Community as the marketplace

Sometimes there are cultural shifts that we experience long before we become aware of their impact on how we live and work.

We wake up and realize that we are using old world tools and ideas for a vastly different new world order.

This is happening today where the idea of community meets the reality of the marketplace.

In the 90s, Geoffrey Moore nailed community and the power of interest groups as the power play of an early-wired world

His idea that you can leverage an early adopter interest group as a sling shot leap into the mass market was brilliant.

Geoff’s vision of the chasm, and Seth Godin’s idea of tribes on hilltops pounding on drums to send signals were connected.

Seth’s idea came later and went further but both defined an Alice’s Restaurant sort of market spread for both the building of brands and the anchoring of commerce around it.

The web as the amplifier and aggregator of groups with connecting individuals as their market momentum was the big aha.

That was then though and this is now.

There is a reason that marketing has fallen into such disrepair and lack of respect.

We’ve focused on approximation and virtual scales of sentiment rather than the tangible and powerful result of social grouping—community–and how that drives change in the markets that form naturally around it.

We’ve ignored the key change in how community functions in a world that is both different in how we navigate it and different in the core of our behaviors.

Today, there are no more chasms.

There are no more hilltops. No individual nodes and no gated communities.

There are only atomic connections that move horizontally across the threads of the world on social nets and in mobile communities.

The more you look to focus them narrowly the more you will miss the thread.

This dawned on me a few years ago that the communities on Kickstarter where not on their site but everywhere cross the web.

Somehow the emotional clarity of a creative project spread out across the nets and tied together people in a loose chain of support aggregated in the transaction.

The project was not the community, the emotional clarity of the idea was the connector.

Community was not a layer nor an entity nor exclusive.

Brand, while born out of belief, was less an idea and more of an emotion.

And marketing needed to be redefined as a language that connects what we believe in naturally to a market that supports it.

I don’t know what the operational manual for a world where community is the  definition of a market is going to look like.

We are in many ways living it before we understand it.

What I do know is that we are different today as people then we were. The markets are different along with us.

If you are an entrepreneur, I can guarantee that your company is already firmly in a community and in market from day one.

You need to start right there.

If you think your community is simply the enthusiasts that you’ve gathered you are thinking too narrowly.  That was the reality in the 90s.

You are missing community in a networked world as inclusive and expansive by definition, horizontal from the beliefs that make it real.

You need to discard the idea that there is a place where community ends and market begins. That you need to approximate and measure community in order to leverage it to a market.

You can’t imagine your market into place certainly.

I’m going to get asked: Is there a new list of tactics we need to implement?

The wrong question to ask first.

You need to step back.

You need to imagine when Kickstarter realized that by the simple act of empowering people to support things that inspired them, they had touched a primal need whose community was as broad as the world.

When Airbnb or Sound Cloud realized that at their most elemental value they touched a community of common interests that opened a market that was as big as the global market itself.

Take a huge whiteboard.

Gather your team and your advisors around you. Fill the entire thing then wipe it clean.

Find the one phrase. Isolate the one emotion, the one core truth that makes you special and unstoppable.

Makes you essential to the market size you imagine.

Understand that community as marketplace is both the message and the medium in today’s world.

Companies succeed on execution but not without that core.

Start there.

 

‘The consumer internet is turning upside down’

I can’t shake this phase.

It came from my friend David Semeria in a comment on avc this past weekend.

On one level it’s something that has been brewing for a while and self-evident as we watch the jostling and ongoing category spread of Amazon, Google, Facebook and Uber.

On the other, it’s an aha to startups and potential game changer raising questions about how we build companies and market our innovations.

The idea is powerful in its simplicity.

We think of innovations bubbling up from the bottom.

The very promise of the web itself is about giving voice to the authentic, empowering the few and the small to change the world for the many and reshufle the global status quo.

