Be prepared to bump up against a lot of cultural challenges during the integration process. Read more about the difficulties of mergers at Forbes.
Be prepared to bump up against a lot of cultural challenges during the integration process. Read more about the difficulties of mergers at Forbes.
At a time when boomers are looking to unload their companies, people in the deal world want to invest in proven acquirers.
Have you ever had a woman ignore your texts or phone calls, and the more she disses you the more you try to make contact? Then when you go out with someone else, suddenly you start hearing from her? Find out what happens next at Forbes
For the latest instalment of my Q&As with established entrepreneurs, I chatted with Mark Graham, co-founder and chief platform officer of Commonsku. He’s also founder of RightSleeve, a leading promotional products distributor. Mark was national winner of the Dell Small Business Excellence Award, presented to entrepreneurs who use technology in innovative ways, and he has been featured by several major media. He’s a founding ‘chef’ at Promo Kitchen, a non-profit web community focused on education and mentorship for the promotional products industry.
This interview has been edited and condensed.
Q: You’ve said Commonsku attracts a younger workforce. Do you see the nature of work changing in the next five years, and how do you think technology will play a role?
A: If we back up, the principle behind Commonsku is to create a cloud-based business management system that had a really strong focus on bringing social into the enterprise.
So what was important to us when we created the platform was:
1. How can we create robust, cloud-based software that is easy and intelligible to use? Because our belief is that a lot of enterprise software sucks. It’s very old-school, there’s a lot of legacy systems out there, so we’re fighting against big IT departments and clunky interfaces.
2. Leveraging good design, good user interface, good user exchange, to make the experience easy. And to also leverage social. Social has been something that has taken the world by storm in the consumer Internet: Facebook, Twitter, and so on. It’s such a great way to communicate in the consumer world, why can’t we bring that style of communication into the enterprise? So, with that, we leveraged those things – cloud, design sensibility and social – to create a modern business platform that can speak to younger people, or speak to people who want to run a better business- people who wanted to be tuned in to what their colleagues were working on and what their supply chain partners were offering.
Then there’s your question in terms of work changing in the next five years. The screen is obviously a very important part of working in a modern office. But since you can access information everywhere, we really see the screen and, you know, life, as blurred. There’s a real blurring. We want to make sure people are able to work wherever they want, and consume information wherever they want to make them really good at their jobs, as opposed to them being chained to their desks and looking at a screen all day.
It’s kind of like, sure, people who use Commonsku look at a screen a lot, but they’re also interacting with the information, they’re learning from the information, and they’re also acting on the information. So they can go away from the office, they can go out and meet with customers, and they can bring the screen with them. So the screen is, sort of, always there, but it’s a lot more complementary rather than something that’s draconian.
Q: Do you think more enterprise-class companies are going to go the social route? Or is the ivory tower here to stay?
A: There’s no question there’s a huge amount of noise being made in the enterprise today to leverage what I just talked about: the cloud, design-oriented software and certainly social aspects. And probably the leader in that movement is Salesforce.com. It’s been very loud with regards to how the enterprise is changing, and it’s staked its brand on that disruption. It’s still very early days, and even though it might seem, if you attend a Salesforce conference or listen to its advertising, that it’s as mainstream as apple pie, but the reality is that a lot of business are still very conservative, and they’re reluctant to get rid of their IT departments, they’re reluctant to move to the cloud, and they’re reluctant to introduce social because they think it’s a waste of time. And it’s really, right now, the most progressive companies that are adopting this.
But there will be additional inroads. And that’s why we’re in this business. Because we see there’s a huge amount of growth in the sector over the next five years, and I think this will become a lot more mainstream, so it’s a real land grab right now.
Q: Commonsku is an enterprise social network for the promotional products industry. Social sharing is obviously a big component. How do you draw the line between what’s okay to share and what should remain internal? What kinds of privacy issues have been raised?
A: Commonsku is a private platform available only to people in the promotional products industry. Competing suppliers and distributors are on the same platform – think of it like a trade show, but instead of being a trade show in a physical location, everybody’s got a profile, everyone can publish content.
The kind of sharing that takes place there is more focused on the industry. It could be a discussion on new colour trends, or where to find a particular polo shirt. A lot of the information may be on Facebook at this point, so it’s not like they’re sharing trade secrets, they’re sharing and discussing products that are already in the public domain. And they’re looking for more engagement and to try to get more visibility for their products.
So for suppliers, or sellers of promo gear that are on the platform, it’s a great opportunity to raise visibility, it’s a great opportunity for them to meet, to share info with their customers, a great opportunity to share information with prospects.
Certainly there are comparisons to LinkedIn because it’s professional in nature, as opposed to saying “I worked at XYZ Marketing and then XYZ Financial,” it excludes all the past stuff and focuses on your time in the industry.
Q: Commonsku is ‘an entirely new way to run your business.’ Can you tell me a bit about how RightSleeve was run before you came up with the concept for Commonsku in 2010?
