tag:laelsturm.com,2013:/posts Lael Sturm 2021-07-15T20:19:16Z Lael Sturm tag:laelsturm.com,2013:Post/1194399 2017-09-27T20:34:18Z 2021-07-15T20:19:16Z Simple Key to Referrals

Referrals could be the difference between success and failure for independent contractors and consultants.  Some of my best clients were referred by people in my network but it was not always like that- for a long time I struggled with how to generate referrals.  The turning point for my business was when I realized that my offering was not simple enough; not broadly appealing enough; not clear enough.  

I have written about this in the past but was reminded today when I attempted to refer business to a person I know and like.  Something interesting came across my radar that seemed like a fit for her so I forwarded along with a one word note: "Interested?"  

She quickly replied that it was outside of her wheelhouse. Fair enough.  But this is the third time this has played out between us- me forwarding a lead, her declining- and I was struck by the fact that I might not actually know what she does.  Three different but related leads that she flat out rejected- not even a call with the company to see if she could make it work.  

I take some responsibility here- she has tried to educate me about what she does and I am definitely missing something.  But it could also be that she has not clearly defined what she does or who she does it for.  Or, like the mistake I used to make, her thing might be too specialized, too narrowly defined or too specific.  

Of course, there is room in the world for specialists with narrow focus.  And in those situations, the key is not to expand focus but to be sure you have cultivated a referral network that fully understands what you do and, more importantly, encounters people/companies that need that specialty.  Oral surgeons have a network of referring general dentists.  Marine plumbers have a network of marinas or yacht clubs.  Forest firefighters have a network of rural municipalities and parks.  

The moral here is that in order to garner great referrals, that lead to engagement, the people referring business to you need to know what you do and be connected to people/companies that need that service.  The clearer you can make that message, the more successful you will be.  Simplicity and clarity are great tools, even if your service is technically complex or obscure.  The better you communicate what you do, the easier it will be for people to send you business.  

PS- want to practice your pitch?  Drop me a note and we can jump on a Zoom call for a free 15 minute session.  

Lael Sturm
tag:laelsturm.com,2013:Post/1186372 2017-08-25T16:54:20Z 2017-09-05T04:47:17Z Thought Leadership

Expertise is not relative but how the world perceives your expertise sure is.  You might be the best there ever was (at your particular thing) but unless someone else knows it, or, ideally, lots of people know it, you could spend your whole career toiling in obscurity.  This is where thought leadership comes in and it applies equally to individuals and businesses.  

The Wikipedia definition of thought leadership is "an individual or firm that is recognized as an authority in a specialized field and whose expertise is sought and often rewarded".  

Recognized AND Rewarded  

But how do you get from here to there?  Becoming an expert takes hard work and that work is usually well defined.  Follow a course of study, find work in the field, distinguish yourself as you work your way up, seek out mentors, etc.  That work alone might be enough to gain recognition and reward, especially if you are developing expertise in a regulated or tightly controlled area like scientific research, academia or even finance.  Chances are you went to a 'good school', joined a well known organization, climbed.  But what if your expertise is in something more emergent or less well traveled like Crypto-Currency or nutrition or fashion or writing code?  The path to becoming an expert could be circuitous and less predictable.  In that case you might be an expert in total obscurity or with limited recognition.  And without recognition, there is no reward.  

You are an expert.  Congratulations!

So, you put in the work to become an expert and now it's time to let the world know so you can start collecting that reward.  But how?  Humility is not over rated.  Nobody likes a braggart, boaster or self promoter.  Good news; there is a way to let the world know without stepping on toes.  Share your knowledge.  Be a resource for people who want to learn what you know.  Use the tools that are available at this unique moment in time.  Here are some of the best:

1.  Blog.  Blogs are a great way to share your knowledge and are often seen as adding value to the community.  This is a simple, low cost way to showcase your expertise.  It just takes some time and a little bit of inspiration.  The more often you write, the better.  Just be sure what you share adds value for the reader.  It helps if you can entertain also.    

