Hype!

I meet a lot of company founders and directors who have some notional idea that the tech they are developing (or developing with) is red hot and the next big thing. There are a number of ways this ends up being the case, previous experience or background, specific opportunities or in some odd cases just a gut feeling. The one that is probably most common is hype. The media has a fantastic way of making us feel that there is a fabulous technology world just in front of us and that we should all ride that wave. The difficulty for business owners is to what extent these visions are real or unlikely. In the 80's we were told we would be riding around in a Sinclair C5, more recently we're promised the utopia of same day Amazon deliveries via drones. So what is really driving all this and how can business owners make more informed decisions on future tech?

I blame Gartner!

There is some established wisdom on this subject. Gartner Inc is a technology research and and advisory firm that is widely regarded. They have long been associated with something called the "Gartner Hype Cycle". This describes the path that most new technologies take through the eco-system of development and then usage over a period of time. That hype cycle is essentially a five stage process:

What this diagram shows is the common path followed by new technologies in the digital era. So what do these stages relate to?

Technology Trigger: A potential technology breakthrough kicks things off. Early proof-of-concept stories and media interest trigger significant publicity. Often no usable products exist and commercial viability is unproven.

Peak of Inflated Expectations: Early publicity produces a number of success stories—often accompanied by scores of failures. Some companies take action; many do not.

Trough of Disillusionment: Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.

Slope of Enlightenment: More instances of how the technology can benefit the enterprise start to crystallize and become more widely understood. Second- and third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious.

Plateau of Productivity: Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology’s broad market applicability and relevance are clearly paying off.

Looking back over the last 20 years this is a pretty consistent assessment of the journey most new tech takes.  

So the challenge for most businesses becomes at what point do you use a new tech to make the most of it? Its not easy to call. If you're an early adopter you can spend a lot of money waiting for the market to develop and appear under you. If you call it too late then the market is dominated by an 800lb gorilla that is soaking up all the customers and revenue. It then just becomes about marketing spend to generate market share - also expensive.

Personally I lean towards early rather than late. Its more rational to have products and services building momentum as the market develops than having to free up huge amounts of cash to make a marketing splash. Being seen to be in the market first/early also has other business benefits for companies creating tech, patents etc.

So how do we prove that the Gartner Hype Curve is valid as a way of understanding the tech market?  Here is the Gartner Curve for 2013:

As you can see from this there are several technologies that are in all the press, autonomous vehicles, 3D Printing, Drones etc. that are all reaching the peak of inflated expectation. Amazon are not going to be doing deliveries by drone and a Google Car is not going to drive you anywhere any time soon. If you study the diagram carefully I think its an accurate representation of where all these technologies were 1 year ago.

So what is the way to assess this? Its really just the age old question of risk versus reward:

Innovators are creators of technology not users of technology. It costs a lot to develop new tech and can take years. The rewards however are huge, particularly with patents.

Early Adopters are inclined to take something that's a little under developed and help shape it. Early adopters tend to become join venture partners or form some other commercial relationship which means they use the product for less than the market rate further down the line.

Early Majority companies are the first real customers for new tech. They realise the benefits early in the technology life cycle and form early client-supplier partner relationships with tech companies.

Late Adopters generally come in when the technology is maturing, has established markets and customers. They are not innovating and tend to be using well embedded tech on low commercial margins. Often they're described as resellers.

Laggards are companies that come to the party just about as its over and everyone's gone home. They are slow to adopt and are seen as technologically backward.

Dependant on what part of this scale your company adopts the risk and reward goes up and down. The earlier your company appears the higher the risk and the higher the reward. No company wants to be seen as a Laggard and this should be avoided at all costs.

The only thing worse than a bad decision is no decision. Every company in the tech space should understand where it fits in the scale above and then match that to technologies on the Gartner Curve. If you think your an innovator then your currently working with drones, 3D Printing and Crypto-Currencies. If you're a late adopter then you're integrating speech and analytics into your products.  Either way make a choice and develop your strategy accordingly.

