I am back after rebooting Shack. It is a 14 years old project. I got lucky. Friends, family and countless bootstrappers have helped me build Shack Coffee Co.

I have also shifted this newsletter from Mailchimp to Substack. The Bootstrappers will share the stories about bootstrapping.

Let’s start.

“What’s new on the menu?”

New items on the menu is arms race of the food industry. Businesses think that it attracts more customers, which increases sales. Big menu restaurants and cafe end up serving inferior food and coffee.

Beyond Trends

I see value in small menu, so do our customers. We did not rush to serve matcha, while it’s a rage. We only make four panini. Others have more than thirty panini on the menu. We did not serve espresso with orange juice or cranberry juice. We have never used condensed milk. We trust our guests to discern between a shiny trend and delicious coffee or food. For example, we only serve one bakery item: Olive Oil Cake.

Food lovers still queue at Old Delhi restaurants with small menu. Our desi QSRs have small menu. Bengaluru has more than seven thousand darshinis. They dish out a similar menu of idlis, dosa, upma and rice dishes. Mumbai has thousands one item menu shops. They serve vada pav.

Not Just India

Rasing Canes only sells chicken fingers

They recently took over KFC in sales. Their menu has chicken fingers, fries, one toast and coleslaw.

Serinkan is perhaps the best pizza shop in the world

It only serves two pizzas: margarita and marinara. That’s it. The owner has not changed the menu in the past thirty years.

Tanaka of Bearpond Espresso only sells coffee

He doesn’t sell food. Yet, people fly from across the world to sip his angel stain espressos. A used car dealership received Michelin star for serving only one ramen.

Rama 5 only sells banana fritters

Michelin writes, “This spot is best known for its deep-fried bananas. Coated in crispy batter made from coconut and white sesame, they exude a rich coconut aroma. The sweet potato balls are another standout. Be prepared for queues during peak hours.”

Small menu is strength

It is not weakness. My goal is to have as small menu as possible. It helps food businesses in building expertise. It avoids wastage. It avoids capital expenditure in machines. In India’s context only a frugal food business will be sustainable. There is no other way.

What is your favorite small menu business?

Let’s make a list of ‘Small Is Beautiful’ businesses. Please share here. I will collate and publish with the due credits.

Stress is lethal for bootstrapping

Last week, Gaurav walked into Shack HQ. He ordered a cup of ‘long black’, a better version of Americano. While I pulled his shot, we started chatting. I found out that he has recently turned a bootstrapper. He started Devotus, a mental health service upstart. He has spent more than ten years in the health care sector. While holding health workshops online, he discovered that more people are eager to seek help for mental health than the physical health. He also saw a gap. It is difficult to take the first step towards mental well-being.

Mental health is still a taboo for the Indian society. Countless bootstrappers and founders endure stress and anxiety, while they build or run the business. When stress and anxiety build up over a period of time, it may lead to disorders such as depression. One does not have to be suffering with a disorder to seek help from mental health professionals. It can even affect the successful people.

Professor Michael Freeman found a shocking correlation between entrepreneurship and mental health. He found that entrepreneurs are twice as likely to suffer from depression, three times more likely to indulge in substance abuse, twice as likely to have suicidal thoughts, 10 times more likely to suffer from bipolar disorder, and six times more likely to have ADHD. Link

Any Dunn was CEO of Bonobos, an online apparel brand. Walmart bought it for more than $300 mn. He recently revealed that he was suffering from a mental health disorder. Thanks to timely help, he has recovered.

Dig more: stories about other founders and their mental health Link

Learning to deal and manage daily stress and anxiety has three key benefits.

1. Learning to deal with one’s emotions and feelings, such as anger.

2. Better decision-making on a day-to-day basis.

3. Longevity of the business, as it benefits from your stable state of mental health.

Worth your time: This man makes founders cry Link

Gaurav of Devotus is hosting a meet up at Shack HQ. The aim is to discuss the mental health myths and how it affects bootstrappers. A mental health professional will join Gaurav to explore. Bootstrappers can ask and discuss their queries.

1. Know the basics of well-being.

2. Know the early signs of distress and anxiety.

3. Learn how to seek help if you feel like getting one.

The meet up is on Saturday of 21st January 2023. Venue is Shack Coffee Co. If you are interested, just mail it to me at abhishek@shack.co.in with few details. I will mail you with the invite.

Bootstrapper of the week: Tanmoy

Tanmoy worked as a business reporter. He started facing mental health issues. He did not just address it, he chucked his job to start a publication for mental health issues in India. Furthermore, he founded Sanity My Tanmoy in 2021. You can subscribe to it.

Worth your time: A long twitter thread about insights about depression and anxiety Link

Yes, a local business will also benefit

When someone orders espresso at Shack Coffee Co., I always suspect her/him of being a bootstrapper. Yesterday was not different. V walked in and ordered for an espresso. At first, he credited CrossFit for the post workout fix. Then, he opened up. He is setting up a bakery in West Delhi. In his past life, he had worked in an advertising agency. Does he require marketing?

He chucked the job to join the family’s grocery business. Irrespective of 10 minute grocery apps, the local grocery shops are doing better than before. He realised he could not add anything to an existing profitable and growing business. He zeroed on opening a bakery. Furthermore, he hired a consultant, who would help him with setting. Next, he looked for a marketer, who could help him with the go-to-market strategy. I asked him, why does he need one, since it’s a bootstrapped gig. I followed with the marketer, who is bootstrapping Chiti Design.

Deepak cited three things. One, V had worked in advertising, and values the importance of marketing. Two, they had worked on the visual branding of the grocery business in the past. It had benefitted the brand. Three, there are multiple players in the market, each catering to a specific audience. It is important to find out the target segment, and position the offerings.

