Retired? Ha! Far From It!

Recent conversations in my life go something like this:

Them: “So, Rick, what do you do?”

Me: “Well, my company, Direxxis, was acquired in March of 2015 by Broadridge and…”

Them: “Oh, so you are retired?”

Me: “No, I’m not ret…<sigh> OK, yes. I’m retired.”

Sometimes it is easier to just give in than to explain.

Some background

In March of 2015 my company was acquired by Broadridge Financial Solutions. It couldn’t have been a better fit since the people at Broadridge are fantastic and it was a great fit from the product perspective as well. I am extremely thankful for the amazing team at Direxxis who embraced the vision and worked so hard for these 10+ years and who also continue to bring positive energy and growth to the company.

At the end of June, I made the difficult decision to depart Broadridge. But NOT for retirement. In fact, I’ve been really busy.

If you know me, you know that I live and breathe business and innovation. My mind goes day and night with thoughts and ideas. Direxxis was my fourth company so I’m far from throwing in the towel now.

And now for something completely different

However, I did need a mental break and so, I decided to do some mind-clearing activities for a while. We did some travel. We bought a house in need of renovation in Stonington, CT. My wife is a very experienced interior designer and has been in business for close to 20 years and really knows her stuff. So, hey, wait a second…I want to do something different…and here is this fairly large project with a whole bunch of things that I know nothing about…wow, this could be fun!

As it turns out, me getting in the middle of her $#!^ was really not such a great idea. Just yesterday, she threatened to call Lena, one of my trusted Direxxis managers, to see how the hell she dealt with my constant questioning and micromanaging for all those years.

But instead, she fired me.

But, that’s OK. I still have plenty of other things to keep me busy. Aside from being a PITA at home, I’ve been a part-time Entrepreneur-In-Residence for the Connecticut Center for Entrepreneurship and Innovation. This organization is part of the UConn School of Business and is run by some incredibly smart and talented people.

I’ve been helping design a new summer business accelerator program as well as mentoring student and faculty members with their startups. It has been a real pleasure working with CCEI Director Michelle Cote, and Dr. Timothy Folta. Although I have a lot of hands-on, practical knowledge, I have really learned a lot about the academic side of entrepreneurship. Many of us learned the hard way about how to build a business through trial and lots of error. Now, there are more structured “scientific methods” for doing it and I’ve begun to open my mind to learning, and teaching, better ways. Yep, old dog, new tricks.

But the fun doesn’t end there! I’ve been spending a lot of time experimenting with new technologies and thinking about their future applications. Discovering potential business and marketing technology uses for bleeding edge technologies is where my heart lies and I will start writing up and sharing some descriptions of what I have been doing. It will be fun and I look forward to sharing this with you and getting your feedback. And if you wish to play, too, just let me know!

Who knows…the next business may emerge from all this fun!

___________________________
Rick Kollmeyer is a 25+ year veteran in founding and building successful technology-based businesses. His most recent company, Direxxis, was acquired by Broadridge Financial Solutions in 2015. He is the founder and organizer of the 850 member Boston Marketing Technology Group, an EIR at UConn’s CCEI as well as an active mentor to New England-based start-ups.

Copyright 2016, Rick Kollmeyer

Trends in Modern Marketing

The Evolving Marketing Landscape

As the co-founder and CTO of a marketing automation platform, I spend many, many hours researching marketing approaches, experimenting with technology and talking to customers. I enjoy talking to marketers at local events, reading posts about marketing trends and, most interesting to me, figuring out the underlying technology needed to support these techniques. Although some fads trend and then fade quickly, there are many new-school marketing approaches that are recognized as being highly effective and are being adopted by savvy marketers.

My research is showing that the digital channels are getting more and more sophisticated. It is allowing us to target viewers with highly relevant content based on their specific stage in the buying process. To do this, we need to be able to gather and analyze their interactions. The main advantage of the digital channels over traditional is that these interactions (responses) can be recorded instantly and the next appropriate action can be determined in real-time.

So, what are some of the more interesting trends that I have been studying? Here is a list of my current favorites.

