Deny, deny, deny; fall, tuck and roll; or put your head in the sand?
The quick answer to this headline is none of the above. A leader, by definition, must do exactly that — lead, which means being in front of a variety of audiences, including employees, investors and customers. Not everyone is going to be a gung-ho supporter. Sooner or later you’ll encounter a naysayer who either has a point to prove or is on a mission to make you and your company look bad.
Many of these verbal confrontations come out of nowhere and when least expected. As the representative of your organization, it is your responsibility to manage these situations and recognize that sometimes a “win” can simply minimize the damage.
When under siege, it’s human instinct to fight, flee or freeze. Typically these behavioral responses aren’t particularly productive in a war of words. Engaging in verbal fisticuffs could simply escalate the encounter, giving more credence to the matter than deserved.
If you flee by ignoring the negative assertions, you’ll immediately be presumed guilty as charged. It’s hard to make your side of the story known if you put your head in the sand.
By freezing, you’ll appear intellectually impotent. Worse yet, pooh-poohing a question will only fuel the aggressor’s determination to disrupt the proceedings. You could use a SWAT-type police and military technique to elude a confronter by falling, tucking and rolling to safety, but that usually only works on the silver screen.
Perhaps the best method to manage unwelcome adversaries is to be prepared prior to taking center stage. This applies to live audiences or a virtual gathering when you’re speaking to multiple participants, which is common practice for public company CEOs during quarterly analyst conference calls.
Most gatherings of this nature include a Q&A segment where the tables are turned on the speaker who must be prepared to respond to inquiries both positive and negative.
Before any such meeting, it is critical to contemplate and rehearse how you would respond to thorny or adverse statements or questions.
A good practice is to put the possible questions in writing and then craft your responses, hoping, of course, that they won’t be needed. This is no different from what the President of the United States or the head of any city council does prior to a press conference or presentation. The advantage of this exercise is that it tends to sharpen your thinking and causes you to explore issues from the other perspective.
In some cases you’ll find yourself in an awkward or difficult situation where there is no suitable yes or no answer, or when the subject of the interrogatory is so specific it is applicable to only a very few.
The one-off question is easiest to handle by stating that you or your representative will answer the question following the session rather than squander the remaining time on something that does not interest or affect the majority.
The more difficult question is one that will take further investigation and deliberation, in which case the best course of action is to say exactly that. Answer by asserting that rather than giving a less-than-thoughtful response to a question that deserves more research, you or your vicar will get back with the appropriate response in short order. This helps to protect you from shooting from the hip only to later regret something that can come back to haunt you.
Effective speakers and leaders have learned that the best way to counter antagonism is through diplomacy. It’s much more difficult for the antagonist to continue to fight with a polite, unwilling opponent.
Finally, when being challenged, never personalize your response against your questioner; always control your temper; and don’t linger on a negative. Keep the proceedings moving forward and at the conclusion keep your promise to follow up with an answer. This will build your credibility and allow you to do what you do best, lead. ●
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. “The Benevolent Dictator,” a book by Feuer that chronicles his step-by-step strategy to build business and create wealth, published by John Wiley & Sons, is now available. Reach him with comments at firstname.lastname@example.org.
My 7-year-old son Cole recently gave me a Rainbow Loom bracelet, which is made of linked rubber bands. It is today’s school-age children’s craze, and Novi, Michigan-based Choon’s Design LLC is churning out the kits at a record pace.
With more than 1 million units sold in the last 24 months, Rainbow Loom is the brainchild of Choon Ng, a former Nissan crash safety engineer who invented it while working on a craft project for his daughters.
And Rainbow Loom, it turns out, isn’t its original name. When it was created, it was called Twistz Bandz.
Timing is everything, and Twistz Bandz may have sounded a bit too much like Silly Bandz — the last “wrist” craze that swept the nation. Between November 2008 and early 2011, every school-age child in sight was wearing layer upon layer of Silly Bandz on their wrists. It was as hot a product as anything since Beanie Babies.
Twistz Bandz’s arrival, it seems, happened just as Silly Bandz ran into what every hot new product eventually faces: competition. Look-a-likes with similar-sounding names began flooding the market. They were cheaper, and you could buy them more readily at more retail locations. The core brand quickly diluted. So Ng did what any smart businessperson would: He changed the dynamics of the situation.
Thus, Rainbow Loom was born.
Enter social media
Within a few months, the product — which allows its young owners to custom-create bracelets — was gaining attention. Much of this was due to a full-tilt social media blitz, including videos on YouTube and an engaging Facebook page, where users could share their designs.
More recently, Ng has become vigilant in protecting his patent and U.S. trademark — battling all wannabe competitors from launching similar-sounding products and flooding the market to dilute his own brand.
