Simply RFiD

Google is the end of ... the distributor

Google Adwords has commoditized advertising and the overall distribution channel. What has Google changed?

I tried the tag line

"RFID catches crooks"

once on Google Adwords and it generated five times the number of clicks vs. a typical message like

"RFID Surveillance System"

With Google you can try five different advertising messages in a day. Each message can be measured by response rate and tuned for better performance. It would have taken 3 months of direct mail to determine what Google answers in two days of measured traffic. And, it only cost $100 to find the answer.

And, unfortunately, the Internet has created a new business model that anyone with $100 and a website can compete with Sears, Target, or Amazon. What those three stores have in-common: They are all distributors - or 'Value Added Resellers'. They don't do anything but provide a place to purchase other peoples goods.

Apple? Innovator. They create new products people covet. Completely safe from Google.
Motorola? Another innovator / manufacturer.
SimplyRFID? In transition...

In the begining, we started selling a mix of our products and integrating them with Zebra RFID printers, Symbol / Motorola RFID readers, and other brand names. We quicky discovered our customers would purchase 'our' proprietary products and purchase thier printers / readers from a discounter. Realizing this, we have transitioned to building all the products we sell.

The other day, Zebra called us to say, "Hey... Why don't you sell our labels?" It's really simple: We can't. You've placed your products into the gray market and there is no profit in selling them. We incur immense cost in supporting them and financing them and explaining them to customers... But, we make nothing for doing it.

From what I can tell, Zebra will eventually realize this and eliminate the distribution channel because 'no one' will sell their goods in 10 years when 'integrator's have no incentive to sell them.

So, what's the solution? How will manufacturers transition from a zero-markup model? How will old-world (pre-2000) companies handle the changing distribution model?

Time vs. Next Day Shipping

There are a hundreds of reasons to take your time when planning and building your company. Time is what allows everything to grow. It's the most important commodity because you can't buy it. Or, can you....

Is Next-Day shipping purchasing time? Is the Concorde purchasing time? Does the Accela Train purchase time?

I've never seen a product sell because the marketing literature was sent using next-day shipping.

If a supplier is sending me everything 'next day' -- they have a very short term outlook. It means either a) their internal process is so slow or innefective that they needed to send it next day to compensate for thier lack of planning, or b) they are charging too much and can afford it.

The reason next-day strikes me is: It's not just 10% or 20% more. It's typically 300% to 500% more expensive than ground shipping. We ship 60lb printers all over the US. It's $29 to ship via Ground or $240 to ship Next-Day. I don't begrudge using UPS or FedEx over DHL. UPS provides a great service level and is worth the premium over 2nd tier carriers.

But, somehow, people rationalize using Next Day because it will help the customer buy faster! This is always wrong. The customer could have printed the brochures from our website -- today! -- if they really wanted the information.

Looking at it rationally:
1) Sales Cycles are 90 days to One Year.
2) Sending a brochure via next-day service is $35 vs. $6.
3) If you send 3 brochures a day, that's almost $100 in additional marketing money you could use.
4) If you're not sending at least 3 brochures a day... You need to work on your overall marketing plan.
5) A sales cycle requiring as long as 1 year is only accelerated by 1% by using Next Day vs. 3-Days for US Mail.

No customer that actually plans on buying will request you to pay for Next-Day shipping.

Do you use Next Day? Why? What's your policy?

Video of the day
Woah... This is the Pet of the week?

RFID Propoganda

I was at a tradeshow for the Barcode / Point-of-Sale and RFID reseller industry. A friend of mine , Andy Kowl, wrote that he asked a dozen vendors if they are doing RFID and they all replied 'no'.

Great news for us!

But, every one of them said, "But, we want to".

Ah... I can smell the gold rush and the profiteers that will take all their money.

Sure there was an "RFID Track" that was packed with VARS (Value Added Resellers) all looking for a gimick to sell. One shyster told them there are 40,000 DoD suppliers that all want to buy RFID and "for just $250 they can claim their stake".

OK, first... Let me point out: There are really about 10,000 DoD suppliers. Only 5,000 of them will ever need RFID. SimplyRFID already has half of them as customers...

