Why small business should care about Meeker’s slides

Mary Meeker’s annual Internet Trends report came out today, so I thought I’d offer a few comments about it and how its findings are likely to (continue to) affect small businesses, including small software companies.

The Slideshare version is rather slow right now,  so I suggest you check out the PDF version of the Meeker report.

Psst, thank you Mary.

Tablet sales

52% annual year over year growth. For software companies, this matters just a bit. Web apps that work great on phones don’t always translate to the tablet form factor. Do the work to make your UX good on both.

Context: There are 789MM laptop users globally and 743MM desktop users globally – this is after decades of computer sales. Tablets – despite the modern tablet only having been around for a few years, there are already 439MM globally. Ignore them at your own risk.

KPCBMeeker2014Tabletuse

 

Advertising media

Meeker2014AdSpend

When reading the “Print is over-indexed” comment, keep in mind that most businesses who use print do so very poorly. They carpet bomb rather than snipe and they don’t track lead numbers or ad/media performance. I suspect they will do the same when advertising on mobile ad platforms and will complain that, just like print, advertising doesn’t work.

Don’t be that business.

Hey, nice network!

95%+ of networks are compromised in some way, and small business networks are likely worse than most of the ones Meeker is referring to.

Yes, yours is probably one of them *or could be*. It happened to Target (et al), it can definitely happen to you.

A quote from the slideshow: “Vulnerable systems placed on the internet (are) compromised in less than 15 minutes“. This doesn’t mean the internet is the big bad wolf, unless you have a pile of XP machines that aren’t properly taken care of and operated by staff (and management) who will click on any-old-thing.

Free shipping

47+% of orders include free shipping, vs. 35% five years ago.

Say this 3 times: “Lifetime customer value”. If this hasn’t reached your area – and in many cases, it may be a long time coming, consider beating the world to the punch. Leaders lead.

Cloud computing costs still dropping

A bit of Doctor Obvious, but the numbers are huge.

  • Compute (ie: CPU costs) – down 33% per year from 1990 to 2013.
  • Disk storage costs – down 38% per year from 1992 to 2013.
  • Bandwidth costs – down 27% per year from 1999 to 2013.

Where’s your competition?

Anywhere and everywhere, perhaps.

Meeker2014Competition

Vicarious video living

The highest volume video streaming site is Twitch – a site where people watch other people play video games. Presumably they do this to learn how to play better, I really don’t know why else you would do this. While this is of little specific relevance to me, Twitch’s numbers are certainly relevant.

Twitch has more user viewing minutes than WWE, Ustream, MLB.com and ESPN combined. Yes, COMBINED. 12 billion minutes per month.

How does video fit into your strategic plans?

As of January 2014, 43% of TV content viewing minutes were on non-live-TV. IE: DVR, DVD, streaming, mobile streaming, etc. They want it when they want it, not when someone says they must consume it.

How does *on-demand* video fit into your strategic plans?

The world is flat

As of January 2013: 9 of the top 10 producers of internet content are in the US, yet 79% of their monthly visitors are outside the U.S.

As of March 2014: 6 of the top 10 producers of internet content are in the US, and 86% of their monthly visitors are outside the U.S. 4 of that 10 have effectively zero US-based visitors. Yes, China.

Alipay’s “Yu’E Bao” asset management startup went from $0 to $89B in managed assets in 10 months. It is now one of the top 3 global money market funds based on assets under management. TEN MONTHS.

60% of the top 25 tech companies in the US were started by 1st or 2nd generation Americans. 1.2MM employees as of 2013.

Are you going out of business…intentionally?

Last week, I wrote about the most expensive minute of your life.

This slideshow should provoke a similar discussion. How does it make you feel about what you’re doing now?

What does your community’s welcome mat say?


Creative Commons License photo credit: archerwl

A state association of businesses has pushed legislation into our state house that would limit the on-premise retail sales volume of a related group of businesses.

Yes, we talked about this recently, but today let’s go beyond this one business, this one time.

That situation is just a symptom of a far bigger concern.

For an established business with good wholesale distribution in place, retail sales limitations wouldn’t be a big deal – except that those same businesses already have legislated production and sales volumes that limit their growth.

These production/sales limitations brilliantly restrict both growth and new businesses in that market.