“Next Best Action” Marketing

The goal of a next best action engine is to continually predict the right marketing channel, message and timing of marketing touches for each of your individual customers or prospects. That is, specifically for my customer Sally Smith, what is the message I should be delivering to her right now.

The omni-channel nature of this approach encourages the use of multiple marketing channels (social, digital ads, email, etc). However, it is important to determine, over time, which ones are the most effective for each individual customer.

Unlike the traditional marketing channels (broadcast, print advertising, etc.) digital channels provide marketers with loads of response and engagement data. Using predictive analytics in combination with a decision engine (configured using your marketing expertise) will help determine the appropriate next action at this moment for each specific individual.

The components of an effective nurturing and engagement system typically include:

• Marketing Data Repository: A centralized data mart to store prospects, leads and customers with an appropriate number of appended attributes to enable analysis and scoring. The database should also store all marketing activities, responses and sales interactions.
• Listening and Response Tracking Engine: Technology to listen, capture and store responses and engagements from all marketing and sales activities.
• Reports and Analysis: A reporting and analytics engine to help in the discovery of  marketing effectiveness and trends
• Rules/Decision Engine: A decision engine that can be easily adapted or that is self-adjusting based on the the results provided by responses, analytics, trend reporting and testing.
• Marketing Execution Engine: Knowing what you should do next is great, but you have to actually do it. This engine will execute on the next appropriate step.
• Marketing Expertise: You need team members with strong marketing and analytics expertise. None of this will work well without a team of experienced marketers.

The final point can’t be emphasized enough. You can be sold the best technology, but to be effective, it must be driven by sound and measurable marketing approaches. Don’t buy into a system or process unless you have the marketing expertise to support it.

Agile Marketing

Taken from the pages of software development, Agile Marketing introduces a new way to execute marketing campaigns that allow teams to implement small initiatives quickly and then measure and adapt them quickly without the huge expense and planning of traditional marketing approaches.

Want to learn more? There is a great overview of Agile Marketing on Jim Ewal’s Agile Marketing blog.

Content (Inbound) Marketing

The basic premise for content marketing is to make it easy for prospects to find content that is timely and relevant to them. They read it, learn something and build confidence that you (or your brand) have the expertise or product they need. Content can be delivered via blogs, tweets, Facebook pages, newsletters and more. Content is found by users via search engine, emails and via the social networks.

The social networking aspect of content marketing is key. The better the content, the more people will interact with it and thus increase your exposure. Make it easy for them to publicly comment, link to it, re-tweet it and thus, increase your likelihood of being found by other like-minded prospects.

Many companies are successful with content marketing. However, many are failing due to their lack of knowledge of how to do it correctly. Content needs to be well-written, educational in nature (not salesy) and in-line with your company’s marketing goals. And again, make it easy for readers to keep the conversation going with you and others.

If you want a great overview on Content Marketing, see Dharmesh Shah’s slideshow.

Social Media Marketing

No longer the new kid, the social media channel has proved itself to be a highly effective marketing tool. Like any marketing effort, the social channel’s goal is to generate visibility for the brand. However, unlike in some other channels, marketing on the social channel isn’t always just about touting the brand’s benefits. It is a channel for engaging with your customers. Social media marketing is a type of content marketing.

There are a number of approaches that can be used with social media marketing. They can probably be lumped into one of two categories: targeted, paid-for advertising and content marketing. The first uses the social media advertising engines to target specific demographics (or specific individuals). The second uses content to generate a real dialog between the brand and consumers.

Sponsoring an event? Always, always, always provide a hashtag for any event where you are presenting or are sponsoring.  Social-savvy presenters include lots of quotable content in their presentations. Encourage attendees to share what they are hearing. If the content is good, the reach for the presenter and brand will go way beyond just those who are in attendance.

Follower engagement is a strong measure of social marketing success. Remember, people trust people they know, and those engagements will expand your brand’s visibility. This is the real goal, and gold of social marketing.

Micro-Targeted Digital Advertising

Marketing is all about getting the right message to the right people during the right time in their buying process using the right channel. Initially, digital advertising was not much more than digital versions of print advertisements. That is, an ad would run on a site for some predetermined time to a very wide audience without regard to an individual’s stage in the buying process.

