eMarketing Consulting

This is an interesting article about choosing your perspective correctly when you begin your marketing campaign. This is totally relevent to us as we try and figure out how we are going to market iRent2u.com. Are we marketing to the few, or the most. According to this article it would appear our service needs everyone to use it for it to work, like eBay. But I think in this circumstance we are probably different from eBay. We dont need everyone in the country to use it, only the majority of people in a specific geographic area.
But at least in that area, we do need many people using the site to make it truly effective. In that case then it appears our strategy needs to be, according to this article, to be exceptional first of all. Then after standing out we need to amplify the excitement of the few and make it easy for them to spread the story to the caring majority.

Does this make sense for iRent2u.com?

Article Found Here:

http://sethgodin.typepad.com/seths_blog/2007/05/one_a_few_most_.html
Article Starts Here:

There are four kinds of marketing situations, and the approach to each is radically different. Yet most of the time, we lump them together as just plain ‘marketing’.

If you are trying to sell a house or fill a job, you only need to persuade one person.

If you want to make your book sell a bunch of copies, your restaurant to be filled on Saturday night or your coaching practice to have a full schedule, you need to sell a few people.

On the other hand, viral bestsellers, killer websites and essential conferences hit their stride when most people in a marketplace have been converted. You can’t get elected President (most years, anyway) without persuading most of the people who vote.

Lastly, when the market is defined right, there are situation in which you need to persuade all of the people involved. If you need 51 Senators to agree with you on a bill, or if you need the purchasing committee at a big company to buy your software, then you need a unanimous decision.

This four-way distinction is important for two reasons. First, because you often have a choice. You can choose which approach your venture will take on its way to accomplishing its goals. Gandhi didn’t need most of the people to change India, he instead relied on a smaller few, but with more passion than most politicians are able to generate.

You could, for example, plan a business that works once almost everyone adopts it (like eBay) or you could alter the business so it works just fine if a much smaller universe of people embrace it (like threadless). Worth noting that neither business would work if just a few people showed up. 37Signals has done a great job of designing web products that only need to be sold to a few people, and then those people do the hard work of getting everyone in their organization to use them.

Here’s a quick list of how the four differ:

ONE: You’re a needle, the market is a haystack. Make your needle as sharp as you can, put it in as many haystacks as you can afford. Alternatively, you’ve already decided on your one (the date for the prom or the perfect job). In that case, throw the haystack out and engage in a custom, one-on-one patient effort to tell your story to the person who needs to hear it.

A FEW: Being exceptional matters most. Stand out, don’t fit in. Shun the non-believers.

MOST: Amplify the excitement of the few and make it easy for them to spread the story to the caring majority.

ALL: Compromise. You need to be many things to many people, embraced by the passionate but not offensive to the masses. Sooner or later, the issue for the reluctant part of the buyer community is that it becomes more expensive/risky to stand in the way of the group than it is to go along.

Blogs, for now, are almost always about the few. Google and Starbucks and the iPod are exciting stories because they’ve moved from the few to the most. The most important industry trade shows make huge profits because they’ve transitioned to the all.

Choose wisely, and realize that as you succeed, the game will change.

Popularity: 36% [?]

I just read a very interesting mini-case study on the startup-review.com blog. It talks about how Elance became a success, even though their original product was released before the market was truly read for it.

I see a very strong connection between their circumstances and my soon-to-launch website www.iRent2u.com. Elance wanted to create an online marketplace for outsourcing, creating a website that connects service providers with service purchases. Unfortunately, the market just wasn’t ready to support such a system. The general public just wasn’t ready to make that leap, but an opportunity presented itself. Instead of just focusing on the long-term product Elance was originally created to support, they also took on a short term project selling an enterprise system. This provided them enough money to survive until thier original product, with much more potential, succeeded.

I view iRent2u the exact same way. We want to create an online marketplace like Ebay for people to rent items to and from each other, but I dont know if the public is ready. Because of this we will start by facilitating rentals from existing businesses. This will give us startup capital and operating funds, but the true end-goal is to create this massive online marektplace, and I believe we can do it. How long it will take, that is another matter.

