Friday, November 27th, 2009

Which Web Sites Teenagers Like And Why

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I’m fascinated with how teenagers are using the Internet these days.

Teenage Internet use has reached 82% in the U.S. (for ages 12 to 17) and 43.5% of children ages 3 to 11 will use the Internet on a monthly basis in 2009.

That’s 32 million teenagers using the Internet regularly just in the U.S. — teenage Internet usage worldwide is likely more than 60 million.

I decided to do a very unscientific poll of teenage Internet usage: I asked my 18 year old nephew Miles and 15 year-old niece Ruby a set of very open-ended questions.

😉

Here’s the Q&A:

Q: What’s your favorite Web site?

Ruby: StumbleUpon. We did it last night…we were too lazy to find a site ourselves.  You can stumble upon art for instance.

Miles: I don’t have one…except ThemThangs.

Q: Do you use blogs?

Ruby: I use a lot of blogs…for photography and art. I can’t name any but I use them all the time.

For example, when I searched masquerade pictures on Google recently, I found blogs listed.

Miles: I don’t have one…but I sometimes read them.

Q: How do you feel about Facebook?

Ruby: I hate that it controls people’s lives. I’m only on it when my friends don’t have phones — because they will send me a message via Facebook instead…so then I check it.

It’s always in every conversation…you can’t avoid it. We were walking down the street yesterday and this girl said: “Did you get any turkeys in Farmville” (Farmville is a game on Facebook).

Someone was at school and said they had to go home cuz they had four turkeys in the oven.

Miles: I hate it…but everyone does it so…I guess it’s ok. I have one (a Facebook page).

Q: How do you feel about Twitter?

Ruby: I know people use it but I don’t have one. Not many kids use it.

Ruby: Some people get carried away with it…people use it to say that someone wrote an article…and that’s useful. And you can do it by phone so that cool.

But I heard about a husband tweeting about what he was eating for dinner….and that’s ridiculous.

Miles: I don’t use it…but I’ve heard people refer to it — I can see how it’s useful. Some of it is cool but I’m sure most of it is bullshit.

Q: How do you feel about MySpace?

Ruby: It’s life consuming for people but not essential — kind of a waste of time. Some friends use it to get in contact with bands.

One thing I’ve noticed is that the term “MySpace picture” is a new term” that kids use these days…if someone is taking a picture of themselves with a friend, they call it a “MySpace Picture” (even though the picture is not just for MySpace (it may be for Facebook)).

Miles: It’s outdated. The MySpace era ended…because of Facebook. People had MySpace’s and suddenly their headlines started saying: “Go find me on Facebook.”

I think Facebook is more innovative than MySpace…and it’s easier to use.

However, I like the creative side of [using] MySpace — they allow you to be more creative.

Q: How do you feel about Google?

Ruby: I like it. It’s very easy to work. Very efficient…and a lot of pictures.

Miles: It’s cool. Basically, anything I type in there I can find. Even with videos, there’s a video for every thing.

If I’m trying to look for song lyrics, for instance, I can type a variation of it and find it.

Q: How do you feel about Microsoft?

Ruby: That’s what Apple doesn’t run on, right? The one Bill Gates started, right? I don’t really like it — it’s not efficient. Too hard to work.

Miles: I don’t really use it at all. Earlier today, I said I wanted an xBox…and that is the only product from Microsoft that I want.

The only thing I currently use by them is Microsoft Word.

Q: How do you feel about Apple?

Ruby: I like it…though it’s frustrating that they come out with new things so often like the iPods and computers — it’s frustrating because you always want the new one.

It feels like it’ll never stop.

Miles: I like it a lot. Their products are all very cool-looking and simple…all state of the art and sleek.

Their computers are so easy…you just open it and use it. It’s very attractive.

With PCs, it’s very 90’s…shitty. If you’re all fried out on a computer, the Mac is easier to deal with than a PC. It’s more visually appealing.

Q: How do you feel about Bing (Microsoft’s new search engine)?

Ruby: I hate it. My school computers converted to it. The default search is Bing but I can’t stand it so I change it to Google. I’m so used to Google…Bing is hard to get used to.

Miles: I’ve seen the TV commericals about it…where they claim Google is random and inaccurate and Bing is more accurate. I don’t believe that.

The image search on Bing is not as easy to use. Google does just fine.

Q: How do you feel about Ebay?

Ruby: I’ve been using it…because I’ve been wanting some used things like clothes. If I had money, I’d buy these things…but I’m broke.

The two things I use it the most for are camera and clothing.

Miles: I used to use eBay but it’s frustrated when you are bidding on a product and then someone else wins with a skyrocketed price.

I prefer Craigslist.

How do you feel about Craigslist?

Ruby: I like it. I go on it for bikes…if I was going to buy a bike, I’d use it. But, again, I don’t have enough money.

