The big news to share this week on bounceit!™ is that the app went live in the app store, after a long period of creation, and we are starting the process of scaling by not scaling, as was discussed in last week’s blog. This week will be focused on getting a small group to use and try it out on all devices to make sure everything is flowing well. Then, we will move to our local and social media friends to give it a try and to share with others, if they like it. And finally, on to the rest of the world.

Well, sort of to the rest of the world. Some people think big launches matter and they want to create a big event with a lot of hoopla, excitement and media attention. After this happens, then everyone will know about it and you are set to go viral. We thought about this approach a while back and decided against it. Interestingly, Paul thinks that this is not the way to go either. He says founders like to think that they have a great building and everyone who hears about it will want it. Even the best of the viral applications don’t start this way. He also says it is part laziness, that with the big launch, the hard work of creation is done and you can sit back and watch your amazing creation take off. This will not happen and will require getting users one at a time.

Another thing that usually doesn’t work on the way to scalability, is partnerships. Paul’s experience is that they don’t work for startups in general, in the form of getting the big break. They usually take lots of work and don’t lead to the scalability that was hoped for in the beginning. That is where you are trying to be scalable. When you get with organizations or other companies to work on building a core group of users in a certain demographic to experience the feedback, then this approach is doing the non-scalable with a few users at a time. We will be doing this with the University of Tennessee and with Regal Cinemas.

We will move in small, non-scalable aspects first, to build a presence with certain groups that we are targeting.

Paul says that what matters is not the big launch or the big partnership, but the ability to delight your customers is the key to getting bigger. Take a handful of people, make them really happy, watch what they do so you can learn, and they will get friends like them taking you further down the road.

So our plan is to go slowly with our initial roll-out to build a core group of users in our local community and test the app with the different ways new people may think about using it, and also to make sure all the software and hardware running the app will handle the pressure of hundreds of pictures and votes, and then thousands.

Bounceit!™ will have announcements locally next week in the press and we will have an article in Nibletz, which has agreed to use bounceit!™ to get feedback on speaker choices for their two big conferences.

This is an exciting time for founders and also a time not to sit back and wait for things to happen. Entrepreneurism is about getting out and creating the success you want!!

I have talked to a lot of people about the big trend of mobile, the growth in this area, how it is changing the way we do business, and how if we don’t want to be left behind, we need to adapt. Some of this has a longer time horizon and some of it needs to be thought about in the short-term. The point is that this is a Macro trend that is happening and one that may be less of a concern than building your small tribe of followers that make a difference to the revenue and profits of your company.

Seth Godin’s blog on Macro Trends Don’t’ Matter so Much, makes a point that I agree with for the more focused, short-term aspects that drive your business. He says that the Macro trends, like internet subscribers some year in the future, or the number of Spanish speakers as a percent of world population, are not the key drivers to your growth and the group you are after. We could add things like, Who will have more in Apple’s IOS or Android’s platforms by 2020? What percent of the world total output will China make up in the next 20 years?

These trends are nice to watch, and some of you may want to think about it more than others. However, the key is that most companies and organizations need dozens, hundreds, or thousands to make a difference in their world. They don’t need access to all Spanish speakers, to all internet subscribers, or all those on Apple’s platform. What they need is the ability to spread the word among a tribe of followers that are like-minded and passionate about your unique “purple cow” offering.

This is where you what to really drill down into who your client is and what it is he wants. Robert Bloom, in his amazing book “The Inside Advantage,” gives us a step-by-step process for drilling down to the true look and feel of who your client is and what is unique about what you are offering him. Knowing your customers in this way will allow the laser-like focus to zero in on your tribe.

Finishing up in Seth’s blog, he says that the big trends are a numbers game, and that by realizing that, you are “treating the market as an amorphous mass of interchangeable parts.” You realize the micro is more important than the macro and that it is about the people – that we are individual human beings and we have names, desires, wants and interest.

What is your micro group that you are focused on?

An analyst I used to follow in my investment days, Henry Blodget, is now an editor for Business Insider, and his own company has been on top of the internet space since the beginning. I like hearing what he has to say because he has had so many years watching the ups and downs of the firms in this space, and he offers good insight into where these companies are going.

Business Insider recently held its annual IGNITION conference with great speakers from LinkedIn, Google, Groupon, and Time Warner. With so many people in companies that are on the forefront, you have the opportunity to enjoy a great perspective at what is happening now and where things are going.