A: Paper! It was run on paper and MS Office templates. We managed our purchase orders, and it allowed us to run our business when it was small. There wasn’t anything out there to effectively manage our workflow. So we created our own system at RightSleeve to automate it. And that system ultimately became Commonsku. We redesigned it to make it more robust, and to allow us the ability to accommodate the different people in the industry. But at its very core, it came from our system at RightSleeve.
Three years ago we chose to spin off the software side of RightSleeve and turn it into Commonsku, so we hired, we incorporated, hired a different staff, and we have different office space. We always like to say Commonsku came from a client. RightSleeve is now a client, a paying client of Commonsku.
Q: How easy would be to leverage the Commonsku technology to go after different industries? Is this something you’ve considered?
A: Absolutely. A big part of our view with Commonsku is that we feel it’s just a better way to do business. I’m not just necessarily talking about buying a T-shirt and then selling it to the Royal Bank. I could be a guy selling office supplies. I could be someone in the real estate world. At the real core of what Commonsku is all about is this ‘new approach’ to running your business, a new approach to interacting with your suppliers, and a new approach to interacting with your customers so that everything is in this one ecosystem, and that data has a lot of social meaning attached to it so that everyone can work better with each other.
Right now we’ve started with one vertical, and we’ll probably be in it for quite some time. So our story is very much tied into the promo story, no question. And, you know, there are certain workflows that Commonsku has optimized for this specific industry. If we were to make it available to other industries, we’d have a bit of tweaking to do – we’d probably have to think about how the brand is perceived and go from there.
But the promotional products industry is a very large global industry, and we certainly have lots and lots of work to do before we come close to capitalizing on the entire industry. But we’re certainly thinking bigger than the industry. The challenges that our industry faces are not unique.
Q: What are the biggest challenges you faced when trying to spin off a system you created for an already existing business? Was RightSleeve the guinea pig for what Commonsku became?
A: Yes! The challenge is running two businesses at once. It was very, very hard. You can’t underestimate that. Just because you’re dividing focus, one business is more established, one is not, so you’re just pulled in different directions, it’s very, very hard. But at the same time, it gave us a tremendous advantage at designing a product because we had the customer right alongside us.
Building a development team is extremely difficult.
When you’re building a new company, there are a ton of land mines you have to dodge – all sorts of problems and issues you’re going to have to face. The biggest one is market fit. You may have a good product and a bunch of people who think it’s really cool, but the rubber hits the road when someone has to open up a wallet and pay you.
That said, all of these things have a silver lining. You spend your first six months bashing your head against the wall trying to find out what customers really want, then you find out what they want and you have to build the product accordingly, and that’s a real blessing. But I would stress that those are challenges at the beginning, they’re not necessarily challenges we face now.
Q: Tell me about how you got started doing what you do. When did you begin to identify as an entrepreneur?
A: Probably when I was a kid, selling lemonade. I know it’s kind of a cliche, but I would sell lemonade in front of my house, I would shovel sidewalks, I would rake leaves, so from an early age I was already predisposed to this kind of stuff. In university I worked for the student newspaper selling advertisements. I put myself through school, at least my final year, doing that. I ran a window cleaning franchise in university for a couple of years and then, when I graduated from university, I actually went down to work on Bay Street. That’s what I thought you did when you graduated from school.
You know, “this entrepreneur stuff is silly, why don’t you get a real job?” I lasted six months and I hated it and then I quit. I was in investment banking, and I quit that world and got into the promotion business when I was 23.
I’ve always been hard-wired to call my own shots. Like if I want to go and do something, I’m good at executing those ideas – for the most part!
Two weeks after I acquired a second cleaning-products manufacturing business, I consolidated the two companies. It didn’t make sense to continue to operate separate facilities. My first acquisition in the space, RoyalPak, was very strong on the production side, while the second, Qwatro, boasted green products and excellent sales and marketing.
Sounds like a match made in heaven, right? Not quite. We had cultural challenges to overcome. Qwatro had lots of support staff, but RoyalPak was as lean as they come. Employees of the two companies had very different attitudes.
Here’s a Top Nine list of what I learned about the integration process (hey, I like to be different):
Photo: Zoomer toy from Spin Master, which has seen its sales figures start to rise again after they had declined to $400-million from just under $1-billion.
I had a heart-to-heart in Paris with an old pal from business school. Topics ranged from life goals to marriage to the definition of happiness. I said I wanted to play in the big leagues and that I felt the need to get there sooner than later. I have great respect for this person’s opinion, and this was his response: “I don’t think you can get a good feel for a business owner’s true potential until you see how they react when they lose it all, and by that I mean going bankrupt.”
His comment stunned me. I fell silent. The wheels in my head were turning. Whenever I make a business move, I bear in mind the equity I’ve built, which I might lose. Does it mean I don’t have the risk tolerance for the big leagues? Am I playing not to lose instead of playing to win? Am I making too many small deals when I should be scoring bigger ones?
