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.  This week we interview Bob Cowan:

Interviewee:  Bob Cowan, started ATS as a 1st-time entrepreneur. 

Why Selected:  With no previous business experience, Bob started ATS from scratch by borrowing $35,000 from friends, family and a second mortgage on his house.  Defying the odds, he grew the business and sold it, 13 years later, for approximately $60M.  I had the pleasure of working with Bob and ATS and I can tell you it was one of the most rewarding and formative times of my career. 

In the following interview, Bob provides you with some insights on how he and ATS were able to enter a market dominated by AT&T, carve out their niche and grow the company before selling it to Premiere Global Services (NYSE: PGI) in 1998.  During the interview, Bob brought up many relevant points about what it took to start, persevere and grow ATS and three key aspects kept jumping out to me:

1.  Focus on solving your prospect’s and client’s pain by constantly talking to them and getting to know their business

2.  Continually innovate

3.  Get to know your employees as they may have additional talents that can help your clients and your business. 

What drove you to start ATS and how did you plan penetrate a niche dominated by AT&T who had more than 90% market share at that time?

Frankly, the health care chain that hired me to develop a medical telecommunications network decided not to fund the effort after several years of effort.  Not having a job and a three-month old daughter was a great motivator!

When asked by a friend about my unique project experience and what difficulties I had implementing projects, I realized that the biggest difficulty I faced in implementing my teleconferencing programs was a lack of service that would reliably handle the interconnection process.  While AT&T and MCI were the largest providers of “conference calls,” even the smaller niche firms that specialized in conference calls did not seem to understand what was necessary from a user’s perspective.

My initial “gut” objective was: “to start a conference call company that provided the services I wished were available when I was a user.” 

First, I went back over all the business and educational conference calls I had been involved with as a moderator and participant and outlined all the problems I had encountered.  Second, I reviewed the equipment available to host teleconferences to determine which problems could be addressed by changes to the service delivery and which problems could be address through modifications to the technology.  Third, I started to estimate potential user communities in the health care industry (since it was a sector I knew quite well) and type/frequency of use.  Fourth, I called many of my health care friends to get more concrete information about who they used, what they were being charged and the service problems they were having.  Fifth, I started to estimate how much it would take to start/maintain such a service and the potential revenue stream that was offered between 10-20% less than the current going rate.  Sixth, I pulled together a conference call with some of the same people in health care to discuss my ideas for a service that would not only address their problems, but offer some additional services that were not being offered by any service provider.  Seventh, I created an Advisory Board of friends that had expertise in finance, planning and education.  Eighth, with the help of the Advisory Board I started to go after funding sources. 

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

In some respects, growing a company is like raising children: there are always problems – the type of problem keeps changing.

Funding.  Obviously, the first issue you face is raising the initial funds to meet the estimates in your business plan.  In our case, the business plan called for about $250,000 in capital to purchase equipment and cover expenses for the first year.  Unable to obtain funds from traditional banking sources, I turned to family and friends.  In the end, we had seven people put up $5,000 each and started the company with just $35,000.  We were seriously undercapitalized and we were able to continue because of two factors.  First, I was able to get initial business from the healthcareclientsthathad helped me design our company’s offerings and, second, their word-of-mouth recommendations brought in significant additional business.

Sales.  While I had managed sales people in the broadcasting field, I did not have any direct sales experience with a product that was sold on a national basis.  We were able to achieve some significant increases in sales by getting stories about out company placed in a number of magazines read by those in our target industries.  Some of our most productive results came from feature articles that appeared in in-flight magazines.  Once we were able to cover our basic expenses, I concentrated on building a sales force.  I think we went through five or six sales managers before we were able to attract someone that had experience in the teleconferencing industry.

Maximizing human resources.  When we needed help, we would hire the best person to fill the position and move on to the next problem.  I didn’t realize until later I was overlooking one of the greatest assets in the company – the unique capabilities of the people already on the payroll.  For whatever reason, when we hire someone to fill, say, a clerical position we tend to forget about any additional skill sets they may have.  Case in point, in a casual conversation with a member of the clerical staff I found out that she was a physician in her last year of residency when she found out she had cancer.  She dropped out of medical school, was divorced by her husband and took the clerical position because she desperately needed a job.  Since she had a strong medical background that could be leveraged, I moved her into a pharmaceutical sales support position where she immediately tripled her salary.  From that point forward, I viewed the “human resources” department in a totally new light.  Instead of a department that managed the paper work associated with hiring/firing, benefits, etc., it became a department that developed an inventory of backgrounds and skills that could be used to gain competitive advantage.  For example, if we were thinking about opening a new sales office in a city we pulled in employees that had lived in that city to give us any useful insights.  Since a number of our employees were ex-military that were stationed abroad, we were able to take advantage of their language skills when dealing with multi-national clients.  For those that are starting a new venture and have limited financial resources, it is certainly recommended that you make maximum use of every dollar spent – and fully utilizing the people you have already hired is a no-brainer (although it took me a while to figure it out).

