Rebranding Your Company: Why And How To Do It

This week WeWork announced a rebranding. The company will now be referred to as the We Company. This also has come along with a $2 billion investment from SoftBank Group.

“The We Company is an ambitious strategy to broaden the company’s aspirations from places to people,” said John Gerzema, who is the CEO of The Harris Poll. “And it’s a sound move because WeWork remains as a famous sub-brand the same way Google is to Alphabet. This strategic evolution should please both investors and customers.”

Yet it is still risky. “A rebrand tends to fail when the name has no discernable relationship to the companies beneath the new umbrella,” said Brady Donnelly, who is the Executive Director of Consumer Experience at FIG. “I think the most famous recent example is probably when Tribune Publishing changed its name to Tronc, which was an awful word. Then, after being ridiculed, management changed it back. The reaction was made worse by the fact that the business itself was failing, and the name change just seemed like an attention grab.”

Why Should A Company Do A Rebrand?

According to Joe Walsh, who is a senior partner at Finn Partners, there are three main reasons for a rebrand:

  • Your company and/or its markets have changed and the current brand does not reflect who the company is or aims to become.
  • There is a merger. In fact, this is the most common reason.
  • The company’s suit of clothes is out of date, unbecoming or otherwise out of step with the times.

An example is Logitech in 2015, when the company was in the midst of a turnaround and needed to refresh its brand. “Part of our turnaround was putting design at the core of every product we created, and it was critical that our brand communicated that shift to consumers,” said Alastair Curtis, who is the chief design officer for Logitech. “Through the rebranding process, we re-imagined our logo and established a new logomark – Logi – with bold colors and an updated look. By evaluating every aspect of our brand, its history, and where we wanted the company to go, we were able to align our business turnaround with the bold transformation of our brand that consumers know today.”

Planning For The Rebrand

A rebrand should not be done hastily. It’s just too important of a decision.

To improve the odds of success, it’s a good idea to conduct a brand audit. This means having surveys, customer interviews, brand sentiment analysis and comparisons of NetPromoter Scores.  Yet it’s also critical that the decisionmaking not get bogged down either.  Yes, it can be a tough balance to strike.

Consider Bombfell, which went through a rebrand in 2011. The main reason was that the company had undergone a transformation of its service offerings and client base over the years.

“We first conducted several valuable exercises across the entire organization to codify our core values,” said Sandro Roco, who is the Director of Strategic Initiatives at Bombfell. “We wanted to hear directly from our employees and in their voice what made Bombfell unique. That said, while it was important to include as many voices as we could early in the process, we learned the hard way that the decision on the final brand direction had to be left to just a few key decision makers. For us — and we imagine most smaller companies — this ultimately came from the founders.”

All in all, it was the right choice, as the rebrand was a key for growth.

“Our belief is that the strongest brands today stake out a unique position and rally the company, customers and other evangelizers behind that voice,” said Sandro. “Unfortunately, while well-meaning, we found the rule-by-consensus approach too often smoothed out the edges necessary to creating a distinct brand.”

Pitching A VC: How To Size The Market Opportunity

When it comes to obtaining venture capital, you must have a solid understanding of the market opportunity. The main reason is that a VC firm needs a few deals to generate substantial returns, so as to offset the inevitable losers.

This focus on a large market opportunity has become even more important in recent years, as the the funds have gotten much larger.

“The size of the market is essential for your pitch,” said Kara Sweeney Egan, who is a principal at Emergence. The firm is a leading investor in early stage enterprise companies. Some of its breakout deals include and Veeva Systems.

To estimate the market size, Kara recommends that you start with a “top-down” approach. Consider that there are numerous research firms, such as IDC, Forrester and Gartner, that publish analysis on markets. From these sources, you can easily come up with the TAM (Total Addressable Market). For example, a quick Google search shows that the CRM category comes to nearly $40 billion (the estimate is from Gartner).

But of course, you should go deeper then this — that is, you need to use a “bottoms-up” approach as will. At the heart of this is calculating the Total Obtainable Market (TOM), which is the total number of target customers multiplied by the average each will pay for your product.

Let’s take an example:  Suppose you are targeting accountants in the US. By looking up Labor Department data, you’ll see there are 660,000 CPAs. If your product sells for $1,000 per year, then your TOM would be $660 million.