Indemnity - Guarantee - Warranty

Indemnity - Guarantee - Warranty 

I often get questions from start-ups about contracts. I should say upfront that I am not a lawyer of any description and the comments in the blog below should not be taken as verbatim - however - I've spent a large part of my work life reading contracts and trying to understand the implications of what it is I'm signing.

What I've learned over the years of working with start-ups is that they commonly misuse particular words that when used in a contract have a specific legal meaning. The biggest misuse/misunderstanding is with the terms Indemnity, Guarantee and Warranty.

In this post I'll attempt to describe the difference.

Indemnity agreements

In an indemnity agreement, you are exactly agreeing to assume all responsibility and liability for any injuries or damages to someone else.

It is accepted that all the parties to the indemnity agreement agree that in the event that one is held liable, the other shall indemnify them for the consequences. There is an underlying principle for this scenario which is that the party that is in the better position to avoid liability is given an incentive to do so by being made responsible for the consequences.

Having used this principle both in the UK and the USA, the terminology for common phrases contained in indemnity agreements include that the person or entity agrees "to indemnify and hold harmless" or "to defend, indemnify and hold harmless.".  This might vary dependent on the legal jurisdiction you're working under.

If the indemnity agreement includes a requirement for you to defend a claim, you will often find the agreement requiring the person who is being indemnified to "tender the defence" to you. Or you should include language maintaining your "right to control" the defence, including requiring that you have final approval of any settlement.

Without such provisions, the party you are indemnifying can rack up huge legal fees and costs which will you will need to pay. If you are controlling the defence, you can choose the lawyer and have a say in litigation costs and expenses, which could be vital to your business.

Usually any indemnity agreement covers things like loss, damages, costs, expenses and legal fees. However, if the indemnity agreement is silent on the subject of legal costs, then the court will not impose this or require the person promising to indemnify to pay legal fees. Even if the indemnity agreement included legal costs, this means "reasonable" fees, which the lawyer has the burden of proving.

It is another important concept to account for, that there be some ‘consideration’ for the issue of the indemnity and, where there is a concern about the adequacy of the consideration, the agreement should be signed as a deed. Appropriate gross-up provisions should also be applied to ensure that, if any money paid is treated as taxable income, the seller should be obliged to gross up the damages to cover any such liability.

There is a further aspect to keep in mind. Contribution involves the distribution of liability for damages among culpable parties according to each party's relative percentage of fault. Indemnification, in contrast, shifts the entire loss from one party to the other. In other words, contribution asks another to share, while indemnity requires another to pay it all. It is often confusing with the difference between indemnification and contribution but the important point is that liabilities can be shared if the situation dictates it.

Guarantee provisions

A guarantee is an agreement to answer for a debt, default or other financial liability of another person. This is in contrast to an indemnity agreement which is a promise to answer for the legal liability of another. You are in essence promising to perform a contract or piece of work or pay a debt in the event the principal person or company cannot or refuses to do so. Once the principal obligation has been paid or otherwise satisfied, then the guarantor's obligation is completed. You could be asked to sign a personal guarantee as part of a loan agreement or as part of a structured debt agreement like an overdraft with your bank.

A guarantee agreement is regarded as "collateral" to another contract, debt or obligation. It is this contract for which you would be secondary liable. Because of this you should always review the underlying contract before signing any guarantee agreement.

There are different types of guaranties. A guarantee might be an absolute and unconditional undertaking, or it may be subject to some conditions established by both parties. Under an absolute guarantee, the guarantor agrees to pay or perform a contract/work upon default of the principal without limitation or advanced notice. Consequently, the guarantor is obligated to pay the entire debt at maturity if the principal doesn't.

With a conditional guarantee, the guarantor's liability doesn't start until the creditor has taken certain agreed steps against the principal. The guarantor can choose the condition that triggers the obligations in the underlying contract. A solid clause to have is that the third party must have tried all remedies against the principal party before pursuing any remedial clauses with the guarantor.

A guarantee can also be to a single transaction, or a continuing guarantee, which extends to future dealings. A continuing guarantee is for an indefinite period and is effective until revoked.

