How I Beat My Competition
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Prepared for: Engineering/Telfer Lecture
Date: February/March 2012
Professor Bruce M. Firestone, B. Eng. (Civil), M. EngSci., PhD.; Entrepreneurship Ambassador, Telfer School
of Management, University of Ottawa; Founder, Ottawa
Senators; Executive Director, Exploriem.org; Real Estate
and Mortgage Broker, Century 21 Explorer Realty Inc.
http://twitter.com/ProfBruce
http://www.eqjournal.org
How I Beat My Competition
How many enemies do you have?
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> 10
< or = 10 but > 5
< or = 5 but > 2
< or = 2 but > 0
0
How I Beat My Competition
How many enemies do you have?
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I have > 30,000
They are called Maple Leaf fans
Banned Maple Leafs mid-week games when we
received Sens Franchise
Made a deal with Canadiens to show their mid-week
broadcasts and vice versa
If you don’t think you have any enemies, you’re just not
looking hard enough
How I Beat My Competition
How many enemies do you have?
Existing businesses don’t want you to be successful
They plan to eliminate you either by:
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a.
b.
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Buying you
Taking your customers from you 1 at a time
P = M = B, an identity at the topmost level
Most nations are controlled by 100 or fewer families
How I Beat My Competition
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“We live in a cynical world, and we work in a business
of tough competitors,” Jerry Maguire.
When I graduated from McGill’s Civil Engineering
program in the 1970s, there were 3.5 billion souls on
this planet
And probably no more than 450 million participated in a
recognizably modern economy
Today, there are 7 billion people and around 4.5 billion
participate
MUCH more competition today: 10 X
But also it has never been easier (Web 2.0 and 3.0
tools, many of them free) and there has never been
more opportunities to start a new enterprise today
Afterall, there are 7 billion potential, end-user
customers
How I Beat My Competition
10-Step Program to Beat the Competition
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1. Get a great Business Model– add some DV and
Pixie Dust [At C21 Commercial, we belong to OREB]
2. Know your competition– also look for opportunities
to be co-opetitors [Window valve installer/curtain wall
manufacturers; Yahoo uses Bing and Google Ad
Servers to power some of their offerings– adding $350
million/yr to their bottom line]
3. Set goals– then democratize them [N=?, Digg.com
launch– don’t push on a string]
4. Out execute—ideas are abundant* & hence
relatively cheap, execution counts/hire ‘up’
[GradeATechs.com v NerdsOnSite.com]
* What is the largest prime number?
How I Beat My Competition
10-Step Program (Cont’d)
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5. Adopt a great pricing strategy– price says a lot about
you [Hotel occupancy rate goes up when price goes
up]
6. Learn how to sell– if you can’t sell (ideas, products
services, new hires, banks, suppliers) , you can’t be an
entrepreneur [Sold the BOG of the NHL on Ottawa]
7. Provide an authentic experience with great customer
service– under promise and over deliver [Tony Hsieh
says: “Provide WOW (customer) service.” Eg., Finding
a pair of boots seen once in a Hollywood film]
How I Beat My Competition
10-Step Program (Cont’d)
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8. Reduce your costs or keep your costs down– no
matter what your income, costs always rise to exceed it
[Canderel and Pen Funds/Collecting Grand Masters]
9. Integrate the Internet into everything you do– don’t
let your competitors start at the 85-metre mark in a
100-metre race [Virtual Homebuilder 30:1 advantage–
GE’s Jack Welch says most important invention in last
40 yrs of the 20th Century is the Internet]
10. Know your business ecosystem– both your supply
chain and your value chain (at least 2-D) [Spa clients–
mostly women. Clients’ clients– mostly men]
How I Beat My Competition
Case Study– Mont Cascade and Proslide
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Rick Hunter, former Canadian Ski Team Member
Retires after injury
Buys a ski hill
Mostly on credit and a bit of savings
Loses an atrocious amount year 1
Sitting on the hill in Spring of that year– what to do?
