Rules for Entrepreneurs – Avoid relying on a few whale customers

As you build your business the thing you need the most are those first customers. They are what provide you cash flow and a track record to win new customers. Getting the first few are the hardest because they are usually buying from you and believe in your ability to deliver. This is one of your greatest strengths, but over time, it can become one of your biggest liabilities. Let me explain…

Selling yourself is different from selling your business

As I mentioned, when starting a business there is probably just you and maybe a partner. Many people bring contracts and relationships from previous jobs that help jumpstart the business and gets the cash flow going. These customers are buying from you because they know you and your ability to deliver. This is great and is the way many companies start, but you are really just selling yourself and not selling your business. This is the habit you must break.

Within the first six months of your business you should be planning a major marketing and sales effort to expand your client base beyond your core relationships. This takes your business to the next level where people are looking at the business and not just buying from you. Still they are buying from you but you must have people that can manage the project and be ready to take the lead. This accomplishes two things:

  1. You have more time to continue selling and growing the business
  2. You do not become the “go to person” for every issue keeping the perception that they are buying from you

Whale customers are great to have in the beginning

As the business grows, you might be lucky enough to land some great big clients that provide a lot of revenue to help you expand. This is great and we should all be so blessed by winning these kinds of clients. However, what develops is the “90/10″ rule – 10% of the clients provide 90% of the revenue. This could mean that 1 or 2 clients are keeping the company running and losing one of them would be catastrophic to the business. So you must do one key thing quickly – diversify.

You must diversify or your put your success in jeopardy

Diversification is hard for some companies. Many people get lazy and confident that they will never lose them. Trust me, I speak from experience, you will. It could be a change in management, your champion leaves to take another job, budget control moves to a different department that doesn’t know you and doesn’t see your value, or the company goes out of business. What I am trying to say is that anything could happen and it could happen at any time.

So what do you do? After I learned my first hard lesson, I applied this rule – for every whale client, I worked over a six month period to find 5-10 customers that matched their revenues so that over a two year period those whales went from 90% to 10-20% of your overall revenues. This gave us a greater sense of comfort so when we would lose one of those two whales, which we eventually did, we only had a dip in revenues and used our sales campaigns to pick up the slack and pick up a few new smaller customers to fill in the revenue gaps.

Are you in the “Whale Boat” right now?

Are you dealing with the same dilemma? What have you done to diversify your client base? What advice to you have for your fellow entrepreneurs?

The Business of Openness

Over the weekend, a big stink was raised over AP News attempting to squash the use of material by bloggers, even flying in the face of fair use. As backstory, the Drudge Retort, a parody site of the Drudge Report, used a very small excerpt of an AP story as part of a larger story published on Drudge Retort. AP served a takedown notice claiming infringement of copyright law.

The repercussions of that action were felt far and wide and caused the AP to sorta, kinda back down off their “heavy handed” approaches.

Last week, Startup Nation served us with a takedown notice of sorts claiming that the excerpt used on Steve’s 6 Steps to Successful Small Business PR was illegally used when the reality was clearly fair use and included a link to the original Startup Nation story. We declined to take down the excerpt but did correct the omission of

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tags.

That’s one business tactic to prevent infringement of intellectual property rights. Most larger blogs respect copyright and trademark laws and make every effort to follow good practice, as we do here. Most larger blogs recognize the hard work that goes into creating content and wish our own IP rights to be protected and respect that line with others. It’s not an issue with us.

The New York Times has taken a completely different approach to business and intellectual property rights. Instead of assuming an antiquated approach to content preservation, they have flung the doors wide open almost begging people to use their content. See, the Times has figured out the magic rule of distributed authority where, regardless of content consumption, the authority always trickles back to them.

This is a winning strategy in an increasingly open world with data exchange being valued highly.

According to the Programmable Web story, not only has the Times invited people to use their content – for free – but they have created a robust API for doing so. Developers love APIs and no better way to make people want to use that content but to make the API fun by producing data in lots of formats, including my favorite, JSON.