2.  LinkedIn.  Use it to supplement your blog or use it instead of a blog.  LinkedIn stands alone in the world of social networks as a professional resource.  Others may try to compete but LinkedIn won the war for professional networking and is a must for professionals of almost any stripe.  If you are not active on LinkedIn, get active.  I recommend sharing this blog post as a step in the right direction.  Posting content is a great start but you should also use the platform for commenting on other posts, debate and following relevant industry groups and companies.  

3.  Email Newsletters.  Newsletters are really just another way to deliver blog content and you can easily re-purpose your blog posts or use the newsletter as a teaser to drive back to the blog.  Building a following takes time but if you write compelling content, send regularly and make a concerted effort to get it to the right people, you can easily build a big audience of readers.  Encourage them to share your newsletter by forwarding to friends, Tweeting about it or sharing on other platforms.  Most newsletter platforms offer an easy to use subscribe tool that you can include on your blog to drive sign-ups.    

4.  Other Social Media.  There are other platforms out there and you should use them to drive to all of the above.  If you are professional and are adding value with your content, channels like Facebook, Twitter, Instagram and others are all great tools for establishing yourself as a thought leader.  

Do all of that and let me know how it goes.  Remember, regularity is key.  One blog post or LinkedIn comment is not enough.  You need a body of work.  Thought leaders are prolific.  Write, post, comment, email, share, repeat.  Publish something at least once a week.  Like, comment or retweet every day.  Awareness is fickle.  Staying top of mind is critical.  

Ugh. Who has the time? I am busy being good at what I do.  

Good point.  If you spent all your time hanging out on social media, commenting, refuting, blogging and emailng you would never have gotten to where you are.  All this hard work takes time to do properly and time is a zero sum game.  This point is made even finer if you bill hourly.  Laywers are often faced with the dollar value of time spent establishing themselves as thought leaders.  It takes an investment.   Your time is worth something.  

There is a trick that many use and it is not a secret or a cheat: they outsource some of the work.  Properly formatting a blog, an email newsletter, social media posts takes time.  Every single time.  Thought leaders hire people to do the tedious part- some even hire writers who prepare the content from notes or guidence the expert provides.  Finding the right people to do that work is crucial.  After all, it's your name on the line.  So, if you are ready to hire your thought leadership team to increase recognition and reward, look for people with track records, references and experience.  Hiring a kid you met one time is a not a great strategy.  You want to find the thought leader in thought leadership development.  

There are firms that provide this kind of service, mine for example.  But, even so, make sure you get the right person for the job.  Be certain that the person you hire can support you in the way you need to be supported.  If your area of specialty is regional real estate law, hire someone who can speak to that- do not hire overseas.  Review everything before it gets posted.  If the person you hire is not living up to your expectations, give constructive feedback to get them up to your standard.  If that fails, fire them and start your search over.  Remember, your goal is to establish yourself as a thought leader in order to gain recognition and reward.  Even the shortcut of hiring someone to support you should be undertaken with care and attention.  This is a strategy to increase your reach without sacrificing quality.  Grow your brand and establish yourself as a thought leader.  The reward for this recognition is both time and money.  

Lael Sturm
tag:laelsturm.com,2013:Post/1159794 2017-06-06T14:16:00Z 2017-06-06T20:43:32Z Both kinds of business: Risky and Stupid!

There have been a lot of questions lately about why I expanded my consulting practice to provide a wider range of marketing services- moving from a focus of startup/tech strategy work into a general purpose digital marketing agency.  The short answer is, I took my own advice about selling what people want to buy but there is a longer answer.  In fact, there are several longer answers that are worth sharing.  

1.  Selling a narrowly defined service to a narrowly defined target is risky and stupid.

There I said it.  It took someone much smarter than me to hold up a mirror and tell me what I was looking at.  My business, for years, has been about getting tech companies to the next level in terms of user acquisition and monetization.  Anyone who has ever played in the startup sandbox can tell you that founders and investors at early stages take tons of risk.  Most startups fail.  By limiting my client base to startup tech companies, I was sharing in that risk without much chance to score the VC multiplier of 10X (earning a return of 10 times their investment to compensate for putting their money at risk).  I like serving the startup community and seeing founders succeed.  It is something I want to continue doing and by diversifying my business with more widely appealing marketing tools that serve a broader base- really any business, anywhere in the world that wants to grow- my goal is to remove some of the pressure from the startup side of my business and diversify income (see example below, in point #3).  This is advice I offer to founders.  Time to take my own medicine.

