FROM A SPEECH GIVEN at the NEW MEDIA WOMEN ENTREPRENEURS SUMMIT:
Not so long ago, I was one of you, an editor and writer, who had worked for many years in the media and saw my calling as something halfway between beat reporter at BusinessWeek and novelist, monkishly writing atop some mountaintop – or (more likely) in a local East Village café.
If someone had told me “one day, Laurel, you’re going to start a company, hire and manage 40 people, grow it to millions of dollars in sales and sell it for millions more?” I would have said “You’re out of your mind! I don’t even want that. Just give me a shot at Harper’s.”
But, I’m here to say that going from THERE to HERE is NOT a crazy impossible road to follow. If a math idiot with no understanding of finance, no tech chops, no prior experience managing a team — much less running a company — can do this, then anybody can!
When I say “this,” I’m talking about starting and running a company that creates good in the world, that helps people, that offers a high-quality product or service, that is profitable –ALL without selling your soul to the gods of dirty, filthy lucre.
As I mentioned before, I really just wanted to be a journalist. No interest in business, except on a merely theoretical basis. I was writing about small business, management and career issues for various publications, as kind of my “day job” UNTIL I could get something more real, like a staff job at The New Yorker!
Because I was lonely — working from home as a freelancer — a friend and I started a series of cocktail parties at bars… mainly to meet guys – but ALSO for career reasons. My second secret agenda was to get to know editors who might assign me stories. I had been in the NY media scene for 7 years and knew about fifteen people in the media. Barely enough to make a kaffee klatsch, much less a rockin’ party.
So, after the first few parties, I began to boldly invite TOTAL strangers – who incidentally, were editors at the major magazines where I might want to work. At first just a few people showed up, then 20… 30… 50 and before long I had thousands of people entered into a database.
TODAY, strictly through THIS kind of word of mouth, more than a million people have signed up on the site, making more than 12 million page views per month. Tens of thousands have in some way engaged with the brand – many to purchase one or more of our services.
They have attended the parties, taken classes with us, gone to a seminar, joined AvantGuild to read our premium content OR just lurked on the bulletin boards. Why, back then, did all these people show up and why did they bring friends and have their friends bring friends? They weren’t ALL single.
It was because, they, like me, truly wanted to make friends and business contacts and to feel part of a community.
That’s what the party provided. Making people feel taken care of and warmly greeted wasn’t being done at your standard-issue New York party. I wore a colorful feather boa and went around and personally introduced people. In fact, I forced people to meet. Go ahead, call me a Party Dominatrix. But, folks seemed to love that. The feedback I kept getting was: Don’t stop these parties.
At this point, I had no business though. Just a successful party and a growing community. And the guests kept saying “You need to make money at this somehow.” But I suspected that they weren’t going to pay to attend a party. And, how do you turn community into a money-making business, anyway. We’re talking pre INTERNET (not to mention Pre-Facebook). This was 1994.
That brings us to the first TAKE-AWAY for you.
1) TREAT your Customers like your community and they will reward you with their love and loyalty. Those are the foundations of a great business. If you don’t have an affinity for your customers, that is a bad sign. How can you expect love, loyalty and respect from people who you don’t feel the same way about?
2) LISTEN to your community of customers. Find out what they want and give that to them. Even if it means providing free stuff to show your love. I’m not saying forever free, or that you have to lose money, but you might have to invest in the relationship a bit before it starts to reward you.
Have trust. People always want to pay a fair price for things they value…because they want to continue getting those valued things.
Over the next few years, I turned each party, each conversation, each point of contact, with my media “customers” into a focus group opportunity. And, in fact, I did have a few dinner parties that were specifically designed as listening exercises.
You can do this, too. And, you must. Whether you stand outside of a mall with a clipboard and ask people in your target demographic to answer a few questions, or hang out at some local bars and quiz people there! Too shy? Do it on LinkedIn or Facebook; connect with friends of friends of friends. Use SurveyMonkey to tally responses! There are so many more tools today then there were when I started.
When I listened, I discovered that my media customers had a lot of needs in common. They wanted more work (both freelance and full-time), they wanted more ways to meet each other and to stay connected, they wanted to be up on the news and gossip in the industry, they wanted to be continually learning and improving their skills.
