Gary Darna

Inside Steve’s Brain

I recently read the book “Inside Steve’s Brain” by Leander Kahney. A complete review is available below, but in short, I encourage anyone interested in entrepreneurship, technology, or just the cult of Apple to read this book.

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The Pre-Order

My partners and I have discussed the pros and cons of holding pre-orders on several occasions. In fact, we were able to launch our first brand SigEpic through a month-long advance order period. During May of 2009, we accepted orders for shirts in advance of production. The money collected from customers based on the response of the first week of sales alone allowed us to fund the first release. We attracted customers by offering discounted prices, free posters and stickers, and by a holding a contest… all at the same time. These methods proved to be successful and generated enough buzz about the release to get us started.

Although there are admittedly many advantages to the concept, the margin for error is so slim that one wrong move could have disastrous results for a company.

The Pros

(1) The ability to more accurately forecast demand based on the number of advance orders. This is especially attractive benefit for those releasing a product for the first time and thus have no historical data to base production-related decisions on.

(2) Based on the number and timing of advance orders received, the proceeds can be used to fund a portion or all of production or development costs of a product. In this sense, advance orders can act as a line of credit for the business. This is often described as a “forgiving business model”.

(3) For limited edition products, advance ordering allows customers to secure their item(s) to avoid having it sell out, which in some cases can be incentive enough to deal with the waiting period after placing the order.

(4) Allows the company selling the product to guarantee sales since the money is collected before the product is even released.

The Cons

(1) Customers are often confused by the concept and will call/email/text/stalk you asking when their order will arrive despite your notice(s) about the post-order waiting period. A customer who pays for “2Day” shipping and misunderstands the “preorder” will most likely call you on the third day asking where their order is.

(2) Depending on the length of the time set forth for the advance order period, the window of opportunity to accept orders is small. Some credit card and payment processors (e.g. PayPal) have maximum days (21 in the case of PayPal) for advance order periods.

(3) For products being shipped, companies like FedEx and UPS provide quotes based on the time of month and week you’re expected to ship a product. This means that if you accept an order on the first of the month and collect $7 to ship it to zip code 33415 from 41042, chances are the actual cost will be much higher (or lower) if you don’t actually ship the order until three weeks after it was placed. Basically, and in most cases, the difference between the estimated (collected) and actual (incurred) shipping expense varies greater the longer it takes to ship the package. That variation and resulting inaccuracy, even if it’s saving you money, can be seen as a bad thing.

(4) Often requires the added cost of “preorder incentives”, such as discounted prices or free merchandise, to compensate customers for their patience and support in advance of the product(s) release.

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At this point, I’m not sure where I stand on the issue. On one hand, I owe much of our success this year to this method of new product development. On the other, many of our most frequent customer service issues resulted from the confusion surrounding the actual release dates of products, thus making whatever benefit we received a costly one. Moreover, the incentives we provided for advance order customers proved to be more costly than anticipated, therefore almost entirely negating the profits from the orders themselves. Clearly, the pros and cons by no means outweigh each other. However, depending on your financial situation as an aspiring entrepreneur, you may have no choice but to try this method at least once in an effort to get your show on the road.

URL Shortening

URL Shorterning is an emerging trend on the Internet that makes a web site’s address available via a short URL in addition to the original address. For example, Google and Facebook recently launched their takes on this trend with goog.gl and fb.me respectively.

In early 2010, RockIt will make it’s short URL debut with rockit.im (the .im a top-level country code domain for the “nation” Isle of Man, or in our case, “Interactive Merchandising”), our primary domain name being rockitim.com. Upon launch, our URL shortening arrangement will use our vendor’s Store IDs (SIDs) and the rockit.im domain for linking on popular sites like Twitter and Facebook where character limits make-or-break a post’s completion and relevance.

For example, the SigEpic store, being SID1000, will be 1000.rockit.im (or rockit.im/1000, we have not decided) as opposed to sigepic.rockitim.com. This simple change for the sake of easy linking, will reduce the length of the URL by seven characters. Being that the char. limit on Twitter is just 140 characters, this makes a huge difference.

