Thursday, June 30, 2011

Hybrid Start Up

I came accross the term "Hybrid Start Up" today and it was definitely a 'Eureka' moment!  For over six months I have been seeking funding for a company that I started five years ago but has a product that has been successfully sold in the marketplace since 1991.

Now, I will admit that I had absolutely no idea how to raise funds; with over 22 years of experience in my industry where we established start ups and successfully financed turnarounds we always did so with our own funds.  So, the process of seeking funding kind of started off on the wrong foot; which was my fault because I was confused by the terms.

Now, I realize I am actually a hybrid start up, "...with one foot in the virtual world and one foot in the real world" which is exactly what we are attempting, we have the foot firmly planted in the real world, with over 200 retailers and 67,000 loyal consumers who shop our website regularly.  We manufacture big and tall tee shirts and we also offer various lines of  big and tall screen printed tees,  but the future belongs to those who can create a consumer centric/customization business model and we are ideally positioned to fill this opportunity in our niche market.  We can provide the plus sized consumer the same opportunities that firms such as Threadless, Cafe Press, and Custom Ink to name a few, have successfully pioneered in the regular sized market. 

After 22 years in the industry I have never seen an opportunity that excites me like this one does!  We would continue to build and expand our retailer based market but we would also be creating an all new market by bringing consumer centric/customization to the plus sized market.  This addition allows us to now expand from exclusively big and tall males into the plus sized female market.  It would allow us to create a synergy between our loyal retailers and our loyal consumer community which would then feed the growth of each other.

I do love my niche because I am tall and have been all my life;  I have spent my life shopping at my competitors like King Size Direct, Casual Male, JC Penney, and the retailers that do carry our product line.  I understand the psychology of the plus sized consumer and I can relate to it; I know what its like to see something on someone else and know you won't get it in your size.  I want to change that for the 76 million Americans who are obese and I want to do it by creating what they want created!

"A hybrid business is built entirely from scratch, to be innovative in its online technology and its real-world operations."  That is exactly what I did, when I got tired of constantly running out of inventory because I was undercapitalized, I stopped and said, "Lets quit working ourselves to death attempting to make do in a market that is overhwelming us and lets start over and create the ideal company to meet the opportunities of the plus sized market."

Now, "innovative" for us means to seek out the models created by others in the regular size market and basically duplicate it for the plus sized market; copy that in the mass market which has been the most successful and just redirect it to a niche market.

I have spent months explaining the vision, and I can go on for hours, but I never felt I was conceptualizing the vision correctly; a 20 year old start up that just wants to do what everyone else is already doing but in sizes 2X to 8X and XLT to 6XLT and build its existing retail base.

Now, I can claim to be a hybrid start up!   Once you get the terminology right you are half way home!

Oh, and I have met some really great people during this funding adventure,  I have focussed on seeking out those in the technology arena because I want to ensure that I have as mentors, the best and the brightest!  Yes, you CAN teach an old dog new tricks!  For that I thank everyone.

Wednesday, June 29, 2011

Employees and Employers: Hostages Of Healthcare

I was reading an article today about internet start ups in Israel and how this portion of their GDP was almost as much as health care was; then I noted that health care was something like 6.8% of their GDP.

In the United States health care represents 17.3% of our GDP.  Now, the government, through Medicare and Medicaid, accounts for half of this amount, but the reality is that this is a huge number! 

Oh, and Israel has universal health care coverage that is mandatory.  In 2009, 61% of non elderly Americans had health insurance through their employers; which was down from 69% in 2000.

Now, I am not going to get into the politics of the Affordable Care Act or "Obama Care" as it is commonly known, but I believe that Winston Churchill pretty much said it all when he stated, "You can always count on Americans to do the right thing - after they've tried everything else." 

For clarification, I believe that we would have been better served if we had implemented the Swiss Health-Care Model; it basically takes the employer out of the health care system. Over the course of the last 20 years I know the importance fringe benefits play in attracting and retaining employees; the reality is if we had not been self funded, or our own health care insurer in 1994, we would have fell victim to NAFTA, but we benefited by being our own health insurer and having a reputation of having great insurance.

Employers, especially small employers, find themselves held hostage by health insurers.  They have to offer health insurance, which requires a decision that most small employers are ill equipped to make.  Then they have to administer the insurance, and the performance of the insurer reflects on the employer.  At renewal, employers always find themselves facing a rate increase and left with the options of reducing coverage or switching insurers; kind of like trying to carve a stick of wood with an axe rather than a pocket knife.

I found this article about the demise of Google Health, which was a platform that Google attempted to launch to provide individuals with a vehicle to centrally store and manage their health care information online.

The reality is in the American health care system there is no consumer. 
"The theoretical appeal of such a service (Google Health) is that people can make better decisions about health care when they have all of their health information readily available. 
After a very successful pilot test with 1,600 patients of the Cleveland Clinic, Google Health launched a little over three years ago. It joined similar consumer-driven offerings from Microsoft, Dossia and Indivo. While none of these other services have outright failed, they cannot be considered home-run successes. 

Why not? Why hasn’t the Internet empowered consumers to manage their personal health information the same way it has better informed them about medical conditions?

The answer is the same as why Health Savings Accounts (HSA) have never achieved the interest that they should have:  Individuals are not the consumers of health care. 

The rates charged are established by the insurance carrier; providers when asked what a procedure costs have to know who your insurance carrier is first.  In turn, doctors are directed by ones health insurance on how to treat a patient; under one health insurance contract the carrier may have agreed to 'bundling' of certain services by CPT code and another might not have.

In more and more cases, particularly with BC/BS - Anthem, more and more medical providers are finding that Medicare actually pays more for some services than insurance companies do, and the federal government is mandated by law to pay all undisputed claims in 30 days; there is no such mandate with health insurance companies.

For employers, I do have the following recommendations, until sanity returns to our dysfunctional health care system:
  • If you have over 150 employees look into self funding
  • Bring employees into the decision making process; get their input
  • Demand experience data, note where your health care dollars are going.
  • Find ways to educate your employees and get them thinking about changing bad lifestyles habits
Think of health care as an employee/employer partnership.  You will find that besides the long term cost savings you will enjoy you will also notice improvements in employee morale and employee retention. 