“Your TOM should range from $500 million to $1 billion,” said Kara. “If it is smaller, then you’ll need a clear plan to expand that market.”

Now there is often lots of tweaking of the numbers. And it will continue over time, as you learn more about your market.

This was the case with NGINX, which offers a suite of technologies for developing and delivering modern applications. “We had the ability to start with a very broad footprint of open source users,” said Gus Robertson, who is the CEO. “When we founded the company, we had about 35 million websites already running the software. We applied assumptions around how many companies those sites represented, and applied some assumptions around the percentage that would buy a commercial offering. As NGINX matured, it became clear exactly what products and solutions our customers valued. We built specific offerings with features that were above and beyond the open source features — a proven open core business model. Some use cases remain adequate for our open source project; other use cases favor moving to our commercial product.”

But what if there is not much data available? This is actually common. But there are creative approaches to deal with this.

Just look at NuORDER, which operates a B2B wholesale ecommerce platform.

“To size the market opportunity,” said Heath Wells, who is the co-founder and co-CEO of the company, “we needed to get a sense of how many brands there are that sell products to retailers. But this is data that isn’t available through 3rd party research or government stats. Instead we used two other data sources to help us size the market.”

First, Health visited the websites of the major retailers in each of the categories his company wanted to target. “From this, we were able to determine the number of brands who wholesale,” he said. “Next, we honed in on the fact that brands have used tradeshows as a major means of finding and engaging lots of retail buyers. Thus, by looking at the number of brands sponsoring and attending major conferences – conferences such as MAGIC, Outdoor Retailer, The Running Event and others – we were able to gather another key data point in sizing the market.”

It definitely worked out. Since 2012, NuORDER has raised about $40 million.

The Big Picture

Just because there is a big market opportunity does not mean VCs will necessarily be interested. They also want to see that there are emerging megatrends, which should allow for the adoption of new technologies.

John Vrionis, a venture capitalist at Unusual Ventures, points out one pitch that did this extremely well.  “The co-founder of AppDynamics, Jyoti Bansal, had a simple picture that showed there’s a huge market for making sure apps run right,” he said. “It clearly showed that a tidal wave was approaching. With the growth in virtualization, the traditional approaches of monitoring would simply not work. Jyoti said he knew this because he was the lead architect of one of the top companies in the space. His compelling argument was that there would need to be a re-write of everything.”

It was definitely spot-on. In early 2017, AppDynamics would sell to Cisco for $3.7 billion.

For the most part, VCs want to get a sense of your thinking about the market dynamics, not just the numbers. “A well though-out view of the the market can help build excitement about your company, demonstrate your industry expertise, and highlight your key insights into your customers,” said Kara.

AI Wars: Will China Defeat The US?

This week’s plunge in Apple’s shares was another sign of the impact of the relations between the US and China. It does look like President Trump’s tariffs are taking a toll and that the tensions maybe lasting.

So this why Kai-Fu Lee’s book, AI Superpowers: China, Silicon Valley, and the New World Order, is so timely. He provides a detailed look at how China is poised to win one of the most important markets. Keep in mind that – according to a research report by PWC – AI is forecasted to add $15.7 trillion to global GDP by 2030. The main reason is that this technology is general purpose, having applications that span industries like healthcare, transportation, financial services, energy and so on. Some consider AI to be on par with what we saw with the revolution of electricity during the 20th century.

Lee certainly has the credentials to make convincing arguments. He got his Ph.D. in computer science from Carnegie Mellon University in 1988, where he focused on AI. Lee worked on leveraging concepts like Bayesian networks for games and voice recognition.

He would then move on to the corporate world. Some of the companies he worked for included Apple, Silicon Graphics, Microsoft and Google. As of now, he’s a venture capitalist with Sinovation Ventures, which is focused on AI opportunities in China.

The Book

Lee notes that China has AI fever, galvanized by heavy investments from the government and VCs.  Yet success is more than just about money.  Lee points out that there are four key factors for AI:  “abundant data, hungry entrepreneurs, AI scientists and an AI-friendly policy environment.”