Advertising technology has certainly changed! In addition to general targeting by geographic and demographic attributes, digital advertising technology can be used to target a specific list of actual customers or prospects. Those specifically named individuals will be presented with your ads. This is very powerful targeting. Including this in your 1:1 omni-channel nurturing approach, it will allow you to present a particular ad to a targeted group of customers or prospects but only when your marketing engine has predicted that now is the right time.

For example, let’s say you are an insurance agent in Boston. Would providing an ad to your actual customers with targeted offers specific to each stage in the buying process be an effective way to generate additional sales? Sure seems like it would! What about uploading your customer list and saying that you want to market to people around your office that “look like” your customers? This is all possible now using micro targeting.

How About You?

It is an exciting time for marketing and marketing automation. I am looking forward to sharing my thoughts about how to implement technology to support these trends.

In the meantime, what other effective marketing trends, techniques or technologies have you been following? I am very interesting in hearing your thoughts!

___________________________
Rick Kollmeyer is a 25+ year veteran in founding and building successful technology-based businesses. He is currently a co-founder of Direxxis, Inc., founder of Blue Edge Labs (a technology incubator), as well as an active mentor to New England-based start-ups. He has been creating marketing and sales-related technology products throughout his career.

Copyright 2014, Rick Kollmeyer  Follow @rickkollmeyer

From Contest to Success: Following iQ Startups

The prize money is only the beginning…

Something that gives me an immense amount of enjoyment is the advising that I do with student startups from the UCONN Innovation Quest program. This program is a contest with real cash awards as well as a six week incubator program that puts the student teams directly in touch with startup experts as well as investors. Just having a cool or innovative idea isn’t enough to compete. The purpose of the iQ program is to create real businesses that have the potential to generate revenue, jobs and growth.

The UCONN program is run by Dr. Richard Dino, a professor from the School of Business with an endless amount of enthusiasm and encouragement. Keith Fox, an alumnus of UCONN, provides iQ support from the national program level. In addition to Rich and Keith, there are twenty or more individuals both inside and outside the University who provide mentoring and other program support.

There are many success stories that have emerged out of the program, but here is a handful of the companies with whom I have regularly stayed in touch. Congratulations to all of these business founders who are now working on their companies full-time!

“Whoa, that is cool…” is what I typically hear when I show people images produced from the Macropod. No one can deny that the high resolution photos rank high on coolness.

Macroscopic Solutions, founded by Connecticut-based Mark Smith, provides high-resolution imaging products for scientific researchers. Although their primary focus is to enhance scientific discovery, their product is also very popular among manufacturers, fabricators, machinists and mechanical engineers for quality, control and failure testing. Along with Mark, the team includes Daniel Saftner, Annette Evans and Jake Bellaire.

The Macropod is an automated photomacrography system that can rapidly capture and assemble multiple images. The images are post-processed so that only the areas in focus will appear in the final image. The result is an ultra-high-resolution, color image that is completely in focus and rivals that of a Scanning Electron Microscope (SEM).

The technology used in the Macropod was invented while Mark Smith was still in high school. Through his program of donating one Macropod to a school for every 10 that they sell, Mark is giving back by encouraging kids to pursue careers in STEM-related fields.

The Macropod is currently available and Mark is busy selling his product by attending trade shows and providing demos to organizations in a number of scientific and research-oriented industries.

I suppose it is no surprise that I share a bond with other fellow entrepreneurs like Mark that emerged from the UCONN Department of Geology and Geophysics (now known as the Center of Integrative Geosciences).

Macroscopic Solutions can be found at www.macroscopicsolutions.com and an amazing treasure trove of images can be found at here.

After a successful launch to six universities to help college students find a safe ride home after a night of partying, Dashride made a brilliant pivot of their business concept: Their technology is now a software platform that allows independent taxi and limo companies to compete with the big on-demand taxi and ride-share services.

Founded by Nadav Ulman and Tom Bachant, Dashride is following a startup pattern that involves building a solid product while courting the angel and VC investor community. They have successfully completed a round of angel funding (I am among those initial investors) and are close to closing a seed round that will net them close to $1MM in working capital.

