Creative Destruction & Recessionary Marketing

Creative Destruction is always widely talked about during recessionary times.  Creative Destruction is the killing off of existing products, services, technologies, or business models by radical change or by achieving desired results by more efficient means.  For example, Wal-Mart’s business model driving mom-and-pop stores out of business, or music CD’s being replaced by mp3s, etc. The internet in general has caused a tremendous amount of creative destruction by providing the means for continual intellectual and process driven innovation.  Here is a cool chart below that I found.

Anyway, we know that recessions are painful but we also know that they provide opportunity.  The point of this post is not to just point this out, but to remind us that marketing efforts must also change during a time like this.  Instead of marketing with the mantra of “make your life better by buying things you don’t need” (a little bit of sarcasm inserted here), the more appropriate mantra is “improve your life by purchasing a needed product that solves a specific problem or need”.  We are working with products (book and other muse ideas) that potentially can address specific problems for people in our current economic climate, we must just make sure we cater to our market appropriately in our product development and marketing efforts.

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Sources:
http://tmccune.blogspot.com/2008/04/creative-destruction-in-action.html

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Layoff Comparison and Jumbo Loan Defaults

According to the US Bureau of Labor Statistics (BLS), this recession has far surpassed the amount of layoffs seen in the tech bubble by over 50%.  The positive note that I am seeing from this chart is that if the current layoff pattern follows the previous pattern, then we could be near the worst of the layoff hit.  The major difference with this recession though is the huge drop in consumer spending and deflation of real estate markets.  The continued pressure from lack of spending may lead to more layoffs in the coming months, it’s hard to say.

Another chart from the Wall Street Journal that I found interesting is this one below.  First the mortgage default problem started with Subprime loans, then moved to Adjustable-rate.  Now the Jumbo loan market default rate (generally $750+) is starting to trend upward as layoffs are affecting higher paid execs as well as business owners.

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Incorporating a Virtual Company in Vermont

This is definitely something to keep in mind as we move along with our virtual businesses.  What is great about Vermont’s idea of incorporation is:

• No requirement of physical presence
• No restriction on location
• Income tax only required on in-state sales
• $275/yr for registration fees

This is a helluva deal if it is as good as it sounds…  Supposedly this was passed into law in summer of 2008.

The state of Vermont is set to become the first in the nation to offer a legal framework for virtual companies. In May, the state’s legislature voted to pass a law, which is expected to be signed this summer by Governor Jim Douglas, that would allow any private company to register in Vermont without opening a physical office, holding an in-person meeting, or filing a single sheet of paper. Companies could meet these requirements — which are mandated by most states in order to legally register or open a bank account — by using e-mail, instant messaging, or other software programs.

Vermont plans to charge fees of up to $275 a year for each virtual company registered, with state income taxes applying only to income generated in Vermont itself. The hope is to mimic the success of Delaware, which collects some $700 million a year in incorporation taxes and fees by offering low taxes, few regulations, and a business-friendly judicial system.

“This is a grand experiment,” says Robert Litan, vice president of research and policy at the Kauffman Foundation in Kansas City, Missouri. Litan says the Vermont law will allow entrepreneurs all over the world to take advantage of the relative legal certainty of the Green Mountain State. An entrepreneur in Africa, for instance, could register a company in Vermont without hiring a lawyer or even traveling to the U.S. “This is going to allow for ways of doing business that we can’t even imagine yet,” Litan says.

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Sources:
http://www.inc.com/magazine/20080701/a-haven-for-virtual-companies.html

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Creating a Simple Marketing Strategy

I liked this visual diagram of the different aspects of a new venture that need to be address to make it successful.  This may serve as a good guide for as as we get things rolling.

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Sources:
http://www.ducttapemarketing.com/blog/2009/01/21/simplify/

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The Frugality Encyclopedia and Pareto's Principle

This book seems to be the staple for frugal people.  It is a 959 page book, yes nearly 1000 pages (1200 articles on different topics for frugality)!  Some of it is said to be outdated, but damn, 1000 pages of shit…unreal.  Blogs take material from this and adapt it to their style of frugality.  From everything that I have read about frugality, especially with children and others that depend on you (businesses, employees, etc), there is an art to really knowing when cutting costs will deliver more money saved than an “investment” into a product, service, etc.  My take away from this is that there comes a point when you have to assess the value of your time, as Tim Ferriss explains in the FHWW.  If you are spending your time “making your own salad dressing” to save $.50 one every several months, or spending several hours sorting through newspapers clipping coupons, you need to stop and ask yourself, how much is my time worth (i.e. can I generate more money by working at my trade or on another project instead of looking for ways to save small amounts of money).  I can see frugality becoming a time waster if not done efficiently, and this may need to be addressed in the book.  I think we should consider making this concept a core value of the book — an efficient and effective approach to frugality, especially for busy people that don’t have excessive time to dedicate to saving money.  In FHWW terminology, we need to take a look at all available material for frugality and 80/20 it.