2.  Automation scales.

You know what does not scale?  Me.  I have 24 hours every day.  Some of that time is spent keeping myself alive: eating, sleeping, exercising.  Some of that time is spent with my family.  Some of that time is spent looking at pointless emails- my outsourced to-do list.  The hours I have left, let's call it 10 hours on a good day, are split between working for clients and cultivating new business.  Even if I could limit the time spent prospecting (by writing enchanting blog posts that lead customers to line up for my excellent services!) my time available to execute would still be finite.  Time is a limited resource.  So, the only way to increase capacity is to grow the team, make use of other people's time and add some automation (online forms to get started, credit card billing, etc) to the process.  As John D Rockefeller may have said (internet quotes are unreliable at best, so maybe he said this or maybe it was Kermit the Frog or someone else entirely): "I would rather earn 1% of 100 people's efforts than 100% of my own efforts."  What strikes me about this is that if he were also to profit from his 100%, he would be earning 200%.  Scale.   

3. Recurring revenue does not suck.

Nearly all of my engagements are multi-month.  Some go years.  But, in life nothing is guaranteed and when startup funding dries up, advisors and contractors are near the top of the list of things to go.  My business is built on working with growth stage tech companies and last summer 4 clients ran out of money at the same time.  I survived but it was not fun.  The new digital marketing tools are not immune to this kind of scenario- a company that goes out of business is not going to continue spending on marketing.  However, with lower prices and wider appeal, the plan is to work with more companies/organizations across multiple sectors: retail, non-profit, hospitality, tech, finance, content, professional services, travel, etc.  With a high level of service and guaranteed results, the plan is to continue providing value, especially during hard times.  By driving new customers via digital channels, we want to be an essential part of our clients success month after month.  Indispensable.  

4. I Got Nothing But Love For You

At least once a week I find myself at a networking event.  I have often found these events enjoyable but not super useful in terms of driving new business.  The reason: unless the event is specifically targeted towards startups with money to invest in growth, there are rarely enough appropriate prospects to connect with.  The new marketing tools change that.  Now I can offer a service to anyone who has any kind of business.  Need more patients for your chiropractic practice?  I can help.  Want to launch a humorous T-Shirt business?  Let's do it!  Thinking about reaching new moms with a dog walking service?  You can count on us!  By expanding scope, we have something for everyone*.  

 image courtesy of Headline Shirts

So, I have effectively turned myself and my business upside down.  Instead of servicing a narrowly defined segment, I can work with anyone.  Instead of limiting myself and my clients to 24 hours of availability, I have exponentially increased available hours (by growing the team and using automation).  Instead of selling one thing, I sell many.  As this plays out I will update you on progress.  In the meantime, ask yourself, what can I change about how I do business?  How can I expand my target market?  Where can automation and scale allow me to grow?  If I can be so bold: the first step might be to automate your digital marketing and grow your business while you sleep: https://www.lpssolutions.com/services  J

*Everyone is a slight exaggeration.  If you have regulatory limitations (Pharma, Hedge Funds, Military Industrial Complex, etc.) we may not have a solution for you.  Nevertheless...happy to discuss!  

Lael Sturm
tag:laelsturm.com,2013:Post/1154550 2017-05-18T18:48:45Z 2017-05-22T04:27:17Z Sell Something People Want

Sell something people want.  Sounds obvious right?  But most people, including me, start with the opposite proposition: this is what I do or what I have; who wants it?  Yes, I have been guilty of this myself on more than one occasion.  "I have revenue generation/marketing/business development/startup expertise; all I need to do is find people/companies that need that kind of support and convince them to pay me for it!"  That is the hard way.  

What's the easier way?  Start with the need then work backwards and see if you can fill that need.  In conversation with founders I often say, 'Stop reinventing the wheel.  Open a hardware store in a neighborhood that needs a hardware store'.  I do not mean it literally (although, why not?).  What I mean is, find a need and fill it.  Too often founders and dreamers come up with a cool idea, a cool bit of tech, a great app, then try to figure out who would be up for paying for it.  Too often the answer is no one or no one that does not share your last name and/or college basketball allegiance.  

