Clif Bar - A Model Of Growth

Gary Erickson had a problem. He was an outdoor enthusiast in need of nourishment but stuck with a stale tasting Powerbar he could not bring himself to eat.

A seemingly simple problem, but one that becomes much larger for an entrepreneur. You either accept the mediocre product dominating the market or you get up and challenge Goliath with one of your own. Erickson, then the owner of a bakery, went to his mother's kitchen and created a great tasting energy bar for athlete's like himself. He turned his homemade creation into a nutritional powerhouse sold nationwide. The most amazing aspects of Clif Bar's ascent in the market is it's lack of outside funding, slow and organic growth dictated by the founder, and a rich pay day from Quaker that was refused.

As I have mentioned before, listening and selling directly to your customer is essential in discovering the best product. Erickson and his wife went to marathons, triathlons, and bike races talking to the very athlete's who needed their bar most. Great taste was the kicker but the functional value of the bar is what sold. Using little advertising, the company chose to grow organically with the founder keeping control throughout the process. Word of mouth is the most powerful form of marketing that exists and it can be very fast in certain circles. Athletes proved to be one of those circles.

There was a little luck involved in Clif Bar's success as the company started getting big just as a national demand wave started sweeping the country for nutritional foods and supplements. The company now found their product featured prominently in supermarkets as well as the small specialty stores to which they owed their start. Everything came to fruition through revenue. Erickson cut deals with his distributors for discounts in exchange for cash on delivery and was able to pay suppliers out of incoming revenue. It is because of this excellent money management that he found the coveted control.

When QUAKER came calling with a big buyout offer, temptation certainly struck but the offer was ultimately turned down. There seem to be two types of entrepreneurs. Some want to start a business to cash-out while others want to run the company as long as they are able. There is nothing wrong with either type it just comes down to a matter of personal preference. If the business is successful, money will be made in both scenarios. Ultimately, you are either OK with prolonged gratification or not.

Clif Bar is a rare example of this level of success but one that is as good a case study as any on small business growth into national brand. The expansion was slow, controlled, and done on revenue.

How To Get Rich

How do you lay the foundation for getting rich? Its a process we all must have the patience and passion to attain.

Mark Cuban understands how to get rich. His success has come from the ability to see opportunity and take the necessary steps to accomplish his goals. This is certainly an over-simplification, but understand that is a macro-approach to the situation. Gaining real wealth means expending all the resources at your disposal and committing the house when the right shot comes around. In youth, the stakes are high but manageable. I don't want this blog to always seem like we have nothing to lose because of our age, but it should drive home the point that now holds fewer consequences.

Even if the right opportunity is not in front of you at this moment, the preparation will make all the difference. Mark has always been very specific about the role discipline must play starting out. There are no shortcuts to real wealth and no gimmicks that will actually make this process any easier than the sweat and stress involved. The discipline takes on a few dimensions. The first is the discipline of saving money and shopping smart. No matter your salary, conserve as much money as possible, not for long term retirement, but in order to have the cash available to make a significant play at the right opportunity. Cash is king in business.

The next facet of discipline involves the patience it takes to wait for an unstable market to attack. Get the best deal possible and be ready for a bust at any time. Learning the business you want to pursue should include learning the historical causes of booms and busts. You must commit to understanding the data and the ramifications from numbers that seem inflated or overexposed. It is during these times whe you use that money you have been conserving. See the opportunity and seize it.

Discover Your Business

Sometimes to discover your business, you just have to start your business.

Steven Blank defines a start up as an organization formed to search for a repeatable and scalable business model. The business model essentially describes how your company will make money. Ask any leader to describe their business model and I can almost guarantee you won't get anything resembling a short answer. The reason is simple, in order to maximize profits and efficiency, the boss has to understand the smallest nuts and bolts of the business. This comes from experience and, most of all, the desire to have this knowledge. One of the benefits of starting a company is that you become the first and hardest working employee. There isn't a job too big or small for someone who can't afford a staff.