Today we have a culture of bottoms up innovation, an economics of disruption that is spewing a cross-generation of quite brilliant entrepreneurs. Out of incubators and accelerators. Out of seed funds. Out of personal capital.

Out of a societal belief that disruption is a business model and entrepreneurship a job description.

David’s phrase speaks to this turned on its head, to where the innovations are not coming bottom up, but top down. Not from the mass of small innovators but from the advantages of the platform incumbents. The core polarity of innovation shifting its axis.

The big platforms have a soft lock on our behaviors, a hard lock on our data and as creatures of habit, a solid spot in the premium brand positions on our phones.

Trickle down innovation meeting attention deficit and market complacency on the consumer side.

People in general don’t appear to be less curious, they do appear to have a higher threshold to change.

Download numbers on apps stays high, usage and replacing the incumbents on the first and second screens on our phones, has flattened.

How often do you change your messaging, commerce, social, transportation, financial and entertainment apps on the first few screens on your phone? Mine are locked in.

The idea of platform creep or in marketing terms, leveraging your brand cross category, is of course nothing new.

What is happening today though is different as it is about data ownership as key to brand dominance. About the breadth of these brands to leverage the depth of their data sets cross the pieces of our lives that matter the most to us.

If this is idea is true (and I think it is), if the innovation pipeline has shifted its access point and the consumer their propensity to adopt new brands, we are definitely in a brand new world. Literally.

And it raises a bunch of questions.

Will it stifle innovation? It will most certainly change the odds.

Can interesting products like Door Dash really take a chunk of the on demand local delivery market when there is Uber Rush?

Can they get us to install another app tied to our credit card when everyone already has Uber installed? Can they be that much better to give them a spot on our front screen in transportation row?

How does this dynamic change the core promise of the web that it is indeed possible for an individual to change the world?

I’m just not sure.

No one is too big to fail and the market is the greatest democratiser.

We all know that human behavior invariably proves spreadsheet logic wrong. Why Amazon is failing for the third time to own the $20B direct to consumer wine market or Google invariably swallowing its foot from G+ to G TV on anything consumer oriented are cases in point.

Truth be told though while my gut knew that this was happening I hadn’t thought about it in these terms. I look at analytics all the time see downloads without requisite engagement, engagement without transactions and sweat changes to test the why of it.

I now have a new viewpoint. I was ignorant as David states (and I paraphrase) that in AI driven models more data trumps a better algorithm. I didn’t have the language to understand the entrepreneurial disadvantage.

Take a look at the thread and the discussion. It’s worth it.

Share with me whether this is impacting how you are configuring your model today.

And mostly, as you iterate your brand forward how to play in a world where the odds are stacked against you.

That’s the most important piece to wrap our marketing heads around.

Netflix’s day & date bombshell

The future of entertainment is changing in front of us—yet again.

Netflix’s announcement of a day and date, streaming and in-theater feature film release is a big deal with some far reaching implications for all of us.

Day & date is the dream of all movie lovers.

This is the idea that you can stream first release movies at home, or anywhere, at the same time they are in the theater.

Day & date is the nightmare, possibly the demise, of the theater chains themselves.

Theaters as a business lives on popcorn and soda margins.

We go to the movies because the system itself is built on timed exclusivity of feature releases that harks back to when the studios themselves owned the theaters as marketing platforms.

Films get made, released to the theaters to market them. We either go, pay for tickets, eat popcorn or we wait till we can stream them at home.

We are at the cusp of change here that has been generations in the coming.

Just as Netflix disrupted the video store culture, they may be the wrecking ball that forces theaters to either change or be gone.

To be honest, I’ve loved the movie theater experience most of my life.

From double feature dates and  skipping school and hiding out in matinees as a teen. To staging my own underground film festivals while at University. To work in bringing stereoscopic 3d as an in-theater advantage to the industry.

But there are few films that I go to see today that I don’t wish I could see out of the theater.

We may love a connected world for search or cat videos, but little  has changed my leisure life as much as streaming movies at home.