Here are some of the key observations that Blodget made from the conference:

With 1/3 of the world population now online, it leaves 2/3 of the market left to grow. However, since this 1/3 earns 85% of the world’s income, the growth and commercial opportunity may not be so strong. As I have discussed before, the smartphones and tablets are now outselling PCs. Mobile should be the focal point because that is where growth and activity are coming from.

Mobile devices have hit the half-way point in developed countries, which usually means growth slows down somewhat. Surprisingly, consumers are willing to pay for content. Blodget says digital content revenues are exploding! He points out that digital advertising is growing just behind TV advertising, with most of this growth is going to Google and Facebook.

Another observation is that Google is a better source of adverting than Facebook because Google is like advertising at a store and Facebook is like advertising at a party. He also notes that the internet has already taken out the newspaper business, so the question is: Will television be next?

Mary Meeker recently released her presentation on the state of the web, and she had similar observations. Internet growth is robust, and mobile adoption as many upsides. Global internet users are growing at 8% year over year, and the USA has 78% penetration, while China has 40%, and India holds 11%. Smartphones are interesting. She shows smartphones as a percentage of total subscribers, and China was at 24%, the USA at 48%, Japan at 65%, and India at 4%. Where do you think you’ll find the most opportunity?

All this data continues to support what we have been discussing for a while, that mobile and all the connectivity it will bring is the major wave we need to be riding right now. What are you doing to get on that wave?

Last week, I said we would discuss how to zero in and better handle the demand economy, and we will also look at how to make your offering target the demand that you want to create. We will actually do that next week, so we can first understand how we have transitioned into an economy of oversupply. Let’s review why economic demand has changed. In the book “How Companies Win,” Kash and Calhoun describe four phases of transitions moving from a supply based economy to a demand based one.

The first phase involved market equilibrium, which lasted from 1947 to 1990. After World War II, places that had avoided destruction kicked into a level of prosperity that last for decades. Other areas took longer to adjust but entered the industrial and information economy over time, continuing to create demand as we became more global. With the advent of many different supply chain management approaches and thinkers like Edwards Deming, we continued to lower cost and improve the supply as more demand was created. These good times stayed in balance for a long time . . . until they didn’t.

The period of oversupply started in 1991 and continued through 2007. An aging population in the developed world, the end of the Cold War, and globalization created this phase. This generated a significantly large number of companies adding their offerings to those of the multitude of businesses already out there. The internet popped up during this period, which also created a medium to communicate and share knowledge. This brought many more companies to the table. Productivity increased. Then, the first bubble hit during the early 2000s and was followed by more, which led to the true slowdown in demand.

The demand contraction of the Great Recession hit during 2008. This created a global slowdown not seen since the Depression. The housing market was decimated, and unemployment shot up, continuing a reduction in demand that has lasted to present day. This was followed by stimulus, increasing the debt. To solve this problem, the government will need to spend less and possibly raise taxes, which will likely lead to even less demand.

We now have a Demand Driven Economy. A hypercompetitive business environment characterizes this fourth area, and it will continue into the future. This flat demand will put a crunch on profits and drive a lot of businesses to disappear.

The companies that have a better understanding of the demand situation will be able to position themselves for a demand offering that will drive more business. More on that next week.

I wrote a blog in July 2011 called “What Disruptive Technology is Sneaking Up on You?” I also wrote another one more recently called “Crowdfunding, the Savior for the Entrepreneur.” Interestingly, they have both been pulled together by the disruptive technology guru Clayton Christensen. Clayton spoke with CNNMoney for an article they featured on his involvement in crowdfunding.

As I explained in my previous blog, crowdfunding will allow companies to raise money with their social contacts for partial ownership in a company. You can raise a lot of money by asking for small investments from a large number of people. Think of this like a mutual fund that has lots of money to invest, but one individual investor may only put in $500 while another puts in $10,000. Crowdfunding gives the investor the opportunity to invest in people they know even if they don’t have large sums of money. The previous laws placed tight limitations on this.

Clayton pulls disruptive technology and crowdfunding together when he points out that crowdfunding has the potential to disrupt traditional financiers. He has invested in a platform that is being created to help bring together both the investor and the company trying to raise more capital.

As I’ve said before, I think this opportunity is going to be big! It will change the game for many people, most importantly the entrepreneur. Ideas and opportunities that would have never gotten off the ground before will now have a better chance at a good start and could become job creating machines.

Now, the important ingredient for anyone with aspirations to grow and get funding is a strong social network. The theme we had back in my investment days was connectivity. We invested in companies that were creating the infrastructure which would bring us together. We have all heard “it’s who you know, not what you know.” This rings even truer today with a major focus on people.