One of our town’s newest businesses, started by a young family, is placed in jeopardy by this legislation just weeks before their doors open.

That doesn’t mean the “other guys” don’t have grievances to settle (such as a level compliance playing field), but those grievances aren’t going to be cured by artificially limiting sales numbers.

Even so, it shouldn’t be about one business group over the other – both have the right to do business. I know business owners and employees on both sides. I believe these two groups have much more to gain by cooperating.

While the specifics of issues like this will change from year to year, what concerns me most is the message these situations send.

What’s the message to young families and entrepreneurs?

Last week, we talked last week about what communities do to encourage young families and businesses to put down roots or return to the area. Governments and community economic development groups put a lot of effort into these programs. Meanwhile, legislative proposals that limit the growth of new small businesses fly directly in the face of that work.

My question to those in the State House is this: Does legislation that chooses one market over another send the message you want to send from your state, much less your community?

Do laws like that encourage young families to stay and invest in your community? Does the legislature realize that when a small business person sees this done to one business niche, they can’t help but wonder if it will be done to another niche in the next session?

The message we heard then

When we moved our family and our business here in the late 1990s, one of the reasons we chose Columbia Falls was the warm response we received from folks around town. When we said we were considering moving here, the typical response was something like “That’s great. We’d be happy to have you here.”

While schools, the Park and recreation opportunities were important, the overwhelming “this is the right place” feeling came from the welcoming nature of the people we met.

The message I heard back in the 90s was not “Be a no-holds-barred success at all costs.” It was “Build it here. Be a good corporate citizen, a good employer, a profitable example for others who want to build / relocate a business here, and an asset to your community. Become a member of the family.”

If things didn’t work out or legislation targeted my business, I could always move it out of state because it isn’t tied to a brick and mortar retail location. It’s a by-design luxury and a property of the kind of work we do.

Thing is, brick and mortar retailers, restaurants, microbreweries and most services businesses really don’t have that choice.

What’s the message now?

No matter what the state house is working on, they must be careful about the message being sent by legislation that artificially manipulates markets and favors one group over another. It’s a message that other business owners and entrepreneurs look for when they choose a home. Business is hard enough as it is without having to fight off competition from the state house.

This session’s controversy in your state house, whatever it might be, will likely be old news next session.

The real concern to have is this: What our legislators do sets out your state’s welcome mat.

Do you want it to say “Welcome to our state” or “Build it somewhere else”?

Take advantage. Leave your small town.

Does your community talk about the flight of youth?

The shrinkage and simultaneous aging of communities is a critical issue for rural places.

Young people graduate and move away for good jobs or for college and they may not come back for a decade or more, if at all.

Recently, a high-achieving, hard-working college student told a just-laid-off friend to take advantage of the layoff and use it as an opportunity to leave our rural community. No question – job loss is a great time to take advantage of opportunities that might’ve been out of reach because you had a full time job – but it’s still disconcerting to hear one of the smartest, hardest working college kids I know advising a friend to “get out of Dodge“.

It illustrates how much is left to accomplish in order to strengthen the relationship between communities, employers, schools, colleges and the youth that local people say they want to retain in (or attract back to) their communities.

It’s not a simple thing to fix. Is it something that can/should be “fixed”? Or is it simply a reflection of market forces that rural communities must recognize and address?

Addressing the gap

Programs to bridge the gap between where youth are and where employers need them aren’t just about the job, but that’s usually the focus.

You’ll find internships, vocational-technical education (which changes the person, not the job or the employer) and many other programs that try to get younger workers to develop a passion for something that will enable them to earn more than what’s available via traditional service sector jobs.

High school graduates who have college aspirations sometimes don’t go right out of high school because they just aren’t sure what they want to do. Internships are one way to offer a look-see at different careers. Employers and colleges of all kinds could do more to offer a look-see of their own.

But it isn’t easy.

Challenges at every turn

Many high school students care pressed for time given that they’re in school from 8:00 am to 3:00 pm or longer, with before and after school activities like “zero period classes”, sports, work, band, etc.

While some think that this younger generation is afraid of work, I think those who claim that are simply more aware of the less-motivated than they were in the past. It’s repeatedly been shown that most rural youth have a strong work ethic because of responsibilities they had while being raised.