Tuesday, June 28, 2011

Facebook, Community, and the Deconstruction of the Internet

The chart on the left has been quite the sensation around the internet the last few days and the article that accompanied the chart is also very interesting in its insight. 

A very simple summary is that  Americans are dramatically increasing the time they spend on Facebook but that this increase in time on Facebook is now coming at a decrease in the amount of time Americans spend on the rest of the web.  I think that the article states it best when it says, "The Social Web Versus the Searchable Web."

Yes, the web as a social utility has won out over the web as search and educate, but I think that where most people are missing the boat is that while the web is shrinking, so is our definition of community.  In another study just released, 89% of the friends that we have established on Facebook, we have met more than once in person.

Can't help but wonder, particularly in light of the belief that the web was going to change the world, change the way we live, and how we see the world, if the reality isn't that once again the old adage, the more things change the more they remain the same isn't true?

It also makes me realize that maybe my post from the other day is something that I need to develop and sell to some venture capital firm; I just might have stumble on the next multi billion dollar idea!

Maybe people are overwhelmed, maybe they are just recoiling from the constant bombardment of information, and they have retreated to the familiar; to the comfort of friends and family.

When you realize that cable news viewership is down, that Walmart is developing a "Walmart Express" in their attempt to cure their slumping sales and Best Buy has announced that they are going to begin renting space in their stores to other retailers, there obviously is a retrenchment from the excess going on.

Of course everyone is going to rush to promote themselves on Facebook,  now the focus will be on social media and "likes", rather than on search and "clicks."  But the reality is that isn't going to do a thing but make Facebook a really wild IPO in 2012. 

From my experience with Fan pages, ads, and promotions on Facebook, I would have to say that most folks use Facebook at work; the greatest results are between 9 am to 5 pm Monday through Friday.  Now, I have no idea if this is real data or just anecdotal but it would be interesting to see Facebook use vs. web use by time of day.  Then we have the development of programs such as Klout and Honestly which are being developed to help use identify who is trustworthy on the web but the reality is Americans are retreating to their comfort zone, of people they are retreating to communities of people they have met and know well; I think we are witnessing a "blowback" amongst internet users.

The future of the internet is scalability; users are going to only partake and consume new technology on a very slow and hesitant basis.  People want to connect but they want the security of a community.  From a retail perspective the concept of a consumer centric business model is critical; that gives the consumer a sense of belonging and fitting in.  Retail is no longer about discounts, emails, and advertising, but rather its about building a "Main Street" like relationship with the consumer; think Andy Griffith and Mayberry R.F.D. rather than Star Wars....

The brave new world of the internet has run into the age old desire for familiarity.  I think we need to start looking at the web from the perspective of sociology and psychology rather than from a perspective of marketing and tech.  Communities are not gimmicks, they are not ploys, but rather, like the theme song to the television sitcom "CHEERS" states:
Making your way in the world today
takes everything you've got;
Taking a break from all your worries
sure would help a lot.
Wouldn't you like to get away?
Sometimes you want to go

Where everybody knows your name,
and they're always glad you came.
You wanna be where you can see,
our troubles are all the same
You wanna be where everybody knows
Your name.

The future of the internet is not shrinking the world or globalization but rather one of re establishing a sense of belonging:  Its Main Street.

Sunday, June 26, 2011

How To Learn from Human Resource Data

Current white collar unemployment is at roughly 4.5%; but if you follow the news you would believe it was much worse.  If you are nearing 50 or if you have lost your job then you are sure it is much worse!

Then you read an article that states,
"Mercer, the global HR consulting firm, just released the results of its new What’s Working survey, conducted over the past two quarters among nearly 30,000 workers in 17 countries, including 2,400 workers in the U.S. It found that nearly a third (32 percent ) of American workers are seriously considering leaving their organization at the present time, up sharply from 23 percent in 2005.
As bad as that sounds, another 21 percent of workers say they are not necessarily looking to leave but view their employers unfavorably and have rock-bottom scores on key measures of engagement, meaning that when you combine the two, more than half of all employees (53 percent) are either looking to leave for a new job or have mentally checked out of their old one."
The reality just might be that these employees are bringing the grind of 24/7 cable news to work with them!  The best solution might be just to move the furniture around in the lobby/offices or paint the walls.  Or maybe copy the practices of younger companies and bring in a ping pong table or copy from Google and bring in a couple of lava lamps and set them up in the break room.

A good manager should know when they have to do something to boost morale and sometimes they have to realize that they have to do something to snap everything back in focus.  Sometimes you have to figure out a way to just let employees vent.

If you look at the statistics in the original article you realize that employees are pretty satisfied with their benefits, of course they are dissatisfied with their pay (I would love to meet the people who when asked in a survey are they paid too much, just right, or not enough respond they are paid too much or just right!), then you have the issues in regards to the "intangibles." 

When you see a study that attempts to create a hysteria around "intangibles" then you need to realize that, as an employer, you may be dealing with something you have no control over.  Lets be honest, there really isn't much news today that is positive, hopeful, and or gives one much faith in the future, and of course that is going to reflect negatively toward ones employer and or employment if that is the focus of a survey.

Sometimes all it takes is to alter the routine, doing something spontaneous or unexpected, or just a little act that is personal in nature; sometimes a little craziness makes everyone all the more sane.

You Got To Be In It To Win It

A stakeholder, or someone who's in it to win it!  I know absolutely nothing about the world of IT start ups but I do study their products and their business practices because I believe that thinking outside the box involves looking outside the box of one's own skill set and or industry for ideas.  Today, I read this article, at a venture capitalist's blog and then I had read this article on Friday.

I firmly believe in the concept of employees and customers as stakeholders!  I also believe in the idea that as a producer I am a stakeholder in my retailers!  Its a very basic idea that the better we all do the better the whole does; or, a chain is only as strong as its weakest link. 

Just something as simple as a question, "...what do YOU think?" can create a bond to an outcome for the person who the question is directed to. 

Now for me to claim to have any understanding about stock options and or vesting would be foolish, because I have never been in a situation where my dedication was rewarded!  Honestly, I do believe I lay claim to having worked for the biggest con artist the world has ever seen; the P.T. Barnum of hype as motivation! 

