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 Gregg Freishtat, the founder of four different start-ups and board member and advisor to several venture capitalist and venture-backed companies.

Why Selected:  Gregg is a four-time entrepreneur and has successfully sold three software companies over the past 10 years – Telet Communications sold to PGI in 1996, VerticalOne sold to S1 in 1999 and Proficient Systems – sold to LPSN in 2006. Gregg serves on many private company and philanthropic boards including: SONE; MarketWorks; Relevant Knowledge; Outweb; Proficient Systems; VerticalOne; Telet Communications; JDRF; and the Jewish Federation.

I had the pleasure of working with Gregg back in the late 1990’s and have always been impressed with his ability to grasp the power of new technologies, the impact they can have on the business world, and his ability to build a business around that technology.  Just as important, Gregg makes those around him better at what they do and always makes working together fun and enjoyable.

In the following interview, Gregg takes us through how he was able to build off the success of each of his start-ups and what he learned along the way.  During the interview, Gregg points out what he believes other entrepreneurs can do to help position themselves and their companies for success.  The key points you’ll take away include:

1. Maintain the flexibility to adjust (morph) your business based on customer/prospect needs. 
2. When evangelizing your business remember, “Big vision for investors; Simple and safe for customers.
3. One of the biggest keys to success and potential obstacle are: People, people, people!
4. Establish your culture early and don’t do business with or for people you don’t like. 

You are now on your 4th start-up, how has each of them differed from one another?

Vertical Acuity is my fourth start up as a founder/CEO.  The business model and vision for each company was based upon the learning’s of the past.  In reality, all the companies are simply an evolution of a single business vision which inevitably gets morphed once we start working with customers and succumb to the realities of producing and growing revenues.  Our first company – Telet Communications – was focused on connecting and integrating voice, email, and fax using IP.

Next, Vertical One expanded the vision of collecting “stuff” from various and disparate back end systems – connected to each other for the first time using the Internet – by aggregating personal information (credit card, bank, brokerage, sky miles, etc).  At Vertical One we began to look at how analytics could be used to better understand the account data we were aggregating and started exploring new applications that could be built by analyzing large scale and real time data on the Internet.  After the sale of Vertical One, we started Proficient Systems to continue the notion of “Real Time Data Mining”.

After the sale of Proficient, we started Vertical Acuity to explore and expand upon this vision by analyzing data (this time content) from many related sites to determine what content was/is most likely to be consumed.  We are now working on re-inventing how content is discovered and delivered.  So…all the companies have been contributing to what we are doing today.  We gather content from many back end systems, analyze what content is in demand and by whom, and deliver it.

What drove you to start your first company and what made you believe you could evangelize the concept to end users, investors and partners? 

If I had thought about having to evangelize to end users, investors and partners, I never would have started my first company.  I just thought it was obvious that the internet was connecting systems that had never talked to each other and that with a little software you could make life easier by getting stuff in one place that used to require you to go to three or four places.  I had no idea what I was getting into – I was 24.  Practicing law seemed to always be looking into the past to figure out “who struck John” and then try to make it right.  Building software seemed like “let’s make something up and push some 0’s and 1’s around until it changes how stuff works.”  Software seemed like more fun – and it is.

When evangelizing the business, I have found many entrepreneurs have the same pitch for each audience.  Can you share your experience and the need to different pitches for each target audience (investors, partners, end-users)?

That’s a good question.   Early on, I would evangelize the vision to whoever would listen.  Over time, I have learned that different constituents require different messages.   Investors need to see big opportunities, radical growth, and revolutionary change.  These things terrify most established corporate customers.  Businesses are just large collections of people doing the same thing in close proximity.  All decisions are personal – folks don’t want to risk losing their job on a “radical, revolutionary” product.  They would rather go with IBM because they won’t lose their job for doing so.  Big vision for investors; Simple and safe for customers.  None of our companies sold directly to end users so I can’t comment on that but I am sure that’s tough as well.

What were the biggest obstacles you ran into at the different stages of your companies’ growth and how did you overcome them? 

