group is startled by a lion who attacks the travelers and tries to bite Dorothy's little dog Toto. Dorothy, heedless of the danger, swats the lion on the nose to protect her dog. Dorothy then has to comfort the lion as he whimpers about his nose, and finds out the lion is cowardly and desperately wants courage. Dorothy suggests that the cowardly lion can get courage from the Wizard in the Emerald City. The lion completes the team, and then the three benefactors successfully get Dorothy to the Emerald City.

-But the story does not all go in Dorothy's favor. Turns out, the Wizard also needs a few benefactors. He needs someone to kill the Wicked Witch of the West. When Dorothy and her team arrive, the Wizard gives everyone the royal treatment. He then gives Team Dorothy an audience and finds out Dorothy desperately wants to return home, the scarecrow desperately wants a brain, the tin man desperately wants a heart, and the lion desperately wants courage. The Wizard promises to give each benefactor what they want most if and when Dorothy brings him the broomstick of the Wicked Witch of the West. Like Dorothy, the Wizard is a born entrepreneur. He really understands how to spot benefactors.

-Products are part of a value chain that extends from components to customers.

-Understanding the value chain and where your startup fits in can be a powerful tool to give your new business legs.

-DuPont manufactures the nylon and stain-release sauce that other manufacturers and carpet mills process to make the carpeting we have in our homes and businesses.

-DuPont found benefactors to transform the carpet industry from a narrow-margin heartbreaker to a high-flying profit maker.

-DuPont managers fought commodity nylon prices for generations, but then decided to fight back by offering something that every player in the carpet industry wanted most.

-Every carpet manufacturer and retailer wanted a premium-priced carpet that consumers would recognize and trust.

-Everyone in the industry wanted a profitable product that would sell itself.

-Before Stainmaster, all carpeting looked pretty much the same to consumers.

-Since all carpeting looked the same, consumers bought on price - bad news for the entire value chain.

-Over the past decade, it has grown rapidly into one of the Internet's top 20 properties.

-To accelerate their growth, MyFamily raised more than $75 million in funding from benefactors.

-MyFamily looked at their value chain and asked the question, "Who will benefit if I succeed?"

-The answers company managers came up with were Intel, Compaq, AOL, and Kodak. Intel benefits because family-history buffs want fast computer processes to digest their mountains of digital photos.

-Compaq benefits because family-history buffs want new computers with lots of hard drive space, up-to-date memory, and Ethernet connections to access and post online genealogical information.
-AOL benefits by providing a value-added service to its growing base of family-history buff Internet subscribers.
-Kodak benefits by repositioning itself in the digital photography sector by building on the traditional strength of family photography.

-My-Family increases the need for Intel, Compaq, AOL, and Kodak products. In addition to capital raised from these investors, My-Family also received publicity from their association with these companies.

-Agilix is a software company that specializes in programs for Tablet PCs.

-In this high-tech product category, Agilix needs capital to fund R&D, but also needs access to programming code and computer hardware technology.

-To address the first need, Agilix approached Franklin Covey. Franklin Covey promotes personal planning and saw Agilix as a means to move forward in the electronic planner product space.

-Agilix got their funding and Franklin Covey got a winning product.

-Reviewers refer to Agilix-developed TabletPlanner software as marvelous, brilliant, and empowering. Competing with heavyweights like Microsoft, HP, and Corel, TabletPlanner is one of the top 10 best Tablet PC applications.

-To address needs beyond R&D capital, Agilix has gone to Microsoft and key computer hardware manufactures.

-They have become strategic partners that have provided Agilix with access to key technologies, allowing them to be on the cutting edge of this emerging field.

-As a result of these benefactor alliances, Agilix was able to be one of two software companies to have their software applications ready for the launch of Windows-based operating systems for Tablet PCs.

1. For a startup, advisory boards are more important than a board of directors.

2. Don't limit advisory boards to just include businesspeople.

3. Invite advisory board members that love your product, have a stake in staying on the leading edge of your industry, and/or people with regional, national or industry-wide name recognition.

-An advisory board can extend your social network of influence to increase its effectiveness in attracting investors, customers, and top employees.

-No new venture is too small or too large to benefit from an advisory board.

-Leveraging advisory board experience, expertise, credibility, and connections is the best way to succeed in today's competitive markets.

-A startup gains a big boost from building a national or at least a regional reputation.

-Perhaps one of the best-kept secrets of successful ventures is they know that reputation and experience counts, but that it doesn't have to be their own reputation and experience.
We can't emphasize enough what we stated earlier about finding and leveraging advocates.

-Successful entrepreneurs know that hard work, i.e., working 90+ hours a week, rarely leads to a successful new venture.

-It is the smart work of yourself and others, especially a credible and supportive advisory board, which leads to new venture success.

-Many startups make the mistake of developing their board of directors instead of beginning with an advisory board.

-Whenever you start a new venture, leverage the experience, wisdom, and creativity of advisory members to accelerate your growth and time to money.
(also connections to create your network)
>> Advisory board members should not be limited to people who have simply done things, but people who can get things done.
>> Also include people who possess local, regional, or national name recognition.
(For example, prominent politicians, retired executives or managers, and industry gurus make great advisory board members.)