Diversifying is one thing, spinning your wheels is another. If I haven’t lost it all, does that mean I’m not pushing the envelope?
Let’s use two companies to illustrate the point. In my eyes, the founders of Spin Master were the perfect Canadian entrepreneurs, but in the past five years the revenue at their company has declined to $400-million from just under $1-billion. At a recent event I attended, they spoke about how they’re on the rise again. Shred-it International, which Birch Hill Equity Partners has invested in, did 20 acquisitions in 36 months and then fired its mergers-and-acquisitions team to allow it to dedicate all of its resources to integration.
If you’re an aggressive company, is it inevitable that the shit will eventually hit the fan? Is it about winning more battles than you lose, or about trying to win them all? If we don’t slam into walls, do we then convince ourselves we’re using best practices when we should be considering alternative approaches?
Early this year, my Oxford Marketing team was decreased by more than half. It forced us to re-invent ourselves and to focus on the most profitable projects. We’ve reduced our overhead. We’ve became leaner, enabling us to respond to clients faster. And revenue stabilized.
Has the shit ever hit the fan at your business? Why, or why not? Are you doing things the way you’ve always done them? Do you think it’s time to raise the bar?
I have a bit of a reputation with my staff. I set extremely ambitious goals that we are unable to execute. Why? I’m always focused on maximizing profitability, while at the same time I want more growth.
Look at it this way: I love building businesses, I have ambitious targets, and I often lack the systems or the people I need to grow. I don’t like to spend the money. It negatively affects profitability.
But as I think about acquisition No. 3, I’m giving increased consideration to putting the proper infrastructure in place.
Before I did the deal to acquire Qwatro (No. 2), I would boast that I had nothing to do with day-to-day operations at RoyalPak (No. 1), and that if I were to get hit by a bus, it wouldn’t affect the business. I could spend all of my time sourcing acquisition targets.
The problem was that I planned to use my operations manager to integrate the two companies so I could turn my attention to the next acquisition. I didn’t factor in this key point: My operations manager needed about 30 hours a week to run RoyalPak, giving him limited time to focus on integration.
My plan, once we successfully integrated Qwatro, was to have my operations manager spend less time on day-to-day operations and the bulk of his time building the business. That involves ensuring stability, increasing our valuation, and getting us ready for the next round of integration.
These same takeaways can be applied to businesses that are growing organically.
Unfortunately, growth costs money, and if a business isn’t set up properly, it can fall flat on its face.
It’s year four of Global Ivey Day, the worldwide gathering for alumni from the Richard Ivey School of Business at the University of Western Ontario, and it’s been interesting to see it go through different phases. For the first two years, the focus was on selling tickets to the flagship Toronto celebration, and it was a struggle. By year three, an experienced team was assembled to execute the event. Two weeks out, once everyone was confident of a sellout, the focus finally shifted away from the flagship property.
This year, a task force with defined roles and responsibilities was assembled, and there’s been a global outlook from Day One. The majority of the 2013 growth is expected to come from outside Canada, making #GID a truly worldwide brand.
Global Ivey Day is just like Homecoming, except it’s brought to your home town, and all events take place around the world on the same day. The idea was conceived in 2009 by Mark Healy and co-chaired by Deloitte‘s Mark Whitmore. It’s Ivey’s No. 1 way to engage alumni, and it’s expected to grow significantly over the next several years.
Sponsors, who fully fund the effort, look to GID as a way to generate a return on investment through outreach to this niche group of alumni. The playbook has been set up to allow the property to be duplicated in other markets. As a result, #GID2013 will take place in 40 cities this year.
Click here for more details.
I like to hire people who can teach me things. I want everyone on my management team to be smarter than I am at what they do. I want them to have experience I have yet to acquire.
They typically have stability and a mature thought process. It’s what building a smart, high-growth team is all about.
It’s also hard to teach old dogs new tricks. Workers in their late 40s and older likely have less appetite to learn new things than those in their late 20s, who are looking to grow their careers. Corporate culture encourages working around the clock in your early years (accountants, lawyers, consultants, bankers, entrepreneurs), and as you get promoted, your underlings do the heavy lifting so you can leave by 6 or 7. Senior employees often have families, which presents competing responsibilities.
I recently asked a trusted colleague why he hired a CFO in his late 20s instead of someone more senior. He didn’t hesitate: “How else can I find someone that cheap, who’s willing to work 80 hours a week and will take part of his compensation in profit sharing?”
There are fewer and fewer jobs out there for Gen Yers, and as a result, there are a number of federal government programs that incentivize companies to hire employees under 30. Some of them cover up to 50 per cent of an employee’s salary for a year. There are a few companies that can help you track these grants down:
There are roles in growth-oriented, entrepreneurial companies that are best filled by experienced employees who have been through the tough challenges you’ll come up against. At the same time, there are other roles where the best candidates will need to work longer hours or agree to significant travel, and those are better suited to younger workers.