Dashride’s platform allows independent taxi and limo companies to take advantage of the ever-expanding rideshare industry. They accomplish this by providing a SaaS-based platform with minimal up-front investment. They currently have 5 employees and are based in New York City.

Dashride was recently featured in the New York Times business section in an article highlighting tech companies who are enabling small businesses to compete in larger markets. You can read that New York Times article here.

 

Another company that successfully emerged from the first iQ program at UCONN was Smpl Bio, founded by James Lindsay and Ed Hemphill. Their company simplifies the process of biomarker selection for scientific researchers through the design and use of their proprietary algorithms.

Biomarkers are used in the bio-medical world to infer the existence of a particular disease, infection or condition. The Smpl Bio team is developing a software platform to allow researchers world-wide to more quickly identify biomarkers for the diseases or conditions that are being studied. The ability to quickly identify the existence of a condition or disease has obvious benefits in terms of speed to treatment.

The team has successfully raised funds through the Connecticut Innovations Challenge Grant program as well as the University of Connecticut Third Bridge Grant. With those funds they have expanded the full-time team to include three new programmers who are doing web development and scientific programming.

James tells me that they are planning on bringing on a full-time technical sales person and veteran bio-science CEO by year end. They also have an impressive and experienced team of scientists and business advisors backing them up.

They are currently finishing up their scalable, cloud-based solution. They are targeting a Q1 2015 date for the general availability of their platform both in the US and internationally.

More Businesses On Their Way!

The 2014 iQ program recently wrapped up and I’m optimistic about the potential success of that next round of new, emerging businesses. I’m also looking forward to the next round of entrepreneurs and their ideas this coming fall!

___________________________

Rick Kollmeyer is a 25+ year veteran in founding and building successful technology-based businesses. He is currently a co-founder of Direxxis, Inc., founder of Blue Edge Labs (a technology incubator), as well as an active mentor to New England-based start-ups.

 

Copyright © 2014, Rick Kollmeyer

Reading List

I’m in one of those phases where I am doing a huge amount of research across many topics, but haven’t taken the time to share any of it back out. So, what are my interests these days? I’ve been reading a lot about angel and start-up investing, innovation and big data marketing.

I typically have multiple books going at any one point since my schizoid brain really likes to jump around. As much as I had been clinging onto my hard-copy analog books in the past, over the past year I’ve 100% switched to e-books. At home or traveling, I always have one of my devices with me, so it is way more convenient to have my reading material available all the time without the additional bulk of printed books.

So, here is what I’ve been reading:

Fool’s Gold? The Truth Behind Angel Investing in America by Scott A. Shane. Scott extensively researched the current state of angel investing and his studies have resulted in debunking many myths surrounding angel investing. It turns out that the bulk of angel investors are not who you think. In fact, they are probably not even good role models for you to follow as an investor. They are typically not professional investors, but rather friends and family with little understanding of the investment process, term sheets and valuations. However, that being said, one should NOT, disregard their tremendous importance in the start-up funding process.

It turns out that the relatively few successful angels tend to have past entrepreneurial success, are very selective, and have intimate knowledge of the industries in which they are investing. The book discusses how angels invest and includes a lot of detailed and interesting statistics about the size and types of investments that are being made.

Term Sheets & Valuations: A Lne by Line Look at the Intricacies of Term Sheets and Valuations byAlex Wilmerding. If reading the first book doesn’t scare you off, and you still want to become an investor (or an entrepreneur), this book is a solid, no-nonsense explanation of term sheets for anyone involved in the start-up funding process. This book doesn’t replace the need for proficient legal counsel, however, this book will provide you with the background on term sheets that you need prior to talking with your lawyer. I like the reference style of this book. No fluff – just straight-forward explanations as to what each section in a term sheet accomplishes as well as implications to both the entrepreneur and investor.

Big Data Marketing: Engage Your Customers More Effectively and Drive Value by Lisa Arthur.
As someone who is interested in analytics-driven marketing, the recent availability of this book couldn’t have been more timely. If you are looking to understand “big data” as well as how to use big data analytics to drive your marketing, then this book is an masterful guide to get your knowledge kick-started. This book is written by the CMO of a division of a large, analytics-driven marketing company, Teradata. Bonus: You’ll be the envy of your colleagues when you start slinging around cool terms like “data hairball” and “goat rodeo.”

