Monthly Archives: May, 2017

Modern Business Failures Part 3 – Polaroid

May 31st, 2017 Posted by Blog Post, Leadership 0 thoughts on “Modern Business Failures Part 3 – Polaroid”

polaroidEvery consumer industry has a few huge brand names that are synonymous with it. For fast food burgers, there’s McDonald’s and Burger King. For discount stores, there’s Wal-Mart and Target. The list goes on.

These companies are massive, and they’ve been around so long, it seems like they’ll be around forever. But there are no guarantees in the world of business.

For most of the 1900’s, there were two brand names that dominated consumer photography (and the film market, as well):

Kodak and Polaroid.

These giants created their industry, and yet, at the turn of the millennium, both hit hard times. Polaroid filed for bankruptcy in 2001. Kodak in 2012. While Kodak eventually recovered, Polaroid never did.

At it’s peak, Polaroid employed around 21,000 people and had a annual revenue of over $3 billion. So what exactly happened?

The Company (and the Founder) that Steve Jobs Idolized

Polaroid was the “Apple” of its industry four decades before Apple even existed. It brought cutting edge technology that disrupted the current market and packaged it with a marketing vision that had personality its competitors lacked.

Much like Apple had Steve Jobs, Polaroid had its own larger-than-life mastermind: Edwin Land.

There was one key difference; unlike Jobs, Land actually was an inventor and engineer, developing the technology that brought his company early success in the late 30’s and early 40’s.

According to Steve Jobs himself, Land “saw the intersection of art and science and business and built an organization to reflect that”.

Today, he’s considered the father of instant photography. Land would lead his company for 43 years as CEO, creating attractive and useful products while filing numerous patents that they fiercely defended. Some would say Apple took inspiration from this as well.

A Failed Product and a Lost Founder

In 1977, Polaroid attempted to repeat its success with instant photography in the video camera market. They launched the Polavision, an instant movie camera system. Unlike its previous cameras, however, the Polavision was lacking in both convenience and quality.

Polavision could only be played back on special Polavision viewers. To create a copy, you had to actually break the cartridge that held the film and then run it through an 8mm system.

This might have been worth it if the Polavision produced a quality picture, but recordings were described as flat and murky.

It also couldn’t record sound.

Meanwhile, VHS and Betamax cassettes were on the rise, providing easy storage and playback on modern TVs. Polavision was dead in the water, resulting in an $81 million loss for Polaroid and the resignation of Edwin Land.

The Beginning of the End

In the years following, Polaroid would attempt to reinvent itself and even had a few minor successes such as disposable cameras, not to mention bringing one of the first mainstream digital cameras to market.

But they hit another snag along the way. In an attempt to fight off a hostile takeover in 1988, Polaroid bought back a significant amount of shares, creating an employee stock ownership plan.

This resulted in significant amounts of debt from which it never managed to escape.

Staff grew bloated as well. According to a report by the New York Times, sales tripled between 1972 and 1998 while staff increased five-fold. For every sales representative, there were two back-office workers.

In 1991, it won $925m in a lawsuit against Kodak, but that wasn’t enough. As the market moved away from film, sales took a serious hit and Polaroid’s patents began to either expire or just stopped mattering.

Today, Polaroid exists as a brand name only.

Basic Business Principles We Can Learn from Polaroid

There are a number of smaller lessons that can be learned from Polaroid. Even in a very successful company, one poorly executed idea can set off a devastating chain reaction.

When a market begins shifting quickly, you have to be ready to move even faster, knowing that the main revenue streams you have today might not always be there to bring in money.

And lastly, a company reaches a point it needs to be bigger than its founder. Polaroid never truly recovered after the exit of Land. Even today, with Apple Computers, many would say that it hasn’t shown any true innovation since the passing of Steve Jobs. Yes, they’re still a very successful and healthy company, but the gears have been slowing.

Though Polaroid is gone, it left behind a legacy of innovation. Recently, Polaroid-style instant cameras have made a resurgence, particularly among younger consumers, for their novelty factor and ability to create immediate memories.

When the app Instagram launched, many of its photo filters carried borders and effects that paid homage to classic Polaroid cameras.

And for entrepreneurs, Edwin Land left behind some great quotes. For example:

“If you are able to state a problem…then the problem can be solved.”

“Optimism is a moral duty.”

“If anything is worth doing, it’s worth doing to excess.”

Working Full-Time While Starting a Business

May 23rd, 2017 Posted by Blog Post, Entrepreneur 0 thoughts on “Working Full-Time While Starting a Business”

can't quitYou’re ready to turn that idea you’ve been kicking around into a full-fledged business. You have the plan, the vision, and metrics for success all place. There’s just one problem:

You already have a full-time job.

