Author name: DanReich

This Startup Failed In Year One And Is Now Doing Over $6M In Sales Per Year

This post originally appeared on Forbes.com.

On January 19th Kyle Porter, CEO of SalesLoft, a sales technology startup out of Atlanta came to chat with the Building The Sales Machine community here in New York City about the challenges of building company as it relates to culture, values and building the sales organization. Kyle and the SalesLoft story is compelling because the business was pretty much a failure in the first year. But now, they are an 80 person company and grew sales by 1000% in 2015. Moreover, they went from $1M to $6M run rate in the past 5 quarters and was rated the #1 Best Place to Work in Atlanta.

As someone who is building a sales-facing technology startup myself, this story is especially compelling to me.

So how did they do it? Here is what Kyle had to say.

Dan Reich: How did you get started with Salesloft?

Kyle Porter: When we started this company, we flat out failed in the first 12 months. In 2011 I started the company and had no idea what I was getting into. I was a really good salesperson but had no idea had to start a company.

A sales person is the closest job to an entrepreneur. It’s the role where you control your own destiny the most. And you have to have this relentless pursuit to make it happen. I had that gene inside of me. But I didn’t understand software development. I didn’t understand the culture of an Engineering Org, the prioritization of product management philosophy. I didn’t understand that you can only do so many thing at once. I had these guys build, build, build and ultimately I scattered them too thinly.

The other big thing that I was missing was the people’s culture. Think to yourself right now about how you think people should behave… If you start a company you HAVE to inject those things into your business. I didn’t make that happen. I had people that I hired that I thought might be good, but the culture spun out of control.

On the reboot: I’m going to start over from scratch but do 2 things wildly different. 1 I’m going to put thought into product management 2. Pay a ton of attention to culture.

Reich: What has become of the modern sales organization?

Porter: You either have a modern sales organization or you don’t. Are you striving to do things better? Are you using the processes and tools that are available today to drive your team forward? What I keep learning is that there’s stages inside these sales organizations.

When I started sales loft we had this hot thing that a lot of people wanted. So we could reach out to anyone with a “soft touch” and were able to kind of “carpet blast” the universe and get some really good numbers. Eventually, you need to go deeper and build real relationships with people.

If you’re out there and have a sales process that’s working but doesn’t require significant sales skills, you should be skeptical.

If you’re sending emails and people are responding, but you’re not actually diving in and solving problems and going deep, building relationships, connecting with people… those sales are going to eventually dry up.

That’s what I’ve learned about the modern sales organization. The good ones aren’t taking anything for granted. They’re going deep to build true problem-solving relationships with their buyers. They figure out ways to get really personal and interactive with their customers over time.

Reich: What should the SDR and Account Management interaction look like?

Porter: Two years ago this was shocking stuff, but now we’ve all seen the SDR [Sales Development Movement]. We’ve seen the specialization in sales between the people who prospect and bring in the business, and those that nurture the relationships and close it down. Now with the specialization, you’re seeing both disciplines get better at their craft. But now those two roles are coming together a bit more. They have empathy for the role of the other person.

Reich: What are your core values and why are they important to SalesLoft?

Porter: As an executive at your company, work hard to inject your personal core values into your business. What are the 3 things that matter most to me? 1. Positive 2. Self Starting 3. Supportive. The first person I hired: are they positive, are they self-starting are they supportive. This ran down to everything we’ve done. The difference has been night and day.

Now as you grow, it get’s harder and harder to control this at a company level, but you can definitely control it at a team level. So hiring the right people to start, then putting your best people into leadership positions, that embody and understand your values, then having them hire their teams to those values and letting them run with it; eventually you have a solid team, built around your culture.

We went from 3 core values, then my team came to me and said, hey I see a few other things we’d like to talk to you about. “We see people who are positive, supportive and self-starting at this company but they leave a bit to be desired. We also see people that are doing things that are not 1, 2, & 3 but we love it. So we went out to dinner and I asked my team to write down: Who are the top 7 people at this organization, that if we cloned them it would lead us to market domination? Write out the top 5 traits of those people and put them in the middle. Sure enough, 1. Positive. 2. Self Starting 3. Supportive. rose to the top, from that we mined out 3 additional core values. 4. Empathetic 5. Transparent 6. Exceptional.

Reich: How can you use your core values to measure a team (hire, fire, train)?

Porter: I’m a super broken record when it comes to core values. I’m sure people say “Kyle’s an idiot, he says the same things over and over and over again.” Well, I might be. But you better believe everyone at SalesLoft remembers those 6 core values. No matter how long they’ve been there, they can walk you through them. That’s important. That means they run deep.