Nike’s founder Phil Knight, said in an interview to Harvard Business Review:

For years, we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. But now we understand that the most important thing we do is market the product. We’ve come around to saying that Nike is a marketing-oriented company, and the product is our most important marketing tool. What I mean is that marketing knits the whole organization together. The design elements and functional characteristics of the product itself are just part of the overall marketing process.

We used to think that everything started in the lab. Now we realize that everything spins off the consumer. And while technology is still important, the consumer has to lead innovation. We have to innovate for a specific reason, and that reason comes from the market. Otherwise, we’ll end up making museum pieces.

V is practicing the first principle of marketing: marketing orientation. It’s all about knowing the consumer and meeting their needs and wants. Even Steve Jobs took inspiration from Phil Knight’s approach.

Bricolage makes entrepreneurs resourceful endlessly

The best thing about brewing coffee in Shahpurjat is meeting fellow bootstrappers. Yesterday I met a fashion designer, who had started her boutique last month. She left her job at JJ Valaya. One of my customers at Shack Coffee is a lady, who runs a popular jewellery brand for women. Earlier, she tried running a restaurant, but couldn’t. My neighbours are two or three people team, running production houses and agencies. They are my first customers. They hop in for coffee, and we share our journeys. One thing is common among all of us. It’s bricolage.

Bricolage is an act of using whatever is at hand, and recombining them to make something new. The boutique owner has brought the dining table for home. It is not a workstation. The jewellery designer uses the furniture from the last business to design jewelleries. She uses a make-shift studio, with wooden sticks and metal hooks, to shoot videos. I am also practicing bricolage at Shack Coffee.

“In The Savage Mind (1962), the French anthropologist Claude Levi-Strauss used the word bricolage to describe the characteristic patterns of mythological thought. Bricolage is the skill of using whatever is at hand and recombining them to create something new. Levi-Strauss compares the working of the bricoleur and the engineer. The bricoleur, who is the “savage mind”, works with his hands in devious ways, puts pre-existing things together in new ways, and makes do with whatever is at hand. What Levi-Strauss points out here is that signs already in existence are used for purposes that they were originally not meant for.” — Source

The jewellery designer started with buying cheap earrings from a local market, and polishing it, to sell to customers. She would buy scarves, and beautify it, before selling. She was profitable from the first day. It took her seven years to set up a workshop and an online shop. She never lets materials go in waste. If there is a wastage from one collection, it becomes a limited release jewellery item. If the metal is rusting, it becomes the rust themed jewellery. She is a true bricoleur. She is looking to expand. Can marketing help her?

Evelia Coyotzi has recently upgraded from a food cart to a shopfront. Her story is that of a bricoleur and grit. She came to New York from Mexico with her two-year-old son. After she lost. In her job to 9/11, she started selling tamales on a shopping cart. With time, she started using a push cart. For twenty years, she would park her cart at 4:30am. Common people and celebrities like Anthony Bourdain loved her food. ( Source: New Yorker & NYT) .

Check out bricoleurs:

1. Van Neistat Link

2. Tom Sachs Link

3. 10 bullets for bricoleurs Link + Video

Startups trying to disrupt the food sector should think again

Tech startup founders can either be visionaries or idiots. It’s difficult to spot the difference. Langda Tyagi may help. He said in the movie Omkara ,“ The difference between a visionary and idiot is that of a string. If you pull the string, both look similar.” Mike Monteiro is one such Langda Tyagi of the tech world.

Yesterday, he posted a thread about startups getting into the food truck business. He explained that food truck owners are people of colour, and it is labour extensive. Most food truck businesses are bootstrapped. They sell cuisines from all over the world. Pandemic affected them. He observed a new food truck, which did not look like a food truck. He found out that it was a VC funded business, had set up a fully robotic restaurant. It served Mediterranean food bowls. A similar startup, called Stockwell, had tried to automate the local convenience stores, called Bodega. It shut down in 2020.

Tech-enthusiasts responded. VC Ritesh Banglani tweeted, “Please nobody tell him about washing machines and what they’ve done to the laundromat industry.” He explained that US became rich because it increased the productivity. And, robotic kitchens are the step in the same direction.

Another person suggested that robotic kitchens and the restaurants are the future.

Mike replied, “If the only way to make a human activity affordable is by removing the human, then we’ve failed across the board.”

Mike is the co-founder ( Erica Hall is the other co-founder + the author of Just Enough Research) of the design firm Mule Design. His firm has done spectacular work. Designers also know him and his firm for A List Apart books such as Design Is A Job. He gets technology and productivity as much a tech VC would. India is facing a similar onslaught on indie and bootstrapped businesses. Cloud kitchens, dark kitchens, dark stores and food delivery are harming the local businesses. The food may travel quicker, but it exploits the employees as much, if not more. The groceries may reach quicker, but it puts the delivery person may meet accidents. It’s not black or white.

If VCs fail to see the point of view of bootstrappers or small businesses, the technology is aiming for monopoly and not productivity. Thanks to people like Mike, who always stand up for the small guy. In 2012, he gave a famous talk: F#uck You Pay Me. He cites the following instances of bootstrappers having trouble in getting the money due.

1. It is really not what we wanted after all.

2. We got somebody internal to do it, instead.

3. We cancelled the project.

4. We did not get the funding.

5. We think we have paid you enough.

6. It’s not really what we were hoping for.

His simple suggestion for fellow bootstrappers were:

1. Do not leave money on the table.

2. Sign a contract with the clauses to getting paid, if things do not go as per the plan.

3. Hire the lawyer to start the process of recovery

Bootstrapped businesses are the future big businesses

Bootstrappers should avoid big ambition, when starting a business. Unlike startups, bootstrappers can just focus on making a decent income. Founder of Sea Bags’ Hannah Kubiak started it to pay the bills. Its revenue is around $25mn ( INR 300cr approx.) per year.

