Thinking Outside the Box: How Joe Colopy of Bronto Software Blazed a Trail to a $200M Business

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$10,000, two people and a dream.

These were the humble roots of Bronto Software, Inc., an email marketing platform that was developed in 2002 then sold in 2016 to NetSuite for $200 million. According to founder and CEO Joe Colopy, the key to success is a hustle. His journey demonstrates that several of the things you think you know about entrepreneurship are actually just myths.

Joe @Colopy sold his #business in 2016 for the sweet sum of $200M! Want to do the same? Get his advice here.

This quick reality check is meant to teach budding entrepreneurs that thinking out of the box can be the key to growing a profitable startup.

5 Myths about the Entrepreneurial Journey

Myth #1: If You Build It, They Will Come

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With so many startup companies popping up today, the life of the entrepreneur is often romanticized. You have a great idea, you build the product, and then voila! The world will beat a path to your door, and you’ll rake in the money.

As Joe explains, nothing could be farther than the truth. The flashy headlines may scream that Bronto Software was an ‘overnight success,’ but it took 15 years to build the company; the true story is in those 15 years, not the $200 million negotiations that caught people’s attention. The journey is tough and not always linear. You may often feel like you are taking two steps ahead and then one back. Grit, persistence, and hustle are what you need to make it through the long and difficult journey.

Myth #2: The Best Business Mentors Are 100 Steps Ahead of You on the Journey

A lot of work goes into getting a startup off the ground, and although it can sometimes make you feel socially isolated, every entrepreneur should reach out to mentors for advice and guidance. When selecting a mentor, it is often thought that you should find someone who has already achieved abundant success in their business – someone who is 10 or even 100 steps ahead of you on their journey. Joe says that this is a myth, and his strategy may help you refine your definition of a good mentor.

Joe says that he did seek out mentors as he was building Bronto. Although there wasn’t a formal board of directors, he had several advisors whom he would bounce ideas around with over coffee or lunch. However, he found that often times the most valuable mentor was the person who was just a couple steps ahead of him. These mentors are more attuned to your particular point in the journey and, having experienced the same challenges recently, their advice will be more relevant, detailed and helpful.

Myth #3: The Key to Success Is to Have Big Goals

“If your goal is to build a billion-dollar company, you’re not going to do it,” says Joe. “Your goal should be to build a one-dollar company. And then for the one-dollar company to be a ten-dollar company, and a hundred-dollar company, and a thousand. If you have that, and you work really hard and focused for a long period of time, then you start getting to some very interesting places.”

Joe started his business because he was simply interested in creating software. After coding it, he realized the product was too broad, so he narrowed in on just the email marketing aspect. In 2002, co-founder Chaz Felix came on board, and they operated out of Joe’s house. Later, a few interns joined the team and they all worked out of a small windowless office. When they became a 10-person team, the company moved to a renovated tobacco warehouse in North Carolina, at which point they were making about one million dollars in revenue. By the time the company was sold to NetSuite, it had blossomed into a business with a team of 300 employees and an annual revenue of $50 million. The key to getting to that point with your own startup is to focus on smaller, incremental progress, and make sure you keep moving forward.

Myth #4: You Need Funding to Build a Business

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There is an implication in the business world that you need funding from venture capitalists to build a company; in fact, many people still believe the myth that this is the only path to success. However, in Joe’s experience, you do not necessarily need funding to grow a startup. In fact, Bronto started with just $10,000 in personal funding, $5,000 from each of the two co-founders, most of which was spent on a computer and some basic office equipment.

Joe says that bootstrapping is tough, but it can work. It is an iterative process of trying to figure out how to survive another day, week or month. There are also benefits to bootstrapping. When you are given money, you aren’t as close to the details and as focused on finding a cost-effective approach. “When it’s tight, you’re brutally focused on the details, and you don’t mess around—there is no time for it. You stay insanely focused on what you need to do.” In addition, not taking funding also gives you more control over the business and the speed at which it grows.

Myth #5: Building a Successful Company Is about Creating a Great Product

Sometimes entrepreneurs get so obsessed with their ideas that they fail to understand that it takes more than just an excellent product to build a thriving business. Joe says that building a great company is about your relationships with the people, both customers, and employees.


“When you ask people to join your startup, you’re asking them to join the adventure.”


From the very start, the Bronto Software business model had an intense focus on over-serving the customer. Joe also understood the importance of team and building a positive organizational culture. “When you ask people to join your startup, you’re asking them to join the adventure.” It’s not all about the money—you’re actually helping people to build their careers and their lives. In turn, they come together, rally around your cause, and help to build your business.   