End of the day, the Times will win the battle of business openness, if only in principle. They are making data easy to access, fun to access and useful to access. Winning Recipe.

Touring NASA Goddard Space Center

@technosailor Come and visit me! Just ask for HMI on SDO. They all know me – I am the cutest instrument on SDO plus I am the one tweeting!

The war of cuteness is on at NASA Goddard Space Flight Center where the team is working on a variety of space projects including the Solar Dynamics Observatory (SDO), the Lunar Reconnaissance Orbiter (LRO) and the Hubble servicing mission.

I had a chance to visit NASA yesterday for a very intimate tour of the projects they are working on and to discuss, among other things, future missions NASA plans to embark on.

This, of course, a tertiary result of my post the other day where I noted that NASA was engaging more and more in social media. As I noted in that post, this stuff is like being a kid again.

My tourguide, Steph Stockman, is playing an integral part in the development of LRO which will be launched later this year. LROs mission is to go into low polar orbit around the moon for at least a year and gather intel about the surface of the moon in preparation for a return to the moon somewhere in the 2017 timeframe.

A fascinating tidbit I learned about LRO is that there will be a laser-sight, of sorts, that will essentially focus on a fixed point in space (satellite?), or at least a known point in space. This will provide a reading that will allow LRO to stay in orbit over the moon. We currently don’t know entirely what the surface of the moon looks like, so where typical orbiters might be able to use the surface of, say, the earth as known quantity, NASA will have no such luck with the moon.

Also of interest is that the dark side of the moon is registering significant amounts of Hydrogen which indicates a potential for water. At this point, we don’t know and the LRO is expected to provide some of that data.

Later in the day, we explored the concept of a manned mission to Mars. Steph thinks that might not be for 50 years as certain scientific problems have yet to be solved. Specifically, once a human body spends sustained amounts of time outside of the earth’s magnetic field, what happens? To provide perspective, the moon is on the outer fringes of the earth’s magnetic field and dips in and out at different points in its orbit. As a result, most, if not all, of manned space flight has occurred within the magnetic field and no one really knows what it would be like outside.

To explore this problem, Goddard has a anti-magnetic sphere (pictured below as a scale model) where the earth’s gravity is counteracted by an equivalent polarization allowing for an anti-magnetic zone for testing. One wonders how this affects the iron in a human’s blood stream.

NASA Goddard Internal Tour

Another problem with a manned mission to Mars is that the planets move at different speeds through orbit, and such a mission with future technology would probably take two years to complete. A mission would have to be launched at such a point that allows the most efficient route to and from Mars. People much smarter than me, scary folks with pencils, will have to figure out that math.

Thanks, Steph, for the tour. Can’t wait to see the LRO launch. :) Click on the montage below for the full photoset from this tour.

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Marketing Plan Series: Part 4 – Objectives

In Part 4, we continue building out the goals that must be accomplished through the marketing plan. This section, called “Objectives” is usually only a page in length and are the milestones that you will achieve as you execute your business on a daily basis.

The KnowThis web site has a great explanation of the Marketing Objectives section:

“Marketing success is quantifiable using several non-financial market metrics. You want to show the underlying conditions and circumstances facing the company that are not easily seen within financial measures. The marketing objectives section should indicate targets to be achieved across several marketing decision areas. To add additional strength to this section include marketing metrics where possible.”

The Chamber of Commerce web site identifies three major areas for your objectives:

  • company definition (e.g., “to be a manufacturer of 100 percent all-natural snack food products”)
  • market definition (e.g., “to attain leadership in dollar market share and volume for the healthy, all-natural snacks segment of the salty snacks category”)
  • technology (e.g., “to become known in the industry as the leading developer of new vegetable protein products”)

KnowThis web site has a great breakdown and outline of how you should structure the objectives section:

1. Target market objectives

  • market share
    • total
    • by segments
    • by channel
  • customers
    • total
    • number/percentage new
    • number/percentage retained
  • purchases
    • rate of purchases
    • size/volume of purchases

2. Promotional objectives

  • level of brand/company awareness
  • traffic building
    • (e.g., store traffic, website traffic
  • product trials
    • (e.g. sales promotions, product demonstrations)
  • sales force
    • (e.g. cycle time, cost per call, closing rate, customer visits, etc.)

