How I Beat My Competition

How I Beat My Competition Prepared for: Engineering/Telfer Lecture Date: February/March 2012

Professor Bruce M. Firestone, B. Eng. (Civil), M. Eng-Sci., PhD.; Entrepreneurship Ambassador, Telfer School of Management, University of Ottawa; Founder, Ottawa Senators; Executive Director, Exploriem.org; Real Estate and Mortgage Broker, Century 21 Explorer Realty Inc.

http://twitter.com/ProfBruce http://www.eqjournal.org

How I Beat My CompetitionHow many enemies do you have?

> 10 < or = 10 but > 5 < or = 5 but > 2 < or = 2 but > 0 0


I have > 30,000 They are called Maple Leaf fans Banned Maple Leafs mid-week games when we

received Sens Franchise Made a deal with Canadiens to show their mid-week

broadcasts and vice versa If you don’t think you have any enemies, you’re just not

looking hard enough


Existing businesses don’t want you to be successful They plan to eliminate you either by:

a. Buying youb. Taking your customers from you 1 at a time

P = M = B, an identity at the topmost level Most nations are controlled by 100 or fewer families

How I Beat My Competition“We live in a cynical world, and we work in a business of

tough competitors,” Jerry Maguire. When I graduated from McGill’s Civil Engineering

program in the 1970s, there were 3.5 billion souls on this planet

And probably no more than 450 million participated in a recognizably modern economy

Today, there are 7 billion people and around 4.5 billion participate

MUCH more competition today: 10 X But also it has never been easier (Web 2.0 and 3.0 tools,

many of them free) and there has never been more opportunities to start a new enterprise today

Afterall, there are 7 billion potential, end-user customers

How I Beat My Competition10-Step Program to Beat the Competition

1. Get a great Business Model– add some DV and Pixie Dust [At C21 Commercial, we belong to OREB]

2. Know your competition– also look for opportunities to be co-opetitors [Window valve installer/curtain wall manufacturers; Yahoo uses Bing and Google Ad Servers to power some of their offerings– adding $350 million/yr to their bottom line]

3. Set goals– then democratize them [N=?, Digg.com launch– don’t push on a string]

4. Out execute—ideas are abundant* & hence relatively cheap, execution counts/hire ‘up’ [GradeATechs.com v NerdsOnSite.com]

* What is the largest prime number?

How I Beat My Competition10-Step Program (Cont’d)

5. Adopt a great pricing strategy– price says a lot about you [Hotel occupancy rate goes up when price goes up]

6. Learn how to sell– if you can’t sell (ideas, products services, new hires, banks, suppliers) , you can’t be an entrepreneur [Sold the BOG of the NHL on Ottawa]

7. Provide an authentic experience with great customer service– under promise and over deliver [Tony Hsieh says: “Provide WOW (customer) service.” Eg., Finding a pair of boots seen once in a Hollywood film]

How I Beat My Competition10-Step Program (Cont’d)

8. Reduce your costs or keep your costs down– no matter what your income, costs always rise to exceed it [Canderel and Pen Funds/Collecting Grand Masters]

9. Integrate the Internet into everything you do– don’t let your competitors start at the 85-metre mark in a 100-metre race [Virtual Homebuilder 30:1 advantage– GE’s Jack Welch says most important invention in last 40 yrs of the 20th Century is the Internet]

10. Know your business ecosystem– both your supply chain and your value chain (at least 2-D) [Spa clients– mostly women. Clients’ clients– mostly men]

How I Beat My CompetitionCase Study– Mont Cascade and Proslide

Rick Hunter, former Canadian Ski Team Member Retires after injury Buys a ski hill Mostly on credit and a bit of savings Loses an atrocious amount year 1 Sitting on the hill in Spring of that year– what to do?

How I Beat My CompetitionCase Study– Mont Cascade and Proslide (Cont’d)

Family to support Debt to repay Bankruptcy facing him Looks at hill/looks at lake/looks at hill again Facing extinction event concentrates the mind Eureka!


Buy two straight plastic tubes from manufacturer in Rigaud, Québec on (yet more) credit

Buys a couple of pumps on (still more) credit One shack for women’s change room/another for men’s Reuse parking and food services and toilets from ski hill 30,000 people show up that summer and give Rick $13 to

use his waterslides


Saved! Asks Rigaud manufacturer: “How about a tube with a bend

in it?” “No we don’t do that.” “Why not?” “We do it that way because that’s the way it’s always been

done.”