Despite a good work ethic, someone still has to manage/mentor an intern. Who does it? When does it happen?

Most employees will expect to be paid for giving up weekend/evening/family time and management may not have the funds for that. College students and high school graduates with jobs might have time for internships during the mentoring business’s “normal” work day, but this still requires employee time for mentoring/training.

In order to work past these challenges, motivation might come from looking at the outcome of succeeding at these programs. Imagine your community with a substantial, community-involved 18-35 year old workforce. What community wouldn’t like that?

Figuring out how to get there won’t be an accidental process, but this visualization could provide the motivation to plan how your community will make it happen.

Making it happen

Some rural communities, including mine, have been growing lately, but the influx is primarily “empty nesters” rather than 18-35 year olds and young families. Research has repeatedly shown that communities must have more to offer than “just jobs” to attract the latter.

Culture, recreation and work flexibility, aka “powder days”, are growing in importance, even while school quality, cost of living and more traditional requirements remain critical.

Culture is more than just art, music and theater. It’s vision too. An attractive community will likely be moving toward achieving a vision (whatever that might be) that’s intertwined with the causes and values attractive/important to a young workforce/young families. Quite often, these will be the things they learned to value while growing up in your town.

What does your community do to attract young workers and young families? What should they do? If these things work, is your community ready for an influx of young families and the leaders among them? If not, is your community ready for the alternative?

Butcher shops concerned about locally grown meat sales limits

Rude Cow!
Creative Commons License photo credit: foxypar4

The legislature is considering placing additional limits on the production or sale of locally grown meat, including the meat of wild animals.

Backing this legislation is the Corporate Grocers Association, which serves the interests of corporate grocery chains across America.

The proposed law also places strict annual limits on hunting and fishing since those activities impact the meat sales of CGA members. Catch and release fishing will not be affected since it does not affect meat sales.

CGA public relations officer M. A. DeUpnaam said “This legislation will protect our members and their employees from the predatory practices of micro-ranchers, predatory local hunters, people who selfishly decline to practice catch and release fishing, as well local butcher shops and meat processors who specialize in processing and selling locally raised meat products.

The action was taken at the request of a local CGA grocer after their newspaper reported that “425 whitetail deer, 64 mule deer and 58 elk” were harvested in his market area during the first three weeks of hunting season. After calculating how much that wild animal meat could cost his grocery in lost meat sales, he convinced the Association to step in.

History on CGA’s side

In prior sessions, the CGA has been successful in lobbying for protection of their members. Butcher shops and meat processors are limited to 10 retail sales hours per day and may sell no more than two pounds of meat per day to any single customer. Micro-ranches are allowed to raise no more animals than would produce 10,000 pounds of meat (for retail sale) annually.

If the 10,000 pound limit is exceeded during the calendar year, the business must shut down retail sales for the remainder of the calendar year and curtail production so that the limit isn’t exceeded the following year. Producers who exceed the 10,000 pound limit more than once will be required to cease retail sales permanently. Of course, they’re still allowed to sell their meat to wholesale buyers.

Of growing concern

CGA members are deeply concerned by the rapid growth of the microranch business, despite annual production limits placed on them. It’s not hard to see why: 100 new micro-ranches operating at maximum capacity in a single state would mean one million pounds of meat is available for purchase in that state – meat that wasn’t previously on the market. Add that to the previously ignored volume of wild animal meat produced and it’s no wonder the legislature is getting grilled by the CGA.

Microranchers and local butcher shops contend that they do not compete directly with CGA members because they produce a premium quality, high-priced product that the typical grocery shopper doesn’t buy at CGA member stores. CGA spokesperson DeUpnaam countered that assertion, saying “Every pound of meat sold by a local butcher shop, regardless of price or quality, is a pound of meat not sold by a CGA member. It’s a zero sum game and corrective action is necessary to return things to the way they were when our members established their businesses.”

Local produce and herb farms watching closely

Organic farms and local gardeners are monitoring this legislation closely, concerned that the legislature might decide to place limits on the sale of locally grown produce.

Community farmers markets are also watching and wondering about “corrective action” targeting their markets. Because they take a small cut of the sales made by a local butcher shop or gardener at their events, they too could become subject to the annual sales limits. While they have never lobbied a state legislature before, the organizers of 14 farmers markets in this area met last weekend to discuss sending a representative to the state house to monitor the situation, and if necessary, plead their case.

