Focus Focus and Focus

This post is mostly about me scolding myself,
Overall in life and specifically in business I am a big believer in Focus - a company should find what it is good at and push on that front, focus on a product, a kind of customers, a distribution channel and be the best in the world in that.
However, slowly in Sabi I started to diverge and in a way Sabi's focus was ALL OVER THE PLACE. I noticed it yesterday when I was meeting a potential investor, it was less about the investor's feedback (which he actually really like Sabi) it was the fact that I noticed that instead of focus, maybe because I wanted to have ready answers to investors I was catering to waaaayyy too many things.

Well today (which is my birthday Dec. 22nd) since it is as good day as any for some reflection I am taking a look at Sabi and trying to see where do we want to focus on in order to maximize our success.

On another note - The course I structured with Bezalel is getting to his ending and in the last couple of weeks I received some amazing ideas for products. It basically proves the point (at least in my mind) that smart and creative people can come up with tons of good ideas and at the end it is all about execution of the ideas.

Merry Christmas and Happy new year to all
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So what do you do all day??

This is basically my mom's question, it took me quite a bit of time to explain to her what is it that Sabi does (which in a way attest to the fact that we need to make the schpill simpler), but everytime they ask me whether the money is in yet - and I respond not yet in a little bit longer it comes up to "SO WHAT DO YOU DO ALL DAY?"

Although I am 99.9% certain my mom isn't one of the avid readers of this blog (if it has ANY avid readers at all) I figured I might as well write about it...

So here goes, basically I look at the day of the closing as the ZERO day where everything starts moving from, yes I talked to many many people and am working very hard in selling the concept and the idea, but there are budget limitations and also not quite easy just selling a concept without specific products yet.

I am constantly working on refining the plans to this Zero day:
Operational plan - What would be the costs of the products, where will they be manufactured - not trivial - the initial thought was in China, but with the Israeli goverment giving grants to manufacture in Israel as well as specific expertise in some plastics areas as well as the quite limited number of products and quantity we will prepare initially (20,000 per SKU) it might make sense to manufacture not in China.

Design - I found the design shop (after probably meeting 50 shops), and am working with them on insights, research, ideas and work processes. In addition, I launched a course with Bezalel school of design to design products for Sabi - and communicating with the students and the professor can take time as well. Conducting focus groups and brainstorm sessions in different places (Boston elderly care center, eons.com etc')

Financials - Constantly updating the plan to see that we will still deliver on time and on budget.

Board - I am currently finalizing the board composition and will hopefully write about it in the coming weeks (we are almost there).

Reseach - I believe that in the last 6 months I read every book I was able to get my hands on on the senior market (bought tons of them on Amazon) - firstly, most of them are just not good - it is very very tough to read a book which is boring, badly written and with no conclusion only to find a couple of nuggets - Near my bed stand are books such as "Boom - marketing to the ultimate power consumer - the baby-boomer woman" (Mary Brown & Carol Orsborn) ; "Turning Silver into Gold" (Mary Furlong); "Dot Boom - Marketing to baby boomers through meaningful online engagment" (David Weigelt and Jonathan Boehman) to "Groundswell - winning in a world transformed by social technologies" (Charlene Li and Josh Bernoff) and "Viral Loop"

Investors - Well it ain't over till the fat lady sings - so I am constantly talking to investors

Legal - Linked to the line above there is always work there until we finalize the round

Networking - Constantly talking to people that can potentially help Sabi - lawyers that can connect to retailers, ex retailers, reps, buyers, people who launched product companies, Sloan lectures and HBS lectures etc' etc'

Well so I am kind of busy...

Full gas in neutral

This is one of these blogs that I just need a place to vent, I haven't written in 20 days since I was really hoping that this post would be the happy conclusion of the funding. However, life does not work like that, so what is the current status???
Overall, I am looking to raise an angel round of $1M, I budgeted it all and was looking for a budget that would allow me to work (assuming zero income will come in) for 18 months and focus on Sabi and not be over busy all the time with fund raising.
I promised my investors that I will only "call" the money when I have the full commitments, what happens is that I currently have ~$750K of confirmed funds and still need the extra $250K. I have quite a few hot leads that I am talking with but nothing concrete yet.

The thing is that it is like a dance sometimes you move two steps forward and one back and sometimes it is the other way around two back and one forward.

What I find very difficult is the full dependancy on someone else, I know I know in sales it is the same story but I can't say it doesn't frustrate me. I am sitting at home in my office, I pushed forward everything I can to the max. Researched and talked to gazzilion of people, set up the operational plan, structured the design process, talked to retailers (which you can do to a limited extent since I don't have the products ready so far), have the legal and structures in place and now just need to put the fuel in the car to get it moving...

This is very much counter my character to stand still, I am literally climbing the walls
BUT I am certain we will get it done and close this round and sooner rather than later and then we will move full steam ahead

That's it - wow I really needed that
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Funding is like the GMAT...

I just came back (yesterday) from a 10 day business trip to Israel working on several fronts:
I officially launched the joint course with Bezalel School of Design, gave a presentation with regards to what we are looking for and now it is in the capable hands of the two course instructors Yedidia Blonder and Raanan Volk and the ~ 45 capable and creative students.

The main purpose of the trip was the close the funding for Sabi, as I said before it is very difficult to get funding for such a venture in general and at the current market status specifically.
I actually got very warm responses, I believe it also has a lot to do with the great progress we made as well as the fact that this time we had specific products to discuss and share (previously it was just the concept) and if everything works well I really hope that in the next several weeks I will close the round and start really pushing the business forward.