Photo: A St. Party’s Day interview. Get out there. It’s worth your time.
Personal brand building is time consuming, and it can be expensive. As any business owner knows, time is money, and this is a non-revenue-generating exercise.
But I continue to invest in it. Why? For six reasons:
1. It can give you instant credibility in the market. If you have good ideas and you can express them well, you can establish yourself online as a thought leader in your industry in fairly short order. It also enables you to fight age discrimination. If you’re a Gen Y entrepreneur and you manage to leverage your brand to gain media exposure, it’s a stamp of approval for older generations.
2. I’ve been fortunate to have achieved success as a business owner, and I like to give back to students and the entrepreneurial community. Exposure from personal branding can lead to speaking gigs, which are a great way to connect with up-and-comers.
3. I’ve talked a lot in the past about the value of networking. Being “out there” not just in person but online keeps you top of mind with your network.
4. Regular personal branding efforts introduces you to potential new contacts, who can come from anywhere around the world.
5. Personal branding gives you a leg up on the competition when you apply for awards. And every time you win, or even when you crack a list of finalists, it gains you valuable attention (not to mention it improves your elevator pitch along the way).
6. Once you have a reputation as a thought leader, it’s easier to stimulate change at all levels.
Do you hear a voice in your head saying “I don’t have time for this?” Give that head a shake and reconsider.
Paris is stunning. The food was great. There’s tons of history. It was my first visit, and it’s clear why it’s considered the romance capital of the world. One day maybe I’ll honeymoon there.
But I was shocked by people’s lack of drive and ambition, two of the things I value most (health would come in a strong third). Attractive unemployment benefits create disincentives to work, and high tax rates make entrepreneurship a poor option.
It got me thinking: Why are people in Toronto killing themselves to get ahead? Why has my home province of PEI, and the rest of Atlantic Canada for that matter, experienced brain-drain issues? Why have Calgary and Fort McMurray been able to benefit so strongly from the westward migration of young workers?
I kept coming back to the brain drain and how’s it’s changing the world. When I made my latest acquisition, Qwatro, I was the youngest team member by 12 years. Post acquisition that’s still the case, but not by as wide of a margin.
While I was abroad I had integration on my mind, but I was too cheap to pay roaming charges, so I FaceTimed one of my three team members who has an iPhone. My older employees, the Blackberry users, couldn’t believe they could see me on a mobile device while I was overseas.
Tell any baby boomer that I take a vacation at least every two months and they’ll tell you I’m a spoiled brat (even though the trips are paid for using credit card points). Tell a boomer I don’t own an RRSP or a mutual fund and they’ll tell you I’m stupid. Tell an older entrepreneur I have leveraged my company and that I personally guaranteed it and they’ll wonder where my parents went wrong.
For baby boomers, life was simple: work your ass off (often by using your hands, not your head), slowly climb the corporate ladder, and hopefully retire and do the things you enjoy (golf, travel, cottaging). A key fact: there were tons of jobs available when boomers entered the workforce.
Today, some of the best business schools can’t place up to one third of their graduates. Gen Ys want to take vacations, they want flex time, and they want to work from home (in other words, they want to get paid while they nurse their hangovers on the couch on Fridays). If they don’t get the job offers of their dreams, they can’t figure out why.
Why would they think any differently? They’ve been told they’re special their whole lives.
How can boomers work with Gen Ys? It sounds like a disaster waiting to happen. Well, here’s the thing: It’s a great time for Gen Y entrepreneurs to get ahead by adopting the work ethic of their boomer parents and having the balls to take some risks.
Image courtesy of chanpipat / FreeDigitalPhotos.net
Photo: Mallorie Brodie, co-founder of Bridgit
For the latest instalment of my Q&As with established entrepreneurs, I chatted with Mallorie Brodie, co-founder of Bridgit, a deficiency management platform. Her first venture, which she launched in 2011, was an online Canadian student art gallery called Start Gallery. According to her profile on The Next 36 website, “Mallorie has a passion for media, has worked at Corus Entertainment in marketing, and was the co-host of a television show on Rogers. In her spare time, she likes to cook, try new restaurants and watch movies.”
Q: Tell me about your business in four sentences or less.
A: Bridgit is a communication platform for field workers. We are currently focused on solving the communication challenge of deficiency management on construction projects. We want workers to be able to communicate efficiently, so they can get back to the real work.
Q: Starting at the Ivey School of Business, did you always know you wanted to take the entrepreneurial route?
A: Before I started Ivey, I knew that entrepreneurship was the path I wanted to follow and I was constantly brainstorming for new business ideas that I could pursue. I didn’t know whether I would start a business immediately after I graduated or not, but I knew it was definitely in the near future. At Ivey, I was the co-president of the Entrepreneurship Club and completed my Certificate in Entrepreneurship. I am eager to stay involved with entrepreneurship at Ivey and I really hope to give back to the program in some capacity.