If promises were kept I would be, by now an equal partner in two companies, but when I was faced with the reality that I was never going to see the redemption of a promise made I basically stopped; I didn't quit but I stopped and did other things thus two very successful and growing companies ended up being shutdown and consolidated into other operations; which in a year led to their demise; 5 million dollars in profitable revenue in the first year of operations gone..... 

I have made promises to employees that the company ended up reneging on and I ended up keeping my word out of my own pocket. 

So, when I decided to go out on my own, who was the first person who jumped in excitedly clamoring to be a partner?  Yep, Mr. P.T. Barnum himself!  His idea of a partnership was that I do all the work, create the vision, implement the vision, and at that point I had put up all the capital and in return he was entitled to 80%!  Sure!

My philosophy is not to make my piece of the pie bigger but rather to make the pie bigger for everyone and thus ensuring myself a piece of a bigger pie; that's the simple logic of  "win-win." 

The greatest sales people for a company are its customers and employees; great people make great companies!  One time, with a start up that manufactured potpourri and scented gifts, I found myself with four trade shows going on at the same time, and I wasn't all that comfortable with our independent sales reps, so I sent employees to the shows to "support" the professionals!  We achieved 10 times our normal results from shows and I had employees who were now stakeholders and each and everyone of them returned to their jobs and looked at things totally differently than they did before the shows.

After reading these articles about how Skype is treating their employees in regards to the issue of stock options, I think that Skype is going to find that their customers are not going to be all that loyal in the future; you do reap what you sow.

Mr. P.T. Barnum now whines because he is struggling; he is growing dizzy from the spin of the logic of a self fulfilling prophecy!  If you want a commitment then you have to empower your employees, business associates, and customers; you have to make them stakeholders, which in turn makes the concept of commitment a two way street.

If you make promises you do not keep, then you can expect the same in return.  If you tell someone you are going to do something then do it!  Business is about winning and you cannot win if your customers and employees are not "in it!"  Being "in it" does not necessarily involve stock options and or ownership, but it does involve being up front and truthful; hiding behind the fine print, or selling your employees out over your desire to get funding, or because it doesn't fit in your long term plans is really short sighted!

Saturday, June 25, 2011

The Web, The Concept Of Community, And Small Business

I live in Bowling Green, Kentucky which is the third largest city in Kentucky with a population of over 58,000.

Its home to Western Kentucky University, Fruit Of The Loom, Houchens Industries, and GM-Corvette Plant, SCA, and Camping World.  I also found this in Wikipedia:
"Bowling Green is shifting to a more knowledge-based, technology-driven economy. With one major public university and a technical college, Bowling Green serves as an education hub for the South Central Kentucky region. In addition, the city plays an integral part as the leading medical and commercial center." 
We also have a minor league baseball team and soon, a performing arts center.  With all of this I believe that one simple thing, one small initiative, that was just launched could unlock a tremendous amount of innovation, job creation, and economic growth in our city and that is the I HEART BG program!

Why not turn this program into a complete community focused internet based web within the web?  Since yellow pages are history and with all the technology of the internet allowing for anyone any where to connect with the world, why not create a one stop shop for every about Bowling Green?  I use the internet on a daily basis and I find myself searching for things in Bowling Green more and more, I also realize that after living here for over 20 years I am more out of touch than I was when I first move here; what we need is an internet community that actually reflects an actual community.

Why can't we create a homepage for everything Bowling Green?  It could replace the yellow pages, it could replace Google Search, it could include a "GroupOn" just for local businesses, it could have a "facebook" like component just for citizens living in Bowling Green.  A homepage that was not the entry point for the globalized web but rather one to the community that we live and work in.

At one time we relied on our local paper and the telephone book to know what was going on in our community but today, with the internet, we find that local businesses, local news, and local events all get lost in the world wide web; I know more about what is going on in the Middle East than I know about what is going on down the street.  I want to shop local, but in between emails, groupon ads, flyers in the mail, local small businesses get lost, they come and go, before anyone is aware they ever existed.

We have television ads, we have mailers, and most small businesses have websites and fan pages on Facebook but the reality is what we need is a locally based web with in a web that allows me, the user, to find what I am looking for, when I want to look for it!

Envision a Yahoo homepage just with news, features, and promotions that are local?  Just this morning I visited three sites relating to Bowling Green, Kentucky and I realized that I missed five things that I really would have liked to have participated in. 

While we celebrate the world wide web, and enjoy the opportunities that it provides us to broaden our knowledge of the world, we also have to acknowledge that the more the internet invades our lives the less in touch with our real community we become!

This would be a multi million dollar project, but we have WKU and Hitcents in town, and we have a very vibrant community of small businesses that would dramatically grow due to this endeavor; the reality is in three years we could generate very healthly increases in tax revenues and probably reduce the local unemployment rate by 2% and this project would be able to return its initial investment and generate income to sustain its self in the future.

Friday, June 24, 2011

Being Frank On Friday - Globalized Web 2.0

I received a tweet the other day from the founder of a company that I have a tremendous respect for and the tweet was about a job opening.

A job that I would will KILL for!

I applied for the job and I wrote a killer cover letter!  I have watched this company from the days when they were just an idea that by chance had been shared with me.  An idea that at the time I tried to convince the two owners of the company that I worked for was the future and one that we had to get behind NOW!  That was over 10 years ago and the owners of the company that I worked for retired and ceased operations and this idea that I thought was the future of our industry has become a major force in the world of Web 2.0.

Of course as I was looking things over I realized that I had more work experience than most of the folks with this company had years on earth! big deal.

I realize that they are using all the current technology to locate applicants and thus I am sure that my resume will not trigger a single keyword match. big deal.

Looking for someone to expand their business internationally, someone with international ecommerce experience.  Let me get this straight, you are a leader in the world of Web 2.0, in the world of consumer centric business, and you want to create an globalized consumer centric platform.  Honestly, shouldn't you be looking for someone who has actually lived "globally?"  I mean, I have been to a couple of "goat pulls" (boil a goat and serve it whole on a bed of rice, oh, and the guest of honor gets the eyeballs and or the tongue) in Saudi Arabia, and have witnessed beheadings and public stonings.  Personally, I think the Arab Spring that we are now witnessing is a great opportunity for you, by building communities of young people in Arab countries, and giving them an opportunity to express themselves, not only among fellow Arabs but with the world.