People.   People.  People.  If you have the right folks in the right position, you can overcome most any obstacle so long as your business plan is sound.  Most of the big problems are the result of either having the wrong folks or having them in the wrong spot.  My biggest mistakes were not letting the wrong folks go soon enough.

You serve on several start-ups and small business’ boards, what do you see as the most common mistake leaders of those companies are making?

Back to People.  And this odd view of dilution.  Many small companies are scared to hire folks that have the experience required to grow because they are intimidated or fearful that they will lose “control” or their role.  Roles change and management and the board’s biggest challenge in managing the change and growth required to go from a small company to a bigger one (the goal for venture backed companies) is to have proven, experienced leadership in the key roles.    The odd view of dilution comes from folks not understanding how the VC world really works and what to focus on.  If you raise $3M – the main issue is not how dilutive it is but rather how much value you can create with the cash.  Until you know both – you don’t know if it’s dilutive or accretive.

Describe how you suggest leaders of start-ups and small businesses interact and utilize their Board of Directors?  How often should executive management be interacting with board members?

Board Members serve different roles at different stages of a company’s development.  Early on it is helpful to get independent credible board members to both help guide the company and to provide credibility for potential investors.  Having an industry leading board member show that he/she is willing to put their name behind an entrepreneurs venture and, in turn, this helps attract outside capital and provides a balance to the board once investors take a seat. 

As a company develops it is key to have board members with the experience and expertise to govern.   Having great leadership and advice on audit and compensation committees helps ensure good decision making and keeps a balance between management and investors perspectives.  Early on meetings should be every month or two and as the company matures once a quarter.  The frequency of meetings should be driven by how productive they are and how much is required by the outside investors.

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?

Find the right people and partners.  If you don’t love working at your own start up – it’s not for you.  There is a lot of risk but even more opportunity – for enjoyment, growth, and building something of great value.  Establish your culture early and don’t do business with or for people you don’t like.  This includes partners, employees, investors, and even customers.  Everyone involved should pass the three C’s test:  Character, Competency, and Charisma.   You have pass each C to get to the next and must pass the first two C’s or you are out.

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.

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 Barry James Folsom and we’ll come to understand how he has “focused” his companies in order to grow more quickly:

Interviewee:  Barry James Folsom, serial entrepreneur. 

Why Selected:  Barry James has over 37 years of executive management and strategic marketing experience with a successful track record of growing divisions and companies rapidly into category leaders. He has played pivotal roles in the creation of 4 major market categories: PCs, Workstations, Internet Data Centers and Web Conferencing.

As a respected company leader, Barry James was Frost & Sullivan’s 2002 CEO of the Year.  He is also a frequent speaker, e.g. Ad:Tech, Media Summit, Digital Hollywood, & Digital Connections.

Barry James is CEO of Twirl TV. Twirl TV is a Social TV gateway experience to online TV for the 30M 16-to-24 year old YouTube on-demand Generation whose PC is their TV.  Twirl TV viewers have choice – from over 400 shows/6000 episodes –  as well as camaraderie with their Twirl TV friends, including chatting and watching together on their respective PCs.

I had the pleasure of partnering and working with Barry James when he was the CEO of PlaceWare (now known as Microsoft Live Meeting) which he sold to Microsoft for $200M. 

In the following interview, Barry James provides you with some insights on how he was able to come into PlaceWare and implement some changes and processes that enabled them to grow faster.  In addition, he gives us a look inside his new company, Twirl TV, and how it is changing the way young adults access, watch and interact with their favorite TV shows.  During the interview, Barry James brought up several points and ideas about what it takes to solidly grow your company.  The key points you’ll take away include:

1.  Look for the pain points of your target market and how your solution can solve them.

2.  If your target market is already in the customer base of an established business, leverage that business to reach and gain customer acceptance.

3.  Know what your adoption cycle is and look for ways to decrease the time it takes to get a “sold” client using your service/product.  This will have an impact on everything from customer satisfaction to cash flow!

4.  Focus, focus, focus…by being narrowly focused you can get to know your prospect’s and client’s needs better and deliver a product/service they highly value.

You are now on your 2^nd start-up, how has the start-up Twirl TV differed from when took over at Placeware?