His success — or failure — is yet-to-be determined. But his efforts will prove fruitless if he’s not already looking ahead to the next product. This is the dirty little secret to any hot toy craze and the core dilemma every business leaders faces: How do you remain relevant as consumers’ wants, needs and desires ebb and flow — sometimes as swiftly as the wind changes direction.
Get beyond being a fad
Success in business relies upon building a sustainable operation that will outlast any cyclical “must have” product explosion.
There needs to be the creation of an idea continuum — an innovation factory, if you will. Innovative leaders must review, measure and adapt a company’s products, services and solutions to the changing whims of the marketplace. You need to talk to customers, vendors and prospects. And you need to regularly take the pulse of the market.
If you haven’t taken at least some of the gains from today’s success and invested it into research and development for tomorrow, you’re already losing ground. Today is today, and just like the disclaimers for financial investing warn — past performance does not indicate future results.
In the end, the only thing that matters is this: Is your next big thing built to last? Or, like every other craze that’s every hit the market, will your opportunities to remain relevant long into the future fade away after the competition creeps in and dilutes your market? ●
Dustin S. Klein is publisher and vice president of operations for Smart Business. Reach him at email@example.com or (440) 250-7026.
Bjorn Rebney was not to be denied, even after spending 16 months meeting with 61 investors and walking out each time without a financial commitment to support his dream.
“I characterize myself as pleasantly relentless, and I tested the limits of my pleasantly relentless personality when I was going out trying to get funding,” Rebney says.
He had been hoping to get funding to launch a mixed martial arts business, a sport of which his passion for stretches back 20 years.
“It’s as pure and straight forward as it gets,” Rebney says. “It’s one man vs. one man in a ritualized combat scenario. Mixed martial arts is the most perfect example of those attributes, drivers and factors that we love about sports.”
Rebney fell in love with mixed martial arts as a fan, but now he wanted to turn that love into a thriving and successful business. He spent three years from 2005 to 2008 analyzing the mixed martial arts industry to figure out what was working, what wasn’t working and what he needed to do to build the right business model to succeed.
Bellator MMA is the product of all that determination. Rebney founded the company in 2008 when he located an investor who believed in his vision. Up to that point, he fully understood why it was taking so long to find support.
“It was so new and the only player in the space that worked was UFC (Ultimate Fighting Championship), which was privately held and closely guarded their financials,” says Rebney, founder and CEO of Bellator. “There was no way for investment groups to look at any kind of tried and true track record of other businesses and say, ‘This would make sense from an investment perspective.’”
There were two other companies involved in the MMA business at that time, both with financial records open for inspection, but in this case, that wasn’t going to do anything to help his plight.
“They were failing miserably and were losing tens of millions of dollars each year,” Rebney says. “Anyone who looked at their financial models as publicly traded companies and looked at their books would say it looked like a complete disaster.”
His tenacity certainly played the biggest part in his ultimate victory. But it didn’t hurt that he met an investor who may have been an even bigger MMA fan than he was.
“He was tracking the UFC, understood their business model and had been pitched by all of the other failed entities as they were getting ready to go out of business,” Rebney says. “When he listened to me, we clicked immediately. He said, ‘This could work.’”
Be truly unique
Rebney can point to a number of factors that help explain why Bellator appears in more than 100 million homes across the nation each week. But his ability to provide consumers with a real and different point of view from UFC is perhaps the biggest reason for his success.
“One mistake people make in business that I see often is they try to create a point of difference for the sake of creating a point of difference,” Rebney says. “Sometimes, they lose the connectivity to realizing that even though it’s different, that doesn’t mean it’s going to be attractive to consumers.
“It doesn’t mean people are going to buy the product or watch the product or log on to learn more about the product. Your point of difference has got to be substantive. It has to be something that people point to and say, ‘Whoa, that’s a great reason for me to watch this content as opposed to the other content.’”
Rebney wanted to create an organization that was built on the premise that athletes would advance through skill and competition. This would differ from how it was setup in UFC.
“The UFC uses a formula where they have a guy who sits behind a desk and decides who fights who for what and when,” Rebney says. “They choose who fights for the world title based on what they think they can sell to consumers. There’s nothing inherently wrong with that, but that’s very entertainment-centric.
“That’s like a casting agent who picks a certain star for a film because they believe people will buy tickets to watch that star perform. What I did was create a dynamic and a model that said this is going to be pure sports competition. It’s going to be tournament-based, and if you win the tournament, you’ll earn the right to fight for the world title.”
Rebney’s goal wasn’t to put UFC out of business, nor was he claiming that it had a flawed business model. Clearly UFC has experienced success with the way it does things. But being a copycat of another business, even a successful one, is not always the best way to build your own profitable business.