Q: How did you get involved with The Next 36?
A: Next 36 initially sparked my interest when an Ivey alumni who was a Next 36 mentor came to speak during my first year at Ivey. I kept in touch with him and was able to learn more about the program. By the time recruiting season rolled around in fourth year, I knew I was more interested in applying to The Next 36 than pursuing the more conventional career route. After the intensive Next 36 application process, I found out that I would be part of the 2013 cohort.
Q: Can you tell us a bit about it?
A: The Next 36 has an academic and venture component. Every week we have between two and four classes that are taught by professors from Rotman, Schulich, Ivey and a few U.S. universities. The courses are intense and the professors expect a lot, but that was to be expected. The rest of the time, the teams are working hard on their respective ventures.
The Next 36 has been an absolutely wonderful experience, despite the many challenges my team has faced. I am incredibly lucky to be working with my incredible co-founder, Lauren Hasegawa, and so fortunate that we have had a great team of interns from Waterloo and the University of Toronto this summer.
Q: How has The Next 36 helped you with your entrepreneurial ventures?
A: There are three main reasons why The Next 36 has been so helpful to my venture. The first reason is that it has given me the opportunity to work with a co-founder that has deep expertise in a particular area: civil engineering and construction. Secondly, the exposure to extremely successful business people helps us set the bar much higher for ourselves. Thirdly, the funding is crucial to getting ventures off the ground.
Photo: The next Entrepreneurship Society event takes place in Toronto on Sept. 25. Put a bunch of business owners in a room together and there’s a good chance cash flow will be a point of discussion. Check out the website for details.
A lot of people have asked me for tips on buying a business. The most important factor to consider is net cash flow. Of the companies you’re looking at, which one has cash flow that is least likely to decrease, and will require the least amount of time to maintain? In a perfect world, you want to buy an asset that, even if you get hit and killed by a bus, it will continue to generate the same cash flow.
Here are other key things to consider:
Is there anything happening in the market or the sector that makes the target more or less competitive? Is the product obsolete? Is there more demand for it for some reason?
Normalized cash flow
How much of it does the business generate? Normalized cash flow is an accurate measure of the company’s financial situation. A target company might show zero profit but generate $300,000 in normalized cash flow. How? The owner could have paid herself $200,000 above market salary, paid her kids $50,000, and put another $50,000 in discretionary expenses through the business.
On the other hand, a company may show $300,000 in profit but the normalized cash flow is significantly less than that amount. This can occur if a client failed to renew a contract for the following year. If that contract generated $100,000 in cash, the normalized go-forward cash flow would be $200,000.
Calculating net cash flow is not an exact science because you’re trying to predict future cash flow.
If a target relies heavily on a single customer, it de-values the company. If that client is lost, cash flow will decrease drastically. As a rule of thumb, when a business is worth less than $2-million, no customer should represent more than 20 per cent of sales.
Key man risk
Are there any employees that, if they were to resign, it would put the company in a very vulnerable state? For smaller deals, the key man risk is often the owner. There are a number of tactics that can be negotiated to mitigate this risk.
Cash flow is the best way to value a business. Bricks and mortar businesses are commonly sold for two-and-a-half to six times earnings. There are other variables: Is it a product- or service-based business (services are typically worth less)? The larger the cash flow, the more stable the business, so these companies often warrant a higher multiple.
The ‘you’ factor
Is the company lean or is there excess fat? Are you going to be able to run the business more efficiently than the current owner? If so, your cash flow will decrease. Alternatively, are you going to add infrastructure by spending more on marketing, by building a new website or by adding smarter, more sophisticated staff? Any of those moves will negatively affect cash flow.
Smaller businesses with a high key man risk because the owner does everything himself may experience a decrease in normalized cash flow. A new buyer or owner may not want to do all the work or will end up hiring experts to do it.
Photo: In Mexico City with the Canadian MBA Alliance.
On Labour Day weekend, Oxford Marketing travelled to Mexico City for a project it’s working on with the Canadian MBA Alliance (CMBA), itself a partnership of the top six MBA schools in Canada. We’re assisting the group as it combines efforts to improve marketability at the national level. Oxford Marketing has two more activations with the CMBA coming up in London and New York.
The travel got me thinking about a blog post I wrote earlier this summer on ‘workations.’ I was introduced to the concept by serial entrepreneur Dan Martell, who defines them as trips to new destinations for six-week periods, where you work until noon and in the evenings, and you play in the afternoons.
I learned a lot from my workation this year, including the following:
My workation also got me thinking more about my work/life balance. People who cut down on work are often motivated by the desire for more life experiences. For me, it was about productivity. I started to realize that working until bedtime and then getting right back at it when I woke up was actually less productive than when I made time for other activities.
I was much more focused and I slept far better during my workation. I woke up energized. It might have been the best summer of my life. I’m planning to take another workation next year.