Please read the mini-case study, I found it here: www.Startup-Review.com

Article starts here:

How to work with imperfect timing – an Elance example
written by Jay Parkhill, posted on May 13th, 2007

Rare companies like YouTube show what happens when entrepreneurs stumble on the right idea at just the right time, but I suspect that most companies miss the time window slightly and have to adjust. Elance is an interesting study in how to adapt when the market isn’t ready.

Elance is an online agency that matches technical, design and other professionals with businesses needing such services. Project “owners” post their requirements and service providers bid on them. The company was founded in 1999, currently receives 130,000 unique visitors per week, and matches 2,500 projects with service providers every week.

A “long detour” through a secondary product.

Elance launched in 1999 as an “eBay for outsourcing”, a marketplace where project sellers could shop for professionals to get the work done, and vice versa. The company raised $80M, $60M at the height of the bubble, only to see the market collapse. Worse, at the time “outsourcing” was viewed by many as distasteful and distributed workforces were not well understood. Due to all of these factors the online marketplace struggled.

One bright spot, however, was in large corporations. Although Elance was founded to bring outsourced, decentralized workforces to a range of businesses, it found that big companies were the segment of the market that had most embraced the concept. Many of these companies had engaged the services of numerous contractors, yet had no reliable systems to manage their distributed workforces.

In 2001, then, Elance both scaled down to conserve its cash and refocused on the opportunity to serve large corporations. It kept the online marketplace, but put its principal energy behind the development of an enterprise software package to permit big companies to manage and track contract workers. By 2005 the enterprise software product was used by 200,000 employees of companies such as American Express, BP, FedEx and GE, to procure manage over $10B of contract work.

In 2005 Elance perceived that the enterprise software industry had started to consolidate while the general public had come to understand and accept distributed workforces. Elance then re-evaluated its product line and decided to return to the original business idea by selling the enterprise suite to ClickCommerce for a reported $15M. Elance’s CEO Fabio Rosati described this product arc as a “long detour” on the road to deployment of the founders’ original vision.

Flexible business model, but adherence to the original ideals

Elance could have simply abandoned the marketplace concept and pursued the enterprise software path exclusively, but didn’t. I asked Fabio Rosati why the company chose to maintain two product lines, and why they ultimately decided to refocus on the original concept.

He told me that the Board considered a variety of strategic alternatives and ultimately came to the conclusion that the online market route offered the best mid- and long-term prospects. At the same time, near term needs in 2001 required that the company secure revenue from another source, namely the enterprise market. During the detour the company continued to believe that the marketplace product held promise and decided not to abandon it, but instead to maintain and manage it for the future.

I find the concept of the “long detour” fascinating. It says that the company believed strongly in the original’ vision, but recognized that the time was not ripe to realize the plan. In addition, Rosati told me that the company saw the enterprise product as having limited room for growth except as part of a larger supply management software suite, whereas the distributed workforce market was still virgin territory. This combination of factors led the company to end its detour and come back to the path originally envisioned.

Reasons to sell or not to sell a product line

Elance could have sold off or simply abandoned the marketplace product to simplify its operational workload. I asked Rosati why the company didn’t do this, and he told me that the company analyzed the situation and concluded that the marketplace, if properly managed, would not damage the enterprise product or divert undue resources from it (in cash or personnel). That being the case, there was no reason to abandon the possible long-term opportunity it represented.

Getting another shot

The founders and investors originally envisioned the idea of a broad market to match many thousands of service sellers with buyers. The enterprise software “detour” secured the company’s survival during the dot com meltdown and culminated in the sale of the enterprise suite for $15M, a return of less than 20% of investors’ capital but more than adequate to fund future growth. If Elance’s only product line were enterprise software it would be deemed a less-than-successful exit for the company. Maintaining and returning to the original idea, however, gives the company another chance to fulfill the original vision.

Elance’s early vision caused it to launch before the market was ready. As noted earlier, I suspect that many companies have the same problem and need to adapt. Elance adapted by reviewing the market landscape and developing a product to satisfy the immediate revenue-generating opportunity. Many businesses may be able to develop a service offering that can bring steady cash flow sooner, and fund development of the original product.

At the same time, keeping the original product rather than changing the business model entirely gave the company a chance to evolve with the market. Elance’s strategy illustrates one way a company can be flexible and capitalize on available opportunities while preserving a range of options for the future.

Popularity: 40% [?]