Iran, Pakistan, India, Bangladesh, Nepal, Burma, Thailand....and all throughout the remainder of Asia, been there and still have friends there!  I have been to more full moon parties in Kathmandu than I care to acknowledge and on a dare I swam across the Mekong River from Thailand to Laos; should have seen the border guards faces as all 6'10" of me came out of the water!

Oh, lets not forget Africa and definitely not Europe!  I lived in Europe for 9 years as a child and my Dad made damn sure that we lived like the locals and that we traveled to every possible country that we could!

None of that is on my resume!  No place on the application to note that even today I get more Christmas cards with international addresses and from non Christians than I do from anywhere or anyone else.

I remember when the company I worked for decided to expand into Europe in 1990; with the attitude that the market in Europe was under served!  It took some real convincing to get them to realize that a tee shirt label of "Porky's Tees" was not going to fly in Europe and that they would be better off going with "Turner Originals."  

I have no idea why Americans think that the world is their oyster; I mean the third largest retailer in the world is a French Company that owns some of the biggest specialty retailers in the United States!  Probably would come to a surprise that Mitsubishi sales more apparel in Asia than they sale cars in the United States; and they sale a lot more apparel than JC Penney does!

Yes, the economy of the EU is bigger than the US economy, and soon so will the Chinese economy be; but their consumers are different, their culture is different, and you need to realize that to be successful in those economies, especially as a Web 2.0 darling, requires more than an understanding of international ecommerce and a program that converts English into the local dialect.

Yes, I spent 20 years with a company that developed a thriving European business and eventually bought a subsidiary in India.  Of course one owner used to love to "educate" anyone who would listen about what was "wrong" with the European societies and the same with India, and from time to time he would forget and attempt to educate me to which I would just respond, "Bob, if you want to do business in other countries then you have to do business their way to be successful!"  Or, "If you want their money then you need to respect them!"

According to the applicant software I only "fit" the job description in two places; one, was I favored fast paced work environments, and two, I favored employers who had a casual attire policy!

I will probably have to kill someone to get the job, or I can continue to chase funding and build up my own big and tall international community and then write a book one day on the topic of globalized Web 2.0; customization and consumer goods in a world without borders!

By the way, some of us had lava lamps long before Google did! 

Thursday, June 23, 2011


Weltanschauung, which translates to how one sees the world and their place in the world, or as a world view; philosophy of life; a framework through which to interpret the world.  Having lived and traveled all over the world, I can personally attest to the fact that the understanding of the concept of 'weltanschaunng' is critical in a globalized world, or a world that is getting smaller.

We like to believe that doing business in foreign countries is just a matter of speaking the language but the reality is its a lot more complex than that!

Think about it!  Think about communications in our own country, because the reality is that you can also find the concept of a world view in the differences between people who are conservative vs. those who are liberal in their political beliefs.  You also are acknowledging the existence of different world views when you talk about 'southerners,' 'northerners,' or an 'east coast mentality' versus a 'west coast mentality.'

I thought about "weltanschaunng" while reading the following quote, “I started thinking that I wanted to do something more important with my business than worry just about winning market share."

Yes, the idea that an individual can breakout of a stereotypical mold, of a businessman, and conceive of an idea that is radically different from the norm is also an intregral part of the concept of 'weltanschaunng.'
That quote was attributed to Joe Bozich, owner of Knights Apparel, and winner of the 2010 Huffington Post Game Changer of the Year for Style.  Apparently, Joe has expanded his very successful sports licensing business to include making sweatshop free tee shirts and sweats for college bookstores.  He pays his employees three and half times minimum wage and has allowed the workers to unionize all the while not raising his base price!  Apparently university leaders are ecstatic, and the United Students Against Sweatshops are actively supporting this endeavor! 

You can read more about this here

"Take Pride In Clothes That Make A Difference." 

I produce a line of big and tall tee shirts and they are very expensive; for which I offer no apologies.  Our shirts are made well, of high quality fabric, and our shirts last a long time!  Now, I sell to a market that views quality as a value.  Now, this does not mean that I do not have retailers who claim that they can get pocket tees for $3.00; I can give them the phone numbers of those manufacturers!  But I know that every month I am gaining retailers and taking away consumers from the really big retailers who produce their own label of goods; and 87% of all consumers who try our product end up purchasing from us again!

"Take Pride In Clothes That Make A Difference."  

Such a simple but profound catch phrase, but one that you cannot help but want to get behind!  I hope you visit their site here and make sure your college and or alma mater is supporting this project.  Or you can visit here and have your own shirts screen printed! 

Now, Knight Apparel is the top manufacturer of collegiate apparel in the world and with over 350 college books stores already committed to this new concept success is pretty much assured.  But, success is not one of profitability, as that is pretty much assured but rather sustainability. 

"I wanted to do something more important with my business than worry just about winning market share..."  The reality is that Joe will do something important with his business, gain market share, and make a profit; but that one simple thought, a world view where he believed he could make a difference will have quite an impact on the apparel industry for years to come.

Take pride in actions that make a difference.

To me that is a world view.  It does not have to be a big action; but it should be consistent action, action in everything that you do.  We buy so many tee shirts and never once do we wonder how they are made or where.  We support so many causes to improve the world, and honestly we can achieve the same goals just by paying attention to the products that we purchase. 

I know where my products are made because I have been there, many times.  I know that the next product line we develop will be made in the USA!  I know that I am making a difference, while winning market share and making a profit!

All you have to do is look at the world and your place in it and you can find all sorts of ways to be a change agent! 

Wednesday, June 22, 2011

Everything To Everyone And Nothing To No One

An article today about brands that will disappear in 2012 really grabbed my attention because American Apparel was on the list.  Now, I wasn't surprised about them being on the list because quite honestly, when they went public I figured it was just a matter of time before they eventually ended up as a "pump and dump" statistic in the annals of the corporate world.