I’m a parent. I have an 18 month-old baby girl, Brooklyn. Every night before I put her to bed I tell her the rules of the house: be nice to Mommy and Daddy, be nice to others, be nice to yourself. I say that to her over and over until she gets it. If she does something dishonest or not fair. I’m going to tell her, “share, share share”. People think that the job of the CEO is to be some mad scientist and write these elaborate equations locked up in a whiteboard somewhere… The job of the CEO is to ingrain the vision and the values into your team. That simply takes repetition.
I’m the chief reminding officer.

Then I’m injecting it into the hiring process. We have a matrix. Anyone hiring at SalesLoft score candidates on a Matrix according to our core values. By the time I see a candidate in the 3rd round, “I’ll walk right in and ask what are the SalesLoft core values?”. If that person doesn’t know it, they’re out.

Then we work it into management. If I’ve seen that Alex has shown a ton of empathy to a vendor. I’m going to pull her aside, look her in the eye and tell her “thank you”, and explicitly call out what she did, how it tied back to our values and how great it was. All of our managers are trained to do that as well. It makes a difference.

I’ll do the same thing if with negative responses to the values. If I notice that Alex wasn’t attentive to a note that was sent around the office. I’m going to pull her aside again and say hey, you need to be up on this, it’s part of being successful. When you’re not up on this, it hurts our company and here’s why… and “I know you’re better than that”. That matters.

Now, the reprimands are like 1:6 on the compliments. Go heavy on the positive. But stick to your cultures. That’s how you inject that shit right into the business!

Promote on culture values, hire on culture values, fire on culture values.

 

How This New Podcasting Platform Pulled Off The Perfect Product Launch

This post originally appeared on Forbes.com.

In the world of technology startups, it seems many people look to a few select sites to figure out what products are new and exciting. Product Hunt is one of those sites. At the time of this writing, Product Hunt has 4,007 products listed, 15,795 comments, 71,842 upvotes, and 29,021 subscribers from around the world. So I was fascinated to see a company called Zula generate as much engagement as they did during their launch of their new product called ZCast.

Why was I fascinated?

ZCast is a podcasting product. It enables anyone to podcast live with friends and let anyone listen and interact in real time. In other words, it removes the barrier to podcasting.

With the world moving towards augmented reality and virtual reality, it seems like sometimes we take for granted tried and true mediums that people are accustomed to. According to the Washington Post, podcast downloads passed the 1 billion mark in 2014, and monthly podcast listeners reached as much as 75 million per month. By mid-2015, ad marketing spend on podcasts reached $50M. Several new podcasting services launched in the past two years, each promising new and exciting ways to allow users to broadcast themselves.

I sat down with Hillel Fuld, the CMO of ZCast, who recently led their launch to gain some insights into their product, their space and into their product launch.

Hillel Fuld
Hillel Fuld, CMO of Zula.

Dan Reich: This ZCast launch was pretty nuts. Most upvotes on Product Hunt, tons of press, and from what I can see, tons of traction. I opened the app and there were tens of upcoming casts. How did you pull off this launch?

Hillel Fuld: Yes, the ZCast launch was bonkers. I mean the team worked for months preparing for it and we hoped it would be good, but definitely exceeded our expectations. I’d like to offer some magical answer that anyone can just do and pull off a launch like this but the truth is, it was a whole lot of hard work. Building relationships for years on Twitter and other platforms, writing content myself so when I ask friends and followers to support the launch, most people were happy to after reading my content daily for years. I mean, there are definitely some useful tips I can offer like to coordinate the Product Hunt aspect of your launch way in advance. Choose the tag line, the person who will hunt it for you, write your first comment in advance, and make sure to spend time on Product Hunt for months before the launch. I wrote many more tips on Medium the day after launch. Read that post here.

Reich: I actually want to focus on Product Hunt a little more. It has become quite a central platform in product launches and you nailed it. I’d love to know five things you would recommend to anyone launching a product on Product Hunt.

Fuld: Sure. Here we go.
A: Spend a lot of time on the platform well before you intend on launching. Give back to the community there because without that, you can’t expect them to support you during your launch. By the way, apply this rule to all aspects of marketing. Give a whole lot more than you take.

B: Before you decide on your one liner, write 20-30 options down, gather feedback from people, team members, colleagues, and anyone else who will offer their opinion. The tag line should obviously talk to the Product Hunt community so be geeky but also make sure the tag line says clearly what your product does.

