October 2007 Archives

In this 10 minute segment (download iPod compatible, 51MB), Paul Wright, owner of Gold's Gym, Ann Arbor, discusses his branding strategy and expansion plans over the next 12 months. Paul is working with a marketing firm to develop a message and a brand that will attract all segments. He sees having multiple brands in each facility: Les Mills for classes, Shake This for shakes, and Gold's or another brand for fitness. You might say that Paul is trying to combine name brand products with excellent customer service at an affordable price.

He is focusing his expansion strategy on small to medium size gyms where he finds the strategy of strong brands coupled with excellent customer service to be poorly executed. As we mentioned in a previous segment, landlords find having a gym is good for their other tenants' business, so they are willing to do things like offer attractive lease terms and build-to-suit.

In this three minute segment (download iPod compatible, 14MB), Dennis Blanchette describes Ensure Technologies' goals for the next twelve months as well as its longer term strategy. In the next twelve months, Dennis wants to continue growing his partner programs to the point that they account for 60% of sales. He also expects to expand sales within the current 90% medical customer base to patient and asset tracking. Next, he would like to expand to additional heavily regulated industries like financial services, the legal profession, pharmaceuticals, and energy.

Further out, Dennis foresees Ensure providing an RFID infrastructure that can be used across a variety of industries. Ensure will build, partner, or buy to enter those markets.

In this 9 minute segment (download iPod compatible, 46MB), Tom Meloche, Senior Partner at Procuit describes his company's product offering as an enterprise ready Web 2.0 knowledge transfer solution. Essentially, Procuit is looking to upend the delivery of corporate training over the Web. To do so, it will utilize its own web site and social utilities such as Facebook which over a year ago opened its doors to corporate as well as educational communities.

There are a few reasons to consider Facebook as an enterprise delivery platform:

• Since opening its doors to corporate customers, membership has been growing at the phenomenal rate of 3% per week.
• Facebook membership currently stands at 45 million but is expected to grow to 200 million by the end of 2008.
• Unlike other enterprise platforms that require active searching to uncover information, Facebook provides a river or stream for each user to simply observe what is happening in his or her network.
• In sum, the size of the platform and the ease of observing the activities of your own network within it should greatly enhance the impact of viral marketing effort.

Readers of this site may recall that Lou Rosenfeld is using a similar viral marketing approach with his own network that is not based in Facebook.

[n.b., Pure Visibility kindly provided the physical location for this interview.]

In this 10 minute segment (download iPod compatible, 51MB), Al McWilliams, Master of the Universe at Quack Media, describes his strategy for marketing Found Magazine. Found, created by Davy Rothbart, might best be described as an art magazine with an edge. Unlike the Michigan Business Review or Metro Parent, also covered on this site, Found's main source of revenue is not advertising, but the cover price, "Always 5 bucks".

The main question then is how to make money. Al's approach has been two pronged. First, via a remarkably simple process he describes in the video, he has convinced distributors that Found Magazine is not a magazine but a book. Having the publication classified as a book means that distributors will keep it on the shelves more than the sixty days typically allotted to periodicals. This added time is important for an art publication, since the back issues tend to sell as well as the current one.

Second, Al has renegotiated Found's distribution deals to keep retailers at around a 50% margin, allowing him to at least break even on the project. As Al notes at the end of the segment, margin is what the distribution business has always been about.

In this 10 minute segment (download iPod compatible, 53MB), Aaron Crumm discusses the central role of manufacturing and production in AMI's business plan. He starts off by noting that, in spite of all of the hype about fuel cells, no one can actually buy one. The big challenge has been manufacturing. AMI has patented a process for miniaturizing solid oxide fuel cells and has already begun piloting production with plans to soon move into a 40,000 square foot facility.

The key benefit of the solid oxide fuel cell is that it uses inexpensive, readily available materials: ceramic and propane or butane. The challenge is in forming the ceramic in the small sizes required. Aaron expects that the new facility will allow AMI to move into orders for thousands of units. However, given the size of the current battery market, he believes that producing millions of units is not an unreasonable expectation.

In this seven and a half minute segment (download iPod compatible, 37MB), Larry Schmitt explains how innovation comes from the community, a notion that might seem counterintuitive at first. Larry's point is that innovation only comes after people have adopted the change it brings. It is not enough to have a new idea, people have to accept it.

