Supernatural Agency: Online business tales

Customers, clients- what if you did not have to deal with them at all?

Is a business a business if it does not require customers?

If you invest in a portfolio do you have customers?

If you never deal directly with your source of revenues are you a business?

These questions have been rattling around in the back of our minds lately. If we’re building an affiliate site, for example, and getting commissioned for referrals, do we technically have customers? Are the businesses we’re sending traffic to our customers?

If we’re parking domains and monetizing them with great content, are our visitors our customers? Do we owe them anything?

Our business cards are these cute little Web 2.0 cards from Moo. We got them because they are different and we are unconcerned about being ‘businesslike’ or ‘professional’ by the old standards. We don’t solicit customers and any networking we do is because we find it interesting, not because we need to do business development so the card is more like a calling card than a business card.

Ironically, people really like them and remember them.

So, we acquire our customers by joining programs or doing a good job promoting our sites. We don’t typically communicate with them face to face. We do get feedback via blog comments and the occasional email but 99% of the time this comes from peers doing similar things, not from someone who ‘did business’ with us.

This is a different business model. I think it’s something new…

We were at the bank today dealing with some stuff and I got into a detailed conversation with the bank manager regarding what we are doing. Because our media sites are dealing with a specific link between men and women (not porn and not dating!), I’ve been running my elevator speech past people to get their response, primarily with women, who tend to be a lot more pragmatic about business ideas.

This kind of research works if you are targeting regular people not web 2.0 geeks, bloggers and other technocrats. When targeting the man or woman on the street you don’t get to explain things, teach them about your idea or even spend more than a few minutes on it. You have to get right to the benefit, i.e. what’s in it for them?

Even better, once you’ve laid out your beautiful concept they should immediately start doing two things:

• Thinking of how their friends and family might use your service
• Offering ideas for helping you get off the ground

The woman at the bank did both. She loved the idea and immediately said she would tell her son about it, ‘because he does everything on the Internet’ and she offered some great feedback on a feminine response to the idea.

Now I’ve probably ran this concept past ten people in the past week and the response was completely the same. So even though it may not be the most technologically sophisticated idea we’ve ever had, it has the broadest market imaginable and people get it in two seconds, very often interrupting me to tell me what a great idea it is.

So what practical purpose does this serve beyond ego-gratification? I’m a marketer and I know that marketing a complex story to a wide audience is practically impossible. Telling about a very simple solution that anyone can benefit from is a lot easier. For example:

• Google. Go to a page, enter a question, find a good answer.
• Apple. Their current ad for the new iMacs has no messaging- just a beautiful flight around the elegant thing. Their iPhone launch ads showed exactly how easy it was to do stuff with it. Dead simple and they had everyone talking, not just the gadget freaks.

We don’t want to fight for attention. We just want to simply explain what it does and why you’d care. My ‘research’ is telling me that is going to happen. I’d recommend the same approach to anyone with a new idea for a business. If a regular person has no idea what you’re doing, you need to refine your message unless your target audience is nuclear physicists or uber-geeks.

“The other good thing about the tech sector is that it is mostly debt-free. If anything, tech firms are over-capitalized, which is why they’ve been using their huge cash piles to buy back stock during the last few years.
Tech firms don’t have to borrow to fund their growth, which means they aren’t likely to get hurt if corporate credit standards tighten.”

That’s John Shinal from Marketwatch. His point is that in a market meltdown like the one we’re currently experiencing, tech stocks are a refuge because they don’t depend on debt to run their businesses. Why am I writing about this? Because the companies we’re building, and I speak collectively for any Internet-enabled start-up, are fundamentally different than businesses whose ability to function is largely based on their ability to borrow. We don’t make things, nor do we use debt to leverage investments. And neither does Apple, Google, Cisco, etc. They make things but they don’t really. Wha…?

They design and market things. Their computers, iPods, switches and server farms are not made by them, they’re made by contract fabrication companies in Asia. What they make is intellectual property. The interesting thing about IP is it is not capital-intensive, it is brain power-intensive and environment-intensive. By environment-intensive I mean that these companies have created a business environment that nourishes focused creativity, creativity that has a basis in market reality.

The businesses going down this week are banks, mortgage lenders, M&A companies, hedge funds, etc. These businesses are little more than gambling operations. They borrow (or convince investors) and gamble that the can resell the money at an incrementally higher rate. The past few weeks the house has called their bets and the markets have swooned. In the meantime, the tech companies have accumulated piles of cash from selling superior technology and automated digital services and are relatively separate from the fluctuations in capital markets.

Our business model is the same thing, albeit on a microscopic scale in comparison. We provide services that don’t require a lot of bodies and hardware to scale. We don’t need a line of credit, in fact we probably don’t need a real venture round (I may regret committing that to print- wait, there’s always Delete!). We really don’t need anything except time, energy and imagination (and a broadband connection).

Guy has a guest post today from Glenn, founder of Redfin, a web 2.0 real state site. Glenn goes over the crazy things start-up CEOs put themselves though mentally and otherwise.

Here’s some quotes:

“The megalomaniac pleasure of creation,” the psychoanalyst Edmund Berger wrote, “produces a type of elation which cannot be compared with that experienced by other mortals.”

“Start-ups are freak-catchers.”

“Fearless leaders are often terrified.”

“Even in the darkest of the Dark Ages, people were nostalgic for…the Dark Ages. Start-ups are like medieval monasteries: always convinced that paradise is just ahead or that things only recently got worse.”

“If you don’t believe you have any reliable competitive advantage, you’re the kind of insecure person who will work your competition into the ground, so keep working.”

“A Sequoia partner once told me that competition only starts when you hit $100 million in revenues.”

Hoo Ha! Good stuff- read it and reap.