In 1999 Hannah decided to skip college and started Sea Bags, to make extra money. Her father had built and sold a similar business. In 2006, one of the customers, Beth, joined Sea Bags as a partner. In 2013 Hannah sold her stakes to Beth and new business partners. Today Sea Bags sells more than 2,00,000 bags a pear. They operate more than 45 locations. In 2021, they grew by 60%. They may be earning a gross margin of 80%, with the net margin of 30% , after excluding 50% of sales goes into rent and overheads ( source: Michael Gridley’s Newsletter). What a journey from some extra money to a fast-growing multi-million dollar business.

Robert Brye founded Indie VC. It chose to invest in small and profitable businesses such as my favourite coffee brand Yes Plz. He wrote on his blog post, “Starting something in the hopes of making an extra $1,000 a month is every bit as worthy as trying to colonise Mars. Start small and give your ambitions room to grow.

You may be surprised with how little ambition it really takes to eventually change the world.”

Source: Link

Bootstrappers can learn three things:

1. Luxury businesses are worth looking at. Customers buy due to emotional reasons. Customers buy Sea Bags for two reasons. One, they are helping the environment. Two, each bag is exclusive, as they make from limited quantities of sail sheets.

2. Look for the right person, who implement the vision, and grow the business. Sea Bags’ second CEO Beth stepped down as the CEO and hired people to run the brand.

3. KISS: keeping it simple studio. Complex plans are great to raise fundings, but may fail as big as well.

Worth your time: How a bootstrapper invented instant noodles Link

Join the community of fellow bootstrappers

• Newsletter Link

• Linkedin Group Link

Bootstrappers can whip #ss of big businesses

Italian bootstrappers have forced Domino’s to file for bankruptcy. Superior pizzas by local businesses, lack of demand for American styles pizzas and pandemic were the key reasons for the bankruptcy. India is Domino’s largest international market with 1495 outlets.

Italian franchise E Pizza had planned to open 880 stores by 2020. Instead, they could only open 29 stores. First pandemic dented the growth with restrictions. Then local pizzerias adapted to the new normal. They started using delivery apps to deliver the pizza. Locals disliked the American style pizzas with more cheese and toppings such as pineapple. Home delivery and cheaper pizzas were the only differentiators for Domino’s. Not just Domino’s

As per Yahoo Finance: Its ambitious expansion ran into trouble as traditional pizza makers scaled up deliveries or signed deals with third-party services such as Deliveroo Plc, Just Eat Takeaway.com NV or Glovo to bring their products to customers’ homes while restrictions prevented dining out.

There are about 63,000 pizzerias in Italy. The pizzerias employ about 100,000 pizza makers. On an average, each pizzeria sells 80 pizzas a day. In total, Italians consume 10 lakh pizzas a day. Norway, USA, UK, and Germany consume more pizzas than Italy. As per Quartz, more than 35% of pizza makers are foreigners and more than half of pizzerias are owned by foreigners.

Why does it matter for India? Bootstrapped businesses such as pizzerias in Italy are the key generators of entry-level jobs. Darshinis in Bengaluru are Indian counterparts of Italian pizzerias. Nearly all darshinis are profitable and employ unskilled or semi-skilled workers. Zoning laws, lack of formal finance and unfriendly municipal laws do not allow such businesses to thrive in the rest of the country. One bootstrapped business in Noida has inspired more than 50 businesses. Strong local and bootstrapped businesses are a nightmare for big businesses. Starbucks closed 70% of its stores in Australia, where most coffee shops are bootstrapped. McDonald’s in Iceland had to quit the country as it could not compete with the local burger chain.

It’s not easy running a bootstrapped business. We need more such stories in India. Let us build something.

Bootstrappers should double down on trade-shows

Last week, I visited Indian Hospitality Expo in Greater Noida. I had gone to check out machines for the espresso bar. I had to pull myself out of the place. Online is no match for in person trade shows.

I met the top B2B suppliers of coffee machines such as Kaapi Machines, Saimex and Kaapi Solutions. I also met manufacturers of kitchen equipments, ceramics, cutlery, cleaning equipment and decor. I asked hundreds of questions. I saw how the machines performed. I could compare the similar products from competing businesses. Top management or operations team attend their stalls.

Before the IHE, I tried to speak with the above teams to know about the espresso machines and grinders. I could only contact teams online or through phone. Either the response was slow or incomplete. The same businesses were prompt and responsive yesterday. One team surprised me with an offer. I am reconsidering my earlier choice. Do not judge a business by its slow response online. Instead, grab them by horns at a trade show.

As per Forbes trade shows are the most cost efficient way for face to face meetings: When I ranked marketing tactics during a ten-year lead generation study I conducted, networking at trade shows finished in the top five. The best marketing tactics are educational in nature, and a trade show let’s you educate prospects face to face (or “belly to belly,” as one of my mentors used to say).

Trade shows are also a boon for the bootstrappers. One can meet other fellow bootstrappers and collaborate. I bumped into a tea brand, which wants to experiment with coffee blends. I would have never gained the opportunity elsewhere. If I can derive value as a visitor, I am sure participants would have generated valuable leads and the businesses.

Following are the few upcoming trade shows, I would like to visit.

1. India International MSME Expo & Summit: August 25–27 Link

2. Indian International Mega Trade Fair: August 19–29 Link

3. Franchise and Business Expo: August 7 Link

4. Indian International Pet Trade Fair: August 29 Link

5. Indian E-commerce Show: August 25–26 Link

6. Indian Manufacturing Show: September 15–17 Link

Read more:

1. Get more out of trade shows — HBR Link

2. Pros and cons of trade shows Link

3. Drive traffic to your booth Link

The focus on customers’ need and wants will help avoiding marketing myopia

It was 2016 when I first heard the phrase ‘marketing myopia’. I had bought Clayton Christensen’s Innovator’s Dilemmna. I found the book boring. I could not get half of what it said. But, it led me to the seminal article by Theodore Levit.

