The Unapologetic Capitalist

Michael O. “Coop” Cooper, one of the world’s top business coaches, facilitators and trainers, is the founder of Innovators and Influencers. Coop and The Unapologetic Capitalist discuss how high growth ventures can best work to achieve their major milestones.

* Introduction of Show Topic: How High Growth Ventures Can Bridge the Chasm from Today to The Next Major Milestones

* Brief Review of Past Shows

* 5 Bar Chart

* Building the Right and Profitable Customer Base

* Cultivating Long Term Loyal Customers

* Introduction of Innovators and Leaders & Michael “Coop” Cooper

Michael O. “Coop” Cooper, one of the world’s top business coaches, facilitators and trainers, is the founder of Innovators and Influencers. For the past 15 years, he has worked with creative professionals and right-brain entrepreneurs who are shaping and changing the world we live in. He has trained over 1,000 coaches through various training programs and personally mentored over 150 coaches. Prior to focusing solely on coaching, Coop served as a management consultant and strategist with Cambridge Technology Partners and Novell and over the years he has aided clients at Vodafone, Wells Fargo, Southwest Airlines, Seagate, Honda and Sony Computer Entertainment. His management and consulting experience in over 15 countries over the last 20 years has brought him to be an advisor to one of the Top 50 Innovative Companies in America and a coach to one of the Top 50 Designers in America for the past 12 years. He was recently selected by the TED Conference to coach one of their Fellows and was the founding president of the International Association of Coaching. What lights him up is helping people find what lights them up and turning it into a lucrative business that they love. He holds an MBA from the A.B. Freeman School of Business at Tulane University in Information Systems and Global Strategic Management. His considerable experience combined with his education allow him to bring his clients the best in cognitive psychology, performance management, organizational & personal development, leadership, communications and influence. For this reason and many others, Coop was awarded the Entrepreneur of the Year award by the City of San Francisco, California, where he currently lives.

* Discussion of 3 Key Impediments Toward Achieving Key Milestone in a Growing Venture

* Setting the Right Milestones

* Having Clarity of the Ventures Current Status

* Setting the Appropriate Next Milestones Given Status

* Being Disciplined Not to Skip Steps

* Understanding Realistic Resources and Timing

* Making Prudent and Informed Decisions…Knowing True Costs (hard costs and opportunity costs)

* Key Challenges for Ventures:

* Gaining Critical Mass of Customers

* Getting Adoption of New Innovation from Notoriously Slow Industries (e.g. Health Care and Agriculture)

* Inventory Management…Balance of Investment in Inventory & Operations versus Investment in Sales and Business Development

* Show Wrap Up

Attracting new customers and earning their loyalty is hard and getting harder. Customers are fickle and overly informed. In today’s day and age of instant information overload, how can you effectively attract customers and earn loyalty? Technology and social media, have given discerning consumers a lot more to consider when they buy. This makes it very challenging to attract customers and demonstrate the value in paying for your product over the many other substitutes out there. The same goes for earning loyalty. Now with very little time and cost, consumers can get access to a significant amount of information that may too easily lead them to other brands and products. The companies that invest in listening to and understanding their customer’s needs and want will attract customers and earn loyalty.

* It used to be that if you were going to buy something, maybe you’d ask a friend who knew a lot about that one area and has already done all the research and can get you informed. However, if you had to do it on your own, it would take time.  You’d do some research and call around to friends and family.  This would take some time and that is a big cost. So clever and kitschy marketing would be sufficient for most companies to attract customers, and loyalty would be easily earned because switching costs would seem high.

* Today, however, technology, social media, have given discerning consumers a lot more to consider when they consider the value of what they are paying for. So even if you are able to attract customers to try your product, getting them to see value in paying for your product and staying loyal to your company is more challenging. Today, with almost no time or cost, consumers can get access to a significant amount of information (for better and for worse) to decide whether or not they will buy or stay with a particular product.

* Having a meaningful brand still matters, but it isn’t enough anymore. Those brands who are going to rely on the equity they’ve built in the past in their brand are in for a rude awakening. Customers are valuing brand less and less, and good enough for the right price more and more. This is making it much harder to attract customers that are new, and even more challenging to earn loyalty with their core customers. Switching has just become too easy.