Fiction?

Yes, that’s a made up headline and story line – but it isn’t quite so fictional if you own a microbrewery or craft brewery business in Montana.

Update: After receiving substantial feedback from constituents, the committee in charge of fine tuning and releasing HB616 to the Montana House thought better of it and unanimously voted to table it. The committee also unanimously approved a study bill that is intended to get all parties involved in “fixing” Montana’s licensing laws in time to bring a palatable solution to the next legislature.

How does your industry organization help you?

This past weekend, I spoke at a national organization’s regional trade show here in the Rocky Mountain West.

As you might expect, we talked about personalizing their businesses – in their very narrow market context.

What always makes me wonder about these events is why they aren’t standing room only.

Why aren’t people lined up at the door, so to speak, to join the trade organization that represents their industry?

I don’t mean this particular organization – I mean *yours*.

The benefits are there

Some trade orgs are better than others, but all of them offer one thing of significant importance: the ability to get with others who do what you do, live somewhere else, and are willing to discuss their business and yours.

Certainly social media has had an impact on the ability of folks all over the world to share information – but it still doesn’t rival sitting at a table with a group of folks who do what you do.

Why don’t more people take advantage of the benefits of their industry’s trade organization?

  • Is it the value proposition?
  • Is it the time?
  • Is it the money?

Maybe all three. Or maybe you aren’t aware of the association for your business. There might be more than one.

Not all trade organizations are the same. Some do little more than have what amounts to a party for their members. Some develop a solid educational program for their members. And some take these things well beyond that.

What the cream does

I’ve only seen one organization that was truly hitting on all cylinders to strengthen the performance of their members’ businesses. They did more than holding regional and national conferences/trade shows.

They set standards for members in their industry, but not just by putting them on paper after having a few meetings.

Instead, they established real-world “you can use this in your shop” standards relating to manufacturing processes, curing times, mix ratios and workplace safety (critical in their industry). From there, they fine tuned the processes and testing procedures with eight years of effort that resulted in the establishment of an ANSI standard for manufacturing their industry’s product.

But that wasn’t enough. They created a third party certification program for manufacturing quality testing that gave their members the ability to confidently stand up to the brutal testing process their ANSI standard requires.

Not just anyone gets to wear the lab coat. They require that independent labs perform the testing during the certification process. These labs must be certified by a short list of testing/product evaluation industry associations, and no business or partnership relationships are allowed between the labs and the organization that approved them to perform the tests. Beyond that, they must have five significant capabilities necessary to administer the visits, lab tests and field work. The science isn’t enough.

Achieving manufacturer certification also requires that manufacturing facilities have a written quality control program that includes, at minimum, a quality check of incoming raw materials and in-process manufacturing process control as well as finished product quality checks. Random in-plant inspections and testing by the third party certifying lab verifies each these requirements.

A few other industry trade organizations do that sort of thing as do a number of major industries. It’s unusual in this case because the organization’s members are family-owned, local custom manufacturers producing annual sales between $3MM and $25MM. They aren’t 3M or GM.

Do even more

They’ve created an industry-standard education program to advance and certify the skills of the people doing the product manufacturing and installation.

In the last few years, they put together a marketing task force in order to help their membership effectively market what they do, while also marketing their industry nationally. That’s fairly common among trade associations. What isn’t common is that they built a marketing tool kit for their members to use in their own communities – a kit that complements the national materials. The national campaign brands their product for all members and is in sync or products produced by these members.

Again…all this from a trade organization that represents family-owned local manufacturing businesses.

How does your trade organization help you and your fellow members? What *could* they do? Perhaps you should ask. They may do more than you’re aware of and if not, your question might start them down that path.

Loose lips raise communities

community obligation

It’s Saturday morning, so the ritual of before-anyone-else-rises reading, writing and coffee is, as no one ever really says to anyone else, “on like Donkey Kong”.

After closing out a couple of chapters and heading to the laptop to write, I happen to see a piece in the news about a local who is heading off to the Montana State timeout facility in Deer Lodge.