He wrote Marketing Myopia in 1960 in Harvard Business Review. It’s as relevant today as it was then. It talked how businesses harm themselves by only focusing on selling, and not on the needs of the buyers. He attributed the failures of railroad companies, Hollywood’s decimation by TV to top executives.

He wrote, “At some point in its development, every industry can be considered a growth industry, based on the apparent superiority of its product. But in case after case, industries have fallen under the shadow of mismanagement. What usually gets emphasized is selling, not marketing. This is a mistake, since selling focuses on the needs of the seller, while marketing concentrates on the needs of the buyer.”

The rise of Koramangala business model has amplified the marketing myopia. Startups today are committing the same mistakes, which railroad companies did. Small businesses are copying them blindly, and think that only strategy to grow is to raise funds, and burn in online ads. Droom, once an unicorn, just fired its 35% of employees. Blinkit, one of the leaders of quick commerce, may have fudged the data, to be sold to Zomato at half the price.

Economist Vivek Kaul wrote in his newsletter, “ The Koramangala business model (KBM) is coming apart. Before we go forward, it is important to explain what I mean by KBM? KBM is a general term I use here for venture capital (VC) backed technology startups that have sprung up in Koramangala in Bengaluru, among other places.”

“While many tech startups offered their services at a discount to build their business, a few firms also pushed the envelope. As the media and the analysts have been putting it, their business models were built around regulatory arbitrage. “

I have learnt a lot from Mini MBA in Marketing. Once it gets over, I would like to meet the fellow independent businesses owners, and talk about how we can set our house in order. It’s been forever that a startup guru or a digital media baba have been giving the wrong and harmful advice to the businesses: double down on content, optimize search ads and hire more influencers. The marketing principles is all about understanding the customers and avoiding the marketing myopia.

Worth your time:

• If there is one thing you will read this week, please read Marketing Myopia Link

• A refresher on marketing myopia Link

Jobs to be done framework is helpful in building the right products

In 2014, I had launched Build Your Community. It was an online tool to audit the online communities of the brand. It also helped to plan and launch campaigns to grow the online communities. But, the brands would rather not use it.

Earlier, my digital marketing firm Shack Co. helped brands build and manage online communities. Online communities for Yahoo, Quakers, Goodyear and MP Tourism were not just social media accounts. A concept website with editorial content and applications served as the hub. All the online activities on social media or off-line flowed from there. We had built a framework using POST ( People, Objectives, Strategy, and Technology).

First, we researched the target audience’s online presence. We looked up their lifecycle, socio-economic class attributes, interests and online behaviour from the publicly available data. It helped us build an editorial plan as per the branding objectives such as raising awareness or consideration. Each piece was for a specific audience, which had a specific objective and the corresponding format such as blog, video, poster, podcast etc. We never did Facebook strategy or Linked-in strategy.

With Build Your Community, we aimed to equip brands and agencies to build their own communities. After more than a year of launch, we had a only handful of customers. It was the height of social media phenomenon. Seth Godin had declared marketing dead, except content marketing. We doubled down, and built another version with more features. Still, the brands would rather not use the tool. What, we thought, was a revolutionary idea, turned out to be a failure.

Thanks to Mini MBA, I am able to pinpoint the exact reasons for the failure. As per the ‘Product’ module, products fail if they are not market oriented or customer-centric. What does it mean? Without market research, businesses do not know who could be their customers. Without knowing the customers, businesses cannot explain the attributes or benefits, which customers are looking for. If businesses aren’t aware about attitude and behaviour of the customers, they do not know what part of the sales funnel requires attention.

Professor Ritson shared Jobs To Be Done framework. Again, it’s about finding what do customers really want. It’s not about what you think they want. Customers do not buy the products for their functional features. Instead, they hire the products for their personal reasons. They do not buy a drilling machine. They buy a tool to hang picture frames on the wall, to cherish memories.

Kathy Sierra, author of Badass, Making Users Awesome, wrote, “Upgrade your user, not your product. Don’t build better cameras — build better photographers.”

Knowing what customers want to hire will help build the right product. It will help businesses communicate the attributes, the customers understand. It will help you focus on the appropriate message for the correct channel. Furthermore, it leads to the eventual goal for the businesses, to increase sales and grow.

Now, upgrade your customers:

• Milkshake invented JTBD, sort of Link

• How Basecamp uses it Link

• Apply it in your business Link

1. Russia’s McDonald’s knockoff Link

2. Try typography Link

3. Building the minimum badass user Link

Ask three questions to assess them

Wrong marketers or marketing agency costs money, time, and effort. Some examples of wrong marketing are spending on trends such as social media advertising or undue focus on social media engagement. 62% of small businesses fail to reach the target on Facebook. Fire such marketers or agencies.

Every business owner cannot be a marketer. But, every business owner can ask three things to assess the marketing strategy, marketer, or the agency.

1. Who is your target

Most businesses assume demography, attitude, and behaviour of their customers. Instead of assuming, always ask for the specific insights about the customers. Marketers and agencies without the consumer research are useless.

Knowing customer segments helps in prioritising. Once you know the different segments, which matter for the business, you can target the specific segments for the marketing campaigns.

Clothing brand Abercrombie and Fitch was infamous about their razor sharp targeting. In 2013 its CEO Mike Jeffries said, “We go after the cool kids. We go after the attractive, all-American kid with a great attitude and a lot of friends. A lot of people don’t belong in our clothes, and they can’t belong. Are we exclusionary? Absolutely.”

If you ain’t got the customer segments, fire.