“More often than not, when someone just tries to duplicate that model, it results in failure,” Rebney says. “If they try to look at what that other group has done and establish a substantive point of difference, even if it’s a slight difference, it can catapult that second player into a very prominent position in the industry. And in some instances, it can catapult that second player into the first position.”
Be willing to adapt
As it turns out, Rebney’s idea struck a chord with MMA fans. In fact, the growth took off to such a degree that it became a bit overwhelming. The company launched in 2008 and today has a presence in 117 countries around the world. It has 70 employees, as well as 25 local hires that are brought in for each event the company produces.
“We were coming out of the tail end of our alliance with Fox and getting ready to make the move over to a new alliance we had with Viacom,” Rebney says. “There was an amazing amount of movement going on at that moment. I recognized very clearly that it was a seminal moment for the company in terms of what the future would hold.”
The biggest aspect of this challenge was the fact that as Bellator continued to grow and draw interest from potential media partners such as Viacom, the parent company of the Spike TV network, the company’s key leaders were spread across the country in New York, Chicago and the company’s headquarters in Orange County.
“We were crisscrossing the country with key information,” Rebney says. “It wasn’t just about setting conference calls to solidify the understanding of what needed to happen next. It was the development of content, the production of TV shows and the orchestration and operation of events that were in arenas with 10,000, 15,000 and 20,000 people.”
Bellator does 25 to 30 live events a year with million-dollar production budgets and countless support staff, in addition to the fighters. Rebney quickly understood the distance was adding a lot of unnecessary stress to everyone’s work.
“From my perspective, you can never underestimate the power or importance of being able to sit with your people in the same room and strategize with them and talk to them about objectives and goals and how to deliver on both of those,” Rebney says.
So he made the decision to move his teams out of New York and Chicago and bring them together under one roof in Southern California. It solved a big problem, but Rebney still faced the challenge of finding the other people he needed to fill positions in an industry that was still very new.
“It was a lot of times finding people for positions who we thought would be great fits because they had great intensity and motivation,” Rebney says. “But you still couldn’t look at someone’s resume and say, ‘Oh, I see in our exact business, you did A, B, C and D.’ That made it difficult.”
So Rebney had to get creative. He had to think about the potential pitfalls and challenges that exist in the MMA world and pose those hurdles to job applicants in their interviews.
“The scratch-and-sniff tactic I’ve employed has been to give people legitimate tasks that apply to our company in a real world situation,” Rebney says. “You could say, ‘This is the conundrum we’re facing. Let me know what due diligence questions you’ve got so I can supply you with all the substantive data from Bellator and what we’re trying to do. Can you get back to me with some answers and a memorandum that addresses these issues?’”
Rebney dug deeper to increase his odds of making good hires and he ended up with a stronger team as a result. But that doesn’t mean he’s eased up on his own workload.
“It was 5 ½ years ago that I took my last vacation with my wife,” Rebney says. “To the detriment of my personal life, I’ve kept my personal connectivity to the business.”
Rebney says he doesn’t see himself as a micromanager since his involvement does not stem from fear that his people can’t make important decisions on their own.
“The big difference is in trusting your people and recognizing that you’re not always right,” Rebney says. ●
- Find a true differentiator.
- Make the tough decisions.
- Find people you can trust.
The Rebney File
Name: Bjorn Rebney
Title: Founder and CEO
Company: Bellator MMA
Born: Los Angeles
Education: Undergraduate degree in philosophy and master’s degree in sports business, Ohio University; juris doctorate degree, University of the Pacific, McGeorge School of Law. Passed the California bar exam.
Why did you pursue a law degree? When I was young, I looked around the landscape of top executives, CEOs and chairmen of major companies. There was one standard thread that seemed to run through almost all of them. They had their law degrees and they were attorneys.
Who has had the biggest influence on your life? My wife. She drives me to be a better person and a better man. I’m in a very aggressive business and industry. She’s kept me very grounded in terms of interpersonal communication skills, working with people and analyzing things from a very calm perspective.
What one person would you really like to meet? I had the privilege, really the honor, of having dinner with Nelson Mandela in a small group of about six people around 15 years ago. I literally became tongue-tied. What he did and what he was willing to give up for what he believed in and his desire to achieve something was so dramatic and so powerful. I only wish I had been able to have a bit more maturity and age to have been able to ask him more questions and engage him in more conversations.
Rebney on his tenacity: Very seldom do you hear someone say, ‘Well, I came up with a business plan, and I wrote it and I had three meetings and on the third meeting, they gave me $25 million.’ It just doesn’t happen like that. As my dad used to always say, ‘If it was easy, everybody would be doing it.’ It’s not easy, but it’s incredibly satisfying.
