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Game Changing Strategies – Part II

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I am reading The Blind Side right now. One part of the book talks about Bill Walsh and his game-changing offensive strategy that made just about EVERY quarterback who played for him successful. He took barely successful quarterbacks and made them the best in the league with his “nickel-and-dime” offense. At the time, teams would either run short yardages or pass long yardages but very little in between. He discovered the highest completion rates were under twelve yard passes. So he built his offensive playbook around the short passes. As a result, his quarterbacks had the highest completion rates in the league… turning more first downs, more points, more wins, more success. Meanwhile, all the other coaches were competing to get better quarterbacks… when it wasn’t about the quarterback, it was about the strategy.

I draw a similar analogy to companies who feel they are dependent on commissioned sales superstars for their success. If they had a more unique selling proposition and marketing engine they wouldn’t need sales superstars to do all the heavy lifting. In addition, it would make them more profitable to not have to pay as much in commissions. I view marketing as an automated salesperson, maybe similar to how Bill Walsh viewed his nickel-and-dime offensive as a way to win independent of superstar quarterbacks (for those of you who will argue he had superstar quarterbacks, like Joe Montana, I would argue that he turned quarterbacks into superstars with his strategy).

In time, teams figured out how to counter act and copy Walsh’s strategy, making it less of a game-changer. Most game-changers eventually get copied by everyone – which is another way of knowing it WAS a game changer, but no longer is. How are you creating game-changers in your industry?

Game Changing Strategies

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I was having a conversation with a friend and fellow board member who has built several successful companies and hundreds of millions in value. We both agreed that in each company we’ve been involved with there has been less than a handful of game-changing strategies that made each company so successful.

In RegOnline’s case, I believe it boiled down to three game-changing strategies…
1. Self-service, get-started-now system
Four years ago, all of our competitors made it difficult to just “give it a whirl” on their systems. They shared very little information on their sites, made you get slimed by a salesperson, and depend on them to setup your first event. With RegOnline we enabled them to learn everything about the system right on the site, open an account, and start using the system right away. Lots of people told us THAT was how/why they choose RegOnline over the others.

2. Simple pay-as-you-go pricing
We then changed our pricing structure to make it easy for prospects to figure out the cost of using the system on their own. Most of our competitors had complicated volume-based pricing structures with complicated ala-carte feature-based pricing, and upfront and annual maintenance costs that they couldn’t figure out without talking to a salesperson. With no upfront or annual fees and easy pay-as-you-go pricing, lots of people AGAIN told us THAT was how/why they choose RegOnline over the others.

3. Search engine optimization
Concurrently we put lots of resources towards strategies to be #1 on Google for a hundred different “online registration” related search results. This boosted our traffic dramatically over time. Combined with our ease of setup and pricing, made RegOnline an easy choice for most.

When I asked my friend what his game-changing strategies were, they were completely different for each of his companies.

Sure, it’s easy to look back and identify the successful game changing strategies. But it takes a lot of trial and error along the way. For me it never stops, I’m always looking for the next game-changing strategy to add even more growth and profitability to the business.

Waiting for the big fat pitches

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In my last post I talked about how I share Buffett’s investment philosophy in liking to wait for the big fat pitches. Turns out that one of Buffett’s baseball heroes is Ted Williams. Considered one of the most disciplined hitters ever, Williams holds the highest single season batting average of .406 in the Baseball Hall of Fame.

He did it by rarely swinging at a pitch outside of his strike zone. He even made a chart (above) of batting averages based on hitting pitches in different places in the pitching zone. He thought the single most important aspect of hitting was “get[ting] a good pitch to hit.” The emphasis was not on being passive, but rather swinging hard at a pitch you could handle, a pitch in what he called his “happy zone.” He made a science of it like Buffett has done with his investments.

Focused Investing

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Last weekend I flew to Omaha, Nebraska to meet with Warren Buffett (along with 32,000 other shareholders of Berkshire Hathaway). I attended the annual shareholders meeting last year and even though this year’s set up was the same (with Buffett answering questions for five hours) and a lot of the questions were the same, I learned different things this year because I’m in a different situation now.