In light of this, it’s actually easy to see why China is in a strong position to benefit.  After all, the ubiquity of smartphones has meant the accumulation of gigantic amounts of data. But China has also seen more usage of real-world applications, such as with bike-sharing, mobile payments and ride-hailing. Part of this has been due to massive private/public investments. But China’s willingness to be permissive with issues of privacy has been another big factor.
Data is essential for AI because it is required for developing sophisticated neural networks. This makes it possible to better understand language, recognize objects or come up with useful insights.

Once the data threshold is met, which seems to be the case with China (it is the largest producer in the world and the country has more than 700 million internet users), then there is less of a need for top-notch engineers. Lee writes: “Algorithms tuned by an average engineer can outperform those built by the world’s leading experts if the average engineer has access to far more data.”

What Now?

Now the US is not doomed to failure.  We still have many advantages. The university system is standout and there are mega companies that are pushing innovation (Google, Microsoft, Facebook, and Apple).

But much still needs to be done. According to Jason Tan, who is the co-founder and CEO of Sift Science (a company that uses AI to help online businesses prevent fraud and abuse in real time), he believes there needs to be the following:

  • Make much more investments in homegrown STEM talent.
  • Make it attractive for overseas STEM talent to remain in the US
  • Get more government support for entrepreneurship — creating workplace opportunities for that talent to be applied
  • Get more government support for AI research — so that we continue to push the frontier

No doubt, all these would make a difference.  But unfortunately, there has been little progress on these fronts.  So unless there is major change – and soon – Silicon Valley may no longer be the center of gravity in the next 10 years.

Uber IPO: What Can We Expect?

Within the next few months, the Uber IPO is expected to hit the markets. Keep in mind that the company has confidentially filed its S-1 with the Securities and Exchange Commission (the document is usually not made public until a couple weeks before the offering).

While we’ve seen many tech unicorns come public during the past couple years, the Uber deal will be in another league. Note that the capital raise could be over $20 billion and the valuation more than $120 billion (the company has already raised $20 billion in private markets). This would make the Uber IPO one of the largest in history.

Getting to this point has not been without its challenges and drama. In June 2017 Travis Kalanick resigned as CEO of the company in the midst of allegations of sexual harassment, trade secret theft and aggressive efforts against regulators.

Yet the incoming CEO, Dara Khosrowshahi (who was the CEO of Expedia), has wasted little time in making big changes, especially with the corporate culture. And yes, the IPO will be an important part of the process.

Although, the offering will be more than just about raising money. An IPO will provide liquid stock as currency for dealmaking as well a way to attract talented employees. Let’s face it, the effort for developing self-driving vehicles will require hiring top-notch engineers and data scientists.

“The marketplace that has the best global coverage, with the most earnings for drivers, and the lowest cost and most convenient experience for consumers will win,” said Andre Haddad, who is the CEO of Turo. “It is still early in the race towards transforming the multi-trillion dollar personal mobility space.”

It also looks like arch rival Lyft will pull off its own IPO in early 2019. But Uber may have the edge. The company has about 69% of the US market and a presence across 70 other countries. Uber also has a variety of other business segments, such as UberEats and freight. As for the growth rate, it remains solid (revenues up about 38% to $2.95 billion in the latest quarter).

But then again, Lyft still has made considerable progress. Besides, when it comes to the tech space, it can be tough to maintain a lead.  Hey, not long ago, companies like Nokia and BlackBerry dominated their industries. Now they are has-beens.

“The biggest difference between Uber and Lyft is the global effort,” said Jamie Sutherland, who is the CEO of Sonix and also the co-founder of one of the earlier players in the taxi-hailing industry, TaxiNow. “Uber is having to spend much more money entering new markets and working out issues with regulators. Once this has been paved, it makes it easier for a company like Lyft to follow. Sure Uber will get some first-mover advantages, but as we’ve seen in more developed markets like San Francisco, the switching costs for a consumer are non-existent.”

But in the end, the Uber IPO may ultimately depend on something out of the control of management: the fickleness of the equities markets. The plunge in December has been the worst since the Great Depression – and it is far from clear if things have stabilized. There remain many uncertainties like the Federal Reserve’s interest rate policies and the trade dispute between the US and China.