With this perspective, it becomes clear that one of the critical factors in promoting innovation is determining what drives adoption. Larry's company, Inovo, uses a number of techniques to determine how people will react to what they have not yet seen, and we discuss how he uses tools like personas to help derive a notion of what the market will adopt.

In this 5 and a half minute segment (download iPod compatible, 29MB), Matt Sharp, Publisher of the Michigan Business Review, describes his business and coverage area. The Michigan Business Review is actually a family of publications including the Western Michigan Business Review, the Ann Arbor Business Review, and the Oakland Business Review. Both the publications and the regions they cover are unique. Matt outlines them as follows:

• The Western Michigan Business Review (founded in 1996) covers twelve counties in Western Michigan with offices in Kalamazoo and Grand Rapids, the hub of the Western Michigan economy. The region comprises about 55,000 businesses with an estimated 35–40% of those in manufacturing (based on subscriber figures). The Western Michigan Business Review is the first business specialized publication focused on this region.
• The Ann Arbor Business Review (started in 2002) covers 10,000 to 12,000 businesses in the Ann Arbor area with an estimated 20% of those in manufacturing (based on subscriber figures). Sixty-five hundred to seven thousand of these are micro-businesses employing three people or less.
• The Oakland Business review (started in 2004) covers 60,000 businesses in Oakland County with and estimated 35–40% of those in manufacturing (based on subscriber figures). Businesses in Oakland County tend to be larger than those in Ann Arbor.

This interview continues our publishing series and will add a new perspective on how print publications are coping and even thriving in the digital age.

In this 14 minute segment (download iPod compatible, 70MB), Tim Daley, CEO, introduces us to his company Crime Cog. In a nutshell, Crime Cog's business is connecting all the islands of information in the criminal justice system from police to sheriff to courts to corrections to parole. There are three components of the value Crime Cog proposes to these constituents:

• Reduced maintenance. The separate agencies no longer have to maintain their own systems, including hardware, networking, and software.
• Increased efficiency. In a traditional arrest, officers may need to enter a detainees demographic information 28 times and have to physically transport data between agencies. All of that is eliminated in Crime Cog's system.
• Increased effectiveness. Using publicly available data from multiple agencies, investigating officers are better able to connect the dots in investigations.

Crime Cog's initial customer focus has been police agencies. With this segment, they have found strong network effects leading them up to higher and higher levels of spending authority including sheriffs departments and county executives.

In future segments, we will learn how Crime Cog assembled the resources to pursue this strategy and its future goals.

In this 8 minute segment (download iPod compatible, 42MB), Carrie discusses how she wants Inner Circle Media to evolve over the next twelve months. Her first goal is to develop additional productized services like their content management system that they can lease. Lease revenue from these services is an important aide in smoothing out their cyclical service revenue.

Further out, she is considering establishing a second office, possibly in New England. An office there would allow them to remain in better contact with a growing customer base and also reduce the cost of servicing that market.

In this 13 minute segment (download iPod compatible, 67MB), Alyssa Martina describes how she uses the web to connect with Metro Parent's readers. She has always felt that she could not rely on print to make the full connection. She has used a whole array of events to make the connection interactive, and she views the web as providing a whole new level of interactivity. On Metro Parent's site, readers can create their own blogs and connect with each other.

Until August 2007, Alyssa had not implemented an extensive web site for Metro Parent. She did not consider reproducing the print publication online, as many outlets such as the New York Times, were doing viable. Online revenues are currently just not sufficient to cover the cost of producing the content. However, she believes that if she treats the web as a synergistic channel that creates better connection with and between her readers, the value proposition is potentially very attractive.

In this 5 and a half minute segment (download iPod compatible, 29MB), Michael Hetherington describes how he has made his business finance itself. RailDriver, the start of PI Engineering's train businesses, is currently its number 4 profit maker. TrainMaster, the professional division, is just starting to mature to maturity after 4 to 5 years of development and $4 to $5 million in investment. Michael expects it to pay back well.

His businesses have a history of paying back. He started PI Engineering out of graduate school with family savings. That cushion gave him the chance to develop an initial product based on his graduate work that was good but could not compete against mass-produced solutions that were starting to emerge. Michael turned the company towards more custom engineered products where he had an advantage manufacturing and has been using that model to keep his business profitable and self-funding since.