C: Make sure your graphics stand out. Whether it is screen shots, a video, or any other visual assets, remember that all people will see when determining whether to upvote is the name of your product, the tag line, and the visuals.

D: Find the right person to hunt it. In theory, you, the maker of the product should hunt it but if you don’t have a large audience there, then find someone who does and can hunt it for you.

E: Here’s something I learned the hard way. Coordinate the Product Hunt launch time with the press. In other words, if you sent out your release under embargo till 9:30 AM, then don’t launch on Product Hunt any earlier than that. If you do, the press can and probably will see the product on Product Hunt and write about it before, which might annoy other reporters and prevent them from covering the launch. I made this mistake and almost paid the price.

F: Bonus: Never ever ask for upvotes. Sharing the link to your page on Product Hunt? Totally fine. Asking for Upvotes in a Facebook post, tweet, email or any other way? Not ok.

Reich: So tell me about ZCast.

Fuld: ZCast is the most exciting product I’ve ever been involved in building. I can tell you that over the last five years, I’ve tried many times to podcast. I’m a big believer in content of all kinds and audio content is no different. The problem is that creating a podcast is super challenging. Either you sit in a studio with your guests and record the podcast with high-end equipment or you need to use some serious software to record the conversation then edit it after the show to make it into a podcast format.

With ZCast, choose a topic, invite your co-hosts and go live. That’s it. You’re podcasting. Approximately ten second setup time. The goal with ZCast is to do to audio content what YouTube did to video. Make it accessible to anyone. For now, it’s iOS and a full-fledged web app that enables you to listen, interact, and cast from your web browser. On Android, you can use the browser as well but an Android app is obviously on the roadmap.

Reich: What are your next moves with ZCast and what are the challenges?

Fuld: The launch was the “easy part”. Now getting content flowing into the platform is the challenge. The amount of casts we had on the first few days is astounding but now we need to take this momentum and leverage it to build out the community. Of course, there is also the fund raising, which is an essential part of building out a vision as ambitious as ours. Finally, we will be working closely with some strategic partners on ZCast. Think entertainment, think podcasting networks, and think different types of content creators who always wanted to podcast but simply couldn’t.

Reich: What was the most exciting part of the ZCast launch?

Fuld: Well we haven’t spoken about this publicly yet but we had many, many visually impaired individuals interact with their audience while ZCasting. Taking questions, answering them, and just literally hosting their very own interactive podcast. I am not talking one or two people, there were many. It was inspiring.

Reich: So I’ll just ask what many people want to know. What does being number one in terms of votes on Product Hunt, getting countless positive reviews in the press, and endless social promotion do to your download numbers? How is that going?

Fuld: Well, obviously it is too early to talk numbers but what definitely matters to us most is the amount of time each user spends on the platform. Downloads are less important to us since the web app has all the functionality needed to ZCast. Having said that, the numbers both in terms of downloads, average ZCast time, and just overall ZCast sessions are super exciting. We didn’t expect them to be this high and that’s an understatement. The retention, in other words, the people that start a ZCast, then come back to do another one? That is the number we are most proud of!

Reich: What’s the stage of Zula, the company? Are you raising capital now? Tell me about that.

Fuld: Zula is a small company with 6 team members. Two marketing, one iOS, one UI/UX, and The CEO. Super lean. Yes, we are talking to a few investors now about raising a round of financing primarily to be used to build out the ZCast platform and make it available to more people, starting with Android users.

Reich: If you had one wish for ZCast, one goal, what would it be?

Fuld: I think our dream here is to offer users everything they need to create high quality engaging audio content. My dream? To have ZCast accompany talk radio shows, sports events, and other less geeky and more mainstream events. We see ZCast as sort of the next-generation talk radio.

Reich: And you? What’s your end game?

Fuld: Well I am super excited about the future of ZCast and I think there is tremendous potential here. I can’t wait to start my own weekly podcast. Soon we will add recording in ZCast and I’ll be hosting my own show. The topic? Stay tuned. Other than that, helping push the Israeli ecosystem forward. It is exciting times for us with ZCast and exciting times here in the Israeli startup ecosystem!

The Captain Of You

I feel like I’m a passenger of my own life.

I’m not afraid of going on welfare. I’m afraid of being ordinary.

As I heard him say the things I saw my life flash before my eyes. I recalled the decisions I’ve made, the places I’ve traveled to, the friendships I’ve made, the speeches I’ve heard.

But most importantly…

The things I’ve done.

Right or wrong, good or bad life is all about the choices we make and the choices we follow through with.