How I Beat My CompetitionCase Study– Mont Cascade

and Proslide (Cont’d) Rick hires first engineer

to design a waterslide with a curve in it

Non trivial problem of g-force calculations


One day a Disney executive hears about this Rick gets the contract for Splash Mountain ProSlide is born World leader in custom design, engineering and

manufacturing of fiberglass water rides

How I Beat My CompetitionCase Study– Mont Cascade and Proslide

LESSONS LEARNED Just because you’re a good skier doesn’t mean you know

anything about running a ski hill– you need to be an expert/no dilettantes please

Opportunity is where you find it/disaster focuses the mind/opportunity to discover your DV

Never give up but be prepared to change what you are doing if it isn’t working– every biz model changes when it comes into contact with RL

How I Beat My Competition

Case Study– Mont Cascade and Proslide (Cont’d)LESSONS LEARNED Stick to your guns– when Rigaud manufacturer said there

was no way to safely design curvilinear slides, Rick would not take ‘no’ for an answer

Zuckerberg at Facebook had a vision for it that was unshakeable despite many setbacks, betrayals and competitors

Read ‘The Facebook Effect’ to understand the level of passion, talent and commitment needed to be successful

What business is Rick really in? The design business Which can not easily be knocked off or outsourced to

CHINDIA

How I Beat My CompetitionCase Study– Tony Hsieh and Zappos.com

Tony knows nothing about selling shoes But he wanted to run an Internet business Wanted to develop a business where customer service was

a core competency No time limits on or scripts for his CSRs Fell in love with a Biz Model that was ‘practically no money

down’: based on drop shipping

How I Beat My CompetitionCase Study– Tony Hsieh and Zappos.com (Cont’d)

Drop shipping meant that he had no control over transportation to the client

And he could not offer a great selection because shoe manufacturers would not give him access to top of the line models– only retailers with RL locations got that

Shoe manufactures gave preferential treatment to brick and mortar stores

Had to open a RL location Had to build mega warehouse and delivery infrastructure Had to go ‘all-in’: even sell his beloved condo in SF to keep the

biz afloat


Tony developed ten core values as part of his corporate culture and part of his DV:

1. providing WOW service

2. embracing change

3. being a fun place to work and a little bit weird

4. being creative, open minded and having a sense of adventure


5. promoting growth and learning amongst employees and as an organization

6. having honest relationships not only between staff members but with customers and suppliers too

7. creating a positive team environment and a family spirit

8. doing more with less

9. being passionate

10. being a bit humble


Similar to Ottawa’s fastest growing tech co, Shopify.com’s corporate culture

Passionate, committed, high end CS, terrific biz model, funky corporate culture, superb execution, bootstrapped, adaptive, authentic, innovative and lots of DV

http://www.eqjournalblog.com/?p=2171


According to Daniel Goleman, Emotional Intelligence accounts for 75% of the performance of an employee or manager with 25% explained by IQ and everything else

For CEOs, ratio is even higher


A Zappos.com client is not looked at as a customer who is buying one pair of shoes for $200

She represents a lifetime client who might buy shoes, handbags, work-out clothing and more—thousands of dollars

Brian M. and the stalled Cadillac


Tony wrote “Delivering Happiness” about his experiences Asked influential bloggers to write a review Promised them a free, advance copy When they received it, there were two copies Delivering “WOW service” again For the ~$300,000 they spent on this, they got the

book to the NYT Best Seller List (http://www.eqjournalblog.com/?p=973)

How I Beat My CompetitionCase Study– Tony Hsieh and Zappos.com

LESSONS LEARNED

Customer service is a profit centre not a cost centre Customer service can be a key differentiator You have to be in it boots and all– not one foot on the shore and

the other in the boat Tony can execute expertly Tony understood that if he didn’t fix biz model, Zappos.com would

die– you must adapt Zappos pays (almost) as much attention to the supply chain

as the value chain [Walmart also does this]

How I Beat My CompetitionCase Study– LooseButton.com

Loose Button Founders Ray Cao and Aditya Shah Both Waterloo Engineers Demonstrate a lot of the principles of GTBMR, Get

the Biz Model Right About 98% client base is female and growing fast Suppliers:L’Oreal, Moroccan Oil, Dermalogica

and dozens of others

How I Beat My CompetitionCase Study– LooseButton.com (Cont’d)

Reshaping the way consumer products industry delivers samples to consumers

Employed agencies to go to malls to hand out samplers to consumers quasi randomly

Ray and Aditya highly analytical/believe in value of tracking metrics to make enterprise smarter

Startups grow faster too–7x if u set goals/track metrics


Value proposition : “We’re the Netflix of the beauty products industry but with e-Harmony for brains.”