All this learning allows for tweaking or complete shifts in the business philosophy as the search continues for a repeatable and scalable model. It's where you meet customers and learn about your product from an outside perspective. It's where you learn the real profit margin on each unit delivered. It's where you discover your business.

The hardest part of this early stage development is the lack of money and direction. This is where that eternally optimistic voice in your head must keep reinforcing faith in your instincts and the product. As this NY Times article points out, even Pandora took 348 pitches to land VC financing.

It Must Be A Marketing Problem

Steve Blank knows the difference between a marketing and a sales problem.

The first step in solving this problem is getting between the departmental finger pointing and investigating the nuts and bolts of how the product is moved to the consumer.

For any budding company, a great deal of the first sales come from friends and contacts of its board members and employees. As Steve points out, this is can be a potentially significant problem as it inflates sales numbers and sets impossibly high goals and projections. In addition, it keeps the sales team from really getting out in the field and interpreting the problem of the customer and solving that problem.

A company that lacks customer discovery is lost. They have no idea where to enhance or adapt the product and cash is pouring out. Steve says there is not better time to get back to basics and fire the wayward employees. The founder needs to reclaim his job as the most passionate and engaging salesman for his product.

Cool College Start-ups

Entrepreneurship is about vision.

It's about the vision to recognize a gap and fill it. This is not based on age and it is not always based on intelligence. I think it's almost exclusively about following through on that conversation you have with your friends that starts with "It would be so great if....".

Check out this INC. slideshow about simple ideas by college students that generate serious revenue. They are the leaders of our generation because there is no doubt they have the mindset of business owners. At our age, if something fails, it fails. Try something new and start over. Learn from your mistakes and succeed.

Steve Jobs And The Path To Personal Success

Steve Jobs has had several unbelievable stories of succees in his life but, in his commencement speech at Stanford University, he tells three surprising stories that influenced his life. These are tales of confusion, naivete, despair, death, and humility that shaped the man and success story Jobs has been for so many years. I will let you hear the stories from him, but wanted to post what I found so energizing and eye-opening about his life.

It's not easy to stomach venturing off the well-beaten and expected path of a typical, successful life. Jobs dropped out of college and took that very route. He trusted that things would work out and maintained his intellectual curiosity and sense of a greater purpose. Sometimes we have to trust the forces of the Universe and our own ability to create success and opportunity to truly achieve our life's destiny. Follow your heart and intuition, shoot for the stars and don't settle.

Jobs was very publicly fired from his post as CEO, not to mention Founder, of Apple. It was only through what became an opportunity that he was able to create and prosper the rewards he found later in life. The world deals setbacks everyday. They will always hurt at first, but understand why they happened and what opportunities they allow for the future. You just have to stay hungry.

The last part of the speech examines death and it's role in living. He talks about how you must assume your time could come and live for the happiness you deserve. Jobs makes a point to look in the mirror everyday and ask if he is happy doing what he is doing. Are you?

Lessons From A Legend: Richard Branson

LOSING MY VIRGINITY, the autobiography by British mogul Richard Branson, is a game-changer for anyone is business. Branson shows the value of listening to your customers, challenging the status-quo, and doing business on your own terms. In almost every business he started or is involved with, he had the unique ability to see large gaps in service and tailor a business to connect with the needs of the customers. The way he was able to have fun in these incredibly trying and stressful stages of business development is almost as astounding as the level of success he has attained with the Virgin Group.

Don't be afraid of competition: Whether it was Virgin Airlines challenging the pillar of English air travel in British Airways or Virgin Music Stores opening shops to compete with the cold, stuffy record stores of the time, Branson was never afraid of a little competition. Just because a business is operating doesn't mean the customers are satisfied with the service. They may just not have enough options to choose otherwise. With Virgin Airways, Branson made travel fun and comfortable again. In Virgin Music Stores, he added bean bags and allowed customers to hang out in the lounge setting. It was all about identifying with the consumer.

Controversy Isn't Always A Bad Thing: Branson has often been criticised for being a showman. But, in reality, he was only using the press to increase the visibility of his brands and show the characteristics that made them successful. The Sex Pistols and Culture Club may have been controversial, but they didn't hurt anyone and their exposure to the public was great for business. Be sure you are not violating any laws or crossing any major moral boundaries and turn the publicity into positive exposure for the merits of your business.

