Friday, May 1, 2009

Threadless...No More

The original pitch for Fossati handbags at start up weekend was to apply Threadless.com’s business model to high end handbags. Threadless is a T-shirt company that skyrocketed to popularity in 2007. Threadless business model is based on crowd sourcing and mass customization.

According to Wikepedia, Crowdsourcing is a distributed problem-solving and production model.

In its simplest form, crowdsourcing follows 8 steps:
1. Company has a problem
2. Company broadcasts problem online
3. Online crowd is asked to give solutions
4. Crowd submits solutions
5. Crowd vets solutions
6. Company rewards winning solvers
7. Company owns winning solutions
8. Company profits

Threadless follows this process to solve the problem, How to get an endless supply of hot designs almost guaranteed to sell on threadless.com. They ask consumers to contribute designs and to vet out the best designs. Threadless rewards winners for the best designs, taking ownership and profits.

It works because t-shirt design and mass customization are fairly simple. The compensation to winners is good and it’s become a platform for artists to promote their work. Even if you don’t win, you get a one of a kind t-shirt with your design printed on it for $12.00. This level of customization on a mass produced item at mass produced prices is called ‘Mass Customization’.

It worked really well for t-shirts and in 2008, threadless expanded to mass customization of bags. They partnered with Timbuktu, a bag manufacturer specializing in sturdy laptop bags.

Crowdsourcing and mass customization work well when you are printing onto a mass produced product like a t-shirt or canvas bag. It doesn’t work as well for more complicated product design like high end handbags. The model finally adopted for Fossati is call Social commerce. I’ll leave social commerce and how I settled there for another post.

Tuesday, April 14, 2009

Top Secret

Your mother’s maiden name is still considered the height of security. It’s used by banks and credit card companies as the most obscure question you could ask someone. A secret no one would every guess. I doubt that’s been true for the last 20 years and it certainly is not true for my two sons.

Their ‘Mother’s maiden name’ is plastered all over the internet. It is signed to thousands of public documents. It’s now the name of a luxury handbag brand.

On the final day of start-up weekend, my three remaining teammates and I discussed the merits of a name. We wanted something either French or Italian. Knowing that the challenge is picking something not already being used, I offered up my maiden name. It met the ‘Italian’ criteria. Although I never thought of it as glamorous, having had to spell it all my childhood as ‘F” as in Frank ‘oss’ as in Sam ‘ati’, they thought it had cache.

And so my handbag brand name became ‘Fossati’.

Monday, April 13, 2009

Startup Weekend Ann Arbor June 2008

‘Startup Weekend is a community building startup event.’ It’s like a mini Ycombinator, but 2.5 days instead of 3 months. And you get to go home at night. Local Ann Arbor businesses donated food and space. We were well fed and had 5000 sq feet to play around in.

Friday night, business ideas were pitched and then everyone gravitated into groups of their choice to work on an idea. 38 ideas were pitched that June evening from tracking and reclaiming stolen metals like copper to providing travel advice on an iphone as you visit a new destination. By Sunday 4 or 5 viable businesses launched. That’s amazing. Pitch an idea, form a team of talented motivated strangers and launch a business in 2.5 days.

It’s polite to bring something to a party. I brought homemade cookies and an idea to create a high end handbag business based on the threadless.com business model. I felt kind of like Reese Witherspoon in Legally Blonde. It was at Startup weekend in June of 2008 in Ann Arbor that Threadless for high end handbags was pitched to an audience. Not only did 6 people join my group but one guy stood up and said ‘I want to use the threadless model to make low end bags and if Cathy doesn’t want to then I’m going to.’ Hmmmm.

That made things interesting because I wasn’t sure whether people were joining me or him. As it turned out, most people had something in between a $30,000 and $10 handbag in mind. Something maybe around the $700 mark. Fortunately for me, this guy turned out to be a little Hitler, and the group shrank from 8 to 4. We became a much more productive team.

By July, a lot of those businesses had fizzled out. You have to wonder how viable a business is when it can be built in a 2.5 day weekend by a bunch of strangers thrown into a room together under time constrained pressure. It was a really great exercise in social and group dynamics. You got to see how people act under pressure really quickly. My team drifted away by late July too.