I made a bucket list of possible services that I could give away or sell to my customers: Monthly parties in other cities, Health Insurance for Freelancers, cheap monthly Lexis-Nexis access, a Freelance Marketplace and much much more. I didn’t get to every single item that first year or even by the fifth. But years later, I looked at that list and I had come pretty close to creating every single item on it.
The very first thing I began to produce after the monthly parties was an email newsletter (once people were USING email, that is). The emails contained information that was extremely helpful and targeted to the community – mainly media job listings and media event listings, and announcements like “Apartment for rent” “part-time office needed.”
After all, these were some of the core functions of the parties. Along with the occasional work assignment and job offer, the parties generated multiple deep friendships, 5 marriages, 3 babies — one out of wedlock – and countless one-night-stands!
Today, 15 years later, if I were on the other side of this podium, I would do things in just the same way: Have parties, start a blog or a newsletter in order to collect names and begin creating relationships with the customer.
The next step for me was in 1996, when someone in the community suggested that I put up a web site so that the party could continue 24-7. The person who made the suggestion was an editor; her boyfriend was a programmer and he already had the code for a basic community website. His downtown hipster community was called TagMag. So, being a good sport, he offered me his code for free – as long as he could use all the banner ads in perpetuity. I said “Sure! …er, what’s a banner ad?”
No matter, in 1996, I had my first web site. In fact, I had one of the first Social Media Sites for Media People (talk about meta!). It wasn’t much to look at – just a few pages, but it was extremely useful to the community.
Today, with open source modules of code floating around, and free blog software, I could have started my site just as cheaply. I would have adapted WordPress or Blogger software to my needs and added out-of-the-box Bulletin Board and Job Board functionality.
But, I would have had to have been careful to remain focused. Facebook didn’t start out with Facebook Places. My business didn’t start out with 100s of offerings. Feature creep is extremely tempting; I strongly recommend starting with as few features as possible. Launch, then test the market and add more features once your users are crack-addicted to your current features and beg for others.
The next challenge for me in ‘96 was something we now call Audience Development. Back then, it was called “How the hhell am I going to get people to check out my new web site?” I’m sure this is a big question for those of you facing that blank page now.
For me, the answer was what I call Party Marketing, And I combined my party marketing with email cross-marketing. What is Party Marketing? It’s me standing up on a chair and announcing that there is this fantastic web site with Job Listings and Event Listings and Bulletin Boards that the party guests just have to check out. In the beginning I had one party a month, and people volunteered to help keep them going.
Once I had some funding, I was able to do a party a month in 12 cities, all on volunteer power. The volunteers wore boas and stood up on chairs to promote the web site. This became a key part of my strategy and enabled word of mouth to grow as quickly as it did.
I was also using the Email Newsletter to cross-market what was on the web site. It was kind of like a Trojan horse. While most people aren’t going to open any old email, who doesn’t want to open a fun community-oriented party invite? Subject line: Come to the Next Media Party~!
Every email contained bits of news, announced the next cocktail party and also linked back to the web site. People loved reading the newsletter because it really pertained to their lives and their needs and it pointedly was not selling anything. However, it became a not-so-“secret” marketing tool for everything we sell.
3) YOU can do your own guerrilla marketing to build audience and awareness of your offerings. Party marketing is easier to organize than it’s ever been. Start a group on Meetup.com for people in your target market. Meet them and get to know them. Ask them lots of questions about their needs. If you have products/services that those folks need, they’ll want to participate as much as possible to help you get where you need to go.
For me, all those years ago, I STILL had no business model but I had more of an inkling. I was happily doing mitzvahs (good deeds) for people – referring people for work, introducing people who might later marry – collecting Karma points. Or maybe, in business parlance, one might call it Generating Goodwill.
My investment in time and energy paid off nearly as well as a marketing budget would have. Within three years of launching, my baby web site was the hottest place for media professionals of all stripes. The bulletin boards got huge traffic and the job listings were the best around, rivaling those in the New York Times for media jobs. My customers loved the web site as if it was their own – and it was, because I had custom-tailored it to their needs.
That was when I listened to another set of my customers: HR people.
