“Follow your passion and you’ll never work a day in your life” — some nonsense

Travel is one of my passion (the other being soccer and photography) so I went into this project thinking I might test that saying for myself. It’s total BS, launching something (anything really) is hard work. My friend Edaan Getzel and I used to joke about the wildly vague and impractical advice people give like “just ship it, bro”, “what you should do is scale”, and all the drivel on blogs about customer acquisition strategies written by folks who spend $10 in CAC for each non paying customer they get, but in reality building something is hard, getting people to notice is harder, and bootstrapping the whole thing is certainly not making it easier.

Nevertheless, in the midst of a nice role change (moving from M&A to starting an innovation fund) started this month, a MBA started in September, and a 6 month exile in England that just ended, I spent a few nights and weekend scratching my own itch, aka building a product for people who travel as much as a I do.

The Flying Alchemist is a non liquid mouthwash meant to solve a simple problem:

3 out of 4 travelers who use mouthwash at home don’t take it on the road.

The culprit: airport security and the liquid restrictions.

There’s a lot more to the product than merely being non liquid, it’s actually also alcohol-free, natural, cheaper, lighter and smaller than any other solution out there. It’s a 3-gram tea bag with 6 ingredients that dissolve in a glass of water (hot or cold)

I hope to fund this solution so I can “just ship it” and “scale it”, so I’m launching a kickstarter campaign today. Check it out here for more info, and please help spread the word.

I actually don’t even really believe that market sizing, projections, segmentations, etc. are great exercises. I find that people focus on the useless and nearly always erroneous approach of precision rather than on accuracy.

I’m certainly a bit on the extreme end of the spectrum, but to me “the market is big, order of magnitude bigger than we are today, growing over 10% annually, and quite profitable” is good enough as long as it comes with solid analysis of trends and other qualitative qualifiers.

People will argue to death about a decimal point in a 5 year forecast for market growth, or market share. But rarely look at the actual broad patterns and the strategic market narrative the research provides.

However, while I’m still on my soapbox, there is another other mortal sin I want to focus on. Especially prevalent in services (and software) markets, where 10 competitors describe their services using the same 10 buzzwords arranged slightly differently and have seemingly limitless portfolio of services and subservices.

Behold, the FRANKENMARKET!

As far as I can tell there is no existing use or definition of the term Frankenmarket for this concept, so I get to make up my own:

Frankenmarket (noun) Fran·ken·mar·ket \ˈfraŋ-kənˈmär-kət\ . a combination of otherwise unrelated markets under a common appellation for the purpose of market research, forecasting or other business analysis objectives. Like a venn diagram with circles not meant to intersect but that look as if they did when one squints, folds the paper a certain way or yells at the analyst drawing the diagram.

Frankenmarkets are very convenient for exactly one things, and very inconvenient for pretty much everything else.

If you are a diversified business but prioritizing or compatimentalizing isn’t your strong suit, a frankenmarket reduces your diversification instantly (on paper). No need to learn about two or more complete markets in depth, just combine them in a way that makes analysis difficult, yet shallow, and skirts any useful benchmarks. Imagine the following strategy conversion at Bakewell (picture above):

> “Are you sure we should invest into a petting zoo?”

> “Of course, we’re the leader in the Auto Parts and Pet Supplies market, no competitor has the breadth of offering we do, if we add a petting zoo we will further differentiate and create unmatched offering in the market”

Sounds reasonable? Congratulations you made good use of a Frankenmarket.

Want to make actual sound business decisions, or provide decision-support information of actual value? Look elsewhere.

In the B2B software space, if your various products don’t address the same personas that should be at least a yellow flag to be careful not to lump it all together, whether for analysis or to actually run the business.

After all, Google broke down into Alphabet, Inc, and there’s at least some voices thinking Amazon should do the same.