For Bronto, the focus on people has brought unexpected benefits. For one, in an incident Joe refers to as ‘the May Massacre’ the company released a new version of the software that was re-coded but it was rampant with errors and bugs. They offered the product for free for one month so they could work out the issues, and because they had been serving the customers so well to that point, many stayed despite the hiccups in the software. Further, after Joe sold Bronto, he eventually formed a new a company called PeopleLove.IO. His first team members were some of the old Bronto employees.

Setting lofty goals, wanting to obtain VC funding, feeling the need to focus on the product…saying that these are ‘myths’ doesn’t mean that they are completely untrue. Some companies will follow these ‘traditional’ paths and find success, but that is not the only way to build a profitable startup. Joe opted to think outside of the box and choose a different route. This strategy made Bronto Software successful, and it could be the key to growing your startup too.

5 Essential Elements for Growing a Thriving Tech Business

5 Essential Elements for Growing a Thriving Tech Business Open China

When Rana el Kaliouby realized that her academic research had great commercial potential, she made the tough decision to leave academia and the life she had dreamed of and instead dive into the unpredictable waters of entrepreneurship.

At the time, Rana was a student in the computer science Ph.D. program at Cambridge University, and she was interested in the possibility of incorporating emotional intelligence into technology. Her program was being used to help children on the autism spectrum identify emotions, but there were multiple other use cases in product testing, advertising, the auto industry and more. In 2009 she left academia and started a tech business called Affectiva.

5 essential elements that you should keep in mind in order to grow your #tech #business, from @Kaliouby of @Affectiva.

The journey was not easy. In fact, when a potential first-round investor asked in an email for her to ‘send the BS’ she had no clue what that even meant. She knew there was a huge learning curve ahead of her, but she powered through to grow the company from two employees to about 50 in less than a decade. Here are some of the key things she learned along the way.

5 Tips for Growing a Thriving Tech Business

1. Be an Expert

Everyone always says that when creating a business you should choose something you care deeply about. While passion is a necessary element of success, Rana says you should also find something that you are an expert in. She had been studying emotion AI for years and had already created and experimented with the technology in real-life settings. Her knowledge and expertise in the area helped build credibility with investors, which helped her raise money for the company.

2. You Have to Build the Right Team

Building a successful tech business is more than creating an exceptional product and making a lot of money. As Rana explains, “I learned very quickly that it wasn’t just about the money. You really have to find the team.” She says that while ‘team’ is about choosing the right company employees, it also means selecting the right team of investors who really believe in your values and vision. Affectiva has raised over $26 million in four rounds of capital. They have cautiously avoided traditional VCs that are not aligned with their vision, and instead chosen financial investors and strategic investors that truly want to see the company grow and succeed.

3. Data Gives You a Big Competitive Advantage

Data Gives You a Big Competitive Advantage

When running a tech business, it may seem that the product itself (software, hardware) is the most valuable asset, but in Rana’s experience, it is the data that gives Affectiva the biggest competitive advantage. The company has a collective of about six million face videos from over 87 countries around the world, which is about two billion facial frames. The company has heard from multiple investors that having such a large database from which to map algorithms is an advantage in itself.

4. Prioritize Ethics

Companies partner with Affectiva to get data from which they can make decisions—for example, facial expressions are recorded while people watch an advertisement so the company can assess in advance how effective the advertisement will be in connecting with the consumer and selling products. Because of this, Rana says they have found that they must prioritize ethics, first and foremost in the way they build algorithms. They must guard against adding bias in the data (and therefore algorithms) by taking a thoughtful approach to sampling data, including making sure to get an equal representation of different genders and ethnicities. Data privacy is another concern. Because emotions are personal, Affectiva requires that all companies that partner with them allow the consumers to opt-in before a video recording is taken.

5. Define and Stay True to Your Values

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There is a range of ‘darker applications’ to emotion AI, but from the start, Rana decided that Affectiva’s top value is integrity. This means that they prioritize ethical practices such as opt-in and consent, and they do not venture into use cases where the company or institution either cannot or does not want to get consent. In 2011, in their second round of funding, they were approached by a three-letter agency that wanted to put a lot of money into the tech business in order to explore security and surveillance applications. As tempting as the offer was from a financial standpoint, they responded by saying “You know what? That’s not in line with our vision. That’s not what we’re here to build.” 


“We’ve grown the team from just being two of us to like 30 people here and 20 people in Cairo. We’re continuing to partner and build new technologies. There’s still a lot of neigh-sayers and skeptics, but we have a lot of supporters and people who are excited about our vision.”