* Unless established companies ditch the entitlement they think their brand has ensured them, they will lose customers and dollars to companies who invest in the value of listening to what their customers find valuable and investing in and rewarding their loyalty.

Successfully building customer loyalty will add significant value to your venture. However, creating and cultivating customer loyalty has become more and more difficult in the digital age. Customers are finicky, and the options to use competitive or substitutive products keep growing. Good enough at the right price will win in today’s marketplace. To be successful, you must convert the right customers to ‘stay and pay.’ Properly investing in long term customer loyalty will build significant value in your company.

* Value is in the eye of the buyer

* Your product is worth what someone else is willing to pay for it

* “Good enough at the right price WINS”

* How consumers value a product has fundamentally changed in today’s information overload

* The right customer needs to be identified

* Solid investment needs to generate customer loyalty

Get customers to try your product, but find the balance

* Be sure you are getting demonstrable value from your customer when you give away your product for a trial

* Know what is truly valuable about your core product from your customers

Segment Your Customers

* Know who in your marketplace is a potentially valuable that become customer loyalty

* Don’t give away product trials to customers who will never pay

* Product trials cost money in time, products and customer service

* High cost in dealing with the wrong customers who will take resources away from investing in customer loyalty

* Be disciplined to find out what customers actually ‘like’ and how they find your product relevant to their lives.

* Have the patience to get the right people you want to try your product

* Remember…you don’t want every customer

Learn from the marketplace

* Groupon has taught us that just getting a ton of people who like free or deeply discounted products will never contribute to customer loyalty. These are people who generally only want a bargain

* Companies throw away huge dollars to buy a high number of customers rather than investing in customer loyalty

* The dot com dot bomb era: a lot of money spent increasing valuation without building real value

* Asset management firms spend an incredible amount of resources raising as much capital they can, but forget to invest in their core product of portfolio management and thus, customer loyalty is lost.

* Digital product companies that invest in hundreds of millions of dollars to be able to boast traffic in the tens of millions, but fail to invest in customer loyalty, thus devaluing the company

Understand the useful tactics to convert

* Give your product away so that your product is valued rather than the experience of getting something for free.

* Learn from companies who have done it well, e.g. Pez

* Apply the freemium model appropriately

* Be clear about what should be ‘free’

* Don’t give away the essential value of your core product

* Make sure your customers really understand why they should pay to get something more

* Remember the goal should be to get your customers to “Stay and Pay”

* Generating customer loyalty will ultimately build value in your venture

Everyone loves free stuff. But once you’ve given your product away for free, you’ve just valued it at zero. People clamor to get free stuff like it is the most valuable thing ever, but once they’ve gotten it for free, they will almost never pay for it, because what they really value is the feeling of having ‘won’ something or gotten ‘something for nothing.’ The ‘freemium’ model of giving away your product today in the hopes to earn dollars from them tomorrow has created a lot of problems that aren’t easily solved. So how do you get the right people to try your product so you can convert them to long term, loyal and PROFITABLE customers?

Building value in your venture at any stage means some form of:

* Getting new customers

* Getting more value from your existing customers

* Converting them all to be a profitable LOYAL customer

Using the 5 bar chart is key: Market, Aware, Like, Try, Loyal

* Fill the hopper with those who ‘like’ your core product

* Ensure only those who ‘like’ move on to try your product

* Make sure there is a quid pro quo to those that try so customers understand the inherent value in the product

* Compel those who have tried your product to become a loyal customer

Building value lies in creating loyal, long term & PROFITABLE customers, the ‘freemium’ model has some pitfalls:

* Beware of ‘free trials.’ If you give your product away, you’ve just valued it at zero.

* Beware the customers you gain from free trials

* You may piss off the right customers by taking away what you first gave for free through ‘freemium.’

* You get the worst kind of customers, the mooch who only wants something for nothing. These customers are costly and high maintenance. They complain and will drag down your brand. Theirs isn’t the feedback you should listen to, but their voice will be the loudest. They may lead you astray while you spend too many resources dealing with them in while your actual core business and product suffer.

Bringing in customers in so they will ‘stay and pay,’ and when they pay, they should feel like it is a great value so much so that it FEELS like a bargain at twice the price.