On a closing note, Frankenmarkets tend to be a creation of big companies, but the flip side happens a lot too. Many small business miss out on opportunities because they define their market too narrowly (e.g. we’re in the market for “on-demand donuts delivery” versus “on demand snacks” or “on demand food”). I don’t have a coined word for that yet, will update when the inspiration strikes.

I put together a basic e-commerce infrastructure by piecing together third party services and worked to create the actual product: a coloring book.

In the last days of February, we launched http://chroma.club but also learned that Edaan would leave for Shanghai to participate in the amazing Chinaccelerator program (that also turned his 90 days trip into… well he’s still there today) so I ended up a solo founder after all. If you’ve read my post about the 100 first days, you know that it took off (at least by side-project standards) and quickly reached 150+ customers and profitability, the learning experiment became in effect a real, albeit tiny, business.

Over the past 8 months, Chroma Club reached $10,000 in revenue ($1,500 MRR over the past 3 month, generated from an average of 2,500 unique monthly visitors) at nearly 60% gross margin. And shipped roughly 2,000 coloring books to a total of 700 customers in 6 countries. More importantly, I learned a ton, about e-commerce, about social media marketing and influencers, about technology, about commercial publishing, and about running a small operations that includes actual production of a tangible product.

The end of Summer was a bit of a tipping point and while starting to work on yet another venture I came to the realization it would be time to move on from Chroma Club.

The learning curve has flattened a bit now, and my personal and professional situation has evolved (5 weeks straight on the road in Europe, 10 more to go, part time MBA program just started) to the point where I can’t focus even the limited time and resources needed to properly run the business.

I decided to part with the business. As a profitable business with a recurring revenue model I figured it would be an attractive asset, so i set out to find the perfect buyer. Someone with similar values (treat customers, suppliers and artists right) and desires (learn first, have fun second, profit third) who could have as much enjoyment out of it as I have, and that would take care of the people who entrusted me with putting a charge on their credit card every month.

I’m happy to say that I found just that, and as of November 1st, Chroma Club will be operated by a new leader. He may or may not choose to put his personal profile forward so I won’t expand on his identity, but I trust that it’s in good hands.

My bank account shows a nice little return on the invested capital, probably less so if I properly accounted for the the countless hours I poured into it, but more importantly I feel proud to have built something from scratch that went from idea to MVP to business to profitable business to an “exit” in just 10 months.

Hopefully the next one does even better…

Nevertheless this post is about what I learned in the first 100 days of being a side-project CEO/entrepeneur.

#1. My brains has 3 gears: fixing, planning and doing. Given that I have a job I usually work on Chroma Club in hourly chunks of time or so, and it’s hard for me to switch gears. I find myself being most productive when I focus on one type of work rather than jump around to do a bit of all three any given day.

• Fixing can be debugging the site and its many integrated 3rd party applications, or handling customer support.
• Planning is thinking through what to do next on any given topic, from creating the next edition of the book to the next marketing campaign.
• Finally, my “doing” gear is editing the artwork, shipping, or setting up the many details of a campaign or new integration.

#2. Ownership and accountability are awesome. My favorite moment thus far was when I received a nasty email from a displeased customer, here’s why:

• It was great because this person cared enough about the product that she was willing to write a 5 paragraphs long email about it.
• It was funny because it was written as if addressed to a giant evil corporation, so it made me feel like I hit the mark on the site looking professional and legit.
• It was encouraging because, honestly, I knew she was right. And I was already working on improvements to every one of her grievances. We launched very very fast, with a very bare bones MVP. I’ve read a few places that you should be slightly embarrassed by the first version of your product, and I certainly felt that way.
• In was exciting because I felt that I could do something. I was accountable for that person’s disappointment, but I was also empowered to do the right thing, for that customer (full refund and sincere response), and for the business (speed up the needed improvements)

#3. Channels are everything. More than 60% of my traffic and customers come from sources I have no control over and can barely optimize for. I naively thought I would be the main lead creator, and I may just be if I spend more time and resources, but channels have been a godsend.

