Stay up-to-date via RSS!

Howard Schultz has long been one of my role models. Not only does he lead with vision and intergrity, he believes that community is what make his business successful.

I had to write a paper on leadership principles, that I put at the end of this post in PDF form for you to check out. I chose Howard Schultz as the person, but likened some of his philosophies to what we see on the internet today.

Some of the references include Schultz’s vision of Starbucks (in building a positive, friendly environment) and how it can be applied to building websites or web applications.

In essence though, the paper really shows what it takes to accomplish a goal. Click the download link to check it out.

**Due to this report being downloaded over 3500 times, we have enacted a donation tab to cover server costs. Please donate whatever you like for the download, but it’s not required!

On another note, in the research for the paper, I came across the Starbucks mission statement. I am going to summarize the points here:

“Establish Starbucks as the premier perveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.”

The following six principles will help us measure the appropriateness of our decisions:

• Provide a great work environment and treat each other with respect and dignity.
• Embrace diversity
• Excellence in purchasing, roasting, and delivery of our coffee
• develop enthusiastically satisfied customers
• contribute positively to our communities
• recognize the profitability is essential to our future success

I want to point one thing out. Two of those six points deal with the business itself. The other four deal with things related to the business, namely people.

Starbucks aims to satisfy you, the customer. They don’t aim to serve coffee, although that’s what they do to make money.

So the next time you are trying to add value to your organization, think real seriously about what it is you are trying to do!

Serve great coffee or build great relationships?

I just learned of a company, thanks to TechCrunch, who has bootstrapped their way to $10 million worth of revenue and 19 employees. That company is SmugMug.

SmugMug is a photo sharing service, with some more upscale features including a slick interface, great customer service, and options of ordering prints. Judging from the reactions of the commenters on TechCrunch, there are a ton of devoted customers who really enjoy the service, even though they are paying for it ($40/year or $150/year).

This really got me thinking about two things:

• What it takes to bootstrap a business
• How can a company charge for a service when there are good, free providers

What it takes to bootstrap a business

There are basically two camps in business creation. You can either start a business and work your way to it being profitable, or you can seek investment (whether that be angel or venture capital).

My personal preference is to see bootstrapping organizations. Have you ever heard the saying, “Those that can get bank loans don’t need them.” The same thought pattern applies. If management is competent, accounting is good, and there is revenue – a company doesn’t need investment unless they have some earth shattering development underway.

On the other hand, if a company is losing money hand over fist and has nothing to show for it, why would someone want to invest in them? There is a myth surfacing about how the goal of entrepreneurship is to get funding… And frankly, that disturbs me.

The truth is, investors don’t pay your salary, as Wil said (the founder of GoBigNetwork). They are looking for their venture capital to be invested in the business, not in a founder’s pockets. Keeping a founder broke, keeps him hungry.

Unfortunately, that is a rough thing to say (and accept…) It took me a while to get that thought through my head. But when you start a business, any consultant will tell you that you will not be paid for the first year. I wish I could say that that wasn’t the case, but oftentimes it is.

How can a company charge for a service that has free competition?

The second part of my dilemma is wrapping my head around how a company can charge a fee for a service that already exists. And when it comes down to it, the answer lies in perceived value.

I am not a photographer. I don’t claim to be. But I do enjoy taking pictures, as you will see from my personal website (generic photoblog..) What smugmug.com does is create supreme value – and back it up with great customer service.

Some of the upper end services which differ are:

• Adding watermarks
• Selling downloads as well as prints of their work
• Allowing customers to use templates,
• Fully customize the look and feel of their albums
• Use domain names

But all of those services add value. The thinking of the company is to recognize the differences between Flickr and SmugMug and expose them. For some, Flickr is a better fit, so choose it. For others, SmugMug works well, so sign up for that one.

In conclusion

I have to say, I love stories like this. Stories that go against the grain and prove everything that you know about the internet wrong.

I applaud the organization, namely the CEO Don MacAskill, for developing a winning system that requires a fee for access. And I commend them for developing an insanely profitable business with no funding.

There are no rules on the internet. It would be wise for all of us (myself included) to remember that.

Brian Scudamore is the founder of a bootstrapping, success story; 1-800-GOT-JUNK.  Not only is he strong willed, he is smart; and he has people around him that believe in his vision..

The Beginning of an Idea

1-800-GOT-JUNK was started in 1989, with $700 and a beat-up pickup truck.  Brian was just out of high school and had his father’s lofty expectations to fill (a liver transplant surgeon).  Imagine the father’s reaction when Brian told him he was dropping out of college to become a fulltime junkman!  

Within a week, Brian hired his first employee, a friend by the name of David Sniderman.  Not knowing too much about the hiring/firing process, he felt it just seemed easier to turn to someone he already knew.  On top of that, he also felt that if he wasn’t willing to make the investment in employees, then he was questioning his own faith in the business.

The Build Out and Expansion

Rather than outsourcing or personally expanding his company’s reach, Brian decided to franchise the business model.  And his recipe for success: Take a fragmented business, add clean shiny trucks that act as billboards, uniformed drivers, on time service, up front rates, and a young culture. 

One of the reasons his company has grown so quickly is the centralized technology that is uses.  All calls to 1-800-GOT-JUNK go to a central call center.  Using that system, all pickups are scheduled and dispatched to each of the franchises located in 47 of 50 US states.  The franchise partners then log in to a central intranet to see what work needs to be done.

Is this kind of thing profitable? 

In 2004, 1-800-GOT-JUNK did about $32 million.  I would say that is a healthy return on investment for a $700 startup, bootstrapped and still owned solely by the founder.  The goal is $100 million and 250 franchises though. 

Not too bad for a junkman..