It’s about doing.

It’s about being the driver and captain of our own life and not being a passenger that’s merely along for the ride.

The irony here is that what holds us back to start, becomes the thing that drives us forward in the end. It’s what rips us out of apathy and tells us that something is wrong.

That thing is called fear.

Being afraid to fail leads us down a path of passiveness. And as we walk down that path we begin to realize just how bleak the path is.

Most of us have seen it before.

It’s a straight line and the roads are smooth from all of those that went before. The speed limit signs of society tell you to that you’re a million miles and decades away from your goal.

Your goal.

You forgot what that was because you were busy thinking about the next pit stop as you stare at the clock of life counting down the seconds and days until you reach a checkpoint.

Marriage. Kids. Buying a house. Paying off a mortgage. College tuition. Switching jobs.

Each pit stop you look back and wonder if you got on the right path.

Each pit stop you look forward and wonder if you can get off.

Where would that exit take me? Am I even capable of getting off?

You realize that the other path, the path of uncertainty and maybe even failure, is a lot less scary than this path of passiveness of ordinary.

You wonder what if you just got on that windy, uncertain road to begin with? And then regret starts to settle in. What if I did those things I was afraid of doing? What if I didn’t settle and do what was expected of me? What if I followed my dreams and put myself out of my comfort zone?

I read a quote somewhere once that said most people overestimate the cost of doing something and underestimate the cost of doing nothing.

Truth.

That person is a smart guy.

And right or wrong, the smartest thing we can do as people is to live life to the fullest. To be the captains of our own lives and to embrace fear head on.

The best thing we can do is to do.

Something..

Something that is extraordinary, scary and defines who you are and who you were meant to be.

It’s not too late.

It’s never too late to look fear head on and say it’s my turn to drive. It’s my time and I got it from here.

And in that moment, you realize you can do anything and that you are in control. You’re the driver again and the captain of your own life.

The captain of you.

How These Founders Built A $1 Million+ Business And Acquired A Competitor All While Bootstrapped

This post originally appeared on Forbes.com.

These days, it seems rare to meet entrepreneurs who have opted to bypass the route of raising venture capital in favor of a building a business that sustains itself through revenue. Josh Goldstein and Chris Muir, cofounders of an NYC-based hiring startup that’s quietly amassed a customer list with some of the best-known technology companies in New York and San Francisco, including companies like Kickstarter, Warby Parker, and Etsy, have done just that. Underdog.io took to its blog today to announce that it had acquired Sourcing.io, another company in the recruiting space, for an undisclosed sum.

I had the chance to catch up with Josh and Chris about bootstrapping their business, financing an acquisition out of revenue, and how they see themselves within a broader recruiting industry that’s rife with venture dollars.

Dan Reich: How did Underdog.io come about?

Josh Goldstein and Chris Muir: We started Underdog.io as a side project back in April 2014. At the time we were working on a different business – enterprise software for real estate property managers – but we weren’t close to making any money with it and started brainstorming some other products that would help us pay the bills. Underdog.io was one of those ideas, and probably the one that we felt the strongest about. After getting some early traction with it, we decided to go all in.

Reich: You both have experience at venture-backed startups. Did you guys plan to build a bootstrapped business?

Goldstein and Muir: We’ve never set any hard and fast rules about fundraising. The only rule that we had when we started Underdog.io  – and this was probably a result of both of us having worked at startups with no revenue – was to build a product that people would pay for on day 1. This was super important to us…much more important than raising tons of money or getting a write-up in TechCrunch.

Reich: Where did the idea to acquire Sourcing.io come from?

Goldstein and Muir: Both of us have been big fans of Alex MacCaw (the founder of Sourcing.io) for a while, in particular his blog and his writing about the state of recruiting in SF. As part of building Underdog.io, we tried out a number of sourcing products, including Sourcing.io. We loved the interface and some of the social and team features that Alex was building. Fast forward a few months and we jumped at the chance to meet with Alex when we found out that he was looking to move on and focus on another business.

Reich: Now that you’ve made this acquisition, what are your plans?

Goldstein and Muir: We’ve got lots of work to do to integrate our two products, onboard some new customers, and make sure that our existing customers understand where we’re headed. After that, it will be business as usual for us, which means staying focused on giving candidates the best experience possible and giving companies a cheaper and easier way to hire great teammates. The recruiting technology space is full of companies with big war chests and even bigger financial expectations. One advantage of bootstrapping is being able to stay focused on what matters to you, which is a luxury that we’ll take advantage of for as long as possible.