Freemium has become a misunderstood and misused business model.

* Even in the most successful examples of ‘freemium’ such as Drop Box and LinkedIn will admit they leave money on the table finding the balance of what they give away and what they get folks to pay for

Finding the balance in a ‘freemium’ model is key. So how do you give away something without valuing it at zero? How do you illicit that exhilaration that they’ve won something without giving away the farm?

* Know what is truly valuable about your core product or offering. NOT what YOU think it is but what your CUSTOMER tells you it is…remember, your perception doesn’t matter…your CUSTOMER’s does.

* Find the customer that knows in this world you generally get what you pay for.

* Make sure your customers try your product by feeling like they are getting a great VALUE rather than getting something for nothing because when you give something away for free…you’ve just valued it at zero.

Forget ‘freemium’ and aim for ‘stay and pay.’

The age old mantra of “buying low and selling high” is the basis for making money on any transaction including an M&A deal. However, there is a difference in perspective if you are a day trader or a house flipper versus buying something to generate substantial long term value.  For instance, sensitivity to purchase price is going to be very different for someone buying an investment property versus a buyer looking for a home to live in for many years. There are a lot of great reasons to build value in your business through an M&A deal. Yet too many get wrapped up the in the M&A transaction and thwart the very value they are trying to build. With excellent decision making, an M&A can be a solid bet to build long term value in your venture as long as you remember that closing an M&A deal gets you to the starting line not the finish line.

Smart M&A means thinking beyond the transaction

* Buy low sell high…general mantra for making money, but there’s a difference in philosophy if you are a day trader or a house flipper versus buying something to generate substantial long term value.

* Discount stores…cost of inventory management…cost to your overall product

* No one likes to be discounted

Don’t forget something is worth what someone is willing to pay for it http://unapologeticcapitalist.com/value-is-in-the-eye-of-the-buyerremember-narcissus-icarus-both-died/

* Some are so terrified of buyer’s remorse that they walk away from otherwise excellent M&A deals

* Do not to ever make a fear based decision.

* If you are the buyer and if there is value to be had, then place your bet. Bet on yourself that you can create something of excellent value with this M&A transaction

Know why you are getting involved in M&A deal

* Know the long term expected value of the M&A deal

* Know the red flags that are deal breakers right up front

* Do not buy just to ensure a competitor doesn’t

* Negotiate M&A terms based on the expected future value not on pinching pennies today

Know that the M&A transaction completion is the STARTING line NOT the finish line.

Patience is a virtue. However, leaders and entrepreneurs tend to be inherently impatient. No matter what stage your company is in, you will always feel the pressure of time and results. Time and results are like a chicken and egg situation.  Time will afford you the chance for results, and results will afford you more time. But usually you have dollars flowing out like sands in an hour glass and you don’t have the luxury of letting things play out. Leaders often unknowingly shoot themselves in the foot by forcing premature results. However, sometimes, the best way to add value is to practice patience to give options the opportunity to play themselves out.

It takes an incredible amount of patience to let some options play out, especially when you are early on in a venture. Most in business today are terrible at being patient…let alone knowing when to practice patience. This episode discusses knowing when and how to practice productive patience leadership in order to drive results.

In the last few shows we’ve discussed what happens when the value you’ve been building might start to show some cracks in the foundation:

* First, you have to recognize that there are cracks in the foundation. Many drones will just keep crossing the bridge and will prefer ignorance to anything that might rock the boat…so they won’t even keep their eyes all the way open…This is where understanding your role as leader or manager is essential.

* If you are a manager, you need to be able to point out the crack to the leader you are working with as a manager is there to mitigate conflict so that the leader can best forge ahead on the path to significant long term value.

* If you are a leader, you have to be the steward of the vision of the long term value of the venture, so you MUST take the time to understand what the potential implication of the blemish is in the overall value.

* So you believe the value to be worth saving, you have to be willing to endure likely short term resistance and conflict.

* So if you’ve built something worth saving, then you have to risk ruffling more than a few feathers who aren’t going to appreciate your efforts…remember, they still shoot the messenger, and people are ultimately self serving and have trouble seeing beyond the now.

It is critical to know how to balance time and results and know when to practice patience.

