Interview Eric Lefkofsky, Groupon Founder and Mega-Successful Entrepreneur

What can you learn from the founder of the fastest growing company in the history of the world? Groupon is that company, and the founder is ready to share ideas if entrepreneurs are ready to listen.

Eric Lefkofsky is a low profile billionaire, but over the last dozen years, he has started and cashed in on an impressive string of business wins.

First, StarBelly, made tools for building Web sites. Then he started two companies that have since gone public — InnerWorkings, which provides printing capabilities over the Web, and Echo Global Logistics, a transportation and logistics outsourcing business. He also started MediaBank, a company that faciltiates advertising buys.

Here is an interview with Lefkofsky in the New York Times that every entrepreneur should read. It is short (it will take you less than 10 minutes) but packed with practical insights.

For instance:

• The most successful company in history, Groupon, started out as a failure called ThePoint. The lesson: don’t get fooled by failure. Look at the positive, discard the negative, and turn your business into a big success regardless of the past
• A well-run business has great operational control and a metrics-driven culture. As a result you can expect growing revenue, profits and cash flow
• The most disruptive (read: successful) business models over the next 5 – 10 years will be taking advantage of social media – or the “social graph” as Lefkowski calls it
• Because of social media, Lefkofsky asks, “Why would you ever make a cold call again?”

Success leaves clues and Eric Lefkofsky has had a huge string of winners. Here he lays out the clues to his success so obviously that any listening entrepreneur can benefit.

For Old-School Ad Agencies “the Carnage Will Be Awesome”

There is a hot article in Fast Company about the demise of the traditional ad agencies. They assert that the old model of ad agency is gone forever and “the carnage will be awesome.” We could not agree more.

I wrote a post earlier about how rapidly growing companies successfully work with an “agency”. It still reflects what I believe. It’s a short read if you are interested.

In fact, I put the word “agency” in quotes because things are changing so fast I am not sure what an “agency” is today anyway.

I can tell you it is not what it was a year ago. Social media, digital communication, peer reviews, and the ability to gather information in nano seconds has changed everything permanently.

What hasn’t changed is that you need savvy marketing and communication help as you set your company up to achieve rapid growth. What also hasn’t changed is that those “agencies” you hire must be focused on simultaneously increasing your sales, profits and reputation.

We need a new word for that group that helps you. “Agency” is as dated as Madmen.

You Are Not Crazy, Great Entrepreneurs Just Have Those Same Symptoms

Studies suggest that if you are an entrepreneur you may not be crazy, but you are at least close to crazy.

An article in the New York Times explores the common symptoms of entrepreneurial vision and mental illness.

Let me sum it up for you: What type of people risk our houses and give personal guarantees against our retirement savings in order to build a business? What type of person passes on the security of a steady paycheck to work ten times harder and while pushing all their (and their family’s) chips to the center of the table?

Well now you have a word for it: Hypomanic. Entrepreneurs generally display many of the symptoms of a person having what psychologists call a hypomanic episode. According to the Diagnostic and Statistical Manual — the shrink occupation’s bible of mental disorders — these symptoms include grandiosity, an elevated and expansive mood, racing thoughts and little need for sleep.

According to the article in the New York Times, “A thin line separates the temperament of a promising entrepreneur from a person who could use, as they say in psychiatry, a little help. Academics and hiring consultants say that many successful entrepreneurs have qualities and quirks that, if poured into their psyches in greater ratios, would qualify as full-on mental illness.”

I write for entrepreneurs (and entrepreneurial type managers) about expandable and scalable business models – but sometimes we take a minute to think about who we are as entrepreneurs.

I just thought you’d like to know. You can now tell your family and friends: YES, you have the symptoms of crazy; NO, you aren’t crazy… well… maybe a little crazy… but that is good.

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The Three Rules To Building A Successful Rapidly Growing Business

How do you build a business that is rapid growing with increasing cashflow as it grows?

For example, if you are investing $X and getting a return of $5X, how can you show that an increased investment will get at least the same 5X ratio of return?

This is what we mean when we talk about scalable businesses: that a business can generate a predicable amount of business leads per dollar therefore has a predicable Return on Investment.

You already know that traditional banks are not going to lend you money for financing growth. Banks no longer take that type of risk. But investors do.