3. Channel objectives

  • dealers
    • total
    • number/percentage new
    • number/percentage retained
  • order processing and delivery
    • on-time rate
    • shrinkage rate
    • correct order rate

4. Market research objectives

  • studies initiated
  • studies completed

5. R&D objectives

  • product development

6. Other objectives

  • partnerships developed

Next time in the Marketing Plan Series, in Part 5 – Strategy we discuss how having a well written guideline that sets forth the business’s marketing strategy is critical to the success of your business.

Next time in Part 5, we will discuss the strategy section which lays out a plan for the situational analysis and the problems and opportunities must be addressed by the marketing plan.

Doers and Talkers

An impromptu conversation happened last night over on Twitter. The topic began as a discussion over a hypothetical show (video, podcast, whatever) that would reflect the community and not just have the same people. The conversation began because of a discussion over perceived sexism in the social media community where men could do anything, but women could only be “consumed” (hey, it’s a legitimate use and context for the word!) if they were “sexy”.

To pop this proverbial bubble, the idea was presented that a community-driven show should be created where “panel members” would include an equal cross-section of the community, regardless of sex or race.At one point, a panel was suggested that I noted were all “talkers” and not “doers”.

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Photo Credit foolfillment. Used under Creative Commons

Naturally, some took offense to this characterization, but my question is why? There is an equal need for both and is non-hierachal. In fact, it may be too simplistic of a thought considering the diversity that exists across sectors, bloggers and industries.

I think it’s important to establish a premise for talkers and doers. What are they, why do they exist and what do they contribute to the ecosystem?

Talkers

Talkers are visionaries, by and large. Not always. Sometimes they are just pundits. They are the idea people, often challenging the status quo and causing people to think based on data, research and innovative thinking. They share their ideas readily and often bring a different level of communication to the fray.

Talkers are often CEOs, PR, Marketing, or members of management teams and they frequent the conference speaking circuit.

Doers

Doers are often mistaken for developers. Though developers generally fall into the category of “doer”, the definition is far wider than just physical “doers”. Doers are usually the ones that have ideas and instead of talking about them, they gather the resources (financial and human) and set about putting plans into actions.

Entrepreneurs are often doers. They are the ones with the ideas that have the guts or experience to run with them. Though they may sometimes be talkers too (small business CEOs for instance), their bread and butter is in the action. Smart doers listen to talkers ideas and filter them for actionable items that make sense for the ecosystem.

These are my definitions. They may be simplistic, but I think they provide a great framework for this conversation.

I think there is a symbiotic relationship between doers and talkers. One cannot exist without the other and gets its lifeblood from the other.

For instance, Jeremiah Owyang of Forrester is largely a talker. Though he comes from Hitachi where he was largely a doer, by his own admission he’s more of a talker now.

I think there’s a negative connotation to talkers. That they are just windbags excelling in the art of punditry. But talkers bring ideas to the table that often shape the course of what is going on in the ecosystem. Talkers need doers who will take their ideas and run with them.

Doers, of whom I would classify Dave Troy of Twittervision have ideas but instead chooses to innovate on ideas and create new things. In this case, David (whom in disclosure, I realized a few weeks ago I interviewed with back in the 2002-2003 timeframe when he was the CEO of Toad) has taken ideas surrounding Twitter and made a visualization for them. He also recognized that there was a need for something like SocialDevCamp East and created it (with help).

Others like Jason Calacanis straddle the line between talkers and doers by challenging the status quo of spammy search engines and proposing a concept of human-powered search and running with it. People who can straddle the gap, place themselves in the most valuable position of seeing the cloud, recognizing it’s potential and doing something about it (pardon the reference).

