In 2003, I was on a business trip in California. As then CEO of telecom software company CoManage, I was visiting a potential customer or partner – I no longer remember exactly.
Alone that the evening, I was sitting in the hotel bar reading The Wall Street Journal, sipping a glass of Cabernet. I was exploring the details of another stellar quarterly earnings report by eBay. The Internet go-go days were returning, at least for them.
It started me thinking about exactly what made eBay so successful. I’d bought and sold products on the site and it wasn’t really a life changing experience. Their site design and user experience was at best “OK”.
After another glass of wine, I concluded that their success came from one key idea:
At its core, eBay is an engine that can identify and connect two people with an obscure but shared interest in trading a specific product.
As a 20-year telecom veteran, I started wondering about connecting people with an obscure but shared interest in trading not products but information. In short, if people could connect with others to talk about their favorite sports, politics, religion, business, hobbies, arts, or whatever, and it could be streamed live on the Internet, and recorded and published in a directory (think iTunes), well that would be interesting. And then, like radio, you could insert advertisements relevant to these valuable micro audiences, make money and share that revenue with the content creators.
Today, this service is called TalkShoe.com and almost 500,000 iTunes podcasts have been created on the platform since 2006. But I nearly abandoned the idea less than one month after starting the company.
Here’s the story of how TalkShoe came to be, and the single best
trick I’ve ever learned in business (hint: it involves social networking).
Fast-forward two years: In April of 2005, we received a term sheet from Syndesis to acquire CoManage (the company I’d founded seven years earlier). I knew that by ten months later, I’d be “free” to work on my next big thing. Acquirers always have their own CEO and don’t need an extra one (AKA me).
So around the same time, on April 1, 2005, I incorporated PCS Corp (AKA “People Connection Service”) doing business as TalkShoe and hired our first employee, Aaron Brauser (pronounced like “browser” – what a great name for the first employee of an Internet company). Aaron is a Product Manager, a person who looks at the competitive landscape, the potential wants and needs of prospective customers, and then creates product requirements, essentially a document that tells the techies exactly what to build. It’s perhaps the toughest job in America because there are so many variables. But Aaron had worked for me before, and he’s got the gift.
My instructions to Aaron were simple: To “do his thing” and to update me at 8 AM every Saturday morning at our local Panera Bread restaurant. As you might imagine, it’s exciting, even intoxicating, when you’re working on a start-up that will change the world, even if in a small way. When you blur the lines of work and play… well, that’s the ultimate job you can create for yourself and others.
Unfortunately, in our fourth meeting, before the end of TalkShoe’s first month of existence, Aaron reported that he found another company doing the exact same thing.
That didn’t bother me; in fact, it confirmed that others were seeing the same market opportunity as I was. It takes many companies to make a real market. “Aaron, that’s not a bad thing,” I said.
“Wait Dave. That’s not the problem. They’ve been around for 5 years, they’ve raised an estimated $50 million dollars, and I bet you a buck you’ve never heard of Ingenio.”
Now that was a problem. If $50MM can’t put you on the radar screen, there must be a fatal flaw in the business.
My first thought was to calculate the cost of two weeks severance pay for Aaron. I have ideas all the time and if this was a loser, well, my total investment in TalkShoe was just one month of one employee’s salary. Let’s move on (easy for me to think).
But I had a second thought. I was one of the first users of a professional networking service called LinkedIn.com. My member number is 98,323, on a service that as of June 2012, now has more than 150,000,000 members. What if I could talk to some former employees of Ingeno? I could learn what they did right… and wrong… and benefit from their 5 years of trial and error in what I was planning to do.
LinkedIn is like Google, but for finding people… people who have knowledge, information, and experience that can help your business. I’m not talking about corporate espionage.
So here’s my most valuable trick: LinkedIn can show you a long list of people who used to work somewhere (think: your competitors). These are people who have experience, insights, and “insider knowledge” that is incredibly invaluable. And there are a lot of them. Experience has shown that most companies have at least twice as many former employees as current employees listed in LinkedIn.
In 2005, LinkedIn was smaller, my network was smaller, and Ingenio was a small company. Still, a one-second search revealed nine former employees. Looking at their past job titles, I selected a former executive living outside of the US, and I reached out through a mutual connection.
I’ll call him “Jerry” (his real name actually rhymes with this, not that that narrows it down very much). In my request to connect, I told him that I was an entrepreneur starting a company and that I thought he could provide me some valuable guidance. Most people are happy to help in this situation, perhaps thinking that I’m a potential future employer. After all, people rarely go backwards (to former employers) in their careers. So maybe I am.
When we got on the phone, I emphasized that I was not interested in proprietary or confidential information. Instead, based on his experience, I said that I thought he’d have insights that could help my new start-up.
After describing my idea, not that different from Ingenio, I asked him to identify what he thought would be my biggest challenges. He said “Dave, think of it like this. You will have a customer acquisition cost, call it X. You will derive from them revenue, call it Y. Initially, Y will be less than X and you’re in the hole. Now, they won’t need your service the next day and they’ll tend to forget about you. To reacquire them, or to acquire “replacements”, you’ll spend X… to get Y. You see the problem?”
And I did.
I explained this to Aaron and asked him how he thought we could stay connected so as not to incur reconnection cost X. Aaron had three great ideas which we baked into the initial design of the service.
Seven years later, TalkShoe is a profitable company serving between 1 MM and 2 MM monthly listeners, all because “Jerry” told me what my start-up’s problem was going to be, two years before I would have actually discovered it. Isn’t that the perfect time to fix it?
You can connect with your competitors’ former employees by signing into LinkedIn and going to “Advanced People Search”. It’s free – part of their Basic service. You’ll see the “Advanced” button next to the “People Search” box in the upper right screen area.
You’ll discover a dozen different attributes you can use to search for people. Specify the company name of your key competitors, set the drop-down to “past employees”, and prepare to be amazed. I don’t know of any other tool in the world that can show you information this.
I call this LinkedIn Advanced People Search trick “insider insights” and it’s the most valuable tool I’ve ever discovered for getting competitive information to help one be more successful in business.