How to reach: Bellator MMA, (949) 222-3400 or www.bellator.com
The Jumpstart Our Business Startups Act (JOBS), passed in early 2012, mandates that the Securities and Exchange Commission (SEC) adopt rules to help start-ups and small businesses raise capital. Because of this, companies can advertise, market and publicly disclose that they are fundraising. The change also allows companies to raise up to $1 million from a large number of “nonaccredited,” or non-high net worth investors.
Smart Business spoke with Mark L. Skaist, shareholder and co-chair, Corporate and Securities Practice, at Stradling Yocca Carlson & Rauth about what this could mean for businesses.
Why does it matter that companies can advertise that they’re fundraising?
Companies need to either register their securities offering with the SEC or find an exemption from registration. Registration is often prohibitively expensive for start-ups, so most emerging companies rely on an exemption from registration, the most common of which is Rule 506 under Regulation D. This permits sales of an unlimited dollar amount of securities to an unlimited number of accredited investors and up to 35 nonaccredited investors. However, in order to rely on this exemption, companies had been prohibited from offering or selling securities through any form of general solicitation or general advertisements.
By allowing companies to advertise their securities offerings to the general public, companies should have a bigger pool from which to solicit investments.
There are, however, two conditions companies must meet in order to use general solicitation and advertisement and sell securities under Rule 506. Namely, all purchasers in the offering must be accredited, which for natural persons generally means net worth in excess of $1 million, or annual income of at least $200,000. Also, the company must take ‘reasonable steps’ to verify that the purchasers are accredited.
How are companies supposed to verify that a purchaser is accredited?
The SEC has said that companies need to make an objective determination in the context of the given facts and circumstances. It has come out with a nonexclusive list of verification methods that can be considered ‘reasonable steps.’ The specific methods and types of information the SEC considers sufficient include written representations of investors combined with two years of federal tax returns; bank statements combined with credit reports; and written confirmation from a broker, attorney, investment adviser or accountant.
How are the proposed rules regarding crowdfunding supposed to work?
These proposed rules provide that companies may sell up to $1 million of securities during any 12-month period to accredited and unaccredited investors. They also limit annual crowdfunding investments by investors with annual income or net worth below $100,000 to the greater of $2,000 or 5 percent of the investor’s annual income or net worth. For investors with annual income or net worth in excess of $100,000, annual crowdfunding investments cannot exceed 10 percent of their annual income or net worth.
There are also proposed initial and annual filing requirements by the company doing crowdfunding financing, which may include financial statements, a business plan and tax returns. Companies can use intermediaries, such as brokers and funding portals, and may not advertise the offering other than to provide a notice directing potential investors to the intermediary.
Based on the proposed rules, which require that companies raising between $100,000 and $500,000 through crowdfunding provide reviewed financials, and companies raising more than $500,000 provide audited financials, it’s likely that the accounting fees alone are going to be a significant roadblock to many small companies relying on this exemption.
While it seems steps have been taken toward making it easier for start-ups and emerging companies to raise money, time will tell whether they have any real impact. In the meantime, businesses are popping up that are looking to get involved with these types of offerings, either by verifying that investors are accredited or by setting up funding portals for crowdfunding. ●
Insights Legal Affairs is brought to you by Stradling Yocca Carlson & Rauth
Merchant services affect the majority of companies — more than 90 percent of online purchases use credit cards.
“If you’re not sure if merchant services is the right fit for your company, think about what your competitors are doing. If you don’t accept cards today, then prospective customers may be going to other businesses,” says Jan Mitrovich, manager for Treasury Management and Merchant Services at California Bank & Trust.
Smart Business spoke with Mitrovich about how to understand merchant processing services and costs, and when to talk to your banker about new solutions.
How do you know if your company is using merchant services correctly?
Every company should consider where it’s doing business and how it’s transacting with customers. Examine whether you are effectively leveraging all your channels for sales opportunities. You may have a storefront that does terminal credit card processing. However, other payment options, including Web-based and e-commerce, may be worth considering.
How much of you sales efforts need to be in the field, such as industry shows? A mobile solution can extend your customer outreach while providing convenience to your customers.
The merchant services environment is continually changing. There are varying degrees of complexity, from processing basic transactions through a card reader, to merchants that need multiple payment channels, gift and loyalty card programs, check verification services and more. Your merchant partner can help you better understand your options and select the right solutions for your business.
What’s important to know when getting a merchant account?
The processing transaction fee can turn off businesses, but they must consider the value proposition of expanding their customer base by accepting more transactions.
Depending upon the transaction type and how it is processed, fees will vary, which gets confusing. Merchant processors also don’t always present the statement information and pricing in the same fashion. It’s common for business owners to think a quoted rate is the all-in cost.