Youtubers, bloggers, and my CMS platform (cratejoy) has sent me more traffic than I could ask for. I’m grateful for it but also equally aware that it isn’t fully sustainable.

#4. Passion is a better fuel than coffee.

#5. Having the right metrics is key. my e-commerce platform provides me with a decent high level dashboard, but figuring out what’s really going on in the business is a rather tedious task. At today’s scale, our analytics are hyper fragmented and I need to check a dozen unique systems (google analytics, fb ads manager, some custom spreadsheets, streak CRM, Stripe, wave accounting, mailchimp, mentions) to get a deeper view of things. Luckily Slack has been a control tower to pull in a few basic datapoints daily in one central place, but the analytical part of me is longing for a BI tool that I’ll likely miss for a while longer.

These are the top highlights thus far, I hope to share more as the business grows and I develop into a better leader for it.

It sounds funny to call a coloring book subscription idea a “startup” and I’ve taken to correct people when they throw that term at the http://chroma.club side project that my friend and I are working on. But I decided to roll with it and even took (non colored) pen to paper to assess the mountain of technology that actually powers this simple idea. Here’s what the tech stack of the least tech-y product you’ll find discussed on Medium looks like:

The reality is that all of this is about distribution, marketing and go to market, rather than the product itself. The product “stack” has decidedly less fancy names in it, USPS being one of the key pieces.

But in any case, I’ve now spent enough time rigging Zapier and IFTTTrecipes to automate processes, and copied/pasted enough API keys to feel the importance of technology in our running of the business, so while I’ll take the term “startup” with a grain of salt in our case, I wanted to share what kind of patchwork of tools can help two non developers to put together a product that depends nearly entirely on technology for growth.

I buy as an individual, I buy as a sole proprietor, I buy as a corporate customer.

I buy a lot of that lot of things online, from companies of all size (though highly skewed to startups), mostly services; I buy more things offline, mostly goods.

I buy to try, I buy to use for myself, and I sometimes buy for others.

I buy stuff that’s tried and true, things that are new, and things that don’t even exist yet (hello thegrid.io still waiting for my login, a year after you took my money).

Like most sophisticated buyers I search for deals, coupons codes, referrals or even use services like paribus to get money back when prices change. But sometimes it’s just not enough, or it’s just not there. So I’ve taken to use an approach most western cultures dread: I bargain. Only I do it the modern way.

Behind every sleek website, polished app, or awesome online class is a person or a team that wants your business, and usually they’d rather have it cheap than not have it at all. And they also understand you may have perfectly legitimate reasons why you don’t want to pay sticker price, at the very least they’d like to hear from a user whose perspective of their product isn’t one where value = price.

In the past 3 months alone, I’ve saved nearly a $500, and boosted my access to some waitlisted service by doing a simple thing: I asked. More importantly, I’ve ended up buying useful services that I would have otherwise walked away from.

If you abandon an shopping cart with a low volume, high(ish) price item in it, you have made it through 99% of the sales funnel, you’re not just a lead, you’re a nudge away from being a customer: you WILL get an email from someone. It’ll typically read something like:

“Hey {first_name}, what went wrong? We noticed you didn’t complete your order, can we help you?’

If you politely and fairly explain of the value/price failed to convince you, you will likely be offered a discount. Even sites that don’t have discount codes can and will do it. Some will ask for something like feedback or a testimonial in return, a very fair deal, but most will just meet you at a spot where they think you’ll be comfortable, likely to renew and even refer.

If you’re waitlisted for a new app or service, simply reaching out and explaining why you’d really love to be onboarded sooner than later puts you above the 30% or so anonymous faces that they expect will never follow through on their activation.

Faceless commerce, where you’re never more than 30 seconds of autofilled forms and a paypal password/credit card number away from buying something, isn’t completely human-less. So next time you’re about to reluctantly buy something that doesn’t fully meet your value-for-price criteria, or that overstretches your budget a bit, walk away, abandon your shopping cart. If only for a bit. It’s not a bad practice anyway, to give yourself more time to think it through, and in many cases you may very well be offered the opportunity to be happy with your purchase.