Ideally, you would just quit your full-time job immediately and exclusively pursue your startup. Unfortunately, that’s not a realistic plan for many of us. Whether you’re supporting a family or you have loans to pay back, you may have no choice but to keep your current job while you build a business.

It’s going to make things a bit more difficult, but that certainly doesn’t mean it’s impossible.

Many businesses begin as side-jobs. Even huge successes like Craigslist and Trello. But in order to succeed, you’re going to have to work that much harder. You’ll need to be that much more focused.

That means you’ll need to start by…

Trimming the Fat

Anything in your life that’s consuming unnecessary amounts of time and money needs to go. It could be a little hobby or watching your favorite shows. Maybe you don’t get to go out for drinks after work. Maybe you have to pack lunch and make dinner at home.

Think of yourself on a boat that’s sinking. You need to throw everything off the boat that’s not essential so that you can stay afloat as long as possible.

That said….

Maintain Rest and Relationships

One of the worst things you can do to your body is deprive it of sleep. That extra hour of work you were able to put in at 1am is not worth the 3 hours of productivity you’ll likely lose from being tired the next day.

Whatever you do, make sure you stay well rested.

Additionally, don’t isolate yourself too much from those around you. Yes, your friends and family will see you less as you strive towards your goal. And if they truly care about you and believe in you, they’ll support that decision.

But you still need to maintain those relationships. Letting them slip away will bring down your mood, your motivation, and your ability to interact with people. Keep your important friendships healthy. Invest in them.

Just know when to draw the line.

Create a Timeline

If you’re serious about your business, then you’re planning on a day when you won’t need your full-time job anymore. Setup a timeline for this path towards your dream job. This will not only motivate you, but it will also prepare you for what’s a head.

You could also set various goals or checkpoints that aren’t necessarily bound to a specific length of time. For example, once your business is making x amount of dollars, you can step away from your job. Or maybe switch to a part-time job just to have some source of steady income.

Set a plan and execute.

Be Wise with Your Money

The good news is, you should be so busy between the two jobs that you don’t have time to spend money. The more money problems you have, the longer you’ll be working two jobs. Be especially conservative with your finances as you begin this journey. Start saving so that you can afford to quit your day job sooner rather than later.

All this budgeting isn’t just good for your personal life, but it should help you to budget better in your own business as well.

Never Forget Why You’re Doing It

When you first start the journey of launching a business, there’s a general excitement to it. Even if you have a fulltime job, you’ll find yourself going through the days with an added sense of purpose.

Sooner or later, however, that bold confidence will begin to wane. You’ll get tired and grow frustrated. Your fulltime job will feel more or more like a burden as you get glimpses of what your business could be.

You may be tempted to quit your day job too soon, leading to disastrous results in your personal life. Or you’ll give up on your dream of running your own business.

The problem is, if you have an urge to start a business, nothing will satisfy that impulse except actually starting a business. So keep moving forward, working the hours you need to, and giving proper attention to your startup, and eventually, you’ll see it through.

For more in-depth guidance on business strategy and metric development that goes beyond the cliché business tips for success, make sure to check out Business is ART, available now!

Obvious blurred lines – improve focus by unfocusing

May 16th, 2017 Posted by Behavior, Blog Post, Business is ART 0 thoughts on “Obvious blurred lines – improve focus by unfocusing”

Photo courtesy gratisography.com

Have you ever heard or used the following phrases: You’re over-thinking things, or, you’re getting into analysis-paralysis.

How about: Look before you leap?

So which is it? Think and focus, or stop thinking and jump?

It strikes me as kind of funny that new research suggests it’s both. It seems kind of obvious, doesn’t it? It’s like saying “New research suggests some people like to drink beer while watching a football game.”

But here it is

But here it is. As reported in HBR. Read it for yourself: Your brain can only take so much focus.

As you’ll see in the article, you are encouraged to “unfocus” at times and that unfocusing is important to healthy focusing. Again, a little like saying, “Periodically you should stop running in order to improve your running.”

How do you unfocus? The article suggests several helpful tips, like: daydream constructively, take a nap, and pretend to be someone else. I’ve just one question. Do you have to occasionally daydream in an unconstructive manner in order to improve your constructive daydreaming?

Maybe it’s me

Maybe I’m just in one of those moods today, but, seriously. Do we have to conduct research to tell us we can’t stay focused all the time and that there is a such thing as too much focus?