How I Beat My Competition
Case Study– Mont Cascade and Proslide (Cont’d)
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Family to support
Debt to repay
Bankruptcy facing him
Looks at hill/looks at lake/looks at hill again
Facing extinction event concentrates the mind
Eureka!
How I Beat My Competition
Case Study– Mont Cascade and Proslide (Cont’d)
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Buy two straight plastic tubes from manufacturer in Rigaud,
Québec on (yet more) credit
Buys a couple of pumps on (still more) credit
One shack for women’s change room/another for men’s
Reuse parking and food services and toilets from ski hill
30,000 people show up that summer and give Rick $13 to
use his waterslides
How I Beat My Competition
Case Study– Mont Cascade and Proslide (Cont’d)
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Saved!
Asks Rigaud manufacturer: “How about a tube with a bend
in it?”
“No we don’t do that.”
“Why not?”
“We do it that way because that’s the way it’s always been
done.”
How I Beat My Competition
Case Study– Mont Cascade
and Proslide (Cont’d)
 Rick hires first engineer
to design a waterslide
with a curve in it
 Non trivial problem of gforce calculations
How I Beat My Competition
Case Study– Mont Cascade and Proslide (Cont’d)
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One day a Disney executive hears about this
Rick gets the contract for Splash Mountain
ProSlide is born
World leader in custom design, engineering and
manufacturing of fiberglass water rides
How I Beat My Competition
Case Study– Mont Cascade and Proslide
LESSONS LEARNED
 Just because you’re a good skier doesn’t mean you know
anything about running a ski hill– you need to be an
expert/no dilettantes please
 Opportunity is where you find it/disaster focuses the
mind/opportunity to discover your DV
 Never give up but be prepared to change what you are
doing if it isn’t working– every biz model changes when it
comes into contact with RL
How I Beat My Competition
Case Study– Mont Cascade and Proslide (Cont’d)
LESSONS LEARNED
 Stick to your guns– when Rigaud manufacturer said there
was no way to safely design curvilinear slides, Rick would
not take ‘no’ for an answer
 Zuckerberg at Facebook had a vision for it that was
unshakeable despite many setbacks, betrayals and
competitors
 Read ‘The Facebook Effect’ to understand the level of
passion, talent and commitment needed to be successful
 What business is Rick really in? The design business
 Which can not easily be knocked off or outsourced to
CHINDIA
How I Beat My Competition
Case Study– Tony Hsieh and Zappos.com
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Tony knows nothing about selling shoes
But he wanted to run an Internet business
Wanted to develop a business where customer service was
a core competency
No time limits on or scripts for his CSRs
Fell in love with a Biz Model that was ‘practically no money
down’: based on drop shipping
How I Beat My Competition
Case Study– Tony Hsieh and Zappos.com (Cont’d)
 Drop shipping meant that he had no control over
transportation to the client
 And he could not offer a great selection because shoe
manufacturers would not give him access to top of the line
models– only retailers with RL locations got that
 Shoe manufactures gave preferential treatment to brick and
mortar stores
 Had to open a RL location
 Had to build mega warehouse and delivery infrastructure
 Had to go ‘all-in’: even sell his beloved condo in SF to keep
the biz afloat
How I Beat My Competition
Case Study– Tony Hsieh and Zappos.com (Cont’d)
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Tony developed ten core values as part of his corporate
culture and part of his DV:
1. providing WOW service
2. embracing change
3. being a fun place to work and a little bit weird
4. being creative, open minded and having a sense of
adventure
How I Beat My Competition
Case Study– Tony Hsieh and Zappos.com (Cont’d)
5. promoting growth and learning amongst employees
and as an organization
6. having honest relationships not only between staff
members but with customers and suppliers too
7. creating a positive team environment and a family spirit
8. doing more with less
9. being passionate
10. being a bit humble
How I Beat My Competition
Case Study– Tony Hsieh and Zappos.com (Cont’d)
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Similar to Ottawa’s fastest growing tech co, Shopify.com’s
corporate culture
Passionate, committed, high end CS, terrific biz model,
funky corporate culture, superb execution, bootstrapped,