Or, they want to do a bunch of things: we develop software, consult on implementation, embed engineers in larger companies, train your team, brew beer, smoke meats, process payments, plan one of a kind experiences for pets, etc.  Pick a lane and stick with it!  Again, I have been guilty of making this mistake.  Focus!    

Filling a need is easier in that success is more likely (to paraphrase Elon Musk: success should be one of the possible outcomes) not that getting things off the ground is easy (see Mars colony video).  In fact, there is more work on the front end in this model but less risk.  The preliminary work, however, could save you from doing lots of work later and, if you are successful with the preliminary work, then you should have an easier time convincing people to work with you and paying them to do that work.  And, if raising money is something you want to do, the preparation will benefit you there as well.  

Note, this is not how to change the world or how to make a billion dollars although maybe you could do either (both!).  This is about starting a business that will make money which is the primary goal of most entrepreneurs.  Some examples: I recently heard about a guy who has a business swapping out batteries on electric vehicle fleets.  He has contracts with local utilities that operate fleets of battery powered service vehicles.  Every night his team pulls out the dead batteries, replaces them with fully charged batteries and charges the flat batteries for the following night.  It is not glamorous but it is a service his clients need and are willing to pay for.  Another guy I know runs a janitorial business for nightclubs.  His cleaning crews go into clubs and clean up the mess from the night before so when the next batch of revelers arrive they enter a fresh, clean, glamorous scene.  Nasty, nasty work but necessary and since someone has to do it, he fills that void.  Another guy, the husband of my cousin (which might make him my cousin, I never know), was in residential real estate management in NY, managing huge apartment towers.  He saw how hard tenants were on floors.  He also saw that units with hardwood floors were more desirable (and commanded a higher price) than carpeted units.  But, replacing/repairing hardwood floors is expensive, messy and time consuming.  So, he set out to create an easy hardwood alternative that snaps into place over existing floors, is inexpensive and, most importantly, is super durable.  Now he is in the flooring business and his first customers were his former employers.  

Perhaps all of these guys had the idea before they knew about the demand.  But they didn't incorporate, hire teams, work on marketing materials, register domain names and start Tweeting until AFTER they tested the hypothesis with actual customers and/or analysis.  We can all do that by making phone calls or sending emails to likely potential customers asking if they might be willing to pay for whatever it is you are considering selling.  Next, spend a few bucks on Google or Facebook ads to reach beyond your friends/family/coworkers and track clicks, registrations and pre-orders.  You do not need a product or inventory to do this.  All you need is a landing page or registration form, which you can set up for almost nothing (or actually nothing) using LaunchRock, Wix, Google Pages, Shopify or dozens of other tools.  Do not take money, simply track interest and let the potential customers know that your product/service will be available shortly and then keep their contact info in a safe place so you can sell to them when you do launch. 

Keep your eyes and ears (and mind) open for opportunities.  I recently saw a John Oliver piece on the sorry state of private dialysis centers in America.  It occurred to me that there might be room in the market for an honest alternative.  Now, the last thing I want to do is open a dialysis business BUT I recognized the need in the market and had a few ideas for how one could approach it differently.   

On a trip to Israel last year I noticed tons of (ugly) electric bikes on the roads (and sidewalks) and wondered, why are there so many electric bikes here.  One answer was that they were extremely cheap (which is why they were so ugly) so that made them more accessible.  In the US the average electric bike costs over $1,000, about the same as a used motorcycle or even a beat up car so the choice is not easy- motorcycle and car are more versatile, have more range, can take passengers and cargo.  In Israel the price was less than half so the choice was electric bike, normal bike or bus.  Many people went electric.  I wondered (and continue to wonder) if there is a market for inexpensive electric bikes in the US.  I did NOT buy a shipping container full of electric bikes and try to find that market.  I did do some preliminary research into the availability of bikes and the demand for them in major metropolitan areas around the US.  If I do go into the electric bike business I will take pre-orders BEFORE filling my garage with them.    