Miles: It’s cool. I use it a lot to look at people selling bikes.

It gives me an idea of stuff I’d like to buy…price ranges for different things.

I like it more than eBay because you don’t have to bid…I can just meet a guy and get it.

How do you feel about Blackberry?

Ruby: I got mine awhile ago…the night I got it I got really mad about it because it made me like everyone else.

[my sister (her Mom) interjects at this point and says: “You can sell your BlackBerry then.” Ruby replies: “No, I do want it!”

Miles: For work and stuff it seems fine. It’s sort of a fashion thing for the girls I know.

Guys I know seem to prefer iPhones. I don’t understand Blackberries for teenagers.

I just don’t think you need [a smart phone]; plus they’re pricey…and I think they’re too distracting (for teenagers)

How do you feel about Wikipedia?

Ruby: I don’t trust it for English or History classes because the information can be false…but I use it for some other things.

Miles: I like a lot. I know people say everything’s fake…sometimes it disappoints me when I’m looking for something basic but most of the time I can try anything.

I like how some things are highlighted in blue…it’s referenced to another page — that’s a fun way to learn about stuff.

How do you feel about Digg?

Ruby: I’ve never heard of it.

Miles: What is it?

How do you feel about Yahoo?

Ruby: I used to use it for horoscopes and that’s it. I’ve never had a Yahoo account.

Miles: I don’t use it very much. I know people who do…but basically I was raised using Google as a search engine.

How do you feel about YouTube?

Ruby: I use it a lot…cuz I don’t have money to buy iTunes songs so I just watch the music videos on YouTube.

Miles: I like it a lot. It’s getting to the point where it’s like Google…you can type in virtually anything and it’s there.

Type in “How To,” for example, and you can find options for how to do anything. I’ll find myself on YouTube for hours.

I’ve figured out how to do math homework using it…people explaining equations.

And there’s crazy footage of accidents and other weird stuff.

Also, if you don’t want a buy a song on iTunes, you can just type it into YouTube and listen to it.

How do you feel about iTunes?

Ruby: I like it. It’s too over-priced though. They changed the songs to $1.29 and that’s too much…I’d rather buy a CD and upload them.

Miles: iTunes is cool. They just recently made it all new. I don’t like that as much maybe cuz I’m used to the old way.

But they don’t have everything…I understand how some bands just don’t put their songs on iTunes (like the Beatles).

But I’m really against downloading music online…because it’s totally killed record and CD-buying culture.

How do you feel about Amazon?

Ruby: It’s good for things you want cheap and don’t mind if they’re used. It’s a good site.

Miles: Amazon is cool…but I don’t use it cuz I’m not sure how it works. Is it just people like you and me selling stuff or real companies? (I told him both).

How do you feel about Flickr?

Ruby: A lot of my friends use it so I look at it when I’m at their house.

Miles: I like it…I don’t know how to work around it very well. Often times I’ll find myself on there because I found something on Google Images and I clicked on it.

Often times I find myself on there by mistake…but I still like it.

How do you feel about LinkedIn?

Ruby: I don’t know what it is.

Miles: I don’t know what it is.

How do you feel about AOL?

Ruby: It’s like Yahoo, right? A copy, right? I don’t have an account.

Miles: I don’t use it whatsover. Sorry. Is that a search engine also. I don’t know what it is.

If you owned the name Purchase.com, what would you do with it?

Miles: It sounds like another CraigsList or eBay or Amazon. It sounds like some place where you can buy stuff…but that’s sort of boring.

Or, what could be cool to give you a list of Web sites that are available for business-people to buy: Web sites people are trying to sell.

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Tuesday, November 24th, 2009

Thought Leadership in Business: The Top Ten List

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I met a woman recently who’s focusing her career on Thought Leadership…and then I ran into this terrific Thought Leadership poll out of the U.K that happened to be released today.

Coincidence? I think not. 😉

So I thought I’d do a short posting on the subject.

The poll is from TLG an Populus and you should click here to follow up on more details of their poll or their services: TLG Blog

TLG defines effective Thought Leadership companies as ones who can help change consumer behavior to generate positive social outcomes. Here’s another definition from WikiPedia: Thought Leadership definition.

And here’s their list:

[it’s neat to see relatively new entrepreneurial thought leaders (such as Facebook and Twitter) so quickly joining the list of other heavy-weights]
Top 10 Business Thought Leaders 2009

The top two were:

1. Apple (up from #2 last year)

2. Google (down from #1 last year)

…then there was a three-way tie for 3rd:

3. Microsoft (unchanged from last year)

3. Amazon (new to the list)

3. GSK (unchanged from last year)

two companies were tied for 6th:

6.  Co-operative Group (down from #4 last year)

6.  Marks & Spencer (unchanged from last year)

…And these three rounded out the list

8. Facebook (new to the list)

9. Virgin Group (slipped from #5 last year)

10. Twitter (new to the list)

The Thought Leadership Index also ranks non-profits and I’m not suprised that the Bill & Melinda Gates Foundation ranked #1 in that group.