Reich: What’s one piece of advice that you’d give others that are looking to bootstrap a business?

Goldstein and Muir: Prepare yourself for a slow grind. Bootstrapping is neither harder nor easier than raising money, but it’s definitely slower. Almost every roadmap you have – from product development to hiring – will be extended because you have fewer resources than you need and, more than likely, fewer resources than other companies in your industry. Stay focused and try to use that slowness to your advantage in some way.

When R2D2 and TARS Show Up For Work – My New Company, Troops

This post originally appeared on Forbes.com.

I’ve been thinking about R2D2 a lot lately and it’s not because I’m a nerd or a big Star Wars fans. Although on some days I’m probably both. I’ve also been thinking about the other sci-fi movie robots out there like TARS from Interstellar, Samantha from HER, or even Arnold from The Terminator.

I think Jeff Bezos and Elon Musk have been thinking a lot about this, too.

Once upon a time artificially intelligent machines, talking robots and self driving cars were just some figments of imagination but now we have Siri, Amazon Echo and Tesla’s driverless cars.

And these are just the pre-school version of what is yet to come. You can be sure these technology juggernauts like Apple, Facebook, Tesla and Google are cooking up some next level, world changing solutions. I mean, Google just created an entire holding company called Alphabet to do precisely that.

Our society has finally crossed a threshold with technology, and there is a shift underway.

Invisible apps, zero UI, artificial intelligence, messaging-as-software. These are all phrases I’ve heard over the past few months that are meant to convey that shift which is: We’re at a moment in time where software can adapt to humans whereas before humans were the ones adapting to software.

Microsoft calls it “Productivity Future Vision.” I call it, “just getting stuff done.”

The software, computing power, hardware, interoperability of platforms, and APIs are all there for this shift to finally happen and for highly complex systems to be built and deployed at scale.

I saw a tweet the other day that said API’s were the unsung hero of technology. There is certainly some truth to that. They allow us to move beyond stand alone solutions to a world where solutions can work with other another.

And to date, those stand alone solutions, at least in terms of software have mostly been about drop down menus, check boxes, field and forms, and some mediocre UI and UX. It’s been about making screens look pretty. Making buttons click so that you can turn to yet another pretty page.

But the next 10 years will be about machine learning, artificial intelligence, natural language processing and technology that is contextually aware to human beings and their preferences. It will happen through interfaces that are intuitive and commonplace to human behavior.

Ben Evans says messaging is the software and not the other way around.

I agree.

I’m personally interested to see how this plays out in an enterprise environment and so I recently started a company with some amazing people to put these thoughts to paper and ideas to bits and code.

Someone once told me that we spend a third of our lives sleeping, a third working and a third watching TV. And it seems like an incredible time to try to make that “working third” a little better for everyone and to do so with entirely new engineering and software development concepts.

And the new company?

It’s called Troops.

How These 20-Year-Olds Raised $13M And Built A Massive Food Tech Company

This post originally appeared on Forbes.com. 

Being a young, first time entrepreneur is hard. Without a stunning success story or years of applicable experience, a new founder can face significant challenges starting and growing a company. A study by the University of California indicated that the average venture backed founder is 38 years old with 16 years of work experience. That’s quite a gap when it seems today that every new startup founder is in their early 20s.

What challenges differentiate a veteran entrepreneur and a newcomer’s experiences? What are strategies a first time business owner can employ to maximize the chances of success?

Eat Street's Office in Madison, WI
Eat Street’s Office in Madison, WI

Eric Martell started EatStreet, the largest independent food ordering company in the United States, when he was 20 years old with two classmates at the University of Wisconsin. EatStreet has raised $13 million and powers the online ordering of 15,000 restaurants nationwide. The startup, founded in 2010, exists in a cohort of foodtech and delivery companies that have some impressive deal flow: Instacart raised $220 million at a $1 billion valuation, Postmates has raised $138 million.

I recently chatted with Eric about starting a business in college and about the explosive growth of the food and delivery tech sectors.

Dan Reich: Speak to the challenges of starting a company at 20 years old.

Eric Martell: Early on, and to this day, we’ve had to convince others to take a risk on us, because we’re young and don’t have any pre-EatStreet experience running a tech company. In 2010, we had to convince the restaurants to take a chance on us. Matt was walking into every restaurant in Madison, WI with a simple pitch that our service would bring the restaurants more orders from new diners. Restaurants were wary of the entire idea, because if we took an order online and didn’t properly ensure that the restaurant received the order and could fulfill it, the diners would blame the restaurant for the poor experience. Additionally, we accepted payments online, which meant that we had to pay the restaurant every week, so they had to trust us with their money. Matt looked young for a 20 year old, and he heard more than once that the restaurant “just didn’t feel comfortable doing business with a kid.” Matt was able to sign up five restaurants when we launched February 1, 2010. With some results under our belt, we were able to expand that list to over 100 Madison restaurants within a year.

