Friday, December 14, 2007

Advertising 2.0 iBreakfast Report: Follow The Customer

If there is one simple conclusion to this completely sold out iBreakfast, it is not whether online is more important than TV, or mobile; or whether Madison Ave. can handle the onslaught of the big tech guys - it is, as Ogilvy’s digital gurus are showing, about tagging the message to the customer wherever they go.

In this continuum of media it means that agencies have to think of how a message on TV ought to pop on a website and then on a cell phone (more of those to come, experts say) and at any other point along the viewer’s trail to purchase.

In this view, the onslaught of media digitization, as exemplified by Google’s buyouts and other appearances on Madison Ave. and the emerging media exchanges (the topic of next Wed. Dec. 19th iBreakfast), not only makes perfect sense but is a prerequisite of the next wave of the Ad Business. We think Madison Ave. will prosper on but not without a few palace coups. It is clear that the young blood is all digital while the old guard is still wary and has traditionally compartmentalized the digital services. Clearly that has to change and you can be sure that some agencies will and others won’t and there will be much upheaval. Think how Rumsfeld combined the three armed services and then think what that did for him and the country. Yet, the first part of it had to be done……

As for cellphone advertising. At first this seems like a horrible idea. Such a personal item infested with such knowing ads! But if you want the free searches, the special offers, the music, the TV shows and so on, you will be getting them on your cell phone soon and if the agencies are smart, it will be in away that serves the TV campaign. For this MoPhapp will be happy explain

This is just a hint of the actual conversation and amazing presentations at this iBreakfast – if you are hungry for more you can request these presentations by emailing us at ad2@ibreakfast.com

The Secret – as Applied to Business

Stand back Oprah, I've got something to say......

Since I have spent the season speaking with investors and prospective entrepreneurs who ask about what we really do, I have had to boil it down to a few principles. We’re in the business of helping companies understand what makes their business plans works, what trends are going to drive the industry and occasionally, the true nature of being.

Savvy early stage investors know what I am talking about because they even have terms for this – “the secret sauce” or the “thumb on the scale” but like the concept of a tipping point, few of them have a way to really articulate this quality.

That’s really where the iBreakfast Entrepreneur Club and the bimonthly Innovator Evenings kick in.

One of the things we do is help people understand the critical element of their business. And that gets into another area that you don’t learn in business school. As a journalist I once covered Artificial Intelligence, and I know from the art of Knowledge Engineering, the interrogative process programmers use to create the rules driving the system, how you gather and order the intelligence. Generally it requires interviewing a domain expert and getting them to explain it in the form of rules of thumb. Often, these turn out to contain strangely mundane little secrets. There are famous storiees like the old Italian immigrant who ran Campbell’s soup tomato vats who had all kids of ways to figure out when the boiling was just so.

So I learned to become a great believer of “The Secret”, but not really in the Oprah way. She may have something though I don’t it believe it works in the way it is hyped. i.e. “learn this secret and everything happens.” But in a particular context where everything else has been prepared, a secret can make all the difference in the world.

It definitely happens in business and I believe it underlies many great businesses even though the secret is usually something quite mundane. It is really the context it makes all the difference. Agein, if you’ve read The Tipping Point you’ll know that big differences can take place from very small issues. Consider them the keystone in an otherwise unformed edifice. The question is how to find them, better yet, which is what we try to do, how do you predict what they will be?

Some of my Favorite Examples of Business “Secrets”

Starbucks – What Exactly are we Buying Here?
How do you get people to pay $4 for a $1 cup of coffee? Do you just make it better? But 4 times better? And how can you support one on just about every corner of the country? Maybe you need to look at the history of the Opium Wars where the British brought cheap opium from India for sale in China. Or just check with the local pot dealer…….of the local convenience store with cigarette ads at counter level. What Howard Schwartz learned in his incubation years as a coffee grinder was how to get more caffeine out of a bean. Starbucks sells the highest caffeine content coffee in the country and his customers, all lined up first thing in the morning, are caffeine addicts. Forget the arguments about taste, the real issue is when it comes to addictive products is whether or not it hits the spot. Starbucks does and it makes them the true successors to the tobacco cartel, the Cali Cartel, the rumrunners. They treat their staff well, they support the arts and if they weren’t so legal and downright acceptable they would probably support organizaed religion too.