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Monday, November 23rd, 2009

Why The Home Page Is Dying & What To Do About It

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The homepage used to represent the online focus of a brand, establishing the point of first contact for the consumer and allowing the company to establish a digital presence.

This is no longer the case.

With increased fragmentation among traditional media channels and even within the content itself, companies must adapt new strategies to best suit the ever-evolving online world.

Given the number of web properties available to consumers, they are now more likely to land on a company web page from another web destination.

In fact, as of 2008 75% or more of corporate web traffic originates from a source other then their own homepage (Schmitt, 2008).

This is largely due to the emergence of Blogs, Social Sites, Search and RSS feeds as primary feeder points for almost all information on the web (Schmitt, 2008).

One important implication of this is the decline in premium pay sites, such as Times Select.  This was dismantled in 2007 as a result of the overwhelming traffic it was generated stemming from large numbers of links from blogs referencing articles.

According to paidcontent.org, they walked away from nearly $10 million in annual revenue to refocus their revenue generation strategy around advertisements rather then subscription service.

While this trend is affecting all brands none are as adversely impacted as major TV networks that are desperately trying to lock in content distribution deals with video portal sites such as You Tube and Yahoo! Videos.

While TV networks are leading the charge away from homepages, largely due to the increasing demand for more instant and relative info, companies will most likely not see the return of the homepage in the near future if ever.

Digital marketing agency Razorfish reported at the end of 2008 that more then 70% of consumers originate their web experience from a search portal, while 60% start form customized start pages and 56% from RSS feeds.

Given the decline of the homepage, there are four important implications for marketers which must be considered:

1) Traffic Distribution Metric

This key metric should be established to measure all traffic in (via search, referrals, or direct) and out of the homepage in light of the various points of origin prior to, and destinations after landing on the homepage.

Razorfish suggests that a key benchmark is 65% of all traffic ending up on pages other then the homepage itself should originate from places other then the home landing page.  This standard has been adopted as the norm for socially savvy websites and will quickly become the standard in which to compete for traffic.  (Schmitt, 2008)

2. Every page is the homepage

Due to increased access to all pages on a site stemming from fragmented points of origin, each page must be treated as if it is the primary landing page.

More specifically, there is an increased chance that consumers will land on any page within the site due to referrals, blogs and search, so greater attention is needed to ensure that the consumers first point of contact with the brand is clean and well presented.

The clarity of content and access to other aspects of the site should be accessible on all pages. (Schmitt, 2008)

3. Web 2.0 Toolbar

Given the need for content distribution, all pages should incorporate a toolbar that facilitates viral distribution.

Applications that enable such mechanisms include Digg and Reddit and should also be used to distribute video content if available to sites such as You Tube and Facebook, broadening the scope of reach as much as possible.

Linked content appears higher on Google powered search results then non-linked content further justifying this web 2.0 integration.(Schmitt, 2008)

4. Performance Tracking

Measurements of success are now dictated by so many different syndicated content locations that it is important to measure the success of websites from all angles. Emails, Applications, downloads, blog links and search results all occur off site but are still valuable in determining and segmenting ROI. (Schmitt, 2008)

As online media becomes more inherently dynamic and new channels emerge, the strength of the homepage will be continually diluted.  As such, markets must adapt to newer, more disruptive consumer behaviors and expectations.

Increased media channel fragmentation driving the decline of the homepage can be attributed to the rise in search and social media.

The combination and power of these two channels is driven by the rise in user-generated content flooding the web – this will only continue as consumers develop increased comfort with technology as it becomes cheaper, faster and more accessible.

How will your company adapt to the new digital landscape?

Note: The above is an exercpt from a thesis written by Daniel Neukomm.  A source for the excerpt was Schmitt, G. (2008). “White Paper: Does the home page still matter? Why distribution trumps destination for publishers and advertisers.” San Francisco: Avenue A Razorfish.

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Thursday, November 19th, 2009

How to Leverage Social Media For Your Business

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Social media is changing the way consumers interact with information and products…and it’s likely going to change your business.

One person specializing in social media for business is Sacha Cohen, CEO of Grassfed Media, an integrated communications company that serves green and socially responsible companies.

Her clients have included National Geographic, The Washington Post, and AARP.

Sacha was kind enough to answer some questions regarding social media and business.

Q: Here’s a lob-ball question to start us off with: would you define social media for us?

Ah, the million-dollar question. Generally, it refers to user-generated content (blogs, video, social networking sites, etc) that enables people to interact, share information, and communicate online.