Having the patience to let some options play themselves out can ultimately add great value.

Getting deals done often comes down to business relationships. Sometimes you have to deal with relationships that have gone sour which puts any business in jeopardy. You will have to decide whether or not the value in that relationship is worth saving. There are MANY ways to cross a bridge, but burning that bridge is NEVER going to be an option a smart person will take. But as last episode points out, there are a lot of bad managers and business people that you will have to deal with and they can blow up the bridge from under you. You will have to repair the bridge to maintain the value you’ve created in your venture. When business relationships are precarious, you will constantly flirt with patience versus progress. The key is to know who holds the ‘currency’ in your marketplace. You may not like it, or who has it, but if you don’t have a good understanding of where that currency lies, you won’t be able to gather it up for yourself to fix the bridge to start building value. This episode focuses on repairing business relationships so you can move forward to create options to help you build long term value in your venture.

* Know the ‘golden rule’ prevails in business relationships: ‘He who has the gold rules.’ The player with the most power gets to make the business decisions…they get to set the rules and they don’t necessarily need to tell you what those rules are.

* Some people have power just because they are popular, and power and politics will often trump good business.

* Know what constitutes currency in your marketplace: political power, money, seniority, or talent.

* Get out of ruts

* Be patient, you don’t always need to be grinding away

* Don’t get caught up in doing lots of tasks trying and control all the things we cannot

* Don’t thwart your own efforts because you aren’t patient enough to let some options and business relationships play out

* Follow the dollars

* Know how the money flows

* Invest your resources to ‘go with the flow’

When getting business done, you will have to deal with bad managers. However, business still needs to get done. It is very difficult to be the one who has to point out that the Emperor is naked. So here’s a bit of a conundrum: Are you going to believe in truth above harmony? Or would you prioritize harmony above truth? Both philosophies have intention for long-term value creation. Someone who puts harmony above truth will let slide some bad behavior or some inaccurate facts so as not to offend someone and indulge a relationship they have convinced themselves is necessary to get business done. Be careful in putting harmony above truth. This is where someone is actually putting their want to be liked above the genuine needs of getting business done. In the process they are excusing this behavior by saying they are fostering a long-term relationship. In the same vein, there are times when harmony needs to prevail in getting business done. Relationships matter, and there will be times when you need to align incentives to prioritize long term value. Don’t be a naked emperor. Always do right over being right. It isn’t always easy. The messenger still gets shot, but getting business done means you might have to rock the boat in the short term to ensure smooth sailing for the long term.

* Maintain the integrity of the relationship

* KEEP the lines of communication OPEN regardless of whether or not the deal goes through

* Communicate clearly & keep your conscience clear

* Avoid temper tantrums…and don’t indulge them in others.

* Place the long term value of the deal above being ‘liked’

* Don’t fear temporarily rocking the boat.

* Don’t devalue someone just because the parameters of the deal may have changed.

* Beware of placing truth above harmony…or harmony completely above truth. Do right over being right.

If you are crossing a bridge and you see a crack in the foundation, do you stop and fix it?

* Is this bridge worth saving?

* Do I want to turn around and cross a different bridge?

* Is the investment already made worth fixing the bridge so it is strong enough to successfully cross and perhaps made strong enough so it can be crossed by many more in the future.

* How can I maintain the value that currently exists without destroying it regardless of whether or not the bridge is worth fixing?

You have 3 choices…if you want to at a minimum attempt to maintain the value that is there…Remember that burning the bridge is NEVER one of them

* First: Stick your head in the sands of ignorance. You can ignore the problems in the bridge and believe them to be minor and cross the bridge and convince yourself that you did the right thing because you didn’t rock the boat.

* Second: You can decide that you will just smile and nod at the bridge and those crossing and say, Thanks, but I’m going to cross a different way.

* For Issues 1 & 2: While you can convince yourself this is done with the interest of long term value, you are really just enabling the damage of the bridge…it is like those folks who see someone who may be lost or in need in some way and choosing to not help because you assume someone else will, and it isn’t going to be your problem.

* Third: You can decide that you’ve invested a lot into this bridge and you believe there is still great long term value in crossing it, so you decide you will make efforts to fix it

* Not every will appreciate this option. People may get offended, and they still shoot the messenger.

