Five Stories To Inspire Entrepreneurs

1. Five Stories To Inspire Entrepreneurs Kevin Rose and Digg.com Aron Thornton and Subway Peter Patafie and Patafies Inc. Craig Schoen and Kijiji-Feed.com Bruce Firestone and the Ottawa Senators Appendix: Ten Things that Startups Forget to Do

2. Five Stories to Inspire Entrepreneurs • Kevin Rose, Founder, Digg.com • Kevin Rose made $60 million in 18 months • How did he do that? • a) JOB? • b) Entrepreneurship?

3. Five Stories to Inspire Entrepreneurs • “If you spend our last $10,000 on launching this site instead of a deposit on a home for us, I’m going to leave,” Kevin’s ex-girlfriend • Kevin and his partner populated their site by CALLING 3,000 of their friends • They didn’t push on a string– an email campaign might have gotten them 15 users • I wonder how she feels now?

4. Five Stories to Inspire Entrepreneurs • DIGG.COM’S DIFFERENTIATED VALUE? • It is a new model for a newspaper uniquely adapted to the Internet • It is not simply the online version of the New York Times or some classified advertising page transferred to the Internet • It is a digital community made up of a fairly homogenous demographic—80% are male, mainly young techie readers • Readers are also contributors • Readers dig up interesting stories from all over the web and post brief synopses to the site and links to them whereupon other readers vote on them—the most popular ascend the page

5. Five Stories to Inspire Entrepreneurs • The site harnesses the competitive instincts of the readers/contributors to compete to see whose story will lead • The site works because of its homogeneous demographic—contributors only post stories that will be of interest to the group • The site is dynamic—leading stories change by the minute or hour • Digg.com’s cost for headline writers = ZERO • Digg.com’s cost for journalists = ZERO • Digg.com’s cost for editors = ZERO • Digg.com’s cost for distribution = ZERO (at least, the marginal cost is practically zero)

6. Five Stories to Inspire Entrepreneurs • Digg’s sustainable competitive advantage is its business model and its readership • You might be able to knock off its business model but it is extremely difficult to knock off its millions of dedicated readers which form a community • The key is that the readership and community are relatively homogeneous and have similar interests

7. Five Stories to Inspire Entrepreneurs Keys to success: • Sound biz model; • Guts; • Marketing that works; • Community makes Digg.com tough to knock off • Beaucoup de differentiated value • Scalable • Human curate the news

8. Five Stories to Inspire Entrepreneurs • Where does true job security come from? • Having a job with the GOC? • 25 years with the GOC doing post project reviews • Aron Thornton (not his real name) laid off in the recession of the 1990s • What to do next? • Send out 500 CVs

9. Five Stories to Inspire Entrepreneurs • ZERO interviews • What kind of JOBS are available for a guy with a PhD in Anthropology who has done nothing but GOC work for 25 years? • ZILCH • What to do next? • Scared to become an entrepreneur • Not the kind of person to start his own business • Needed some structure– Ah Ha! • Buy a franchise • What franchise?

10. Five Stories to Inspire Entrepreneurs • Bought a Subway franchise and a couple of years later bought another • Took over a loser of a location but only paid $35,000 • Turned it around in less than 18 months using smart (guerrilla) marketing • Every day at 10:30 am go to mega mall parking lot across the street* and put $1 off sub coupons under the windshield of 500 cars • Run back to his shop and wait for the traffic to come in the door (* With permission of franchise owner + promise to clean up lot every evening)

11. Five Stories to Inspire Entrepreneurs • Also visited every local (tech) office within three kilometres between 11:00 am and noon weekdays over the next 18 months • Would bring in huge platters of finely cut subs and a bunch of $1 off coupons • Talked his way past receptionist and security to hand out free food and coupons by the bucket load • Although he only made $30k in his first year, he made over 100 grand for himself and his family in year two

12. Five Stories to Inspire Entrepreneurs • Bought a second location and now takes home over $140,000 every year • Making more than he ever did at the GOC and loves what he does • Does his own hiring, firing, banking, accounting and marketing—outlet for creativity • As long as he keeps a good relationship with the Master Franchiser, no one is ever going to downsize him again • True job security comes from what you have between your ears: what you learn over a lifetime + your ability to put it into practice

13. Five Stories to Inspire Entrepreneurs • Peter Patafie: up by the bootstraps kind of guy • Hired on to sell moving and packing supplies– 100% contingent (all commission) • Peter had confidence in himself • At age 45, suddenly laid off • Why? • Because he was making too much money (more than the President) • He had a wife and three kids to support and only had High School • What to do?

14. Five Stories to Inspire Entrepreneurs • Started his own business selling moving and packing supplies • Started with less than $5,000 • But he had a great reputation, knew how to sell and he could get product on credit from suppliers • Also brought some creativity to the new biz

15. Five Stories to Inspire Entrepreneurs • First great insight: realized that his clients’ salespeople spent a lot of their time redelivering packing and moving supplies to their clients • That is, he worried about his clients’ clients • What if instead of delivering moving boxes to client warehouse and then having their salespeople redeliver them to people who are moving, deliver boxes and moving supplies directly to them • Client salespeople can then spend more time selling (moves) and less time delivering boxes

16. Five Stories to Inspire Entrepreneurs • Peter ended up with a 97% market share (better even than Microsoft’s OS) • Within six years, business that did $13 million per annum with 30% margins • Never expected to make that kind of money and every year gets together with his employees and shares cash with them!