Warranty agreements

A warranty agreement is an assurance by one party to a contract of the existence of a fact, often times relating to the quality or quantity of the subject matter of a contract upon which the other party might be relying. A breach of warranty will only give rise to a successful claim in damages if the buyer can show that the warranty was breached and that the effect of the breach was to reduce the value of the asset acquired.

A warranty agreement is intended to relieve a party of the task to research the fact(s) for themselves, and amounts to a promise to indemnify for any loss if the fact proves untrue.

No specific words are required to construct a warranty if it is clear that the parties intended one. An express warranty will be seen in accordance with natural import of the language used, as applied to the subject matter of the contract. Liability under a warranty will be enforceable only in view with its terms. You can disclaim any warranties by including a disclaimer provision in your contract.  Under common law, a buyer is clearly obliged to mitigate any loss for a breach of warranty. There is no such clear obligation for a buyer to mitigate its loss under an indemnity.

Personal Experience

It is very important to understand that even if a contract is labelled as a warranty, indemnity or guarantee, a court may decide the contract is a different type depending on the actual attributes it contains. Just writing the word Warranty at the top doesn't explicitly make it so.  Disclosures might be made against warranties in certain transactions, such as share or asset sales, thereby limiting liability, but should not be made against indemnities.

The extent of your liability relative to the warranty, indemnity or guaranty agreement will be determined by the terms and conditions of the contact. The lesson I've learned here is to choose the language carefully, as you will be accountable for the words you choose to use.

Winning Funding

Winning Funding

There is a moment with every company where some funding (usually public) becomes available and there is a notion that applying for that funding would help the company grow/develop/diversify/compete/distribute or pivot. Every company that applies for funding feels that their proposals are rational, reasonable and obvious and therefore should be granted. As someone who assesses funding proposals for a number of public sector organisations I have spent a lot of time wondering where on earth the proposal has come from and how did the company applying even begin to think that their application is acceptable - for a whole range of different reasons. This post is my attempt to lay out the main causes of why funding applications don't get accepted.

Read the god-damn form!

It is simply astonishing how many funding applications are never assessed just simply because the applicant did not read and understand the criteria for a successful bid. If the form has a deadline date then meet it. If the fund has a maximum bid value then don't exceed it. If the fund excludes certain activities or items then don't include them. It's probably fair to say that 30%-40% of funding applications have some transgression of the bid guidelines embedded within submitted forms - its then in the lap of the gods as to if anyone reads it. If you don't understand whether something your adding to your bid is excluded then ask ...

The Basics

Spelling! Grammar! Paragraphs! Punctuation!

Purpose

The funding body will always provide a rationale for applicants as to what the fund is for and what impact it should have. Typically its along the lines of jobs, business and wealth creation but there are sometimes some more social impact outcomes or learning outcomes that can come in the mix. The application MUST take these into account. If your proposal does not create a job (or sustain an existing one), create a new business (or accelerate and existing one) or does not create a significant and sustainable new revenue stream then its difficult to see why it would make the grade. Public money is scarce and funds need to justify the awards they make, so make it easier for them to rule in your favour and clearly identify which outcome you meet and to what degree.

Realism

Within the creative sectors specifically but across the board in general you need to keep your application realistic. Don't inflate the price of something because you think you can get away with it - the assessors are not stupid and can use Google. Its disappointing to have to downgrade someone's perfectly sound idea because they got excited about the prospect of the money and made this schoolboy error when doing the budget. If your proposal looks realistically costed and looks tight in terms of spend then that's a huge positive for your application.

Think Big

Its true that a lot of local causes suffer when trying to get the necessary funds together to keep sub-regional community and culture alive. Remote communities often would like something that is specific to them (magazine, film etc.) and will submit funding applications on the assumption that the rural side of life is no different to the townies. I sympathise here, its a way of life that needs support and preserving - but this is unlikely to be the scenario with most funding schemes. The rural communities, niche causes and colloquial organisations need to think big, be bold and look further than the end of their garden. Thinking big is not turning a 5 minute film into a 15 minute film. Thinking big is making a 5 minute film, adding Japanese sub titles and then taking it to Japanese film festivals. Showing local content locally makes no sense for the assessors so look further afield and shoot for the moon with every proposal.