For all I know, Schwartz got his ideas from Phillip Morris (remember, mundane secrets are fungible) who learned how to up the nicotine content in Marlboros through a combination of specially cultivated strains of tobacco and the addition of nice, fresh ammonia. He might have read David Ogilvy’s classic “Confessions of an Adman” where we learn the secret of how the young Ogilvy, as a cook, charmed an old dowager on a strict diet of one stewed apple a day by mashing up the content of two apples and shoving into the shell of one…… Or, maybe he just have stumbled upon it. But you can see how it worked - it took Americans a few years to get hooked……and then wham! My guess is that if anyone ever buys Starbucks it will be tobacco company……..or a drug company.


MacDonalds: Getting You Out in 20 Minutes.

The story goes that the founder came up with the combination of fast food and free diner seating in the army. The camaraderie of the cafeteria in wartime was deeply compelling and that became the basis of the MacDonald’s brothers fast food concept. Don’t just sell hamburgers, give people a nice place to sit down and eat ‘em. The problem was, how do you get these happy customers out of there in 20 minutes or less so that you could maintain the turnover necessary to reach profitability. How do you get rid of seat-hoggers? The obvious answer is - uncomfortable seats. But that wouldn’t look good besides, you still want the initial experience to be comforting, you just don’t want it to last that long. So they came up with molded seats that forced you to sit in such away that your spine would tell you to leave in less than 20 minutes. Even my chiropractor laughs at that one as he forces me out of his office in 20 minutes…….

The funny part is that when the fast food co.’s first started taking over midtown Manhattan with 24 hour free seating in a nice warm place - the winter tramp community paid attention. Turns out they understood the principles of ergonomic engineering too and to get around the forced spinal subluxation, they simply piled up freely available old newspapers in a way that voided the back-aggravation, enabling them to stay all night and long enough into the morning to enjoy a nice Egg MacMuffin. Is it any wonder then, that one of the biggest franchise holders in midtown is a former cop. What are the odds he came up with a secret of his own for getting rid of the bums? Just wondering……

The Secret in Sports

No question, sports has its secrets too. Not the chemical ones, although there clearly is a huge market for that. (And of course, no ever guessed those bulked up hitters were doing anything other than Exercise Made Simple or 5 Minute Abs.) I am talking about all kinds of subtle ones that again, only really work in the context of a particular talent. Everyone knows Wayne Gretzky’s mantra, “don’t be where the ball, be where it’s going to be.” But that’s easier said than done. Did Gretzky major in calculus or did he just have a sixth sense? I’m guessing he would do well in options trading too.

We know that Muhammed Ali won through talent and mind games. But did you know that Michael Jordan’s genius also had something to do with a special skill he mastered. According to a recent TV interview, he showed how we able to imperceptibly tug or push the limbs of his opponents so that he could manipulate them and amazingly, always seem to get the ball away form them. Why did it have to be imperceptible? Because its illegal. But what the camera couldn’t see, the refs couldn’t either. Now that Michael is retired, he is happy to talk about it….Turns out, talent has tricks too……

I would argue that in each case, these geniuses, especially the ones giving the $1500 motivation courses, are leaving out this critical element. For example, Tony Robbins wants to unleash the giant in you. But it helps to be giant in the first place and you don’t get that from seminars. Donald Trump wants to make you rich, but no book of his can help you grow up with a father who taught you everything about the building industry, hand you off to all his contacts and then leave you a few hundred million to get you on your way. By the way, I consider the fatherly training and credibility-building more valuable than the cash which he would have lost anyway, if it hadn’t been for the former.

In another context, lots of people want to be the next Bill Gates but aside from his privileged background (his parents got him a gig debugging minicomputers while still in high school), it helps that he has something akin to a photographic memory.

The secrets are really something specific to a certain person a certain management or even a certain time and space. Our passion at the iBreakfast Entrepreneur is really to help people find their own. Usually, it encounters great resistance and denial of the sort…..”I already know….blah….blah…blah….” Sometimes they do. Usually not. Wish it were easier but when you come down to it, that is why we’ve been dong the iBreakfast for 10 long years……..

