The Reality Mirror

I believe the aim of a business should be to provide a differentiated product or service which after deep reflection your customers would still recommend to their mothers.

It encompasses developing a sustainable cash-flow, developing amazing stakeholder relationships, allowing leadership to shine through wherever it arises in the organisation and running the company in harmony with what is. By this I mean there is a way in which our society evolves over time and we are as a society working towards larger goals more important than any one of us but that affect every one of us.

There is so much conflict with what is and the direction we are all headed it reminds me of some great stock picking advice I read in a book. It said in short to go with the flow before you pick your investment. If the market and sector a company operate in are aligned in growth then be a buyer if they are both contracting then be a seller and if they are conflicting then stay neutral and wait for alignment.

The wisest people I know use their individual will to question and analyse what is going on but eventually fall in line with what is. The reality of what is happening is the most powerful convincer there is so why fight it? It trumps any marketing ploy, gamification, reality distortion or other juvenile methods which have their power and effectiveness based in simply in emotional reactions.

Does this mean we are all fated? No I firmly don't believe it doesn't but if you want to swim against the stream you do have to paddle very hard, the question is are you up to it?

So does this apply to business? I believe that it does because we can all tap into reality if we give it the space and reflect on it then once we see it without emotions, rationalisation or even fanaticism blinding us we can simply present it to our customers. If your intent is good and you want both your company and your customers to participate in a fair transaction and you are prepared to work hard on establishing what this means and covering difficult ground to eliminate misunderstandings and emotive decision making from a deal you can arrive at a rational contract which quite simply just makes sense.

If you are frustrated by emotion when negotiating just go higher. Not to a different person but to appeal to a higher shared goal that is real, I call this the reality mirror.

If you are working from evidence and where there is a lack of quantitative data you are making reasonable qualatative assumptions this reality mirror can be a hugely powerful negotiating tool for establishing long term partnerships that work.

When you face a problem you need to appeal to the lowest common core value you and your customer share and if this fails go higher until you find agreement this might start with a personal or professional relationship based on ordinary conduct, if that fails a higher level might be a stated CSR policy or if that fails you might take it up to the highest codified level of shared human goals the united nations declaration of human rights. Did you know the Nuremberg trials of Nazi war criminals have held individuals responsible to place universal principles of human conduct above the authority of a particular leader, nation or group and this is a principle we all must follow.

Of course doing this you need to act without ego if you are using such a high aim to further your own egoistic goals then you should expect the unexpected consequences that can result. But if you're underlying aim is to run a sustainable company which is acceptable as a goal to all humans for the good of all those people who work for it, buy from it and even those who are not directly connected with it then this a great way to do business and develop lasting long term partnerships with your clients.

Company Design

Dieter Rams had something to say about what makes good design when he €œbecame deeply concerned about the impenetrable confusion of forms, colours and noises in the world around him he set out to describe the most important criteria to him of good design he said it should be:

innovative
make a product useful
aesthetic
help a product to be understood
unobtrusive
honest
durable
thorough to the last detail
concerned with the environment
as little design as possible

"Back to purity, back to simplicity." was his mantra. When he spoke of less is more in design but today he argues that we all have enough things and stuff around us so in the future he believes that the media and society must learn to become excited not about improvements to things which seem spectacular but instead to realise that what we all need and really appreciate is not the object itself but the container or structure of the object and that that is good design.

It seems that now Rams is arguing that good design is unobtrusive this particular aspect has never been so important. And as I think more of his tens commandments it seems to me clear that the design of the order of them is also important and changeable. Being thorough to the last detail is to ensure the order of his commandments revolves and changes fits the need of todays society.

Whereas before more innovation, usefulness and aesthetics were appreciated as the height of good design now the primary qualities to strive for in an era of austerity appear to be fundamentally different. It seems we are craving not the spectacular but the basics of products which support us without trying to amaze or shock us with innovation or aesthetics but instead letting their durability or honesty stand proudly but unobtrusively and showing us a new exciting future with as little spectacle as possible.

Of course Rams himself says it better

"The unspectacular things are the important things, especially in the future."

Whistles.co.uk

I saw today an article on econsultancy about a relaunch of a womans clothing site called Whistles.co.uk. Given I don't buy many woman's clothes I may be way off the mark commenting on this but my sense is that they have done something very clever perhaps for the first time.

I think they have created a pleasurable browsing experience and combined this with ease of purchasing. What's unique about that you might ask? Surely there are lots of good ecommerce sites that look nice aren't there? Well; No! Actually I don't think there are. It has been a problem that has always exercised my mind and I think a lot of it has to do with understanding that the way we shop for computer parts or objects which we don't attach to our body is very different from the way we shop for those that we do.