Of course the article wants to define American Apparel as,
The once-hip retailer reached the brink of bankruptcy earlier this year, and there is no indication that it has gained anything more than a little time with its latest financing. It currently trades as a penny stock. The company had three stores and $82 million in revenue in 2003. Those numbers reached 260 stores and $545 million in 2008.
The reality is that American Apparel was also a player in the promotional product market and the private label market.  Basically, if you read both of the linked articles you will realize that on the west coast American Apparel is known as a big player in the promotional product market and on the east coast it is perceived as a 'hip retailer.'

Everything to everyone and nothing to no one.

While the promotional products market is huge, and the private label market is even bigger you also have competitors like Alstyle, Gildan, and Delta, to name a few who are focused on those markets; Alstyle is half the size of American Apparel and the other two are a little larger but only marginally.  All of them are aggressively defining their markets and exploring new ones; for example, Gildan's bought a sock company a few years ago so that it would have access to Walmart, all in an attempt to compete with Fruit of the Loom. 

Common sense would make you ask one simple question, "Why would someone pay retail for an American Apparel product at one of its stores when they can also find themselves receiving an American Apparel made product for free as some promotion?"

Personally, I could never understand how a company with a customer base that was 85% female could be so popular with women when Dov Charney, the CEO, has had more sexual harassment lawsuits filed by employees against him than you could imagine!  This won't be an issue much longer.

The future belongs to those companies that define themselves and then embrace their market; at some point companies have to say, "That's not who we are and that's not what we do."  Success will not come to those who hedge their bets by dabbling in a variety of markets. 

Everything to everyone and nothing to no one.

I always admired American Apparel because they were cutting edge and swimming against the current with the concept of  "Made in Downtown LAVertically Integrated Manufacturing" and their vocal support of causes such as immigration reform, support for gay rights, and environmental issues.  They were "Web 2.0" long before it became common.

But if you are going to be more than just a tee shirt, then don't sell to markets where all they care about is a tee shirt, because that ends up being a battle over price. 

I really do hope that somehow American Apparel is able to find its way and recognize that it was once a brand that's value was greater than the sum of its parts.

Tuesday, June 21, 2011

Are Great People Overated? The Tao of management

I stumbled upon a debate that is occurring at the Harvard Business Review blog that is basically running for three articles, Are Great People Overrated?, Are Great People Overrated? Part II, and We Is Bigger Than Me and basically I think the whole argument is one of apples vs. oranges.

I guess in Silicon Valley a new process has developed, known as "acqhire" which basically involves buying a start up to get the talent and jettisoning their product.  Having worked with software engineers and programmers over the course of the last 20 plus years I can tell you that one great one is worth a lot more than a bunch of average ones.  

I have worked with individual software engineers and we could accomplish in days and weeks what a team could never even begin to comprehend but at the same time I also realize that these programmers could not run a help desk or train others without bringing others to tears; the one software engineer who I respected the most would just walk out of training sessions because it was a waste of his time to train stupid people! 

Its kind of like the concept of "customer service" which is a term used in the most general way to describe a process.  If you actually look at the process, a process that involves orders, shipping, invoicing, and payment along with communication you realize that the product, the customer base, and the environment influence greatly what qualities you would consider ideal in a customer service representative.

As a manufacturer who has sold to consumers, to small retailers, and to major department stores I have established customer service groups of one person doing all tasks to splitting up duties based on tasks, to splitting up duties based upon customers.  A person that was an expert at order entry, could also be trained to handle invoicing and receivables for the most part but someone who worked with consumers and or smaller retailers could not adapt to dealing with a major retailer.  

Some tasks require teams and others require great individuals.  Certain skill sets tend to favor a team mentality and other skill sets seem to favor individualism.  I have yet to meet a great artist, graphic designer, or sales person that worked well with others!  

The key is to recognize this, accept it, and have the management that can allow for individualism and collaboration and knows when one trumps the other while respecting each.  I really don't think it was a coincidence that a day after announcing that Apple was building a new corporate campus that all of the sudden we find out that the employees in Apple retail stores were contemplating a union!  Looks to me like someone might have the beginnings of a morale problem.

So, when I read things like:
Facebook CEO Mark Zuckerberg made a passing comment that has become the entrepreneurial equivalent of a verbal tick — something that's said all the time, almost without thinking.

"Someone who is exceptional in their role is not just a little better than someone who is pretty good," he argued when asked why he was willing to pay $47 million to acquire FriendFeed, a price that translated to about $4 million per employee. "They are 100 times better."
I can't help but wonder what that does for morale of the 1,000's of other "pretty good" employees that make Facebook what it is today?

Dog Shows Teach A Business Lesson

I have a tremendous admiration for success, and I really admire success that is subversive; success that challenges the status quo and is achieved against overwhelming odds.

In 1994 a very good friend of mine informed me that he was going to begin showing dogs because he loved animals and he felt he would be "good" at it.  He asked me to go to a couple of dog shows and let him know what I thought.

So, I went to three dog shows with him and I, as I am accustomed to doing, just wondered around and observed.  Of course he kept hounding me about what did I think and until the third dog show I just kept my mouth shut.  Finally, after the third show I told him what I thought:  Dog Shows are a racket!  They are a very expensive hobby where winning has nothing to do with your dogs or your skills but rather everything to do with who you know, who you are, and what money you have behind you.

After a very long period of silence in a very dark van, as we were trying to reach home on a Sunday night, the little 5'4" 110 lb. Chinese guy in the car said, "I think I can do it!  I think I can change things and be successful....."  A guy that can buy his clothes at the young boys department has decided that he was going to become a subversive and take on the most entrenched power structure I had ever seen.

So off he went with his Shih Tzu where after the first year he had won a total of 1 point!  Since it takes 15 points to achieve the status of 'champion' I had to be the one to inform him that at his current rate the dog would be dead before it ever became a champion; talk about raining on someone's parade!

All he said was, "Just wait till next year," and not another word was spoken the remainder of the trip home.  

Now, I have known this young man since he arrived in the USA as a refugee and I learned very early on that you should never underestimate the guy!  When he puts his mind to something he will learn everything that he needs to know about it and then he will work at it until he is perfect; he hides his determination to succeed behind the most endearing charm and people skills I have ever seen.