Why Big Media Really Doesn’t get Google.

I was at a media conference where a number of TV execs lamented first that the Maurice Levy, chairman of the giant European ad agency, Publicis, said there wasn’t enough ad money to pay for TV-like ads on the internet. Also, that Google was up to something that threatened the ad industry in their new relationship with Simon Cowell of American Idol. Then, one of the execs showed off this new TV Networks’ website along with an ad for a national brand. I asked that if they realized that Google’s market cap was about 10x all of Madison Avenue’s simply because they had found out how to make themselves accessible to millions of small, non-national brand advertisers. So, in the spirit of responding to Maurice Levey, what would they be doing to address this issue.

“Nothing,” said the exec.

“So you’ll be coming to the next iBreakfast,” I said.

The point is that big media is really the handservant of big business. The guys with the pinkie rinks only know how to go after fat cats just like them. Same with the flashy media saleswomen. Google advertising is open to all comers, is mostly self service, requiring little sales support and therefore is worth much, much more. In order for these old media guys to prosper they are going to have to reinvent themselves at a completely different level.

Tuesday, November 6, 2007

Report: Entrepreneurs Club & Start-Up Pitching

After 10 years of helping Start-Ups get funded, the iBreakfast finally
launched a special meeting group for Entrepreneurs with the help of the wonderful folks at Pace University's SCI2 Incubator. What makes this group
different is not only that it helps Entrepreneurs stay in touch with the
support providers they need and of course, the investment community, but it
enables them to work through the issues that define their business concepts.

At the heart of this group is the interactive, peer-to-peer discussion of
the issues shaping their business concepts. By using group dynamics to
analyze elevator pitches, the group is a powerful force to help start-ups
shape their ideas and make themselves salable to investors and
to customers alike. This is like Oprah for Entrepreneurs and no one leaves early...

The Entrepreneur Club will meet at least 3 times a year and is a special
membership package offered to iBreakfast Attendees. Just by signing up for
an iBreakfast Entrepreneur membership (currently $155 a year) members get 6
iBreakfast/iEvening events free. They can use 3 credits for a one-time
investor pitch and they can attend the Entrepreneur Meetings at no charge.

With support from people like Rosalind Resnick of Axxcess Business Centers,
who is a highly successful entrepreneur in here own right, the FENG CFO Club
and the pitch and marketing support of Laura Allen (15secondpitch.com) and
Sandra Holtzman who wrote "Lies Start-Ups Tell Themselves to Avoid Marketing) the group offers a lively interaction with leading industry figures and Entrepreneurs.

The next meeting will take place on Q1 with the support of Agency.com

IEVENING START-UP PITCHING REPORT

Once again the Start-Ups came out with a fascinating group of business ideas
that ran the gamut of arcane research to fast foods. The judges included
Josh Grotstein of SASI, Allan Grafman of Mercury Capital, M.J. Segal of
Joshua Capital and T.J. Walker or Media Training Worldwide, who critiqued
the presentations.

The winner was the MugsToGo, a nifty, patented way to add handles to Starbucks type
paper cups which are sold as an advertising medium. Since there are billions of cups
sold every year, the judges' sense of large numbers kicked in they voted
Tomas Leszczynski the winner. Many other companies got warm responses too.
BreadnBrie.com, a Fresh Direct competitor that uses technology to tie together
independent food producers to deliver bag of groceries to NY shoppers
was judged as having the best presentation. Mommies on Demand, an
IPTV-community solution for new mothers was judged interesting. Investors
were also very interested in the Universal Listing proposal for local
businesses from Name Dynamics which lists local businesses for a low $30 fee.
Chalex Corp, a low-cost, online document management system also got a mention.

The other companies were GreenCanopy a B2B Green business magazine.,
Tuglink a targeted jobsite, Darwninian Media Interactive and RealMarkets, a
Real Estate investors advisory.

Thursday, October 25, 2007

Report from the Oct. VC Outlook Meeting

by Alan Brody


[This was one of the most insightful events we have had on the art and mindset of early
and middle stage investors. So we have included extra long videos of the speakers
and an in-depth report on the event.]


