Software is eating the world

Software is eating the world. This is the title of the last chapter of The Launch Pad by Randall Stross, which is a book about how Silicon Valley invests in start-ups run by small teams of brilliant software engineers and salesmen, which then go on to change business as we know it.

This book is one of the most gripping business books you could read. It is about the realities of modern entrepreneurship where 20 year old college drop outs create ideas that can disrupt any industry.

I was reading Peter Blakemore’s remarks on turning 70, reflecting on his very successful career in wholesaling built on a very simple business model: buying well, knowing your staff giving great customer service and competitive prices. A simple strategy executed well.

The scary thing about the Launch Pad is how Y Combinator, the school for start-ups launched by Paul Graham, is enabling digital businesses to find simple strategies that can change how your world works.

Stross followed 64 teams (out of 2,027 who applied) who were funded through the 2011 Y Combinator summer school. As well as cheap cash, these businesses get access to mentors and angel investors. After three months they get to pitch for investors to support their business ideas.

Consider this pitch from Chris Steiner of Aisle50. He was pitching to a room full of billionaires and celebrity investors (Demi Moore and Ashton Kutcher to name two).

“We will be the premier way for food manufacturers to market their products. The consumer packaged goods industry in the United States is a $2 trillion business.” It will spend $35 billion a year on marketing. “More than half of that money ends up in these things.” He holds up a sheaf of newspaper coupons.

“Freestanding inserts. FSIs. More than 250 million of these go out to newspapers every single week. The problem, of course, is that most people don’t look at these. So there’s this giant pot of money that’s trying to migrate…to digital.”

Steiner says his competitors have had to “jam” all the coupons into a couple of web pages. But Kraft don’t “really want a thumbnail image of their products next to competitors. What they want is a pedestal with the product by itself. That is why they’re still willing to spend $500,000 for a single page ad in an FSI that goes out across only half the country.”

Aisle 50 provides an alternative. “We take these products and put it on a big stage. All alone. With custom copy and great photography. We e-mail the deal out every morning. They buy from us and we load it to their grocery store loyalty card.”

This will mean an end to consumers being forced to flip thorugh the newspaper in search of a good deal.

Aisle50 has launched only the week before, with a grocery chain in North Carolina. Other changes have been added swiftly, including a deal signed the previous Friday with SuperValu, the nation’s third-largest grocery conglomerate, with 2,500 retail stores like Albertsons and another 2,500 independent grocers that it supplies.

Since launching Steiner says Aisle50 has been fielding unsolicited enquires from consumer product companies rather than chasing partners itself.

Stross observes that it took Aisle50 one week to be on the verge of attaining a retail partnership extending from coast to coast.

[Check out the Aisle50 web site to see the brands that are supporting it today!]

But the Launch Pad provides readers with much more than just stories of 25 year olds backed with lots of cash. Business readers will learn from the way Stross records with care how US entrepreneurs structure their business propositions and how they create opportunities.

Reading this book will help you to put together business presentations, to win support for your ideas, to challenge your team to think about the big picture and will fuel the fire in any entrepreneur.

For more see www.betterretailing.com.

Digital disruption in the UK wholesale space

“Twenty years ago I was driving boxes to the post office in my Chevy Blazer and dreaming of a forklift,” says Jeff Bezos in his most recent letter to shareholders. A blink later and he points out that the company has grown from 30,000 employees in 2010 to 230,000 now. But his ambition is the same. “We want to be a large company that’s also an invention machine. We want to combine the extraordinary customer-serving capabilities that are enabled by size with the speed of movement, nimbleness and risk-acceptance mentality that is normally associated with entrepreneurial start-ups.” Amazon is great at disruption because of its customers focus and the fact that the internet means it needs none (or very few) people between its warehouses and the shopper. The threat of Prime, its membership service, is the biggest challenge facing the UK retail market and the wholesale market by extension. It is both a direct threat and an indirect threat in that is inspiring countless numbers of othe...

New look: big copy small?

The owners of B&Q are talking up how they have cut the price of a store refit from £2.5m to £1m by using wood-effect vinyl instead of wood and painted MDF backboards for displays. Managers are learning to live with grey shelving instead of a warmer-looking cream. Shoppers notice the produce, not the fixtures, suggests one executive. Up to a point! Most local retailers will extract the maximum possible life from their fixtures, sometimes taking too long to change equipment that has become tired. As in all business, it is getting the balance right. Shops need to be refreshed and with a purpose.

The secrets of persuasion: No short cuts.

The best moment in my interview with Terri Sjodin, who teaches many of the world’s top corporations how to sell persuasively, is when she smiles at me and asks to hear my “elevator speech". My mind literally goes blank. The author of Small Message, Big Impact , her new book on how to craft powerful messages that persuade people to listen to you, has thrown the gauntlet at me. There was nowhere to hide. I had just told her how I had used her book to write out my three minute speech to open the Local Shop Summit. She listened patiently to my pitch, thought for a moment, and said: “I bet you had an illustration in your mind of an independent who really capitalised on your ideas and has taken them to the bank.” I could swear she was reading my mind. I blushed and nodded. “So you should open with this story,” she said. “Start out by saying: ‘Let me open the conference by telling you a great story with a happy ending.’ So the audience will say to themselves: ‘He is goi...

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