“We originally had visions of building a little bit of a client base, selling to AOL, and retiring in the Caribbean. Well, we were a little late for that, so we had to opt for Plan B which was to buckle down and build the business.“  Dale Coyner, Serial Entrepreneur, Founder of Communicast and Open Road Outfitters

The Rich Niche Group blog interviews and enables you to hear directly from successful entrepreneurs and product managers about the steps they took to grow their businesses/products and how they were able to create, penetrate, and/or dominate their niche.  This week we interview Dale Coyner, the founder of Communicast (which was sold to PrecisionIR Group), Open Road Outfitters and a noted author of several motorcycle touring books and a motorcycle touring blog

Interviewee:  Dale Coyner, serial entrepreneur. 

Why Selected:  Dale is a two-time entrepreneur and one of the pioneers in the use of interactivity and streaming technologies within the web conferencing and webcasting industries.  Dale is also a motorcycle touring enthusiast and author of several books and a blog on the topic. Dale is also a member of the Virginia Governor’s Motorcycle Advisory Council.

I had the pleasure of first consulting to and then partnering with Dale (and David Paul, co-founder of Communicast) as we grew the company and eventually sold it to PrecisionIR Group and their Vcall division.  Under Dale’s guidance, Communicast became known as the leading interactive webinar platform and was one of if not the first to integrate streaming audio and video.  Dale’s foresight and unique ability to understand problems and break them down to their smallest and easiest to solve position enabled Communicast to continue growing while delivering its famed “white glove” service.  Dale also understands himself, his strengths, and the strengths of those around him and he has the ability to bring those strengths together to make the team more productive. 

In the following interview, Dales takes us through how he was able to keep Communicast growing without ever taking any venture capital and how the start-up of Open Road Outfitters differed from Communicast.  During the interview, Dales makes several points about what it takes to grow a company, the key points you’ll take away include:

1.  Know your buyers.  Possessing a solid understanding of your buyers will enable to you understand their problems and build products they understand.

2.  Take advantage of the numerous open source and low-cost solutions are now available to help small businesses. 

3.  “It’s the rare opportunity that can stand up to the scrutiny you’ll put it through if you write even a simple business plan.”

4.  The biggest threat to losing your position as a market leader is to become complacent to the changes in your niche/industry.

You are now on your 2nd start-up, how has the start-up Open Road Outfitters differed from starting Communicast?

 

In some respects launching Open Road was no different than Communicast.  When I launched Communicast, I knew the market well because I was actively evangelizing webconferencing technology inside the company I was with at the time.  I already knew who the likely buyers were, their concerns, and how to approach them.  The same was true of Open Road Outfitters, targeting people who travel by motorcycle.  Since I am a long distance motorcycle rider, I already knew the customer in this segment because I was one of them. So, knowing the market well was the key similarity.

 On the other hand, building the business, operationalizing—whatever you want to call it—that was completely different.  Communicast was a web-based service bureau, Open Road is a retailer.  At Communicast, we built all our products in-house and hosted our own servers.  At Open Road, we do none of that.  Our e-commerce platform was open source and hosting duties are handled by someone else.

 Very generally speaking, one thing that is vastly different, and continues to amaze me, is how many awesome open source and low-cost solutions are now available to help small business owners do business more effectively and for less cost.  I regularly use WordPress, an open source content management system, to create informational sites.  I have a credit card processing app for my iPod instead of a terminal.  Phone calls are managed through a free Google Voice account.  My hosting service is so inexpensive it barely registers on the P&L.  The all-powerful analytics product I use to examine our website traffic patterns, also free.

 

What drove you to start Communicast and what opportunity did you see that was not being served at that time? Same question for ORO.

 It was pretty simple.  When I first saw webconferencing technology in the mid-90’s, I felt the hair raise on the back of my neck.  It was immediately apparent to me that this was a technology that would have a widespread effect on business.  The advantages were just so immediately obvious; I knew it would be adopted rapidly. I was at Ernst & Young when I first saw the technology and within six months from the time I demonstrated the technology in house, we had a dedicated webconferencing service bureau with 2 or 3 people producing multiple events per week.  I knew that not every company would have the resources or desire to staff an internal bureau, so that led me to start the business plan for Communicast.

 With Open Road, I first identified the opportunity when doing some book research.  I found there was an underserved part of the powersports market that I felt could be addressed with a web store.  That was part of my motivation, but I was looking for the right business opportunity to gain more experience with e-commerce tools and this was the perfect outlet.  Open Road is my living laboratory, allowing me to experiment with different online marketing campaigns, site copy, web analytics, videos, etc.