A huge screen and a comfortable couch. Unfettered access to most titles with a click. Hanging out in sweats, alone when I can’t sleep with samthecat on my lap. With friends and wine. Over dinner with family.

The theater experience has gone from romance and pleasure to mostly legacy habit. While I love special places like the Sunshine Theater in New York, the allure has frayed along with the theaters themselves.

Whenever an indie film is available day and date, I opt to watch at home.

I’ve been wanting this to happen for a long time.

The lock on the relationship of the studios and the distribution chain seemed impenetrable.  I didn’t see the disruption coming not from within the system but from without—or more so– the new system.

I never thought that Netflix, the company that killed Blockbuster and created the economic model around high production binge viewing of episodic TV would be it.

Read the link but basically Netflix is releasing a full-length feature online and through some theater chains.

The chatter is that Netflix doesn’t care about the theaters and is using them for marketing. I’m sure they are right.

The smart chatter is saying that this is simply a trojan horse strategy to qualify for the Academy Awards that requires theatrical or simo-theatrical release. Sounds like a smart move to me.

What’s interesting is that the balance of power has tilted here. Hollywood and the theater chains are tied at the hip. Netflix is doing what they couldn’t and while the success of Beast itself is irrelevant, this I think may be the pebble in the pond that breaks the dam.

So what is going to happen?

Five years from today will the theater chains be gone?

What’s clear is that the time for change is right now.

Theaters as physical environments all basically suck. The locked distribution system between the studios and forced exclusivity windows is a legacy system closing on itself. Feels out of touch and a tad stupid.

It’s time to reinvent this.

Maybe Netflix should buy Landmark theaters and re-imagine what a theater means and own both sides of the equation. Creating an on the street experience that is completely unique and suited as a marketing tool for its releases.

Maybe the studios themselves will be forced to embrace a new date & day release strategy themselves, reacquiring theater spaces as they own their own online distribution.

Maybe someone will understand that even though people want to stay home as a choice, impromptu environments like the explosion of movies in parks as a social events is very much part of today’s urban culture.

Maybe with technology we can stage showings in a more impromptu and fun ways.

I’m not rooting for Netflix, I’m rooting for the consumer. For myself.

I’m not rooting against the studios, I’m rooting for a creative way to reincorporate the magic of group viewing possibly in the dynamics of an event in a new definition of a smart city.

I’m rooting for free choice.

It’s Saturday morning as I write this.

My plan for the day is you guessed it—off to see the new Spielberg/Tom Hanks film. All the choices of where and when are sub optimal.

I’d rather watch at home or maybe over an extended brunch at one of my favorite venues.

Or somewhere creative that inspires me to get up and go and meet friends there.

Today I’m stuck with a theater chain and bad popcorn.

Not for long as the first shoe with Netflix has definitely dropped.

Why raising more capital, not less is often the smart move

I’m on the opposite side of common knowledge on this topic.

The argument for raising the least amount of capital needed is the gist of the lean funding paradigm.

It keeps the entrepreneur focused, instills creativity and grass roots street smarts. It forces iteration as the backbone of both market discovery and product development. Less is more is the net of it.

It also let’s the funder stay close to their investment, managing it by objectives in a sense, creating a perpetual funding cycle. You fund what the entrepreneur needs to get to the next stage of product or market proof.

It also means that the entrepreneur is always raising funds, always on a tight leash from the sources of capital, always on the stressful watch of cash flow.

The upside of this is the lean startup concept in a nutshell.

A brilliant mashup of ideas that the best startups use to harness the market itself as a catapult not as a chasm to cross.

It works well as an operational principal, but jumps the shark as a funding paradigm in most all instances.

My counter argument to why raising more, not less is often the smart move:

1. There has never been a plan or a budget that didn’t prove absolutely essential and invariably incorrect.

If you raise to a plan you will come up short. Plan for a smoother runway into what neither neither you nor anyone can imagine in detail.

