Lessons

Lesson Info

The Importance of Preparation

First session here is about preparation. I'm very much a free wheeling, just go after kind of entrepreneur. However, I did go to business school so I learned a little bit of diligence and planning from that. I'm not suggesting that anybody needs to go to business school to do this, and I don't think you do. It does help to actually think about what you're gonna do, and prepare before you throw yourself over the fence or off the cliff or whatever analogy you want to use. Three key questions to ask yourself. What do you want to do? That's key, I'll be honest. I didn't realize that I would do this for this long. I'm eight and a half years into this company. I originally was just trying not to get a job. The reality is, if you figure out something that the world wants, you can deliver profitably, the world is gonna ask you to do more of it, and you're gonna end up doing it for a really long time, hopefully. Hopefully you're gonna be really happy about it. If you choose to do something that...

you probably won't be happy doing for a very long time you have to start again, and then you lose momentum. That's fine, maybe in this town, or around the world people call that pivoting, but ideally you don't. I look back on the first blog post that I wrote for this company. Some of the early marketing materials, which I'll show you, we're doing the same thing. It sounds kind of crazy that eight and a half years later we are providing the same services. I think we were, for one part, really early to a lot of things. This is 2007 and I think Twitter was just launching then. We were already well down the path of providing social media marketing services. I wrote about connecting online and offline audiences. We do really big, live stream campaigns for people like NBC Universal for the show Mr. Robot, if anybody's watched that. For Miller Coors, Nickelodeon, a bunch of others. It turns out that that service mix, which we'll get into in a later session, was what the world was gonna need even more, not what they needed less of. I thought about where's the world going, rather than where has the world been. If I'd thought about where the world had been, I'd probably offer services that, by this point in time, wouldn't want any more. Think very heavily about, very diligently about what you want to do, and then who do you want to do it for. My fear, and I'll tell you, I'll say the word fear a couple times maybe. Fear is an incredible motivator. I don't know if you realize this or not. I was driven by fear for the first three or four years of this business. Fear of dying, not actual dying, but fear of totally failing in the business, and going bankrupt. Having, as I said before, move back in with my parents. Fear of having horrible clients. I don't know if anyone out there has a concern about that. Fear of getting sued, fear of not delivering, and all of those fears. This second question, who do you want to do it for? There's probably going to be fear no matter what, in the mix, especially in the onset when you're very vulnerable as a young company or just a solo practitioner. That fear is compounded if your working for horrible people. Really think about, who do you want to be working for? I'm not gonna judge any given industry, but if you pick the tobacco industry, for example, and if you wanted to work for them I can't imagine it's not the kindest, most compassionate group of people. I don't know cause we don't do work with that category of clients. What do you need to deliver? In the onset, it might be just you and a camera. It might be just you and a laptop, and Adobe Creative Cloud so you can do design work. It might just be a laptop and a GitHub account, but it might be you and a small, creative collective of people that you really want to work with, side by side, as collaborators, and that's it. So, think about it. Think about it before you dive in. Thankfully, there are all sorts of tools that can help you do some planning. Maybe some of you out there are familiar with the business model canvas, maybe you're not. Now you're gonna be cause we're gonna go through it. This is a blank template. You can find this stuff online. There's so many different templates on the web for a business model canvas. This one came from our friends at Strategyzer. I just go through the little blocks here, and then I'm gonna show you a fully fleshed out one for, essentially a small digital agency, and then we're gonna go back to a blank one, and we're gonna make one together. For those of you at home, be thinking about this. For those of you here in the audience, I may ask you to tell me what business model we need to build together. We could do yours, we could show yours. Let me talk about these specific buckets. You start all the way, top left. You have to think about your key partners. Maybe you won't have any, maybe it's just you. That's fine, but maybe you'll have some key partners to make this business work. The key activities you're gonna be engaged in. The key resources you'll need to do those activities. The value proposition that you'll project out to the world, that people will say, "Oh my god, "yes, of course, I want that." It has to be obvious, it's gotta be very clear, otherwise it's not really a value proposition. Where am I gonna get these customer relationships from? Where do they come from? Do I have to hunt them down myself, do they just come to me? Is there someone that can refer them to me? Do I need to do paid advertising to get them? How does that whole thing work? Are there channels? Are there distribution mechanisms for the thing that I do? If you think about a physical product, if you're gonna sell consumer electronic device, those channels are things like Best Buy or Amazon.com, not necessarily relevant if its a service that you are providing. There are plenty of channels on the web, maybe some of you who are designers, realize that Dribbble, Working Not Working, or Behance. Those are actually channels for sales for your services. So, thinking about the channels. Then the customer segments. Are you gonna work on just local