Who is your competition?
Just who is your competition anyway? Is it the wine store down the block with really cheap prices, or that winery across the way with perfectly draining soil?
The execs at Coke did a good job when they began defining their market in terms of "Share of the Stomach." No longer was Pepsi their only nemesis, suddenly Campbell's Soup, Burger King, and bell peppers all became public enemy #1.
Chris Dixon, Co-Founder at Hunch, recently wrote about a quote that summarizes this perfectly for internet companies: "Your #1 competitor starting out will always be the BACK button, nothing else."
In my role at Snooth, I have been asked the competition question at least 50 times, and each time I say that same thing: We compete for users' attention (and if we sold anything, we'd be competing for their money, as well). People hate my response, and they expect me to list companies like Wine Spectator or Wine Advocate or Thrillist or Wall Street Journal or someone else, when that simply wouldn't be true.
It wasn't true when Snooth had 1,000 users, and it's not true now that we reach 10 million users per month. Our biggest issue has always been lack of recognition, or worse, ambivalence from users that we've managed to get to our homepage. Wine Spectator, great as it is, has obviously never captured 100% of the universe of wine lovers on the planet. For Snooth to get its first 1,000 users, let alone its 10 million users per month, we didn't have to win them from another wine resource. In fact when we survey our users the most common answer to "what other wine websites do you visit?" is "none."
It's the same for a winery, or a retailer. Your biggest problem is not the obvious competitor you've been eyeing warily, but the other distractions, causes and temptations that tug at the minds and wallets of your prospective customers.
That may make marketing sound like an impossibility, but remember this, the customers that chose to spend their money with you, did so above every other option in the world. You just need to figure out what it was that caused them to do that, and position yourselves for a repeat.
Monitoring Your Reputation
Last time I wrote about how I stay on top of industry and other relevant news, and I promised to talk about how I keep tabs on what’s being said about the brands I work for.
The gold standard used to be Google Alerts. In true Google style, there’s a simple interface where you type in the keywords you care about (your brand, your name maybe, a region or varietal you are interested in, your competitor's brand, etc.) and then choose whether to have the results emailed to you daily or weekly. Sadly, since the explosion of user-generated content, Google Alerts has struggled to keep up and is now significantly less useful. I still use it, however, as it helps deliver a baseline.
Each of the social networks offers a way to search their own data. For example, there's Twitter Search. This used to be a separate product called Summize, but was acquired by Twitter a year ago. The service is still not well-integrated into Twitter.
Recently, the tracking and monitoring space has exploded and there are lots of choices that each offer a single way to track what is being said about your brand across multiple channels (web, Twitter, Facebook, blogs, etc). These range in price from free to several thousand dollars per year. I think that the free services are sufficient for those starting out, and fine for the majority of wineries and wine brands.
Social Mention, which is built on Yahoo’s Search Engine, is my favorite both for its simplicity and for its depth. The web interface is simple, there are some basic analytics, it allows you to receive email alerts, and importantly, it’s free.
Embracing Fear
Entrepreneurs frequently have to make big decisions based on limited information, and when a wrong decision can bankrupt the company many people would over analyze and not commit, which in itself can be equally detrimental. Fred Wilson of AVC blogged that "Fear is a No-No" a few weeks ago, and I wanted to share two stories I've experienced that back that up:
Snooth moved into a new office a month ago. It's the fourth space we've had since we incorporated in November 2006, if you include working off of the kitchen table in Mark's old apartment. Here's the list of spaces we've had:
- Marks Kitchen Table - 2 people - dollar risk: $0 (Mark could always go back to eating breakfast there)
- Shared office space (Sunshine Suites) - 5 people - dollar risk was 1 month's rent: $3,000
- Shared office space with a fellow startup (HopStop) - 10 people - dollar risk was my commitment for 6 month's rent: $21,000
- 49W 24th St, Snooth's own 5,000 square foot office - 20+ people - dollar risk is a 5 year lease, plus improvements to the space, with a total value of over $600,000
When you're a small startup watching the pennies it can be hard to go from $3,000 to $21,000, but the sticker shock on moving to a commitment of over half a million dollars can keep you up at night. However, as the CEO of a hyper-growth startup (we've tripled our headcount in the last 12 months) I've become inured to the pressure of making these big decisions, and when you factor in that the process from finding a new office space to moving can take 6 months, and the growth rate of our company over that time, if we'd moved to anything smaller we'd have been wanting to move again by Christmas. Now we're settled, the new space is the perfect size for the team, and what seemed like a huge monthly commitment now seems tiny.
The second example of this is that when Snooth was first conceived and launched we had intended on monetizing via lead generation. We put a lot of effort into the platform to manage the accounting, billing and management for our partners, and then, when we began signing stores up, we found the going slow. After a year of fits and starts we realized we still didn't have a viable business model, and so (here's the fear inducing part), abandoned our original plan, and thus far our only hope of revenue, to build an ad supported business. Oh, we also decided to do that in the winter of 2008, which was probably the worst time to launch an ad supported anything.
Fast forward 18 months, and Snooth is now a profitable ad supported media company. We have multiple brands: Snooth, Thespir.it, and we're launching several other verticals over the coming months, and our sales and operations team, which has grown from 0 to more than 10, now makes up around half the company.
As CEO I've gambled on these issues and others, and have been lucky enough to have bet correctly each (well, at least most of the) time. If I'd have bet wrong with the latter example the company would not exist today, and yet, its clear to me that not taking these big swings would also have resulted in a company unlikely to have existed at this point either.
Keeping Current
People often ask me what newspapers I read. I haven't read or held a physical newspaper in a decade, and I get very little of my news from traditional news sources. However, I skim a lot of sources daily for information, be it general news, wine and spirits news, or technology-related information.
I follow 39 feeds, ranging from the NYTimes to Techcrunch to Tom Wark's Fermentation blog, and in total these sites generate around 200 articles per day. The only way I can keep up with this is to skim the headlines and just read the few that really catch my attention. I can do this in around 20 minutes using Google Reader which allows me to skim headlines chronologically.
Google also makes it easy to whittle down your list once it gets too large. They have a trends tab, which shows you which feeds you typically read. It's then easy to delete feeds that you may have added but no longer focus on. For example, from my account, Google tells me that “From your 39 subscriptions, over the last 30 days you read 4,517 items, starred 2 items, shared 0 items, and emailed 0 items.” However, some feeds are read frequently (NYTimes 83%) while others are ignored entirely.
In addition, I subscribe to several newsletters, including the following Wine Industry ones that I recommend:
> Wine Business Daily - Essential daily industry news
> Benson Marketing Groups daily newsletter - As above, essential daily reading
> Bottlenose newsletter - Bottlenose builds ecommerce websites for wineries, and they have a monthly newsletter which discusses aggregate metrics and data for their customers (eg. June's average order value for their stores was $255.09 a drop of 0.2% from the previous month).
> Mark Brown's Buffalo Trace Industry News Update - Mainly focused on Spirits, but a nice counterpoint to the California-centric wine news I often get.
I’ll talk about how I stay on top of whats’s being said and written about the companies I work with in a later post.