Twirl TV and PlaceWare are different in three ways. Twirl TV is 1) a raw startup focused on consumers, specifically 16-to-24 year old viewers; 2) leverages Facebook to gain viewers; and 3) Social TV collaboration aka chatting about the latest TV episode. Whereas PlaceWare was 1) had 30+ employees and revenues as a B2B business, 2) had a direct sales force and 3) business collaboration aka how are we going to close the sale. 

What drove you to start Twirl TV and what made you believe you could evangelize the concept to end users, investors and partners? 

We saw two major trends to jump in front of and we saw major pain points for our initial target segment (16-to-24 year olds).  The two major trends are 1) episodic primetime TV is readily available online/on-demand and the content library is growing daily; and 2) advertisers need smarter ways to gain access to, and engage with, the highly coveted 16-to-24 year old demo.

For our initial target viewers of 16-to-24 year olds, they have major pain points we at our age (older adults) don’t relate to, nor grasp.  And those pain points are that their PC is their only TV screen and they have a hard time discovering relevant entertaining content to chill out to with their TV friends.

Internet/Mobile TV (ITV) is a new concept for much of mainstream America and thus getting consumers to notice Twirl TV vs. the competition has to be difficult, what is Twirl TV doing to set itself apart from the competition?

As you indicate, first there are several ‘spaces’ and thus it’s all very confusing.  There is trying to get online video content to the TV (Internet TV), there are those trying to get video to the mobile phone, and finally there are a few of us working on delivering the TV experience, and in our case a new Social TV experience, to the PC/MAC.

So how do we set ourselves apart from the competition?  First, by being very focused on our initial target market of 16-to-24 year olds, we can leverage Facebook in many ways to deliver a Social TV experience with the few friends that are into TV with them.  So out of say 500 Facebook friends, we only expect our viewer to have 3 to 7 Twirl TV friends that they share their passion for say ‘Family Guy’ with.

Of course we will be compared to Hulu as our competitor, yet we actually focus on who are meta-competitor is and that is user generated content.  Why?   Because that’s where our target spends most of their video viewing time!  At a higher level, the entire TV industry has to come together collectively to help deliver compelling entertainment to this demo so they start watching more TV, not less, than the prior generation did.

In the end what really sets up apart is that Twirl TV has nailed what this demographic loves to do – socialize around their favorite TV episodes with their Twirl TV friends and that we are the only ones ‘who get them’.

When evangelizing the business, I have found many entrepreneurs have the same pitch for each audience.  Can you share your experience and the need to different pitches for each target audience (investors, partners, end-users)?

At the end of the day, the pitch has to answer for each audience “what’s in it for me”????  For business end-users, does it improve productivity, increase revenues or decrease costs?  For partners, does working with you gain us any competitive edge, increase our servable markets or open up a new market we can’t reach? For investors, if the opportunity really exists, can this team execute on winning major market share both effectively and efficiently so I get a 10X return on my money?  (And it’s worth noting today, many financial investors see today’s stock market having the potential to deliver a 5X return at much less risk than venture investing).

What were the biggest obstacles you ran into at the different stages of Placeware’s growth and how did you overcome them?  Are you seeing any of these same issues at Twirl TV?

There were three stepping stones (or obstacles we climbed) to get to success.  First was converting the emphasis from technology and features to nailing the experience and having a rock solid service.  That was a major change in values! Second was really understanding our sales cycle AND our adoption cycle (two vastly different loops).  Make sure a senior person is assigned full time to owning the adoption cycle of your users/consumers. Our analytics on our adoption cycle lead to major process/structural changes that improved adoption immensely as well as increased our sales!  Third, as you grow, the sales team collectively will ‘justify’ going off in several different directions.  It’s important to remember your size – we were $35M on the way to $50M in revenues, and we kept our focus and did not start a second product line.

At one point Placeware became known as a leader in the web conferencing/webinar niche. Once in that position, what did you set-up so that you stayed in that leadership position?  What were you doing different than others?