Do we not know that over-focusing can result in tunnel vision?

Let’s do something real

Hey, want a constructive way to put some focus in to your business without writing a mini-novel that some people, perhaps the same ones who conducted the focus / un-focus study, would call a business plan?

Check out my book, Business is ART, available at Amazon, and stay informed on the progress of the soon-to-be released Plan Canvas, the business planning software based on the book, by signing up for my monthly newsletter.

And now if you will excuse me, I am going to go constructively daydream in the hopes I will fall asleep and imagine myself being someone else. I intend to wake up effectively and completely focused.

Modern Business Failure Part 2 – Pets.com

May 2nd, 2017 Posted by Blog Post, Business is ART, Business Plan, Uncategorized 0 thoughts on “Modern Business Failure Part 2 – Pets.com”
Photo courtesy of gratisography.com

Photo courtesy of gratisography.com

“Failure” is an ugly word. Some say there is no such thing as long as you are learning and applying that knowledge to your next attempt. Let’s just assume for a moment that failure is real, and is indeed an option.

As an entrepreneur, failure is something you’ll have to come to terms with. You will have failures as you try to build a business.

Even as you succeed, the possibility for failure is always there. In fact, sometimes a surge of success can actually end in failure.

A few weeks ago, we talked about once successful businesses that slowly died out and shut down altogether. Today, we’re going to focus on one specific company that fell almost as quickly as it rose.

The Brief Success of Pets.com

Pets.com is often the poster child of the dot-com bubble burst – and with good reason. They received huge amounts of capital investment before actually achieving anything, they became a nationally known brand through a wildly successful marketing campaign, and then they imploded almost immediately after.

Looks good….wait a minute

Before things came to a terrible end, however, it looked as though they might be the last big internet company to come out of the 90’s. Like so many early internet companies, their concept was simple: sell pet food, supplies, and accessories online. The pet supply industry was valued at $23 billion at the time, and little to none of that was being moved through the internet.

With such a simple, powerful domain, success seemed all but guaranteed. Especially once their advertising kicked in. The Pets.com sock puppet mascot became a nationally recognized icon almost immediately.

Whether you loved him or hated him, you knew him. After all, he appeared on Good Morning America, Live with Regis and Kathie Lee, a Super Bowl Commercial, and as a float in the Macy’s Thanksgiving Day Parade in the span of months.

All this marketing was funded by venture capital money, as well as Amazon, who bought half of the company’s shares very early on. While Amazon wasn’t quite what is today in the late 90’s, it was still a pretty big deal.

When Pets.com went public, it closed at an $82 million IPO. Soon, they were employing 320 people.

So what happened?

Pets.com was all basic idea and no actual execution, research, or planning. The company started when a Harvard business student convinced the guy who owned the domain to use it for selling pet supplies.

That was the entire vision, and it was enough to convince investors to buy in.

Before they had any plans on how to scale to being a nationwide distributor, Pets.com had embarked on an $11 million marketing campaign. Trouble was, they were losing money on every sale they made, even before advertising was taken into account.

A lot of issues stemmed from the fact that they did almost zero market research beforehand, so they had no idea what consumers’ spending habits would be. It turned out, many people weren’t ready to buy pet supplies online, and those who were bought small quantities of simple products with poor profit margins.

These types of orders actually hurt Pets.com’s finances.

They attempted to incentivize additional purchases by offering things like free shipping, but as you may know, pet food isn’t known for being light weight. Their expenses increased.

Meanwhile, they were investing heavy amounts of money in expanding infrastructure, servers, engineers, and more to handle their growth and expansion. This was before pre-built ecommerce solutions existed. There was no cloud computing. Software hadn’t been designed to connect websites with warehouse inventory.

They had to try and do it all themselves, which led to additional errors, delays, and worst of all, further loses.

Pets.com was this hugely recognized brand that no one actually used.

Realizing they weren’t going to be able to make it work, Pets.com made one of their smarter decisions and liquidated their assets. This happened less than 300 days after going public.

While a fair share of money was lost, it’s worth noting that Pets.com did get some money back to their investors after their liquidation. PetSmart bought their domain (and they still have it), while a car financing company bought the sock puppet mascot for $125,000. Yep, that actually happened.

What Business Owners Can Learn from This

While Pets.com is often used as a cautionary tale about investing in unproven startups, I think there’s a more important lesson here. Simply put, they didn’t plan. They didn’t strategize. They didn’t research.

They tried to skip over the first, and arguably most crucial part of starting a business, and it ended up being their death sentence. A business needs more than a hot idea and some money.

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