Five Stories To Inspire
Entrepreneurs
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Kevin Rose and Digg.com
Aron Thornton and Subway
Peter Patafie and Patafies Inc.
Craig Schoen and Kijiji-Feed.com
Bruce Firestone and the Ottawa Senators
Appendix: Ten Things that Startups Forget to Do
Five Stories to Inspire Entrepreneurs
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Kevin Rose, Founder, Digg.com
Kevin Rose made $60 million in 18 months
How did he do that?
a) JOB?
b) Entrepreneurship?
Five Stories to Inspire Entrepreneurs
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“If you spend our last $10,000 on launching
this site instead of a deposit on a home for
us, I’m going to leave,” Kevin’s ex-girlfriend
Kevin and his partner populated their site by
CALLING 3,000 of their friends
They didn’t push on a string– an email
campaign might have gotten them 15 users
I wonder how she feels now?
Five Stories to Inspire Entrepreneurs
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DIGG.COM’S DIFFERENTIATED VALUE?
It is a new model for a newspaper uniquely adapted to the
Internet
It is not simply the online version of the New York Times or
some classified advertising page transferred to the Internet
It is a digital community made up of a fairly homogenous
demographic—80% are male, mainly young techie readers
Readers are also contributors
Readers dig up interesting stories from all over the web and
post brief synopses to the site and links to them whereupon
other readers vote on them—the most popular ascend the
page
Five Stories to Inspire Entrepreneurs
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The site harnesses the competitive instincts of the
readers/contributors to compete to see whose story will lead
The site works because of its homogeneous demographic—
contributors only post stories that will be of interest to the group
The site is dynamic—leading stories change by the minute or
hour
Digg.com’s cost for headline writers = ZERO
Digg.com’s cost for journalists = ZERO
Digg.com’s cost for editors = ZERO
Digg.com’s cost for distribution = ZERO (at least, the marginal
cost is practically zero)
Five Stories to Inspire Entrepreneurs
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Digg’s sustainable competitive advantage is
its business model and its readership
You might be able to knock off its business
model but it is extremely difficult to knock off
its millions of dedicated readers which form
a community
The key is that the readership and
community are relatively homogeneous and
have similar interests
Five Stories to Inspire Entrepreneurs
Keys to success:
a. Sound biz model;
b. Guts;
c.
Marketing that works;
d. Community makes Digg.com tough to knock
off
e. Beaucoup de differentiated value
f.
Scalable
g. Human curate the news
Five Stories to Inspire Entrepreneurs
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Where does true job security come from?
Having a job with the GOC?
25 years with the GOC doing post project
reviews
Aron Thornton (not his real name) laid off in
the recession of the 1990s
What to do next?
Send out 500 CVs
Five Stories to Inspire Entrepreneurs
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ZERO interviews
What kind of JOBS are available for a guy with a
PhD in Anthropology who has done nothing but
GOC work for 25 years?
ZILCH
What to do next?
Scared to become an entrepreneur
Not the kind of person to start his own business
Needed some structure– Ah Ha!
Buy a franchise
What franchise?
Five Stories to Inspire Entrepreneurs
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Bought a Subway franchise and a couple of
years later bought another
Took over a loser of a location but only paid
$35,000
Turned it around in less than 18 months using
smart (guerrilla) marketing
Every day at 10:30 am go to mega mall parking
lot across the street* and put $1 off sub coupons
under the windshield of 500 cars
Run back to his shop and wait for the traffic to
come in the door
(* With permission of franchise owner + promise to clean up lot every evening)
Five Stories to Inspire Entrepreneurs
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Also visited every local (tech) office within three
kilometres between 11:00 am and noon
weekdays over the next 18 months
Would bring in huge platters of finely cut subs
and a bunch of $1 off coupons
Talked his way past receptionist and security to
hand out free food and coupons by the bucket
load
Although he only made $30k in his first year, he
made over 100 grand for himself and his family
in year two
Five Stories to Inspire Entrepreneurs
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Bought a second location and now takes home over
$140,000 every year
Making more than he ever did at the GOC and loves
what he does
Does his own hiring, firing, banking, accounting and
marketing—outlet for creativity
As long as he keeps a good relationship with the
Master Franchiser, no one is ever going to downsize
him again
True job security comes from what you have
between your ears: what you learn over a lifetime +
your ability to put it into practice
Five Stories to Inspire Entrepreneurs
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Peter Patafie: up by the
bootstraps kind of guy
Hired on to sell moving and
packing supplies– 100%
contingent (all commission)
Peter had confidence in
himself
At age 45, suddenly laid off
Why?
Because he was making too
much money (more than the
President)
He had a wife and three kids to
support and only had High
School
What to do?
Five Stories to Inspire Entrepreneurs
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Started his own business selling moving and
packing supplies
Started with less than $5,000
But he had a great reputation, knew how to
sell and he could get product on credit from
suppliers
Also brought some creativity to the new biz
Five Stories to Inspire Entrepreneurs
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First great insight: realized that his clients’
salespeople spent a lot of their time redelivering
packing and moving supplies to their clients
That is, he worried about his clients’ clients
What if instead of delivering moving boxes to client
warehouse and then having their salespeople
redeliver them to people who are moving, deliver
boxes and moving supplies directly to them
Client salespeople can then spend more time selling
(moves) and less time delivering boxes
Five Stories to Inspire Entrepreneurs
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Peter ended up with a 97% market share
(better even than Microsoft’s OS)
Within six years, business that did $13 million
per annum with 30% margins
Never expected to make that kind of money
and every year gets together with his
employees and shares cash with them!