 

You launched Communicast right after the internet start-up bubble burst in 2000, how did this affect your plans and what adjustments did you make?

 Good question.  It made us work a lot harder at focusing the business and the message than if the money was still flowing freely.  We originally had visions of building a little bit of a client base, selling to AOL, and retiring in the Caribbean. Well, we were a little late for that, so we had to opt for Plan B which was to buckle down and build the business.  We decided to forego seeking venture capital. Every time we started chasing VC money, our sales dipped because we were spending too much time and energy polishing our business plan, doing pitches, and not selling.  When it was apparent the VC path was not for us, that decision really freed us because we could go back to focusing on sales and building the product.

 

What were the biggest obstacles you ran into at the different stages of Communicast’s growth and how did you overcome them? Have you seen the same obstacles at Open Road Outfitters?

Initially our biggest obstacle was the fact that we didn’t own the technology we were using to serve our customers.  We had done some creative cross-licensing with another conferencing company to build our service on.  We built a complimentary enhancement to their main product and exchanged that for rights to use their technology.  That saved us a lot of money, but strategically we were completely tied to their fortunes and their decisions about where the product would go.

We finally faced up to the fact that we needed to build our own product in order to really create a difference we could use to sell against our competitors.  Our biggest challenge was that, because we were self-funding through sales, we had to build most of it in-house and outsource only the things where we didn’t have the expertise. So, I spent a lot of late, late nights building the interface for both participants and the presenter, along with all the back-end reporting, registration, and other features the product had to have.

David Paul, the guy who handled our sales, and who I really consider to be a co-founder, had a unique way of getting clients to help us pay to build the product and it’s a strategy I’d recommend to anyone similarly situated.  If our product lacked a key feature needed to close a sale, Dave would offer to build that feature to the client’s specifications for a certain price.  The client would get that amount of money credited to them in webconferencing services, so from their perspective, they were getting a custom-built product and paying nothing extra for it.

We would only make this offer if the client was asking for something that fit our product development plan; we didn’t do it for just anything. But the bottom line was, we got a lot of our product built that way and picked up a number of clients who were impressed with our willingness to “customize” the product to suit them.

 

Communicast was one of the first web conferencing companies to integrate streaming audio and video back when neither of these were popular, my question for you is what did Communicast do to evangelize why streaming audio and/or video made sense and how did you overcome some of the initial hesitancy by clients. 

We did a lot of talking and a lot of demos, but it came down to the fact that clients were never sold on it until they had their first success with it.  So, we would ease them into it. We always offered alternative solutions.  For example, in addition to streaming audio, it was common to offer a teleconference for audio in a web conference for participants who couldn’t receive the streaming feed.  Over time, as clients saw the number of stream users rising, they saw their bills go down as a result.  And this encouraged them to push the streaming option harder or offer it exclusively altogether.

 

Communicast became known as one of the innovators in the web events market. Once in that position, what did you set-up so that Communicast stayed in that leadership position? What were you doing different than others in the niche?

From the beginning, our difference was interactivity.  We offered so much more than just slide-after-slide-after-slide in our events.  We built interactive tools that allowed presenters to really involve the audience.  We had not just one type of live polling, but several different forms.  We offered a “Pro/Con” exercise that allowed audience members to respond to a scenario with plusses and minuses. The instructor then had the power to select individual responses from the list.  We offered a brainstorming tool.  Our niche was interactivity and we continued to expand on that with new tools and templates to collect data, followed by richer reporting features to gain more intelligence out of that collected information.

How did we set that up to maintain that edge? Well, I believe it’s because this view of making web conferences interactive was the most important element of our vision. We were clear on who we were. I made most of the product feature decisions, based on wide input of course, but the conversation in my head usually went like this: “We offer the most interactive webconferencing system on the market.  Does this feature we’re proposing enhance that?  What other features can we add that reinforce that vision?” 

 

In general, what piece of advice would you give to someone who is either starting a new company or getting ready to launch a new product which they are hoping to either create and/or penetrate a niche?

 I’d heard these two points a thousand times before but didn’t really understand them until I lived them. 

Know your customer.  Develop a profile or a picture in your mind of your perfect customer.  What’s their position in a company? What are their responsibilities? What are their biggest problems and how does your product or service solve their problem?