After the business trip to New York in November, I think I’ll spend an extra 10 days between there and Boston to try taking a workation in a fast-paced city. It will be a completely different environment than relaxed cottage living in Stanhope, PEI, but without day-to-day obligations it should lead to more creative thinking.
For the latest instalment of my Q&As with established entrepreneurs, I chatted with Craig Follet, co-founder and CEO of uniiverse.com. Before starting his own business, he held positions as a management consultant at BCG, an investment banking analyst at Credit Suisse, and he worked on the product side at Spin Master Toys. A software engineer and graduate of the Ivey Business School at Western University, Craig enjoys rock climbing in his spare time.
Q: Tell me about your business, Uniiverse, in four sentences or less.
A: Uniiverse is an online social, local marketplace for activities and services. People use it to discover unique events based on what their friends are doing, and they can instantly buy tickets. Anyone can offer an event for free, and immediately accept credit card payments, manage bookings, and promote their listing to their followers and past buyers (as well as degrees removed, such as friends of their followers and past buyers). Our community is offering some pretty awesome events, both big and small, free and paid: everything from yoga in the park to 1,000-plus person food festivals.
Q: What is the overall vision for Uniiverse?
A: The vision is to help people interact more in real life. We felt that the world had become too virtual, and built Uniiverse to connect people to real life activities and services offered by their community. People have really bought into the vision: We’re now trusted by more than 26,000 event organizers and service providers, and there are listings in more than 400 cities around the world. Uniiverse has proven to be a great way to meet new people with a common interest (learn to make sushi), to come up with a unique date idea (a vibrant night market), or to find something fun to do with friends (yoga in the park or a graffiti tour). We’ve also seen that once people use Uniiverse to book an event or activity, they realize that there’s a unique activity or service they can offer too (bartending services, jewellery making classes, or a fundraiser event).
Q: With a corporate background in finance and consulting, what inspired you to take the entrepreneurial route?
A: I always knew I wanted to start a company, and I studied software engineering for this reason before earning an HBA from Ivey. One of my internships while at Western was in product development at Spin Master – Ronnen and Anton, the co-CEOs, were big role models for me. After graduating, I chose jobs that would teach me the most in a short period of time – at Credit Suisse and BCG I focused on high tech, covering IPOs, M&A, due-diligence and strategies for Internet, software and digital media clients. The irony is that the more focused on the sector I became, the more I couldn’t help but be inspired and simply had to go for it.
Q: Do you think it is important to get diverse experience before switching to a startup?
A: You don’t need to, but I definitely think it helps. Having solved challenging problems for a large number of tech clients, our decision making is not only quicker but also more rigorous and accurate. I’ve also realized how valuable the hard and soft skills are that I and my co-founders gained before making the jump – financial modelling for capital raises, cohort analyses for understanding user LTV (lifetime value), evaluating and recruiting top talent, negotiations, and so on. I also met my co-founder Ben at BCG, which was great because even though we are highly complementary, it meant we both come from the same school of thought and structure our thinking in a similar way. We usually know what the other is thinking without even needing to ask, we trust each other a lot, and we can get a ton done in an incredibly short period of time.
Julie Cole of Mabel’s Labels
For the latest instalment of my Q&As with established entrepreneurs, I chatted with Julie Cole, who in 2003 co-founded Mabel’s Labels, a kid-proof label-making business that has become the leading provider in its industry in North America. The company’s line of products has expanded to include several other items, which it sells worldwide through its website and more recently in Wal-Mart and Target stores.
Julie also balances a busy home life as the mother of six children.
Q: Tell me about your business in four sentences or less.
A: Mabel’s Labels is the leading provider of personalized labels in North America. We’ve grown from a basement startup into an award-winning, celebrity endorsed international phenomenon. As four moms frustrated by our children’s belongings leaving home, never to return, we decided to create the very best personalized, waterproof name labels and tags possible. Since our start in 2003, we’ve continued to build on this commitment to excellence and our growing line now features child safety products, household labels and seasonal items.
Q: There must be some unique challenges to owning a business with three other people. What are they?
A: There definitely are some challenges that go along with having four co-founders. We’ve had to deal with issues around communication, distribution of work and trusting each other to do what needs to get done. Entrepreneurs often feel most comfortable when they are in control of every aspect of their business. Particularly in the early days, it was difficult to let one person run with an area of the business and not personally know the day-to-day activities of that area.
Letting go took practice. In spite of the feisty conversations and debates around the boardroom table, there have been some clear advantages to this partnership. Dividing the work between us contributed to quick and early growth. Also, having four different skill sets and perspectives at the table has been a benefit to the company.
Q: Mabel’s Labels is about 10 years old now. What does your day-to-day work life look like now versus 10 years ago?