Sustainability

This is a hard one for most people who might apply for funding. The issue here is making the most impact for the money your given. Its easier to approve a bid that says "We're going to make enough money from this film to make our next one without your help". That notion that a sustainable set of activities is created by the funding award makes it a lot more likely that you will get short listed and/or get the award. Personally I would love to see an application that says "We're going to use any excess revenues to give our own funding award to someone to the same value as the one we might receive" - but I've yet to read that on an application. Passing the benefit on and creating activities that become self-propelling have to be the underlying aim for the awarding body.

Feedback

Most awarding bodies will send feedback to the unsuccessful applicants to let them know how they did. The number one thing is to not take it personally. Your idea was simply not good enough. These things tend to be uber competitive so if you just did the bare minimum it probably wasn't sufficient. The feedback is carefully considered and you should see it as an action list for another application the next time funding is available. Every failed submission takes you closer to an accepted one, its a learning curve (sometimes steep) like most other things in life. Get over it and start work on your next great idea and make sure the next submission is better than the last. If you don't understand the feed back then ask for a meeting - any good funding body should give you the time to understand where you might have not scored so well.

Summary

- Read the form, understand the form, stick to the form.

- Spelling, grammar, punctuation - their not optional, use them.

- Stick to the purpose of the award, meet the criteria.

- Keep it real, you will get caught out.

- Think big, shoot for the moon!

- Can you idea persist and become sustainable, if it can it should.

- Feedback is not criticism its a positive learning experience.

The Velvet Rope

The Velvet Rope

There are only a few things that humans really respond to. Celebrity and success are two that spring to mind. Anyone notable or anyone successful are two people types that we all aspire to be seen as - its part of the human condition. For me, the third thing on that list is exclusivity. Being seen as in-the-know or someone of exclusive know how has some very positive implications, especially in business. So how do you use exclusivity in a positive way to benefit your business?

Introducing the concept of the Velvet Rope. You've all seen them outside nightclubs, bars and restaurants. The feeling that being inside the rope and therefore exclusive has driven the young and the restless since the dawn of going out. Can the Velvet Rope concept be used to help business?

Early access: Give someone who signs up for your mailing list early access to a white paper packed with great information or other relevant resources. This is like sharing a secret with someone; it engages and creates a special relationship between the people involved. It’s also a good technique because at some later date you can use the content for a more general purpose.

Members-only perks: This is a variation on the early access strategy. You can have aspects of your site or specially created content that is only available to those on your mailing list. This can be a digital resources, forums, reviews, photos, or the ability to ask you a question. Another members-only early-access perk would be advance notice of sales.

If you do this, we’ll…: If you’re promoting something like a an event, a webinar or something similar you can mention special offers that will only be available to those who participate. “If you attend the webinar will receive free copies of the slides and a transcript of the session.” Or you can say, “At the end of the session, we will give you a link to a 50 percent savings on our newest widget.”

We only have space for 25: Cap how many of an asset you’ll sell or how many people can participate in your event. Be honest about what you do. Adding something like, “This will not be available again until March 2015” is a way to give you the ability to re-offer the item/service and it also creates an additional sense of urgency.

Enlist the endorsement of a noted personality: If you want to introduce something new, connect with a person who is big on Twitter or a blog and say something like, “Only @davywavy followers will get a link to download the beta of our new Android app.”

Google used this kind of “VIP access” to create buzz during the roll-out of Google+, Gmail, and more. To get in on the early versions you had to be a friend-of-a-friend. There’s one more lesson we can learn from Google regarding this marketing technique: User expectations will be high when they sign up for something they feel is exclusive. Make sure what you offer is sign-up-worthy.

Summary

The Velvet Rope is about creating “exclusivity,” either real or imagined. The desire to become part of the “privileged few” will help turn casual visitors to your site into regular users, customers, and names for your mailing list. Apple is a company that has worked hard to create the feeling of exclusivity around its brand of products. The techniques above should work to get you started with a Velvet Rope for your business.