The benefits of this will be even more profound for some of our other stores, like Inspire & Infect, whose URL is the extra long inspireandinfect.rockitim.com. Using the shortened URL redirection, the new URL will be 1003.rockit.im instead.

College Drop Outs

Michael Dell: Founder, Dell Computers
Bill Gates: Founder, Microsoft
Steve Jobs: Founder, Apple
Johnny Earle: Founder, Johnny Cupcakes
Mark Zuckerberg: Founder, Facebook
Kanye West: Producer, Rapper
Ted Turner: Founder, CNN
Paul Allen: Founder, Microsoft
Ralph Lauren: Fashion Designer
Larry Ellison: Oracle
Craig McCaw: McCaw Cellular (renamed AT&T Wireless)
Ted Waitt: Founder, Gateway
Shawn Fanning: Founder, Napter / Founder, SNOCAP
Kevin Rose: Founder, Digg.com

The Best Things In Business (Are Free)

Since starting my first business in the summer of 2005, I’ve learned that the best things in entrepreneurial life are free. Whether it’s a piece of free software (a.k.a. “freeware”) or a website that connects you with manufacturers for the clothing line you’re trying to start, chances are there are free (or very cheap) alternatives to anything you can buy for your business. Here are a few examples of tools I use on a regular basis that have proven to be worth a lot more than I paid for them:

Google Apps: Like most of what Google has to offer, Google Apps is a free service for individuals, organizations, and businesses to combine the power of various Google services in a single, easy-to-manage interface (the alternative to which is having to login to various control panels all over the vast, loosely connected Googleplex). It integrates Gmail, Google Docs, Google Calendar, Google Sites and other goodies from the Google empire all for the charming budget-sensitive price of Free Ninety-Nine.

Probably one of the best parts about Google Apps is the ability to use your own domain name (for example, rockitim.com) for your users’ email address. Thus, you’re able to have mark@yourdomainnamegoeshere.com instead of mark@gmail.com, @yahoo.com, or the most antiquated and tacky of all free mail services, @aol.com. Using your brand or company’s website address for email as well adds a touch of professionalism to your infrastructure. I don’t know about you, but I can’t take people seriously who use a free mail service like Hotmail for business email communications.

Alibaba: Although the name sounds like something cheesy from the Disney film Aladdin, this website is actually a very useful tool for any entrepreneur looking to produce some sort of product, whether for promotional or retail purposes. The website, which describes itself as a “manufacturer directory for buyer and suppliers”, allows users to make posts requesting quotes in specific product categories. For example, I recently posted as a buyer looking for a company to produce 250 to 500 custom printed suntan lotion bottles. I was able to specify my budget, provide a description, and even select what country or region I wanted to meet a supplier from. Since my company prefers to work with American firms, we made the post visible to American suppliers only. Rather than outsourcing the production of these suntan lotion tubes to a promotional products company who would simply outsource it to someone else and mark up the price, Alibaba levels the playing field for small businesses and allows you to go direct to the source. However, some suppliers do have large minimum order requirements depending on what it is you’re trying to produce, so that’s something to keep in mind.

Social Media: Anyone that says social media has no place in their business (or simply ignores its value) is an idiot. One of the number one tools I have used for the past five years has been social networking websites and blogs. These sites (Facebook, MySpace, Virb, LinkedIn, Twitter, etc.) have connected me with partners, clients, and vendors alike. Maintaining a Facebook Page for our brands like SigEpic has allowed us to maintain a personal, one-on-one kind of relationship with customers. Years ago, this would not have been possible. Having a website for your business isn’t enough. In order to build a reputable, well-connected brand in today’s world, you have make the use of social media a cornerstone of your business. Of course, there are (a few) exceptions and some industries lends themselves better to the use of social media than others. Regardless, it cannot be denied that the use of these tools is paramount. Best of all, they’re free!

Mentors: Despite never really having a mentor, most people with entrepreneurial success stories to tell claim that mentors are an invaluable resource for aspiring entrepreneurs. I can see how this would be true, since bouncing ideas off of a person who’s “been-there-done-that” seems like something that’d be a nice resource to have.