adaptive, authentic, innovative and lots of DV
http://www.eqjournalblog.com/?p=2171
How I Beat My Competition
Case Study– Tony Hsieh and Zappos.com (Cont’d)
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According to Daniel Goleman, Emotional Intelligence
accounts for 75% of the performance of an employee
or manager with 25% explained by IQ and everything
else
For CEOs, ratio is even higher
How I Beat My Competition
Case Study– Tony Hsieh and Zappos.com (Cont’d)
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A Zappos.com client is not looked at as a customer
who is buying one pair of shoes for $200
She represents a lifetime client who might buy shoes,
handbags, work-out clothing and more—thousands of
dollars
Brian M. and the stalled Cadillac
How I Beat My Competition
Case Study– Tony Hsieh and Zappos.com (Cont’d)
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Tony wrote “Delivering Happiness” about his experiences
Asked influential bloggers to write a review
Promised them a free, advance copy
When they received it, there were two copies
Delivering “WOW service” again
For the ~$300,000 they spent on this, they got the
book to the NYT Best Seller List
(http://www.eqjournalblog.com/?p=973)
How I Beat My Competition
Case Study– Tony Hsieh and Zappos.com
LESSONS LEARNED
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Customer service is a profit centre not a cost centre
Customer service can be a key differentiator
You have to be in it boots and all– not one foot on the
shore and the other in the boat
Tony can execute expertly
Tony understood that if he didn’t fix biz model, Zappos.com
would die– you must adapt
Zappos pays (almost) as much attention to the supply
chain as the value chain [Walmart also does this]
How I Beat My Competition
Case Study– LooseButton.com
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Loose Button Founders Ray Cao and Aditya Shah
Both Waterloo Engineers
Demonstrate a lot of the principles of GTBMR, Get
the Biz Model Right
About 98% client base is female and growing fast
Suppliers:L’Oreal, Moroccan Oil, Dermalogica
and dozens of others
How I Beat My Competition
Case Study– LooseButton.com (Cont’d)
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Reshaping the way consumer products industry
delivers samples to consumers
Employed agencies to go to malls to hand out
samplers to consumers quasi randomly
Ray and Aditya highly analytical/believe in value of
tracking metrics to make enterprise smarter
Startups grow faster too–7x if u set goals/track metrics
How I Beat My Competition
Case Study– LooseButton.com (Cont’d)
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Value proposition : “We’re the Netflix of the beauty
products industry but with e-Harmony for brains.”
Every consumer completes profile letting
LooseButton.com know what type of products
interested in
Once /month, Luxe Box delivered by CPC (Canada
Post Corporation) with travel-size samplers from
suppliers
How I Beat My Competition
Case Study– LooseButton.com (Cont’d)
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Form of mass customization—every Luxe Box
contains different products matching individual
consumer interests with a few surprises on upside
thrown in
Clients independently started to record YouTube
videos of themselves receiving, using and
experimenting
Over 10,000 views
Tribes of makeup evangelists forming around
strongest influencers
How I Beat My Competition
Case Study– LooseButton.com (Cont’d)
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Clients paying $12 per month ($10 if they sign
up for a year) to receive monthly try-beforeyou-buy Luxe Box filled with samples
LB’s suppliers provide samples for free
In addition suppliers like L’Oreal and Moroccan
Oil pay for right to be included in Luxe Box
How I Beat My Competition
Case Study– LooseButton.com (Cont’d)
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Negative cost marketing too—organizations paying to
market Luxe Box for them… Globe and Mail,
Chatelaine and other publications, desperately trying
to hold onto readers, buy Luxe Box subscriptions (at
around 80% of retail price) to give to their most loyal
customers
Vastly extends LB’s reach & growth rate
LB getting paid on 3-sides of their biz model– a first!
How I Beat My Competition
Case Study– LooseButton.com (Cont’d)
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Tough business to knock off until Internet can
“download” makeup and beauty potions!
As long as Canada Post Corporation keeps going,
they’re in great shape
How to make it even tougher to knock off?