Factor in the Factoring

Factor in the Factoring

Image copyright of selectfactoring.co.uk

With any small business one of the most difficult things to learn is how to manage cash flow. Most business courses and books harp on about it - quite rightly - but sometimes even with your best efforts the cash flow for your business just doesn't function the way you would want.

There are a number of interim solutions for cash flow issues you might face but this post is specifically about the use of Factoring to help make those cash flow issues a little less profound.

What is Factoring?

Factoring is effectively the selling of an outstanding invoice to a financial company at a  discount.

The three parties directly involved are:

- The seller (one who sells the invoice)

- The debtor (customer of the seller)

- The factor (financial organisation)

In invoice factoring, the factor provides financing to the seller of the accounts in the form of a cash “advance,” often 70-80% of the invoice face values, with the balance of the purchase price being paid, net of the factor’s discount fee (commission) and other charges, upon collection. The emphasis is on the value of the invoice which is essentially a financial asset. The seller is borrowing against its debtors.

So an example would be:

You are the seller and your client owes you £10,000. You're cash flow means that you need money quicker than the invoice will be paid.

You go to the Factor and sell the £10,000 for £9,000. You therefore have 90% of the invoice value to help your cash flow.

When the invoice is paid by your client, the full £10,000 goes to the Factor - thereby they make £1000 for extending you the £9000.

What's the downside of Factoring?

The real downside is that this is an expensive way of managing your cash flow. Its not a strategy that will help your business in the long term but for a short term requirement its often a quick and easy way to address any issues your business is suffering.

How does this effect my clients?

In theory not at all but not all clients are created equal. Sometimes your business is not the issue and your clients are:

- Customers with a higher than average credit risk and don't pay on   time
- There are service related problems with queries, disputes,      complaints
- They are not you and don't chase debts in the early stages as you   would i.e. deal with service issues or use your trading history    and customer relationship.

What this means is that although your business is acceptable for the Factor your clients might not be and therefore their invoices can't be used in the factoring.

How do you find a Factor?

The best place to start is with your existing bank. Most large banks have a factoring company that they either own or partner with. Because of the existing relationship then its likely this is the route of least resistance in terms of getting some invoices factored. A Factor that has no previous knowledge or relationship with you and your business will need to do some due diligence to understand how your business works ahead of agreeing anything with you.

oops!

oops!

Email has become the de facto weapon of choice for most of us when it comes to conducting many of the business functions we are required to carry out on a day to day basis. Email transformed the way we do business and the speed at which it takes place. It does however have a down side - especially within the sales function. What I'm going to try and tackle in this post is what I think the #1 mistake is with email and how you might negate this as an issue.

Scenario

You've been to meet a prospective client and the meeting has gone superbly. The client likes the product, has indicated they want to buy it and didn't baulk at the price. You tell the prospect that you will confirm everything in a follow up email.

Jump forward a few weeks and the client hasn't responded to your email and isn't replying to your calls.

What went wrong?

Follow Up Emails

One of the most common flaws with the use of email is the idea that everyone you deal with sees them the same way you do. To some people emails are important - they're like legal documents. To others they are a trivial and less important issue.

The real issue then becomes that you left an important business matter subject to an email at all - follow up emails are a fragile business mechanism when concluding a deal or a sale.

When concluding a sale, the best approach should be to use the last five to ten minutes to book the next call or meeting. In doing so, it eliminates the need to follow up post-meeting or post-demo. I now always try to establish:

• If they're actually interested?
• If I'm talking to a decision maker?
• If they have money?
• The game plan for the sale
• What makes sense as the next step?

Trying to remove the follow-up email as a possible block on moving forward is a very good strategy to adopt, it often makes the sales cycle shorter and clearer.

Follow Up Email Tactics

So what's the scenario if you're already on the follow up email merry-go-round?  There are two variants of emails you can send for the follow up email. The choice of words in each email is different but key to getting the recipient to react in the way you would like.

Email 1 - "Unsure, can you advise?"