If you pay attention you will find there are openings all over the place: your kids' school outsources afterschool programs, your city government hires consultants and contractors for a huge range of projects, your neighbors are looking for ways to save on electric bills- what luck!  You just launched a solar power brokerage!  

If you fill a need and can make a good living being the boss, who needs glamour or billion dollar exits?  You are an entrepreneur and you sell something people actually want or, better yet, something they need.  

Want more?  Check out my Newsletter on Nuzzel
Lael Sturm
tag:laelsturm.com,2013:Post/911089 2015-09-29T19:20:24Z 2016-02-26T11:30:34Z Listen Lists. Coming Soon.

Every season (Winter, Spring, Summer, Fall) I put together a playlist of the new albums I am listening too.  I typically hear or read about a great song then add the entire album.  This is purely selfish.  I love new music and curating a list is the easiest way for me to access the new stuff I am enjoying.  When friends ask what I am listening to these days, I can quickly check my playlist or even email them a copy of the whole thing.  

The time has come for the next step: publishing.  Coming soon, I will start posting those lists here.  I have a few things to figure out: should I post the old lists or start from now?  Should I post and update the current season or should I wait until the list is finished (and a new one has begun) before posting the whole thing?  Would images like album covers be helpful or not?  

As soon as I figure it out, I will be back with music.  Check back soon.  

Lael Sturm
tag:laelsturm.com,2013:Post/580411 2013-05-21T22:57:43Z 2013-10-08T17:25:39Z What's your idea worth?

I got an email this morning asking a question that I have heard several times over the years: 

"Recognizing that much depends on the particulars of each case, wondering if there would be any rules of thumb or other market guidelines to determine how much extra founders' equity should go to the founder who was the source of the "idea" for a startup?"

I immediately fired back a very brief answer (more on that later) but continued to think about it and figured it might warrant a blog post.  The problem here is that the answer depends on who you ask and what their vested interested is in the answer.  It could also depend on the nature of the 'idea' but that is a different story (a revolutionary new cancer drug is worth more than a new way to photograph your naval).  

If you are the 'founder who was the source of the "idea" for a startup' you likely think the idea is amazing.  If you don't think it is amazing, you should find something else to do because doing is not easy.  And, as amazing as the idea may be, having an idea is not all that special.  We all have ideas.  Still, this one is yours and you think it is great.  Having an idea, from your perspective is worth the lion's share of equity, of course.  

If you are the other founders you likely also think the idea is terrific.  Again, if you do not, then move on and make room for someone who brings enthusiasm to the project.  This is where things get tricky.  You need to find a balance between loving the idea, giving credit where credit is due and making sure there is enough pie for you to share in the upside when you execute on the idea.  At this point it is just an idea.  There is doing to be done and, hopefully, that is where you can contribute to turning the idea into a reality.  Do you deserve less for your role of making this into something?  Maybe, if you can deliver, you should get more than the guy with the idea.  

If you are an investor you might be inclined to point out that an idea without the financial resources to get it done is worthless.  However, if you want to do business with the founders you better believe in the idea to some extent or why throw your money at it.  This is the first test of the idea and its value.  The investor wants to keep the value down in order to get a good deal.  So, as an investor, you attach the smallest possible value to the idea and are likely more interested in the team that will bring it to life than the guy who dreamed it up.  

Then there is the outsider, which is what I was when the question was asked of me this morning.  I have no stake in this.  I am not interested in exploring the idea as a co-founder, as an investor or as a partner.  I was asked for an opinion on the value of "ideas" without any specific details about the actual idea or anyone involved with the idea or the team working on it.  My reply was:

"0%. Value is in execution. Everyone has ideas."

It was early and I was a little bit distracted so I may have come off sort of flip but the underlying message holds true.  Everyone has ideas.  The question is, what are you going to do about it?  I was in a startup a few years ago that was my co-founder's idea.  He was terrible at execution and quickly backed out of the company, keeping a large chunk of equity without contributing anything to execution.  In fact his presence slowed us down initially and almost sank the company. That became a problem when I went to raise funding.  It plagued the company and me for years.  In retrospect I might have been better off doing something else.  The idea litterally cost me- an opportunity cost.  Firing off ideas  then letting someone else run with it is great work if you can get it.  When they succeed with your idea just show up and collect your winnings.  It served the Winklevoss twins.  

