system two
start-up thinking in the enterprise
Showing posts with label funding. Show all posts
Showing posts with label funding. Show all posts
Wednesday, 16 July 2008
instead of running ads - improve your product
I was talking to a friend who runs a startup technology company. A web2.0 application, which frankly needs some work - both in its functionality and look and feel.
He's a wealthy guy and he knows a thing or too about business but he's never run a tech startup. We got talking about his marketing strategy and he told me in some detail the number of people he had working on this project and that, what he would be spending on PPC, this much on below the line etc.
He was making the classic start up error. Spending on marketing instead of your product. Having got out of beta, it is so tempting to start spending on "marketing" - the analytics suddenly look good, the investors are pleased something is happening
And then.....
Nothing.
Takes a lot of courage to continue to look honestly at your product, your technical development plans and your internal systems. To listen to your customers and address their concerns.
Money spent on developing your product is never wasted. Cash spent on old skool marketing too early often makes the directors and shareholders feel better in the short term but rarely produces the long term users and revenue it was designed to.
Thursday, 3 July 2008
how not to do it....the music industry
The trials and tribulations of the traditional record labels and their failure to engage in the digital world hardly require re-examination.
You don't need an MBA to figure out suing your customers and then expecting them to form an orderly queue at the record store is unlikely to produce a long term, mutually profitable relationship.
Present a 15 year old with the choice between an expensive, complicated and legal way of acquiring a product and a free, easy and illegal method and again, you don't have to have a masters in psychology to figure out the route most teenagers will go (and most adults for that matter).
The question is what could a business, that has so obviously got it wrong for so long, do now to turn the ship around?
Well, to begin with they need to understand the problem as it stands today. Unlike 5 years ago most people within music now understand that a 360 degree model is the way forward. There is little debate over the solution itself.
The issue for the record labels is that they are now taking a battering, not just from their customers, but other businesses within the sector, offering artists deals they simply can't compete with.
The labels look like the distinctly uncool dad at the skool disco.
Their only chance in my mind is for them to become a brand. The only value left in their businesses, once the publishing arms have been sold and the glitzy offices have emptied, is the significance and meaning associated with their name.
EMI, Chrysalis, Warners - those names still have meaning, not to their customers, but to the talent.
Hands at EMI and Bronfman at Warners will almost certainly fail. By VC standards Hands is already 6 months late in delivering a working business. The chance for reinvention perhaps is after they have gone and those companies are going cheap.
Join those brands with semantic web technologies which enable the better understanding of customer and talent - add city funding, in the form of tax efficient vehicles like VCT / EIS and you have a model for the future.
You don't need an MBA to figure out suing your customers and then expecting them to form an orderly queue at the record store is unlikely to produce a long term, mutually profitable relationship.
Present a 15 year old with the choice between an expensive, complicated and legal way of acquiring a product and a free, easy and illegal method and again, you don't have to have a masters in psychology to figure out the route most teenagers will go (and most adults for that matter).
The question is what could a business, that has so obviously got it wrong for so long, do now to turn the ship around?
Well, to begin with they need to understand the problem as it stands today. Unlike 5 years ago most people within music now understand that a 360 degree model is the way forward. There is little debate over the solution itself.
The issue for the record labels is that they are now taking a battering, not just from their customers, but other businesses within the sector, offering artists deals they simply can't compete with.
The labels look like the distinctly uncool dad at the skool disco.
Their only chance in my mind is for them to become a brand. The only value left in their businesses, once the publishing arms have been sold and the glitzy offices have emptied, is the significance and meaning associated with their name.
EMI, Chrysalis, Warners - those names still have meaning, not to their customers, but to the talent.
Hands at EMI and Bronfman at Warners will almost certainly fail. By VC standards Hands is already 6 months late in delivering a working business. The chance for reinvention perhaps is after they have gone and those companies are going cheap.
Join those brands with semantic web technologies which enable the better understanding of customer and talent - add city funding, in the form of tax efficient vehicles like VCT / EIS and you have a model for the future.
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