Startup weekend is where Fossati handbags began to take shape.

Thursday, April 9, 2009

Time Traveling

Time travel is possible.

You know you’re time traveling when:
• you call someone and ask if you can email them a handbag design and they say ‘email, nooooo. I don’t use computers. I got no time. ’
• you ask if you can email a handbag design to someone and they say ‘I don’t do email, FAX it to me’.
• ‘someone insists you work side by side with them through the month long handbag design process’ And you live across the country. Or in another country.

It’s been a blast traveling to the past to find a high end handbag manufacturer in the US. Fortunately, I found one of this era. And She’s really good.

Have you done any time traveling?

FossatiUS

In the Pursuit of Happiness

The last 19 months I've transitioned from being a corporate executive to an entrepreneur. It's a hard story for me to tell because I'm still in the transition. My April 6 launch of Fossati US marked a new stage of my transition. It seems time to start to tell the story in case it helps someone find the courage to start something new when they find the way they've known, the path they've followed, for years is gone.

Last Career: Automotive Executive: Twenty plus years working in the automotive and automotive finance industry. Most recently employed as Interactive Marketing Director, Chrysler Financial. Responsibilities included overseeing all aspects of the interactive marketing initiatives from policy, strategy, planning, execution and maintenance.

New Career: Entrepreneur. CEO and Founder of Fossati , a boutique luxury brand specializing in exquisite limited edition handbags.

I left Chrysler along with a number of colleagues on the day Daimler signed over ownership to Cerberus, August 3, 2007. Becoming an entrepreneur isn’t too different from directing chryslerfinancial.com except I have no employees, no multi -million dollar budget and high short term personal risk. In the long term the risk is much lower because when I come through this, I’ll have many revenue sources.

Being at a cross roads in my career and life, I realized I could do anything. I have so much at stake and am in such a risky position that doing anything is less risky than doing nothing. The job market is abysmal. My sister and I had joked about selling handbags and shoes for years. As it turns out handbags and shoes are lucrative. In fact, they carry most big brand names. I learned most big brands have sullied their brand by mass producing and manufacturing in China. Not only will you see your bag everywhere, but you can buy a knock off made in the same plant, for a fraction of the cost on the streets or at a ‘purse-party’. Terrorists sell knock offs because the profits are as high as selling hard drugs but the penalties are almost nothing. Your purses are taken versus years in prison. This has opened the door for people like me to enter into the market. There are a few successful examples of women without design backgrounds launching boutique brands specializing in handbags. I followed their path and created Fossati.

After nine months of planning and preparation, I launched Fossati, on April 6. Fossati is a luxury brand specializing in exquisite limited edition handbags. Each handbag is meticulously hand made in the USA of the finest materials. My factory insures all their workers and many have worked there for over a decade. We use only top quality ostrich and reptile skins and buy only from reputable sources that follow environmental guidelines. Our editions are limited to 100 bags in any design, material and color combination. Fossati is a socially responsible luxury brand, contributing to the US economy.

At Fossati, luxury means exquisite craftsmanship and materials, classic styling with an edge, exclusive, limited-edition handbags and personal service. From the convenience of ordering online to the knowledge that you will not see your purchase everywhere – all priceless, rare little luxuries.

Visit us at fossatiUS.com

Obstacles to Overcome: You’ll have a lot of bad ideas that don’t produce any income. You’ll work hard and not earn a dime for months. You’ll need a way to survive financially. You must be confident, independent, determined and persistent.

The best way to have a good idea is to have a lot of ideas. That means most of your ideas will be bad. Learn to evaluate your ideas quickly and cheaply. Move on from the bad ideas.