What is the ideal way to choose clothes? To try them on your own body, you get the size, the feel and the look in front of a mirror. What's bad about that though? people waiting around crowded changing areas, lots of changing rooms, for some too much fuss. What's the second best way? Projection + Practicality. You see a model with the clothes on and think damm that looks good if I buy that I will look good too, next thought is what size am I once you know that you can buy.

It's worthy of note that some guys don't even project before they buy, clothes can be purchased purely on the basis of practicality rather than as any form of self expression. Also of note is that a lot of people using flash to develop web sites that are capable of an ecommerce element have tended to be more practical types. So what I think is different is that ecommerce has finally figured out its strong card.

That is when I go into a store there is only so much wall space for pictures of models. In fact probably less than 5% of the clothes in a typical store are represented by models in posters displayed at that same retail outlet. Whereas on a flash web site there is potentially an unlimited amount of space so 100% of the clothes I want to buy can be modeled. The success of clothes by mail order was driven by this, they figured out that projection as well as practicality was key to generating intent to purchase so most lines were modeled and pictured.

The new flash technology is taking this further. Now I am not saying the web site is the height of usability. Simply that it has a nice balance, it is pleasurable to browse around and this allows me to start the projection of what clothes might look like in aesthetically pleasing surroundings. This type of experience is a marked change from browsing in a more functional layout which typifies most ecommerce sites in this sector and in general. Yet under the hood is the power to quickly switch my mind from projection to functional "what sizes are there available?" mode and back again with minimum hassle.

Thinking also of the success of zappos I think part of it at least was down to the fact that they focused on shoes first. A shoe has a definite form, you can browse it comfortably in a functional environment because you know the shape it will be on your body is the same as the picture. A flat picture of a pair of jeans does not do that you need to see what it looks like on a model what is the cut like in real life to get the same projection going in your mind.

In short whistles doesn't hurt my head and that can only be a good thing hopefully they will launch a menswear range soon.

Saturday afternoon inspiration

I was doing a bit of thinking today about defining Fubra's goals and my own for the next few years and I have stumbled across someone who is quite inspiring his name is Sir Ray Tindle and he actually lives near me in Farnham, perhaps I'll get to meet him one day.

I was curious about him and so I checked out his accounts and indeed he has built a pretty amazing business since the second world war which now has nearly 60m in assets no debt and is consistently throwing off over 5m a year in profits.

The most inspiring thing about him is that he has does all this by running lots of newspapers I've never heard of, local ones that I didn't think could be hugely successful especially given the recent performance of many of the larger companies in that space. Sir Ray has had a single minded focused approach to his business. He understands local newspapers are about local issues and never tries to grow them beyond the locality they serve.

There are a number of lessons I have learnt from reading about Sir Ray Tindle and the first one is quite important. It's a lesson I thought I knew a lot about and that is that with hard work and focus you can achieve anything given time. Over the past few years my focus has waned and I haven't been happy with what we have achieved at Fubra. I put a lot of this down to seeing and getting carried into the excesses from a period of unsustainable borrowing which caused me to focus externally and procrastinate for a period of perhaps two years or so, short termism set-in and I became envious or angry at the perceived wealth of those who appeared to take a short view and keep winning.

Al Ries is a person I think is smart and he has a video about all about focus.

I always recommend it to people but it hasn't been until I read about Sir Ray Tindle today that I really started to believe what I was saying to others properly. I used to think Fubra was unfocused because we have lots of web sites, have built loads of tools but we are not in truth I think Paul and I know very well what our focus is. I am not as sure we have communicated that very well to others around us including our staff, our customers and our visitors.

I've decided I really want to start doing a better job at communication so I will be starting today defining a clear road map for what we will achieve as a minimum in the next 5 years. In truth I will be happy anyway if I can continue to experience the determination and enjoyment it's clear Sir Ray still gets from sitting at the helm of one of the most interesting businesses I have come across in a long time.

Which leads me to the most important thing I learnt from reading about Sir Ray Tindle - make haste slowly.

a priori truth

I am completely fascinated by starting to re-read Discours de la méthode pour bien conduire sa raison, et chercher la verité dans les sciences at the moment.

"I entirely abandoned the study of letters. Resolving to seek no knowledge other than that of which could be found in myself or else in the great book of the world, I spent the rest of my youth travelling, visiting courts and armies, mixing with people of diverse temperaments and ranks, gathering various experiences, testing myself in the situations which fortune offered me, and at all times reflecting upon whatever came my way so as to derive some profit from it."

Having foundations in life is really important, following your principles everyday, even more so, reflecting when you don't, still more.

I feel very lucky to know that.

10 Credit Crunch tips for first time Entrepreneurs

Here are a few tips I think can help start-up companies to be successful based on my own experiences I hope you find them useful.

1. Buy something for a £1 add some value sell for £2 just to start off with.
Trying to climb everest without the proper equipment is a sure route to failure. By starting a small business which buys goods and sells them you will learn to deal with customers and how to satisfy them. If they feel like are getting a good deal they should tell their friends about you and you will sell more. If they don't like your business they will either buy once and never again or they will tell you they are unhappy. Ask your customers what they think of your products they will tell you.