When we sold RegOnline last October, I went from having all of my net worth concentrated in one company (something I grew familiar and comfortable with) to having it all liquid and searching for places where it can generate solid returns (something I don’t have as much confidence in). To help better understand the investment world of things, I interviewed a half dozen investment managers and read a dozen books on the topic. I found that 99% of the world believes in a diversified asset portfolio theory, which means buying a bunch of mutual fund-like instruments that have hundreds of stock positions and let them “ride” the market over the long haul. Something about that didn’t set well with me since up until now I’ve built all of my wealth by being confident in being highly concentrated in one company at a time.

So, even though I’ve owned Warren Buffett’s company, Berkshire Hathaway, for many years now and have had a respect for Buffett’s track record and no-nonsense approach to business and the world, it wasn’t until I sold my company last November that I rolled up my sleeves to really figure out HOW and WHY he chooses his investments and his core principles for investing. This year’s shareholders meeting shed a lot of light on that.

What I’ve learned, and continue learning, is that Buffett is one of the most sound investors I know. He is exceptional in his approach because of the disciplined principles by which he invests. In a nutshell, he’s made his fortunes by investing in companies with

1. >10% return on equity for more than 10 years
2. A durable competitive advantage
3. A stock price that is well below intrinsic value

He’ll only consider something when his confidence is high enough and the price of the stock is discounted enough. For example, he invested 40% of his partnership into The Washington Post in the early 70’s when its stock price was trading at 1/5 what he thought it was worth. He did the same thing in the 80’s with both Coke and American Express. He is probably one of the few people who gets excited when the stock market is crashing, because it means that great companies will be undervalued.

Two secrets to all of this:

1. Knowing the VALUE of a company based on the predictability of its future cash flows. 99% of people I talk to, including investment advisers, can’t tell me the intrinsic value of what they are invested in. Buffett CAN & DOES… and gains great confidence and strength in knowing the intrinsic value of every investment.

2. Having patience to wait for the perfect opportunities. Buffett is sitting on $35 billion in cash right now, with the discipline to hold until the right moment presents itself to go big.

It’s very similar to what happened when I invested in RegOnline 4.5 years ago. I had looked at almost a hundred companies to buy, invest in, or start. Nothing grabbed me. I wondered if I was being too selective and should just jump into something and “make things happen”. When RegOnline hit my radar I knew instantly that I wanted to plow everything I had into it (and even borrowed some). Why? Great growth rate, diversified fragmented client base, profitable, price of investing was far less than what I perceived it’s intrinsic value to be, and I liked the founder/CEO. It was a no-brainer then as it is now. That’s my plan going forward too. Wait for the big fat pitches and then focus my energy on hitting them out of the park when they appear.

Take Your Dad to Work Day

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Something very cool happened last week when my Dad came to town. Usually when family is in town I have meals with them in between my business meetings. This time was different. On Thursday and Friday my dad came with me to my meetings. He had a blast listening in and I had fun hearing his impressions of the meetings afterwards.

The first meeting, I was interviewing a job candidate. I introduced my father and asked the candidate if he would be ok with him sitting in the background. My dad promised to sit silently and the candidate said no problem. At the end of our 45-minute interview, my dad asked if he could ask a couple questions. We all laughed and then he asked some good questions. At least now I know from where I get my burning desire to ask questions!

In the meetings that followed over the next two days I introduced my dad and explained to everyone that it was Take-Your-Dad-to-Work day. Everyone chuckled and had fun having him there as an observer… and sometimes some follow-on questions. We had a lot of fun and some good laughs because of it. It was a truly memorable experience for us. So, thank you to everyone who participated with us!

It’s fun to have someone I’m close with observe my world close-up. Growing up I had similar opportunities to observe my Dad run his law practice close-up. I learned a lot from doing that and had a much greater appreciation for him as a result.

To shadow or be shadowed, what a great experience! Give it a try sometime.

More signup power

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Our open account page used to have three times as many fields than it does now… and 1/3 the conversion rate! The conversion rate of a registration page is inversely correlated to the number of fields. The less fields, the more business we convert.

It wasn’t easy eliminating fields because we are addicted to information. Here’s what I learned to ask myself and my team…
1. Which information is a must-have? Do I have to know where they came from or can my web analytics tell me?
2. Which information could we collect later? For example, we collect billing information when the client goes live with their event.
3. Eliminate the rest. If a piece of information doesn’t create a change in action, then I eliminate the field.