I wanted to pursue an idea of creating a fashionable solution for mild to moderate hearing lose. My family has hereditary hearing lose. My mother is very hard of hearing; my sister is losing her hearing, as am I. It’s estimated that half of people over 40 have mild to moderate hearing lose. The only available solution is hearing aids. Hearing aids are expensive, not very effective (for my type of hearing lose) and have a social stigma. I wouldn’t want to be seen wearing a hearing aid. I can pass for 30-something but with a hearing aid, I’d look old and decrepit. Even the most expensive hearing aids look like you have a wad of gum stuck in your ear. I found the industry is moving in the direction toward fashion and function. In fact Siemens came out with a hearing aid in 2008 that has fun coverings and makes a fashion statement. It retails for $3000 per ear. I abandoned my idea to produce a mid priced digital Bluetooth hearing solution that filtered sounds and worked with modern gadgets because Bluetooth chipsets had not reached a small enough size to create something fashionable. There’s also a lot of competition and not much margin. Four months learning about consumer electronics and no productive outcome. That’s part of being an entrepreneur.

In January 2008, I had an opportunity to bid on Chrysler’s dealer web site initiatives. Unfortunately the bidding was limited to a small set of vendors and I didn’t make the cut. Having invested time into the idea, I tried taking it directly to dealerships. After months of talking to dealerships, it became clear that dealerships were stuck in a time loop somewhere back in the 1950s. I decided to pursue something that sounded fun; something not so serious and dominated by gladiator types. It was June 2008.

Advice for Others: Start your own business while you’re gainfully employed. Know when to leave. Some may consider it a conflict of interest to start your own business while earning a salary. That was a rule made in a different era. It may have been true in the days when you could count on your employer for a stable lifelong job. Times are different. It takes time to build a network of colleagues you trust and can rely on to deliver. Start building your network and client list when the stakes are lower.

As an employee, your employer can decide to ‘cut –you-loose’ at any time. They don’t need a reason. Usually the real reason is cost cutting. They can hire someone with less experience for less money that costs them less insurance. You’re most vulnerable after you’ve accomplished your goals. Especially if you’ve made it look easy because you are competent. The best time to leave is when you’ve accomplished your goals, and have the most offers. Leave, even though you want to enjoy the fruits of your years of hard work and dedication. Leave.

Tuesday, October 14, 2008

Automotive machine churns on

The banking and market meltdown, the credit crisis, recession, and ‘global warming’. Yesterday’s spiraling gas costs, US automotive over production and poor product mix. ‘Dealer consolidation’. Detroit is a nervous town. The question on everyone’s mind is how much change all this turmoil will cause and which US automotive manufacturers will survive.

All three are scrambling to raise capital, talking about mergers and sell offs. They’ve already been rushing to cut inventory and produce products consumers want at competitive prices. They’ve laid off employees, outsourced, cut production, discounted, discounted and discounted even more. With all the challenges there is some normalcy, the machine churns on. A number of online initiatives have launched recently. Let’s take a look.

Chrysler LLC recently launched new dealer sites focused on driving more revenue. The refreshed sites do a nice job of repackaging existing functionality. The corporate dealer sites are fully integrated into the brand sites. You can’t ‘visit’ a dealer site, you can view inventory, request a quote, schedule a test drive etc on Chrysler.com, Jeep.com and Dodge.com. They incorporated google maps to find dealers near you.

Still missing is the ability to search inventory across dealerships and accurate pricing. Still missing is any attempt to incorporate the social sharing tools all online junkies have come to expect on every site.



Ford continues to provide store sites for their dealerships. They’re all template based, but at least Ford let’s dealers upload videos to inject some personality into the site. Here’s talking at you. Being able to search inventory across dealerships is a nice touch.


GM also provides template sites for its dealers bu even if they were links out it would be hard to tell. Competition for dealership business is fierce and owned by a few big players. The only way for vendors to make money is to resell a template based platform. Most dealer sites, regardless of who implemented them, look very similar with similar functionality. Almost all use the same data and image sources. Where are the sharing features? Where’s the conversation? Where’s the talking at you video?



There are some renegade dealerships experimenting with virtual F&I and accurate pricing. These are the exceptions; innovation generally comes from startups leveraging the lead generation model. Lead generation is the automotive retail monetization model of today. Leads and ads.