2. Advisory board members can't be sued for their advice because they do not have any fiduciary responsibility to stockholders as do members of the board of directors. Thus, advisory boards are usually made up of nonpolitical, fun, and creative professionals who have a genuine interest and sincere desire to see the startup succeed.

informal
-serve only as long as needed

not liable
-not accountable if things go wrong

advise team
-give advice

2. Encourage honest feedback, i.e., stay away from friends

3. Be professional to get professional behavior

4. Shouldn't cost them anything to participate

5. Listen and take advice or they will leave

Horses for the Product: Dr. Oz??

Advisory Board: Shark Tank QVC Lady

2. NTB: need to believe
-large addressable market with large addressable pain(need)

3. DTS: dominate the situation
-deliver genuine delight in a specific usage situation

4. RTB: reason to believe
-easy to demonstrate and verify the distinction and benefit

5. QTS: quantifiable support
-quantitative evidence of product superiority

2. What is the right level of experience?
-Bring in people that are beyond, but just beyond, where you want to be.

3. How do I get them aboard?
-Provide two-page prospectus of the business, the issues the board will address, how the board will operate, and compensation.

4. What is the compensation?
-Travel, meals, perhaps some entertainment, opportunity to work with smart people on an interesting problem.
-Modest compensation after and extended period of service comparable to their hourly rate in their full-time job.

-enhance the Need to Believe

-enhance the Reason to Believe

-enhance the Unique Product Claim

Sharpening the Angle
-Unique Product Claim
-Large Addressable Need
-Dominate the Situation
-Reason to Believe
-Quantifiable Support

Leveraging Leverage
-Ride Horses
-Prospect for Beta-Goldmines
-Land an Anchor
-Seek Out Benefactors
-Build an Advisory Board

Think Big and Act Big
-Puff it Up
-Grow with Borrowed Interest
-Master Social Media & Publicity
-Get Your Swagger On
-Reach Out with Crowdfunding
-Dominate Trade Shows

-How to market on a budget?

-How to gain credibility when you are a new brand?

Don't act small
-Potential Customers want stable and reliable

-Business Advisors want vital and growing

-Suppliers and Employees want dependable and industry leaders

-Partners and Investors want blue chip and reputation builders

But you are not established, still unproven, a niche player, and don't have a track record

1. Use the elevator pitch to advance the sale and not to make a final sale.

2. An elevator pitch must hit hard and be brief. If at all possible, grab attention with a memorable product demonstration.

-the 30 second to 2 minute elevator ride.
-It is the amount of time that VCs will spare to identify good ideas and successful business teams that have promise and eliminate those that are not ready for funding

-When putting together an elevator pitch, we want to hit hard with the most important information up front.
-We want investors to get interested enough to invite us back to make a bigger, more detailed presentation.

2. Opportunity
-Describe the customers, competitors, how the product or service makes the competitors irrelevant, and how the product makes money. Investors want to see the potential for big revenues and big returns. Remember that if there are no competitors, then there usually are no customers, which in turn means that there is little or no money to be made.

3. Status
-Present clear financials and make note of market traction. Highlight letters of intent, product orders, and better yet, product sales.

4. Ask
-Make a case for your valuation of the startup and ask for an investment to accomplish the next set of important goals such as manufacturing products to fill orders, hiring staff to expand the sales or service organization, or expanding into new locations. Balance investment with reward.

5. Remember
-Demonstrate how the product is validated with interested customers. Highlight the contributions of business team members to the startup. Close with a short "pump up" reminder with an industry opinion leader weighing in on the broad appeal of the product.

1. Social Media empowers small players to think and act big. SIze and money are no longer barriers to starting a successful business.

2. Facebook, Twitter, Youtube, Product Blogs, and Google each have their own rules for success. Informed use of all five is needed to beat Big Business at the Social Media game.

-In this new era of Internet and social media, everyone can be a star everyone can have a voice everyone has market access.

>> Startups can wear very big adult shoes even when they have very tiny baby feet.

Think big and act big, but don't spend money like you are big. DON'T try to buy success. Learn to earn success. DON'T bring in corporate marketers that haven't worked with small budgets. DO use new technology and tactics that level the playing field.

-Technologies such as social media and SMS communications, as well as low-barrier-of-entry market channels such as the Internet now give businesses of every size an opportunity to successfully compete locally and globally.

-Knowing how to think big and act big without stumbling around can make or break a startup.

Startup Location Examples: where would you meet with your potential client? your dirty closet office space? NO. rent an office space for a day. Leverage your contacts (putting plaque on the front entrance with all other company names in the building have the secretary be in on it too)

-When startups go where the money is, and they must, their competitors will be big in terms of money, resources, personnel, and image.
-Customers and investors often equate big with safe. "It's safe to do business with Big Blue because, well, they're big." IBM, aka Big Blue, made a living on this line of reasoning for years.
-Unlike the happy thoughts that come to mind when doing business with a large, well known company, many unhappy thoughts may come to mind when doing business with a startup.
-Potential customers prefer buying from a stable, dependable company, but this business is not established.
-Business advisors prefer working with a viable, ongoing company, but this business is unproven.
-Suppliers and employees prefer teaming up with industry leaders, but this business is a niche player.
-Partners and Investors prefer throwing support behind a reputation builder, but this business doesn't have a blue chip track record and may even harm one's reputation.