Be aware of hidden fees. For example, only some organizations do pass through pricing for the interchange fees. A discount rate doesn’t necessarily compare apples-to-apples, so a more important question is, ‘What is the cost of the service?’
You also need to understand and educate your employees on the associated responsibilities and risks as a merchant processor, such as protecting customers’ sensitive data. Validation of payment card industry compliance is an important step to ensure credit card data is being protected. Data breach coverage can protect merchants from the cost associated with a data breach, which can easily run $35,000 or more.
What additional factors help determine which provider is the best fit?
One differentiator is customer service. Banks typically have a higher level of customer service, like 24/7 call support, than independent sales organizations.
You also need to consider whether to lease or buy equipment. The industry is moving toward chip-enabled cards that will require companies to change equipment during the next few years. Take the time to understand your options and pricing structure, as well as if any equipment is proprietary.
Finally, cut-off times for transactions and settlements can be a game changer. Settlement time frames differ, anywhere from next day to 30 days, depending upon the vendor. If you want to improve cash flow, in some cases, you can process transactions up to midnight with next-day availability of those funds.
How should you review current services?
Take the time to review your merchant statements and pricing. If your business model or activity levels have changed, talk with your merchant representative. New services or tools may be available that can create processing efficiencies for your business. For example, card-present transactions are generally lower risk and thus cost less to process, while manually keyed transactions cost more. You could make internal changes to reduce the volume of keyed entry transactions or possibly process transactions through a lower-cost channel. ●
Jan Mitrovich is manager of Treasury Management and Merchant Services at California Bank & Trust.
Insights Banking & Finance is brought to you by California Bank & Trust
For-profit organizations use the theory of profit to strategize and lead. However, not-for-profits, like Woodbury University, operate under the theories of constraints and strength.
“With the theory of constraints, the idea is to review past performances, coupled with ongoing and future goals or expectations, to identify areas that may delay or stop you from reaching goals,” says Kenneth Jones, vice president for finance and administration and CFO at Woodbury University.
That goes along with the theory of strength, which relies on engaging your total community, including your customers, to help develop your strategic plan, he says. Stakeholders help you achieve your vision.
Smart Business spoke with Jones about putting customers first to build strong loyalty and enhance your value.
What can for-profit businesses learn from the theory of strength when strategizing?
All organizations, for-profit or not-for-profit, need a strategy map that defines their mission, values and where they are headed. However, it’s important to include all stakeholders in the process of inception, implementation and assessment.
The corporate world often develops a strategy map through modeling and the experience of employees, but they don’t look at the No. 1 objective, the customer. A customer’s perspective and feedback is essential. If you don’t involve them, you’re not going to see what they see and you’re not going to react to the environment as readily.
In the education world, we have to understand our customers, the students, to do an effective job and provide a better service. As educators get older, our students stay the same age, so educators must change teaching methods as needed. Educators need to scan the environment of each new class, keeping the same core while adapting the delivery.
In the corporate world, you can create efficiencies with your basic business practice, distribution center, administrative center, etc., but you absolutely need to have a focus on your customers and get them involved.
Beyond understanding customers, how can you help clients become part of your community?
If you have value in your company, people want to share what they have to help enhance that value. By including key vendors, clients or customers in your mission and strategic plan, you show them the value of their input. When you deliver the outcome, they see that their opinions matter. They are not an offset of the community, but part of it.
As part of the community, you want to take care of all your stakeholders. For example, when the Cal Grants were cut in 2012 and scholarships for low-income students were reduced, we knew how hard it would be for our students to succeed, so Woodbury issued vouchers to make up the difference.
As another example, Woodbury has a lot of first-generation college students on financial aid. We can reach out and ask for input on how to make everything more affordable, making students part of the process. This in turns leads to former students wanting to give back. They could start a scholarship, set up a writing center or help with counseling services. You can’t build loyalty when you create an environment where you absorb the profit and customers take the loss. Stick to your word and show customers the quality they subscribed to.
Under the theory of constraints, how do not-for-profits do more with fewer resources?
One high-level constraint may be affordability. From an administrative perspective, we can accomplish that by investing in technology to shorten our operating processes, increase automated processes and eliminate processing constraints, thereby reducing the processing cost of material and labor.
The purpose isn’t just to create revenue or improve the bottom line. You want to create efficiencies, and then redirect resources elsewhere by investing in areas of strength.
Also, you don’t want to acquire something that is a constraint on your operations right away, just because you want to diversify your product line. For example, we wouldn’t bring in a dentistry school at Woodbury just because we can acquire it. It has to fit within the strategic map of the institution. Bring in something that you’re strong at, which will be a prototype for the next development. ●
Insights Executive Education is brought to you by Woodbury University
Mobile game company BonusXP found the perfect place to grow in the Watters Creek development in Allen, Texas.