Uber and its gig economy brethren are walking the fine line between enabling sidelined people to rejoin the workforce and downgrading employees to contractors. Others are working tirelessly to build AI that could replace a large chunk of the workforce from truck drivers to accountants and other white collar “knowledge workers” (RIP Peter Drucker). And suddenly entire career paths look the way factory jobs did during the industrial revolution, bound for a slow extinction documented on the evening news.

Despite that context, I am doubling down on people, hedging against the trend by betting that soft skills will remain valuable and that the talent pipeline will remain one of the most effective growth lever a company can wield.

On the one hand, I am embracing some of the changes afforded by technology, and encourage my staff to replace the most tedious of tasks with automation (rss feeds, IFTTT, hacking CRM for other uses while grabbing its rich data, etc.) and to elevate their contribution with the now freed time. There simply is no need for manual work for the sake of manual work.

On the other hand, With Awesome Boss I’m betting that a factor as hard to quantify as employee engagement can drive meaningful business results and more importantly meaningful relationships in the workplace. I’m investing into the idea that face to face conversations, water cooler chats, and scheduled feedback meetings can still be relevant. In fact, I’d argue they have the potential to bigger factors now than ever before.

Think about it, 20 years ago the workplace was a finite environment, a box with space-time boundaries you could draw. You worked from 9am to 5pm, from a specific location, with a team that sat a few feet from you. Communication only happened during these hours, in the office, by way of a few mediums: meetings, phone, memos, etc.

Fast forward to today, work is a continuum that often doesn’t have geographic boundaries, rarely is contained to office hours, and often relies on scattered communication mediums (email, phone, video conference, slack, text messages, chat, trello cards, comments in documents, feedback logged into ERP HR module, banter on facebook or twitter for those willing to break the work-life wall and befriend coworkers). In the midst of all that, over 80% of the workforce still isn’t engaged (the big 3 HR consulting firms agree on the “actively engaged” group ranging from 10% to 20%).

Creative thinking, customer-centricity, business development, strategic thinking, and many other skills and behaviors simply can’t (yet) be automated, replaced by big data, or simply driven by KPIs. Unfortunately these skills only express themselves in engaged employees, but when they do, they transform a task-oriented contributor into a problem solver, an analyst into an innovator, a salesperson into a consultant, a supervisor into a leader.

Unleashing these traits requires two decidedly human inputs:

• Mentoring / coaching, because guidance, governance and the establishing of a safe climate are important aspects of breaking out of a shell.
• Relationship nurturing, because very few will want to surpass themselves for a stranger, or someone will will treat them as one.

Much like culture, engagement is an art rather than a science, and cannot be directed through simple calculated stimulus. Culture is an influence at the level of a group (team, department, organization) but engagement operates at the individual level. In both case though, they start from above, with the “boss”… and that’s why rather than AI, drones or “tinder for HR”, I’m delighted to be involved with Awesome Boss to make unlocked the human component of productivity: employee engagement.

In traditional business or bootstrapped startups, the MVP or first version of a product is typically not a great value, because it has to make money with unoptimized and not-yet-scaled operations. And the value to customer improves (either by way of declining prices or additional features, or both) up to a point, before plateau-ing and possibly commencing a slow decline as the product moves into cash-cow territory and away from innovative position in the portfolio or the industry. Robot vacuum cleaners, electric cars, and smart phones are recent examples following this pattern in the tech world, though it also applies to every industry from foodstuff to plastics manufacturing to apparel and sports teams.

Back on my Uber Pool ride, I became frustrated as we went out of our way to pick up a 3rd rider, and when upon arrival I had spent $17 to go 3 miles in 35 minutes, including 20 spent in the middle seat of a Prius.