Elon Musk was not the first person in history to imagine a private space agency.  Bond Villains and eccentrics have talked about doing the very same thing for years.  The difference is that Elon Musk executed.  He worked.  He did it.  

Tim Westergren was not the first person to suggest streaming music online.  He was not even in the first 1,000 people to try.  Rumor has it that dozens of investors laughed in his face when he was pitching Pandora.  Was it a bad idea?  No, it was a good idea, but as an idea alone it had no value.  Tim and his team built Pandora into something interesting; something different; something valuable.  Then the money came rolling in.  

Having an idea is a good first step.  Convincing someone else that it is a good idea is a solid second step.  Getting a non-family member to invest is a great third step.  And then comes the hard part: making your idea into a reality, hopefully a reality that people are willing to pay for.  Ideas are a dime a dozen.  And even then ideas may be overpriced.    Doing is the difference.  

Lael Sturm
tag:laelsturm.com,2013:Post/533854 2012-12-09T23:21:00Z 2013-10-08T17:15:34Z Ours go to ELEVEN!

You know, just like in SpinalTap, our amps are louder.  Yours' go to 10, ours go to 11.  Everyone loves that and has a good chuckle when they hear it.  But what does it really mean?  To me, it means that you've been doing everything you can to make your startup work and, somehow, you dig a little bit deeper and find more to give.  Put in more than 100% because 100% just isn't good enough and good enough is not enough.  If you want great, you're gonna have to do better.  


That's where I am right now.  I've been working on unseat.me in one way or another for almost two years.  From dreaming it up to finding a domain to writing up the idea to building a prototype, designing and launching to growing, adapting, hustling  refining, adding, subtracting, hiring, testing, pitching, raising, dealing, modifying and pushing forward, it's been an onslaught of work.  And still, there is always more work to do.  The challenge is prioritization, of course.  What needs to get done today?  What can wait?  What seems like a good idea but may not be worth the time, energy, cost?  What is a distraction?  What do users actually want?  What should be delegated?  What should I hire someone to do?  Even after that priority list gets tightened up, there is still too much on it.  Plus, on top of everything, there's fund raising.  If pitching to investors takes up too much time/attention, there is no way your business is going to succeed.  Product, marketing, sales, HR should all be higher priorities than fund raising.  But without money, the whole thing could come apart anyway so, you have to decide how to spend your time.  


At unseat.me I think we've had a good balance so far but now we find ourselves at a cross-roads and, after giving 100%, I need to come up with more.  More time.  More creativity in deal-making.  More focus.  More intensity.  More resources.  More contacts.  More schmoozing.  More enthusiasm.  More conviction.  I have to take it to 11.  Ten is no longer enough.  If this is going to be a billion dollar company, it is going to take more.  The good news is that I have it to give.  I have not held back but I am inspired to do even more now.  For every sleepless night (working late, obsessing about one thing or another, etc.) there are five mornings that I jump out of bed ready to go; excited about a new feature, pumped about the day's meetings, eager to get to work.  I love the hard work.  I love building.  I love solving a problem that big, entrenched players don't want me to fix.  I am in this to win this.  Now excuse me while I take mine to 11.  

Lael Sturm
tag:laelsturm.com,2013:Post/533855 2012-09-24T21:09:00Z 2013-10-08T17:15:34Z Long overdue.

I admit it, I've been distracted.  Will get back to blogging straight away!  Would you believe I keep a EverNote with blog ideas?  

Lael Sturm
tag:laelsturm.com,2013:Post/533856 2011-10-03T00:11:00Z 2013-10-08T17:15:34Z Crappy By Design
Great design and carefully planned strategies are all around us.  The iPhone changed everything for phone manufacturers.  Turntable.fm masterfully trickled out invites to waiting music lovers and created huge demand during the wait.