Every consumer completes profile letting LooseButton.com know what type of products interested in

Once /month, Luxe Box delivered by CPC (Canada Post Corporation) with travel-size samplers from suppliers


Form of mass customization—every Luxe Box contains different products matching individual consumer interests with a few surprises on upside thrown in

Clients independently started to record YouTube videos of themselves receiving, using and experimenting

Over 10,000 views Tribes of makeup evangelists forming around

strongest influencers


Clients paying $12 per month ($10 if they sign up for a year) to receive monthly try-before-you-buy Luxe Box filled with samples

LB’s suppliers provide samples for free In addition suppliers like L’Oreal and Moroccan

Oil pay for right to be included in Luxe Box


Negative cost marketing too—organizations paying to market Luxe Box for them… Globe and Mail, Chatelaine and other publications, desperately trying to hold onto readers, buy Luxe Box subscriptions (at around 80% of retail price) to give to their most loyal customers

Vastly extends LB’s reach & growth rate LB getting paid on 3-sides of their biz model– a first!


Tough business to knock off until Internet can “download” makeup and beauty potions!

As long as Canada Post Corporation keeps going, they’re in great shape

How to make it even tougher to knock off? Build an even stronger community around it– add

follow/follower model; e.g., integrate Twitter API or other SM


Named company ‘Loose Button’ cuz: “Buttons are fasteners that connect two pieces of cloth. We intelligently connect consumers and brands.”

Also LB name is different from product (Luxe Box) cuz it’s the 1st of many

“Manpacks”, Foodie, Health, Wellness, Fitness, Tools & Equipment, 100s more variations!


Started LB right out of University Advisory Board with luminaries like Harry Rosen and

Jagoda Pike (former publisher of the Toronto Star) Mentoring helped a lot Decided not to go into apparel space since it was

saturated Went into market research and product discovery side

instead Biz coach comes in once per week Set goals, track metrics and live up to their word


Other changes? Add Qricket Code to each Luxe Box (QR code where u can change

website resolves to after printing them so that, like ET, each Box can call home

Add LooseButton.org to give back to their community too Business models today not just about making money If it’s all about money you’ll have none If it’s all about building insanely great products and services plus

making contribution to society, you’ll seem to have it all Gen Y and Steve Jobs phenomenon Bolt on to existing model standalone not-for-profit dedicated to say

wellness with own sources of funding and marketing would help wider community

How I Beat My Competition

How I Beat My CompetitionCase Study– LooseButton.com

Lessons Learned GTBMR, Get the Business Model Right Add DV, Differentiated Value Mass Customize—integrate the Internet Set goals/track metrics for yourself and your

clients/suppliers/marketing partners Build a community/give back

How I Beat My CompetitionCase Study– Ottawa Senators and the Palladium

Canderel and others enter the Ottawa marketplace and out compete the locals

Office rents go from $18 in 1982 to $6 in 1987 We were constantly trading up in terms of business size and

complexity Move to a market with fewer competitors and some more

DV– get out of the way of the elephants “What does TO have that we don’t have?”

How I Beat My CompetitionCase Study– Ottawa Senators and the Palladium (Cont’d)

A Zoo, the Princess of Wales Theatre, a NHL Team NHL is getting ready for expansion again Randy, MBA from Clarkson: “Let’s do it.” Cyril Leeder, CA: “How much is it going to cost?” Estimate: $35 million (then going rate for NBA expansion

team)


Franchise cost: $50,000,000 USD in 1990 Pre-sold 15,000 PRNs for $25 each for a team that

does not yet exist Pre-sold 500 Corporate sponsors for $500 each Pre-sold 32 Original Corporate Sponsors for $15,000

each Pre-sold media rights for radio and TV for $250,000

and $4,000,000, respectively


Pre-sold 30-year arena management contract for $15 million + a corporate guarantee