A few weeks earlier Uber would have provided this same ride for $7 in 20 minutes with one fewer stop. In the past few months, the company that made me enjoy package deliveries (Doorman) raised prices to the point it stopped making sense for me, the one that gave me a sense of empowerment through networking (LinkedIn) made me ashamed of my profile through bogus buzzword-laden endorsements, and countless b2b Saas “free for now” where anyone can sniff the unsustainbility of the model have let me down when they started charging (hint: going from free to > $50 / month is quite a change in value prop).

While one of these startups amassed a ton of users, delighted them for 6 months, and promptly pissed a majority of them off, two guys were probably bootstrapping a similar idea, and when they couldn’t compete on price or marketing, and maybe shut down or lost a key employee tired of the ramen diet before the free-spenders started acting like a real company…

My theory: VC backing creates inefficient winners, sometimes delays or kills otherwise sound companies, but is also the backbone of hail mary innovations that have altered the landscape of today’s world. So I recognize the good of it, but I’ve felt the negative externalities of it more than ever before in recent months, and wanted to get on my soapbox here.

Now I’ll add that these behaviors aren’t all that different from that of blue chip companies (remember when that phrase was as hip as “unicorn” is today) when they killed off competitors through artificially low and unprofitable prices funded by deep pockets, but at least they had earned that cash from operations rather than capital injections.

Cheers to the scrappy ones, and good luck to them, I for one root for them.

From Corp Dev / M&A to home buying:

Imagine a home-buyer, she lives in Springfield (like the Simpsons) with her family and has a robust income, she has about $150,000 saved up, can qualify for a loan up to $1,000,000 and has distant wealthy relatives.

Our home-buyer hires a realtor to assist in her quest for a new home. During their first discussion guidance she provides the following guidance:

Find a home within 50 miles of her current home

Priced between $600,000 and $900,000

Single family home with a yard

The realtor finds a few homes that meet her demands and eagerly presents her with options. The options seem to strike home when, to the realtor’s surprise the home-buyer starts asking for more information: additional photos, video walkthroughs, receipts of all home-repairs made the past 5 years, seismologic data from the area.

While unusual and time consuming, that request is certainly one that can be met, so the realtor digs for data and re-contacts the various sellers. On the sellers’ sides, owners and their very own realtors get excited, as the home-buyer seems greatly interested in their properties.

After a short time, the realtor presents the updated options in the amount of details desired.

The home-buyer decides to make a verbal offer to one of the sellers, but makes an additional request to her realtor, “just in case”:

Let’s look at homes in 4 other states, and in one other country

Let’s also look at both single family homes and condos and co-ops

Let’s look at foreclosures, homes in my financing range, and homes that I may be able to afford if my wealthy relatives donate $5,000,000

Let’s look at commercial properties that could be re-zoned to residential and converted to a home

Let’s look at home that aren’t for sale, even the ones that recently sold way above my price range

Let’s look at renting vs. buying

Let’s look at buying some land, tearing down our current home and using some of the parts to build one on the new land.

… oh, and of course for all of these let’s have more data that what is provided by the seller, in our own template, and with multiple sources and means of comparison.

The realtor is looking at the perspective of an endless process with perhaps no final outcome. A process that will require to stretch his relationships with home inspectors, his agency, his peers; that will likely require assumptions on topics and domains he’s not familiar with, and will depend on information he hasn’t personally vetted or verified.

Meanwhile, the sellers of the home on which he home-buyer made a verbal offer are beginning to wonder what is taking so long to get to a written offer, they are starting to wonder if it was such a good idea to tell other interested parties that they expected to withdraw from the market.

Why that makes little sense…

People who make a living buying stakes in companies, such as Private Equity firms, VC funds, Angel funds, Accelerators, Incubators, even Investment Banks specialize and focus. Yet many inexperienced leaders, when presented with the green light to pursue M&A as a growth vector, use a scattered approach like the fictional home-buyer above.

And while strategically it may occasionally make sense to go after exotic assets, stretch the limits of your financing or cultural fit, the resources needed to carry out a wide mandate are orders of magnitude greater than that of a focused approach.