Build an even stronger community around it– add
follow/follower model; e.g., integrate Twitter API or
other SM
How I Beat My Competition
Case Study– LooseButton.com (Cont’d)
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Named company ‘Loose Button’ cuz: “Buttons are
fasteners that connect two pieces of cloth. We
intelligently connect consumers and brands.”
Also LB name is different from product (Luxe Box) cuz
it’s the 1st of many
“Manpacks”, Foodie, Health, Wellness, Fitness, Tools
& Equipment, 100s more variations!
How I Beat My Competition
Case Study– LooseButton.com (Cont’d)
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Started LB right out of University
Advisory Board with luminaries like Harry Rosen and
Jagoda Pike (former publisher of the Toronto Star)
Mentoring helped a lot
Decided not to go into apparel space since it was
saturated
Went into market research and product discovery side
instead
Biz coach comes in once per week
Set goals, track metrics and live up to their word
How I Beat My Competition
Case Study– LooseButton.com (Cont’d)
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Other changes?
Add Qricket Code to each Luxe Box (QR code where u can change
website resolves to after printing them so that, like ET, each Box
can call home
Add LooseButton.org to give back to their community too
Business models today not just about making money
If it’s all about money you’ll have none
If it’s all about building insanely great products and services plus
making contribution to society, you’ll seem to have it all
Gen Y and Steve Jobs phenomenon
Bolt on to existing model standalone not-for-profit dedicated to say
wellness with own sources of funding and marketing would help
wider community
How I Beat My Competition
How I Beat My Competition
Case Study– LooseButton.com
Lessons Learned
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GTBMR, Get the Business Model Right
Add DV, Differentiated Value
Mass Customize—integrate the Internet
Set goals/track metrics for yourself and your
clients/suppliers/marketing partners
Build a community/give back
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium
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Canderel and others enter the Ottawa marketplace and out
compete the locals
Office rents go from $18 in 1982 to $6 in 1987
We were constantly trading up in terms of business size and
complexity
Move to a market with fewer competitors and some more
DV– get out of the way of the elephants
“What does TO have that we don’t have?”
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium (Cont’d)
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A Zoo, the Princess of Wales Theatre, a NHL Team
NHL is getting ready for expansion again
Randy, MBA from Clarkson: “Let’s do it.”
Cyril Leeder, CA: “How much is it going to cost?”
Estimate: $35 million (then going rate for NBA expansion
team)
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Franchise cost: $50,000,000 USD in 1990
Pre-sold 15,000 PRNs for $25 each for a team that
does not yet exist
Pre-sold 500 Corporate sponsors for $500 each
Pre-sold 32 Original Corporate Sponsors for $15,000
each
Pre-sold media rights for radio and TV for $250,000
and $4,000,000, respectively
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Pre-sold 30-year arena management contract for $15
million + a corporate guarantee
Pre-sold pouring rights for $3 million
Pre-sold product rights for $1 million
Pre-sold 10,000 season tickets 22 months before the
first game for $22 million in cash
Pre-leased 100 suites at $100,000 per suite per year or
$10 million per year for 5 years = $50,000,000
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Bought 600 acres for $12k per acre, won a NHL
franchise, built a MCF (Major Community Facility– aka,
Scotiabank Place) in the middle and sold extra 500 acres
for $112k per acre to make $50,000,000
You get the picture… PRE-SELL, PRE-SELL, PRESELL… find ‘launch clients’ before you launch
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Howard Darwin: “If anyone should be bidding for a NHL
team for Ottawa it should be me. But you have the only
site for a MCF, you have 500 corporate sponsors tied up,
you have 15,000 reservations for season tickets, you
have the relationships with the NHL BOG.”
Me: “That’s right, Howard.”