We started watching people, in our usability tests, trying to open an account. It was amazing to discover fields that confused people and error messaging that wasn’t apparent or easy to understand. At one point we started tracking the number of attempts it takes to open an account. By changing wording, eliminating confusing fields, and changing the error handling we went from an average of 2.5 attempts to 1.5 attempts.

After several dozens of iterations of our open account page over the years, we STILL are finding ways to bump the conversion rates by making it easier for everyone filling it out. How much easier can you make yours?

Hiring Made Easy

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A couple people have asked about my strategies for hiring. My goal over the years has been to attract great people who REALLY want to work at RegOnline and fit in well with our exisiting team. I believe the best way to do that is to share what makes the company great and then have a challenging interview process. So I developed the following process:

1. Write Craig’s List ads that standout and are personable – Support SuperStar: looking for people to knock the socks off our clients everyday.

2. Take them to an interesting/personable landing page that tells them WHY they would want to work there (I copied some of the content below because this page is going to change because of the acquisition)

3. Show the company’s personality with a video, letter from the CEO, and even a company cookbook because it gets people excited when they get a FEEL for the work environment before applying

4. Make your application an online survey where you can ask some telling questions and have them copy and paste their resume. This is a great pre-screening tool and makes it much easier to track applicants. Plug: get your online surveys from SurveyGizmo.com (a GREAT company I’m an investor in).

5. Make your applicants earn their way into a job by having a challenging interview process. When they do get the job they will feel a lot prouder about having made it. I like to give them a couple assignments*, a couple phone interviews, a couple in-person interviews, and then in-depth reference checking. Describe this process to them upfront. Sometimes the more challenging/exclusive something appears, the more people want it. Plus, you get to see more of the person and the fit prior to hiring.

*What I like about giving assignments is it puts the work on the applicant AND tells a lot about the applicants. Once created, they are real easy to hand out. For example, for our support team we give an assignment to respond to an email for a request for help with a specific feature. What we can look for in the response is: were they resourceful in finding the answer in our online help, did they start the email reply with compassion for the clients frustration, were they articulate and accurate with the answer, did they close in a warm friendly way, and did they go above and beyond in some way. It’s a lot easier to hire for compassion, resourcefulness, articulateness, and friendliness then it is to teach someone to be that way.

Seven Reasons to Work at RegOnline

  1. Fast Growing – 50% growth per year means more career growth opportunities for you.
  2. Established – 10 years in business, debt-free, and profitable means a stable workplace for you.
  3. Great People – 45 fun, smart, happy, and hardworking co-workers means you love the people you work with.
  4. Da Schizzle – company trips to Mexico, catered Friday lunches, monthly fun activities (wine tastings, happy hour, bowling, Rockies games), and more! Oh yeah, and other mundane benefits: Medical and Dental insurance, Paid Time Off (of course), Retirement Savings Plan, Discounted Health Club Membership
  5. Based in beautiful Boulder, Colorado at the foothills of the Rocky Mountains.
  6. The industry leader in providing online event registration for over 25,000 events worldwide (conferences, meetings, seminars, & tradeshows).
  7. 15,000 Users Love RegOnline (and the people who work here) because it cuts their workload in half.

Bonus Reason: Because we are a small company, everyone’s ideas are important to making RegOnline even better. Here’s the catch. Our interview process is tough. We have a commitment to our team to bring on only the best-of-the-best to sit next to them. A typical interview process includes: two phone interviews, three in-person interviews, two assignments, and thorough reference and background checks… and it all starts with this application survey. Is it worth it? ABSOLUTELY! (Please refer to #’s 1-7 above)

Letter from the CEO Cooking with Regonline

Be a tyrant – make great products

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“Democracies don’t make great products.
You need a competent tyrant.”

Jean-Louis Gassee, a former Apple executive

Several entrepreneur friends have asked me lately how they can get their employees to come up with more innovations. My answer is simple: “Why? That’s YOUR job!”

I think involving my team in the creative process is important. I think getting creative on the execution of new ideas is important. But, I believe the entrepreneur/leader is the heart and soul of leading innovation. My role is to listen to customers, listen to employees, look at the world around us, and then lead the way in taking it to the next level.