PlaceWare definitely owned the large scale webinar segment of the market.  Our competitor WebEx did a great job in the Small/Medium Enterprise market around small meeting collaboration.  We extended our lead in the F1000 niche with a strong secure service that the financial services industry came to deeply trust in time.

 Ken:  Having worked with PlaceWare from almost its inception, I want to add a little to what Barry James has pointed out:  When PlaceWare first came out of Xerox’s Parc Research Lab, it was an extremely feature rich web conferencing application, over time PlaceWare narrowed the features to the most widely used and earned their customer loyalty and new customers by providing a great experience coupled with exceptional new customer training and support.  This last part was a key factor during this time as web conferencing and webinars were still a new concept for most companies and individuals and the training was a key to getting client/partner buy in.

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?

Simple to say, very hard to do in practice:  The more narrow you focus your initial market, really really narrow, the larger your market actually is!! Yep, re-read that.  Counter-intuitive you bet.  Because when you are narrowly focused, you drill down 3 to 5 layers of detail in knowing your customer to really deliver specific value to that target vs. being generic (and feature rich) but not delivering the core – if you take this away, I will do you bodily harm – VALUE to that target.

Thanks for the insights Barry James!

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.  In addition, we also interview those that provide services entrepreneurs and small businesses need in order to help them build their companies.  This week we interview Roy Cammarano:

Interviewee:  Roy Cammarano, former President of three INC. 500 companies, business consultant, public speaker and author of Creating Do-It-Yourself Customers and the award-winning book, Entrepreneurial Transitions.

Why Selected:  Having had the pleasure of working with Roy at two different companies, I can attest to the fact that Roy’s perspectives and insights into helping entrepreneurs, entrepreneurial organizations and businesses of all sizes grow themselves and their companies is invaluable.  I would encourage every entrepreneur to read Entrepreneurial Transitions, it is one of the very few books that can help you move from being an entrepreneur to a leader.

In the following interview, Roy discusses how starting and running a business is analogous to starting a family, helping it grow and some of the mistakes to avoid along the way.  As you read the full interview, here are some points that stood out to me:

1.  As a company grows, the founder and/or leader of the company must transition from being the “entrepreneurial genius” to visionary leader.  One key to this relies on the leader of the company building a strong executive team and then enabling them to run their departments.

2.  Entrepreneurs need to realize that at some point in order for their company to reach its full potential, they may need to bring in someone to run the business.

3.  When times get tough, focus everyone on a common goal and use that to rally the troops by celebrating small wins and build positive momentum. 

4.  When hiring outside consultants, only hire those that provides the skills the company needs and does not already possess.

5.  Companies that continually dominate their niche are always asking themselves, “how would I compete with me” and then building the barriers to keep them competition at bay.

In your book Entrepreneurial Transitions you compare the life of a company with that of a human (Birth, infancy, toddler, adolescent, etc.) can you elaborate on that and why it is important for a business leader/entrepreneur to the stages?

I think it is important to create an analogy that most people are familiar with and this one allows significant latitude to address the “growing pains” than an organization goes through. For instance at some point a discussion will take place as to whether the founder has the necessary skills to grow the company: The skills of impregnating are different than the skills of parenting and those skills are different than teaching skills.  A child needs all and so does a company.

Additionally, as a company grows new skills and processes become necessary and often perfection is expected at these new skills and process and little tolerance exists for on the job learning. I liken this to a crawling baby learning to walk. The parents and virtually anyone seeing this struggling acquisition of new skills and process offers encouragement and by providing a helping hand they create a safe environment whereby they can pick the child up and provide comfort when the inevitable fall happens.  Rarely do companies provide this type of learning to take place, so I like to ask them what would have happened to the baby had they been treated to a negative, critical impatient process?

There are very few founders who have made that transition to lead and grow the company as it gets larger, how do you suggest other executives & board members start this conversation with the founder and many times the majority share holder?