2. What do you stand for

Remember Steve Job’s talk about ‘Think Different’ campaign. It was not just a great advertising campaign. It was about how do customers should perceive Apple and its products regarding their competitors. If there is no effort from the business, then customers identify your brand in context of the competing brands, such as cheaper this or more expensive that.

Professor Ritson wrote, “A brand needs the consumer to know that it exists and to think two or three things about it. Those two or three things are what we require the brand position to be. Write them down.”

You can call them brand purpose, positioning statement or North Star. It matters. If the marketer isn’t helping your brand with positioning, please look for a different one.

3. How to achieve the goal

Every business wants to earn more, or sell more, or capture the market share. The marketer or the agency should always share a list of objectives, which will achieve the broad goals of more sales. Jazzy objectives such as more engagement, and viral content do not make the cut.

Impactful objectives require purchase funnels. A purchase channel should tell you the percentage of target customers desiring your brand, intending to buy, considering to buy the products, and finally buying it ( conversion).

There shouldn’t be more than three or four objectives. Always check if the objectives are SMART: specific, measurable, ambitious, realistic, time bound. For example, Tourism Australia’s aimed to increase the visitors from US by increasing the intention by double digits.

You know what to do if the objectives sound like Gary V’s. Fire.

With the three questions, you can ask the marketers to focus on the right things, instead of trends or shiny things.

Interesting things

1. The rise and fall, and rise of Abercrombie & Fitch Link

2. Don’t love your business hero Link

3. 60:40 rule of marketing Link

Your love your product more than your survival

My second business venture failed. I had shut down my first business, to focus on the second one (Build Your Community). It was a software service to help brands build their online communities. I looked for the reasons for the failure. One thing stood out. I kept ignoring the early signs of failure. Instead, I doubled down on building the next version with more features.

As per Investopedia: Data from the BLS shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.

Mini MBA in Marketing’s latest module introduced us to the research of Joan Schneider and Julie Hall. Both researched hundreds of product launches. The top most reason for failure is lack of research. Businesses start without knowing about their customers and the market. Joan and Julie listed down 40 reasons for the failure.

In the interview to HBR, they said, “The biggest problem we’ve encountered is lack of preparation: Companies are focused on designing and manufacturing new products that they postpone the hard work of getting ready to market them until too late in the game.“

Top five flaws are:

1. Flaw 1: The company can’t support fast growth.
   The Lesson: Have a plan to ramp up quickly if the product takes off.

2. Flaw 2: The product falls short of claims and gets bashed.
   The Lesson: Delay your launch until the product is really ready.

3. Flaw 3: The new item exists in “product limbo.”
   The Lesson: Test the product to make sure its differences will sway buyers.

4. Flaw 4: The product defines a new category and requires substantial consumer education — but doesn’t get it.
   The Lesson: If consumers can’t quickly grasp how to use your product, it’s toast.

5. Flaw 5: The product is revolutionary, but there’s no market for it.
   The Lesson: Don’t gloss over the basic questions “Who will buy this and at what price?”

CB Insights had also shared a list of reasons for failures. It focused on startups.

Top five reasons were:

1. Ran out of cash.

2. No market need.

3. Got outperformed.

4. Flawed business model.

5. Pricing cost issues.

Both, startups and small businesses meet the same fate. While developing the product, the businesses fall in love with the future success, forecasts and imaginary scenarios of people using their product. Instead of focusing on best-case scenarios, businesses should focus on the worst case scenarios.

Readings

1. 40 ways to crash a product Link

2. Why Google Glass failed Link

3. How Levi’s ducked up a product launch Link

Honda defeated Yamaha by using Blitzkrieg strategy

In 2nd World War Germany used Blitzkrieg strategy to defeat the allied forces of France, Holland and Belgium. Allied forces outnumbered Germans. They had better technology than Germans. Yet, Germany won easily. They demolished the 300 years old military history.

“A spectacular military feat, but why should a manager or anybody in business during the early 21st century care? True, the German victory in France led to five more years of war in Europe, the Holocaust and the deaths of tens of millions of other civilians, and the eventual triumph of the Soviet Union, the Cold War, and 50 years of Stalinist repression. This was unspeakably tragic, but there is nothing any of us can do about it now. There is, however, one good reason for looking over the shoulders of Hitler and his generals, as repugnant as we find their aims and ideology. At the start of the attack on France, the Germans had no advantage in numbers and lagged in technology. Yet they won and won easily, and they did it through the application of strategy. Their strategy was so powerful that in one two-week period, it set aside 300 years of military history.” — Certain to Win: The Strategy of John Boyd, Applied to Business by Chet Richards

German Blitzkrieg disarmed the enemies with the OODA loop.

1. Observe

2. Orient

3. Decide

4. Act

The equivalent of OODA also exists in marketing. Remember Diagnose, Strategise and Tactics. When businesses orient themselves to the market, they activate OODA loop. It’s about understanding the landscape. Landscape for businesses comprises knowing the different types of customers and competitors. Honda defeated Yamaha in the famous H-Y War, using blitzkrieg style strategy.

By segmenting the consumers as per demography, attitude and behaviour, the businesses can target them. Businesses should know about their customers at the point of purchase, point of consumption and the point of discussions.

Demography: It is about knowing the basic information about the customers such as: age, location, salary, life cycle.

Attitude: It is about knowing the likes and interests of the customers. The research should find out if the customer is interested in the product category or not.

Behaviour: This shows if the customer likes or dislikes the product. It tells how does the customer use the product, on the day-to-day basis.

Segmenting helps businesses measuring the worth of customers and the market.

