Search

Rss Posts

Rss Comments

Login

 

My Investments: Not all publicity is good publicity

May 27

Freshbed:

Channel Four ran a program called ‘Make me a Million’ several years ago which got three Entrepreneurs to each choose from a group of start ups, a business that they would like to work with and invest in. The challenge was to transform these ideas (with minimum investment) into a million pound business within a year.

Not all publicity is good
I was asked to help one of these companies as a sales person. The idea behind the business was simply brilliant. Most of us do not get a good night sleep because we are either too hot or too cold. If you are an asthmatic, bed bugs can cause absolute havoc with your condition. The idea behind this business was simple. They would enable your bed to have fresh air flowing through it whilst you were sleeping at a controlled temperature. I fell in love with the idea and not only did I take on the role of helping the business, I also invested a small amount in the company.

The whole thing was nothing short of a disaster. The problem was that because of the involvement of the TV crew (and see my next experience to give the other side of the same coin) this was not about business but about PR and people who were on the team had very different agendas.

One of my issues with business people who have had success in one field is that they tend to think of themselves as great business people rather than someone who was fantastic at a business in a particular field. Other than a few people (including begrudgingly some of the Dragons on Dragons Den) there are very few people I know who are good at ‘business’ and have been successful in more than one field. The Entrepreneur for this particular project applied the skills that were perfect for their main business to this business and it did not work. Firstly, targets were set of what the company should produce in year one which had we spent ½ an hour researching the bed market we would have realised were totally false and unrealistic. It meant that on day one we tried to create too big an operation. This though was called ‘reaching for the stars’ There were numerous other occasions where the lack of leadership impeded the business.

Secondly, we did not have anyone who had spent anytime in the bed industry. I remember going to see Mike Claire (CEO and founder of Dreams). I started talking to him about selling beds and he put me in my place very quickly! He was absolutely right to do so. I had shown him a lack of respect by trying to get him to sell my beds without understanding his business (I had not even made the effort to visit his stores – no excuses

... sales people
as there are enough of them!) Can I give all entrepreneurs some advice on this? Having learnt this lesson, I always ask companies that pitch to me how much they understand their customer – and why? I had personally forgotten a very good lesson I had learnt whilst working for Mr. Kipling Cakes. Whilst visiting a northern based retailer to sell some cakes, I came across a sign to sales reps which said

“If you are here to sell to us and you have not visited at least three of our stores in the last month, please cancel your appointment and rebook for a time when you can demonstrate your interest in becoming our partner”

The very next weekend I spent some time learning about selling beds by asking Feather & Black if they would be kind enough to employ me for three weekends to sell beds – I learnt a lot and the next time I saw Mike Clare he was impressed and could see that I had learnt a thing or two about selling beds. The lesson here for businesses is that even if you see your model as disrupting the existing business model in a sector, please try and have at least one person on your board, or management team who understands the way the industry is at the moment.

The business was running to a very tight deadline, which was imposed by the TV schedule rather than by us and having the product ready. We never had a chance of making the deadlines and as a result the product did not work properly, prices were way too high – we needed to be at least 50% cheaper than we were. Despite heavy TV presence we failed to sell more than 10 beds (our target was something stupid like 100,000!) This also taught me that just because you advertise your product; it does not mean you will sell your product. My advice to any would-be entrepreneur and management team that may appear on TV as part of a documentary is don’t do it. If you have to – then invest in some handling the media training!

We failed to plan – which meant we planned to fail!

Related posts

Investments
  • Michael
    This is so true, great advice Permjot, I will be looking to follow this advice.
  • Pvalia
    Thank you Matthew,

    You make some very interesting points and I think yes - humility is needed. I will write a blog about your points as you do stir some thoughts

    Permjot
  • Matthew Artero
    Mr. Valia, I want to say "WOW!" in response to this post of yours. I have not been to your blog since you mentioned a contest that required pitching in an elevator (maybe years ago) but last week Frank Peters put up a link to your blog so we could see his guest post.

    I am impressed with your acceptance of responsibility for yourself, your analysis of your mistakes and your advice for us. Others claim to be giving Entrepreneurs and Startups advice but it is usually nothing more than business generalizations that one could have gotten out of a fortune cookie.

    Just as you shared with us how Mr. Claire and Mr. Cakes did not want to hear from you until you educated yourself on the business, as an Entrepreneur I really don’t need Angels wasting my time pretending they know everything. It’s much better if they just admit they aren’t going to take the time to learn about the breakthrough technology or the rapidly growing new industry rather than waste my time so they can stroke their egos pretending they have something useful for me to hear.

    If the advice Angels give to an Entrepreneur is specific it is usually on pitching and presentations; utter nonsense that puts the cart before the horse. Angels and VCs tell us how we have to excite them and stand out from the many opportunities.

    If the industry I’m in is growing rapidly and the need I satisfy is real that should be memorable enough. I shouldn’t have to literally jump up and down on stage to excite Angels.

    Some say they like to bet on the Jockey instead of the horse so they look for star individuals or teams. I say even the stars can only lead the horse to water but can’t make it drink.

    Because this post of yours shows honesty and integrity on your part, I would like very much to read what you have to say about the arguments I make in my reply to Frank Peter’s guest post. Specifically that Frank is not giving the candid analysis he claims to be giving since he is comparing apples to oranges and the fact that his organization lets mediocre opportunities through the screening process all the way to the finalist stage, including one that failed 10 years before becoming a finalist.

    My main point is that advice on how to present is a joke when Angels are not bothering to educate themselves on particular industries so that they would be knowledgeable as to what constitutes good advice. Essentially the same point you make with your examples of Mr. Claire and Mr. Cakes.

    I say what’s good for the goose, is also good for the gander. Angels should practice what they preach. If it is good for the business to do it, then it is also good for the Angel to do it before he gets into the business and before the Angel pretends to be in a position to advise on the business.
blog comments powered by Disqus