The Innovator’s Solution. Creating and Sustaining Successful Growth by Clayton M. Christensen and Michael E. Raynor. This book, published by the Harvard Business School presents the authors’ research on approaches companies have used to drive increase revenue through innovation. It is a solid mix of theory mixed in with actual market-disrupting examples. The content is applicable for both start-ups as well as corporate strategists. I found particularly interesting the examples of failure when companies tried to expand revenue by entering into lower-cost markets rather than continuing to expand upstream with their products or services. A few of the predictions and examples in this book are a little dated; however, I believe a new edition was just published.

Rick Kollmeyer is a 25+ year veteran in founding and building successful businesses using innovative technology. He is currently CTO and co-founder of Direxxis, Inc., founder of Blue Edge Labs (a technology incubator), as well as an active mentor to New England-based start-ups.

Copyright © 2013, Rick Kollmeyer

Summer is for Play!

Well, it is summer. That means hanging out at the beach, cookouts, watching sunsets and, well, trying to expand my brain with some new technology.

Although I’ve accumulated a long list, I’ve realistically settled on a much shorter summer playlist:

• Xively and Open Sen.se: Platforms to enable “The Internet of Things”. I’ve always been interested in remote sensing and data gathering from my studies of geophysics. These platforms will provide services that will allow network connected devices to communicate. I’m intrigued to find some fun uses for connecting remote devices, sensors and controllers.
• Faceshift: Markerless facial animation software. I played with an early version by using Xbox Kinect camera and was successfully able to have a 3D model mimic my facial expressions. I am looking forward to seeing their new version. I’ll post my experiments here sometime in August.
• Unity3D’s I’ve actually been goofing around with Unity for a while. I’m currently experimenting with their location services for a VR project I’m working on.

Man, there just aren’t enough hours in the day…

I’m happy to show you some of the projects I am working on, especially if you are in the  Boston area and wish to get involved in something  fun.

How about you? Experimenting with anything cool? I would love to hear about it.

Rick Kollmeyer is a 25+ year veteran in founding and building successful businesses using innovative technology. He is currently a co-founder of Direxxis, Inc. and founder of Blue Edge Labs as well as an active advisor to several New England-based startups.

Copyright © 2013, Rick Kollmeyer

Vizago: Adding Dimension to your Visage

Don’t you love it when you happen upon something so cool that you start developing product ideas centered around the cool technology, rather than the other way around?

Such was the case for me recently when I found Swiss-based Vizago’s cloud-based 3D model creation service. Vizago’s service can take a standard, 2D photo of your face and convert it into a realistic 3D model.

Cloud-Based Service Model

Click to view and rotate the 3D model

The Vizago technology is provided as a cloud-based service. To integrate with it, your software (game, web site, etc.) posts a photo along with some additional details about the location of the facial features to the Vizago API. A few moments later, a 3D model is produced.

Will you get some cool-points from your friends when you show them your 3D model? Yup. However, there could be some other interesting and useful applications for this technology. For example, imagine games or web sites that provide realistic representations of their users, rather than stock avatars. Think about a game where you can not only customize your clothing and weapons, but your character’s face will look just like you (or, I suppose, whoever’s photo you choose to upload).

Other applications might include social networking sites, personal product sites such as clothing, eye/sunglasses, wigs, hats, etc. All of these could be enhanced by allowing users to view the product on their own self while being able to rotate the model to get different perspectives.  I would imagine that any site that provides personal services could benefit by allowing their users to visualize themselves in a particular setting.

To see an example usng their demo site, click on the above image of my head to open a viewer where you can click and drag to rotate the model (Note: you must have a WebGL-enabled browser such as Chrome or Firefox).

Matthias Amberg, one of the founders of  Switzerland-based Visago, explained that companies interested in providing automated 3D facial models can subscribe to the service for a monthly fee plus a fee for each model generated. However, you can currently play with their demo site for free.