1. How many customers are there in the market?

2. What is the value of the segment?.

3. What percentage of the market does your brand own?

It helps to target the right customers. There are multiple examples where 2/3rd of the business comes for 1/3rd of the customers. Ian Barnard is a marketer and an alumnus of Marketing Week Mini MBA. He shared the step-by-step process of segmenting your market. Link

1. Tell me you own a small business Link

2. When life gives you potatoes, make crisps Link

3. Podcast; rock solid marketing strategy. Link

Hire a plumber, not a digital ninja

Let’s do a small quiz. You are the founder of a food delivery brand. You are about to hire a marketer in the team. Who would you hire?

1. A digital marketer, who can manage all digital media channels and tools.

2. A traditional marketer, knows nothing about the digital media.

3. A food influencer, who has a million followers.

The correct answer is none of the above.

Salad Days wants a ninja marketer

Salad Days , a food delivery brand is hiring a ‘growth marketing manager’ or the first option: a digital marketer. The founder posted the job requirement. It is seeking a multi-multi-multi tasker. It starts with the vague objective of increasing sales, revenue and meeting ROI & company goals. It contains all the buzzwords such as CAC (cost of acquisition), funnel, content campaign, social media platforms, Whatsapp, Google analytics, Photoshop etc. That’s a profile for five professionals, not one. Even if it manages to hire one, it will not help to solve the problem of slow growth. Instead, it should hire someone, who can identify the market, the customers and then strategise to meet the specific objectives such as percentage increase in sales, increase in awareness etc.

Take a step back and reorient

Let me run a quick back of the napkin analysis. It started in 2014, before it was cool. It serves salads, sandwiches, beverages, desserts at premium prices. It grows its own vegetables. It runs four kitchens in Gurugram, Delhi and Noida. As per reviews (Google, Trip Advisor and Zomato) for every customer liking the brand, there is a customer who does not like the brand. Unhappy customers are complaining about delivery time, quality of ingredients, quality of ingredients, high prices. Happy customers love the brand for its healthy ingredients, taste and packaging. It also has competitors such as Salad Days, restaurants in Delhi-NCR and other health food delivery brands.

Salad Days needs a plumber

The job of the marketer is to diagnose the brand and the landscape, it is present. Then, the job is to identify the right market and the competitors. It could be other health food alternatives such as baked snacks. The marketer has to position the brand such that the consumers find it more appealing than the competing brands. Then, thas to pick the SMART objectives, which should not be more than 2 or 3. The last step is to be able to move the tactical levers such as promotion.

Salad days has many a leeks happening in the purchase funnel, from many a people not being aware about the brand, to people not thinking about it, to people preferring competing brands to people not recommending others for the brand. That’s the primary job of a marketer.

Mark Ritson said in a video of Mini MBA, “A plumber who arrives at the job with only one tool is a bad plumber. A good plumber looks at the job and goes back to the van to get the right tool.”

Interesting reading

1. Plan better, market better Link

2. Asian Americans love Costco Link

3. Minimum viable brand Link

There is no marketing in digital marketing

Mini MBA in Marketing is a myth busting machine. The course charts out step-by-step process of marketing. It doesn’t contain terms such as digital marketing, social media marketing, LinkedIn strategy, Twitter strategy, viral marketing etc. Instead, it offers a framework, which allows marketers to use digital tools as and when it is necessary. The biggest myth is ‘digital marketing’ can replace all marketing.

1. Digital marketing will disrupt marketing:

There is no marketing in digital marketing. What we call digital marketing is one of six tactics of marketing communications. Marketing communication is also one of ten things, which make marketing. Social media updates, blogging, online ads, emailers, search ads, video ads are all different forms of direct response marketing. Others are advertisement, publicity, sales promotion, face-to-face selling, direct marketing, and discoverability.

Ritson says: Digital marketing’ is redundant Link

2. More content means more views:

Not more than 5% of the followers on social media see the updates from the brands they follow. What we call see is a mere impression or appearance on their timelines. Unless one spends tons of money, the updates are not going to help.

Dave Trott says: Content (noun): everything that is inside a container; the contents of a box Link

3. Search engine optimisation is magic:

SEO professionals and digital agencies help brands rank their pages higher in the search engine results. Brands use tricks such as descriptive URLs, use of keywords and secondary keywords broken, page title and META description etc. The list is long. After all this, the content is only useful if the target customer has shows any interest. Or else it will get discovered for nothing.

Ryan Stewart says: The days of ranking a products or services page first for these purchase-intent keywords are limited Link

4. Community will attract customers:

All brands want a community, but they do not know what it is. The myth of community is such that it will help achieve all the marketing goals, at the fraction of the cost of marketing. Community is a buzzword for your current and future customers. Without the clear objectives, the team will keep running in circles or chasing engagement, from one tactic to tactic.

I wrote: Avoid Gary V’s ideas about community Link

5. Viral everything:

Brand chasing viral posts or videos are the best examples of FOMO (fear of missing out). Because Dollar Shaving Club became an overnight sensation, it is now on the list of every brand. Did you know Michael Dublin, its founder, had trained as a writer for eight years? Moreover, a filmaker produced the video, who also owned a priduction house.

Jerry Daykin says: How a single tweet misled an entire industry to dive into the dark Link

6. Hire anyone

Brands are hiring the operators of digital tools such as social media, emailers, search engine etc. They are not operating real marketers. It’s similar to constructing your dream home with just the help of masons, and not architects. Digital enthusiasts learn from a blog here and an update there. It’s better to avoid digital marketing, than to do it wrong and get harmed.

Twitter discussion : Formal training in marketing Link

Interesting things

1. How much are the people in Tech earning Link

2. The lost lager Link

3. What’s the value of a like Link

There is no shortcut to product-market fit. It only comes with the good old customer research. Without consumer insights, businesses are gambling to achieve the product-market fit.