Here’s a cool little video that illustrates the concept of social media better than I could ever explain in a few words: Social Media in Plain English.

Q: Would you give us a little “Social Media 101” on the top few social media tools (LinkedIn, Twitter, Facebook, etc.) — and how a business should participate in each?

I’m going to point you to Mashble’s Social Media 101 Guides which has, for example, these how-to tutorials and many more:

• How to Measure Social Media ROI
• How to Make Facebook Your Company Newsroom
• A Small Business Guide to Wikis
• How to Integrate Facebook With Your Blog

What I will say is that no matter what forum you are participating in or what tool you are using, becoming familiar with the etiquette and conventions of each is critical.

Chris Brogan, who is something of a social media god, offers this excellent Twitter Etiquette Guide.

Q: Your firm provides social media marketing services for socially conscious businesses — would you elaborate on challenges a business might face that you can help them with?

The social media universe is constantly changing and evolving. I’ve found that many businesses are overwhelmed by this new world; I help them navigate through it.

The other challenge is having enough bandwidth to successfully engage through Twitter, Facebook, LinkedIn, etc. They can all be huge time-sucks if you’re not careful.

On the other hand, they can be extremely useful for connecting to customers, product development, and marketing-it’s a matter of focusing on goals and staying on message.

Q: Whose job within a business is it to set social media strategy?

There’s no one-size-fits-all, but it’s usually a collaboration between marketing, PR, and customer service.

Q: What do you think are important new social media trends happening right now?

Here  are three:

1. Social media for social good (e.g. Fledgling Wine)
2. Mobile and local social media (e.g. Four Square)
3. Mass mingling
   

Q: Would you list examples of businesses using social media most effectively?

Love this one. Here are my top picks: Zappos, Virgin America, and Starbucks. As for non-profits, I’d have to say the Nature Conservancy and Share Our Strength.

Q: You mentioned that you used social networking to increase conversion 17% for one of your clients — what can you tell us about how that worked?

Actually, it wasn’t a client. It was a company I worked for full time. We were able to increase conversion by introducing product reviews and rating with help from a company called Bazaarvoice.

Customers want to know what other customers think; they want real, unbiased opinions. That’s what we delivered and it was a huge success.

Senior management was very resistant at first, but by showing them the research and best practices from other companies, they eventually saw the light.

Q: How do you see social media and public relations working together to grow a business?

Honestly, these days, you really can’t have one without the other. People are talking about your product and company, whether you know it or not.

The questions is: Are you going to ignore the conversation or join it?

Q: What are Top Essential Tools You Recommend for Twitter? (this was added after the original Q&A)

1. TweetDeck — This is a must-have Twitter application. It can help you manage multiple Twitter accounts, keep track of mentions and friends, help you find other people to follow, and more.
2. Twitter Grader — Find out how you stack up to other Tweeters in your area.
   
3. TwitPic — Easily upload photos to Twitter via your phone or the web.
4. Twellow — You’ve signed up for Twitter. Now what? Find people who share common interests on this Twitter directory.
5. Qwitter — Are you posting good content? Keep track of who is unfollowing you with this clever notification tool.

Q: Thanks, Sacha! If someone wanted to get in touch with you, how should they do so?

They can email me at [email protected] or call me at 202-234-0104.

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Monday, November 16th, 2009

What is Affiliate Marketing? — Tips From a Veteran

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Pam White has helped affiliates sell millions of dollars of  products…and those sales were made at little risk to the affiliate marketer’s she managed, as they were primarily performance-based (they didn’t layout any cash until the products were sold!)

She generously agreed to answer some questions to help us understand the affiliate marketing business.

Q: Welcome, Pam. A lob-ball question first: What is online affiliate marketing?

A good description, I believe, is “selling other people’s stuff” on the Internet and receiving a commission for doing so.

Q: If you’re a business, and you have products to sell, how do leverage affiliate marketing?

Determine the financial benefits of handing over the marketing expertise of a “staff of affiliates”, versus the cost of marketing the product through your own marketing department’s expertise.

Does the competitor have an affiliate program?  Maybe you should consider it as well.

Q: If you want to run a business, but don’t have any products of your own, how do you leverage affiliate marketing?

1. Learn all you can about affiliate marketing – in general.  SEO, PPC, etc.

2. Research products or services of which you have expertise and are passionate about.

3. Analyze keywords and quantity of searches performed for the   niche.

4. Realistically analyze your budget and ROI goals

Q: You mentioned earlier that the top affiliate marketing programs are offered by Commission Junction (CJ), Sharesale and LinkShare — please tell us more about each of them?

Commission Junction /LinkShare/Shareasale and many other networks, contract with hundreds of merchants selling products, and for a fee, handle the management, tracking internal listing of the Merchants Affiliate program.