Using their on-line demo software, I was able to generate a sample 3D model from a photo of me as well as preview other variations that Vizago created for me. “Hipster Rick”, for example, has additional objects, such as hair and a beard, layered onto it by the Visago site. Those objects could be added by your own rendering or modeling software, although I believe Vizago offers customization of your model as a service.

Try It For Yourself!

You can try it out for yourself at the Visago website using a WebGL-enabled browser. Create an account, upload a photo and follow the simple mapping instructions. Within minutes you will be able to view your model. If you prefer, you can also download your model, including a mesh and texture, and use it with your own 3D tools. To download your model, Matthias has provided a download code for anyone reading this blog: rick12

I’ve been working on a small interactive demo that uses my model in the Unity Game Engine. You can access it by clicking the screen shot below. Look, it doesn’t do much and I’m certainly not a game programmer, but it was fun building none the less. As you approach the flaming box, I, as “the oracle”, will appear. If you move closer, he will look at you. as you move away, he loses interest in you. That’s it. I don’t have the fortune telling part working yet. You will need to download, when prompted, the Unity plugin.

Click the image to see my 3D model inside my game demo

Got any cool ideas of how you might apply Vizago’s technology? Please share your thoughts or your 3D models!

Rick Kollmeyer is a 25+ year veteran in founding and building successful businesses using innovative technology. He is currently a co-founder of Direxxis, Inc. and founder of Blue Edge Labs as well as an active advisor to several New England-based startups.

Copyright © 2012, Rick Kollmeyer

Recommended Summer Reading List for Startups

An entrepreneur I was advising recently asked if I had any recommended summer reading. So here is a list of books I’ve read in the last 6 months that I feel are worth checking out, along with my brief comments.

The Four Steps to the Epiphany by Steven Blank. Why do 9 of of 10 startups fail?  This book discusses techniques for creating startups focused on customer needs, and re-adjust as you build. Lots of solid examples and supporting stories. Great appendix for walking you through his process.

Mastering the VC Game by Jeffrey Bussgang. Great book that explains in detail what goes through the mind of investors as they evaluate your business. Lots of details on company valuation and how a VC looks at you and your business.

Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein. Interesting book that discusses how people can be “nudged” into making choices based on how information is presented. Not written as a technology book but still a good read for UX designers, developers, marketing professionals and managers.

Patent It Yourself by David Pressman. I always seem to have a number of ideas brewing that I think may be patentable. Inventor-friend Eric Knight recommended this book to me as a roadmap to getting through the process. I just started to read it, but it looks to be a great resource just to learn about the process even if you decide to hire a patent attorney to get you there.

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries. I’m part-way through this book. Honestly, I would say it is not as readable or interesting as The Four Steps to the Epiphany, but if you are looking for info on the Lean Startup movement, this is one to read.

I read these next two biographies at the same time, which was really interesting to simultaneously compare and contrast two highly driven innovators.

Steve Jobs by Walter Isaacson. A story of how brilliance, creativity, obsession, drive, ego and absolutely no conscience can create the world’s largest company.

The Wizard of Menlo Park by Randall Stross. A story of how brilliance, creativity, obsession, drive, ego and procrastination while bringing a product to market can MISS the building world’s largest company.  Key fact at the end of the book: For all his effors, Edison’s estate at the time of his death was estimated to be only $1.5MM.

That is my list. Anything you have read recently worth sharing?

Sell While You Build

It is always exciting for me to share in the enthusiasm of an early stage startup. I love seeing the energized look on the face of the partners as we discuss their product concept, the stage they are in, and hearing about the new product features they are developing.

At some point, my questioning tends to focus on where they are in the sales process. Often, the answer is something like “We’ve talked about it, but we really want to get the product closer to completion first.” That is not the answer I am looking for.

Whether you are planning on bootstrapping your business or going down the road to funding, it is critical that you begin the sales process early. You should be starting this process well before your product nears completion.

Why Sell if You Can’t Deliver?

So, why start selling when you obviously can’t deliver? Without talking to prospective customers, you only think you know your customers want. You need to find out what they actually want.