I LOVE the story of Apple and Steve Jobs because while there are a lot of bright, creative, talented people at Apple, Jobs is the heart-and-soul of Apple and the innovation leader. Apple did great while he was there, tanked when he wasn’t, and has been amazing since his return. He’s a tyrant with implementing is vision. AND he has created a phenomenal amount of innovation in a short period of time because of it. He has surrounded himself with a great team that gets creative in executing his vision.

I sometimes hear entrepreneurs feel like they need to or want to get their employees to be the innovators. I love being an entrepreneur because I have always had a strong vision for how things could be better. Why would I want to delegate that? I love surrounding myself with bright, creative, passionate people who enjoy executing new ideas.

So, I hereby give you permission to be an innovation tyrant and bring great products to the world!

“The entrepreneur is essentially a visualizer and actualizer…
He can visualize something, and when he visualizes
it he sees exactly how to make it happen.”
— Robert L. Schwartz

Leadership by ROI

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Last night I met up with a friend who I call Boulder Buffet because he lives in Boulder and has built his wealth from nothing to $100 million in 15 years through Buffet-like investing. He asked me an interesting question that has now come up in three conversations in the past month…

How do I make business decisions on whether to go ahead with projects, or continue or discontinue existing ones?

My answer: When I perceive a high level of probability (through lots of questions and research) that it can return at least $2 for every $1 that I spend on it, then I start or continue the project.

Seems dumb simple, right? Well Boulder Buffet confirmed, something that I have noticed in most leaders as well, that 90% of the 100’s of public company executives he has questioned over the years surprisingly do NOT use this thought process. In my opinion, it is the most important thing that a leader can do for their organization… determine ROI for projects within their organization and shift resources based on what will generate the greatest ROI for the organization.

For example, at RegOnline we’ve dabbled in the membership management software space for years. We have had so many internal debates on whether to put more or less resources towards it that I cringe every time I hear “membership management”. We’ve dedicated sales, support, marketing, and development time to a project that has yet to account for more than 1% of RegOnline’s revenue after 4 years of working on it. It has detracted resources away from a much greater ROI that we get from every additional dollar that we invest in our core business. Especially since we continue to be on the steep part of our growth curve in that business. That’s not to say Membership Management couldn’t be a great business – but not at the cost of detracting from amazing ROI in our core business.

I recently asked the leaders of two companies, who are raising more capital to fund their growth, what projects will the $’s go towards and what is the ROI of those projects and in what time frame? What I got was the usual vague answer that we need to hire more sales, more support, and fund general operations. What is the ROI of each additional salesperson? How long does it take before they are break even? When do you know whether to cut or keep them? For each new position I added at RegOnline, I asked myself these questions. And as brutal as it sounds, I shared this with the people I hired so they could tell me what their personal ROI was at their 3 month and annual reviews.

Warren Buffet has said that capital/resource allocation is what he is best at and what has made him so successful. Where are you allocating YOUR organization’s resources to create $100 million… or $50 billion of value?

Usability Testing -Being Our Prospects

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We just finished two days of usability testing of RegOnline’s marketing website (we test the product separately). Our marketing team sat in a room and observed (via video feed) eight event organizers each spend 45 minutes going through our site and talking out-loud about what they are thinking as they go (kind of like Being John Malkovich).

I’m always amazed by what we discover in this process of observing how new people perceive our site… and how different that is from how WE see things as people who are knee-deep in our own product and site. Within the first 3-4 people, the same comments and observations were already repeating. It’s like ringing a big bell in the room to tell us where we were blind because we were to close to see. We observed them wanting the same things:

  1. An easier way to play with REAL sample registrations and reports (vs. screen shots) without opening an account
  2. More information upfront about security and how RegOnline integrates with other systems
  3. How RegOnline makes it easier for them and their registrants and less about how it would increase attendance (which they didn’t believe)
  4. More believable explanation for why it’s free to try RegOnline (like a 30 day trial)

By making these improvements, we aim to make it easy for prospects to choose to do business with us. Which, in my opinion, is THE objective in marketing.

What can you learn by entering your prospects minds and looking through their eyes?