Those interested in joining an affiliate program within the network can peruse the various products offered once they have completed the signup and approval process.

Generally speaking, however, the affiliate must have a domain name and website or blog to be approved to sell the merchant’s product.

Q: You also mentioned, that if you’re selling a service you can utilize Clickbank: how do you make money with Clickbank?

Clickbank is similar to CJ, in that there are several merchants listed in the Clickbank Marketplace and you can choose which products you wish to promote.  With most merchants offering up to 75% commission per sale, it’s very popular for those wishing to sell digital products or membership site offers.

Q: What’s the “Clickbank Elite”?

Clickbank Elite is a program sold by a 3^rd party merchant that extracts the “hot” selling products at Clickbank as well as cloaking the Clickbank generated hoplinks.

Q: I understand that Google has entered this space — what are your thoughts on the Google Affiliate Network?

I must be honest and say that I’ve not had the opportunity to search their offers or speak with any Merchants who are currently using the Google Affiliate Network.

Q: Speaking of Google, I hear stories about affiliate marketers who receive “Google slaps” — What’s a Google Slap?

A Google Slap occurs when Google views your website’s content and the Adwords keyword used to drive traffic via that ad to your landing page as not relative, or of poor quality.

This will result in an increase in your PPC costs to as high as $10.00 per click.  Additionally, your page rank, and thus your Quality Score, will be adversely affected.

Q: How do you avoid getting Google-Slapped?

Consider the keywords you are bidding on and the landing page and Adwords Ad group to make sure that they all “relate” to the content on the landing page as well as offer value to the visitor.  Be sure the page has adequate “original” content.

A great place to learn all the basics of Google Adwords is from the Google Adwords Learning Center. You can also view the Youtube videos published by Google.

Q: I hear that Pay Per Click (PPC) is key to affiliate marketing — would you elaborate on that, including defining a PPC Affiliate?

A Pay Per Click affiliate bids on and pays for each click on his targeted Sponsored ad at Google, Yahoo, Bing or any PPC network.

PPC is the key to gaining an immediate presence for your brand or campaign in the search results.

Q: What do you consider to be the best affiliate marketing program of all time?

I don’t know that I’m qualified as an expert on that question, so I’ll go with Amazon, since they were one of the first to enter the space.

Q: Who do you consider the best affiliates in the marketplace?

Not to hedge that question, but “the best” I believe, would be relative to the vertical.   Best CPA, Best CPL, Best CPM.  I haven’t worked in all those verticals.

Q: What’s a super-affiliate?

Again, this is relative to the vertical.  A “super-affiliate” may be an individual, an agency, or a network.  It’s any affiliate that has the ability to drive high volume sales (consistent with the niches expectations) which outperform the “average” amount generally produced over a given period of time.

Q: What’s the best way to recruit super-affiliates?

Network, know the competition, review who is the top PPC advertiser in your niche, identify them through various online tools, contact them, present your offer and metrics and invite them to join your program.

Q: What’s the best way to learn affiliate marketing?

Forums, Blogs, E-books, Industry leaders, Google Learning Center, Articles, Mentors, Coaching programs, trade shows like Affiliate Summit. Twitter, Facebook

Q: What’s a good affiliate marketing website to check out for beginners?

Affiliate Tips owned by Shawn Collins, who is also the co-founder of Affiliate Summit.

Q: In our last conversation you mentioned ABestWeb.com — would you describe the affiliate marketing forums they provide?

Basically, almost any network you choose to join will have a corresponding forum at ABestWeb where you can discuss openly any issues, complaints, questions, or accolades you wish and have it viewed and answered by a moderator/associate of that particular network.

Q: Thanks for sharing your perspective, Pam. If someone were to want to get in touch with you, how might they do that?

You’re more than welcome.  Those who wish to reach me may do so by contacting me at my e-mail address [email protected].

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Sunday, November 15th, 2009

How to Raise Money Using a Bridge Loan or Convertible Note

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If you’re raising money for your business from friends and family or angel investors, I recommend you consider using a convertible note or bridge loan to do it because it is typically cheaper and quicker than raising a “priced” round (in which you sell stock at a certain price).

Here are the main things you need to know about bridge loans/convertible notes:

Q: What is a bridge loan (or convertible note)?

A bridge loan/convertible note is simply interim financing until the next round of financing can be obtained. The word “convertible” is often used since the bridge loan will “convert” into equity at your next round of financing.

Q: Why use a bridge loan/convertible note versus selling stock?

• It typically costs you less than selling actual stock — You can get a bridge loan administered for a couple of thousand dollars or less.
• Fewer attorneys involved — Investors are less likely to ask their counsel to review it .because it tends to be a shorter document that is less complicated than a stock agreement.
• You don’t have to set your valuation yet — A bridge loan is simply a loan that will convert into equity later when a valuation is set (typically during a larger round of financing).