Here are some benefits to starting your sales process early:

• Prospective customers will help guide your product development. This will help you prioritize features that are the most important and allow you to postpone features that are not.
• They are a sounding board for the viability of your concept in general, but specifically, the willingness of companies to pay for it.
• Since your product or service is so terrific, a prospective customer may even be willing to “pre-pay” for part or all of it. I have even seen motivated prospects get creative and dip into their “consulting budget” or other funds to help get the product completed quicker. Remember, if you are solving a true need and potentially saving them money, they will be motivated to get your product sooner.
• It will help shorten your initial sales cycle. Even if the prospective customer is not willing to pre-pay for anything, you have generated solid demand for when your product does ship. Since bootstrapping is all about cash flow, the quicker you can generate revenue, the higher the likelihood of your success.

Ongoing Market Research

If, after a number of months, you can’t get anyone excited about your product, then maybe it is time to change direction or cross this business idea off of your list.

On the other hand, if you are getting a lot of positive feedback, pay attention to what your customers are telling you. You may hear an industry-changing idea.

At Direxxis, we closed our first customer with only a PowerPoint-based mockup. During that meeting, the prospect made some suggested improvements that would be needed in order to fit their business. They were even willing to pay for those improvements up front to help speed up the development process and get it sooner. The payment was definitely helpful for cash flow, but more importantly, we received some valuable product ideas that would have been unknown to us if we simply kept our heads down and developed.

Even after nine years, we continue to involve our customers in helping guide new product features long before we begin the development process.

What is your experience?

Do you involve your prospects and clients in your product development process? What benefits or challenges have you experienced?

Rick Kollmeyer is a 25+ year veteran in founding and building successful technology businesses. He is currently a co-founder of Direxxis, Inc. as well as an active advisor to several area startups.

Copyright © 2012, Rick Kollmeyer

Bootstrapping a Business: Building Your Pitch

Conceptual Stage: Building Your Pitch

You can have brilliant ideas, but if you can’t get them across, your ideas won’t get you anywhere. – Lee Iacocca

OK, so in the previous posts, we discussed the importance of doing your preliminary marketing research and rough revenue projections. Executing those tasks may take you less time than it takes to read these posts, or it may take a few days or weeks.

At this point, you have assured yourself, and possibly a co-founder, that your idea can generate income and ultimately sustain itself. This is a key requirement of a bootstrapped business.

Don’t Go It Alone

If you talk with others who have bootstrapped businesses, they will likely tell you that a startup with a small founding team is more likely to succeed than one with just a single founder. If you are an engineer, it is tempting to team up with other engineers. However, for technology/software companies, I would highly recommend that the initial team consists of at least a technologist and a well-connected business development expert (i.e. sales). As a bootstrapped business, you need to get the word out to prospective customers as early as possible.

A future posting will discuss this in detail, since it is key part of the bootstrapping process.

Building Your Pitch

Soon, you are going to be asking like-minded people to spend their nights and weekends, working for free, in exchange for equity in a company. You want to be somewhat prepared before you broach the subject.  It’s not that they don’t want to work for sweat equity, but rather that they want to make sure that your idea is worthy. It is a sales process.

The good news is that there are people out there very willing to do this, because they share the same passion and vision as you to be part of a startup. The people you are going to be pitching are likely already spending their free time working on pet projects, reading, writing and researching their own great ideas. They already figured out that the only way they could ever amass enough money to meet their long term financial goals is to have equity in a successful business.

In order to convince them to spend their valuable time working on your project, you will need to build your pitch. Spend the time to create a presentation that explains the idea, describes competitors, shows revenue potential and outlines the end-game.

Why go through this effort? First, it will help you refine and articulate your concept even to yourself. Be sure to highlight why you are uniquely qualified to spearhead this new business (or maybe why they are). Share your revenue projections. You are selling your potential team – and likely their spouses – on why they should spend their free time working on this. A decent presentation will show them that this idea has been well thought out, and that you are serious. You want them to leave that initial meeting excited about the new venture, and ready to get going.