Investors have money. You have a business model. You need to prove that combining their money and your business model will make lots more money for both of you.

You may not need investors. But you still want a scalable model. Why? Because creating a scalable model will give you the metrics and goals to optimize your business success.

Here are the three rules to begin to create a scalable business model:

Rule #1 Resist the temptation to do something immediately satisfying

There are lots of ways to sell your product or service that will provide immediate satisfying sales results. For example: YOU do one-to-one selling or YOU leverage your network of contacts.

But if I gave you twice the money, you could not make another you.

So this not scalable.

Rule #2 It is ok to lose money – within reason

Said another way – you are looking for a mix of ideas you can scale up and some of those things will not work.

Which brings us to Rule #3…

Rule #3 Test and Measure constantly

What is measured grows. What is measured and reported grows exponentially.

Test and Measure and then Micro-Test and Measure and then Test and Measure and…

Follow these rules for fantastic business success… even if you don’t need investment. They will lead you to running a continually improving business.

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Retooling Stale Businesses Into “A Highly-Scalable and Expanding Enterprise”

A lot of VCs and sharp entrepreneurs, looking objectively from the outside, can see how a $1 million business could easily become a $10 million business. Maybe there is a way to take a quick objective look at your business and find 10X the money there.

Fred Wilson writes the A VC in NYC blog. I think he consistently has interesting insights into business.

Here is a link where Fred highlights a blog comment about retooling older and stagnant businesses:

“There is a huge opportunity in America today to acquire ‘old school’, low tech businesses and retool them with modern management, modern marketing including social media, a well crafted financial structure and a dab of leadership to make an otherwise boring business into a highly scalable and expanding enterprise in which the growing size provides an enormous financial operating leverage.”

Ooooooooo. I love the phrase “enormous financial operating leverage.” But I digress.

Of those mentioned items above, the one I spend my time thinking about everyday is “modern marketing including social media.” I have seen the transformative power of marketing and sales designed to be scalable and immediately measurable.

Why is social media “scalable?” Because you can see immediately what messages are working to drive qualified leads and then put more resources toward those things. You can’t do that with a brochure.

What can you do? Follow this link to a free worksheet that will help you determine if social media could drive explosive scalable growth for your business.

Maybe your current business could be retooled to become vibrant by updating to a “highly scalable and expandable enterprise.” Hummmmmm. And you’d need relatively very little money to do it.

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Prioritizing Your Most Important Next Steps to Double Sales

There are hundreds of things you must do to double the size of your company… how do you know what to do first?

Quick exercise:

First:

Imagine you could not have anything to do with your business (no working no communication no reading about no contact in any way) for one year – starting today.

Take 30 seconds are write down what you would worry would not get done or would not get done correctly.

Second:

Imagine you could not have anything to do with your business (no working no communication no reading about no contact in any way) for one year – starting one year from today.

Take 30 seconds are write down what you would want to get done in the next twelve months.

Third:

Look at the lists… these are your most important priorities to move your business forward. How do I know that? Because YOU are doing those things and for you to have the time and energy to move your business to the next level there must be systems/processes in place and assign tasks to others to get these things done.

What other insights did you gain from this exercise? Take a few minutes and organize your thoughts.

I always preach to my team: “The problem isn’t the problem. The time to think about the problem is the problem.”

If you want to double your sales, creating processes for your team and vendors and creating time to think about the big problems are your top priorities.

Try the above exercise. It is the tool to make the next twelve months the beginning of a huge growth spurt for your business.

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Trade Big Hairy Audacious Goals For SMART Goals Your Team Understands If You Want To Double Sales

Forget Jim Collins’ BHAG (Big Hairy Audacious Goals) and instead focus on SMART.

BHAG goals are inspiring. They get the troops motivated in a meeting. But then the team leaves the meeting and struggles to execute.

That is the problem: BHAG goals are too unspecific to be practical to the rank and file. So they can be overwhelming.

Most of us – and certainly the people that work for us – need to know what to do TODAY to move the business forward (“today” is as timely as it gets). And frankly, BHAGs are sometimes unrealistic or unattainable.

SMART goals: Specific Measurable Attainable Realistic Timely

Maybe Collins’ mentor Peter Drucker thought it through better when he suggested in The Effective Executive that you set measurable six-week goals and ruthlessly examine and reset them every six weeks. That is SMART.