Q: During which stage of financing is a bridge loan/convertible note most useful?

I find them most useful during the initial seed financing rounds of fundraising such as taking on a small amount of money ($500,000 or less) from private angel investors or friends and family (as opposed to venture capital firms).

Q: How long should a bridge loan be for? (what should the length of the term be?)

It will typically be one year or less (it should be timed such that the maturity date of the bridge loan is due roughly around the time that another financing (or liquidity) event occurs for the company.

Q: What should the interest rate for a bridge loan be?

A: The interest rates for convertible bridge notes vary but tend to be around five percent greater than the Federal Reserve rate (one point of reference: California laws dictate that there should be a cap of 10% on the bridge note interest rate).

Q: What happens if you reach the maturity date of a convertible promissory note and there hasn’t been another round of financing or liquidity event (and your company doesn’t have the money to pay back the loan)?

In this event, you can:

1) Ask the investor to extend the maturity date

2) Convert the loan into stock based on a price you pre-determined or a price you determine at the maturity date.

Q: What is a conversion discount (or warrants) for a bridge loan?

A “conversion discount”(or warrants) is a future discount that you provide to your investor (the person giving you the bridge loan) in the event that you do raise another round of money or have a liquidity event.

The conversion discount generally ranges between 20% and 40%.

So, for example, let’s say you get your bridge loan and offer a 30% conversion discount and then later you raise a Series A round of venture capital at $1 per share. Your bridge loan investor would then receive one share of stock for each $.70 that he loaned you.

Q: Do you have an example of a convertible note/bridge financing term sheet?

Here’s one: Convertible Loan Term Sheet

Q: Are there any drawbacks to taking a bridge loan?

If you take a bridge loan and can’t pay it back at maturity then an investor can technically use that as an “event of default” which could lead to bankruptcy — the way around that is to accept the bridge loan from someone close to you who you trust to see you through such a scenario.

Additionally, to protect yourself, you can try to get language into the bridge loan which converts the loan into something else (no matter what).

Final Thoughts

If you want to read more about bridge loans/convertible notes (which are also called “convertible promissory notes”), a great resource can be found at Convertible Notes by Yokum Taku, an attorney at Wilson Sonsini Goodrich Rosati (WSGR) in California, USA.

I have worked with the WSGR law firm on one of my startups and highly recommend their services. In fact, one of their attorneys was so good, I eventually hired him as our general counsel!

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Friday, November 13th, 2009

How to Master The Design Process: Six Easy Steps

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My friend Jessica has designed products ending up in such places as Pottery Barn, SF MoMA and Barnes & Noble.

She also teaches Product Design in the Mechanical Engineering department at Stanford University.

I ran into her at our favorite San Francisco Mission coffee house recently and talked her into sharing her thoughts on the design process as it relates to business.

Q: Why is a product design process important for business?

Product design is a lot more than just the design of an object.  It is a process for creative problem solving.

The design process can yield great products, but the process can just as easily help to create unique solutions to problems in any other area of business.  The design process is a way to think, create and come up with new ideas.

Objects and solutions don’t just appear. It is a time consuming and detail oriented process.  However, it can lead to great results, get you thinking out-of-the-box and you might even have some fun in the process!

There are design consultants of all sizes and types that can come in and facilitate this process for any of your needs.  Each firm or consultant has a specific focus and their own process, I am going to discuss the basic process that I use.

Q: What are examples of when design processes should be applied in a business?

A creative process can be applied anywhere.  I use the process to help me when I am stuck or need inspiration in any area of business….it does not have to be design related.

As the founder of a toy company, I have used this process (or parts of this process) to plot the overall direction of the marketing, branding and the general trajectory of the company.  Of course, I also use it to design toys!

With clients, I often map out the process to show them exactly what I am doing for them.  It also helps to keep them involved.

As an external consultant, I cannot design in a vacuum. We all need to work together as a team.  Especially in the Analysis and Definition stages, I can lead the process, but the trajectory ultimately needs to come from the client.

Being a designer is not a solo job.

Q: Do you have a design process diagram you could share with us?

This is a basic representation of the process that I use. It is an adaptation of the design process that Don Koberg and Jim Bagnall describe in The Universal Traveler.

Q: Would you explain each of the six steps of your design process model in more detail (I’m especially interested in the ideation phase)?

As shown in the diagram above, design is a process.

Step 1: Analyze

To design an object you need to understand the area surrounding that design.  Why are you designing this object? What is the need or problem that you are trying to solve?

What else is out there? What is your competition?  Why is your competition not filling the need?  Who is going to use it?  Where is it going to be sold?

The list goes on and on….

You can do this in a number of ways.  Market research, talking to primary or secondary users, formal interviews, market surveys and observation are a few of the methods.