Before product-market fit, businesses have to find:

1. Potential value of the market.

2. Actual population of the market.

3. Current market share of the business.

4. Product-market fit

Without the market research or knowing the users, businesses are relying on guesswork and luck. A product may fit a market, but the value of the market may be small with the small population and high market share.

Paul Graham, founder of Y Combinator, wrote:

• I think most businesses that fail do it because they don’t give customers what they want.

• In nearly every failed startup, the real problem was that customers didn’t want the product. For most, the cause of death is listed as “ran out of funding,” but that’s only the immediate cause.

• he only way to make something customers want is to get a prototype in front of them and refine it based on their reactions.

Paul Graham warns businesses of the Hail Marry approach, where they develop the brand or the product for years, and do not care to know what customers want. Marketing Mini MBA professor Mark Ritson wrote, “Smaller companies, for example, without the resources or scale of a Mars would do well to start by taking a smaller, segmented bite off the marketing apple and gradually building their presence.”

Basic market research such as speaking with the customers help you to understand the customers and the size. Secondary research can help you ascertain the size of the market and the brand’s market share. Spending time with the customers at the point of purchase, consumption, and discussion will help you understand their behaviour with regard to the product.

Learn from:

• Gillette’s marketing strategy Link

• Strategy before tactics Link

Interesting stuff

1. Does mayonnaise need a mission statement Link

2. You think you know your customer Link

3. Brand vs the performance Link

Because of marker orientation

Orienting towards the market and the customers is free. It does not cost to think from the perspective of the customers. Yet, businesses ignore the first step to grow.

Nokia was once the number one mobile phone brand. It stopped tapping into what the customers wanted. Apple did the opposite. Nokia hired Tricia Wang, an ethnographer, to study mobile phone users. She suggested Nokia to focus on affordable smartphones. It did not.

She wrote, “ I concluded that Nokia needed to replace their current product development strategy from making expensive smartphones for elite users to affordable smartphones for low-income users. I reported my findings and recommendations to headquarters. But Nokia did not know what to do with my findings. They said my sample size of 100 was weak and small compared to their sample size of several million data points. In addition, they said that there weren’t any signs of my insights in their existing datasets.”

Yet, world’s biggest beer brand Corona did not ignore their customers. They discovered that beer lovers add lime to the beer. Customers had invented a ritual of squeezing lime into the bottle. Then, they pushed the lime wedge into the bottle. Corona used the ritual in the promotion. Customer centricity made Corona the number one beer brand.

Professor Deshpande had coined the phrase ‘customer centricity’. He listed four things, which made a brand or a business successful.

1. Customer centricity, not product or technology ( Ola is product/ tech centric)

2. Out compete other firms in terms of in-depth customer insights ( Amazon)

3. Integrate branding with customer centricity (Hello Corona beer)

4. Rewarding employees for customer focussed innovation (Zingerman’s)

I have worked with big and small brands on online brand awareness campaigns. Almost all small and independent businesses avoid going to customers. Instead, they wanted shiny websites, colourful social media updates, cool Instagram feeds, digital ads and money from investors. E-commerce businesses focus on sales. D2C brands focus on sales. Tech or fashion brands focus on product. If only they focus on customers: at the time of purchase, at the time of contusion and at the time of disposal; they would not fail.

It’s never too late to start the right thing. You can assess how customer-centric is your business by using MORTN scale. Answer ten questions on a scale of one to five, and add the score.

I will be happy to assess your business with you. Shoot me a mail at abhishek@shack.co.in

Local businesses should not blindly trust digital marketing

Social media ads, updates, and blogs may bring a few additional customers, but without a plan all businesses look and sound the same. Small and local businesses hop on to digital because it is doable and cheap. Businesses are slaves to the social media platforms.

Food business upstarts such as cloud kitchens, independent cafés, restaurant upstarts rely solely on Instagram to attract customers. It harmed them, when Instagram changed its focus. They could only reach one tenth of customers than before. Facebook encourages independent businesses to use Facebook to grow business. They can run advertisements with less than INR 100. Cheap advertisements, free updates, long blogs are for everyone else. When the number of advertisers grows, the returns are lesser and lesser, as everyone is trying to reach the same audience, using the same approach. As per ad-man Bob Hoffman, social media companies are not even serving the online ads to the customers.

As per New York Times: Then, at the end of 2021, Instagram’s parent company, Meta, changed the platform’s algorithm to prioritise videos, called Reels. Accounts that don’t regularly post the short-form videos appear below those that have embraced the format in users’ Instagram feeds, resulting in a notable drop in engagement on posts — and, in turn, sales — for many small businesses.

Running away from social media is not the solution, either. Small business, who do not only rely on social media, are doing better. They also focussed on media relations and word of mouth. The key is the balance.

Diagnosis first, strategy second and tactics in the last is the right way:

1. Diagnose is about knowing the audience according to the problems they face. Does the business want to raise awareness or bring in new customers? Young businesses have to inform people first, build trust and memories. Older businesses can offer discounts to move the sales up.

2. Strategy is about figuring out how to solve the specific business problem for the audience. Without knowing where to go, any road will take there. Businesses should identify their audience, the places where they exist, and then find the buying path.

3. Step three is to focus on the best way to reach the audience according to the objectives. Young businesses with newer products may have to educate the customers, using longer videos and articles. Fashion businesses may have to position themselves rather than offering discounts.

Mini MBA Marketing’s professor Mark Ritson wrote, “Marketing strategy is where we play and how we win in the market. Tactics are how we then deliver on the strategy and execute for success.”

Interesting reading:

1. Social media didn’t spare meme investors Link

2. Four is better than two Link

3. The short of it Link

The world runs on coffee and if you really want to pep up your day, there’s espresso– an innovation of the late 1800s and early 1900s. A dark, rich, and creamy beverage, espresso gets its name from esprimere, an Italian word which means ‘fast, express’ and is in fact the first example of fast food as we know it, since its very name literally translates to speed.