Getting Back To Human

Last week, I attended the Vocus users conference here in DC. It was an interesting time for me based on my history with PR both as a blogger who can’t stand PR and a blogger who wants to see PR do well in social media.

There was one session, in particular, where an audience member asked a speaker talking about software that is currently monitoring only main stream media outlets, “What do we do about monitoring and responding to bloggers?”

The response blew me away. “We don’t do anything about bloggers because we haven’t figured them out yet. Until we do, we won’t be doing anything about them.”

The context here being, of course, the software product.

Software developers understand that software is built on complex sets of logic. If this happens, then we do that. If a user clicks here, then this thing is going to happen. The speaker was saying that until bloggers could be broken down into a logical algorithm, the software won’t incorporate blogs.

My snarky response, expressed only in my own mind, is, “We’re human. If you can’t figure out how to approach us as humans instead of machines, maybe you should get out of the public relations business.”

On Friday, Chris Brogan wrote the same thing from the opposite side:

I have an anti-robot stance on Twitter. By that, I mean to say that I don’t want to follow things that aren’t people (with all due respect to Bruce Sterling’s spimes). I just don’t need to add something automated into a place that’s inherently human.

He goes on to say that his anti-robot stance is being challenged because someone who is using an automated posting system is actually offering something of use and now he has a crisis of conscience.

Folks, we’re unnecessarily complicating our lives. Sometimes a bit of common sense is needed to overrule our warped sense of logical rules. PR folks should look at blogger coverage, not in some automated way that has to fit into specific guidelines in order for them to know how to respond. And Chris needs to stop worrying about artificial rules he has created for himself. You made the rule, you can break it.

I have rules on Twitter too. I don’t follow sex-bots. I don’t follow spammy people. I don’t follow people that have disparate ratios of followers-followees. Except for the sexbot rule, I’ve broken every one if I needed to.

I’ve done the same thing with LinkedIn and Facebook.

Rules are made to be broken by sound human rationalization.

Presidential Endorsement

For a long time, I’ve sat back on the sidelines trying not to get involved with the political process via this blog. This does not mark the time where I *begin* however there is a process here whereby people and groups shift their allegiances one way or another.

I also believe that this country is far too divided for its own good. Politics is not a zero-sum game where if one candidate wins, everyone else on the other side loses. That’s how the game is played but it is far from the reality of everyday life. In fact, we are all shades of grey between the bedrocks of party politics in one way or another and that is why I am conservative, yet fiercely independent.

On both sides, there are good ideas and bad ideas and if voters can objectively step back from party brinksmanship, I think we can all find good qualities and stances on each side.

For instance, I believe that McCain is more moderate than his campaign is letting on. He has a tough battle to secure undecided conservatives who don’t like him. The Gang of 14 move a few years soured many conservatives to him and McCain-Feingold dramatically influenced the military-industrial complex that is largely pro-war because it’s good for business and undercut their ability to have late-campaign influence in the election. McCain has to play the conservative part to sure up a wobbly base that will have defectors to Obama. These undecided conservative voters, if for nothing else, want to send a message.’

However, I believe a McCain administration actually would be highly centrist but his ability to work with a Democratic Congress would be stunted by the perceptions of a McCain presidency as a Bush third term. That said, I’m always a fan of divided government and things not getting done in Washington. History shows that government involvement in things better left to the citizenry or private sector is usually problematic in the long run.

However, McCain also concerns me. Frankly, his stance on illegal wiretapping is problematic. In 2006, McCain appeared on Fox News Sunday to say that he did not believe President Bush at the Constitutional authority to engage in the warrantless wiretaps of U.S. citizens but that he thought Congress would grant that authority if asked. This is still unconstitutional and I called for the President’s impeachment on this point, and this point alone. The Constitution would need to be amended to make it legal – otherwise the 4th Amendment is in play.

He reiterates his case, more strongly, late last year in an interview with the Boston Globe.

Does the president have inherent powers under the Constitution to conduct surveillance for national security purposes without judicial warrants, regardless of federal statutes?