This is he book, The Complete Tightwad Gazette:
http://www.amazon.com/gp/product/0375752250?tag=onejourney-20

Here is a review of the book from The Simple Dollar:
http://www.thesimpledollar.com/2007/07/27/review-the-complete-tightwad-gazette/

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The Entrepreneur's Psychological Rollercoaster

Tim Ferriss created a great post about the emotional cycle that a majority (if not all) entrepreneurs go through as they create a company (I would argue that this applies to life in general, at least mine seems to at times).  The psychology behind this makes so much sense, and we have both experienced this in past endeavors — Vector, other jobs, etc.  The creator of this diagram and explanation is Cameron Herold, former COO of 1-800-GOT-JUNK.  The following quote I took from Tim’s website, it is from Marc Andreessen:

“First and foremost, a start-up puts you on an emotional rollercoaster unlike anything you have ever experienced. You flip rapidly from day-to-day – one where you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined, and back again. Over and over and over. And I’m talking about what happens to stable entrepreneurs. There is so much uncertainty and so much risk around practically everything you are doing. The level of stress that you’re under generally will magnify things incredible highs and unbelievable lows at whiplash speed and huge magnitude. Sound like fun?”

Here is a summary of the steps as seen in the diagram above.  During each of these stages, it is important to realize you are in this stage and utilize your existing frame of mind to tackle appropriate tasks only.

* Stage 1: The first stage of the concept is called “Uninformed Optimism”. At this stage on a rollercoaster, just getting to the top of the rollercoaster, you experience feelings of an adrenalin rush, characterized by excitement and nervous energy.

* Stage 2: The second stage is called “Informed Pessimism”. As you ride over the top of the curve you now have a bit more information. Feelings of fear, nervousness, and frustration begin to set in. Perhaps you even want to get off of it.

* Stage 3 – The third stage is called “Crisis of Meaning”. You’re past scared. You feel despair. It’s as if you’re standing on the edge of a cliff ready to jump, and you begin to think “Today the rollercoaster’s going off the bottom of the track for the very first time.” You feel helpless and you’re both terrified and frozen.

* At this point, you face a critical juncture. You can come off the bottom of the curve and crash and burn, which is when your business goes bankrupt, you lose your marriage, you start drinking, or you end up in a doctor’s office because of stress. Or you can come around the corner because you’re getting support at “Crisis of Meaning” and you can enter an upward swing call “Informed Optimism”.

* Stage 4 – Informed Optimism. You’re calm. You’re informed. You might even say you are cautiously optimistic.

At the end of this cycle, look for it to start back over…

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Sources:
http://www.fourhourworkweek.com/blog/2008/10/03/harnessing-entrepreneurial-manic-depression-making-the-rollercoaster-work-for-you/
http://www.backpocketcoo.com/

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Conference Call with Mike Piper

Great call with Mike, it gave me a much better understanding of the process we will need to go through in order to make this venture successful.  Wow, that was a lot of info to digest.  Even going through the notes below is pretty cumbersome.  I am first giving my overall reaction to the call, then below that I have detailed notes of our Q&A.  Take a deep breath and get ready…

Summary of my analysis after the call:

Advantages of our Frugal Book idea:

• We have a straight-forward topic that potentially appeals to many people
• We can easily search and find ideas for generating creative content for the book
• We both have a good working (and successful) understanding of the material we are covering

Challenges with our idea:

• Will need to create a successful blog in our topic area
• Will need to convince readers (as well as other bloggers) that our material is worth buying and contains significant value over what readers can find on other blogs or through internet searches

My quick analysis of book topics in general:

• Evaluating the viability of a topic (I am doing my best below to break down each model here)
  • Mike’s Tax Topics:
    • Complex topics, niche target (people that want to do their own taxes) with objective answer/solutions –> Mike is compiling answers and simplifying it in a short resource book
  • Mike’s Investing Topics:
    • Complex topics, broad subject with subjective answers/solutions –> Mike is compiling data and proposing a viewpoint for a solution
  • Our Frugality Topic:
    • Simple to moderate complexity of topics, broad subject with subjective answers/solutions –> We are attempting to compile proven ideas/solutions to saving money and presenting as a quick resource guide that guarantees results
  • Our Job Interview Topic:
    • Moderate to Complex Topics, niche subject (sales jobs) with subjective/objective answers/solutions –> We are compiling the most common questions and presenting researched answers/solutions to them
• Of the topics above, the tax topic lends itself best to this business model and surprisingly, the job interview muse (and possibly a book?) actually looks pretty good on paper…

Action Steps for us to make a book successful:

1. Create a website to market the book
2. Write book
3. Format book
4. Send it out to proofreaders (7-8 people)
5. Revise Changes
6. Design Cover (outsource this)
7. Convert to PDF and send to Lightning Source
8. Approve the proof (will eventually show up on Amazon)
   1. Amazon publishing can take from 2 days to 2 months
9. Find people to review the book on Amazon

Notes: Steps 3-8 may take a couple months

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Q&A Notes

The rest of the info below are notes from the conversation with Mike:

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Sales Interview Idea

Update: More examples added

This idea is being narrowed to focus solely on interview questions, and not much more.  The following outlines what the product will include:

• Audio based guide focusing on direct sales only
• Includes the 50 most common interview questions
• The 50 questions will be broken down into categories
  • i.e. – openers, experience, qualifications, sample sales situations
• For each question, do the following:
  • Breaks each question down and explains the psychology behind it
  • Gives several different example responses to each question
  • Outlines how to create a response to each question

Challenges:

• Establishing credibility to make the customer feel they are getting the highest quality advice
• Making the audio product easily navigable and easy to follow

2-do list:

• Pick a product name
• register a Domain
• create a product “phrase”
• find top search results and PPC results to analyze
• find experts or way to build credibility
• create a few sample audio questions for the sales webpage
• create a sales landing page, order page, and backorder page
• setup a google adwords campaign

Top PPC and Search results:

http://www.jobinterviewtools.com

https://www.impressionmanagement.com/cgi-bin/store/checkout.pl?product=Systems

Other Links:

http://salesjobinterviewguide.com/

http://www.best-job-interview.com/sales-interview-questions.html

http://www.justsell.com/salestools/salesinterviewquestions.aspx

http://www.job-interview.net/questionstoask.htm

Interview Question Examples

http://bhuvans.wordpress.com/2006/08/19/50-common-interview-qa/

http://www.jobinterviewquestions.org/questions/interview-questions.asp

http://jobsearch.about.com/od/interviewquestionsanswers/a/interviewquest.htm

http://jobsearch.about.com/od/interviewquestionsanswers/Job_Interview_Questions_and_Answers.htm

http://www.jobbankusa.com/interview_questions_answers/free_samples_examples/sales_ability.html

http://www.justsell.com/salestools/salesinterviewquestions.aspx

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Great products in a bad economy

Opportunity during a recessionary environment can at first appear as a few rays of light that peek through dark clouds; but it is these few rays that will eventually multiply to become bright enough to create a sunny day.  (Hey, it’s my first quotable quote…maybe…lol).  Recessions come along and provide a “clean-out” period for inefficient markets.  Though painful, it is normal and necessary.  This is not new news to us, but it is worth repeating to remind myself.  It is counter-intuitive to most to take risk during a challenging time, but it actually provides the best odds of becoming successful barring you have a great product and a solid business model.   Jimmy did a great job of articulating this in his latest blog post:

One of the things people always say is that it is tough to sell in a bad economy. I agree because most people have average products or products that are wants not needs. On the other hand if you have a great product it is easy. Especially if the product makes money for your customers and pays for itself.

The other great benefit about a bad economy is it is easier to find sales reps. So if you have the capacity and a great product you can gain alot of market share. Competitors are dropping off, new companies aren’t being started, and as a result when the economy turns around you explode.

So I suggest selling your best product in a down market and hiring sales people. Also if you don’t have an awesome product, look for someone who does and sell their product. That is what we are doing and it is turning out to be a great win.

Being very small can be advantageous if you progress carefully and keep all risks calculated.   There are plenty of talented people looking for work right now, and we need to use this to our advantage (in more than one way).  We need to outsource to them cheaply and also create a product they can use (in the case of the Sales Interview Project).

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Sources:
http://jimmyhendricks.collarfree.com/2009/01/07/selling-great-products-always-works/

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Muse Idea Breakdown

Sugar paste flowers

• PROS: minimal competition, great access to an expert, proven DVD template to follow, high selling price is feasible
• CONS: gay competitor, production time would require some time, would rely on Becky to anchor the project

Increasing finger strength

• PROS: simple, access to professionals, proven market for it, climbers like to spend money
• CONS: almost too simple of an idea, lack of personal experience

Sales job interview guide

• PROS: experience interviewing people, job hunting is more competitive, can niche down to target market
• CONS: hard to measure results, hard to guarantee, hard to cater to specific needs, lots of competition

Rollens

• PROS: very simple idea, great markup,
• CONS: need to setup a marketing agreement with Rollens to sell their product, making them look fashionable, need to test product for fogging, stability, etc for motorcycle use

Duck decoy

• PROS: expert with credibility and awards, very focused, potential to expand
• CONS: expert willingness to participate, fact that it is in CoMO

Sugar-free drink mixers

• PROS: good market for upscale product – not much competition in commercial market (bars, restaurants), culture shift is demanding healthy living
• CONS: would require private labeling, require some time and money to put together

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