Way Too Early vs. Last Money In

The heart of the October iBreakfast was the interaction between Howard Morgan whose
lament is that he invests too early (and way too early) vs. Robert Hoffer an investment
bank advisor. The early stage investor goes through many twists and turns before seeing a
return on their relatively modest investment. Oftentimes they see nothing. The late stage
investor, the last money in, on the other hand, gets the most money and often sees the
payout a lot sooner. The investor who participated in Facebook at a $500 million
valuation, saw a 20x return - and much sooner than the typical Angel, who sees his
investment flounder at the same time that he gets diluted with each round.


So what makes an Angel tick? A big part of it is love - they just love to be at the cutting
edge of the next big thing. Or realistically, putting together a few bets that anticipate
it. On the other hand, they also need to make a big return. Forget 10x, think more in terms
of 30x. This is what pays for all the failures. So how does a true Angel Investor -
a unique combination of compassion and greed - think?


According to David S. Rose who, like most Angels, wears many hats (Investor, Software
Entrepreneur etc.), the most important piece in the start-up puzzle is you the
entrepreneur. You plan comes next but they expect that to change anyway. It's you and
your team, expertise and willingness to adapt and endure that really counts. If they feel
you have it, they will work with you until your plan is investible.


In David's case, he has committed to a true in-house incubator of entrepreneurs, just
like that. Indeed, many investors have Entrepreneurs-in-Residence whose purpose is
to wait around until they have developed the right idea. So incubators, of one kind or
another aren't entirely dead. In fact, whole regions like Silicon Valley, according to
Robert Hoffer of Newforth Partners, an Investment Bank for early- to mid-stage
companies, are really large incubators. Rose is building one in New York while using the
overall experience to attract, anticipate and gather deals for his own funds or the NY
Angels group of early stage investors that he chairs. While some cynics may argue that New
York's idea of incubation is simply to leave the air conditioning off, in fact, this is
generating plenty of interesting deals. At the top of his list are a Fishing Community
website and Comic Book Portal. Fishing, as we learn, is one of the biggest recreational
communities in the country, while the demographics of Comic book fans are
surprisingly mature and well-heeled (25-35 year old males with decent jobs).

Howard Morgan's view is more of the jockey over the horse. He partners with idealab, one
of the great in-house incubators of all time. Aside from investing in big ideas on the edge
of a breakout like a hybrid vehicle that does 300 miles a gallon and a company that
provides all the solar energy roofs for Google, he looks at the 6 P's before
investing:

1. People - are you really the person for this company? Can an investor really work
with you?

2. Product - they have to flexible enough to position it where the investors think it
should go.

3. Profits - a monetization strategy.

4. Passion - can you fire up other investors, workers and customers .

5. Persistence - can you really stick with it.

As an investor, he is currently involved with VideoEgg, a web video hosting platform along
with other ventures in the online advertising category.

Robert Hoffer's, Newforth Partners looks for companies that can become fodder for M&A and
they like to bet on the technology and markets rather than the people. The people
running the company can change, he says, but we can predict where the technology is going.
His hot spots are any technology related to MPEG 4 and the digital distribution system
that accompanies it.

See the TechConfidential article on Howard Morgan and the iBreakfast

Report from the August Start-Up iEvening

According to this popular blog, our Start-Up iEvening event went to the dogs - well not exactly, its just that the winner was MyHound, an artists/entertainers newstracking site.


According to Dorian Benkoil "it was no Always On Summit, but a gathering of startups, VCs, angel investors and others interested in it all gathered for a New York version of PowerPoint-meets-VC on Wednesday. About 60 people crammed into a large boardroom for an "Innovator Evening" hosted by event entrepreneur Alan Brody of iBreakfast. Brody says these events have already gotten some $40 million in funding for new ventures......"

Click for the rest of the article

Report from the July Search iBreakfast

If you want to know where Search is headed, what Semantic Nets and Human-powered search are all about and, most of all, what Google has up its sleeve ,you need to read these reports on this milestone iBreakfast.

These reports capture the news and drama of this very important Search iBreakfast.

Red Herring iBreakfast Report

Silicon Alley Insider on the iBreakfast

Search Blogger