Additionally, in order to process online payments, we needed the trust of a credit card processor. We applied for six processors before getting approved… there was a lot of inherent risk to accepting online payments and transferring out the payments to restaurants on a weekly basis. It took over two months of searching before someone took the risk on us.

If it weren’t for those five restaurants and the credit card processor taking a risk on us, EatStreet would not exist.

Dan Reich: Do you still face challenges similar to these?

Eric Martell:  Although the nature of the challenges has changed over the years, we still face obstacles from being first time entrepreneurs. We’ve raised over $13 million from venture capitalists, and every single one of them has taken a risk in betting on our drive. We also form strategic partnerships with companies like Yelp, Google, Single Platform, and Hotel Communications Network. These businesses need justification to take risks on a company like ours. I’m glad to say that we’ve always been able to put up results, and the company is the strongest it’s ever been.

Dan Reich:  Do you think the current trajectory of food and delivery business funding and acquisitions will continue?

Eric Martell: We stand by what we’re seeing. GrubHub IPO’d a little over a year ago, and has consistently held its value as a multibillion dollar company. Over in Europe, DeliveryHero has raised over $1.5 billion, and Just-Eat also had a very strong IPO. With even Amazon and Uber eyeing the food delivery space, we’re happy to be where we are, with strong relationships with thousands of restaurants.

Dan Reich: Do you have any advice for first time entrepreneurs facing challenges regarding their experience levels?

Eric Martell: Persistence and results. Matt went to over 100 restaurants and only signed up five for our business’ launch. We could have called it quits after five credit card processor rejections. Our investment pitch historically has had less than a fifty percent success rate. Accept the failure as inevitable, and push forward. We’ve had restaurants that initially refused to sign up with us tell us today that when they finally did sign up with us, the additional orders we drove saved their business from going under.

Results might not always be present, but they speak louder than the best sales pitch. Focus on the aspects of your business you have control over, and grow like crazy. We didn’t raise a dollar until we had over $1 million in food sales, and that first million was the product of thousands of hours of promotion and hard work. It’s much easier to convince someone to believe in your vision if you have a track record of growth and hard work to back it up.

My Unhappy Customer Wanted to Kill Me

This post originally appeared on Forbes.com. 

When I was in high school, I learned two important lessons about business and life.

First, if it’s too good to be true it probably is and second, know who your business partners are. Unfortunately, it was only after receiving death threats from an anonymous Russian, that I came to understand these valuable principles.

About five months earlier my friend and I were sitting in the back room of history class. As a 10th grader, the back room is prime time real estate. It’s where you can get most of your note passing, whispering, and sleeping done. We had been talking about different ways we can make money. This was a hot topic because just a few weeks earlier I was making some spare change by selling bouncy balls to my friends. I’d buy them wholesale on eBay and then sell them for $0.25 to $1.00 per ball depending on the size and color. It was my first lesson in wholesale economics and my friend took notice.

bouncyballs

I sold these like hot cakes in high school.

The teacher continued on with the lesson and my friend leaned over, “I know a guy that sells urban clothing at wholesale prices. We should take a drive down there and see what kind of clothes we can buy. We could even resell them to our friends.” There wasn’t really much to think about. I already knew the answer. “Done” I said. “Let’s go after school.” I should of however asked, “how do you know this guy?” I would learn later that the wholesaler was involved with scams before.

Failure #1.

After a brief drive we arrived at some worn down residential home. We walked inside and immediately noticed that the interior was far from residential. It looked more like a warehouse. There were folding tables set up everywhere and the entire space was filled with piles upon piles of brand new clothes.

Jeans, shirts, shorts, blouses, skirts, you name it. It was all there. We sat down with the owner and peppered him with questions.

“Where did this stuff come from?”

“What kind of business is this?”

“Who are these other people in the warehouse?”

All of his answers seemed very legitimate and before we knew it, we were developing our business plan. We would pay someone to build us an e-commerce website, we would do the marketing, sales and advertising, and he would do our fulfillment and drop shipping right from the warehouse.

And that’s exactly what we did.