Domestic auto companies and dealerships continue to do things the way they’ve done them for the last 10 years. It’s web 0.5. Accurate pricing and a shopping cart would take them to web 1.0. Simply adding social sharing tools would move them onto the beginning edge of web 2.0. Matching the dealerships mega store business model to help them upsell and help consumers shop their entire inventory based on needs. Errr, No.

Maybe in the next few months as more dealerships go under we’ll start to see to real changes in how cars are sold. Both online and off.

Triiibes

In early August, I was invited to join Seth Godin’s online community, Triiibes. It’s a gated community, the price of entry was preordering Seth’s book 'Tribes'. All members were also ‘approved’, only 3,500 people were invited. For me, Triiibes has been a study in how leadership style and exclusivity effects group dynamics.

I didn’t know what to expect when I joined, but I have been a fan of Seth Godin for over a year and was thrilled to be invited. The first week I got used to the format. I created my profile, read the rules, accepted some friend invitations and sent some of my own. One of my new friends invited me to join a game where the leader starts a story and tags someone to write the next scene who then tags the next person. This was incredibly fun to watch the story unfold and see where each person would take the story, until someone didn’t participate. The leader didn’t step in to tag someone new. I felt this same kind of disappointment with a lot of the threads.

With 3,500 members, there’s a tremendous amount of activity. I could read for hours. I found it hard to catch a thread at the beginning that I could contribute to meaningfully. Many of the threads were over by the time I could jump on. Most seemed to last one or two days and I found that many people felt the same way I do about social media. Conversations end abruptly. The relationships are shallow. Someone you’re having a conversation with will leave and you’ll never hear from them again. You never know why. It’s disconcerting if you expect a reply. Triiibes is better than most social networks in regards to depth. Some threads went on for days and the conversations were very deep. Certain people emerged as natural leaders.

Anne has a natural talent for encouraging more conversation. After each reply to her post she’d make an insightful comment and pose another question to encourage deeper conversation. Becky, is amazingly prolific. She flits around contributing to so many posts. She’s an amazing story teller with tremendous depth. Mary added the hard core marketing perspective. The hard love. You’ll notice I don’t mention Seth Godin.

It wasn’t that Seth wasn’t there, he was. He set the ground rules, he posted, and his posts ran longest and had the largest participation. He was a leader, but he took a background position. I learned to pick up his posts from the home page and look at his page to see where he posted. He was very active. He set the rules and let the tribe lead. He encouraged and complimented members. He let the natural leaders emerge. He did enforce his rules. One was that triiibes was not a place to promote yourself. One person was excommunicated early on. Then someone tried to excommunicate an entire category of members in the name of Seth. Weird.

Three weeks in, a few people still had the default monkey picture. One member wanted to kick these people out. He called his post ‘The thinning of the tribe’. He attempted to change the rules and used Seth as his lever. His point was that Seth had asked everyone to upload a picture and these people had been disrespectful in not following Seth’s request. They should be ‘thinned out’ if they didn’t comply. He went as far as recruiting people to write to the slackers to update their photo or else. A few responded. They had been incredibly busy or on vacation. They were obviously people you’d want in the tribe. Seth’s only input was that it would be too much work to remove the profiles. This was a very long thread and many posts and comments about the monkey pictures followed for weeks after. The original poster changed his story to ‘It was only an experiment’. This guy is a leadership coach who works with politicians. Whew!

In September, Seth held a webinar. The agenda as purposely left open. Two people that hadn’t been strong leaders in the tribe led this initiative. They organized it, collected questions, and conducted the interview with Seth based on the questions.

I’m an even stronger fan of Seth Godin after hearing him speak about an experience we had shared vicariously for weeks. The most telling answer, paraphrased below, was to the question of what you keep score of.

‘What you keep score of is important in whether you see yourself as successful. Some people measure money or traffic. I measure how many people I can touch and help to be successful. My goal was to take the idea of tribes and flesh it out and allow people to experiment with it; to push people to build their own tribe. I believe in peoples’ power to make a difference. The biggest thrill would be to have someone come back months later and say ‘we never conversed during tribes but I did what you said and it made a huge difference.’’’