In this four and a half minute segment (download iPod compatible, 22MB), Paul Wright of Gold's Gym, Ann Arbor, discusses how he will evolve his management structure to accommodate planned growth. A major consideration is selecting new managers. He is looking for personable people with creative minds who are not stuck in the small club mind set. Potential managers do not need to be from the industry as that can handicap them with old ideas about how a club should operate, although the familiarity with the basic components of a club would be a plus.

An important consideration for Paul is how to maintain his competitive edge of a friendly, non-intimidating atmosphere as he expands management beyond the current core group. To this end, he is currently documenting all of his processes.

In this 5 minute segment (download iPod compatible, 25MB) describes the typical enterprise sales process. Need for his product is typically driven by regulations and requirements such as HIPAA regulations to protect patient data, Sarbanes-Oxley to ensure internal control of financial data, or the need to protect intellectual property. However, while respecting the security requirements, employees must also be able to use the system.

Therefore, Dennis views his sale as comprising three entities:

• The CFO or CTO in charge of regulatory compliance.
• IT which is typically charged with implementing any solution and must satisfy the needs for regulatory compliance while also taking into account the needs of the end user.
• The end user who must experience the system.

Ensure's point of contact is typically IT or above. However, they must satisfy the end-user or the sale will not work.

In this nine and a half minute segment (download iPod compatible, 49MB), Jan Davies McDermott describes her role as facilitator in the Southeast Michigan Women Presidents Organization (WPO). The WPO is an organization founded 10 years ago to help women owners of "second stage" companies. Second stage companies have over $1 million (service) or $2 million (manufacturing) in revenue and have begun to experience problems related to growth beyond the early entrepreneurial venture.

Jan's WPO chapter uses roundtable techniques developed by the Edward Lowe Foundation. In a roundtable, second stage business owners gather together and focus on a problem raised by one of the individual members. The philosophy behind this peer-oriented approach is that entrepreneurs are strong individuals who will accept advice from other strong individuals who have the credibility of having gone through the same issues. A further advantage of this approach is that over time the group gets to know and trust each other allowing members to burrow to the root cause of one another's issues.

In this 6 minute segment (download iPod compatible, 29MB), Al McWilliams, "Master of the Universe" at Quack Media, outlines Quack's businesses in print publishing, music, and TV. A large part of the music and print business focuses on distribution. Quack has a warehouse in the south of Ann Arbor from which they distribute to thousands of dealers. These range from large book distributors like Baker & Taylor and major retailers like Borders to many much smaller dealers.

On the TV side, Quack creates video and then releases it to major outlets for distribution. For their publishing and music businesses, Quack produces other artists works.

In later segments, we'll discuss how Quack packages content and its editorial role. This series expands on our recently concluded set of segments with Lou Rosenfeld.

In this 8 minute segment (download iPod compatible, 41MB), Aaron Crumm lays out the value proposition for Adaptive Materials, Inc. (AMI). AMI makes fuel cells for the military and high-end electronics applications. Fuel cells typically provide ten times (10x) the energy per weight as batteries resulting in a substantial weight savings for users. AMI has developed a unique, patented process for making fuel cells with ceramics and propane. The use of ceramics grew out of Aaron's PhD work at University of Michigan.

In a manufacturing business, like AMI's, based on unique processes, patent or intellectual property (IP) protection is critical. Aaron views patents as the rite of entry to compete in the market. They allow him to negotiate with large firms that might otherwise swallow his markets. The protect his core business by providing road blocks to near competitors and a ring fence to keep them out.

In future segments, we will discuss AMI's manufacturing and distribution strategy.

In this two and a half minute podcast (download iPod compatible, 13MB), Lou Rosenfeld, CEO of Rosenfeld Media, describes himself as an "infrastructuralist". Over the next year, he hopes to use his newly developed publishing infrastructure to produce 10 books focused on User Experience (UX). More importantly, he is trying to create a platform where smart people can properly package their content and monetize it without having to worry about the details. In this regard, he intends to move beyond books to multimedia web-delivered content.

In this two minute segment (download iPod compatible, 10MB), Linda Girard, Chief Visionary of Pure Visibility, outlines her plan to go from 15 to 25 employees in the next year. She will need multiple kinds of talent because optimizing web sites for high search visibility is a labor intensive process. Sites need "people power" to make their story known. Linda's highest objective is to grow a happy, productive environment where staff work with customers to achieve this objective.

In this 7 minute segment (download iPod compatible, 38MB), Carrie Hensel describes Inner Circle Media's staffing model. Currently, they have six core employees beyond the founding partners and frequently hire in contractors. Contractors typically engage in coding and other back-end work that does not involve client contact. Design and project management are front-end activities, and Inner Circle does not outsource these positions.