New businesses are stressed. When they swim frantically around like little fish or bite off more spending than they can chew, they will choke and fail. When they puff up like a puffer fish they often succeed. One way to puff up is to dominate a vertical market where you have a natural advantage before expanding to other markets.

Ex:
Francois Lane, serial entrepreneur and co-founder of CakeMail a whitelabel email marketing service, insists that new businesses "must select one vertical market and focus on complete world domination of this specific market." He also points out that new businesses are best off when selecting markets that have their own network of trade shows and industry publications. When you are small, it is important to attack a market where it is easy to identify and connect with marketing channels.

Social media provides a spectacular way to puff up your market presence. For many startups, your website is your company. Build a look and feel for your website that is equivalent to an IBM. Show real people. Show a brick and mortar location. Include a telephone number. Learn what makes a productive splash page. Highlight awards, accomplishments, notable customers, and interesting product stories. Blog the victories. Twitter the fun. Facebook for friends. Get involved with a cause popular with social media followers. Bring your pitch to life with YouTube.

Ex: Puff it Up: Phone Service
-BJ's brother's wife acting as his secretary and having all calls forwarded to her number and then saying "please hold Ill connect you with ____ or ____" but really it's still her playing those roles


NPD Test #2

1. Don't do it alone. Be smart, find some help, and "ride horses" to the bank.

2. Look for a love-group and empower the group to help promote and gain market access for your new product.

-find the sort of horses that you can ride to the bank

-a good horse will be a champion for your competitive angle

-identify and partner with people who have the skills, energy, and influence you need to succeed with your product and target market
(after all, with startups and other types of ventures, "it's not what you know, but who you know" that determines success or failure.)

2. Evangelists
-I'll prepare the way by stirring interest and awareness

3. Patrons
-you pat my back and I'll pat yours

-they desire recognition
-they want credibility among peers
-stock to increase their social equity
-being part of a winning team

2. Trade Association President
-angles with "wow factors" put them on the cutting edge

3. Local Expert in your State
-looking credible because he/she is a "thought leader." Experts love to jump on a winning bandwagon

-makes bath time easy for mom and makes baby feel comfortable

-warm to the touch
-non-slip
-hangs in storage: flat
-doesn't absorb water
-folds easily
-fits into bathroom sink
-comfortable to baby
-makes it a bonding experience and there are no distractions

Who would be a Horse for this product?
-Ellen!!

Ride Horses-Evangelists & Patrons
-PUJ Tub and Rachael Ray & Kelly Ripa guessing game

-BIC pens "for her" (pink and purple) designed to fit a woman's hand

-very important to growing a startup business

(also known as product advocates, or the Love Group)

Ex: think of them as a huge herd of wild stallions that jump to action at your command and set a positive, enthusiastic tone for everyone that sees them.

-DDS developed the first management software to connect the operators to the front desk, minimizing billing loss and confusion.
(but even after successfully developing the software and addressing a sizable pain-point, the venture would fail unless it found a way to persuasively and efficiently reach the target market--dentists)

-DDS at first thought they had only 2 choices:
1. hire a company sales force or
2. outsource the selling to independent sales agents such as dental product distributors or value-added resellers.

but Dentrix had a third option when they started looking for leverage

Kimball's hard work in uncovering and solving everyday pain for dentists gave Dentrix a sharp competitive angle
-it wasn't difficult to find experienced and credible dental-industry salespeople that believed in Dentrix and wanted to take a chance on selling it for a commission and stake in the company rather than for a fixed salary

Dentrix leveraged their leverage and found salespeople to help them do what they couldn't do or afford to do on their own

-learned hot noble gases are used as insulators inside of dry suits to keep divers warm
-envisioned how the "dry suit" technology could be adapted to insulate winter gear
-while insulated clothing is nothing new, using thermostat-valve-controlled linings in clothing to regulate temperature is new
-no bulk, no layering, just turn the dial up and down
(if the skier is cold, add a little argon gas to the jacket lining if a skier is hot, open the valve and release some argon to cool down)

-from the outset, he understood how to network and recruit product advocates.
-his biggest successes have been with a local mayor that wants to make his city the skiing Mecca of the US, who has introduced him to a number of leading outdoor companies and investors.
(one company is not a primary development partner and several others helped fund the business)
-he was also introduced to an industry "graybeard" (someone w/ decades of experience in the outdoor markets) who began assisting the company as a consultant
-he featured this industry insider whenever pitching Klymit to investors

-don't use time and energy to fight cynics and hecklers. learn to focus on the love and take your product to the market through the eyes of those that love it