A: Ten years ago, I would meet my business partners in the basement of my sister’s house and we would make labels until 3 a.m. We would be up the next day at 6 a.m. to be with our children or head off to our “day jobs”. During the day, we’d juggle family and jobs to try to fit in customer service, media outreach and the many other duties that come with owning a business. We now have a 14,000-square-foot facility with more than 40 employees. All of the partners work full-time in the business and we have not had to make a label at 3 a.m. for quite some time! We sometimes feel a little nostalgic for the old days, but then we remember what it felt like to live in a fog.
Q: You recently made your first retail deal after selling millions of labels online in dozens of countries. How did the deal happen? Did you use a commissioned salesperson or a consultant?
A: Taking the leap from online to retail was a big one. Our first challenge was creating a product that would fit with retail. Once we did that, the second challenge was actually getting into retail. One lesson we’ve learned is that if we have a knowledge gap, we need to fill it. We hired a retail consultant with many years of experience who helped us understand the very different world of retail.
Q: Tell me about the kids’ sector. It’s a huge industry. How hard was it to grow in the early stages and what is the biggest pain point?
A: For us, the biggest challenge was that we brought a product to market that didn’t actually exist. In the early years, we had to educate parents and show them that our product was a necessary purchase. Because of the nature of our labels, once we started getting out there, the public was easy to convince. Once parents saw our labels in action in the schools, day cares, camps and sports fields, they became customers. Getting the labels out there for all to see, was our very best marketing tool.
The end of the Labour Day weekend is a tough time in Toronto: it marks the unofficial end of summer. The city’s one saving grace is the huge buzz surrounding the film festival, which this year takes place from September 5th to 15th. The Toronto International Film Festival (TIFF) is one of the biggest weeks of the year, but I’d like to see it become our version of the Stampede. The annual rodeo and festival shuts Corporate Calgary down for nine nights in July. Nearly every business worth its salt hosts a significant event for clients and employees. Similarly, all major companies in Toronto should take a page from Calgary’s book and become part of TIFF.
A lot of scenesters get into corporate-sponsored parties at the festival. Fair enough. But more of Bay Street should be actively involved to help diversify the crowds and show commitment to this incredibly important entry on the social calendar. During TIFF, demand always far outstrips supply. There are never enough tickets to go around. How often can you say that in this day and age, when it’s usually the other way around?
The TIFF effect on my entrepreneurial career is a smaller-scale example of the impact the festival can have on a business. I talk a lot about my network and its benefits, and TIFF is one of only two times a year that I invite all of my business colleagues to an event. It’s partially because I know the prestige of an invite-only festival party is of interest to them, but it’s also an opportunity for my contacts to meet and hang out with other like-minded attendees.
My events business, Oxford Beach, kicks off its TIFF contribution with the Glitz and Glamour Motionball Benefit to support Special Olympics. It’s also a celebration of the festival’s opening weekend, and this year we’ll be back at Arcadian Court on September 6, 2013. Click through to see a video from last year’s event.
If my company can pull off a major event, how can the Bay Street crowd be encouraged to better embrace TIFF? How can it be made more corporate, and by that I mean how can capital investment in the festival be better stimulated to further build the brand?
For the latest instalment of my Q&As with established entrepreneurs, I chatted with Michele Romanow, who co-founded e-commerce site Buytopia, one of Groupon’s biggest competitors in Canada. The company began with $45,000 in startup capital, but within a year it was recording $3 million in sales, and it has since acquired six competitors to help it achieve even more aggressive growth.
Michele is a smart, bold, driven young entrepreneur, who wants to reach 10 million subscribers in the next five years. I wouldn’t bet against her.
1) Tell me about your business in a few sentences.
Buytopia is one of Canada’s leading e-commerce companies. We work with over 5,000 merchant clients marketing and selling exceptional offers to over 1.8 million subscribers. The company delivers value to its merchants by sourcing new customers at a lower cost than traditional alternatives and delivers value to its subscribers by providing products and services at a deep discount. Buytopia has saved their subscribers over $100 Million in the past two years. The company’s merchant base includes over 50 national brands including Staples, Sears, Netflix and Cirque de Soleil. Buytopia grew from only $45,000 of the founders’ personal capital – no external financing was accepted although it had been frequently offered. We recently acquired 6 smaller competitors to consolidate the daily deal space and compliment our organic growth.
2) What was your inspiration behind this business venture?
Two and a half years ago, Ryan Marien, Anatoliy Melnichuk and I thought advertising was going to change. For years, retailers bought mass media like radio, print, and television based on impression in hopes that consumers would notice and buy. Group-buying changed this model. Instead of idly hoping that mass advertising campaigns would work, retailers and local businesses would only pay when a consumer bought a voucher and redeemed in-store. This was truly the first mainstream performance based advertising.
3) Do you find managing business owners’ who are selling their business expectations on valuation of their company – especially tech companies who talk of selling for insane values when they’re losing money – challenging? How do you manage that?
Yes and no. We understand the work and dedication required to start a company, and why this experience leads to a hope for high returns. A clear and open discussion outlining the value of all aspects of the company leads to a mutual understanding of the true value. As long as a tech company owner is willing to have this discussion, we can resolve the valuation and find an amount and structure that is mutually amicable.