Why don’t we pick a need and walk through an example together.  Let’s say you were annoyed that your bike seat got wet in the rain and you wanted to design a cover for it.  How would we go about doing this?

First we would look at stores, catalogs and bikes we see around to see what other solutions exist. We might talk to bike commuters, people who worked in bike shops or kids who ride to school.

We might see how others are solving this problem or are you the only person who has this specific problem….if it is just you, your product might not be such a huge success and we might want to just make one.

This is also the phase when you should question your mission and try to look at it from a new perspective entirely.

Is a bike seat cover really the answer, or do we really need to create a new form of transportation that is rainproof?  Or should we really be creating a way to stop rain all together?  Would waterproof pants solve the problem instead?

Is the bike seat cover really the best solution to your problem or is it just the first thing you thought of?  Take a moment to explore other directions.  We might end up back where we started, but we should take time to consider this.

Step 2: Define

Once we have analyzed the marketplace and environment that we are designing into, we need to define the goals. What are the specific design principles where we will not compromise?  Who are we designing for?  What qualities does the product need to have?

Is our bike cover for bike cover for tri-athletes that have very high-end bikes? Is it for college kids with no money?  Is the price important? Are your users eco-conscious and do we need to consider that?  Is aesthetics an important factor?  Is convenience important?

Does it need to stay attached to the bike so it doesn’t get lost? Are our users somewhere where it might get stolen and does it therefore need to lock?

The list goes on, but the designs that emerge will be vastly different based on the answers to these questions. This is especially important when designing with a team. If everyone is not going down the same path, we are going to have major problems.

(This is why when I design for a client group, their involvement is imperative!)

Once we list out all our design criteria and everyone agrees to them, we are ready for the ideation phase!

Step 3: Ideation

Ideation is also known as brainstorming. This is where you should go big and not be afraid to get a bit wild.   The ideation phase is a divergent phase.   We go wide, looking for quantity over quality…yes, quantity, not quality!

There are a number of different brainstorming techniques that you can use.  But the main rules of brainstorming remain the same.

RULES OF BRAINSTORMING:

• Defer judgment -Don’t edit yourself of others.  No idea is stupid!
• Encourage wild and crazy ideas (Maybe we should all move to the moon and bounce to work instead of biking?)
• Build on other people’s ideas.  Steal, Steal, Steal!!  Take other people’s ideas and leapfrog off them. There is no claiming credit in a brainstorm; it’s all about working together!
• Stay focused on the topic.  Your ideas can get wacky, but keep generally focused on bikes and rain.
• Have one conversation at a time. If you are brainstorming in a group, let other finish their thought. Jot yours down so you wont forget them in the meantime.
• Be visual. Drawing conveys ideas; you don’t have to be Rembrandt, stick figures are great!
• Go for QUANTITY!!!  (We make our students come up with at least 100 ideas before they can pick one to work on).

SUPPLIES:

• Big paper or a white board
• Comfy chairs
• Caffeine and snacks
• Items for inspiration. (In our scenario, we might have a bike, an umbrella and any existing seat covers on the table for inspiration.)
• Open minds!
• In a group, it also helps to pick a facilitator to lead the brainstorm.

There are a number of techniques people use to brainstorm from listing, to different uses of perspective.  Any technique is fine as long as it gets creativity flowing.  My favorite technique is mind mapping.

Mind mapping is the equivalent of a writer’s free-writing.   Mind mapping is simple, you write a topic or question in the center of a paper.  Then as quickly as you can, branch out and write or draw ideas.  Topic areas will naturally form as you branch off each other.

Q: Do you have any mind map examples you could share

Sure, here’s one example of mind mapping:

When I mind map with a partner, we both write as fast as we can, when we see our writing start to slow down, we rotate the paper and start to branch off of each other’s ideas.  We keep rotating until the paper is full.

Now that you have a huge stockpile of ideas, it’s time to converge again.

Q: Ok, sorry to interupt. What’s the next step in the design process?

Step 4: Select

Don’t forget to look back at those design criteria from the define step.  With those in mind, we will pick 3-5 ideas that we like from the crazy brainstorm.  There should be some really fun ideas that don’t fit the criteria, but hopefully we can find a few that could.

The selection process can be as formal or as informal as we want.  We can pick based on our favorites, we can hold a team vote, or we can use a more formal decision matrix. (I wont go into the details of that here, but it’s an mathematical way to make a decision.)

The decisions might be made due to cost, or manufacturability or just how cool the idea is. Whatever direction we choose, we need to make sure we all know why we are choosing it.  All these reasons are valid as long as we understand our motivations.

After one more check to make sure everyone agrees on the concepts and to make sure all the criteria can be met, we are ready to implement!

Step 5: Implement

Now that we have a direction (or a few) it is time to implement our ideas.