In my book “Entrepreneurial Transitions” I describe 4 phases that an entrepreneur goes through, Entrepreneurial Genius, Benevolent Dictator, Disassociated Director and Visionary leader. Unfortunately very few ever become Visionary Leaders.  Most actually vacillate between Benevolent Dictator and Disassociated Director and this is very frustrating and painful for the entrepreneur and the organization.  The ability to acquire the skills to be an effective CEO is as difficult as an average singer becoming a great recording artist.  Some of it is God given talent and much of it is hard work and dedication at “constant improvement” and growth. Unfortunately many entrepreneurs as their companies become more and more successful fail to acquire the next level of skill sets to continue to lead the organization instead they rely on the skills that got them to where they are. Professional athletes still practice and get coaching in order to improve. Often entrepreneurs do not. If you have the opportunity to influence an entrepreneur make sure you: 1) respect what they have accomplished; 2) provide them with an illustration so they can see what has worked for others; 3) ask them to play to their strength; and 4) provide a safe environment to help them acquire the skills they need.

You’ve worked with and run several small businesses and some large ones, what key traits have you seen in some that make them more successful than others? 

Like watching small children play soccer as they grow and mature they learn to transition from “bunch ball” (everyone around the ball or in the corporate world – decisions) to positions and then ultimately strategy. When the positions are understood and the strategy in place, tactical skills (specific to positions) can improve. Going to a Saturday morning soccer field can teach you about the proper growth and maturity of the organization as it transitions through the age groups to eventually look like the pros.  Often entrepreneurs think they are David Beckham and can always carry the day.

When evangelizing the business, I have found many entrepreneurs have the same pitch for each audience.  Can you share your experience and the need to different pitches for each target audience (investors, partners, end-users)?

Often listening to entrepreneurs is like listening to a tape recorder repeating what they say and know regardless of the audience.  Be careful of the single pitch as it means that they may have only one way to get what they want.  I believe that you can always have your way provided you have more than one way.  Unfortunately entrepreneurs often have a story pitch because it worked at one time and people reacted favorably so they continue to do what had worked before. Have them read “Who Moved My Cheese.”  It is especially important to understand that people listening to what you are saying can only understand what you are saying if they can relate to what you are saying.  Audiences are made up of many different types of people having only one way to tell your story ensures that only a limited number of people will understand and relate.

What were the biggest obstacles you’ve faced at the different stages of the companies you’ve run and how did you overcome them? 

Working with an entrepreneur who has gone from hero to villain within their organization is always tough.  The parenting skills they had do not transition to the educator and then coach roll they need to play so they are angry.  Often the organization has rebelled and battle lines are drawn.   The employees suffer, the entrepreneur suffers and the customers get frustrated.  I again use analogies to help everyone understand that this is normal (like adolescence) and we begin to look for common ground we can work towards as opposed to focusing on what we disagree on. Take on small problems solve them celebrate and continue to gain positive momentum.  Never take on the big problem that no one thinks can be fixed and never allow people to criticize an individual’s focus on the necessary results.

If you avoid ever taking on the big problems that will likely haunt the company, are you suggesting they break the big problems into smaller components and tackle each component one at a time, or something else?

I think I was specific about the BIG problem that no one thinks can be fixed. Take on the big problems that you think you can fix after you have success with the problems that are easy to fix.  Problems in organizations will always come up and having a team of people that can work together is critical to solving them.  In many instances entrepreneurs believe that they are the only ones that can solve the problems and they have done it so many times that they have trained their employees to not even try to fix something because they know that the entrepreneur will only want it solved their way.  Big problems often happen because people do not handle the little ones.

What do you see as the most common mistake leaders of start-ups and small businesses are making?

They think they have to be in control of every detail and that the only way to solve a problem is their way. It destroys people’s willingness to contribute and the entrepreneur never teaches anyone they just tell them what to do.

Describe how you suggest leaders of start-ups and small businesses interact and utilize outside consultants? 

Carefully! Only hire for specific skills that the company needs and does not possess. Never take operating advice from a lawyer and realize that most accountants are historians and risk averse. Check the references and be careful if you meet them on a plane. It seems most entrepreneurs (most people) seem to open up to strangers on airplanes, I think it is breathing the pressurized air that makes everyone susceptible to listening to a complete stranger and take their advise while ignoring what your top employees are telling you. Also never attend a one day seminar and think you have the necessary perspective and skill to implement what you learned.

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?