Granted, this is not to imply that Uber will fail in getting its deal done.  However, it could mean that the valuation will need to be revised downwards and the after-market performance could be muted.

2018’s Biggest Moments In AI (Artificial Intelligence)

When it comes to Artificial Intelligence (AI), there is no shortage of hot air and hype. Note that many companies are trying to get a piece of the digital gold rush (similar to what we witnessed during the dot-com boom).

Yet despite all this, there is true innovation occurring in AI.  In fact, some of the new technologies are draw-dropping.  The fact is that AI is experiencing an acceleration of progress.

So what are this year’s most important developments?  Well, let’s take a look:

AI-Driven Medical Diagnosis: “In 2018, we saw artificial intelligence leveraged extensively in healthcare to help medical professionals accelerate and improve diagnoses by combing through mountains of data within 3D and 2D medical imagery,” said Sujai Hajela, who is the president, cofounder and CEO of Mist.

He points out some examples:

  • The improvement of cancer detection rates in tissue by eight percent with iCAD’s ProFound AI for Tomosynthesis
  • The improvement of “diagnostic accuracy” in imaging devices with Samsung Electronic’s “Ultrasound, Digital Radiology, Computed Tomography (CT), Magnetic Resonance Imaging (MRI) concept and [their] software innovations.”

Sheldon Fernandez, who is the CEO of DarwinAI, also agrees that some of this year’s greatest breakthroughs have come in the medical field. Here are some of the developments he considers important:

  • Google DeepMind used AI to predict protein folding–the physical process by which a protein chain acquires its 3-dimensional structure — and won the overall protein-folding competition.
  • AlphaFold shows the crossover potential of AI and deep learning to benefit humankind. This breakthrough regarding the configuration of proteins will help those in the health sciences field better understand what causes specific diseases and develop drugs to treat these illnesses.

Autonomous: The City of Las Vegas Innovation District launched the first completely autonomous electric shuttle on a public roadway in the US, which has carried more than 32,000 passengers. And yes, Google’s Waymo announced the commercial deployment of its self-driving rides, surpassing 10 million miles in 2018.

Talking: “At Google I/O, Sundar Pichai demonstrated Google Duplex, an AI based system that could call a local business and schedule an appointment over the phone using a natural conversation,” said Roy Raanani, who is the CEO and founder of Chorus. “In most cases, the humans did not even realize they were speaking to a computer.”

Translation: Microsoft leveraged AI to translate sentences of news articles from Chinese to English with the “same quality and accuracy as a person.” According Xuedong Huang, who is one of the company’s technical fellows: “Hitting human parity in a machine translation task is a dream that all of us have had. We just didn’t realize we’d be able to hit it so soon.”

Virtual Assistants: Of course, this technology has been around for a while. But for this year, virtual assistants have hit critical mass.

“For the first time, conversational search — the process of interacting with a technology and getting responses in the form of a natural conversation — serves as a conduit for contextually relevant and personalized interactions,” said Nicolas Dessaigne, who is the co-founder and CEO of Algolia.

Based on research from the “Voice Assistant Consumer Adoption Report 2018,” the number of voice-enabled digital assistant devices has grown to over 1 billion worldwide over the past two-and-a-half years.

Connected Supply Chain: In January, launched its wristbands that can track warehouse employees, so as to streamline factory order fulfillment.

“Amazon said that the wristbands can help employees improve time-consuming tasks such as inventory management,” Phil Friedman, who is the CEO of CGS. “Agility and automation in smart factories can allow the factory to adapt to changes with minimal intervention. Now with workers and technology working hand-in-hand, manufacturers can monitor and adjust in real-time.”

Recognition: This year Pindrop was granted the first ever patent on utilizing an end-to-end Deep Neural network for speaker recognition. The technology, which the company calls Deep Voice, can passively identify legitimate and fraudulent callers — solely by voice.

According to Dan Capozzi, who is the EVP and President of Credit Operations and Decision Management at Discover Financial Services:  “Discover constantly seeks new ways to protect customers to help them continue to feel secure using their accounts freely and easily.  Pindrop’s AI technology brings additional layers of convenience and security to our customer experience, while allowing us to provide excellent service at the speed of natural conversation.”