Designer will consider implementation anything from sketching to prototypes.   The quicker or faster we can prototype something, the faster we will be able to evaluate it and move on.

A designer’s motto is “Fail Early, Fail Often!”  Test all the crazy ideas; just don’t invest a lot of time or money to do this.  Ugly prototypes out of foam core or cardboard are great!

If we are testing our bike seat cover, maybe we spend 30 minutes with a garbage bag and an empty soda bottle to test a concept.  All we are doing is seeing if this concept is worth moving on to a more advanced prototype.

There is no point in wasting time or money on something that we can prove wont work with 30 minutes and stuff we found lying around the office.

We build to learn. The first idea might inspire our second and we will certainly take what we learned with us.

Don’t fall in love with any of the ideas! This will cost time, money and heartache.  Test it and move on if it doesn’t work.

Step 6: Evaluate

Now it’s time to debug the prototype.  Take a step back and evaluate it with a fresh set of eyes.  After we do this a few times, and we think we have something good, we are ready to get some feedback!

It is time to take our prototype out for a test run!  The point at which we can do this depends greatly on what we are making, but the earlier the better. Get it in front of users and get feedback!

People often think they can judge a design themselves. Unless you are creating something that is only for your use, get other people to tell you what they think. They will think of things we never could.

Maybe our design only works for tall people, or people that have both hands free at that moment.  Maybe there is a social stigma that we are not aware of for some users. Testers will be honest. We will take their feedback and go iterate.

Iterate

The design process is iterative.  We will cycle through this process many times in the creation of a product.

Express-Test-Cycle is another way to look at this phase of the process.  Express or build your idea, test it and then iterate!

We will do this on a macro and micro scale.   The same process we just went through for the overall design will work for the details.  For example, we might do an entire mind map and implementation on how one hinge is going to work in our overall bike cover design.

Ideate and iterate at ever stage and for every part!  Our final results will rarely resemble where we started.  (If it does, we are probably not working the process correctly.)

Q: What are some design tips that most non-designers wouldn’t be aware of?

Come up with crazy ideas. Don’t be afraid to get silly.  They might seem ridiculous, but they can also spur other ideas that may in fact be great.

Remember when we were 5 years old and imagination was endless?   Try to recapture that part of yourself!  It’s still in there!

Only positive energy and positive comments are allowed during a brainstorm.  Don’t edit yourself or others.  There is no such thing as a stupid idea.

Come up with as many ideas as you can…narrow them down later.

Don’t fall in love with any one idea. This will make it easier to test them objectively and move on if necessary.

Q: Let’s put me on the spot: do you have any blog design tips for Purchase.com?

Yup!  Invite friends over and do a brainstorm!  (I am happy to come facilitate.)

Q: What are you favorite books about the design process?

The books that we often recommend to our students are:

• The Universal Traveler: A Soft-Systems guide to creativity, problem-solving and the process of reaching goals by Don Koberg and Jim Bagnall
• Experiences in Visual Thinking by Robert McKim
• Rapid Viz by Kurt Hanks and Larry Belliston

Another good book is Back of the Napkin by Dan Roam (This is a more recent book. It does a great job at showing non-designers how to use visual thinking techniques.)

Q: Thanks, Jess. If someone would like to learn more about you, or get in touch with you, what should they do?

I am always happy to talk about design.  I am available at [email protected] if anyone wants to reach me.

Amazing value, Jessica — see ya at the coffee shop!

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Tuesday, November 10th, 2009

Here’s A Good Example Of A Credo/Mission Statement (Johnson & Johnson)

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I’ve been thinking about mission statements lately and I’m real impressed by Johnson & Johnson’s credo (they call it a corporate credo instead of mission statement).

I know J&J people, and they’re truly proud of their credo!

Why is a corporate credo important? Read this article on how it helped guide (and some argue save) J&J during the Johnson and Johnson Tylenol Crisis of 1972.

The Tylenol Crisis put J&J on the map as a leader in PR crisis management.

If you want a great book on credo and mission statement examples, try Say It And Live It by Patricia Jones and Larry Kahaner (the article above is excerpted from the book).

Say It And Live It includes credos and mission statements from such business leaders as UPS, IBM, Kellogg’s, Citicorp, Hallmark Cards, Reader’s Digest, Boeing, Southwest Airlines, UPS, Xerox and Ben & Jerry’s.

(note: You may also enjoy this list of My Favorite Vision Statements)

Oh, and I almost forgot, here’s J&J’s Credo:

We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality.

We must constantly strive to reduce our costs in order to maintain reasonable prices.
Customers’ o

rders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit.

We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs.

Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibilities.

Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified.

We must provide competent management, and their actions must be just and ethical.

We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens – support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education.

We must maintain in good order the property we are privileged to use, protecting the environment and natural resources.

Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for.

New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return.

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