Five Stories to Inspire Entrepreneurs
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Peter has three priorities:
Priority # 1: TAKE CARE OF THE BUSINESS
Priority # 2: TAKE CARE OF MY FAMILY
Priority # 3: TAKE CARE OF YOURSELF
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“Surely, you mean TAKE CARE OF THE FAMILY is your number
one priority?”
No!
What is the number one cause of divorce: a) Alienation of Affection,
b) Financial Difficulties?
Answer is b)
So take care of your business so it can take care of your family and
you
Five Stories to Inspire Entrepreneurs
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Craig Schoen, former
student
Winner of Wes Nicol
Business Plan Competition
Serial entrepreneur
Hi ECQ Test Score:
http://www.dramatispersona
e.org/ECQTest/ECQ(ns)Tes
tAuto.htm
Sold (Cutco) knives door-todoor!
Five Stories to Inspire Entrepreneurs
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Problem: car dealers and REALTORS taking
forever to upload their info to Kijiji.com
Answer: www.Kijiji-Feed.com
Irresistible value proposition
Servers do the work!
From his apartment!
Five Stories to Inspire Entrepreneurs
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Bring Back the
Senators Campaign:
1987 to 1990
“What does Toronto
have that Ottawa
doesn’t?” Bruce
Firestone to himself,
1987
A zoo, a theme park,
a NHL Team!
Five Stories to Inspire Entrepreneurs
Out execute the competition:
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Purchase 600 acres for Palladium (now SBP)
Pre-sell 15,000 PRNs for season tickets (at $25
each)
Sign up 500 corporate sponsors (at $500 each) and
32 original corporate sponsors (at $15,000 each)
Lobby the 21 members of the NHL’s BOG and its
President
Five Stories to Inspire Entrepreneurs
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Don’t take ‘No’ for an answer, late Professor
of Economics O. J. Firestone, U Ottawa to
his son Sept.1990
“You will never, ever get a NHL Team in
Ottawa,” anon. BOG member the night before
the NHL awards the Senators to Ottawa,
Dec. 6, 1990
Five Stories to Inspire Entrepreneurs
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“Make sure that the last face the BOG sees
before they make their decision is yours,”
Norm Seagram, former member of TOOC to
Bruce Firestone
Last two faces the BOG see: Phil Esposito
(Tampa) and Bruce Firestone
“The NHL is pleased and proud to
announce… franchises have been awarded
to Tampa and Ottawa,” five hours later
Five Stories to Inspire Entrepreneurs
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a)
b)
After winning the franchise, you:
Party all night?
Do a few media interviews, leave for Miami,
fly to Montreal, drive to Ottawa, prepare to
sell $22 million in cash worth of season
tickets in ten days in late December 1990
for a team that won’t play (and win) its first
game until October 8, 1992?
Five Stories to Inspire Entrepreneurs
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“John, what was the vote?”
“It was unanimous.”
Surprise phone call three weeks later
Five Stories to Inspire Entrepreneurs
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People like to buy from people they like and
trust
Suppliers trust you to pay them/you trust
them to deliver on time
Clients trust you to deliver and you trust
them to pay you
Sold the NHL on Ottawa and … on BMF
Five Stories to Inspire Entrepreneurs
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Trust is the foundation of a successful career
Once you establish trust, you become part of a (business)
ecosystem that will sustain you, your business and your family for
a long time
Every business is an experiment… until proven otherwise
Good decisions come when all three are in agreement:
YOUR GUT / YOUR HEART / YOUR HEAD
A mentor can help give you confidence but at the end of the day,
every enterprise is an act of faith
GO FOR IT!
THANK YOU,
Dr. Bruce M. Firestone
B. Eng. (Civil), M. Eng.-Sci., PhD.
Twitter: http://twitter.com/ProfBruce
Five Stories to Inspire Entrepreneurs
Appendix: Ten Things that Startups Forget to Do
1.
2.
3.
Select the right idea—if their idea is a bad one to begin with, they
are going to waste precious years of their lives for nothing. A
knowledgeable mentor can really help here
Create a business model for the 21st Century that produces
great results so that the harder they work, the more money they
make—if their business model is bad, they won’t be able to
compete effectively with hard charging entrepreneurs from China,
India and other Tigers. Maybe their business model can be easily
duplicated or dislodged and doesn’t give them a lasting,
sustainable competitive advantage and concession or franchise
Add differentiated value, innovation and ‘pixie dust’ to their
business models
Five Stories to Inspire Entrepreneurs
4. Create a compelling value proposition and learn
how to clearly demonstrate it to customers and
clients
5. Self-capitalize (bootstrap) the new enterprise so
that a VC firm or other investors, partners or
creditors won’t end up owing it instead of them
6. Use smart marketing (guerrilla marketing and
social marketing) so they can acquire customers
and clients cost effectively—if you have to run
Super Bowl ads to get your fist clients, you’re
probably dead anyway
Five Stories to Inspire Entrepreneurs
7. Mass customize products and services using the
Internet so that, for the first time in history, they
can get custom outputs from standard inputs as
well as reverse out some of the work to their
clients, customers and suppliers using the Internet
so that they create a scalable enterprise that can
produce more value than if they simply had a JOB
8. Find pre-launch and launch customers and sell,
sell, sell (or as Ben Affleck said in the film Boiler
Room: “ABC”—always be closing). If they have
cashflow, they will probably survive. Ever hear of a
company with fast rising revenues folding?
Five Stories to Inspire Entrepreneurs
9. Execute expertly, show leadership and become a
trusted member of their community and business
ecology—if they can’t execute and they don’t
become a part of their community, it won’t matter
how good the idea and business model were,
they’re sunk.
10. Make your own rules and set and achieve their
goals—people are excellent at achieving their
goals if they remember to set some!
Prof Bruce