There are some areas where the statutes don’t apply, such as in the surveillance of overseas communications. Where they do apply, however, I think that presidents have the obligation to obey and enforce laws that are passed by Congress and signed into law by the president, no matter what the situation is.

Okay, so is that a no, in other words, federal statute trumps inherent power in that case, warrantless surveillance?

I don’t think the president has the right to disobey any law.

Recently, however, the presidential hopeful has taken exactly the opposite stance backing the President’s impeachable offenses. The National Review published this letter from a McCain Adviser “setting the record straight”:

Here is the bottom line: Senator McCain supports the FISA modernization bill (PDF) passed by the Senate without qualification. He believes no additional steps should be necessary to secure immunity for the telecoms;

<snip>

As you know, the FISA modernization legislation passed by the Senate earlier this year sets forth clear guidelines authorizing the Attorney General and the Director of National Intelligence to direct a telecom company to immediately provide the government with all information necessary to protect Americans from foreign threats and outlines legal procedures with respect to any challenges of this authority. Additionally, the bill requires the Attorney General and the Director to assess compliance of the intelligence community with minimization techniques. These types of modernization provisions placed in the bill are the “œclear guidelines” and “œvetting processes” I stated that Senator McCain, like a majority of his colleagues, supports.

Folks, I support warrantless wiretaps on foreign suspects in foreign countries. I don’t support those wiretaps when American citizens are involved. Quite simply, the fourth Amendment requires due process. While I support FISA, I do not support the ignoring of FISA. McCain has supported a FISA Modernization bill that would make it easier for the government to obtain warrants, even after the fact, for suspected terrorists or suspects in or outside of the United States. That’s good. What concerns me is the willingness to continue the status quo absent any action by Congress.

On the Obama side, I’m concerned by the sense that there would be a single party ruling Washington. I’m also concerned by the cost of programs like universal health insurance that would put the weight of a multi-trillion dollar program on the backs of taxpayers who are cash-strapped from war, rising oil prices and unemployment. I’m concerned about a lack of any real plan on Iraq. That said, no one has a plan.

However, Obama represents a change in Washington that, regardless of politics, I think everyone agrees is needed. We are a Nation weary of what we’ve had for eight years and not wanting to continue the same pattern. While Obama does not have executive experience – in a company, in a city state or county or in national government, he does command the imagination of the American people and I’d expect he would have competent advisers to help him.

I do not agree with partisan snark. I think there’s enough blame for our current state of affairs to go around on both sides. I don’t believe that by voting Democrat, you are invoking doomsday or by voting Republican, Roe v. Wade is going to magically disappear via some vast right-wing conspiracy. However, based on my single question of impeachability of the current president, I cannot in good conscience consider John McCain. In the spirit of change and inspiration, and with a moral opposition to contraconstitutional governmental behavior, I endorse Barack Obama for President of the United States.

As a sidenote, I will leave comments open but will close them if I feel the comments are distracting or anti-productive. This is a subjective post and I reserve the right to be subjective about comments. Thanks, play nice kids.

Bringing the Kids Back to the Show: NASA Using Social Media

When I was a kid, I wanted to be an astronaut. Hell, when *you* were a kid, you wanted to be an astronaut. Then, one day, we grew up and realized we were destined for more traditional careers like lawyers, accountants or *gasp* social media consultants. Yeah, we didn’t end up quite as sexy as we hoped we would in those days of being of single-digit age.

Today, my son and I watched Shuttle Discovery land online at NASA TV. He loved it and promptly said, “Daddy, I want to fly a spaceship when I get big”. I invited him over to watch after discovering that yet another NASA initiative was using social media. They were using Twitter (@STS124), in this case, to tweet the landing.

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This is not the first time in recent weeks that NASA has used social media. The Phoenix lander on Mars is still sending tweets back from the Red Planet – though we obviously believe this is some savvy user or group of users in Houston Pasadena, CA and not the lander itself.