I make a comment on Facebook about the story, the essence of which is “Good riddance, don’t come back”, and then move on to writing. So of course the first response to my “don’t come back” comment is politically charged (because that’s the only way some people see the world these days) and a little snarky.

Public comments of a political nature are rare from me because political conversation usually degrades into one of two things: political arguments or political rants. I have absolutely no use for either one because I find them a waste of time.

So why did I say anything about this story? Why this time?

It isn’t just news

Because this isn’t just news, and it’s only political to those who see the world only through their party’s political lens, regardless of their politics.

What struck me about this story is that the criminal in question is a convicted felon on parole who owned a business and is married – yet no one noticed a thing. Yes, despite the comings and going of employees, customers and a spouse, no one saw or did anything and when asked – the convicted criminal’s spouse said “Oh, I just thought those people were coming over to use (the convicted criminal’s) computer.”

Really?

Is that your contribution to the community? I’ll bet you can tell us what happened on the last two episodes of Real Housewives (or similar), but all that stuff in the basement (nothing out of the ordinary, just the guns, drugs and other stuff) somehow escaped your attention.

Again, why did I say anything about this story? Why this time?

Beyond the headline

Let’s go beyond the headline and it’ll become clear.

We have a business owner with employees. Now that the business owner is going to Deer Lodge, the business is likely to go under, because the owner is probably the “technician” (read The E-Myth). But there are other reasons that the business is likely to lose.

The community now knows that the owner is a convicted felon – in this case, a repeat felon with meth and weapons charges. That isn’t likely to attract more business.

What does the community lose if this business fails?

  • Employees lose jobs.
  • Employee families experience decreased financial stability, if not serious trouble. It’s not uncommon for these things to roll downhill to what might be called “social issues” such as domestic violence or changes in the behavior of kids. It just depends.
  • Whatever benefits the community might gain from the tax revenues collected from that business.
  • The rollover of money use from those employees’ pay in their community.
  • Some level of stability of the community, which drops when the stability of the communities’ employee families drops.

Those are just the obvious ones.

Had someone said something sooner, maybe this could have been averted. In the case of a repeat situation like this, maybe not. We’ll never know. The choice made to say or do nothing reminds me of a conversation I had recently with a group about their obligation to sell harder.

Why sell harder?

Selling harder benefits your community in ways that are similar to those mentioned in the above business failure discussion.

I have to repeat this because people tend to take it out of context thanks to an experience with a less-than-reputable salesperson in their past: Selling harder does not mean “hard sell” or unethical sales. It means selling better and testing the “fringes” of your market for new opportunities.

Selling better should result in a stronger business, thus more stable (perhaps increased) employment, thus more stable families, thus a more stable community.

It’s your obligation to sell more and better, just like it is to be observant and open mouth when something’s wrong.

Both reflect your leadership as well as your stake in your local community.

Do you love your local business environment? They do.

This video is a stunning demonstration of creativity with the iPad, but also a strong testimonial for the city of Stockholm’s business environment.

The business environment where you live might be like potting soil. Or not. Regardless, it’s your garden. You decide what to plant and where.

If the local business environment isn’t as enriching as Miracle-Gro, what can you do to improve it? Your business community needs leadership as much as your business does.

If making that sort of change isn’t your thing, supporting the folks in those roles and encouraging the right people to step up, invest and lead might be your focus.

If all else fails, there are these things called “roads” in your town. You decide how to use them, as a foundation for your business or as a route to a better place. No regrets regardless of your choice.

Is your craft becoming a commodity?

We’ve talked about this before, but it merits another mention whether you are a programmer, web designer or woodworker.

Written by Christian Heilmann in *2009* and borrowed from a slide in Nathan Smith‘s presentation: “Sass and Compass, The Future of Stylesheets Now” (cool info, BTW), the graphic’s comment is about programming, but could be about any number of skills.

Is your craft changing? Is it already commoditized or moving that direction?

In the past, we’ve talked about your work being outsourced to other countries (some that are perhaps thought of as third world countries) and how the work you do cannot be as valuable as it once was if this is even possible.

It isn’t that the work is no longer valuable. It’s that the ability to produce that kind of work has become more common and the skill to do so is no longer a true rarity/specialty.

Is that the kind of work you’re doing/selling?

Is that the positioning you want in the future, much less now?

It’s no longer about the code. Hasn’t been for some time.