Pre-sold pouring rights for $3 million Pre-sold product rights for $1 million Pre-sold 10,000 season tickets 22 months before the

first game for $22 million in cash Pre-leased 100 suites at $100,000 per suite per year or

$10 million per year for 5 years = $50,000,000


Bought 600 acres for $12k per acre, won a NHL franchise, built a MCF (Major Community Facility– aka, Scotiabank Place) in the middle and sold extra 500 acres for $112k per acre to make $50,000,000

You get the picture… PRE-SELL, PRE-SELL, PRE-SELL… find ‘launch clients’ before you launch


Howard Darwin: “If anyone should be bidding for a NHL team for Ottawa it should be me. But you have the only site for a MCF, you have 500 corporate sponsors tied up, you have 15,000 reservations for season tickets, you have the relationships with the NHL BOG.”

Me: “That’s right, Howard.”


Having launch clients (pre-sales) changes everything– it gives everyone involved confidence that you are on the right track, it increases your credibility and is an important source of (cheap) capital

The minimum number of launch clients you need is three: you can convince one fool to buy any product or service, maybe two but probably not three


Meet with each member of the BOG at least twice Meet with the President of the NHL Go to Palm Beach with 120 followers including the

Ottawa Fire Department Marching Band Slogan: “Bring Back the Senators” Name things like: “The Palladium”– give it the breath of

life (like the Elves did in Middle Earth)


Prioritize Lobby Know what you are doing (learn from Bill Torrey/Glen

Sather/Sam Pollack) Media proclaims: ‘Milwaukee/Seattle’ Stand your ground– “You will NEVER, EVER get a NHL

Team in… Ottawa.”


Plaster Palm Beach Airport with Bumper Stickers Make your presentation a conversation Never stop Last thing they see is your happy, smiling face Be someone others can have trust in; trust is the

foundation of a successful life in business and in your personal situation

“Go where hockey is known and loved and we’ll take care of your franchise.”

Beat Milwaukee, Portland, Seattle, Houston, Hamilton and St Petersburg


Dec. 6, 1990, the NHL awarded franchises to the cities of Ottawa and Tampa

But really they awarded them to Phil Esposito (for Tampa) and Bruce Firestone (for Ottawa)

They trusted us Our theme song– Tom Petty’s DON’T BACK DOWN We get a unanimous vote from the NHL! In entrepreneurship, results count and results come from

a fundamental source: trust— remember this— “People like to buy from people they like and trust.”

How I Beat My CompetitionCase Study– Ottawa Senators and the Palladium

LESSONS LEARNED

Set your goals, internalize them, democratize them and publicize them

Outwit, outplay and out execute the competition Know who your real audience is There’s the published hierarchy then there is the one that

really makes things happen– not all owners are created equal– know the business ecosystem

How I Beat My CompetitionHow Do I Beat the Competition: Pop Quiz

1. Can you name five things you need to do to beat your competition?

__________________________________

__________________________________

___________________________________

___________________________________

___________________________________

5 Marks

How I Beat My CompetitionHow Do I Beat the Competition: Pop Quiz (Cont’d)

2. When you start a new enterprise, you should focus exclusively on customer-facing aspects of the business not on your supply chain or your costs.

a. I agree

b. I don’t agree

1 Mark


3. Is it possible for two companies in the same industry to have different costs structures and, if so, can you give an example?

____________________________________________________________________________________________________________________________________________________________________________

3 Marks


4. Is customer service a profit centre of a cost centre?

a. Cost centre

b. Profit centre

1 Mark


5. Why is it important to have pre-sales made up of at least three launch clients?

___________________________________________________________________________________________________________________________________________________________________________

3 Marks

6. Can u complete this sentence: “People like to buy from people they like and ________________.”

1 Mark


7. What is more important—a great idea or expert execution?

a. Great execution

b. Great idea

1 Mark


8. Can you name two things that the Bring Back the Senators campaign did to out compete the local competition?

a. ________________________________

b. ________________________________

3 Marks


9. Rick Hunter’s ski hill, Mont Cascades, was saved from bankruptcy because:

a. He outworked his competition.

b. He spotted an opportunity to take advantage of his existing infrastructure with a summertime use.

1 Mark


10. Co-opetiton means

a. Sometime co-operating with your competitors

b. Beating the competition at their own game

1 Mark

Total Marks: _________/20

Documents

How I Beat My Competition