Tech CEOs: This Year’s Favorite Books

While writing my posts, I have a chance to talk to many CEOs.  Often I will ask them what books they have read recently. If anything, this gives me a chance to check out what’s good in the market. Let’s face it, there are thousands of books that come out every year (which has accelerated because of the self-publishing revolution).

Then what are CEOs reading now? Well, I’ve put together a list. Here’s a look:

Leading at the Speed of Growth: Journey from Entrepreneur to CEO

Tien Tzuo, CEO and co-founder of Zuora:

I hesitate to give away a great secret, but “Leading at the Speed of Growth,” by Katherine Catlin and Jana Matthews, is absolutely mandatory for anyone involved in a high-growth organization. Your job changes dramatically as your company expands, and this book does a great job of identifying all the relevant priorities, skill sets and red flags by growth stage. Plus, all the personal stories from entrepreneurs in the trenches are really great. Even though it’s almost twenty years old, it’s still incredibly relevant in light of all the IPO and M&A activity we’ve been seeing lately. When you’re running a subscription-based business model, you find yourself dealing with a lot of growth-based “nice problem to have,” and this book helps answer those problems.

The Tyranny of Metrics

Sridhar Vembu, CEO and founder of Zoho:

The Tyranny of Metrics by Jerry Muller is the book I enjoyed most this year.  We live in times when metrics and data have been elevated to God-like status. This book is an excellent antidote. Metrics matter but cannot substitute for human judgment.  Goodhart’s maxim says when a measure becomes a target, it ceases to be a good measure. Anyone who has tried to institute measure and manage systems for people discover this all too soon, if they keep their eyes open. People game metrics.  That is why that ineffable quality known as good judgement is indispensable in a manager. I tell my managers that if we could reduce all management to metrics, we would need no human managers at all, and there goes my CEO job!

Team of Teams: New Rules of Engagement for a Complex World

Kate Dewald, CEO of Oncue:

At its core this book is about adapting to changing times and how to build an organization for the future. Full of real-life examples this book explains the essentials for scaling high performing teams. It provides practical advice and anecdotes for getting disparate groups to work together for a common goal.

The Score Takes Care of Itself: My Philosophy of Leadership

Vineet Jain, CEO of Egnyte 

Bill Walsh was not just a profound leader of the San Francisco 49ers organization, but he was a profound leader in life. Nearly all of the principles he applied to coaching could be applied to my leadership of Egnyte. One principle that has always stuck with me is this, “Others follow you based on the quality of your actions rather than the magnitude of your declarations.” This speaks volumes about setting the tone for the culture of your organization. As a leader, I must put forth my best effort and show the rest of my company the level of effort and professionalism I expect from them. I cannot expect my team to operate at a high level if I am showing up late to meetings, being distracted by my phone, or taking extended periods of time out of the office. This principle proved to be a real affirmation for me.

And one other principle that I took to heart and have since adopted for our team at Egnyte is this: “There is no guarantee, no ultimate formula for success. It all comes down to intelligently and relentlessly seeking solutions that will increase your chance of prevailing.” This principle applies to everything we do throughout the entire company, from HR to finance, to marketing and sales. We do not simply look for one right answer and move on, we relentlessly pursue the best possible ways we can provide value to our customers and never settle for mediocrity. In return, our customers trust us and believe in us to always be doing what is best for their business, which leads to our ultimate success as a company.

Shoe Dog: A Memoir by the Creator of Nike

Stacey Epstein, CEO of Zinc:

When we look at hugely successful businesses like Nike, it’s easy to assume that it was high growth and smooth sailing from the get go. I loved Phil’s candor and masterful storytelling as he took us through the journey of the company. The challenges they faced, from competition to manufacturing to legal battles to cash flow, even as they were thriving, made some of my own CEO challenges seem trivial. And his highlighting of the key people in the journey reinforced the importance of loyal, passionate talent. Ultimately, it was Phil’s determination and relentlessness that made Nike what it is today, and I felt more inspired after every chapter.

Grit: The Power of Passion and Perseverance

Stephanie Lampkin, CEO of Blendoor:

The most successful among us are those that have a strong sense of their internal locus of control. Inherent talent or intelligence won’t get you far if you don’t have an optimistic disposition about your ability to control the fate of your life. This has helped get me through a lot of challenging moments amidst fundraising, building a product and a team. There are so many externalities that get in the way of accomplishing these goals such that it seems easy to attribute it to one’s own inherent weaknesses or incompetence. It requires a daily consciousness of ‘grit’ to get to persevere.

Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs

May Habib, CEO of Qordoba:

I literally took the playbook and adapted the principles the next day, and it’s been 3 quarters now of much more transparency and accountability across our teams (sales, marketing, product, engineering, customer success).

The data shows that tracking what matters actually works. A study referenced in the book showed that people who wrote down their goals and shared them with others attained 43% more of their objectives than people who didn’t record them. In fast-growing startups, it’s essential, foundational work to record and track progress to objectives.

The book outlines Doerr’s approach to OKRs — or “objectives and key results,” the framework first developed by Andy Grove at Intel, where Doerr was a young recently-minted MBA, and then famously applied by Larry and Sergey at Google, where Doerr was famously an early board member. The power of OKRs comes down to 4 things, which Doerr calls “superpowers”:

  • Focusing on and committing to only the most essential priorities
  • Aligning the organization against those priorities in a transparent way
  • Tracking progress for accountability
  • “Stretching for amazing” – what it means to exceed the objectives outlined

Definitely a must-read for anyone looking to supercharge a 2019 planning process.

Algorithms to Live By: The Computer Science of Human Decisions

Clara Shih, CEO of Hearsay Systems:

It describes, in plain English, important computer science concepts and applies them to everyday life. Even having studied computer science in college and grad school, it has helped me live life more efficiently and effectively by thinking about what algorithms, which are really just recipes and best practices, could apply to everything from cooking and shopping to parenting, organizing your kitchen, and making time for friends and your spouse.

Our brains use algorithms unconsciously all the time to formulate “gut” feelings and make quick decisions with incomplete data. It’s a great read for techies and non-techies alike!

Zuckerberg: How He Can Get Facebook Back On Track

This year has been a hot mess for Facebook. It’s actually getting tough to keep track of the controversies! The latest came this week, as the social media giant admitted that photos of up to 6.8 million users could have been disclosed because of a software bug.

Granted, Facebook continues to grow its user base, despite the privacy problems. Yet Wall Street is getting antsy. Since July, the shares have plunged from $210 to $144.

“Facebook rose to success at a time when most people made clear how little they cared about privacy – we would post anything, and we enjoyed the freedom and the sense of connection,” said Dr. Mike Lloyd, who is the CTO of RedSeal. “Unfortunately, like a vine growing up a building, Facebook has spent years attaching itself to the way people used to behave.  Its business model depends on people remaining incautious, and insensitive to privacy issues. But people are changing as we encounter more of the downsides of social networks.  We are getting more suspicious and less trusting.”

Yet all this is not to imply that things are hopeless for Facebook. The fact is that CEO Mark Zuckerberg has – since 2004 – been quite adept at dealing with major challenges. He has fended off many fierce competitors (like MySpace, Friendster and Snap), pulled off smart acquisitions (such as for Instagram and WhatsApp) and made a wrenching transition from the desktop to mobile.

Then what should Zuckerberg do now? What are the strategies to pursue?  Well, first of all, he needs to focus much more on transparency. A good start would be to provide a full accounting of what happened in the 2016 election.

“Facebook’s response to this crisis — described by reporters as ‘delay, deny and deflect’ — is where Facebook crossed ethical lines,” said Eric Silverberg, who is the CEO and co-founder of SCRUFF. “There is only one way out of this: Own your mistakes, apologize, and publish a complete and candid account of what happened, who knew what, and when. Rather than openly explain what went wrong, Zuckerberg and Facebook have chosen instead to allow all bad news to drip out one story at a time, each time ignoring or attacking the story. This strategy simply adds fuel to the fire of skepticism and prolongs the public shaming they now endure.”

Next, Facebook needs to focus on clarifying and enforcing its censorship policies. For the most part, the company has been too reactive and even random – which only adds to the problems.

“Facebook needs to recognize that its mission of ‘connecting the world’ can have disastrous — even if unintentional – outcomes,” said Silverberg. “A clear content policy is the only way to achieve lasting stability for their platform, even if this means that some people will be alienated and leave. If that means radical openness with persistent harassment, fine; if that means a sanitized and restricted ‘walled garden,’ fine. Just decide.”