But what about companies, products and organizations that make what seem like boneheaded decisions.  Are they just not trying hard enough?  After all, even the dumbest companies can copy success and find some success for themselves.  But what about smart companies that do crazy things?  Maybe they are not as foolish as we might initially think.  

Take Netflix for example.  They revolutionized movie rentals, shifting revenue away from punitive late fees and unlocking a gold mine of subscription fees.  They made corporate incumbents look like jokers and put the major brick and mortar chains out of business.  But then they made an incredibly unpopular move and jacked up their prices- alienating a huge percentage of their member base.  And, if that is not bad enough, they went a step further by spinning off their core business- DVD delivery by mail- into a new business with the insane name Qwikster.com (or is it Quickster.com, or Qwickster.com or Qwixter.com...you get the point.  It’s impossible to remember let alone spell).  

Was that a colossal fuck up by a company that is famous for making smart choices?  Or, is it crappy by design?  When Netflix raised prices a month before spinning out their DVD business the strategy was clear.  They wanted people to stop using the DVD service in favor of the higher margin streaming service.  It is a sensible goal but since the selection of movies available on streaming is anything but comprehensive, users needed a little bit of motivation to make the move.  The price increase was that push.  What’s more, there were no savings offered to users who chose to keep a bundled service with both streaming and DVD.  The message was clear.  

There was an outcry by users and it looked like a PR nightmare but Netflix stuck to their guns and a month later, introduced Qwikster.com where users would be billed separately, have to maintain a separate log in and manage a separate wish list of movies.  

They added friction.  This is the definition of crappy by design.  They know that the domain name sucks.  They know it is a hassle to have two different movie queues.  They know that you will look at your credit card bill and see two different charges.  And that is the plan.  It drives users away from the lower margin business.  

What about crappy by design in the real world?  The California Academy of Science is a beacon of green building practices.  They reclaim water, use solar power and insulate with a living roof- the largest of its kind in the world.  Not only is it built with environmental conservation in mind, the entire space is dedicated to educating visitors about living in harmony with nature.  This state of the art building has a two story parking garage underneath it for visitors who travel long distances to visit.  
As thoughtful and functional as the building upstairs is, the garage is a disaster.  It is hard to get into and out of.  Passing a slow parker is impossible.  There is no turn out or temporary parking for people who enter accidentally, loose their ticket or forget to pay before exiting.  That can back up traffic in both directions.  In order to enter or exit you have to drive through the entire garage.  Crossing from the north side to the south side is often prohibited with cones or other barriers.  It is not uncommon for it to take ten or more minutes to park after entering and that is time you pay for.  

So what is going on here?  How could the architects have spent so much time thinking about how foot traffic will flow through the museum and not consider how auto traffic would flow through the garage?  Is this a case of not going that last mile to achieve greatness or could it be intended to drive you crazy?

If they can make it unpleasant enough to drive, maybe people will take public transit, walk or ride their bikes.  That would push the environmental agenda forward.  So maybe the bad parking experience is not an accident.  Maybe it is crappy by design.  

Health insurance is another product that is crappy by design.  It is too confusing and convoluted for most people to figure out.  Even when an employer is paying for it, plans are intentionally obscure and difficult to manage.  Picking a plan is a shot in the dark.  All you can do is hope that it covers whatever comes your way over the next year.  The insurance company spends a lot of time, money and energy complicating what should be a simple offering- ‘you get sick or hurt and we will take care of it’.  It is designed to be a bad experience but you have no alternative.  
Still, crappy by design can not explain everything.  Some things are just bad.  AT&T service on the iPhone is terrible.  There is no upside.  Rush hour traffic around Southern California is never good.  Arbitrary TSA security protocols at US airports would be funny if they were not so inconvenient.  

No, crappy by design is intentionally inefficient with a specific goal in mind.  Netflix wants to change user behavior by raising prices and adding difficulty for users of the core service.  The California Academy of Science makes parking frustrating in order to get people to leave their cars at home.  Insurance companies complicate plan selection and claims processes to confuse customers and reduce the liklihood of paying for medical services.  

Of course there is risk involved with annoying customers.  Netflix stock is tanking and hoards of users are leaving (including me).  People still drive to the Academy of Science, they just arrive at the front door agitated.  Insurance customers have no choice so they pick a plan and hope for the best.  Until there is a simple inexpensive alternative (and some dramatic changes to the way people get coverage; but that is another post) there is little risk for insurance companies.  