Though NASA TV broadcasts on almost every cable or satellite outlet, no one actually turns that on – that I know of. That’s because it’s often as dull and non-compelling as CSPANs programming. However, they are using social media to capture the moments that we will one day look back on and tell our kids about are indeed inspiring the imagination of a new generation who missed out on the space race decades ago.

President Kennedy inspired this imagination on May 25, 1961 when he aggressively informed Congress that he wanted a man on the moon within the decade.

I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth. No single space project in this period will be more impressive to mankind, or more important for the long-range exploration of space; and none will be so difficult or expensive to accomplish. We propose to accelerate the development of the appropriate lunar space craft. We propose to develop alternate liquid and solid fuel boosters, much larger than any now being developed, until certain which is superior. We propose additional funds for other engine development and for unmanned explorations–explorations which are particularly important for one purpose which this nation will never overlook: the survival of the man who first makes this daring flight. But in a very real sense, it will not be one man going to the Moon–if we make this judgment affirmatively, it will be an entire nation. For all of us must work to put him there.

Today, we have a shuttle launch every few months. We get jarred back to the reality of the danger of the adventure that is space with tragic accidents such as the Challenger or Columbia disasters, but soon enough, going into space becomes, yet again, a routine thing that is not all that riveting.

NASA has every intention of returning to the moon by 2020 and Russia wants to build a permanently manned lunar base by 2027. Do I have your attention yet?

In 1969, people woke up at 4am to huddle around tiny black and white televisions to watch Neil Armstrong become the first man to step foot on the moon uttering those historic words, “That’s one small step for man, one giant leap for mankind.” Today, we’re huddling around internet-connected computers sharing historic space moments via uStream – where we watched the Mars Landing (SpaceVidCast not officially connected with NASA). We watched the tweet streams come in as we sensed the whole world was watching – again.

NASA is recapturing the imaginations of a generation all over again and using our tools to do it. All the kids are coming back to the show again and we all want to be astronauts. Again.

Jeremy Zawodny Leaves Yahoo

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Photo Credit Josh Bancroft
Yahoo’s brain drain continues and, TechCrunch provides a great analysis into the latest desperate deal Yahoo is engaged in. This time with Google.

Yahoo is in a very bad position and everyone knows it. Now, possibly the best known Yahoo, Jeremy Zawodny is leaving the company for greener pastures. Jeremy made his announcement the other day amidst denials.

I won’t at all be surprised if some people think this is related to Microsoft or Carl Ichan and the uncertainty surrounding Yahoo’s future. The reality is that there’s nothing pushing me out the door at Yahoo. The reason I’m leaving is that something very compelling has come along to lure me away. Despite what the current press sentiment might be, Jerry and David have built a remarkable company.

While I don’t believe this for even a second, I also know what it’s like to leave a company you feel tremendous kinship to. Especially one you’ve been at for a very long time.

Jeremy was one of those guys I read avidly in my early years of blogging. James from Outside the Beltway was my political blogger of choice. He reads my blog today as I do his. Seth Godin was my business blogger of choice. I’m quite sure Seth does not read my blog. Jeremy was my technology blogger of choice and I have no idea if he reads my blog. :-)

I’m really excited for Jeremy. I’ve felt he should move on from Yahoo for awhile now, and I’m sure he has felt the pressure to do so himself. Finding people in technology – particularly at web companies – that stay with a single company, loyally, for 8.5 years is somewhat akin to Cal Ripken being a Baltimore Oriole for all of his 20+ year career.

Whoever he lands with gets a tremendous depth of knowledge, ingenuity and public respect. He could be an evangelist, a product marketer, a product manager, a systems administrator, a DBA, a business development guy or even Public Relations. Whoever gets him doesn’t just get a brain, but gets a whole lot of influence and political capital in the web world.

Congratulations, Jeremy, to you and your new wife. Don’t worry about the economy. I’m pretty sure you can pick your job. And it sounds like you have.

Update: Jeremy is going to Craigslist.