Finally, Facebook should aggressively leverage its technology infrastructure and talented engineers in a “moon shot” effort. In other words, look at the current situation as the company did with the challenges of transitioning to mobile.

“Facebook, like so many of the other social media giants, continues to dig itself into a hole too deep for human hands to dig themselves out of,” said Richard French, who is the CRO of Kryon. “Utilizing AI and robotics would mean that Facebook will reduce the room for human error. The company is facing a global crisis of mistrust yet still largely relies on humans to flag and review content. A quick solution would be to implement AI to automate processes and take appropriate actions without human error.”

Leadership Lessons From Hollywood Super Agent, Michael Ovitz

By far, the best business book I’ve read this year is Who Is Michael Ovitz?

Keep in mind that I was once an investor in a talent agency – so I have some first-hand experience of the challenges of the Hollywood biz.  And yes, we viewed Michael Ovitz as a legend.

He started in the entertainment business as a part-time tour guide at Universal Studios, where he was an instant success and began to put together his network.  After graduating from UCLA, he landed a job at the William Morris Agency…in the mailroom. Again, he proved to be a standout employee and quickly rose within the organization, where he would become a highly successful television agent.

But the William Morris Agency was too stifling. So he teamed up with four other employees to launch CAA (Creative Artists Agency).  To disrupt the industry, they innovated the “packaging” of actors, directors and literary clients. This approach flipped the “power equation by amassing so much talent the buyers couldn’t go around [CAA].”

Yet this was not enough.  Ovitz would further redefine the talent agency business, such as by taking the role as an investment banker (for example, he brokered Matsushita’s purchase of MCA).  He even built a successful ad business, which started with a marque deal with Coca-Cola.

Amazing, right? Definitely.

OK then, so what are some of the lessons? Well, here are my takeaways from the book:

Research: Nothing that Ovitz did was by accident. He always had a clear-cut understanding of the end-game. He also spent quite a bit of time thinking about his firm’s strategies, which involved intensive research. Before meeting a client, he wanted to know everything about the person.  Decision making was always about having complete information.

He also looked at what were the factors of success for entertainment. According to him: “I had started a private project (one that took me ten years) of watching every film that had won one of the five big-category Oscars. I discovered why Gone With the Wind had passed the test of time and How Green Was My Valley hadn’t; I learned the relationship between vision and craft.”

Image Is Everything: Ovitz definitely dressed for success. His wardrobe was impeccable, with Armani suits and Gucci loafers. He wanted to show his clients that he was very serious.

In the book, Ovitz writes: “Our focus on first impressions won us new clients before we’d uttered a word.”

Company Values: Every person in CAA had a deep understanding of what mattered for the firm. It became a part of the DNA.

Actually, Ovitz called it the Four Commandments:

  • Never lie to your clients or colleagues
  • Return every call by the end of the day (or at least have your assistant buy you a day’s grace)
  • Follow up and don’t leave people guessing.
  • Never bad-mouth the competition

Client Focus: Ovitz was obsessive with making his clients successful. He notes: “I focused intensely on you always turning the conversation away from myself.”

But he was also honest with his clients, such as mentioning the negatives in advance. He considers it like a vaccine against the flu. He writes: “The easiest way to lose a client is to make a promise you can’t fulfill; the client always remembers.”

With client relations, Ovitz also would hand write over 1,000 personal letters every year. He even had a Gifts Department, which would spend over $500,000 on clients annually. But to make this work, he had his team catalog as much as possible about the hobbies and interests of the firm’s clients. Ovitz also focused on gifts that were not disposable, like a rare edition of a book, a painting or even a car.

Team Work: This was certainly unique with CAA and allowed the firm to make quick inroads with the competition. The focus on teamwork was a force multiplier that allowed for much better outcomes for clients. Ovitz compares it to the way Magic Johnson ran the fast break with the Lakers.

In the CAA organization, there was “no hierarchy, no titles, no reporting lines, no nameplates.” Ovitz writes that it was “American team sports boosterism mixed with Spartan military tactics mixed with Asian philosophy, all overlaid by the communication spirit of the Three Musketeers.”