 

“It isn’t an easy journey at all, but it is an amazing one,” Rana says as she reflects upon her nearly decade-long experience as CEO of Affectiva. “We’ve grown the team from just being two of us to like 30 people here and 20 people in Cairo. We’re continuing to partner and build new technologies. There’s still a lot of neigh-sayers and skeptics, but we have a lot of supporters and people who are excited about our vision.” There is still a lot of work to do in exploring emotion AI, and Rana plans to use her expertise, team of employees and investors, data, ethics, and values to pave the way to new breakthroughs in this intriguing area of modern technology. 

For more tips on running and growing a thriving tech business, be sure to bookmark my blog and come back for regular, fresh blog posts that I publish.

Rent the Runway Owner Shares 3 Places to Look to Discover and Justify Your Innovative Business Ideas

3 Places to Look to Discover and Justify Your Innovative Business Ideas OG

“Hell will burn over before I work with Rent the Runway.” 

That was the response Jennifer Hyman received when she pitched her company to Oscar de la Renta, an award-winning fashion brand known internationally since the 1960s. Like others, the prestigious fashion icon was worried that Rent the Runway would disrupt the entire fashion industry and cut into their bottom line. “These were the types of reactions I got from designers all the time,” says Jennifer “I’d have to just be like ‘Thank you so much for your feedback. I’ll be back in six months to re-pitch you.’”

Jennifer, who views ‘no’ simply as ‘not right now,’ did go back in six months. Today Oscar de la Renta is one of their biggest partners. “Everything is an opportunity for learning, especially the no’s,” she says. 

Check out these tips from @Jen_RTR of @RenttheRunway on how to #innovate in your #business—or justify that #innovation that everyone thinks is ‘crazy’!

Jennifer has created a company that brings high fashion to the masses via renting versus traditional ownership. Inside the company, no one, not even Jennifer herself, is an ‘expert.’ Instead, each of the 1200 employees is encouraged to study the world around them to gather the information and data that will lead to innovation.

If you want to innovate in your company, market or industry—or justify that innovation that everyone thinks is ‘crazy’—try looking in these three places. 

3 Places to Look to Discover or Justify Your Innovative Business Ideas

The information you need to plan and justify your next innovative idea is all around you; you just have to know where to look. Here are three places where Jennifer found justification for her business and proof that she could create a multi-billion dollar company and become one of the few female CEOs to reach unicorn status.

1. Look at Other Industries

 Look at Other Industries

In 2008, when Jennifer first formulated her innovative business ideas for Rent the Runway, getting dressed each day relied on the ownership model and few people rented clothing except for the fanciest of occasions. However, as Jennifer examined the transportation industry, she noticed the trend toward rentals that could certainly cross over to fashion.

“It was 80 years ago in the transportation industry that you had the opportunity to lease a car—the first time you had a choice, you could buy a car, or you could lease a car,” explains Jennifer. “Sixty years ago, companies like Hertz and Avis said ‘Maybe you don’t need to lease a car for a year; maybe you’re going on a business trip, and you just need to rent a car for a week,’ and they gave you the opportunity. It was 25 years ago that Zip Car said ‘Hey, maybe you don’t need a car for five days of your business trip—maybe you need it for five hours for your trip to Costco.’ Uber and Lyft and the million competitors that they have are just the next generations of that. They say ‘Maybe you don’t need it for five hours, maybe you just need to be in a car for five minutes.”

What is trending in other industries and is there a way to apply those trends to yours? That just maybe your ticket to innovation, or to convincing potential investors that your idea shows promise.

2. Look at Changes in Demographics

Jennifer also examined demographic changes in the United States to plan out her company and to determine if her innovative business ideas were sound. Two major demographic transformations in America convinced her that she was certainly on to something.

For one, there is a trend in the US (and in fact the entire world) toward urbanization. By 2030, 60 percent of Americans will live in city areas, and the one sticking point is that when you live in a confined area, you lack the space that you have when you live in the suburbs or rural areas. On average, people acquire 64 new clothing items per year and amass 10 years’ worth of clothes in their closets. As more people move to cities, it is clear that the traditional ownership model will not work.

The other trend is the increase of women in the workforce. In the 1980s, women started going to work in droves and now 70 percent of women across the country work. However, women still control 85 percent of all purchases and do over 50 percent of the childcare. The major thing these busy women lack is time. They are looking for quick, efficient and frictionless shopping experiences, which is why Amazon has become so popular.