-"Who is in your Love Group?"
>> most startup marketers, similar to most Big Business marketers, can't identify who faithfully purchases their products beyond offering up a few Demographics like average age, gender split, and regional sales percentages
(startups can't afford to be that unobservant)

-The Love Group is their lifeblood. Just like a political candidate, startups must know and retain their Love Group while at the same time helping the fence-sitters see their product through the eyes of the Love Group

-New companies don't need 50% of the popular vote to succeed, but do need a strong group of core customers that they thoroughly understand. By thoroughly understand, we are talking about drawing together a profile that looks more like an ethnographic Mona Lisa than a demographic stick figure. What do customers look like, how do they express themselves, what do they read and watch, where do they live, what vehicles do they drive, what are their hopes and aspirations, and most important, which of our product features and benefits really get them going?

-Special interest groups were successfully encouraging legislation to reduce, phase out, and even ban the use of plastic packaging and products. The American Plastics Council (APC) came to the rescue with a flashy advertising campaign to inform the public about the substantial efforts the industry was making toward recycling and reuse, and that products and packaging made of plastic actually saved resources compared to other alternatives such as paper or metal. Millions of advertising dollars were spent, expectations were high, but success was nowhere to be found.

>> Directly attacking the concerns of the Hate Group didn't convince anyone and ultimately led to the APC being ordered by a dozen or so state Attorneys General to desist in their "false" advertising claims about the availability of plastics recycling.

-The APC failed because managers ignored the Love Group in favor of attacking the Hate Group, but they learned their lesson. The next round of advertising built on the beliefs of plastics advocates. These messages highlighted the noble qualities of plastics - personal safety and health - that researchers had identified in personal interviews with the plastics Love Group. This time the positive results were staggering.

- They raise an important point and put themselves on the threshold of discovering what really sets a successful startup marketer apart from a frustrated would-be entrepreneur.

-Successful startup marketers don't expect their Love Group to find them they aggressively seek out their Love Group. >> "Build it and they will come" rarely works in today's world of information overload and product proliferation

-Realizing we don't know our Love Group is the first step in beginning to prospect to find a Love Group.

-There are many ways to prospect for a Love Group, but we suggest bringing eight to twelve people together that may benefit from the new product, feeding them pizza, and soliciting their impressions.

-After explaining the product concept, ask questions like, "Who would love this product? What would they love about it? Where and how would they use it?"

- Listen and note the responses, but more importantly, observe the participants and look for those few who are completely engaged and articulate.
-Ask them back to another session so that you can find out more, because they are your Love Group.

-One prospecting session will not be enough to establish a detailed profile for the Love Group. In our experience, about three to five prospecting sessions are needed, and they should be spread across a variety of geographic regions.

-At the time, executives wanted to branch out into new areas of clothing over concerns that too high a percentage of their sales came from jeans.

-They wanted to grow by penetrating new markets. Levi Strauss did their homework. They examined suit-buying preferences, shopping practices, lifestyles, and demographics for 2,000 men.

-They uncovered five distinct segments in the market: the traditionalist, the classic independent, the utilitarian, the trendy casual, and the price shopper.

-The marketing quickly focused in on the "classic independent" as the target, i.e., the tailored suit Love Group.

-The segment accounted for 21% of male shoppers. They purchased about one-half of men's natural-fiber clothing products, were not price-sensitive, generally shopped for clothes in specialty stores, and strongly preferred tailored clothing rather than buying it off the rack.

-The Levi Tailored Classics marketing team put together focus groups of the classic independents to prove the new product concept.

-The focus group testing went well until it was suggested that (1) the suits would be sold off the rack, and (2) the suits would be manufactured by Levi Strauss.

-At that point objections flew hot and heavy.
-Behind the mirror in the focus group facility, the marketing team had answers for every objection.

-The marketing team pushed forward, even though the product was completely inconsistent with everyone's existing belief about the brand and because of it, trounced every physical and emotional benefit these customers wanted from the Levi's brand.

-But again and again we see the same behavior from entrepreneurs dead set on selling to a particular type of customer.
>> They settle for fool's gold rather than prospecting for real gold.

Ex:
-To make the point, consider the case of an entrepreneur who had invented a device to measure the curvature and other features of human spinal columns.

-His technology could give doctors the lowdown on backbones.

-Medical doctors, however, are a skeptical group. They are highly educated, opinionated, and slow to revise best practices.

-This didn't stop our entrepreneur.
-MDs would love his invention, he just knew it. -He aggressively pursued them. He pushed hard. They pushed back. They preferred X-rays.

-In the meantime, chiropractors discovered the new back-measuring device and loved it. It was just what they needed to get a quick read on a new patient's spinal column and to provide feedback on the progress being made by on-going patients.

-The entrepreneur, however, didn't want to sell to chiropractors. He felt they weren't professionals and that their involvement would diminish the seriousness and significance of his invention.

-He ignored the Love Group, unsuccessfully tried over and over again to sell his invention to the Hate Group, and ultimately squandered hundreds of thousands in venture capital. His business went bankrupt.