Well, next year was different and within a couple of years he was winning every time he went to a show; not just in the breed ring but also in the group ring, which is where the game changes.  By 1997 he had won his first Best In Show.  You have to realize that dog shows are big business; most handlers have been in the business all their lives and they expect, if they are to campaign a dog and win big with it to be paid a minimum of $150,000 a year and then you have another $150,000 a year in advertising and expenses at a minimum.

In three years this young man had achieved what 99.9% of the people who participate in the sport of dogs all their lives can only dream of, he had one a Best In Show, and he was only warming up; he made it seem so easy and so natural!

Now, I can attest that no one worked harder than he did to win:  When he wanted to train his dogs around people he talked the Manager of the local Walmart Supercenter to let him train his dog IN THE STORE!  When he wanted to get his dogs accustomed to cars and traffic he did so by walking them along the busiest road in town.  When he was at a dog show he would wake at 2 am every morning and groom, trim, and prepare; six to eight hours worth of work for no more than 20 minutes, at best, in the ring!  Small show or big show didn't make a difference because the routine was the same.

By 2000 he had a cult following, he was the little guy that had taken on the status quo and won!  Even the elites of the sport were cheering him on! 

By this time he was campaigning the number 1 pekingese in the United States, had bred the number 1 pekingese in Japan, won the Pekingese Club of America's J.P. Morgan trophy, which is bigger than the Stanley Cup!  His Shih Tzu's were winning beating the biggest names in the sport, winning specialities and group placements!  He could claim that he campaigned the number 1 owner handled pekingese of all time and was in the top 5 of owner handled toy breeds of all time.  

He was dining with Bette White on the west coast and Lauren Bacall on the east coast.  He had a fan club in Europe and he was being invited to judge shows in Asia.

Then in 2006 at the same dog show that had been his very first dog show in 1994 he decided while in the breed ring with his Shih Tzu that he wanted to help a friend of his.  It was obvious that day that he could win Best In Show with his Shih Tzu, the judges that day were perfect and the competition just wasn't there but he decided that he wanted to help his friend when the breed and so he took her dog in and let her take his dog in for the breed.

He won with her dog and when he came out of the ring I looked at him and said, "What in the hell are you doing?"  He just looked up at me and said, "Somethings are more important than winning...."  Just the weekend before he had finished a pekingese by winning three 5 point shows in one weekend over all the top names in the sport!

He went home and never attended another dog show again.  Dogs that he was selling for $5,000 to $10,000 he turned around and gave them away for free and he has never watched a dog show on television and he has turned down every request for an interview from print and or television sources since.

The only comment he has made since is that, "...I lost sight of why I loved dogs in the first place...."  I hope I never forget this lesson.

Sunday, June 19, 2011

When An Online Community Becomes A Ghetto

We manufacture a brand of big and tall tee shirts that has amassed quite a loyal fan base, with consumers and retailers over the course of the last 20 years; when we added screen printed tees two years ago sales doubled.  When we tested going B2C via the internet we found our sales doubling again!  

I attempted to take every single telephone call from consumers over the last 10 years and I was fascinated to find out how far the big and tall consumer would drive to buy our shirts, I have heard numerous stories of how they still own the first shirt they bought from us 15 or 20 years ago.  I found out that their wives love how our shirts wash up and I was surprised  at the number of women who would wear their husband's shirts as nightgowns after their husband had bought new ones.  I was also surprised at the number of women who bought our shirts for themselves when we added long sleeve and a couple of fashion colors to our line; in fact, they accounted for 35% of our sales. 

I have retailers who claim that they have customers that only shop at their stores because of our shirts and if they are out of stock then their customers walk out!  I have one elderly woman who buys her son 6 new shirts every month; she will not place her order on the internet because she doesn't trust the computer with her credit card, which she will only share with me!  I have doctor in Germany who buys 20 white tee shirts every three months; he must be one big surgeon!

That is a foundation from which to build a 'sized centric' community! 

Of course, as I am seeking investors to grow the business, I am constantly reviewing what other companies are doing to determine what innovations could benefit our niche in the future.  Since our basic product line is big and tall tee shirts, that we can also screen print, the idea of providing the big and tall consumer the same opportunity that Threadless, Cafe Press, and or Custom Ink offer regular sized consumers is obvious.  To look at Bonobos and realize how they have added product to their basic line, makes the concept of big and tall sunglasses, hats, and sandals logical.  As I am big and tall I know that hats, sunglasses, and sandals are impossible to find and they fit so well with our basic line.

In a six month period with nothing more than social media, and a direct mail of 5,000 postcards we built up a community of 67,000 consumer addresses; of which 87% are now purchasing 5 shirts on average twice a year; 10 basic tee shirts at a minimum of $17.50 each! 

That is a foundation from which to build a 'sized centric' community! 

So then I find out that companies such as ShoeDazzle, Jewelmint, and now Beachmint have redefined the concept of 'community.'  Apparently, now the concept is something you develop and then herd into a buyers club, where for a monthly membership fee you are offered a predetermined style of goods which you have automatically purchased unless you request not to purchase that month within a time window.  Or, from the Jewelmint website:
"Your credit card will not be charged until you make your first purchase! After you make your first purchase, you can always click "skip this month" in your Showroom from the 1st to the 5th of each month to avoid the $29.99 membership charge. This charge will add one credit to your account which may be redeemed for any piece of jewelry in our collection, at any time during the month."

I belonged to a record club in the late 1970's and I know that my neighbor belongs to Gevalia Coffee Club and I find it really hard to believe how much money folks are willing to pour into this concept!  In college, 15 of us decided to join a record club at the same time and within 6 months only one of us still continued their membership; with this type of business model you are not building a customer base as much as you are churning one and hoping that you attract more new members every month than you lose.  After six months in the coffee club my neighbor has threatened his coffee club customer service person if they mail him one more month's worth of coffee and that was two months ago!

Reading the consumer reviews on Facebook for Jewelmint, the concept, the product, and the customer service, I realize that the concept of 'community' has become a ghetto!

Over 20 years our brand has never experienced returns of more than 1/10th of 1 percent of sales!  Returns at Jewelmint have to be averaging 20%!  We sell a basic commodity which have no "fashion" and or "season" and as such we have never had to clearance sale anything; I am not real sure how one would deal with the fact that at anytime 20% of your inventory is floating around in the return system especially in light of the fact that your "selling" season is only one month.