When Jennifer combined these demographic trends, she predicted that we will be moving to a third kind of behemoth in retail—renting versus ownership, which will benefit the lives of busy professionals living in cities who lack physical space, can’t buy all the things they want, and desire an efficient shopping experience to get what they need for the time period they need it.

What do demographic changes and predictions mean for your industry? Can you capitalize on these things to brainstorm a new model of business, product or service that will fit in with the changing times? 

3. Look at the History of Your Industry

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Looking at the history and present reality of your own industry can also help you figure out where the gaps are and where your ideas fit in. As Jennifer looked at her industry, she noticed that many fashion retailers were catering to one of two things (a) giving customers a high-quality product at a low price or (b) giving customers access to branded clothing that was pre-owned. However, both of these innovative business ideas haven’t been able to scale because they still rely on the ownership model, which means that customers aren’t buying at high enough frequency.

Digging deeper, Jennifer discovered that the only fashion retail businesses in the past 20 years that have been growing are companies like Zara, Forever 21 and H&M—a category of clothing called ‘fast fashion’ because it is low quality and often falls apart after it is washed a few times. These companies have primed people to be okay with disposable fashion. “H&M is the largest rental business on earth,” realized Jennifer. Essentially customers had already accepted low-use ‘rental’ clothing. With Rent the Runway, Jennifer could offer that experience and low price along with the status of designer brands that would otherwise be unattainable for most shoppers.

After meeting with higher-ups at a number of department stores, Jennifer once again received confirmation that shoppers would actually be interested in renting clothing—and they had been doing it in a sneaky way for years. “Oh my god, Rent the Runway has been happening in our stores for generations!” said the head of Neiman Marcus after Jennifer explained the idea for her company. As it turns out, January 2nd is one of the biggest return days at all the department stores because people purchase an outfit for New Year’s Eve, leave the tag on, then return it afterward. She found out that 70 percent of dresses returned to Neiman Marcus are returned after having been worn. Jennifer had even more proof that shoppers were interested in renting clothing and her business idea was sound.


“Every smart entrepreneur will do research to position their company in the market. If you have done it already—look again. Finding evidence that customers want your product or service and there is a gap in the market means you could be onto something big.”


Real-world data can justify your innovative business ideas or lead you to your next creative breakthrough, and those data is all around you. Jennifer has used her observations and research to obtain $19M in funding, more money than any woman in US history. She has then applied the knowledge within the business to build out infrastructure and nail down logistics that, in the future, could make it possible to rent any number of short-time-use items (think that ski equipment that you use for three months a year and then it just takes up space during the other nine). “You can’t be an expert on a world that’s continuously changing,” advises Jennifer. Pay attention to the trends and changes, and you could disrupt your entire industry, just as Jennifer has.

Claytronics: Building Matter from Microscale Robots

Claytronics: Building Matter from Microscale Robots

Today, computing engages a user’s senses of sight and hearing through video and audio devices whose effects the user must integrate into his or her mind.  Suppose that electronic media could offer users an active form of original information that would fully integrate sight and sound and add the sense of touch for the user experience.  Suppose that the person using information could interact physically with it.

This is the concept of claytronics, which is also known as programmable matter. Through this medium, users would engage with information in realistic, 3-dimensional forms — represented in the immediacy of the user’s personal space.

>> Read More

 

Problem Representation

Problem representation relates to the fact that how we see or conceptualize a problem defines how we try to solve it. Solving difficult, high-impact problems requires finding a representation of the problem that is solvable.

If you are not able to solve the problem that has been presented to you, the answer may be to simply change the problem to one that you can actually solve. In that way, problem representation can hold the key to valuable innovation.

Here’s a great example:

Most people who want to transport a gallon of water from one place to another look for a solution by hunting for a vessel like a jar or a bucket. Their representation of the problem is based on the belief that you need to contain the water in order to move it. But someone else may do the opposite and free the water by converting it to steam. Then they can move it through the air. Meanwhile, any person may solve the same problem by simply freezing the gallon the water and then carrying it as a block of ice without the need for a stream or a vessel.

So the potential solution all depends on the particular problem representation vision.

Invention vs. Innovation: Understanding the Difference

invention vs. innovation

Invention vs. innovation — Many people mistake invention for innovation or believe that every invention is an innovation, but this is not exactly accurate. The key difference to understand is that invention is about the creation of something new, without regard for value.

You can come up with a new idea or product and even secure a patent for it, but that does not automatically mean that it has practical value. Creativity for the sake of doing something different does not guarantee success in the marketplace. If you want to innovate you have to combine inventiveness with a measurable and marketable value-add. Start with identifiable value. Then create an innovation to capture it.