Synchronizing service capabilities and sales promises.  We were able to attract many new clients by providing customized services that other firms were not willing to provide.  As we grew in sales staff, we encountered an increasing number of problems where the services promised by a creative sales force (many of whom were now living in major metropolitan areas and unfamiliar with the specifics of service delivery) created problems for those that were tasked with providing the service.  The resources necessary to meet the level of service promised by the sales force were not reflected in the charges to the client.  The sales staff was doing their job – our revenue growth rate was in excess of 40% – but there were also an increasing number of quality related issues that were giving our competition an opportunity to take business from us.  We went back and reviewed every type of service we offered, reset the pricing elements, reduced some of the customization elements that were getting us into trouble and dramatically increased the staffing in our service area.

Helping Employees become Employers.  We were growing so quickly that in a three-month period of time a new hire could become a supervisor.  While we had training programs in place, I wasn’t sure they were helping our staff in their decision making process.  I started ATS University as my “sleeping pill” – since I would like awake at night wondering whether the new staff members “got it.”  Essentially, every new staff member would go through a 3-day training period on the industry, on the history of the company, and the financial contribution of the Top 20 clients.  Finally, I would put up the detailed income/expense sheets and we would go through every line item so that they knew not only where the money was coming from, but where it was going.  Finally, there had been some criticism from those on the service side that we were not hiring enough to cover the growth – so I started to put up some historical revenue numbers and challenged the group to estimate future growth.  They soon became aware of the complexity of the forecasting process AND the key elements necessary to provide a more accurate estimate.  Now, when they heard client comments that might have a potential impact on future revenue they were very quick to pass those observations along.  In addition, we started a process of dividing service providers into small entrepreneurial groups that had some control over their own expenses and were able to retain some of the excess profits they generated.  After a few false starts, this became an outstanding way of creating employees that could make ad hoc decisions more in line with company goals and significantly reduced some of the quality and expense issues that had surfaced.

In 1994, when Telespan Magazine named you “Teleconferencing Professional of the Year,” one of the things they said about you and the company was “ATS doesn’t steal market share, they create new markets.”  That is easier said than done.  What steps did ATS take that made this possible?

For me, the key was listening to clients or potential clients talk about the problems they faced – the kinds of issues that kept them from being more successful or reducing their stress.  If they were a potential client, I was interested in the problems they were having or the features they wished were available.  If it was an existing client, I was increasingly interested in the issues their division or company was facing – including objectives or targets for the coming year.  This gave me a chance to think about how our technology or service could help them meet their goals. 

Over time, I started to understand that I was searching for their “pain” – on a professional and personal level.  When someone would express their concern about a corporate goal to open a significant number of new offices, I would try to understand the basis for their concern and see if we had or could develop a program to help them.  When someone would complain that they couldn’t get home in time to see their child play baseball, I found myself trying to find ways to reduce their workload. 

While I started these discussions with users because I enjoyed the conversations, I found that when we came back with some potential solutions several things happened: first, since we were offering relief from the pain there was no bickering over price and we were able to maintain outstanding profit margins; second, the fact that we listened and brought back potential solutions made us more immune to competitive attack from our competitors; third, we would get amazing word-of-mouth recommendations within the company leading to additional business; fourth, the decision to use our services was kept out of the telecommunications department (who often went with a low quality, low priced service).

The other approach that helped us create new markets was our approach to vertical and horizontal solution sets.  In the beginning, the bulk of our business was three vertical markets: the health care industry, Wall Street financial firms and the airline industry.  Since we wanted to find ways that we could help our clients, we ended up learning quite a bit about each industry and developed a number of industry-specific offerings that helped us attract others from the same industry.  We developed marketing materials that targeted each industry that highlighted our unique understanding of their business needs – a strategy that was unusual at the time.  As we worked more closely with firms to refine the services, our clients started to view our work effort as part of their competitive advantage and it became increasingly difficult to use case studies as a method of selling a service to a potential competitor.

At approximately the same time, we started to promote our services at a series of national and international conventions of educators, public and investor relations professionals, human resource providers, etc.  It was at that point we realized that the lessons we had learned in creating, for example, service offerings geared toward the training of on-the-road pharmaceutical sales staff could be slightly modified to train on-road-sales staff regardless of industry.  This horizontal approach that targeted people holding similar organizational positions regardless of industry enabled us to leverage our experience and program development effort.