Within a month we had a fully functioning website and a full time client services representative taking and processing credit card orders. Each morning I would set up our Google and Yahoo ad campaigns and then my customer service employee, otherwise know as my mom, would handle all client email correspondences and orders throughout the day. Slowly but surely the orders came in. First New York, then California, and soon enough, we were taking orders from all over the world. Including Russia. But as the orders and sales grew, so did the complaints.

“What did you send me? I want my money back.”

“Theses clothes have been worn. Is this a joke?”

We thought it was a joke, so we took another trip down to see our wholesaler. “What is going on?” And so his responses began. “We just had some issues with our shipment company. It’s being resolved now, and we’ll be able to replace and take care of those bad orders.” He continued with more of the same and again, the answers all seemed legitimate. In hindsight, my BS detector should have been ringing a whole lot louder, but what did I know? I was just some bouncy ball businessman.

We went through a few more rounds of bad orders and even worse complaints until we got the very descriptive email that said people were going to come after us. And so with a hit on my back and a dysfunctional business, we shut down the operation and returned whatever funds we could to the very unhappy customers.

I learned two very important lessons that day.

  1. If it’s too good to be true, it probably is.
  2. Know who your business partners are.

The wholesaler was eventually arrested, and I eventually bought more bouncy balls.

South Beach Wine And Food Festival Beginnings

This post originally appeared on Forbes.com.

If you’ve ever done sales before you know how important customer service is. At the heart of any sale, there is mostly always good old fashion communication and relationship building. That is why I find it fascinating to look at how some of the best people in the hospitality business do what they do and how they think about all facets of an experience or of a relationship.

Take Lee Schrager as an example.

Fourteen years ago, Lee attended the food and wine classic to represent his company, Southern Wine and Spirits. After a wonderful experience, he decided to try to create an event that benefited his brands in a place that he felt would be more conducive to a larger and more influential group of people. He realized that to win people over he would need warm weather and a closer location to NYC.

Shortly thereafter the South Beach Wine & Food Festival was born.

Today, more than 60,000 people attend the events, and Lee is able to attract big names like John Legend, Chrissy Teigen and others.

I was able to chat with Lee to learn about three things that he felt contributed to the successful execution of this event. Here is what he said:

Leverage your unfair advantage. Lee was very quick to admit that part of his success with the event stems from the fact that he works for a large and successful organization, Southern Wine and Spirits. Having the resources of a large organization gives him a tremendous platform to get things in place however, this is just a part of the puzzle.

Engage with tastemaker and influential folks. In the first year of the event, Lee had no track record to speak of when it came to producing such large-scale events. So he reached out to his network and engaged with friends who become early adopters which in his case, were people like Emeril Lagasse, Rachel Ray, Bobby Flay and Giada DeLaurentiis, all highly respectful folks in the food industry. Couple this with the amplification of social media and the popular shows on the Food Network, and building an engaging audience was not too difficult for Lee.

Create great products, programing and listen to your customers. Lee and his team are very conscientious of different demographics, price points and customer feedback. As a result, they recently revamped the festival’s signature event – the Grand Tasting Village – to offer a brand new layout and timing based on festival goer feedback. They also added more late night events with cocktail themes, instead of only adding more of their traditional daytime events, and intimate dinners with chefs ranging from international superstars to local culinary talents.

Lastly, everything Lee does is done with a mission in mind and in this case, it’s charity. To date, Lee and his festival have raised over $20 million for the Chaplin School of Hospitality & Tourism Management at Florida International University.  The New York City Wine & Food Festival is hosted by and benefits the Food Bank For New York City and Share Our Strength’s No Kid Hungry campaign and 100% of the Festival’s net proceeds go toward helping these community based organizations fight hunger.

That’s not a bad mission to have, and with right skills and groundwork, it’s easy to see how an event like this can become and remain a success.

Nice job, Lee.

The Most Unlikely Startup: IAF

This post originally appeared on Forbes.com.

In 1948, at the Henry Hudson Hotel in New York City, the most unlikely startup was created. It’s founding members dropped everything to fly across the country to Manhattan for secret meetings to launch their endeavor.

Just a year before, one of it’s founding members Leon Frankel was already running a highly successful business buying and selling used cars making $100 to $200 a pop on every sale. Not bad when you consider this is 1947.

But then Leon and a few others got a phone call that would change their lives and put them in one of the harshest environments to build a new organization.

As Leon put it, “I just made up my mind and nothing was going to stop me.”

When you’re building any new venture from scratch, that attitude is critical. When you’re building an air force amidst an ongoing war, that attitude is absolutely required.