Wall Street Meltdown: What Does It Mean For Cloud Startups?

The US economy does look like it is on solid footing but Wall Street is still nervous. This week the major indexes plunged by more than 4%.

Some of the reasons include uncertainties with US-Chinese relations and Fed policy.  But it also looks like programmatic trading is having an impact. “Much of the trading is not from human beings,” said Ajay Royan, who is the co-founder and managing partner of Mithril Capital. “It’s bot-driven. These bots are backward looking and can trigger at the same time, exaggerating the volatility.”

And yes, the tech sector has suffered the brunt of the selling.  Just look at the cloud stocks. Companies like Zuora (NYSE:ZUO), Docusign (NASDAQ:DOCU) and Dropbox (NASDAQ:DBX) are well off their highs.

So in light of all this, might the environment get tougher for cloud startups – say with funding? Or is all this trading activity just noise?

Well, according to Cloud Apps Capital Partners’ Matt Holleran, he thinks the situation could get tougher in the coming months. His firm provides venture capital to early stage cloud companies.

“Will this market correction hold?”, said Matt. “I predict it will and that it could be deeper and longer than most people anticipate.”

First of all, he believes that late stage fundings for cloud companies will cool down, especially with new series C and D financings. “VC firms leading large rounds are increasingly unsure about valuations,” said Matt. “They also don’t know if the IPO window has shut and whether and when late-stage cloud companies will still be able to go public. As a result, late stage firms will work with the CEOs of their portfolio companies to reduce the overall rate of spending in 2019 including reining in hiring that will temper employee salary expectations throughout the industry.”

Unfortunately, the mortality rate of seed stage deals will rise. This will largely be due to “headless syndicates” of angels. “The problem is that the companies they’ve already funded start looking for more capital to weather the storm just when more capital is growing scarce,” said Matt. “It’s scarce because the large series A and B firms that would typically provide the next round of funding will instead concentrate their capital and time on helping their existing portfolio companies to buy time to grow into their last round valuations.”

But with lower valuations, there will probably be a pick-up in M&A activity. Let’s face it, old-line tech companies need to find ways to retool their platforms for the cloud. “The M&A wave is already on its way,” said Matt. “A notable example is SAP’s acquisition of Qualtrics. The company was planning to go public and was days away from announcing its IPO pricing. But clearly the high acquisition multiple and the unsettled public markets caused the Qualtrics board to reassess. I expect to see similar deals in the coming months, as both strategic buyers and sellers in the cloud market recalibrate their thinking post the correction.”

Now for entrepreneurs, the changed environment has its benefits. It means that there should be less competition and there will be a need to be more lean (which usually benefits smaller companies).

“Historically, some of the best technology companies, including Google and Salesforce, have been launched in down periods,” said Matt. “Similarly, for the right entrepreneurs focused on the right opportunities, 2019 will be the perfect time to grow their businesses—the old-fashioned way. By that I mean hiring the right people with the right salary expectations, and raising the right round sizes at the right valuations from the right firms.”

B2B Marketing Strategies For The New Year

Marketing in the B2B world is always tough. Let’s face it, the topics can be a bit dry, at least compared to the consumer segment.

So with the year coming to a close, it’s a good idea to think about new approaches. What are customers looking for? What will resonate?

To get some answers to these questions, I reached out to various marketing experts. Here’s what they had to say:

Sense-Based Marketing

Brett Zucker, CMO of Monotype:

“Thanks to the evolution of new technologies like AR/VR, consumer preferences toward short, ephemeral video content, and the explosion of voice-based devices and assistants, sense-based marketing will take center stage in 2019. We can expect brands and marketers alike to invest aggressively in strategies that appeal to varied audiences across sight, sound, touch, etc., as there is a wealth of opportunity in B2B applications. Take voice for example. This could translate directly into an overhaul of content marketing strategies that prioritize long-tail keywords which are more conversational, “featured snippets” that appear higher on search results, and the continued importance of the mobile-friendly interface. Further, prepare for B2B influencers to wield more power than ever in the new year, as they drive brand authenticity and ROI, even—and perhaps especially—in light of the new privacy-sensitive landscape.”

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