 

 

Whether you are working on deal, raising money, dealing with a partner, vendor or employee, at some point, the relationship might start to go south. Defeat may be looming, but that doesn’t mean you can’t still salvage victory. What happens when you are crossing a proverbial bridge and see that there might be a crack in the foundation? Do you stop and fix it? Could the bridge come crumbling down? And if that’s the case, do you get off the bridge or ensure you fix it before it gets to that point? There are MANY ways to cross a bridge, and you can even decide that isn’t the bridge you want to use to move forward toward the long-term value you are trying to build. Of all the ways to cross a bridge, burning it is NEVER going to work out well, and it is BAD capitalism! If you believe defeat may be impending, you can seek victory and snatch it from the jaws of defeat. If a bridge is worth saving, make sure you aren’t the one destroying it.

In order to have a chance at snatching victory from the jaws of defeat, you must:

* Maintain the integrity of the relationship

* KEEP the lines of communication OPEN regardless of whether or not the deal goes through

* Communicate clearly & keep your conscience clear

* Avoid temper tantrums…and don’t indulge them in others.

* Place the long term value of the deal above being ‘liked’

* Don’t fear temporarily rocking the boat.

* Don’t devalue someone just because the parameters of the deal may have changed.

* Beware of placing truth above harmony…or harmony completely above truth. Do right over being right.

If you are crossing a bridge and you see a crack in the foundation, do you stop and fix it?

* Is this bridge worth saving?

* Do I want to turn around and cross a different bridge?

* Is the investment already made worth fixing the bridge so it is strong enough to successfully cross and perhaps made strong enough so it can be crossed by many more in the future.

* How can I maintain the value that currently exists without destroying it regardless of whether or not the bridge is worth fixing?

If you want to snatch victory from the jaws of defeat, you have 3 choices. Remember that burning the bridge is NEVER one of them!

* First: Stick your head in the sands of ignorance. You can ignore the problems in the bridge and believe them to be minor and cross the bridge and convince yourself that you did the right thing because you didn’t rock the boat.

* Second: You can decide that you will just smile and nod at the bridge and those crossing and say, Thanks, but I’m going to cross a different way.

* For Issues 1 & 2: While you can convince yourself this is done with the interest of long term value, you are really just enabling the damage of the bridge…it is like those folks who see someone who may be lost or in need in some way and choosing to not help because you assume someone else will, and it isn’t going to be your problem.

* Third: You can decide that you’ve invested a lot into this bridge and you believe there is still great long term value in crossing it, so you decide you will make efforts to fix it

* Not every will appreciate this option. People may get offended, and they still shoot the messenger.

Cultivating talent is critical to business success. While some things can be taught, other things are simply innate. In cultivating talent, understanding what is nature versus nurture is essential. In our quest for building long-term extraordinary value, it is really important that we invest in what we can learn or what we can teach. Know how to spot and be able to acquire the talent that cannot be taught. Most of all, to truly cultivate talent, we must stop wasting precious resources in teaching that which can never be learned and no longer try to change that which is hard wired.

* Show #12 Getting Smarter and Staying Relevant was about making yourself smarter.

* Have an open mind

* Learn from experience

* Learn from academics

* There are things you can’t teach: work ethic is one of them.

* Work ethic versus Intellect…work ethic can go very far on its own. Intellect can easily be wasted without work ethic.

* Statistics show that the work ethic folks who don’t quite have the work ethic get into better universities and go further in their careers and generally make more money in their careers than the naturally brilliant folks who skate by on their natural intellect.

* Demonstrated work ethic gets more job opportunities than pure intellect

Invest in acquiring that which cannot be taught

* Work ethic

* Tenacity

* Congeniality and Salesmanship

Teach/learn the skills you need

* Align incentives in a way that leverages these things that cannot be taught in a way that also adds long term value to your venture

* Know what you have from nature and leverage that while knowing what you need to learn so you can compliment that which nature has given you.

* Beware of ‘fake it until you make it’…one of two results will occur:

* You will be revealed as a poser which will lead to your demise if it is a just a matter of nature

* OR, if this is truly a learned or nurtured skill, your diligence will nurture you to where you need to be.