As coffee gained popularity across Europe in the 19th century, the time-consuming boiled-water process of brewing made it less appealing to workers looking for a quick fix on their coffee break. In order to hasten the labourious process of brewing, Angelo Moriondo, an Italian inventor, invented the first espresso machine. Unfortunately, Angelo’s invention produced espressos only in bulk — a glitch fixed by Luigi Bezzera, another Italian inventor who created the first single-serving espresso machine. Bezzera reduced brewing time from a couple of minutes to 30 seconds. That’s the average amount of time the majority of espresso machines today take to pull a cup of good espresso.

Luigi Bezzera designed a coffee machine that forced, by pressure, hot water and steam through finely ground coffee into an individual cup, and that’s the bare minimum you’ll need to get started. Not Bezzera’s espresso machine per se, but an espresso machine that comes with a portafilter and tamper.

Espresso machine

Espresso is another way of making coffee with the same ingredient, but a different machine. When you are pulling a shot of espresso, you are forcing, by high-pressure, water to reduce brewing time and dissolve more solids in emulsified oils. This results in a thick, rich layer of crème at the top of the shot. In a nutshell, pulling a cup of espresso is a concentrated way of making coffee that requires a different range of equipment.

An espresso machine correlates to your brewing method and is where the magic happens. An espresso machine (like the Budan Espresso Machine) has a portafilter that has the same functionality as a paper, metal, or cloth filter. The portafilter is made out of stainless steel and is a small cylindrical basket that comes attached with a handle. The tamper, also metal, is used to compress the ground coffee into the portafilter.

Once you have your espresso machine, you need a few other pieces of equipment to complete your homebrew setup — a weighing scale, a timer, a grinder, and of course, roasted coffee beans.

Find your bean

Start with good coffee beans (like Korebi Coffee Espresso) and ensure you are using coffee at its prime. Fresher the coffee, more the foam. Traditional espresso is made with a darker roast. You can either pick out coffee beans marketed as ‘espresso’ or experiment with different beans since that’s the biggest advantage of home-brewing yourself a rich cup of crema.

Grind up your coffee

As with any brewing method, there are certain brewing variables that bring about the best results, like choosing an espresso grinder (one that has burrs instead of blades). An espresso grinder (like the Budan Express Electric Grinder or the Hario Ceramic Mini Mill Grinder) with burrs makes a fine grind, possibly a little finer than table salt.

Measure up your coffee

It’s best to use a weighing scale (like the Varia Digital LED Scale) to ensure you are measuring out the coffee grounds correctly. For a double shot of espresso, a standard dose is between 13–21 grams of ground coffee. Since every espresso machine is different, it’s best to begin with narrowing down your ideal dose by leaving a little head space once you’ve tamped down the shot. This will give you a good clearance for brewing once the portafilter is locked into the machine.

Did you know it takes about 42 espresso coffee beans to produce a single shot of espresso?

Other equipment

• Shot glass to get your shot into.

• Timer (like the Automatic Shot Timer by Luminaire) to keep track of the whole process, unless your espresso machine already has one.

Brewing the perfect shot of espresso

Once you have your equipment, you can finally pull your first shot of espresso. Here’s how:

Step 1: Prep your coffee machine

• Fill the machine with water (some machines you may be able to plumb directly).

• Heat the machine up (could take from 10–45 minutes).

• Ensure that all components are warm and ready to go.

Step 2: Preparing your shot

• Run water through the portafilter and the group head (nozzle where the portafilter is inserted).

• Wipe the group head and portafilter dry before actually starting.

Step 3: Grinding & measuring coffee beans

• Finely grind your coffee beans.

• Fill the portafilter with freshly ground coffee (18–21 grams).

• Slide your fingers across the top of the portafilter to pack coffee in a straight line.

• Make sure your tamper is clean and dry.

• Go ahead and tamp evenly (firmly press down and twist slightly). The twist or polish will put loose grounds in place and make sure everything is packed perfectly for the water to begin doing its job.

• Stick the portafilter inside the group head.

Step 4: Final steps

• Place your shot glass on a scale and tare the weight.

• Start your timer and activate the switch.

• Wait for the distinct layer of crema.

• Measure your yield.

• Enjoy your freshly brewed cup of espresso!

Tip: Grind your coffee beans finer if your coffee comes out too sour or add more pressure when you tamp to pack the grinds compactly and improve extraction. Follow the same process if your coffee is bitter.

Visit our website www.somethingsbrewing.in to explore our collection of espresso machines.

Small businesses can get as good insights as big businesses

I finished the 2nd module of the course. It was Market Research. As a small business owner, I had two questions.

One, small businesses are too small to carry our market research.

Two, customers are too less, to get the consumer insights.

Professor Mark Ritson said that small businesses can benefit as much from the market research.

Few actionable takeaways for small businesses:

• Always start with the secondary research and qualitative research.

• Collect the information about the competitors from the secondary data and proxies. Get the big picture about the market.

• Go to the customers and interview them to understand the specific questions about their interests, attitudes, and lifestyle.

• Ask questions to know their preferences in regard to your product or service.

• If possible, spend a time with the customers. Trail them. Record how they behave at the point of purchase, consumption, and disposal (if any).

The above exercise will give you insights to ask more specific questions:

• What is the right price for my product for the market?

• How big is the market for my product or service?

• Which group of people should we focus on? What are their key interests and behaviour?

• How do they buy a specific product from the category?

I also learnt backward market research:

It means instead of researching ambiguous categories about the customers and the market, the right way is to think of a presentation you would like to see, with the answers. The focus is to diagnose the problem, and act on the insights.

Worth your time: Marketing hacks for small businesses Link