Unlike the inspiring but too unspecific BHAG goals, every six weeks you will see measured progress.

Maybe Drucker read St. Francis of Assisi who said, “First do what is necessary, then what is possible; soon you will be doing the impossible.“  Wow. The “impossible.” Maybe the way to get to BHAG is by SMART.

The Best Way To Find Your Investors – Prepare to Double Your Sales

Sometimes growing businesses need investors. Whether the investors are Angels who want to help or Venture Capitalists that want to rape and pillage, all investors are looking for proven concepts with a clear path for sales growth.

There are two ways great marketing can play a critical role in attracting investors:

The first is obvious: put together a 36 month plan to ramp up sales. And investors want to see a plan that is scalable: meaning, the marketing concept should be designed to expand in a unlimited way if they provide money as fuel.

Marketing should provide a great strategy (“Where will we play and how will we win.”) and then engaging and innovative tactics that demonstrate scalability and proof of concept.

Secondly, marketing should put together a great campaign to find and engage potential investors.

This, of course, is a very different target than your customer. But surprisingly, most entrepreneurs think that if they show investors a great business concept they will connect the dots and see the potential value of the investment. But the business concept needs to be sold in the language and from the perspective of this different audience.

Two campaigns need to happen : the one that successfully targets an unlimited pool of prospects and the one that markets to investors. They are different targets and need different messages. But first things first: put that scalable sales and marketing plan together and operate a great business – then putting the marketing to investors together will be easy.

Want To Double Sales? Here Are Four Things You Can Learn From The Gibson Guitar Company

What the Automobile Industry Can Learn from a Guitar Guru – The Conversation – Harvard Business Review.

Turns out the CEO of the thriving and growing Gibson Guitar Company is a graduate of General Motors Institute. So some professors from there (now called Kettering University) went down to Nashville to see if anything he is doing to make Gibson successful could be applicable to the car business (or any business that wants to thrive instead of just survive).

Here is a link if you want to scan the blog post on Harvard Business Review about the professors’ interview.

To summarize, there are four things that may be takeaways from the guitar business

1. Do not isolate yourself in your industry. Be part of your customers’ “ecosystem.” Spend time where they work and understand how what you do fits into their lives.
2. Find out what your customer is into and be a part of it. For example, Gibson found out that there was a odd statistical correlation between guitar players and NFL fans. So they have leveraged football events successfully with their customers.
3. Become obsessed with making Fans of your customers. And don’t be afraid- because making fans also means making enemies.
4. NEVER stop innovating. Surprisingly, success is your big enemy on this one. When you make a pile of money doing something, the danger is that you will think you have it figured out. You never have it figured out because things change.

I am listening to this guitar man, because there is no sweeter music than a thriving and growing success story.

Get Past Technology Denial to Double Your Sales

Do you know who this guy is? You might be able to relate to him if you’re living in technology denial.

Technology denial is something you have to move past in order to double your sales.

This guy to the left is ‘Dennis,’ a fictitional character from the first season of 30 Rock. His character refers to himself as ‘The Beeper King.’  In the show, Dennis ignorantly boasts that he is the last beeper salesman in New York, naively believing that ‘technology is cyclical’ and beepers will make a comeback.  While the show makes light of his quirky character and his struggling business, it has real life application in the sense that refusing to embrace technology can be associated with ignorance and lack of success.

Technology is always evolving, and to double your sales, you need to embrace it and understand how you can use it in your favor.

Here’s a quick quiz to learn if you’re living in technology denial:

1. Do you refuse to join Facebook?
2. Have you had the same computer for more than 4 years?
3. Is your mobile phone unable to take pictures?
4. Are you unsure of how to send a text message?
5. Do you still use an aol email account?
6. Do you think LinkedIn isn’t for you?
7. Do you read the newspaper more than you read news online?
8. Do you feel that technology is more for younger people?
9. Are your friends using technology more than you?
10. Would it be difficult for you to explain what Twitter is?

If you answered ‘yes’ to more than 5 of these questions, it might be time to embrace reality.

Getting past the ‘it’s not for me’ mentality is a step toward doubling your business. If you can keep up with technology, it’s going to be easy for you to exceed your sales goals.

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