Presentation Topics                                          

What do you need to prepare? Don’t make the presentation too long and boring. But, remember, this is a sales pitch designed to attract your target partners and team members, so make it interesting and believable. Here are some ideas for what to include:

• Market Statement. Describe the industry you are targeting and the issues they have.
• The Solution. Here is where you unveil your concept. Keep it short, but exciting. Include a few wireframes.
• High level technical overview, but only if needed. If you are going to build a first of its kind transmogrifier, then you should include a few key technical points to convince your targets that it is possible.
• Sales channels and potential partners. Describe how the product will be sold, as well as any potential resellers or other channels.
• Revenue Projections. Include a slide showing your realistic numbers
• Company Goals. Include short-term goals as well as the end game and the expected timeframe.
• About you. Describe your unique story. Why would I want to partner with or work for you? Have you done this before? Do you have a great track record of managing products and teams? Even if you know the person, they may not know as much about your successes as you think.
• The role of your target. Describe why you are interested in having them on your team. What will they get out of it (stock, future job, management roles, etc.). This is one of the most important slides, since people are generally most interested in knowing what is in it for them.

Now you are ready for things to really get going! You’ll next be pitching and building your team. In the next post, we’ll talk about a few housekeeping issues you’ll want to take care of as you are building your team. These will include a few legal documents to take care of, as well as some discussions regarding giving equity vs. just paying for certain roles.

Rick Kollmeyer is a Boston-area technologist. He has founded a number of successful companies and is co- founder of Direxxis, Inc. as well as an advisor to several area startups.

Copyright © 2011, Rick Kollmeyer

Bootstrapping a Business: Revenue Projections

CONCEPTUAL STAGE: Preliminary Revenue Projections

Lack of money is no obstacle. Lack of an idea is an obstacle. – Ken Hakuta

Your idea is solid, but can it sustain a business?

With your killer idea in hand, the next step should be to get a gut-level feeling as to whether your business can generate enough revenue to be bootstrapped. Yes, I know, I’ve read the same articles that say screw the planning and just jump in and build your great product without worrying about its financial viability. I’m not saying that is a bad idea, at least in some cases. However, businesses that can’t generate revenue early enough generally won’t fit into the bootstrapped model.

The revenue model needs to prove to you, and eventually to your prospective team, that your concept is viable.

Don’t just throw in the towel if, at this point, your idea doesn’t appear to generate enough revenue to sustain itself. As great as your idea is, it will likely evolve into something very different.

Estimating Revenue

At this point I would be less concerned with projecting expenses, unless the business requires some unusually large capital purchases. Focus more on projecting sales revenue at this point.

Variables to consider in your revenue projections may include the following:

• Estimated product pricing
• Expected number of customers
• Recurring revenue
• Potential sales per sales channel (direct, partners, enterprise, etc.)

Project these numbers over at least three years.

 

If you click the image to the right, you can download a very simple spreadsheet that you might find useful as a starting point for building your own model. It is designed for a fictitious software company, delivering a hosted SaaS solution.

Further down the road, when there is a business to actually manage, you will need models and reports that include income projections, expense and cash flow projections. But for now, since your founding starters may not initially require a salary, your expenses should be relatively low.

The end result of this exercise is to allow you to test the potential for generating revenue. Look closely at the numbers, and make sure that they are attainable. If they look realistic, then things will quickly get exciting, since you are ready to start building your team, creating your product, launch your marketing programs, and make your initial sales.

The bootstrap conundrum

The key point to remember about a bootstrapped business is that growth and expansion will typically trail revenue. That is, without an external infusion of capital, your growth and expansion will be paid for by actual sales to customers.

But, how can you possibly generate sales to customers, if you don’t have a product? And how can you create a product if you don’t have any cash to pay your team? Ah, yes, this is the bootstrap conundrum! The key to success is the old term “sweat equity.” That is, you need to build a dedicated team willing to work for free, in exchange for something, typically equity in the business, or promise of a future job with an exciting company.

How do you do this? You will first need to build your pitch, and I will discuss this in the next posting.

Rick Kollmeyer is a Boston-area technologist and entrepreneur. When he is not hiking, snowshoeing or skiing in the mountains and woods of New England, he can be found at the various Boston-area innovation and startup meetings.

Copyright © 2011, Rick Kollmeyer