1. Recruit early adopters to provide capital to develop your new product.

2. Learn the keys to selling innovators and how they differ from selling imitators.

3. Give innovators what they want the next big thing at a bargain price. But make sure to offer a bargain price that keeps your startup in business.

-Consider mining for gold with the early adopters the customers that will get your startup out of the gate and running!

-Pete Seeger wrote the lines, "Oh, had I a golden thread and a needle so fine, I'd weave a magic strand of rainbow design."

-Beta Customers fund your R&D activities

-Getting the first person to buy is unbelievably expensive. Getting the second person to buy is unbelievably cheap

-Software products usually have an alpha stage, that is, a stage in which features are added a beta stage, in which flaws are removed and a market-ready stage, in which the product is fully groomed and broadly released to potential buyers.

-The beta version is the first version of a product that gets released outside the business.

-Beta versions help developers evaluate their products in real-world settings.

-Beta versions are evaluated by beta testers.

-Beta testers can be current or prospective customers. In the software industry, beta testers receive the beta version of a product for free or at a "bargain" price.

-Consequently, when looking for beta testers to transform into beta goldmines, picking customers with a strong need to believe is a key success factor.

-In other words, the pain-point must be particularly painful for beta goldmines or the need for market leadership must be particularly strong.

>> Give innovators what they want the next big thing at a bargain price.

>> "Build it and they will come," is just a Field of Dreams

1. product development
2. alpha test
3. beta test
4. release

-the number of innovator-buyers can be very small, sometimes as small as 2-3% of the total number of people that will ultimately make purchases in the product category.

-Consider the Dvorak keyboard. Back in 1936, Dr. Dvorak patented a simplified and much improved typewriter keyboard layout to solve the fatigue and inefficiency problems created by the gold-standard QWERTY keyboard layout.

-In today's world, the use of computers makes the streamlined Dvorak keyboard available to anyone who wants it however, the old QWERTY keyboard introduced back in the 1860s continues to dominate.

-Beta-products suffer when people see them as complex to understand or just plain difficult to use.

-The IBM PCjr of the mid-1980s provides an interesting example.

-High price and limited software aside, the product was DOA because of its tiny "Chiclet" keyboard, which made typing almost impossible.

-Evidently, when developing the PCjr, IBM hired usability testers with some mighty tiny fingers.

-Beta-test customers become beta goldmines when they become reference points for future customers, provide funding for product R&D, are top prospects for upgraded products, and supply easy access to in-the-field reactions regarding value-in-use, product fit with current practices, and product usability.

-When it comes to purchasing behavior, innovators
(1) want to buy the next new thing before having to pay full price,
(2) believe they deserve special consideration because they are taking extra time and effort to test an unproven product, and
(3) refuse to sit back and watch anyone else have something new that they don't have.

-Knowing a little bit about the buying culture of innovators can go a long way in helping entrepreneurs sell to them.

-First, innovators believe that new technology initially costs more than the old way of doing things, but that costs will come down with time.

(Ex: After all, ENIAC, the first large-scale computer, cost $500,000 back in 1946 and only performed 5,000 operations per second. Today's home computers perform billions of operations per second at less than a hundredth of ENIAC's price tag.)

-Second, innovators apparently can't say no to new technology even when they know it falls way behind on the bang-for-buck buying curve.

>> Innovators crave new technology, but fear they can't afford to buy new technology.

> Entrepreneurs to the rescue! Entrepreneurs can attract innovators by asking innovators for their help.

> By recruiting innovators as product-development partners, startups can offer opportunities for innovators to move quickly and buy new technology at bargain prices before it is introduced to the general public at nosebleed skim-the-cream prices.

1. An Anchor is your "stamp of approval." It provides "I have arrived" credibility.
(your core customers. your best friends)

2. Anchor customers pay the bills. Every business needs a steady flow of revenue even if it is low margin revenue.

-Finding anchor customers must be a top priority.

-For a moment, imagine that different kinds of businesses are like different kinds of ships.

-The Big Business ship likes to drop anchor in a calm and sunny harbor. The heavy anchor and calm waters make everyone on board the Big Business ship feel safe and secure.

-The startup ship is like a pirate sailing the open sea.
-The captain of the startup business ship doesn't like to drop anchor. The captain knows the ship only moves once the anchor is on board. Startup businesses must get an anchor on board before they can start sailing.
(with an anchor on board, you can start sailing!)

Make Partnerships
-give discounts in exchange for being a reference
-test the "newest things" on them
-make them feel like a partner

-Take a look at their customer list. There is Toyota, Cadillac, Ford, Microsoft, HP, Oracle, VISA, Ameritrade, ADP, Xerox, Siemens, Tyco, HBO, Fox, CBS, Walmart, Mary Kay, eBay, and it goes on.

-Omniture always had great products and talented employees, but their success story really got started with two anchor customers, Microsoft and eBay.

-According to their CEO, before landing these anchor customers, the Omniture sales cycle was a long and painful nine months. Prospective clients had lots of questions about Ominiture's financial stability, technology, and Service Quality.