Have Fun: The only reason Branson has been able to hold the passion for business as long as he has is because of his ability to have fun. There don't have to be the rigid constraints that sometimes monopolize corporate culture in order to succeed. Keep hobbies and make sure you love what you do and it will show through on the balance sheet. Branson also always had a deep love for his employees and customers. He is known to carry around a notebook and write down the ideas of his staff and consumers to implement. These personal connections will keep you motivated and fresh.

There are no set rules for success. Branson shows anyone can make it with the right passion for what they do and the instincts to adapt with the market.

David Heinemeier Hansson: The Secret To Making Money Online

David Heinemeier Hansson of 37signals and the creator of Ruby on Rails delivers a must-see speech on the merits of running a sustainable business without the desire to get bought out by a conglomerate. To set the stage, David is speaking after attendees have just been taught, by speaker after speaker, how to pitch VC's and get high-level financing for their business.

The counter-argument is the so-called 'mom and pop shop' of the Internet
that fills a niche and charges for it's services in order to create consistent revenue and profit. The numbers are simple; with the large number of online consumers and the relatively low overhead of most Internet businesses, consistent cash flow can keep you wealthy and happy for years. Find the hole in the market and create a product to fill the void. This idea is only rational because, as David points out, selling your business to a large company is the equivalent to winning the lottery.

Make Your Business Happen

It is possible to start a business in a recession.

The financing is out there. Venture Capital firms handed out $17.7 billion in financing, angel investors are looking to nurture and mentor, and, what seems to be the most exciting of all, the age of the incubator is upon us.

Picture this: You move to San Francisco to develop your business where you are given office space surrounded by other smart, motivated entrepreneurs sharing ideas and contacts. At night, you go to dinner with some of the icons of technology, business, and investment. This is the essence of the Y Incubator founded by Paul Graham and Company. They also give you an investment to obtain between 2-6% of your company. It's hard to imagine a better way to get started and this is far from the only incubator that exists. They are sprouting up all over the country from Charlotte to Seattle. And, of course, those running the incubators are doing everything they can to help you succeed in order to make their investment worth while.

Angel investors can sometimes be exactly what their title says to your business. They provide capital and, with the right investor, the opportunity to use their knowledge in your growth. Target entrepreneurs from your industry and you will find a more hands-on director who can help guide through the perils of a start up. Netscape founder Marc Andreeson was already a legend in Silicon Valley before he started investing and mentoring the next crop of web 2.0 innovators. Contacts and industry knowledge that come from a person of his stature can change the game for a young company.

Venture capital firms want the next idea. Think mobile, on-demand, or a completely new model of commerce. They are still investing at very high rates, but don't think they are your only option.

Be creative. There is no better time than now, recession or not.

Engage With Your Community

Decrease your spending and increase potential clients and buyers through the new wave of digital marketing.

It's time to use a more integrated, targeted, and brand-building strategy to create a buzz and reputation customers will associate with your company. The new platforms include blogs, podcasts, virtual worlds, web communities, and social media. The beauty of these mediums is the initial investment of time and not money.

There are a lot of tutorials on how best to use digital marketing, but it all boils down to a few simple lessons: be transparent as a brand, engage in conversations with your customers, and use multiple platforms to establish credibility and reach a wider audience. Twitter and Facebook are a great place to start with their ease of use and the vastness of their communities. Start a page, begin engaging in conversations, and don't over-promote. The brand itself is going to have to cede some control to the customer and trust the process.

Become active in the various ratings systems such as Yelp. These sites are only growing and a few bad reviews can be costly to your business in the same way a good review can help. Ask why people had a negative experience and what you can do to rectify the situation. The beauty of sites like Yelp and Twitter is the ability to identify unhappy consumers and change their minds.

The Founder Factor

Fred Wilson has a cool take on company founders. They run the most innovative, forward-thinking businesses because it's always about what comes next and not the merits of the past.

THE FOUNDER FACTOR