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Having launch clients (pre-sales) changes everything– it
gives everyone involved confidence that you are on the
right track, it increases your credibility and is an
important source of (cheap) capital
The minimum number of launch clients you need is
three: you can convince one fool to buy any product or
service, maybe two but probably not three
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Meet with each member of the BOG at least twice
Meet with the President of the NHL
Go to Palm Beach with 120 followers including the
Ottawa Fire Department Marching Band
Slogan: “Bring Back the Senators”
Name things like: “The Palladium”– give it the breath of
life (like the Elves did in Middle Earth)
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Prioritize
Lobby
Know what you are doing (learn from Bill Torrey/Glen
Sather/Sam Pollack)
Media proclaims: ‘Milwaukee/Seattle’
Stand your ground– “You will NEVER, EVER get a NHL
Team in… Ottawa.”
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Plaster Palm Beach Airport with Bumper Stickers
Make your presentation a conversation
Never stop
Last thing they see is your happy, smiling face
Be someone others can have trust in; trust is the
foundation of a successful life in business and in your
personal situation
“Go where hockey is known and loved and we’ll take
care of your franchise.”
Beat Milwaukee, Portland, Seattle, Houston, Hamilton
and St Petersburg
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium (Cont’d)
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Dec. 6, 1990, the NHL awarded franchises to the cities of
Ottawa and Tampa
But really they awarded them to Phil Esposito (for
Tampa) and Bruce Firestone (for Ottawa)
They trusted us
Our theme song– Tom Petty’s DON’T BACK DOWN
We get a unanimous vote from the NHL!
In entrepreneurship, results count and results come from
a fundamental source: trust— remember this— “People
like to buy from people they like and trust.”
How I Beat My Competition
Case Study– Ottawa Senators and the Palladium
LESSONS LEARNED
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Set your goals, internalize them, democratize them and
publicize them
Outwit, outplay and out execute the competition
Know who your real audience is
There’s the published hierarchy then there is the one that
really makes things happen– not all owners are created
equal– know the business ecosystem
How I Beat My Competition
How Do I Beat the Competition: Pop Quiz
1. Can you name five things you need to do to beat
your competition?
__________________________________
__________________________________
___________________________________
___________________________________
___________________________________
5 Marks
How I Beat My Competition
How Do I Beat the Competition: Pop Quiz (Cont’d)
2. When you start a new enterprise, you should focus
exclusively on customer-facing aspects of the
business not on your supply chain or your costs.
a. I agree
b. I don’t agree
1 Mark
How I Beat My Competition
How Do I Beat the Competition: Pop Quiz (Cont’d)
3. Is it possible for two companies in the same industry
to have different costs structures and, if so, can
you give an example?
____________________________________________
____________________________________________
____________________________________________
________________________________________
3 Marks
How I Beat My Competition
How Do I Beat the Competition: Pop Quiz (Cont’d)
4. Is customer service a profit centre of a cost centre?
a. Cost centre
b. Profit centre
1 Mark
How I Beat My Competition
How Do I Beat the Competition: Pop Quiz (Cont’d)
5. Why is it important to have pre-sales made up of at
least three launch clients?
____________________________________________
____________________________________________
____________________________________________
_______________________________________
3 Marks
6. Can u complete this sentence: “People like to buy
from people they like and ________________.”
1 Mark
How I Beat My Competition
How Do I Beat the Competition: Pop Quiz (Cont’d)
7. What is more important—a great idea or expert
execution?
a. Great execution
b. Great idea
1 Mark
How I Beat My Competition
How Do I Beat the Competition: Pop Quiz (Cont’d)
8. Can you name two things that the Bring Back the
Senators campaign did to out compete the local
competition?
a. ________________________________
b. ________________________________
3 Marks
How I Beat My Competition
How Do I Beat the Competition: Pop Quiz (Cont’d)
9. Rick Hunter’s ski hill, Mont Cascades, was saved
from bankruptcy because:
a. He outworked his competition.
b. He spotted an opportunity to take advantage of his
existing infrastructure with a summertime use.
1 Mark
How I Beat My Competition
How Do I Beat the Competition: Pop Quiz (Cont’d)
10. Co-opetiton means
a. Sometime co-operating with your competitors
b. Beating the competition at their own game
1 Mark
Total Marks: _________/20