-With the anchors on board, however, most of the prospective clients' questions were answered with two words: Microsoft and eBay. The sales cycle shrank to a manageable three months.

-For example, a local bakery got its start by providing low-priced, high-quality bread and other baked goods such as impossible-to-resist giant cookies to area restaurants, cafeterias, and catering services.

-These businesses were their anchor customers.

-With the anchors established, the bakery could make their brick-and-mortar retail store a success, charging premium prices for their tried-and-true products, and even were able to add a few new products not offered through other marketing channels.

-Anchor customers get your startup going and keep paying the operating bills through good times and bad.

-Once the factory is rolling, design engineers and marketers start looking for opportunities to swap out the manufacture of low-margin goods with high-margin goods.

-Not every manufacturer, however, has the good sense to bring anchor customers on board before investing millions of dollars in product development and/or building a new factory. Recall DuPont's cautionary tale of Kevlar.

-DuPont spent $500 million to develop and commercialize Kevlar as a replacement for nylon as tire cord, but did not lock-up tire manufacturers. The tire manufacturers decided on steel as a better alternative and took a pass on Kevlar.

-This left DuPont with a very expensive product in search of a market a market they never found. Startups can't afford this type of misstep.

Big anchors don't always suit small startups.

1. Payment Practices
-bigger anchors pay slower
2. Vetting Practices
-smaller and growing anchors set lower hurdles
3. Distribution Practices
-online and TV shopping channels may make it easier to manage inventory

-An important decision point for a startup is whether the potential anchor is more likely to foster a startup business or let it flounder and sink under the weight of their way of doing business.

-Unfortunately, we have seen far too many examples of the latter rather than the former.

-A startup the size of a dinghy goes down fast when they take on an anchor fit for an ocean liner.

-The national retailer declined to reschedule a pickup and told the new business to wait another year before trying again.

-Yet another new business shipped inventory worth hundreds of thousands of dollars to a national retailer notorious for paying vendors slowly.

-The entrepreneurs, having taken out second mortgages and maxed-out their credit cards, got nervous and tried to pressure the retailer into paying with aggressive, bordering on rude and unprofessional, phone calls and letters.

-In response, the national retailer returned the entire inventory. The entrepreneurs were then left with lots of debt, lots of inventory, and few prospects for earning any revenue.

1. A benefactor is a company with complimentary products and/or services that win if your startup wins.

2. Entrepreneurs can find benefactors in the value-chain, in the local community, and in the same industry.

3. Benefactors can help out a startup with cash as well as non-cash benefits.

-Think through the question carefully, because the answer will help you find initial investors, key strategic partners, and perhaps anchor customers.

-Learning to ask the right questions is fundamental to startup success!

-Dorothy needs to seek out benefactors and she keeps an eye open for anyone that will also greatly benefit from a trip to the Emerald City.

-At the journey's outset, Dorothy runs across a scarecrow at a crossroads. She removes a nail to take the scarecrow down from his post and finds out the scarecrow desperately wants a brain. Dorothy suggests that the scarecrow can get a brain from the Wizard in the Emerald City. The scarecrow joins Team Dorothy.

-Next, the two stumble on a rusted tin man. Dorothy liberally applies some oil from an old oil can and finds out the tin man desperately wants a heart. Dorothy suggests that the tin man can get a heart from the Wizard in the Emerald City. The tin man is now part of the crew.

- Not long afterwards, the little group is startled by a lion who attacks the travelers and tries to bite Dorothy's little dog Toto. Dorothy, heedless of the danger, swats the lion on the nose to protect her dog. Dorothy then has to comfort the lion as he whimpers about his nose, and finds out the lion is cowardly and desperately wants courage. Dorothy suggests that the cowardly lion can get courage from the Wizard in the Emerald City. The lion completes the team, and then the three benefactors successfully get Dorothy to the Emerald City.

-But the story does not all go in Dorothy's favor. Turns out, the Wizard also needs a few benefactors. He needs someone to kill the Wicked Witch of the West. When Dorothy and her team arrive, the Wizard gives everyone the royal treatment. He then gives Team Dorothy an audience and finds out Dorothy desperately wants to return home, the scarecrow desperately wants a brain, the tin man desperately wants a heart, and the lion desperately wants courage. The Wizard promises to give each benefactor what they want most if and when Dorothy brings him the broomstick of the Wicked Witch of the West. Like Dorothy, the Wizard is a born entrepreneur. He really understands how to spot benefactors.

-Products are part of a value chain that extends from components to customers.

-Understanding the value chain and where your startup fits in can be a powerful tool to give your new business legs.

-DuPont manufactures the nylon and stain-release sauce that other manufacturers and carpet mills process to make the carpeting we have in our homes and businesses.

-DuPont found benefactors to transform the carpet industry from a narrow-margin heartbreaker to a high-flying profit maker.

-DuPont managers fought commodity nylon prices for generations, but then decided to fight back by offering something that every player in the carpet industry wanted most.

-Every carpet manufacturer and retailer wanted a premium-priced carpet that consumers would recognize and trust.