Two very different questions and each depend on the maturity and previous experience of person and the complexity of the offering.  Know it is going to cost you way more than you think it is and take more time.  A rule of thumb is two time the money and three times as long or three times the money and twice as long.

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

Niche penetration means that the other company did not protect itself by asking the key question how they would compete with themselves.  And then doing it or creating barriers for others. Often we like to glamorize the one company or product that makes it.  We ignore the ones that failed miserably and cost people their life savings. Learn before you take action but when you take action go for the gold.

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?

Most often we think of big companies that are dominant and we loose sight of the growing pains and the mistakes that were made as they grew.  Jim Collins in his book “From Good to Great” did a good job of sharing the learning’s that these companies went through.  I think what they do is adhere to a core set of beliefs and create a culture of always getting better.  I like asking Peter Drucker’s questions; “What business are we in? What business will we be in? What business should we be in?”  Intel is the most notable example of asking and answering these questions.

What are the biggest threats to losing that dominating position?

Fail to ask Drucker’s questions and think that the market will never change.

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?

SONY (the walkman vs. the IPod)

SONY created the take your personal music where ever you want to go.  IPod now dominates that market. SONY had too many battles on too many fronts (beta max vs. VHS) etc. but the market was made by SONY and they did not stay on the edge and adapt to the new technologies till it was too late.

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 Ara Bagdasarian:

Interviewee:  Ara Bagdasarian, this is Ara’s second start-up. 

Why Selected:  Omnilert (www.omnilert.com) was one of the first companies in the unified mass notification systems business (urgent text messages) for colleges and universities.  Ara and his partner started Omnilert in 2003 and have since become a leader in the space.  I had the pleasure of working with Ara in the past and he is one of the most innovative and customer-focus individuals I know.  In addition, he is very active in his community of Leesburg, Virginia serving on many non-profit boards and as the Chairman of the Town of Leesburg’s Economic Development Commission.

In the following interview, Ara takes us through the concept for Omnilert, how it changed based on feedback, and then managed the hyper-growth caused by the shootings at Virginia Tech in 2007.  As you read the full interview, here are some points that stood out to me:

1.  If your initial concept does not resonate with your target audience look for others where it might

2.  Innovate in all areas of your company, not just with technology

3.  Publicize every new client you get and get existing clients to tell your company story  

What drove you to start Omnilert and what opportunity did you see that was not being served at that time? 

As with any innovation, there must be a pain that needs to be remedied.  The initial pain arose when my wife and I were looking for homes during the incline of the insane housing market in Northern Virginia.  By the time we received a listing; the house was either under contract or sold.   It was getting beyond frustrating!   The initial concept was to allow a Realtor to broadcast a new listing to their group via text message even before house was listed on the market.   We ran the idea by a few Realtors, and the response was lukewarm.   There clearly was a market opportunity in instant dissemination for time-sensitive information, however the real estate market would have to wait. 

Several months later, I was reading an article about a female college student who was brutally raped and murdered in her dormitory room in 1987.    Her family investigated the situation and formed a non-profit to support campus safety enforcement.   They determined that the information about the rapist on campus was not distributed quickly enough to the campus community.  This information could have saved her life.   At that moment, it became crystal clear that there could be no better application for mass text messaging than for campus emergency alerts.   Some quick market research revealed that over 90% of college students carried mobile phones, and there was no service that provided campus alerts.   I called my partner and the wheels went in motion to start Omnilert with the vision to create a new standard in campus communications.

You actually launched Omnilert prior to the Virginia Tech shootings how difficult was it evangelizing your concept and how did that change post that event?

Prior to the VT shootings, it was a challenge evangelizing our concept to schools.  It was such a new concept at the time.   Most people over the age of 25 had little familiarity with text messaging.    We started to gain traction in the 6 months prior to the VT shootings as some key customers signed on for the service.  We noticed a direct relationship between posting a press release highlighting a new customer and the amount of incoming leads and started closing a new customer almost every week.