17. Five Stories to Inspire Entrepreneurs • Peter has three priorities: Priority # 1: TAKE CARE OF THE BUSINESS Priority # 2: TAKE CARE OF MY FAMILY Priority # 3: TAKE CARE OF YOURSELF • “Surely, you mean TAKE CARE OF THE FAMILY is your number one priority?” • No! • What is the number one cause of divorce: a) Alienation of Affection, b) Financial Difficulties? • Answer is b) • So take care of your business so it can take care of your family and you

18. Five Stories to Inspire Entrepreneurs • Craig Schoen, former student • Winner of Wes Nicol Business Plan Competition • Serial entrepreneur • Hi ECQ Test Score: http://www.dramatispersonae.org/ECQTest/ECQ(ns)TestAuto.htm • Sold (Cutco) knives door-to-door!

19. Five Stories to Inspire Entrepreneurs • Problem: car dealers and REALTORS taking forever to upload their info to Kijiji.com • Answer: www.Kijiji-Feed.com • Irresistible value proposition • Servers do the work! • From his apartment!

20. Five Stories to Inspire Entrepreneurs • Bring Back the Senators Campaign: 1987 to 1990 • “What does Toronto have that Ottawa doesn’t?” Bruce Firestone to himself, 1987 • A zoo, a theme park, a NHL Team!

21. Five Stories to Inspire Entrepreneurs Out execute the competition: • Purchase 600 acres for Palladium (now SBP) • Pre-sell 15,000 PRNs for season tickets (at $25 each) • Sign up 500 corporate sponsors (at $500 each) and 32 original corporate sponsors (at $15,000 each) • Lobby the 21 members of the NHL’s BOG and its President

22. Five Stories to Inspire Entrepreneurs • Don’t take ‘No’ for an answer, late Professor of Economics O. J. Firestone, U Ottawa to his son Sept.1990 • “You will never, ever get a NHL Team in Ottawa,” anon. BOG member the night before the NHL awards the Senators to Ottawa, Dec. 6, 1990

23. Five Stories to Inspire Entrepreneurs • “Make sure that the last face the BOG sees before they make their decision is yours,” Norm Seagram, former member of TOOC to Bruce Firestone • Last two faces the BOG see: Phil Esposito (Tampa) and Bruce Firestone • “The NHL is pleased and proud to announce… franchises have been awarded to Tampa and Ottawa,” five hours later

24. Five Stories to Inspire Entrepreneurs • After winning the franchise, you: • Party all night? • Do a few media interviews, leave for Miami, fly to Montreal, drive to Ottawa, prepare to sell $22 million in cash worth of season tickets in ten days in late December 1990 for a team that won’t play (and win) its first game until October 8, 1992?

25. Five Stories to Inspire Entrepreneurs • “John, what was the vote?” • “It was unanimous.” • Surprise phone call three weeks later

26. Five Stories to Inspire Entrepreneurs • People like to buy from people they like and trust • Suppliers trust you to pay them/you trust them to deliver on time • Clients trust you to deliver and you trust them to pay you • Sold the NHL on Ottawa and … on BMF

27. Five Stories to Inspire Entrepreneurs • Trust is the foundation of a successful career • Once you establish trust, you become part of a (business) ecosystem that will sustain you, your business and your family for a long time • Every business is an experiment… until proven otherwise • Good decisions come when all three are in agreement: YOUR GUT / YOUR HEART / YOUR HEAD • A mentor can help give you confidence but at the end of the day, every enterprise is an act of faith • GO FOR IT! THANK YOU, Dr. Bruce M. Firestone B. Eng. (Civil), M. Eng.-Sci., PhD. Twitter: http://twitter.com/ProfBruce

28. Five Stories to Inspire Entrepreneurs Appendix: Ten Things that Startups Forget to Do • Select the right idea—if their idea is a bad one to begin with, they are going to waste precious years of their lives for nothing. A knowledgeable mentor can really help here • Create a business model for the 21st Century that produces great results so that the harder they work, the more money they make—if their business model is bad, they won’t be able to compete effectively with hard charging entrepreneurs from China, India and other Tigers. Maybe their business model can be easily duplicated or dislodged and doesn’t give them a lasting, sustainable competitive advantage and concession or franchise • Add differentiated value, innovation and ‘pixie dust’ to their business models

29. Five Stories to Inspire Entrepreneurs 4. Create a compelling value proposition and learn how to clearly demonstrate it to customers and clients 5. Self-capitalize (bootstrap) the new enterprise so that a VC firm or other investors, partners or creditors won’t end up owing it instead of them 6. Use smart marketing (guerrilla marketing and social marketing) so they can acquire customers and clients cost effectively—if you have to run Super Bowl ads to get your fist clients, you’re probably dead anyway

30. Five Stories to Inspire Entrepreneurs 7. Mass customize products and services using the Internet so that, for the first time in history, they can get custom outputs from standard inputs as well as reverse out some of the work to their clients, customers and suppliers using the Internet so that they create a scalable enterprise that can produce more value than if they simply had a JOB 8. Find pre-launch and launch customers and sell, sell, sell (or as Ben Affleck said in the film Boiler Room: “ABC”—always be closing). If they have cashflow, they will probably survive. Ever hear of a company with fast rising revenues folding?

31. Five Stories to Inspire Entrepreneurs 9. Execute expertly, show leadership and become a trusted member of their community and business ecology—if they can’t execute and they don’t become a part of their community, it won’t matter how good the idea and business model were, they’re sunk. 10. Make your own rules and set and achieve their goals—people are excellent at achieving their goals if they remember to set some! Prof Bruce