-Everyone in the industry wanted a profitable product that would sell itself.

-Before Stainmaster, all carpeting looked pretty much the same to consumers.

-Since all carpeting looked the same, consumers bought on price - bad news for the entire value chain.

-Over the past decade, it has grown rapidly into one of the Internet's top 20 properties.

-To accelerate their growth, MyFamily raised more than $75 million in funding from benefactors.

-MyFamily looked at their value chain and asked the question, "Who will benefit if I succeed?"

-The answers company managers came up with were Intel, Compaq, AOL, and Kodak. Intel benefits because family-history buffs want fast computer processes to digest their mountains of digital photos.

-Compaq benefits because family-history buffs want new computers with lots of hard drive space, up-to-date memory, and Ethernet connections to access and post online genealogical information.
-AOL benefits by providing a value-added service to its growing base of family-history buff Internet subscribers.
-Kodak benefits by repositioning itself in the digital photography sector by building on the traditional strength of family photography.

-My-Family increases the need for Intel, Compaq, AOL, and Kodak products. In addition to capital raised from these investors, My-Family also received publicity from their association with these companies.

-Agilix is a software company that specializes in programs for Tablet PCs.

-In this high-tech product category, Agilix needs capital to fund R&D, but also needs access to programming code and computer hardware technology.

-To address the first need, Agilix approached Franklin Covey. Franklin Covey promotes personal planning and saw Agilix as a means to move forward in the electronic planner product space.

-Agilix got their funding and Franklin Covey got a winning product.

-Reviewers refer to Agilix-developed TabletPlanner software as marvelous, brilliant, and empowering. Competing with heavyweights like Microsoft, HP, and Corel, TabletPlanner is one of the top 10 best Tablet PC applications.

-To address needs beyond R&D capital, Agilix has gone to Microsoft and key computer hardware manufactures.

-They have become strategic partners that have provided Agilix with access to key technologies, allowing them to be on the cutting edge of this emerging field.

-As a result of these benefactor alliances, Agilix was able to be one of two software companies to have their software applications ready for the launch of Windows-based operating systems for Tablet PCs.

1. For a startup, advisory boards are more important than a board of directors.

2. Don't limit advisory boards to just include businesspeople.

3. Invite advisory board members that love your product, have a stake in staying on the leading edge of your industry, and/or people with regional, national or industry-wide name recognition.

-An advisory board can extend your social network of influence to increase its effectiveness in attracting investors, customers, and top employees.

-No new venture is too small or too large to benefit from an advisory board.

-Leveraging advisory board experience, expertise, credibility, and connections is the best way to succeed in today's competitive markets.

-A startup gains a big boost from building a national or at least a regional reputation.

-Perhaps one of the best-kept secrets of successful ventures is they know that reputation and experience counts, but that it doesn't have to be their own reputation and experience.
We can't emphasize enough what we stated earlier about finding and leveraging advocates.

-Successful entrepreneurs know that hard work, i.e., working 90+ hours a week, rarely leads to a successful new venture.

-It is the smart work of yourself and others, especially a credible and supportive advisory board, which leads to new venture success.

-Many startups make the mistake of developing their board of directors instead of beginning with an advisory board.

-Whenever you start a new venture, leverage the experience, wisdom, and creativity of advisory members to accelerate your growth and time to money.
(also connections to create your network)
>> Advisory board members should not be limited to people who have simply done things, but people who can get things done.
>> Also include people who possess local, regional, or national name recognition.
(For example, prominent politicians, retired executives or managers, and industry gurus make great advisory board members.)

2. Advisory board members can't be sued for their advice because they do not have any fiduciary responsibility to stockholders as do members of the board of directors. Thus, advisory boards are usually made up of nonpolitical, fun, and creative professionals who have a genuine interest and sincere desire to see the startup succeed.

informal
-serve only as long as needed

not liable
-not accountable if things go wrong

advise team
-give advice

2. Encourage honest feedback, i.e., stay away from friends

3. Be professional to get professional behavior

4. Shouldn't cost them anything to participate

5. Listen and take advice or they will leave

Horses for the Product: Dr. Oz??

Advisory Board: Shark Tank QVC Lady

2. NTB: need to believe
-large addressable market with large addressable pain(need)

3. DTS: dominate the situation
-deliver genuine delight in a specific usage situation

4. RTB: reason to believe
-easy to demonstrate and verify the distinction and benefit

5. QTS: quantifiable support
-quantitative evidence of product superiority

2. What is the right level of experience?
-Bring in people that are beyond, but just beyond, where you want to be.

3. How do I get them aboard?
-Provide two-page prospectus of the business, the issues the board will address, how the board will operate, and compensation.

4. What is the compensation?
-Travel, meals, perhaps some entertainment, opportunity to work with smart people on an interesting problem.
-Modest compensation after and extended period of service comparable to their hourly rate in their full-time job.