The whole propoganda angle made me sick -- mostly because I hadn't thought of it... But, it also made me realize that sitting in a room, listening to someone tell you they know the secret and are about to share it with you is what people WANT to believe. They think that if they "do what someone tells them, they'll get rich".

Don't be greedy. Greed is deadly. If you aren't building something of value, you should be very suspect of someone offering to do it for you. If someone wants just $250 for their amazing wealth-building-system -- be quick to recognize them for what they are.

Good things:
BlueStar: They throw a great show and an awesome party. If you are a Bluestar Reseller -- don't miss it.

Janet Schjins: She is a mesmerizing speaker.

Just how big is the RFID market? Don't be a sucker...

"You're in RFID? You must be hurting!"

I was at a trade show a couple weeks ago and when I told people our name (SimplyRFID), they all reacted the same way.

One attendee said,

"Theres 40,000 DoD suppliers but no one is doing anything"

It is absolutely amazing how people get excited about a new market. And, how they did absolutely no research into the market size.

In 1969 everyone announced they were a Barcode shop. Most of those companies are gone.
In 2003, everyone announced they were an RFID shop. Most of those companies are gone.

Barcodes made their first commercial appearance around 1969. Many "experts" showed up to help rollout this revolutionary technology. However, is wasn't until the early 1980's that barcodes started being widely adopted. In fact, it was the DoD's adoption of the barcode in 1981 that spurred barcode growth. Although it's been 26 years since the DoD required barcodes -- we still have questions from companies asking if they need to put a barcode on their DoD shipment.

If you follow the successful companies from the barcode era, you will find they didn't start doing well until the late 80's. It took nearly 15 years from the initial commercial pilots and 10 years from the initial rollouts for barcodes to create a true market. All the top companies from the early barcode days (e.g. Zebra, Symbol / Motorola) started, excelled, and survived the early days to be the leaders of barcode production technology.

At the DoD Summit in April this year, the DoD's message to suppliers can be paraphrased as:
We (the DoD) have started collecting RFID data. We have a large sample base and we are now developing the correct data processing systems to act on this information. We are committed to RFID and this will enable us to serve the war fighter faster and more accurately.

Frankly, I'm impressed the DoD has gone as far as it has. In the past two years: The DoD adopted the standards set forth by Wal-Mart and EPC Global. The DoD implemented an RFID policy. The DoD deployed hundreds of dock door RFID read points to collect data. The DoD educated thousands of suppliers and DoD employees on how to tag their RFID shipments. And, the DoD has done all this while waging a war.

The disappointment in RFID's adoption is from being a sucker about the growth potential. Even a glance at history, Harry Potter, or Dr. Seuss tells you this: Don't be a sucker. Create something of value, build a good team to support it, and work hard.

The RFID rollout is going well. It's going according to history. It's going as-fast-as-it-can.

If this was free -- would I want it?

Yesterdays blog generated a few emails that said,

"Yeah -- but what makes a GREAT product."

I found Buffets quote in todays Motley Fool article on Chipotle.

"Forget about share of market, I'm talking about share of mind." - Warren Buffet

Buffet didn't say that about Chipotle -- but, it applies. Morgan House writes about Chipotle:

"I'll admit my own membership in the Chipotle cult."

What defines a product with that kind of following? What is an 'It' product?

1. Mirrors todays desires and needs.
Even boring products can be exciting. Whole Foods. Anyone within driving distance is switching grocers. It's a grocery store. But, it's better. Whole Foods focuses on quality, organic products. This mirrors what people want. Todays shoppers are going for affordable quality. Not 'cheap' -- just affordable. Examples of affordable quality: Costco. Apple. Sony. Toyota. CraigsList. Amazon. Lowes. Chipotle. B&H Photo.

Wait... Sony? B&H Photo? Well, yes. Unfortunately, for these two I listed two companies that I believe could be players -- but, they are spending their marketing in the wrong place. They don't follow through with the rest of what it takes to make a great product and so, while they may have a great product/service, they aren't a true player.