All of this led us to look for several potential client types: the underserved (those frustrated with their current provider), the pent-up demand (those know there is a solution to their problem but don’t know how to move forward), and “I could have had a V-8” group that had no idea there was a solution to their most vexing problems.  If you notice, there is no mention of “someone that wants it cheaper.” 

All of this led us to a “contrarian” marketing approach – going where our competitors were not showing up and filling their vacuum.  If all of our competitors were exhibiting at national conventions, we targeted smaller regional conventions where we could be invited to speak and could spend more time talking with potential users.  I must admit that I resisted this approach at first, but our return on investment was dramatic.

After a while ATS, became known as one of the conferencing niche leaders. Once in that position, what did you set-up so that ATS stayed in that leadership position?  What were you doing different than others in the conferencing niche?

If the standard mantra is: do it better, do it faster, do it cheaper, then you better think along those lines.

Very much like software companies that need to constantly introduce new versions to keep the revenue on an upward trajectory, a service shop has to constantly refine its offering and offer new options on a regular basis.  If you don’t constantly try to innovate, then it gives the competition an opportunity to develop their offerings to mirror your own.  Once that occurs, you have lost the competitive advantage and are forced to compete on price alone – leading to a death spiral of profits.

The problem we faced was that there were only a few companies that manufactured the equipment used to combine the telephone lines for conference calls which meant that those providing the services all had similar technical capabilities – a difficult strategic position.  None of the equipment providers were willing to allow our software programmers access to the source code to make modifications to handle our unique requirements.

Suddenly, there was a dramatic increase in use of computer server technology to replace the telephone switching systems being sold to businesses.  During our research, we found that this new technological application was incorporating some conferencing capability.  We negotiated the rights to the source code, hired our own programming staff and were able to create conferencing equipment that we could modify to meet our own strategic needs at 1/10^th the cost we were paying existing hardware firms.  To be fair, however, the expansion of our programming staff did decrease the hardware savings, but control of the “feature set” would have been worth even more in an increasingly competitive environment.  We had created a new “barrier-to-entry” for the competition.

In the end, continued innovation and creating new barriers-to-entry is the key to maintaining profits and market share.  By this I mean innovation in both service delivery AND technology.  In addition, I have never been interested in my market position in the overall industry – I just want ownership of the most profitable segment of the market.

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?

Someone said “Do what you love and the money will follow.”  A little over simplified, but effective advice.  If it is something you love, then you will have greater knowledge of the entire field than someone that simply thinks that it is a great investment opportunity.  In addition, you will find yourself spending far more than 40 hours a week with your new “baby” and it is much less painful if you are developing a product or offering that you are passionate about.  You will also find that your “passion” for the product is a great sales tool – I believe that potential buyers are strongly influenced to try a service/product from someone that truly believes that their product will make the world a better place or solve a significant problem.

I believe that there were elements in my background that gave me a unique perspective on the type of services we designed – a perspective that was missing from those offering services that were never end-users themselves.  The key is finding the “pain.”  If you are frustrated with the lack of a product or service there are probably hundreds like you out there that would be willing to spend a premium to have their problems solved.  That’s the place to start.  Then add your own take on the solution – something that only is obvious to you because of your unique experiences.  Now, you have high profit potential and a barrier-to-competition.

While there are other elements to make a new venture a success, you can hire those elements out.  No one else can be paid to come up with an idea that stems from your unique take on an industry or problem. 

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

Success oriented service.  I believe that regardless of the product or service you provide it is critical to see yourself (and your company) in the position of helping your client get promoted – by making their decision to use you reflect positively on them with their superiors.

Service agility.  Have and maintain the ability to quickly modify the product offering to meet underserved or pent-up demand.  Look at what the dominant company does not provide and seek to provide it.  Look at what they do well and avoid it.

Company-wide vision of client success.  The tone of service starts at the top and the message must be uniform all the way to the bottom.  Special attention needs to be given to the sales commission plan.  My VP of Sales once said “If you want to see what a company is really all about, read their commission plan.”  It took me a while to understand the implications of that statement, but I’m a true believer.

What are the key characteristics of companies that have been able to dominate a niche?

Listen and listen for the pain.  Whenever someone says “I wish…” the next few words will probably define a moderate- to high-profit market opportunity.  Someone is giving you a clue.  I always tried to write down every “I wish…” I heard and go through the list every three months.  If you toss an idea because you can’t do anything about it RIGHT NOW, then you are missing an opportunity to enter a new niche when the conditions are right.

Never act like you are a market leader.  A market leader pleased with their success will often respond to new ideas with a “No.”  Someone trying to become a market leader is looking for ways to say “Yes!”

Every employee is a disciple.  Don’t just hire people that can “do the job,” but seek out those that have the same vision of helping clients.  A good example would be those that work in public contact positions for Disney.