The game studio was started in April 2012 by three industry veterans of titles such as “Age of Empires,” and now has 15 employees. That growth meant finding a larger office space that would appeal to employees and set the stage for future expansion.
“A lot of the decision was based on the development of the area where we’re going to be located. There’s a really nice live/work/play atmosphere in the area. It’s a nice, subtle perk to have an office in a cool location,” says Dave Pottinger, founder and CEO of BonusXP.
Smart Business spoke with Pottinger about BonusXP and the company’s new offices in Allen.
Was the office decision based on location or assistance from the city and the Allen Economic Development Corporation?
It was mutual. It’s a good location that’s near home, and we were introduced to the development corporation, which was able to provide some economic incentives and help us get involved in the community. They were able to connect us with technology staff at the Allen school district for assistance in getting interns.
Even for a city with a population of 90,000, Allen is still able to provide unique services to companies relocating here. The economic development corporation tailored its help to what we needed. Once we get bigger we’ll receive some economic incentives.
Was it important to be around similar companies?
Although there are small tech corridors nearby, that really wasn’t a factor in the decision. Dallas has a thriving tech culture, but there aren’t really any within walking distance.
What types of games does BonusXP develop?
We’re up to two teams now and recently launched ‘Cavemania,’ which is available on iTunes for iPhones and iPads and Google Play for Android devices. It’s more original than a lot of games. We’re known for strategy games, like ‘Age of Empires.’ When you develop a game, it needs to be familiar enough so people understand how to play, but with new elements to capture their interest. ‘Cavemania’ is kind of a mix of ‘Candy Crush’ and ‘Age of Empires.’ You move around the board and gather resources, which are spent on characters used to fight dinosaurs and save your town.
We take an old-school approach to games. We build our games without any monetization — make a fun game and then try to figure out what people would be willing to pay to make the game better or customize their character.
What are the plans for BonusXP’s future?
Reaching 15 employees was a big goal because it enabled us to have two teams. The next step would be getting to 20 or 25 employees.
We’re in a difficult industry. People want downloadable games to be free. The barrier to entry is very low, but it also creates a simultaneous low barrier to exit. When people pay $60 for a game, they give it time to decide if they like it or conclude they wasted their money. When a game is free, they move on if they don’t see something new in 15 to 20 seconds. It’s a hit-driven business where the top 10 games make most of the money. Then there’s a big dropoff.
We’ve been lucky enough with some of our previous jobs to be able to self-fund the company and build it. We’ve been fortunate and now we’re trying to build a studio that works the way we’d like it to.
Would you recommend Allen to other companies looking to relocate?
Definitely. It’s a nice area and has a little bit of everything. This location is in a medium-sized development, but there are about 15 restaurants you can walk to for lunch. We were able to build out an office that was simpler because we didn’t need things like a café — employees can walk out the door and get better items than what we would have in the studio.
The Allen Economic Development Corporation also was very helpful and that certainly was a factor in deciding to come to Allen.
Dave Pottinger is founder and CEO of BonusXP. Reach him at (214) 616-8771 or firstname.lastname@example.org.
Reach the Allen Economic Development Corporation at www.allentx.com or call (972) 727-0250.
Insights Economic Development is brought to you by the Allen Economic Development Corporation
When Rajesh and Rupesh Shah agreed cuts were not an option for M S International, they pushed their team to carve out new revenue streamsWritten by Mark G Scott
When Rupesh Shah saw headlines about companies cutting costs, staff and basically whatever they could to stay afloat, he wanted to take another course as the recession that began in 2008 tightened its grip on the American economy.
“Anyone can cut costs, and that’s probably the low-hanging fruit,” says Rupesh, co-president at M S International Inc. “But we view cost-cutting as a last resort. If everything else fails, let’s look at cost-cutting. We said, ‘Let’s take a hard look at our business. If we know the industry is contracting, how can we expand our addressable industry?’”
MSI is a distributor of countertop, flooring, wall tile and hardscaping products. The company of more than 900 employees manages 50 million square feet of inventory and has international purchasing offices in India, China, Turkey and Brazil.
Rupesh and his brother, fellow co-president Rajesh Shah, have taken the company that their parents founded in 1975 and have made it even stronger.
Now they needed to find a way to battle through this tough time and give their customers a reason to continue doing business with MSI.
“What else are our customers buying that we’re not selling them?” says Rupesh. “Are those industries we can get to? What are we losing to our competition and what can we do to regain that? What can we do to get more market share?