This email should have the subject line as "Next Step?" or "Potential Next Step?". The question mark is a must.  Clearly state in the email that this is a follow up - no point in masking it.  "I'm not sure what the nest step is?" is a line that offers the opportunity to the other person to take control and dictate back to you what the step is - like a teacher to a pupil. whilst this might be a little patronising it also means that there is a next step and the opportunity has not just ground to a halt.

Email 2 - "Update"

When the subject line of an email is "Update" people tend to act differently. Just the single word can be read in 2 ways, its either information offered or information requested but the recipient will read it almost immediately to find out which one. This email works better if there is a 3rd party referenced as part of the request. Something like "My boss just asked me what the current situation is so I wanted to speak to you". This creates urgency to reply with the recipient.

Summary

The thing I have got used to is that in reality people don't get back to you. Its a common outcome of a meeting for both parties to placate each other with the promise of follow up but for it to then not take place. If possible the end of the meeting should be about not allowing the progress to die in this way and to create an action plan that does not allow either party to hide in their inbox and not communicate.

Get Alert

Google Alerts

What is a Google Alert?

One of the best and most under used Google feature is Google Alerts. This is an automated search bot that trawls the internet looking for content based around key words or phrases that you give it. Its extremely easy to use and a very useful tool for entrepreneurs and small businesses.

- You can set up an alert for yourself or your own business. This can help you manage your own presence and reputation on-line.

- You can set up an alert for your competitors, allowing you to monitor their presence and reputation on-line.

- You can look at the sites that carry news or articles related to your business, identifying them as quality back-linking opportunities.

- You can use Alerts to follow breaking news stories or debate.

How do I use Google Alerts?

Below are some suggestions to get the most out of your Google Alerts:

Use your business name and personal name. Are people saying good things or bad things about you on-line? This is your opportunity to thank the good ones and address any issues that are being published on-line.

Set up an alert for your website URL without the www. This will help you find out who is linking to your website and talking about your website.

Understanding your competition. Who is doing the best job on-line in your sector? Create alerts for their name, track them and learn from them. This will help you with your on-line strategy and open up new opportunities.

Industry Information. What is the latest news and developments in your industry? This is very useful for giving you ideas for blog posts and news articles to add to your website and to talk about on social networking sites.

Prospective new clients? Understanding their company and learning more about their on-line activity will put you one step ahead of the competition.

Back linking opportunities. Blog links are sometimes the easiest for finding a place to link back to your website as they are well set up for comments. When commenting, add interesting information and answer questions on these blogs and include a link to your site, in this way your post is more likely to be accepted by the blog moderators. 

You will soon find the alerts that really suit the information you find useful. Some will inundate you with far too much information which will take forever to wade through. Delete these and concentrate on the good ones.

Tips and Tricks

If you're interested in something that's a real name then put it in quotes. So someone's name is "Dave Sharp" or "Virgin" if its a business name. It helps the search algorithm understand what you're referring to.

Use the + sign to help remove words from within words. So if you're interested in hands then the search will be +hand. This will then remove things like "handing", "handler" and "handling" from being caught up in the search. The plus indicates to Google Alerts that your just interested in the term "hand".

You can use the minus sign to help you in the same way, especially with place names. So there is a Durham in the UK and a Durham in North Carolina in the USA. So to focus a search on Durham in the UK the Google Alert reads Durham -carolina. This tells Google Alerts to remove references to Durham that also include Carolina. It will not remove everything from the USA but it will get rid of most of it.

You can search a specific website using a Google Alert:

If you want to focus on the Techcrunch website for news about Mark Zuckerberg then you would use:

site:techcrunch.com "mark zuckerberg"

This Alert will just focus on Techcrunch and Mark Zuckerberg.

You can also use the minus sign to ignore a site in the same way so that would read as:

"mark zuckerberg" -site:twitter.com

This will trawl the entire internet for news and references to Mark Zuckerberg but will ignore all the references on Twitter.

Summary

I use Google Alerts a lot. I find them extremely useful for just harvesting information that I don't have the time to research myself. Its good reading material when I'm on the road or have 15 mins to spare. Its worth spending the time to (a) get the hang of them and (b) refining them so they deliver useful information. It can take a bit of time but the best decisions come from the best set of information.