Always let the client know when you went “above and beyond.”  When I heard several of our staff people talk about a situation where their quick decisions kept a miscommunication from one of our clients from creating a disaster, I asked if they had shared that with the client.  After hearing “no,” I started our Guardian Angel program to make sure our clients knew when we put in extra effort to make sure everything went well for them.  Each problem offered a unique opportunity to talk with the client and reinforce our dedication to their success.

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?

The current economic environment may unseat many firms that view themselves as “dominant.”  Frankly, I think this is an ideal time for new start-ups to capture significant market share.

Dominant organizations are tending to reduce staff on the service provision side of the business in an attempt to preserve executives.  More often than not, these executives have only a partial understanding for the nuances of high quality service.  In addition, the number of unemployed, high-quality potential employees makes it an ideal time to bring in considerable expertise at a very affordable cost.  Add any additional incentive for long-term business development and you have the potential to add yet another “disciple” to the staff.

What are the biggest threats to losing that dominating position?

Thinking you are big enough to withstand any attack.

Saying “No” more than saying “Yes.”

Lack of innovation (look at the game developer/software market)

Laying off key people that will contribute to the long-term success just to save money to keep executives employed.

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

Kodak.  The shift away from film and the introduction of high quality home printers has been faster than they predicted.  They are only now starting to understand their new niche potentials.  Wasn’t Polaroid a big name for a while?

General Motors.  You figure it out.

Record companies as a group.  Failed to find a new business model for their industry.  Tried to use law suits as a way to modify consumer rather than spend the time/money on finding new ways to make money.

Xerox.  Lost their market position by not understanding the shift from heavy metal to lower cost, distributed printing.

IBM.  Not only were they the name for big computers, they were the leading providers of home computing – for a while.  By not embracing Microsoft’s operating system, they created a huge opportunity for no-name companies to achieve leadership.

For me, the number one question becomes how can a dominant company retain a non-dominant “hunger” to innovate?  How can you avoid becoming content?  How can you let the expense side of the business (especially fixed expenses and those on wages not connected to company success) gradually creep up to destroy the company’s ability to withstand competitive price pressures?

What in your background gave you a unique ability to see potential opportunities and capitalize on those opportunities?

Since you are a product of “everything that doesn’t kill you” every person has the potential for a unique take on a situation or problem.  And you may have to go through a lot of potential ideas before one really takes hold, but I believe the seed for a potential business is in each one of us.  The key elements are doing a personal asset inventory, starting to look for potential opportunities and having a grasp of the business planning process.

Here are some elements in my background that helped me…

Technology:  While my college degrees were not in a technical field, I had experience building and using electronic equipment in the broadcasting field, I learned computer programming, and acquired my own personal computer when they first came on to the market.  It was easy for me to see how computer technology and programming could make our company more efficient.  We were the first teleconferencing company to move away from paper & pencil scheduling to a computer based model.

Experimental design:  The college courses in statistics and conducting experimental studies gave me valuable insight into problem solving:  how to formulate good questions, how to look for and control variables and how to analyze results to determine trends.

Broadcasting:   Attention to delivery details when providing a service.  Coaching staff on how to view telephone conversations as “live radio broadcasts” that needed planning and focus.  How to capitalize on live events by recording and editing them for distribution to secondary audiences that could not be at the live event.  How to make use of Internet “streaming” used by radio stations for the distribution of teleconferencing.  How to establish a “ratings” system to determine the perceived quality of our service offerings.

Communications skills:  After teaching courses on public speaking, listening and persuasion, I found myself talking to clients about problems they were facing in their jobs and developing solution sets to address those problems. 

Creative use of financial data:  I wrote computer programs that would give me information on how and why people would use our services.  In addition, I found ways format the information into graphs that I could understand more quickly than rows of numbers.  I found ways to use the financial data as feed-back to the client on how our service was being utilized – by department and by use.

Thanks Bob for the great insights and for sharing your thoughts on how to be a successful business person!  Let me take a moment to summarize some of the main points besides the three I mentioned above:

Summary:

1.  Utilize free PR as much as you can to get your company name and services out to potential clients.

2.  Make sure you are constantly aware of what is actually being sold and that it syncs with your service capabilities.

3.  In a fast-growing company on-going employee training is a must.

4.  Focus some or all of your trade show efforts on the smaller regional conferences where you might be able to be a speaker and spend more time talking with clients and prospects. 

5.  Do what you are passionate about and use your knowledge of that area to carve out your niche.

6.  Instill a sense of service/product quality from top to bottom.

7.  Never be satisfied with your success, always look for ways to improve.

8.  Teach all employees to understand the financials of the business and how each contact with a client can impact key metrics.

My thanks, again, to Bob.  Hope you enjoyed the post.

Ken