What are you doing to grow your social network?

Mary Meeker recently released her annual overview of internet trends, and I found it to be very insightful. You may remember that I have discussed Mary’s research and opinions on this topic in some of my previous blogs. She pushed forward as a leader in this space with different investment banking firms and is now a partner at one of the most prestigious venture capital firms, Kleiner Perkins.

Meeker’s overview includes more than one-hundred slides, so I have summarized some of what jumped out at me. The general theme is that internet growth is still significant and mobile adoption is still in the early stages. Many of the slides show examples of how this connected world is creating the Re-Imagination of everything.

The Smartphone has penetrated only 953 million users when compared to the 6.1 billion mobile phone subscriptions as shown on slide 11. This is a huge upside. Think about all the new businesses and people considering apps moving forward. Is your business prepared to benefit from this growth?

Next, on slide 10, compare the global penetration between the Android and iPhone shipments. Android has over 250 million compared to over 60 million with the iPhone. This is a four times difference, and it makes you think about for which one you would build an app. Looking at your demographic, area, and global reach will help to determine if you choose to create an app for one or both.

Slide 18 shows India’s usage of the internet on a desktop has decreased over time, and their usage of internet on mobile devices has increased over the period 12/08 to 5/12. Mobile usage has currently surpassed that of desktops, which should be considered for the monetization of sites. Most sites make more money from ads on the desktop than on mobile. This will changes things.

Mary also makes several points about how things are changing in the world with the internet. In 2010, after 305 years, newspaper ad revenue was surpassed by internet (slide 32). The trend lines for the newspaper ad revenue were declining much faster than the internet was sloping up.

From a technology investment perspective, be careful. Look at slide 108. Out of the 1,720 IPOs over the periods 1980 and 2002, only 2% of these companies accounted for 100% of net wealth creation.

Mary states that the “Magnitude of upcoming change will be stunning. We are still in spring training.” She gives a long list of reasons in slide 85. A few key elements include nearly ubiquitous high speed wireless access in developed countries, fearless and connected entrepreneurs, and inexpensive devices and services, including apps.

How are you benefiting from these major trends taking place right before our eyes?

In business we refer to a sandbox as the area in which you play or conduct business. It consists of three things: your geographical boundaries, your products or services, and either your client description if you sell direct or your distribution channel if you sell there.

When determining your sandbox, one area of thought is to make sure that the sandbox you are playing in is capable of getting you to the goals you have created for yourself. Problems could include not having enough customers or not having the right customers in your geographical boundaries. The product or service may have saturated the market you’re in, and the client description could have changed or expanded.

In our situation, we found that to reach our goals we need to add a geographical boundary that is larger and more diverse than our existing one in Knoxville, TN. We have the opportunity to open another office in a market that provides this, and we feel this will open the sandbox for us to get where we want to go.

April Cox, my partner and co-founder of Efficience, will be going to Dubai in the beginning of June to start our new office in that fast growing and dynamic city. April has contacts there from her husband and EO members that we have met over the years, so she will be off and running to network and increase our reach in our new expanded sandbox.

Not only will she be in fast growing market, it is also a modern city adapting to the latest technologies. This will be a plus for us at Efficience because we believe there is a better way to leverage technology and growing in a new environment with other companies that believe this also will be mutually beneficial. It takes four hours by plane to get to our office in India from Dubai, so working with our team there will be more “local” for the companies we connect with as we work together.

We are excited for this expansion and the chance to open the door to new relationships, customers, and product opportunities.

Is your sand box big enough to get you where you want to go?

Have you thought about how fast things change and how really different things have become with how you work and live? Think about the companies that you use every day that didn’t even exist ten years ago. Think about how you use your smartphone today and access Facebook. How different, both good and bad, was your life back then?

Consider all this from a business perspective. What new companies have appeared or disappeared because of a new innovative idea? Things move so rapidly! A company can go from zero to hero in a flash, but one can also go from kingpin to trash bin in the blink of an eye. What happened to MySpace, and what is occupying that building near you that was once Blockbuster?

The point is that technology and connectivity are changing the world so fast that items and companies we consider staples, such as Google and Facebook, may not even be around in 5 or so years. I recently read a Forbes article that shared a perspective on this topic.

According to the article, companies in the early years of the web 1.0 like Yahoo, Amazon, or Google didn’t see the social aspects of web 2.0. Now in web 3.0, the social companies have not adapted to the current world of the Smartphone.