After the VT shootings, the demand tsunami began as the market was exposed e2Campus (our service brand) as the solution to the campus emergency communications pain.   As Malcolm Gladwell notes, that experience was the “tipping point” – a market suddenly sees value in the service that we are offering.    We went from one customer per week to over 10 per day.  CNN, USA Today, ABC World News, MSNBC, and most importantly our existing customers became our evangelists at that point.

What were the biggest obstacles you ran into at the different stages of Omnilert’s growth and how did you overcome them? 

In the early stage, the biggest obstacle was finding the visionaries in the market.  We were fortunate to find one in our first prospect, however it took time to find others.    Once we went into hyper-growth mode our biggest challenge was dealing with the rapid spike in demand and customer acquisition.  We overcame the challenge by implementing highly-scalable processes and systems that allowed us to be responsive to all inquiries and be timely in delivering new service accounts.   By using CRM tools such as Salesforce.com, a hosted telephony system, desktop-sharing software for demos, and creating an easy account creation tool in our application, we were able to successfully operate in an intense environment.

Also, suddenly after the VT shootings, hundreds of new competitors instantly appeared in the marketplace.  Most were offering a lower-cost and technologically unsafe service and they started aggressively selling into our market.  What this did was create the perception that Emergency Notification Systems were unreliable and did not work “as advertised”.   Administrators from colleges would speak at conferences and share their unsuccessful stories about emergency messages taking hours to get delivered, and only half of the registered population even received the message.     With all of the heavy evangelizing by the media and parents demand, there began a “this text alert stuff is not all it is cracked up to be” movement.  Our system really DID work- we invested heavily into our infrastructure to ensure this, however many third-tier providers tainted the overall market perception.

We overcame this obstacle by launching a comprehensive education campaign.  The campaign was designed to allow our customers to share their success stories, best practices, and educate the market that not all Emergency Notification Systems were created equal.  We sponsored a webinar series “Best Practices in Emergency Notification” and we launched e2Campus.org which was a peer-forum for our customers to share best practices.   Over the last 2 years, most of the new competitors dropped out of the marketplace as their customers upgraded to the more reputable providers.  That also helped with this negative perception.

Omnilert was one of the first unified mass notification systems and services companies, my question for you is did you find more collaboration between you and the other pioneers in your industry or was it more of a competitive nature between your companies?

Immediately after the VT shootings, we had several companies contact us to partner since they were not providing mass text messages (just voice messages).   Since that brief exchange, it has been more of a competitive relationship.

Omnilert is known as one of the innovators in your niche. What are you doing so that Omnilert stays in that leadership position?  What were you doing different than others in the niche?

We are very cognizant and almost obsessive about keeping and widening our leadership position.   To do this we constantly innovate – not just from a technology perspective, but also from a customer experience, and operational perspective.    We choose not to enter the “feature war” game with our competitors- instead we find better ways to accomplish our customers’ objectives.   It is about offering the “right features” not just “more features”.   I know it is tempting to want to check every feature box on an RFP response, however too many features can sacrifice usability and the effectiveness of the product.    For example, the iPod had considerably fewer features than most mp3 players on the market.   Any standard mp3 player had tons of buttons and features included FM radio, voice recorder, preset locks, and other functions that should accommodate any consumer requirements.   The iPod came out and it had one button and a circular dial!   It made it incredibly easy to manage the user’s music library, purchase new music, and the user interface was far superior to any of its predecessors. The iPod offered the “right features” not just jam-pack the unit with “more features”.

If others are doing something in our niche, we will not do it.   If there truly is a pain for a feature, then we will find a better way to realize that feature’s outcome.   We will not simply just add the feature as already defined.  When a feature request arises, we always ask “What is your objective?” and then come up with the best solution to that objective.

We invested heavily in the most important features in our niche- speed and reliability.  While competitors may add more bells and whistles to their systems, we maintain a reputation for being the most reliable and trusted in the marketplace because we constantly innovate on making our network the best.   You can have all of the bells and whistles in an ENS service, however if it does not work when there is an emergency- that does the customer no good.  Don’t get me wrong- our platform is very feature-rich; we just have different features that enable our customers to be successful when there is an emergency.

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?