stuff? Are you gonna work on just local restaurants? Are you gonna work on only national things? Only international things? What are the segments of customers you really want to go after, and orient you're services and all of your language around, and all of your pitching efforts, et cetera? What's the cost structure of this business? If this is just you starting out, today, in your apartment, that's gonna be simple. That should be three lines and it should be very low dollar. We'll go into an example. Then, where are the revenue streams? I would encourage you to not get too crazy, and creative about these revenue streams in the onset. It could be just one, and then as you start to see revenue, and you go, "Wow, this is really working. "Let me add some other ones." Cause people keep saying, "Oh, can you do this too?" Why, yes I can, and we'll talk about upselling later. That's the business model canvas. Maybe before I go on to the example, I'll take some questions. Internet audience, be thinking about questions so Chris can pull those up. Maybe in studio crowd, anyone have some initial questions about the business model canvas before I show the example? If not, I will go into the example forthwith, which may answer your questions. It looks like the online audience, some people are already familiar with it. Sophia says, "I love the business canvas, "it's really helpful to make my mind clear." I guess my question for you is, is this something that, when should people fill this out? Is this first thing anybody does, as soon as you have the idea, should you already have some material prepared before you sit down to fill this out? Good question. I think this is to be used immediately. I like to use it as a way to actually lay out an idea for business. I might be walking around saying, "Oh, I want to create "a new virtual reality studio business, "and how would that actually work?" I'm thinking, I want to do a VR business because, personally, maybe I'm really passionate about that. I go, "Okay," and I start laying it out across the canvas. Mind you, that business, I think, would very much work at this point in time, but if it was ten years ago, I'd probably find out that customers are gonna be really difficult cause no one's demanding it. There aren't really any segments yet. The cost structure would probably be prohibitive because of the headsets would have been 20 grand each then, but now all that's changed. I'd like to do it as early as possible. I did, I cheated. I set up a little, minny digital agency so that we can see the model, the business model canvas in action. I'm gonna take you through this. Like I said, we start top left, key partners. We're gonna be modeling just a digital agency, something you could start yourself, today, in your apartment if that's what you wanted to do. This is basically, this was at Strategy Labs day one. Key partners, I'm assuming that I'm not a partner. I'm the CEO, I'm starting the company. I'm gonna do the sales myself, basically do the project management. I need a developer, also remember I told you I was designing back then. I said I was sort of mediocre, I was about a 6.5. I'm gonna take on the design work too, but I need a developer, I need a content writer. Those are my two key partners. These are gonna be freelancers. These are people that I know, maybe it's my friend that I've gotten to know over the years. Trust them with regard to engineering or maybe a content writer, somebody I went to college with, who I always thought was just the best writer. I wanted to work with them, and they happen to be doing freelance content development. The third one is maybe optional. Maybe I have an agency partner. There are big shops, big, it's hard to judge big. Even 50 person agencies or 100 person agencies, and then five hundred and a thousand person agencies. They have too much work, and so they're just gonna send you work. It's called overflow. There've been, I don't know, there's gotta be hundreds of agencies, small agencies, that built their businesses in the early years just from overflow work from other agencies. I specifically didn't do that. I decided not to do that. I think it was because I wanted that very direct connection to the client, and didn't want to have to deal with going through somebody else, maybe. Sometimes you have to go through somebody else. You have to decide, do I have an agency partner as a key partner, maybe you don't. What are the key activities? This is pretty obvious. If we're gonna be a digital agency, we're gonna build websites. When I say websites, I just mean things that people are gonna access over the internet. It's websites, it's mobile applications. It's mobily, natively responsively things. Whatever we want to call them. We're building websites, we're hosting those websites, and we're securing them. Some of you might say, "Well, I don't know anything "about hosting, I don't know anything about securing." Maybe you wouldn't do that, but I knew something about that, so I was like, "Okay, I can do that." Those are key activities. Those are key activities that I think that people really want, things that clients are really gonna want. They don't want me just to build it. I need to put it on the internet for them, host it, and then make sure it doesn't get hacked and taken down. I'm thinking in the back of my mind, so I get paid up front to build the thing, and then I get paid every month for hosting it and maintaining it. That's pretty good. The key resources, so you already start to know it's people. This is a people business, so, your people are the key resources, and then just software. Some software for project management. You're probably heard of things like Basecamp, Osana, and there's a whole bunch of them, but that's about it. You don't need a coal mine. You don't need pick axes. You don't need trains. You need some people, and some software to manage the project. Those are the key resources for this kind of business. Maybe, if you really wanted to break it down, you could think about the intellectual capital, and specific types of knowledge. I think that's all encapsulated in your people.