The death - and rebirth - of retail

The death - and rebirth - of retail

On January 29, Marc Andreessen predicted the death of retail in favor of disruptive, pure-play etailers, such as Fab.com. A choice quote from the PandoDaily article:

“Retail chains are a fundamentally implausible economic structure if there’s a viable alternative,” he says. “You combine the fixed cost of real estate with inventory, and it puts every retailer in a highly leveraged position. Few can survive a decline of 20 to 30 percent in revenues. It just doesn’t make any sense for all this stuff to sit on shelves. There is fundamentally a better model.”

I've been studying retail ever since I can remember. My parents were retail entrepreneurs from the time I was born, as I wrote about in this Lucky7 post. I've been programming since I was seven-years old, as I wrote about in why I named this blog Lucky7 - in tribute to my mother. I leveraged these two experiences to start my own etailer in 1998 - programmed on an eCommerce platform that I created. And I've founded two large companies to help retailers - Bazaarvoice and Coremetrics. I've also served on the Board of Shop.org for three consecutive terms. So to say I've been thinking about this for awhile is an understatement.

The tale of Bazaarvoice, as told through the shirts on our backs (2005-2007)

Every startup has their t-shirts, and we were no different at Bazaarvoice. But you can tell a lot about a company by the t-shirts they produce. And so I would like to take you through our history - and our culture - with probably the most complete collection of Bazaarvoice t-shirts with the possible exception of my co-founder, Brant Barton.

This will be a series of post, and this first post covers our first two years in business - 2005-2007.

The first t-shirt we made was the coveted Bazaarvoice Community One 2005 t-shirt. There are very few of these. The point that I was making was that we were part of a very special community - those that joined in the first year of business (Brant and I founded Bazaarvoice in May of 2005).

50% of startup exits in 2012 exited for less than $50 million in 2012, and the founder mindset

As this article and the chart below from Business Insider points out, 50% of startup exits in 2012 exited for less than $50 million in value. Personally, I would only sell a business if it didn't have a great future ahead of it. This is the founder mindset needed to go long. At Bazaarvoice, we created over 1,000 jobs and a valuation of around $550 million today. But Brant and I could have sold Bazaarvoice for around $25 million when it was around a year old. As I point out in my Lucky7 post about the five critical ingredients to build a big company, the founder mindset matters for ultimately what ripple effects will be created.

Are you going to create 10 jobs or 1,000 jobs? Are you going to create less than $50 million of value or greater than $500 million? It all depends on your potential or TAM (Total Available Market), execution, and your mindset. Some entrepreneurs are only in it for the quick flip, and they do it over and over again. They feel more comfortable in that groove and they haven't pushed themselves to go beyond it - perhaps because it is so hard to do so.

If you are looking to join a startup, avoid these entrepreneurs unless you know that is the game and they are open enough to call it like it is. Make sure this is what you want to do - and you get a large percentage of the equity. There is a big difference in who makes money with a $50 million versus $500 million valuation, and that also means a big difference in the company's benefit to the community (jobs, future philanthrophy, etc). It is also really fun - but really hard - to go from a $50 million to a $500 million valuation. But I've never had more fun in my career than that ride at Bazaarvoice, even when factoring in all of the challenges and learning along the way. And I know many early Bazaarvoice employees feel the same way.

How to be efficient in your communication to get things done quickly

In startups, you have no time to waste. Every day counts. The opportunity cost of lost time is huge. Startup life can be short and fragile. So, one way to get things donequickly is to communicate in an effective manner. I was thinking about this today while I was at The Wharton School serving as an Entrepreneur-in-Residence and talking about a lot of lessons learned at Bazaarvoice and Coremetrics. As I wrote about in this Lucky7 post, Bazaarvoice was one of the most capital efficient companies leading up to the IPO as compared to many companies that reach this milestone. Certainly one of the reasons this was the case is we wasted less time than most companies in how we chose to communicate with each other in order to get things done quickly.

Things I've Learned (Austin Monthly)

Things I've Learned (Austin Monthly)

Austin Monthly, a great local magazine, ran a profile on the things I've learned in their February issue. This is not yet available online, so I'm including a photo of the article here.

They did a great job on this article, describing a lot of my philosphies on life and entrepreneurship. They took a lot of time with this, which is rare in these days of the rushed and declining media industry. There is one error, though - my age. I'm 40, not 43.

Your first clients - how to win over the 'cool kids'

Your first clients - how to win over the 'cool kids'

In my last post, I wrote about a very important question I often get asked by entrepreneurs, "how do I win my first clients?". My answer to this isn't just "how" but critically includes "who". I suggest you start with that post before continuing. In this post, I'll cover how you win over what I call the 'cool kids' - the people that are the most respected in whatever industry you are trying to win.

Your first clients - start with who, and win over the 'cool kids'

I haven't written a post in awhile because I've had the flu. It has been the first time I've gotten it since I was a teenager, and it was rough to say the least. I'm still recovering. I would recommend for you to take your flu shots, but I did that - just as I have every year - and they failed to work this time.

The most important thing you can do to build a great startup culture

I often get asked by entrepreneurs, "what is the most important thing that I can do to build a great culture?". My answer, "recruiting". Recruiting has to be a top-three priority for any CEO, for any size organization. But as a startup, it is the difference between life and death.

When Brant and I started Bazaarvoice, we wanted to get the team right from the beginning. We were obessive about that, and it paid huge dividends later on. If there was ever a secret to Bazaarvoice's success in those early days, both culturally and performance wise, it was that we obsessed about recruiting and also constantly debated how we would create a great culture (more on this second point in a later post). Brant and I came up with a process for recruiting that was so obvious in hindsight but yet is so rarely done.

A 'proper' vegan breakfast

I just ran into my friend Rip Esselstyn, who had a major impact on me at Bazaarvoice. Seeing him today made me want to share my story and also the breakfast I have every morning (my recipe below) for the past two years. After all, it is the first week of the new year and if you are like most people, you are thinking about carrying out your new year's resolutions and health is probably near the top of your list.

The Most Important Book I read in 2012

Reading Abundance is like going to TED - the main TED, in Long Beach, CA. I first went in February of 2011, and I cannot wait to go again in February of 2013 (only my second time to go). Later in 2013, I'm also going to TED Global in Edinburgh for the first time. Going to TED is a life-changing experience. It was especially moving in 2011 because my wife, Debra, and I had just visited Africa - also for the first time. Africa was life-changing too, but in a very different way. Going to Africa gives you incredible perspective on humanity and what really matters in life. Debra and I went to see the high school we helped build, via the Pipkins, the incredible leaders at The Nobelity Project. Seeing how we had directly helped a small village in Kenya was a game-changer for us. In Africa, you see some of the most beautiful landscape and animals of your life, coupled with the depths of the most pressing problems for humanity. It is overwhelming and when you return there is a thought of, "the problems are too big for humanity to overcome". Going to both - Africa and TED, side-by-side - was especially thought provoking. TED, and the brilliant book Abundance, address this unproductive "too big to try" thought head-on, and that stokes my optimistic entrepreneurial energy in a big way. I think it will do the same for you.