Alternatively, look at Apple. They did great in the early 80's. Lost touch with the market from 86 to 97. Transformed itself in the late 90's.

2. Customer service policies and employees.
Once you provide a quality product -- you still need to provide top-shelf service.

Costco's return policy is ridiculous: You don't like it, bring it back -- whenever... Costcos policy makes us much more likely to try stuff. We trust Costcos guarantee and we drive 20 miles to our Costco -- past a number of other stores. Who doesn't love Bannana's for 33 cents per pound? Or, a bottle of Rodney Strong for $11?

So, so, so many companies miss this point. You have to trust the company to 'do the right thing' -- always. Because the customer is ALWAYS right. Period. My favorite quote from Andrew Carnegie is, "How would you like us to fix this for you?" -- and then do it. Nine out of ten customers will be fair and tell all their friends about how great you are. The other one person... That's marketing. Consider that the cost of creating your cult.

3. Innovative.
You have to have something better, cooler, more fun, different.

You can't create the Microsoft Zune. That's just not worth bothering with. The iPhone? Or, iPod Touch? Wow...

XBox 360? PS3? More boring stuff. Nintendo Wii? That's Killer. Nintendo DS? Even more amazing.

4. Desirable.
Unfortunately... You can have all three of the above. But, if your customers don't desire your product -- pick something else. This is the entrepreneurs plight. If you are creating a product for an unknown market, you don't know if anyone would buy it -- even if it was 'free'.

The first question I always ask myself,

"If this was free -- would I want it?"

Are there other factors? Send me an email -- or comment below.

"Your marketing sucks!"

How is your marketing percieved? Is it beautiful? Does it make people laugh? Did it reach millions of viewers? Did you get a big splashy ad in the superbowl? Are you proud of how it makes you feel? Did you show it to your friends, put it on the wall, and stare at it?

So what.

There's a fairly good book out called "Your marketing sucks!" by Mark Stevens. The only problem with the book: It's about 230 pages too long and it's only 250 pages.. I guess they felt bad writing a concise 20 page brief for $20. In fact, a 20 page brief would have cost $495. So, consider yourself saving $475 if you buy the book.

Regardless: Mark has a good point. If your marketing isn't making people want to buy in a cost effective / measurable way, your marketing ... sucks. But, I think he misses #1 marketing strategy (besides measuring ROI): Word of mouth. It costs nothing. But, how do you make it happen? What drives Google, Chipotle, Craigslist, and MySpace to massive revenue -- and ZERO advertising?

It's the product. People that use those companies are so friggin' delighted, they can not help themselves but tell the world. Marketing firms want to change your lead generation process -- they'll never look at your product. Consider spending marketing dollars on product and customer service improvement and see what happens.

At SimplyRFID, we have focused on the best possible product, at a reasonable price, with unparralleled support and satisfaction policies. Have we done it right? I think so. Over 80% of our new business is through referrals.

Marketing Tip #1: Don't listen to marketers when planning your marketing.

First

My dad always says, "Look at all those rich people -- why aren't you?" To which I reply, "What rich people? You mean like Carly Fiorna?" It took a long time to figure out -- it's not about being rich -- it's about making just $1 more than you spend while being able to sleep at night.

I started doing startups in 1992. I launched a company called Image Sciences. I think I owned 2 Million shares of Image Sciences and the stock certificates were very nice. I even framed them. Of course, they aren't worth anything now.

Since then, I've started to feel like the death knell for a startup. In the begining, I was a software engineer and each startup taught me one new piece of the puzzle. I moved from programmer, to leader, to director, to VP of Engineering. Each startup had more money to start with than the last -- and each one found a way to spend it all. At its peak (the Internet bubble), we spent $100 Million in two years. We did create a $3 Million dollar company. But, we were spending $10 Million.

In 2002, I started SimplyRFID. SimplyRFID has grown to a successful startup with low millions in revenue, over 2,000 customers, and a growth rate of 20% per month. But, it's taken five years to get there, a great deal of determination, and over three years without any pay.

This blog is for every entrepreneur that may find some value.