Will Google face a challenge as better ways to search on smartphones appear? Will Amazon and Facebook keep up as more people use their phones to shop and connect instead of the desktop? Which one of these companies will be hit by a new idea brewing up in the garage right now?

Is there an opportunity for you in this space? If mobile can disrupt Google and Facebook what can it do to your business?

I have been working on putting together some content for a breakout session I’ll be doing at the EO Nerve Conference in Atlanta next week. This content was created for Insignia and Quantum leap EO programs to help Forums engage in more stimulating discussions around your businesses with the other business owners. I really enjoy these events, catching up, and sharing with my existing EO friends and meeting new ones.

The topic has to do with discovering your X-Factor, which is not an easy task. Your X-Factor is a decision or strategy that solves an industry bottleneck and gives you 10 to 30 times the competitive advantage. This is something that is not visible to your customers. In fact, you don’t want to share it with anyone outside your organization. Treat your X-Factor like your company’s top secret magic ingredient, which will greatly increase your profitability compared to your competitors.

What are some of the industry bottlenecks? Bottlenecks can come from delivery, largest cost, innovation, process flow, customer retention, employee retention, selection, or people reduction. There are so many options, the ones listed and some that may not be thought of right now. That’s the beauty of it! Seize the opportunity to seek out and develop your X-Factor.

Now, what are a few examples of X-Factors? Outback Steakhouse created a compensation plan to retain restaurant managers (an industry bottleneck), keeping them for 5 years or longer when the average was around 6 months. AutoNation offered all the brands of the various cars to break the bottleneck of customers not returning four out of five times. Starbucks focused on higher prices, giving them unbelievable margins.

So, what process can you follow to help discover your X-Factor? This takes some analysis and digging. Sometimes, you discover it at the industry trade shows. Looking at all the breakouts, you will see the problems they are trying to solve, and that may be just the clue you need. You can brainstorm around these questions: What is the biggest cost in my industry? What are the people problems? Where is innovation not happening? And how do I keep my customers and employees happy? Once you think you have a handle on it, then ask yourself, “Why?” five times and watch the onion open up and reveal itself.

When you latch onto your X-Factor, you will be ready to jump on and ride the rocket, so be prepared to hang on. What are you doing to discover your X-Factor?

Anti Herpes

I am on my way home from India and excited about what is going on at our office in Pondicherry, where we have our software development office.  Each time I go, it is exciting to see what has manifested from a small 10’ x 15’ room with 2 people back in 2004 to a facility expanding 4000 square feet and about 40 people today!  This team is filled with smart, highly analytic minds with a desire to grow, progress, and improve their lives while making a positive impact on their families.  I have watched as they have matured, gotten married, had children, and bettered their lives, increasing their standard of living.  It is a great feeling to see this evolution and connection we have with the team! 

Connectivity is an important word.  My increasing exposure to the effects of connectivity has opened my mind to new levels of thinking.  In 1999, I created a mutual fund called the iFund.  It was the first shareholder-controlled fund, where connectivity drives intelligence making the group smarter than any individual.  To make this happen, we utilized software to bring shareholders together to manage the portfolio.  From that moment, I knew software would be the driving force connecting a business to it’s customers, financials, inventory, and new markets. 

 I recently read an exciting article by Marc Andreessen in the Wall Street Journal called “Why Software is Eating the World.”  Marc invented the Netscape Browser which changed the landscape of how we connect online.  He explains that software is a huge growth opportunity!  Companies like HP are transitioning from the PC hardware biz into software for better prospects.  He believes the future of the world economies is brighter because of the potential expansion of the software industry.

Marc says, “My own theory is that we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy.”  He believes the growth we saw over the past decade from about 50 million people to 2 billion people connected will translate to 5 billion connected using smartphones in the next 10 years!  Imagine the power of 5 billion people connected . . . real time, all the time!

This makes me wonder about the possibilities for new businesses, including low start-up costs for internet based operations, as well as the potential problems for existing businesses not moving in this direction.  His examples include how software has changed music with Apple, books with Amazon, movies with Netflix, direct marketing with Google and Groupon, telecom with Skype, and recruiting  with LinkedIn.  Organizations in every industry need to be aware of this software revolution!

My partner April Cox and I created Efficience in 2004 to build custom software applications for others and to generate products that are niches to help businesses improve.  Sluice and MeetingHabits are two products we have out there, and we look forward to creating even more to meet our core purpose:  Discover solutions that make life better for all.

What are you doing to not get eaten by the software world or to benefit from the software world?