With Communicast, we found our perfect customer was at the director level in either marketing, corporate communication, or training inside the company.  They were constantly being asked to find ways to train more people with less money and disruption (time out of office, away from clients, etc.).  When we found this person with this issue, the sale was easy.

Know yourself.  In our early days, we fought hard to stay focused on our primary business, but sometimes we strayed.  As you are out there pitching yourself, other opportunities present themselves, but not are all well-suited to you.  For example, we got involved in a discussion with a radio personality about providing our service to them, but eventually the conversion twisted into us providing a website and e-mail service. We were neither an e-mail or website host and even though we entertained the idea, we ultimately turned down that business. 

Now for an example that exactly contradicts what I just said. At one point, we were approached by a webcast technology company about doing some competitive analysis and writing a report for them on a competing company.  Even though this was hardly our core business, it was income, it was a one-time thing, it wouldn’t take much time, and did I say it was income?  The point was, we knew going into it that this wasn’t something we wanted to do more of, we knew ourselves better, but it was a quick paycheck, so we took it.

 

What are the key characteristics of companies that have been able to penetrate a niche, even niches dominated by another company?

 I think clarity of vision and a single-mindedness of purpose are two really important characteristics and they go hand-in-hand. Having hit on a thousand business ideas, I know that when you think of something, and you think it’s good, it hits you it’s like an adrenaline rush. The business is almost a vision before you. But as you start to think it through, it’s the rare opportunity that can stand up to the scrutiny you’ll put it through if you write even a simple business plan. 

If you get through that and you still have a very clear idea of the business, the model, the market, and you pursue it relentlessly, I don’t think it matters how many competitors are in that market.  That clarity of vision is reflected in every aspect of your business from the marketing messages you send to the way the receptionist answers the phone and it will be a palpable difference that prospective clients can sense.

 

When you think of companies that dominate a niche, who do you think of and what do you see them doing to keep that dominating spot?

 Harley Davidson is a great example of a company that figured out who it was and who its customers are.  They continue to dominate motorcycle cruiser sales because they have moved from being a motorcycle maker to a lifestyle manufacturer. Want to throw away your business suit, hit the open road, and ride to the horizon? Want to live dangerously (and be home for dinner)? Harley Davidson is the official sponsor of the Wild Side of Life (Harley, feel free to drop me a line if you want to use that.) A few other manufacturers have chipped away at their niche, but I don’t see anyone kicking them off the top of the hill any time soon.

 

What are the biggest threats to losing that dominating position?

Well that’s a really good question.  In Harley’s case it’s the risk of becoming complacent and potential changes in motorcycling attitudes.  Since a group of far-sighted executives revived the company in the late 80’s and early 90’s they’ve been on a roll, so to speak, for the past twenty years.  It will be interesting to see how Harley continues to promote and evolve their “Harley Lifestyle” which I think is the essence of the revival.  Will people continue to seek that lifestyle or will it eventually go out of fashion?  Will tightening regulations on motorcycle emissions and sound levels force them to change the nature of their product in a way that reduces its appeal?

Broadly speaking, they face some significant challenges as well. Harley’s average customer age is creeping up, they’ve reached market saturation in the U.S. for cruisers and they’ve been hit hard by the economic downturn. However, if there’s good news in that, it’s that their competitors have been affected nearly as much.

Finally, which companies come to mind who once held a niche dominating position and then lost them and why do you think they lost that position?

Most frequently I think of companies who thought they were in one business, but were really in another.  A commonly cited example from an earlier time is the guy who delivered ice to customers for their ice boxes.  As ice boxes were replaced by refrigerators, the ice man who stuck to the ice business eventually watched his business melt away.  On the other hand, ice providers who thought of themselves as being in the “food preservation” business, adapted to the new reality and became appliance salesmen.

A few decades ago, I think IBM clearly saw itself in the “computer business.” Even though they eventually abandoned some of their positions in hardware, they were capable enough to reinvent themselves to take a leading position in information services.  Companies like WANG, on the other hand, built dominating positions, but as technology evolved, they couldn’t evolve quickly enough to respond to changing market conditions.

I also think of Microsoft.  They haven’t lost their dominating position in operating systems, but as the power of the web browser has increased, and the sophistication of applications delivered via the browser has grown, they are certainly less able to wield the same influence they once held.

Good luck and as always we welcome and value your feedback, please post comments and invite your colleagues and friends to our blog.  Thanks!

We’ll be taking the next few weeks off and want to wish you and your families a Happy Holiday season and a safe and prosperous New Year.  We look forward to seeing you in 2010.