Herd young ladies into your club with low cost product and the idea that you tailor their product offerings through your "style guide" and you have turned the concept of community into that of a ghetto!

I cannot help but wonder how many of these young ladies are actually old enough to have their own credit card and or to have a credit card with much of a credit line?

Not all change is a good idea and not all innovation is worth implementing.  I think business has to be sustainable and scalable thus I will focus on building our loyalty card program, our tee shirt of the month club, and try to figure out how to expand into Canada, Europe, Russia, and Australia in a manner that makes the shopping experience for our consumers a pleasant one, and makes the shipping of the product not such a nightmare for us.  Then of course I have the consumers in Singapore.... 

Saturday, June 18, 2011

Big And Tall - The Future Of Business Funding (Poking fun at the investment community)

"Getting funding for your business has had me totally perplexed.   I mean, folks are throwing bucks into sinkholes but why they won’t consider a company that has a great market and the goods is beyond me."

A quote from a friend of mine, with 10 years of experience with some of the biggest names on Wall Street, and another 15 years experience with the technology industry who in his spare time writes for Forbes.

Exactly how does one begin to answer that question?

Most Venture Capitalists have blogs and you can read them on a daily basis, you can visit Angellist, Quora, and or Kickstarter and basically you will find the same things being said a variety of different ways....and still not be able to answer the question.

I think the most interesting information comes from the Designer Fund where the mission is:
"If you're an early stage startup with a designer founder, we'll help you get to the next stage of funding and growth. If you're a designer looking to take the leap into entrepreneurship, we'll match you with hacker engineers and business hustlers to get your ideas off the ground. We collaborate with multiple accelerators and funds to build a solid foundation for your business and get you the best deals."

So, basically a bunch of designers are angry because the techies and the finance folks are cutting them out of the loop and they feel underapreciated.  Basically, their argument is that, "It's about giving designers a seat at the startup table that engineers and MBAs already have."  They believe that the focus on people with tech and finance backgrounds creates an investment climate where, "Most startups fail because they make things that people don't actually want!"  You can read more about this new venture capital fund here.


I guess if you have a business proposal you better have a techie or a designer as a founder or no one is going to be interested.  Or you could be like Bonobos, a company that was founded by two roommates who were graduate students at the Stanford School of Business to basically provide men with pants that make their butts comfortable!  Pants for $88 to $188 dollars a pair and a business model per selective quotes from the NY Times:
  • "The Bonobos pants, which come in straight leg and boot cut, are best for those with athletic builds, although it is developing pants for slimmer and bigger men."
  • "Mr. Dunn is well aware that manufacturers could easily replicate Bonobos pants, so he is trying to distinguish the company with customer service, convenience and technology."
  • "Bonobos also offers free shipping both ways along with lifetime returns, and encourages people to buy and return several pairs of pants to find the right fit."
That business model is enticing enough for a major VC firm to invest $18 million dollars in?  I cannot help but wonder if the decision to invest in this start up was made by a group of young, unmarried, fellow MBA's?  I wonder what Bonobos will do once their current loyal consumers get married and have kids:  Married men with kids are not 'fashionistas' and dramatically limit their apparel purchases.  Their was once a great retailer, Castner Knotts, that had the absolute best customer service and return policy and they ended up being bought out by Dillards because of their liberal return policy!

I notice that since they received funding they have dramatically grown their product line, in fact, the whole business model has changed as they now, "...we pair our offerings with hand-picked brands to bring you an expertly curated lineup of better-fitting men’s apparel."

Hey, if that works then I can add Fatheadz sunglasses, which is a great product from a great company which Forbes has highlighted in their "20 Million Dollar Businesses That You Have Never Heard Of."  Or, I can add Sanuk Sandals in big and tall sizes!  What a great combination, big and tall tee shirts, big and tall screen printed tees, sunglasses, and flip flops!  THAT is one awesome product mix for a sized centric community!

But since most venture capitalists are young, health consious, water drinking, exercise fanatics they probably avoid at all costs noticing that the vast majority of Americans are overweight slobs who are more concerned of finding a shirt that covers their "crack" when they bend over than they are with ensuring that their pants give them the male equivalent of "butt."

Let me know when a television show is produced for "Guys With Comfortable Pants" that has more viewers than "Say Yes To The Dress - Big Bliss."
My sense of humor is getting the best of me....

How about this line from a Bonobos ad: "“When you wear the world’s best-fitting pants, women tend to stare. Even gawk. If you can handle being seen as a sex object, visit and order a pair.”  In a world where over 50% of the adult males are overweight?  Get the guy a shirt that fits, sunglasses, and a comfortable pair of flip flops!

Friday, June 17, 2011

How IBM Changed The Way We Think!

IBM celebrates its 100th birthday today!

I remember the late 70's and programming in Cobol and or Fortran, having to deal with punch cards, chads, and where you had to haul around boxes of these punch cards for simple programs. 

I remember the database we used, SPSS, or what was then, Statistical Package For The Social Sciences.  I did not realize that the keypunch machines, the computers, and the database were all owned by IBM!

I remember taking a class, Scopes And Methods Of The Social Sciences, which for me was one subject that totally defined my future;  this eventually led to statistics, and eventually expected utility theory.  I remember that the program I ran for the basis of my thesis at Vanderbilt University took three days to run; a program on one simple floppy disc took three days to process!

To this day I cannot help but look at studies that I read and question the results, the methods, and or think of possible additional studies that are warranted. 

Every problem can basically be laid out like a Fortran flowchart.  Laying out a product line list for next season?  You can build a flowchart that details out what markets and what  what products will serve those markets.  Flowcharts can isolate production and inventory problem areas.  Internet advertising and social media greatly benefit from a flowchart, a map of how one can anticipate programs working and then analysis the data from your results to determine if the relationships one anticipated were what one achieved.  

Flowcharts are great way to anticipate problems and to being proactive to these problems when they occur.  If one were to layout a flow chart of the upcoming healthcare changes that are part of "Obamacare" one would realize that the analysis would provide not only a blueprint for action but also provide areas to seek change and innovation for future cost savings.