Today, the Israeli Air Force ranks second to none globally, according to a study conducted by military experts for Business Insider. “Pilot to pilot, airframe to airframe, the Israeli air force is the best in the world,” said Chris Harmer, a senior naval analyst at the Institute for the Study of War.

In a new documentary called Above and Beyond, which debuted in NYC this past weekend, Nancy Spielberg tells the story of how a few young Americans started what is today considered the world’s leading air force.

nancy-w-f15

Nancy Spielberg with Israeli F-15, Hatzor Air Base, Israel

I was able to sit down with Harold Livingston, another founding pilot who also happened to write the screenplay of Star Trek: The Motion Picture, to ask him a few questions about how this highly unlikely organization was formed.

Dan Reich: I can’t imagine the numerous challenges you confronted, but what was the biggest obstacle you faced when building the Air Force?

Harold Livingston: The United States Government who prevented us from taking the aircrafts out of the country. They enforced an embargo against any aircraft weighing over 25,000 pounds being sent without an export license.

Reich: In the beginning, there wasn’t a blueprint or playbook for what you were doing. How did you train and recruit new members?

Livingston: We played it as it was, with what we had. Recruiting was achieved through word of mouth, airline and/or ex-military friends of friends, various Zionist organizations, even to the point of scanning Air Guard rosters for pilots and crewmen with Jewish-sounding names. Training was another matter: everyone had to be thoroughly checked out by the handful of experienced people (obviously airline and military veterans) available. This was why we were always so woefully short of skilled crewmen, and towards the end forced to hire some dozen (non-Jewish) mercenaries.

Reich: In any new venture, partnerships are very important to achieve success. Were there any partnerships that facilitated the growth of the organization?

Livingston: Czechoslovakia of course was essential, without their assistance and cooperation, we would have been in deep trouble. Same for the Panamanians, although they (Panama) were led to believe we truly were establishing a national Panamanian airline. That “franchise” allowed us to fly the airplanes out of the U.S., and on to Israel.

Reich: In hindsight, what steps would you have taken differently in growing and building the organization?

Livingston: No, not even in hindsight could we and probably would we have done anything different. Under the circumstances, there was nothing we could have done differently. We were, as stated, a “start-up” organization, and therefore learned as we went. And, for sure, from our mistakes.

Harold and Leon’s “nothing was going to stop me” attitude continues to permeate throughout the rest of Israel’s high tech institutions today. With nearly $15 billion in exits through mergers and acquisitions and public offerings, 2014 was an all-time record year for the Israeli hi-tech industry, compared with a mere $1.2 billion raised in 2013, according to a PwC report for 2014. The exits were spread out between a variety of tech industries, including Internet, IT, life sciences, communications and semiconductors.

According to Hillel Fuld, CMO of Zula and startup advisor, “Last week there were $910 million in Israeli tech transactions. In one week!” This past week, the Israeli ecosystem continued to deliver with both VCs and startups raising substantial capital. Some of the financing announced include companies and firms like like Vintage, Singulariteam, ClickTale, Addallom and Kaminario. That amount of capital is highly unlikely for any set of companies, and yet, these businesses and others continue to grow despite the many challenges the region faces.

Native Advertising for Uber

Here’s an idea for Uber on how they can sell advertising that is unique to them and them only. We’ll call it native advertising for Uber.

Today, Uber passengers have the ability to split a fair with other passengers. But Why not let Uber passengers split a fair with brands or advertisers?

So for example, if I chose “split fare with coke” I might be prompted to watch a 30 second coke commercial or maybe I would have to fill out a branded questionnaire.

Either way, I opt in to the advertising, coke gets my full and undivided attention and I get a subsidy on my car ride.

Furthermore, if the brand or advertiser was providing me with real value then I might, keyword being might, be compelled to give them my email address or phone number. It’s already there in my profile along with my home address and other important travel destinations. And if Uber took this a step further, they could theoretically enable hyper targeted advertising based on who the passengers are.

And then when I’m riding solo in a car like I am now (yes, typing from the back of an Uber), I could get a better rate on my ride and Coke or whoever else can get a nice slice of my time and attention.

Brands and advertisers are already paying big money to advertise in airports, taxis, buses and trains so why not Uber? This form of advertising might be the first time there would be a truly interactive form of ‘transportation advertising’ because it wouldn’t be on some display in a taxi or on the back of your chair on an airplane. It would be on you personal mobile device.

I’m not sure I’ve seen this before and for all I know Uber could very well be working on something like this.

But that’s my idea of the day for Uber and now I’m at my destination.

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