In 1999, HR people from all the major media companies – from Hearst to Fairchild – were using my job board to hire. And many of those HR people felt guilty that they were getting for free what they were paying for in the newspaper classifieds. Some of them wrote me to ask if they could pay me. Around the same time, Monster.com advertised on the Super Bowl. My first thought: “If Monster is making THAT much money from job listings, maybe I can as well.” If I could make just a little bit of income from job listings, I might be able to quit freelancing and spend more time coming up with products and services – and who knows where that could lead?
So, in early 1999, I sent an email around to all the people who had posted a job that month. I announced that I would start charging for the Job Listings, “Pay me $100 – but only if you’re happy – and consider this email your invoice.” I only wanted to take money from happy customers.
I went to my PO box the next month and there were 11 checks. Wow! $1,100. The next month, it was $2,200, then $1,800, then $3,100! Before I knew it, I was making more money than I had ever made as a writer.
I hadn’t launched the parties or the email newsletter or the web site with any intention of creating a profit-making business. Yet without investing any money, I had unintentionally built up several years of good will, brought together a customer base, done market research and launched ONE real product that customers had now proven they would buy!
And the story could have ended there. Party Girl makes good on the Internet, earns herself a nice, steady income from her apartment in her pajamas, with her cats jumping all over the keyboard. In fact, I think that story exists even now at JournalismJobs.com, which started a bit later, has a small staff and isn’t really known for much more than job listings.
But I had other ambitions. I didn’t want just a job board, I thought this community thing held pretty exciting possibilities. So, I came to a decision point. How do I take this thing and make it BIG, Go global, go Galactic, go anything but postal? Do I get funding or not? Do I solicit a partner to help me make decisions or go it alone? What is the very next step?
Luckily, my background expertise in business writing came to the rescue. I had edited stories like these before for Executive Female magazine and written features like this for Working Woman. “Entrepreneur launches empire on a shoestring – well-financed competitor comes in to eat her lunch.”
“CEO takes on wrong business partner and business crumbles in a bickering mess.”
Speaking of stories, I’ve only gotten up to 1999, so I’m going to fast forward my story a bit to leave ample time for your questions. The highlights for me were:
– In 2000, I got $1 mm in funding
– left my apartment and two cats for a real office
– hired actual staff, to augment my intern team
– survived the first Crash of the Internet
– Survived 9/11
– added more products and services that my customers asked for
– grew the company to solid double-digit profits within three years of raising capital
– and sold my baby in 2007 for a reported $23 mm.
Here are take-aways #4 – #9 from my story, then I’ll open it up to your questions:
4) What makes for a good business idea?
Most successful small companies are NOT ones started by MBAs with years of experience as CEOs or entrepreneurs – as I had wrongly thought. They are ones started close to home. Meaning: something in an industry you understand deeply or for which you are a domain expert. It could be a hobby, even. Start with an area you know and worry about adding business skills later. It’s more important that you know the PRODUCT, SERVICE or CUSTOMER than that you be an Excel Monkey.
In my case, I was a journalist and I knew journalists. Only later did I figure out what products or services journalists wanted. I never went to business school, but I hired people who had those skills and listened to them.
5) WRITE a plan.
No matter how ill-equipped you are to do this, no matter how simple you think your business is, write a business plan. You can buy books guiding you through the process, there’s software to help. I hired someone who had professional experience doing this. (I paid him a very small fee and paid him the rest in stock options). Go through your network. Ask for help from small boutique bankers in your industry; B-school professors can recommend students who might do your plan as a class project.
6) GET FUNDING, whether from a bank, from friends and family or from professional money:
Never make the mistake that most founders make, which is to starve their baby businesses. You’ll need breathing room; 6 – 12 months capital in the bank.
If you are getting money from any type of investors, take as little as you need in the beginning from the smartest, richest people you know. Keep as big a chunk of your company as possible – there are exceptions to this rule, of course. If you are rushing a product to market that is mass-market, is easily copy-able and/or requires a heavy marketing budget to grab market share, then you may have to raise more upfront and give up a lot in equity. But you’re betting on the fact that you’ll have a smaller amount of equity in a much bigger pie.