“We didn’t engage in layoffs — probably one of the few companies that did not do that. Instead, we started expanding our product line and started getting into new product lines where we could use our same sales force to sell the same set of customers.”
It’s not always an easy strategy to follow, especially when it goes against the grain of what everyone else seems to be doing.
“The outside pressures and priorities, both internally and outside, can take over if you’re not disciplined about it,” Rajesh says. “They can take over your thinking, and you can slip on the disciplines that made you good. You can easily fall into the simple and quick versus what may be a little more difficult, but longer term, and is the right thing to do.”
Set your course
Before the company embarked on this growth strategy, a meeting was convened with the management team to list the company’s options.
“We can aggressively do cost-cutting and downsize our business by 20 to 25 percent,” Rupesh says. But before the company did that, Rupesh presented an observation.
He posed the growth opportunities as he and his brother saw them and attempted to calculate what it might take to make them work.
“Let’s make some reasonable market share calculations,” Rupesh says. “How long will it take? Can we stomach it financially? Should we do it? It helped get our culture and all our management team to move in that direction. We had a series of meetings on it.”
Certainly there is emotion involved when you’re in the midst of a recession and jobs and business relationships are potentially hanging in the balance. But Rajesh says he and his brother focused more than ever on taking emotion out of the equation and trying to make decisions based on facts.
“With the downturn happening and business slowing down, we said we’re going to survive and thrive, but the only way it works is if we make data-driven decisions and prioritize quickly,” Rajesh says. “We don’t have infinite manpower, resources or investment dollars. So we have to use all these approaches to decide how we unleash those resources and use them, including their own time being one of the biggest resources that we had limits on.”
Once the decision was finalized to not make cuts, but to instead pursue data-driven growth opportunities, it was critical that everyone was on board to make it work.
“Failure is not an option,” Rupesh says. “Changing course is not an option. As a distributor, you have vendors, salespeople and customers. You’re creating a view that this is not optional — it’s mandatory.
“We start judging salespeople by how many new products or product lines they are selling. You look at it very analytically. It’s not just the sales. It’s why aren’t you selling porcelain? Why aren’t you selling quartz? Why aren’t you selling wall tile? Get them to feel the pressure of it.”
One of the keys to being effective with limited resources is the ability to know what doesn’t work for your business.
“We tell all our managers your what-not-to-do list has to be longer than your what-to-do list,” Rajesh says. “It’s funny, but most people don’t believe in that. They always want to show what you did do. People don’t get objective credit for not doing something. We internally believe some of the best things we ever did are the things we didn’t do.”
If your business has products that had been big sellers but aren’t anymore, and you’re still trying to push them instead of promoting a new product that has a lot of potential, you’re asking for trouble.
“It’s a discipline change, and it’s not simple,” Rajesh says. “It’s a change of thinking. You need to make it a priority and continuously communicate it. You can’t just stand up and say, ‘We’re doing this. We’re done.’ It’s an ongoing process. And you can only do it by example. You can’t make decisions on gut instinct yourself, and then expect everyone else to do it with knowledge.”
The effort to drive results has to be constant to maintain momentum and reinforce the message that this is a very important thing you’re doing for your business.
“Let’s create a culture and an environment where everyone is thinking, ‘OK, right now, most customers are buying 15 to 20 percent of their product from us. Can we get them to buy 30 percent, and what will it take to do that?’” Rupesh says. “So we made a very strong push and created a culture. Everyone from 2008 to 2011, all they thought about was market share, market share, market share. How can we get more market share?”
MSI has positioned itself to succeed in the post-recession economy, but that doesn’t mean the evolution is over.
“You have one set of challenges to go from $40 million to $100 million in revenue,” Rupesh says, “another set to go from $100 million to $250 million and a third set to go from $250 million to $500 million. And now we’re looking at what it’s going to take to get us to $1 billion. That’s kind of the next major milestone for us.”
Just as it was in recovering from the recession, the makeup and attitude of MSI’s employees will be crucial in determining whether the company reaches that ambitious milestone.
“With our current set of employees, the majority of them have done a great job adapting,” Rupesh says. “So first, we look internally and say, ‘For the changes that need to take place, what skill sets do we have to have?’ Where there are gaps, we look to the outside.”
And while they want people who have experienced success, they also want employees who have experience setting a goal and working hard to achieve it.
“We’re very cautious and wary of hiring people who have just been in large organizations,” Rupesh says. “They probably have tremendous experience, but they worked in an organization that was already set up for what we want to get to. Ideally, we’re looking for people with transitional experience.”
The goal is to find people, either within your current ranks or externally, who can continue to identify those new opportunities and help the company take steps to better serve its customers.