Here’s a great example:

In the late 1800s, people used oil lamps as a means of portable light. They were messy, not very bright and dangerous. The invention of the electric lantern, or flashlight, was an innovation and an invention. The development of an LED flash was also an invention, but not an innovation. It did not create new value, but rather just a new form of the existing value.

The Champagne Principle: How to Turn Your Uniqueness Into a Market Leader

the champagne principle

If you lived somewhere where you made bad wine, would it have occurred to you to make champagne instead? Probably not. But that’s what innovation is: taking sour lemons and inventing lemonade.

Consider the real-life history of champagne. Champagne refers to the chalky soil that was very dry and barren. Most people don’t realize that Champagne is grown in regions that make poor wine.  These regions had grapes that were acidic and perfect for making champagne.  But luckily Dom Perignon found a way to add sweetness and flavor to the poor wine to give it a better taste – but that sweetness made extra bubbles!

Same thing in cognac. That’s why they were the perfect places for the liquors that bear their name.

I toured those regions but didn’t actually realize how innovative they were until I was at a popular champagne winery in New Mexico. I mentioned to someone working there how remarkable it was that they had a winery in the desert area when it wasn’t a great place to grow grapes. The person agreed with me and said that’s why they made champagne. ?

Only then did I realize that champagne and cognac were invented in those regions because they could NOT grow wine. Necessity really was the mother of invention.

The Champagne Principle is about discovering your special resources, your special backgrounds, and your special techniques. From there you gain a unique perspective on your unique assets to present a unique competitive advantage. Champagne shows that adversity can be nothing more than the gift wrap that surrounds a success.

Often times our unique capabilities, strengths or even disadvantages create an opportunity for differentiation and market leadership.

Disruptive Innovation: How It Differs from Keystone Problems

What is the difference between disruptive innovation and solving keystone problems? Keystone problems are the things that must be overcome so that companies who have a nascent technology can actually gain the market through that technology. The rate at which some technologies get better may be faster than what the market needs. Simplicity, convenience, accessibility, and affordability are just some of the barriers to be overcome to steal the market.

Dolby B introduced noise reduction, and made the cassette a dominant technology… until CDs, of course.

Harvard Professor Clayton Christensen who coined the term “disruptive innovation, talks about how IBM had a breakthrough technology when it developed the disc drive. Over time, however, they lost the market to smaller companies.

The potential for disruptive innovation typically emerges when you lack the quality or value to lead the field and gain a superior position in the overall market – but you can adequately serve a small niche. If the niche you occupy continues to grow fast enough and your technology progressively improves, you’ll overtake the leaders – disrupting their established market position. Disruption can come about by accident or through an intentional effort.

Here’s another great example:

Newspapers used to reap major revenues from selling classified ads. Then Craigslist came along and offered consumers a free version of classifieds. In doing so Craigslist disrupted a long-established mainstream market. Craig initially provided his list to friends as a convenience and community service, so his disruption was not really intentional. But after his idea worked he realized its value and began to engage in purposeful, deliberate disruptive innovation.

The Rubber-Band Principle: Using Value to Create Innovations

the rubber-band principle

The Rubber-Band Principle basically teaches us to discover unseen opportunities for value to create innovations that touch our daily lives

The rubber-band principle comes from the story of how Kraft macaroni and cheese originated. James Lewis Kraft, the founder of Kraft Foods, found a salesman in St. Louis who was selling boxes of pasta with bags of grated cheese attached with a rubber band. Kraft knew a great idea when he saw one and started to sell boxed macaroni and cheese in 1937. His company sells a million boxes a day even now.

What I find unique about this story is how it illustrates the principles of innovation in basic terms: technology meets need. Kraft foods had a very advanced technical product when it discovered how to dry cheddar cheese. During the depression, Kraft needed to store and transport cheese easily to make it cheap. What the salesman identified was the value–people wanted a good dinner. He connected technology with value—that’s the rubber band.

Do you want to innovate? Find unseen opportunities to connect the possibilities of technology with the possibilities of delivering value. The sales forces of many companies are out there trying to figure out what is valuable, while their engineers are working in the back on developing technology. Innovation only comes when someone connects the two. Go ask any engineer or designer in a company and ask, “What is the number one unspoken problem of your customers?” Frankly, most engineers couldn’t even tell you the number one spoken question. But salespeople know.

Think of the rubber band as the connection between engineering and sales, technology, and value. Put their heads together and innovate.