2. Being cash poor drives poor decisions, keeps you in blinders to objectives and invariably stifles openness to market opportunities.

Focus is essential but having the creative freedom to consider change and opportunities is where great things happen.

3. Lean funding by definition puts the directional control in the hands of the funders not the entrepreneur.

It is equally incorrect to assume that the funder is always the source of wisdom and guidance and that entrepreneurs are children who will put their hands in the cookie jar and glut out if left to their own devices.

I believe that the best chances for success come from raising capital in a partnership paradigm. From people who are in it for the long haul and where a small group of them can provide guidance and operational expertise.

I also believe that winning happens because the entrepreneur just nails it.

When a leap into the void, often counter intuitive happens. When you push everything off the table, and rethink market connections in bold new strokes.

To do that you need a runway. You can’t be backed into the disrupting cycle of always raising funds and always heads down to a plan.

If you have to give away a bit more of the company to create that security, so be it.

You need guidance and oversight but as much, you need the freedom to move and follow you gut.

Cashflow is king. Make sure you have it.

The entrepreneurial anomaly

There is a core anomaly between the ease of starting businesses today and the challenges around funding their growth and discovering market fit.

There is almost no friction to start something.

From tools to build with and pay as you go services to host on. From a plethora of early stage capital.  And most important, a culture that has embraced entrepreneurship as a legitimate occupation.

It has never been easier to run with a hobby and see where it goes. Never been more possible that your tiny niche could become a global game changer.

The flip side is that while it certainly easier to start something it has become increasing difficult, and much more expensive, to find true market fit if not scale something to a success.

This has turned 360 degrees in my career.

When I first started raising capital it was a challenge to raise your initial funds. There was less funding available as the cascade of capital from successful startups was just beginning to trickle down. The idea of seed funding was in a neonatal state.

It’s much better now, just very different dynamics that have resorted the challenges.

The truth of course is that entrepreneurs are chasing the impossible.

Creating something new from an idea that could become a household brand is the work of the wonderfully obsessed and the unflinchingly unrealistic.

Then as now both.

To change how we as a society work, play, connect and share our lives brings amazing satisfaction—and sometimes wealth–but the odds of winning are not great.

The very framework that this happens against has changed dramatically.

The thresholds for market proof today are as ambiguous as they are stratospheric in most cases.

The attention spans of the consumer for trying new things has diminished to a nanosecond. Capital needed to get started is everywhere. The capital needed to grow it, more and more challenging to get.

You can simplify this to say that there is just so much noise that makes it harder to break through, the odds of success less and less, and the cost to get there increasing all the time.

That sounds to me like an excuse.

My takeaway after a career of doing this is that it has always been hard, damn near impossible actually.

I just see it as uniquely different today on three fronts:

The number of failed companies and emotionally exhausted entrepreneurs will dramatically increase.

This is the exhaust of the process and it will fall on the culture of today to mollify. We give lip service to the acceptability of failure but this is an emotional scar that foreshadowed the emergence of the entrepreneurial psychologist.

Those with capital to invest will become both more powerful and formative as they doll out funding in controlled pieces.

The upside is that from the best investor, the ability to mentor their investments increases. But the innate discordance between the portfolio view of an investor at the top of the funnel, and the single focus of an entrepreneur at the bottom will inevitably increase.

The net of these moving pieces is that the truly impossible is becoming possible to a broad population of entrepreneurs.

A founder with a big idea can truly believe that they can change the world. Not as an isolated instance but part of a culture, with strange analogs to the old Hollywood system that supports this.

We all see the obvious—the issues of creating more accessibility to this funnel to all economic classes, the recent awareness of the emotional toll of failure and the rising tide of wealth creating more for itself.

All this is true but whether it is easier or not, less expensive or not, doesn’t really matter.

What matters is that the impossible has become simply more possible.

That’s a truth that overshadows everything else and makes it worthwhile.