If you run a business, or a department, if you manage sales or advertising, you should right now, layout a flowchart of how you "know" the flow of work evolves and then actually go through the actual process, step by step, and I assure you that you will find that you missed 20% of what actually is involved in running your company, department, or managing sales or advertising.

As I have been seeking out funding for my business I have studied quite a few of the ideas and or businesses that are getting funded.  I have heard the terms, "changing the world," "disruptive," and "revolutionary" used over and over by the folks that are selling new ideas and those buying into these new ideas.  Hula Hoops and Pet Rocks were world changing, disruptive, and revolutionary in their time too!  

One consumer centric, Web 2.0 pioneering company that I have studied extensively is now attending trade shows and wholesaling to retailers.  I cannot help but wonder, if you are a community based company should you not be putting your money into growing your community?  Rather than attending trade shows maybe you should be promoting art and design in schools?  If your existence is based upon the concept of a community then shouldn't you be investing in growing that community?

If you are getting $20 a shirt on the internet, selling to a multi million person community then how does going wholesale to retailers, where you will get, at best $8.00 a shirt, benefit your brand?  Wouldn't you be better served, considering that trade shows are expensive, why spend $20,000 to $30,000 to attend a trade show to open up a sales channel where you will "lose" $12.00 a shirt?  Wouldn't you be better served investing in developing the future of your community?  

Right now the trend in human resources is not to hire older job applicants and or individuals that have been unemployed for longer than six months.  Of  course, there is some logic to this trend, but if you think about it, if the average baby boomer has had 11 jobs during their most productive work years that works out to 2.36 years per job.  If all employers begin to hire only employees who are currently employed then the biggest issue for employers is that fact that they are facing a dramatic increase in their turnover rate.  If the unemployement rate for college graduates is roughly 5% then obviously this trend is going to effect those employees most critical to ones operation.

Why not hire those who have been unemployed?  They would obviously be more loyal and thus more productive.  Why not hire someone over 50 if right now you are only retaining employees for 2.36 years on average?  The reality is that it takes 6 to 8 months for an employee to adapt and become productive and at 2.36 years of employment you basically get a years worth of benefit before the employee focuses on seeking their next opportunity.

Thank you IBM!  Happy Birthday!

Wednesday, June 15, 2011

Patience And Passion

I have never been a big fan of motivational speakers; but Gary Vaynerchuk is different!

I just do not understand why people do not take the concept of patience and passion to everything in their lives!  Lets be honest, all of us spend most of our waking hours at work and if you do not enjoy what you do at work then you might need to think about what is wrong with your perspective of life rather than seeking a career change!

Life without risks or challenges is a passionless life.  Sometimes you have to establish your own challenges and risk; sometimes you have to be your own competition.

A well lived life is a culmination of a journey of numerous peaks and valleys; patience and passion makes it possible to appreciate the peaks and press on through the valleys.  Sometimes the valleys seem to never end, trust me I know!

Nothing worthwhile comes easy….

I remember at 21 finding myself in Saudi Arabia being introduced to my staff:  A 150 men from a variety of different countries and I was the only westerner.  I spent the first three months being frustrated by the fact that they all waited on me to tell them what to do and at the same time they paid absolutely no attention to my instructions!  With patience you learn to observe, to learn, and to grow.  With passion you will always seek success and you are willing to adapt to a situation so to be successful.

Challenges are just opportunities to observe, to learn, and to grow.  With patience and passion challenges become nothing more than opportunities and opportunities are just the front door to success.

I have never sought an opportunity or a job where I was an ideal fit; that's too easy!  If its easy then its not worthwhile!

Monday, June 13, 2011

Basketball and Human Resources

I didn't watch much of the NBA championship because it was obvious to me that Dallas was going to win it:  The were the better team!

Now, growing up I played basketball literally everyday and I was fortunate enough to go to college on a basketball scholarship and to enjoy a few seasons of playing in Europe.  I admit, I have a totally different way of watching the game; I am impressed by defense, team work, and the mid court area, or how well a team transitions.

Teams are much more than the sum of their parts; its a balance between individual talent and role playing.  A team made up of extremely talented individuals will ensure that you totally overwhelm less talented teams of individuals but a true team will allow you to win games against superior opponents.

All the plays, all the "X's" and "O's", all the backslapping and or in your face antics on the side of the court does not make things happen on the court, the reality is a game has its own natural rhythm, and every individual on a team is unique.  The individuals have to adapt to the rhythm and to each other on a game by game basis.

A team has to be made of individuals who know their roles and the roles of each of their team members.  Most importantly they have to respect the roles that each plays on the team.  A coach has to know what makes each individual on the team click; what motivates one player may just be the worst thing in the world for another.  Motivation is always an energy that must be individually focused at the same time group focused; and most importantly, its an energy that flows between and among the individuals.

I read so much about hiring the "right" or the "best" person for a position; and that would be fine, if a position is that of an independent contractor, but the reality is positions are within departments, organizations, and or companies.  I cannot help but wonder if sometimes we search for candidates with certain skills when it fact we should be searching for individuals with certain personalities!

I have also seen companies that had some extremely intelligent talent and they could accomplish absolutely nothing.    I have also seen companies go out and search for a position as if it was nothing more than a cog in a machine and then turn around and bring in consultants to find ways to create a less structured and hierarchical organization!

On a daily basis we read news stories about how companies are not hiring candidates over 50, or how the new workplace is one of constant turnover, but the reality is that balance makes great teams!
"Job-hopping statistics get a lot of attention. For example, the average baby boomer held an average of 11 jobs between the ages of 18 and 44. Lost in statistics is the fact most people don't leave for more money; most leave a job because of a poor relationship with a boss. Don't assume high employee turnover is a fact of employment life. Find out why employees want to leave and address those issues. Employees don't start checking employment ads unless you give them reasons. Few people look forward to the upheaval and stress of starting a new job unless the old job -- and old employer -- was terrible."
I read the article this morning, and I couldn't help but be shocked!  Looks to me like quite a few teams need to focus their attention on their management team and less on their human resource process!  Mark Cuban did a fine job building the Dallas team over the last few years and his team beat a team that thought it could trade its way to a championship.

The true test for Dallas comes next year!