“How are they going about solving problems?” Rajesh says. “Make sure when you interview or you’re promoting from within or reviewing within, that you’re grading on that question. How do you solve problems?”
The ability to solve problems and process data to make smarter decisions is a key reason why MSI has grown as quickly as it has.
“In 10 years, we’ve grown tenfold,” Rajesh says. “I don’t think we would have taken the market share we have taken because we would have been correcting a lot of wrong decisions. Of course, a decision isn’t always right or wrong. It can also be the wrong priority. This is a lower priority thing, and if we had done the higher priority thing, it would have generated faster or better results.”
If you have concerns about the systems you have in place to manage your company and its potential growth curve, the best advice is not to wait to act.
“The longer you wait, the harder it becomes,” Rupesh says. “To do a change in systems when you have several hundred employees is a lot more challenging than when you have 30 employees. As you think about any company’s transition, think first and foremost if you have the systems in place. If you don’t, how are you going to put them in place?” ●
- Agree to a plan.
- Hold your team accountable.
- Keep your eye on the future.
The Shah Files
Names: Rajesh Shah and Rupesh Shah
Company: M S International Inc.
Born: Fort Wayne, Ind.
Education: Finance and accounting degree, Wharton School of the University of Pennsylvania.
Who has been the biggest influence on you? My parents, Manu and Rika Shah. They always taught us to not be afraid to do things in life just because it’s risky.
What one person, past or present, would you most like to meet?
I actually wrote my college entrance essay on this. Wile E. Coyote, the cartoon character. No matter what he goes through, he just gets up the next morning and keeps trying it again. I would just love to talk to him. ‘You fail every time. What makes you get up and want to try again?’
Education: Bachelor of science in economics with a focus on finance and strategic management, Wharton School of the University of Pennsylvania.
Who has been the biggest influence on you?
It would have to be my parents. One thing my father did which has been very helpful to my brother and me is when we started, he never took the approach, ‘I’m going to show you the way to do things. This is what you’re going to do.’ He gave us a lot of autonomy to try things, and he provided a lot of support in those endeavors.
What one person, past or present, would you most like to meet?
I really admire Steve Jobs. He came to an industry and revolutionized it. I’ve read his book, and what I still don’t understand is how does someone like that have the vision he had and feel so passionate about it and execute on it.
How to reach: M S International Inc., (714) 685-7500 or www.msistone.com
Fall is a great time for sports fans. The World Series takes place in baseball, and the regular seasons for the NFL, NBA and NHL begin.
The end of the year is also one of the most important times for small businesses. A lot of entrepreneurs look back on 2013 and wonder what could be improved and what should be changed. Luckily, there are plenty of business lessons to learn from professional sports.
There is no “I” in team
Chances are good that you’ve run the entire show from day one, so as you add employees, it can feel a bit uncomfortable to put some of your former responsibilities into their hands. That’s why people micromanage — they assume that they, and only they, know how to do a task correctly.
You need to get into the habit of trusting your employees and backing away. Give them room to surprise you and rise to the occasion, and start building a team in earnest.
Avoid “Hail Mary’s”
It is awesome to see a crazy play work out beautifully. But, more often than not, we just get stuck watching the wide receiver fumble the ball and lose the game. It can be tempting to try your own Hail Mary pass at the end of the year to boost your numbers and round out 2013 on a high note, but marketing gimmicks are a real gamble.
Instead, drum up business with time-tested, reasonable marketing practices. The end of the year is not the time for a business to experiment with its customer base.
Don’t be a Monday morning quarterback
We all know Monday morning quarterbacks. They are the ones who know the plays that should’ve been made and mistakes that should’ve been avoided. Advice based on hindsight can get pretty annoying, especially in a small business.
You want your team to like working for you because if morale drops, so do sales. Constructive, end-of-the-year criticism is appreciated. If all you do is point out your employee’s mistakes without giving them room or advice to grow, however, they are going to be put off.
Keep your eye on the ball
This idiom always interested me. The point of any game is to score points and win, and a ball is a means to that end. But the idiom isn’t “Keep your eye on the goal,” or “Keep your eye on home plate.” The focus is the ball.
Like in sports, the goal in business is to win by staying in business and supporting your livelihood. But how your business operates, and how it takes advantage of your personal, entrepreneurial style is how your company achieves that end.
Take this time to reflect and remember why you got into business in the first place — a crummy boss, a side passion or a desire to better your community. Whatever the reason, focus on that and use it to guide your growth strategy. If you find your niche, your company will do just fine.
Admittedly, the sports-to-business analogy can be a bit corny, but you have to admit that using some of these fundamental practices can help you improve your business. Focus on them, and 2013 will be a real winner — if you’ll allow me one more sports-related pun before I go.
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services.