Today, we have an unprecedented opportunity for entrepreneurship.   With the advent of the Internet and all of the technologies that are associated, an idea can become a business quickly and efficiently.  Here are a few points of advice:

                     A. Visualize the Outcome.   What does the world look like after your product is well-adopted and in use?  Now, with that in mind, how are you going to get there?  That outcome needs to serve as your decision making beacon on attaining that goal.  When new “opportunities” arise (partnerships, markets, etc) you can decide whether or not that “opportunity” is a true opportunity, or if it is a distraction.  You can do this ONLY if you know what direction you are headed in.  If you have your outcome defined, every action your business takes must be a step in the direction of that outcome.   For Omnilert, our outcome was to become the new standard in campus safety communications.  Every college would be using e2Campus to notify students, faculty, and staff of a time-sensitive emergency situation.   Our decisions leading up to that point were made towards realizing that outcome.  Today, most states, and even the federal government are mandating Emergency Notification Systems for college campuses.  We now have a new Outcome as our beacon:  to evolve all campuses into utilizing multiple communication end-points (their single message reaches text messages, voice mail, public address systems, desktop alerts, email, digital signage, and other technologies) to keep campuses even safer.

                    B. Tell your story.  Use your website, press releases and the media to communicate your message.   People want to be a part of a movement, part of a solution.  To build momentum for a new product or company, it is important to build a story around the product.  As early customers adopt the product, let the marketplace know – make a big deal about it.  Make it newsworthy.   When Penn State was featured in USA Today for their text alerting usage, we quickly signed up several new customers who wanted to be a part of this new movement.   You can tell your story with little investment as well.   By utilizing press releases, web sites, email newsletters, webinars, and speaking engagements your story can be spread on the smallest budget.    Rather than hiring a Marketing Director, you are better off hiring a Chief Storyteller.

                    C.  Be “tech frugal”- utilize technology to give your business the same customer experience as a Fortune 50 company.  You can outsource anything that is not a part of your core business.  Also, it is best to start with a prototype of your product/service before investing in fully developing the product.  Many entrepreneurs I speak with believe that one of the first steps in launching the business is raising millions of dollars to build their product.   They write a lengthy business plan with wishful projections and market analysis.   I suggest the opposite: if you can design a prototype or even a “mock up”- you can begin selling the product immediately and then re-invest the sales revenue into the development of that product.   There are so many resources today that allow a new company to prototype a product with little or no funds (do-it-yourself).

                    D. Trail Blaze – never create a competing product, instead innovate in a niche where a remedy to a pain has yet been created.  I have often heard “how can you compete with the big players in the market?” from young entrepreneurs.  The answer is simply “do not compete with the big players in the market!”    In 2004 there were a few ENS providers in the market, and they were all focused on federal government, military, or corporate markets.   There were no providers in the higher education space, so it made even more sense to forge forward in that niche.

                    E. Make lemonade from lemons – Look at problems as opportunities.  Problems are opportunities to innovate.    This is not only true for your product, but it should also apply to the way that your business thinks and operates.   When presented with a problem in sales, operations, marketing, or any other process, be sure to turn that problem into an opportunity to improve and innovate.  If you lose a customer, hit a roadblock with sales, or lose power at a trade show, rather than write it off as a problem, you can find ways to improve and become even stronger.   If there is a problem in the marketplace that has yet to be met, turn that into an opportunity!  If you and your company think from this context, you will constantly improve, constantly innovate, and constantly lead.

Ara, thanks for the advice and for sharing the Omnilert story.  Starting and running a mission critical service presents great challenges and I am thrilled to see you and your company doing well.  Let me provide a quick summary to Ara’s interview:

1.   Solve a particular problem and be sure your solution resonates with your target audience.

2.  Create a vision for what your product/service will look like in the market place and NEVER lose focus of that and the solution it provides. 

3.  Implement highly scalable processes and systems as you never know when a catalyst for hyper-growth will come along and having processes and scalability will enable to you surge while your competition ramps up.

4.  Be overly responsive to inquiries and delivering new service accounts. 

5.  Don’t copy what your competitors are doing, create better solutions. 

6.  Use existing clients as company evangelists and use PR and press releases to get your story told.