So that leaves two questions.  First, can your business benefit from crappy design?  If so, can you live with the fact that you are intentionally delivering a bad experience?


October 4th, 2011

A couple others companies using 'Crappy by Design' came to mind so I thought I would mention them also.  

SallieMae.com is where millions of people go to make their student loan payments.   The average person takes 30 years to pay off their loans making monthly payments.  That means that they might have to log in to SallieMae.com 360 times.  The only reason people log in to that site is to make a payment on their loan.  There are no tools to barrow more money.  There is no way to shift your education debt to someone else.  All you can do is pay.  Why then does log in require a username and password...then a cofirmation of your birthday...and your social security number...then a security question (What was your pet's name)....then another security questions (What was the name of your elementary school)...then a form to update your mailing address...and phone number?  If you forget your password the reset protocol is standard except that you can not use a password that you have used in the past so each time you forget and reset your password becomes more and more obscure and hard to remember.  Making log in secure is one thing.  Making it the most secure log in possible, seems like it might be intended to keep people from logging in.  The only reason for doing this would be to lead to missed payments, fees and penalties- most notably a significant upward udjustment of rates.  This gets them out from under federally mandated rate caps.  Crappy.  By design.  

The other one worth noting is from CitiBank.  Their online banking site is clunky and not especially user friendly but it's no worse than other banking websites; until you are late on a credit card payment.  The day after your credit card bill is due you no longer have the ability to pay online.  They engineered the system to prevent payments from being made after the due date.  This one is less obviously by design because the have already assessed the penaly and there is no additional fee until you miss the next payment date.  There is additional interest charged for every day you carry a balance but then why not make paying online more difficult at all times.  So this one may not be crappy by design but it's sure not good.  Of course the solution is to pay your credit card on time.  

If you have your own excamples of crappy by design leave them in the comments.  

Lael Sturm
tag:laelsturm.com,2013:Post/533857 2011-04-26T03:16:00Z 2013-10-08T17:15:34Z Air It Out- Say No to Stealth

I've heard all of the reasons for keeping your start-up a secret and I see how some of those reasons weigh heavily on the mind of a would be founder but ideas are a dime a dozen.  Everyone has their own ideas, why would they steal yours, especially before you prove it is a good idea.  I had a professor at Columbia who advocated for the opposite of stealth.  He told founders to share their ideas with as many people as possible and here's why:

1.  Don't waste time on a bad idea.  If your idea is flawed, better to find out before you spend a bunch of money and time working on it.  

2.  Social diligence.  By talking about your idea you are likely to find out what people might want from a product or service like yours.  The more feedback you get, the more likely you are to launch something with real value.  

3.  People know people.  In sharing your idea you are likely to hear things like: "That would be a perfect thing for company X to use" or "My friend might be able to help you bring that market, you should call him" or "I know a guy who failed at a similar project.  You might be able to learn some lessons from him".  

4.  Ideas need to be refined.  There are hundreds (thousands?) of ways to present any idea, no matter how simple.  The more you talk an idea through, the better you will understand how to present it.  You may find that certain audiences react to one type of presentation while another finds that pitch uninspiring.  Get to know your audience and how to talk about your project by pitching to different kinds of people with different needs and backgrounds.  

These are just a few of the reasons why I am always talking about projects.  Even between start-ups I talk about the ideas that are percolating in my mind and taking shape on my white board.  unseat.me went from spark to web app after talking to dozens of other ticket holders with similar challenges- too many tickets and no good way to share/promote them to friends.  When it seemed clear that there was a need for such a service, I called the likely competition to ask them to build it.  I wanted the service and if they were going to build it, I wasn't.  But, it wasn't on their product road map.  So I decided to proceed.  I never would have known that social was not on their road map unless I talked about it.  Sure, that might change, but not because I told them I wanted it and not because I decided to do it.  

Keeping quiet is a great way to avoid embarrasment but talking about your start-up is so much more useful.  Air it out.  

Lael Sturm