4) What significant synergies do you experience when buying your competitors? Is it on the front end (sales) or more on the execution side when acquiring deals?
Each deal has unique synergies. Our goal has always been to deliver the best value to the consumer and we increase our value to our merchants when we can drive more traffic to a greater number of users. This means we are always looking for new subscribers and new merchants – both goals can be achieved through acquisitions.
5) Has it been easy to integrate your new companies into your existing operation? What are the biggest challenges? How do you address these?
Integrating companies is not always easy. It’s always a big project to integrate users, communicate with subscribers and mesh the technical aspects of each acquisition. We keep getting better at integrating companies with each acquisition and are excited to keep growing.
Rob Linden of SampleSource
For the latest instalment of my Q&As with established entrepreneurs, I chatted with Rob Linden of SampleSource, who got his feet wet climbing the corporate latter at P&G. When he got the entrepreneurial “itch” and wanted to try something different, he started his own company. It didn’t take long for him and his team to build a great business.
Rob tapped into a niche that has left a number of marketers, including me, scratching their heads, saying “why the hell didn’t I didn’t think of that?” He has the leanest, fastest-growing business I’m aware of, always keeping an eye out for efficiencies and cost controls. What is amazing is that even though he has an ROI/efficiency mindset, He’s also very generous with his time and he’s always offering to help his colleagues in any way he can.
Q: Tell me about your business in four sentences or less.
A: We help consumer packaged goods (CPG) marketers find new shoppers for their products through our proprietary digital product sampling platform: SampleSource.com. All marketers know that sampling is the most effective way to generate new buyers, but current sampling vehicles (such as in-store demonstrations, street sampling, festival sampling) are broken or lacking. SampleSource.com is far more cost-efficient and effective versus current vehicles.
For consumers, we offer a one-stop place on the web where they can find products to match their needs and wants that they may never have heard of or thought of buying. They fill out a profile of who they are, and we match them up with samples they may be interested in. They can then pick what they would like to try, and we send them a box of samples in the mail. They try them, and report back to us.
We really are a one-stop shop for brands to reach potential buyers – an end-to-end solution that provides everything from warehousing to web, packing to shipping, even targeting filters and follow-up tracking research. Brands that work with us include Garnier, Unilever, Clorox, SC Johnson, John Frieda, Jergens, Sunlight, Snuggle, and more. Over 50 so far in Canada and the USA.
Q: What is your viewpoint on the importance of first-mover advantage when going to market and why?
A: First-mover advantage in a product or service offering is only one side of the equation, and I would argue not even the most important. Without sales to prove it out and build the client roster, your offering can quickly be overcome by a competitive entrant. Even if their technology or product is not as good as yours, if it doesn’t sell, your offering has no value. We always try to move fast with our product and the sales: we seek client input on the value of what we do and we refine. We then deploy rapidly, and secure participation and sales as fast as possible.
Q: How important is innovation in your business and what do you do each year to innovate?
A: We have an internal mandate to add one client-focused, ROI-driving innovation each year. This innovation must meet the following criteria:
1. It must be focused on helping improve the results for our clients or something clients would see true value in.
2. It must be a natural extension to our current offering so we stay focused on broadening our shoulders versus focusing on too many bits and pieces.
3. It must be monetizable and scalable for our business financials. Without those core criteria in place, you may just be innovating for the sake of innovating, but you don’t have true market potential. The riskiest part for any entrepreneur in a digital space is continuous innovation that nobody is interested in buying or will not impact your top or bottom lines. Otherwise, it is just runaway expense.
Q: How important is automation in your business?
A: Automation is more on the process side rather than the traditional lead-generation side we all hear about in terms of marketing automation. For us, automation is in simplifying our procedures, and in simplifying the lives and workload of our clients. In many ways, that is where we innovate a lot. The more we can simply process, the cleaner and more streamlined the execution becomes. This translates into capacity savings for both sides, as well as expense savings in terms of time and rework. Our process and systems are now exceptionally automated, but we are always looking for even smoother, faster, easier ways to execute. After all, the only real strategy a consumer or client sees is the execution, so our goal is to make it simple, flawless, and done with excellence.
Q: Why do you feel your business has been so successful?
A: I think our advantage is our service, both in terms of the product we offer, and in terms of how we meet our client needs. Our product is geared toward a true client need (building sales) and does so in a more efficient and effective way versus current offerings. It is very easy for them to understand. It is not a difficult sell because we have asked what is important to our clients, sought their feedback, and built a program and offering that they clearly understand, that they have budget for, and that helps them be more effective and efficient. I believe the other side to our success is in how we service our clients – every day, all day, rapidly, fast turnaround, almost instant response. We take the work off their desks and handle everything from A to Z so they do not have to. Working with us is practically no work, and for a busy client, that is a real benefit.