And if you don’t know smart, rich people – find them through your network. I offered a finders fee of 5% of any capital raised, plus some stock options to get my $1 mm investment in 2000. I didn’t know any people with money, so I tapped into the old boy Harvard network through a guy who had dated the daughter of a guy who taught there.
7) HIRE HELP, NOT A PARTNER
Why do many people start businesses with partners? Fear, loneliness, small amounts of startup capital, supposed expertise, the desire not to make a decision by themselves.
Don’t team up with a partner for the wrong reasons. If the business is your idea, keep it that way. And keep the power in your hands. When you get a partner who has nothing to offer but keeping you company, you’ve basically given away a bunch of your equity for something you could have gotten cheaper through advisors or through a trusted employee.
In the short term, rely on the kindness of strangers. Ask people to be informal mentors and advisors. I had no money and I just asked many smart, talented people for their time and advice. They happily gave it to me – even lawyers and accountants. In some cases, I offered to pay folks “later, after I raised money.” In other cases, I offered small amounts of stock options in exchange for help. People like that [lawyers, accountants, etc.] are in the business of building relationships with up and comers. Make yourself appear to be one of the winners and everyone will want to be associated with you.
Later, when you have money, hire staffers or consultants to do the jobs you’re not good at. And if you’re not the managerial type, by all means, be the outward-facing type CEO. Go to conferences, do the fun meet-and-greet stuff and hire someone strong to manage the staff stuff.
8) DELEGATE, BUT PAY ATTENTION
Delegating is hard. It’s hard to find someone you can trust, hard to train the person, hard to hand stuff over to her and then once you do that, you kind of want to say “Okay, that’s done. Now, I don’t have to bother with that any more.” Then you wonder why all your priorities aren’t being met.
Unfortunately, you do have to manage people. You can’t get away from that. If you’re lucky – as I was, you’ll find a couple of people who can operate the company and to whom everyone else reports – and then you only have those one or two to directly manage.
With any employees you manage, even those who are senior-most and trusted, you STILL need to keep them accountable in very strict and formal ways.
Schedule regular weekly meetings in which you are updated on the progress of every project. In those meetings, you will see the entire scope of the tasks being done, where each one is in its cycle and whether or not new priorities are pushing important projects to the back-burner. That way there are no surprises.
The last thing you want is to tell your best employees to do something and three months later, when you finally get around to checking in, you discover that nothing was done. “But you told us to do these other things first,” they retort. You are furious that the priorities were rearranged and projects got lost in shuffle. They are furious and hurt that you didn’t understand what was being given up when you sent them all those Urgent, Must-DO task memos.
9) GET YOUR HANDS DIRTY
While I’m a big fan of hiring experts and letting them do their thing, I also feel that you need to know what their “thing” is, what goes into making their “thing” happen and why their “thing” works the way they say their “thing” works. I was terrible at finance and knew nothing of tech, but I made sure to sit down with the people in charge of those areas and get to know intimately what decisions they were making and why.
For example, you’d be surprised at how divergent your ideas can be from those of your technical people, based on simple misunderstandings. And Techs can be pretty convincing when they tell you “Oh, that can’t be done.”
My Advice. You need to learn what a database is and how it works; you need to know what a relational database is. You need to know how Search on your own site works and can work. You need to know what HTML looks like and HTML5, and Drupal or Ruby On Rails (or whatever they’re using).
I’m not saying program code, I am saying ask a LOT of questions like a child to find out how things work. And ask the programmer to show you things. Once I saw the difference between straight HTML and Nested Tables, *I* was hooked. Joking aside, it will help you ask the right questions later and get to the bottom of those “it can’t be done,” retorts.
To help you out, here are 6 KEY questions to ask any tech who replies “It can’t be done:”
1) Why exactly can’t it be done?
2) Is anyone else you know doing it that way?
3) Why can they do it and we can’t?
4) What could we do to enable it to be done?
5) What steps would we have to take?
6) Is it really impossible, or is it just impossible the way you’ve got things set up now?
On many occasions, my developers have told me “it can’t be done,” and after this line of questioning, I learned that it can be done. It was just inconvenient for them because they didn’t share my vision for the product.
That’s all folks, let’s open it up to questions.