-enhance the Need to Believe

-enhance the Reason to Believe

-enhance the Unique Product Claim

Sharpening the Angle
-Unique Product Claim
-Large Addressable Need
-Dominate the Situation
-Reason to Believe
-Quantifiable Support

Leveraging Leverage
-Ride Horses
-Prospect for Beta-Goldmines
-Land an Anchor
-Seek Out Benefactors
-Build an Advisory Board

Think Big and Act Big
-Puff it Up
-Grow with Borrowed Interest
-Master Social Media & Publicity
-Get Your Swagger On
-Reach Out with Crowdfunding
-Dominate Trade Shows

-How to market on a budget?

-How to gain credibility when you are a new brand?

Don't act small
-Potential Customers want stable and reliable

-Business Advisors want vital and growing

-Suppliers and Employees want dependable and industry leaders

-Partners and Investors want blue chip and reputation builders

But you are not established, still unproven, a niche player, and don't have a track record

1. Use the elevator pitch to advance the sale and not to make a final sale.

2. An elevator pitch must hit hard and be brief. If at all possible, grab attention with a memorable product demonstration.

-the 30 second to 2 minute elevator ride.
-It is the amount of time that VCs will spare to identify good ideas and successful business teams that have promise and eliminate those that are not ready for funding

-When putting together an elevator pitch, we want to hit hard with the most important information up front.
-We want investors to get interested enough to invite us back to make a bigger, more detailed presentation.

2. Opportunity
-Describe the customers, competitors, how the product or service makes the competitors irrelevant, and how the product makes money. Investors want to see the potential for big revenues and big returns. Remember that if there are no competitors, then there usually are no customers, which in turn means that there is little or no money to be made.

3. Status
-Present clear financials and make note of market traction. Highlight letters of intent, product orders, and better yet, product sales.

4. Ask
-Make a case for your valuation of the startup and ask for an investment to accomplish the next set of important goals such as manufacturing products to fill orders, hiring staff to expand the sales or service organization, or expanding into new locations. Balance investment with reward.

5. Remember
-Demonstrate how the product is validated with interested customers. Highlight the contributions of business team members to the startup. Close with a short "pump up" reminder with an industry opinion leader weighing in on the broad appeal of the product.

1. Social Media empowers small players to think and act big. SIze and money are no longer barriers to starting a successful business.

2. Facebook, Twitter, Youtube, Product Blogs, and Google each have their own rules for success. Informed use of all five is needed to beat Big Business at the Social Media game.

-In this new era of Internet and social media, everyone can be a star everyone can have a voice everyone has market access.

>> Startups can wear very big adult shoes even when they have very tiny baby feet.

Think big and act big, but don't spend money like you are big. DON'T try to buy success. Learn to earn success. DON'T bring in corporate marketers that haven't worked with small budgets. DO use new technology and tactics that level the playing field.

-Technologies such as social media and SMS communications, as well as low-barrier-of-entry market channels such as the Internet now give businesses of every size an opportunity to successfully compete locally and globally.

-Knowing how to think big and act big without stumbling around can make or break a startup.

Startup Location Examples: where would you meet with your potential client? your dirty closet office space? NO. rent an office space for a day. Leverage your contacts (putting plaque on the front entrance with all other company names in the building have the secretary be in on it too)

-When startups go where the money is, and they must, their competitors will be big in terms of money, resources, personnel, and image.
-Customers and investors often equate big with safe. "It's safe to do business with Big Blue because, well, they're big." IBM, aka Big Blue, made a living on this line of reasoning for years.
-Unlike the happy thoughts that come to mind when doing business with a large, well known company, many unhappy thoughts may come to mind when doing business with a startup.
-Potential customers prefer buying from a stable, dependable company, but this business is not established.
-Business advisors prefer working with a viable, ongoing company, but this business is unproven.
-Suppliers and employees prefer teaming up with industry leaders, but this business is a niche player.
-Partners and Investors prefer throwing support behind a reputation builder, but this business doesn't have a blue chip track record and may even harm one's reputation.

New businesses are stressed. When they swim frantically around like little fish or bite off more spending than they can chew, they will choke and fail. When they puff up like a puffer fish they often succeed. One way to puff up is to dominate a vertical market where you have a natural advantage before expanding to other markets.

Ex:
Francois Lane, serial entrepreneur and co-founder of CakeMail a whitelabel email marketing service, insists that new businesses "must select one vertical market and focus on complete world domination of this specific market." He also points out that new businesses are best off when selecting markets that have their own network of trade shows and industry publications. When you are small, it is important to attack a market where it is easy to identify and connect with marketing channels.

Social media provides a spectacular way to puff up your market presence. For many startups, your website is your company. Build a look and feel for your website that is equivalent to an IBM. Show real people. Show a brick and mortar location. Include a telephone number. Learn what makes a productive splash page. Highlight awards, accomplishments, notable customers, and interesting product stories. Blog the victories. Twitter the fun. Facebook for friends. Get involved with a cause popular with social media followers. Bring your pitch to life with YouTube.

Ex: Puff it Up: Phone Service
-BJ's brother's wife acting as his secretary and having all calls forwarded to her number and then saying "please hold Ill connect you with ____ or ____" but really it's still her playing those roles


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