2. Focus on the value of everything not the price.
Good entrepreneurs pay the value of everything they buy not the advertised price, in this world everything is negotiable and you should learn very quickly there are lots of mispriced products and services around. Every single mispriced product presents an opportunity to save if you are buying it or to compete if you want to sell it.

3. Get some grey hair on your team early on.
There are lots of people who have run their own business and if you are just starting out the CEO of Tesco might not have time to help you out but successful local business people would probably be only be too happy to help you out, network with them ask them if they would like to be a non-executive director for your company for a very small shareholding and if they can help you with occasional advice and counsel. Maybe try and see if there is a service or a product you can offer them first to build a relationship with them.

4. Your customers are your best friends treat them like it.
One happy customer tells more than one person, lots of businesses have customers but not as many take the time to get to know them and ask them how they can better serve them. Make sure you are not one of those businesses. How about offering your customers a referral fee if they introduce their friends, I did this early on by giving £50 to all my previous customers if they helped me sell my next computer.

5. Don't believe the business haters.
The people closest to you, your best friends and family especially if they have not run a business may not be as supportive of your new venture as you first expect. This is probably because they care about you and don't want to see you fail or get hurt, for a lot of people starting a business is just too big a risk but if you have taken the plunge you are obviously not one of those people so stick it out.

6. Learn the importance of equity.
I like to talk about equity because that is what you are building the value in if you choose to start a business. When you first start the equity you have is worth the market value of what you are going to put in to the company. If you are trying to sell it for more than that to an investor you need to convince them why and probably how you are going to increase the value of the equity on offer. You should hold the equity very precious if you don't care about your company no one else will but remember those who seek equity must do equity so give it wisely to people who can help your company grow.

7. Put an A4 sheet on your wall with your short term target.
You won't always need to literally do this but it helps. Writing down targets you must hit reminds you of their importance and by putting the date you need to do it by applies pressure you will need to hit them.

8. Keep growing every day and keep a long term view.
Drive your company using an inner scorecard, there are plenty of pressures around in the world, other companies paying higher wages, spending more on marketing and seemingly doing much better don't focus on that at all it's irrelevant. Focus on what is important to you and make that focus providing a great long term viable company that people love working for and you enjoy growing. Envy is the enemy, think of your company as a mission.

9. Remember hard work counts for a lot more than an idea.
I like to say even if you have a crap idea and you work hard on it you can make it a success. When we started Fubra our first product was selling .it domain names to UK companies. As it turned out in 2000 our potential customers only just realised they wanted a .com/.co.uk and .it names were really not selling well but we worked very, very hard and managed to gain enough customers to pay our expenses. This gave us a platform to grow further in to more profitable areas. Our next idea was selling software and was better because it brought in millions in sales.

10. Network up, research, research, research, and innovate.
Always try and connect with people above you in business that way you will learn from them, research all your competition and companies in general in depth. Some of the best web entrepreneurs I know are plugged into the internet they know literally everything that is going on they use this information and their connections to validate their own plans. Finally innovate! Make sure your product is different and adds value to the market place but is close enough to a working idea to give you confidence you are in the right market. Leave brand new markets and ideas to the competition once they have validated the space innovate quickly behind them but make sure you ski your own tracks and add value.

JPR, Yell and SEAT Pagine Gialle

Watch out equity holders free cash flow won't be around much longer and your equity is going to be pretty much worthless by 2010 if you have any in these companies.

These are all classic examples of companies that are inherently strong businesses gearing up massively on debt which will prove hard to re-finance and not really having that great growth strategies or being able to develop any as they spend all their time looking in the rear view mirror.

I was talking to Paul yesterday about how we should offer to buy Thomson Directories from its Italian owners SEAT Pagine Gialle as a joke I'm not sure we could afford it right now but you never know. The £3.8bn of debt SEAT Pagine Gialle its parent has is crippling it and is sure to make good assets like TDL come onto the market at even lower fire-sale prices later in 2009 and if they don't I am so happy that all our main competitors in the local advertising space are basically at the mercy of the debt markets as well as without much of a clue about online strategy.

Listen to this quote from Tim Bowdler MD of JPR getting all angry about someone accusing him of ruining the business by gearing it up like LCD TV's are going out of fashion: "Most analysts in 2005 were saying we should take on more debt. It is very easy to sit on the sidelines and appear wise after the fact. Back in 2005 nobody was suggesting our strategy was flawed."

There are a lot of responsible business owners who didn't take the route you took Mr Bowdler but now like Yell with it's £5bn debt you and your fellow shareholders are going to be well and truly diluted as the free cash flow you thought would be there forever starts to decline sharply and the bankers come calling.