When I asked Carrie about offshoring, she went on to further describe the work environment. Much of the office is open, and communication between people working on a project is tight and easy. Offshoring a project would require tight specifications that might not meet what the client needs as their views on the project evolves. However, if Carrie had a project with components that could be tightly specified in advance, she would offshore.

In this 5 minute segment (download iPod compatible, 25MB), Bruce McCully, CEO of Dynamic Edge, states his desire to grow staff by 43% and double the number of customers in the next year. He expects that two modifications to Dynamic Edge's business model will help enable that growth. First, in the past year, Dynamic Edge has moved from having all employees report to a central location to having them start from home and going directly to clients. This speeds responsiveness to client needs and cuts down on required office overhead.

Second, planned growth from 35 to 50 employees will mean that Dynamic Edge's current flat reporting structure with most management decisions coming to Bruce will no longer suffice. Bruce is going to add teams with team leaders who will report to him. We expect to catch up with Bruce sometime in the future to hear what comes next on his path to growth.

In this 11 minute segment (download iPod compatible, 57MB), Larry Schmitt, co-founder of Inovo, describes how Inovo helps companies at the front end of the innovation process. At this stage, companies have a lot of ideas but don't know how to determine which are likely to lead to true innovations, i.e., new products or services that succeed in the market place. Larry and his partner, Steve Schwartz, have developed a proven process for helping companies winnow potential innovation candidates from their ideas.

Some highlights from this segment:

• Companies come to Inovo to improve their front-end process for determining which ideas to pursue and evolving the initial idea into something customers will really want.
• Many companies need help, and a process, to explore new “white spaces” where they do not currently have any products or services. This takes place outside their current business operations where they are extending current product offerings.
• Finding successful innovation opportunities involves assessing the needs and desires of potential customers, a difficult proposition at the early stage of idea development when customers do not have something concrete to react to.

In this 11 minute segment (download iPod compatible, 56MB), Dennis Blanchette describes what it is like to grow an IT company so that it is able to succeed at enterprise scale. He compares his current company, Ensure Technologies, with another where he was at the helm, Wise Solutions. As Dennis has mentioned in a previous segment regarding Ensure, he also learned from his customers at Wise. Specifically, customers were using Wise's single user technology to help manage their enterprise. With properly focused development, Dennis was able to move customers from this $300 product to an enterprise product that cost $10,000 and worked at a much larger scale.

Dennis perceives similar opportunities for Ensure, but cracking the enterprise market is hard. There are four challenges:

• Scaling your own processes: Generally, larger scale leads to more manufacturing efficiencies. However, internal processes generally have to be reworked to handle the higher volumes, and the supply chain must also be optimized.
• Handling customer workflow: Does your product add an efficiency to the customer or a roadblock? In the case of Ensure's 'Xyloc product, an efficiency is added by removing the need to manually secure computers.
• Scaling deployment: Enterprise customers may require an order of magnitude or two orders of magnitude the level of deployment required for single user customers or very small businesses.
• Regulatory compliance: Many large corporations live in a thicket of regulations. Your product must be in compliance with those regulations.

In this 9 minute segment (download iPod compatible, 47MB), Alyssa Martina discusses Metro Parent's revenue and distribution models. Like almost all periodicals, Metro Parent's revenue model is based on advertising. Advertisers are concerned with two things: (1) How many people you distribute to; and (2) Who those people are. News stand sales and subscriptions are actually loss leaders in the industry and mainly serve to help tabulate the two items advertisers are interested in.

At Metro Parent's inception, Alyssa determined that it could not afford the loss leader strategy required for traditional distribution channels, so she opted to go with the free-controlled distribution approach pioneered by alternative magazines (e.g., The Boston Phoenix). She places her magazines where parents are most likely to congregate, quality supermarkets and libraries. An independent agency monitors both the number of magazines distributed and where they are placed (BPA Worldwide is one such agency).

It's interesting to contrast the different distribution strategies announced by this site's participants in the publishing industry. Alyssa depends on physical placement so that her shoppers just pick the magazine up. Lou Rosenfeld, discerning that his audience is among the most digitally capable, relies on electronic word of mouth. His revenue model depends on selling packaged information in the form of books while Alyssa's depends on verified delivery of advertising messages. In future segments, we will examine how Alyssa is moving into the world of digital media.