A good friend told me before that until one was able to raise angel money one doesn't know what a hard sale is - well I have to agree, the ability to sell someone on your idea is a great great achievement. As an entrepreneur one is ALWAYS selling but when pitching for money an entrepreneur is in hyper drive.

The analogy I made to GMAT is something I really wish for, when I applied to Biz school the GMAT was one of the hardest hurdles initially, but the second I finished with it (720 after 2 tries for those curious) it became in significant and I was totally focused on the rest of the application - this is what I am hoping in Sabi's case so I could focus on the actual business and move forward and put the funding part to rest

That's it for now
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If life is like a roller coaster - then being an entrepreneur is like living in Six Flags

Today I just wanted to share something which for some will seem quite trivial and in a way a daily manner - the emotions roller coaster in the life of an entrepreneur

In the past several months I had amazing highs and lows and in a way sometimes I miss the stable lifestyle I had before.
Every meeting you leave you are either on cloud 9 or at the bottom of the abyss, there are very few meetings, calls, conferences I held that left me neutral.
The interesting thing is that both good and bad meetings make me more resolved and eager to prove either that I was right or that the other person was wrong...

I am also a big believer in "Analysis Paralysis" - basically, the more you dwell on an idea and research it the higher the prospect of killing it.
This doesn't mean that I don't believe in research and learning about the topic (working in both Intel Capital and McKinsey taught me that), it is just that there is a lot of research that shows that successful companies are essentially working on plan C and D so the importance of getting it right on plan A isn't that important - enough to read Professor John Mullins (from LBS) Getting to Plan B: Breaking Through to a Better Business Model, co-authored with Randy Komisar, a partner at venture capital firm Kleiner, Perkins, Caufield, & Byers to understand this point.

This means for me that the drive to start something in what I believe to be the right market is more important then getting all of the pieces right from the get-go, the idea is to surround yourself with top caliber people and learn from everyone, be flexible to adjust and make fast corrections on things that are going wrong.

Hence - my new focus now is trying to find a co-founder that will complete my skills and bring new perspectives and spirit to the team.
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Dude - you are old (Marketing messages)

Today I want to raise another challenge I constantly face - How do you sell a product to a customer that by buying this product he basically admits something about himself that he is trying to avoid/hide/deny?

This question is one that I get quite often, usually in the context of SABI's products. Since we are selling products for the aging population, by actually selling our products we are making people feel old... which counter what we are trying to achieve making people feel cool and good about themselves.

There is a lot of research out there:

• Seniors in the US feel younger than their actual age, despite the prevalence of age-related health issues a total of 64% of those aged 55-64 in the US reported in February 2008 that they felt younger than their actual age according to a survey by Energizer Holdings. Despite this finding, around half of this age group suffered from high blood pressure while approximately 40% could be classified as obese. Health problems such as these did not detract some Seniors from feeling young in this region.
• Old age is increasingly seen as a positive life stage by consumers – the Pew Research Center researched consumer views of old age in 2009 and found that older adults have a largely positive take on their Senior years.Spending more time with family members was the key benefit of growing older cited by respondents aged 65 and over: around 70% said they were enjoying more time with their family and 28% said that this was what they valued most about growing older. And additional 25% said that they valued spending time with their grandchildren most. Pew’ study also showed that around two-thirds of respondents cited more time for hobbies,more financial security and not having to work as major benefits, while around 60% felt that older age offered them more respect from others and less stressed lifestyles compared to when they were younger. Notably, greater financial security was cited by only 14% of older adults as the most valuable thing to them about getting older, emphasizing that emotional wellness factors are the key positives coming with advancing years ratherthan practical/financial benefits. Interestingly, the research also showed that older adults today are not necessarily experiencing these benefits to quite the extent that younger consumers expect to enjoy them once they get older, suggesting that reality is not quite as rosy as expectations formed earlier in life.
• However, this does not diminish the clearly positive take that Seniors have on the opportunities afforded to them in later life.

The paradox between age pride and fear of aging explains why older consumers do not relateto many adverts

• The Senior population grouping consists of several different sub-cohorts, meaning differences in attitudes and behaviors must be recognized
• Similarities exist between what older and younger consumers want, meaning that they should not be excluded or taken for granted in product marketing
• Many older consumers feel that advertising does not speak to them
• Older consumers are more likely than average to rely on word-of-mouth

Implications for SABI: Shifting the ‘center of gravity’ in marketing campaigns can help to target down aging consumers. Late Mid-Lifers and Seniors are particularly likely to see themselves as 10-15 years younger than they are.

Consequently, marketers must help them fulfill their aspirations by a) emphasizing the relevance of products targeted at younger age groups to them, and b) by avoiding creating a staid image around products deliberately marketed at older consumers.

The question that I was trying to solve is HOW? How can I serve them and after quite a bit of consultation it hit me - THIS IS BASICALLY HOW PHARMA COMPANIES ARE SELLING EVERYTHING.
It is enough to sit in the evening in front of the TV and see a pharma company ad to understand what am I talking about http://www.youtube.com/watch?v=LYwljWbg2Vs; http://www.youtube.com/watch?v=UKDzeQSIp2M&feature=related; http://www.youtube.com/watch?v=RBzfK8dFgtM;

The idea is to show the problem and then to show how you can improve the quality of life - it is a simple strategy that all the Pharma companies are using, but very few (other than infomercials) CPG companies used - but it is a very effective and valid form of advertising.
Before I realized that I was really struggling with it... a good friend told me just imagine what it was to sell Viagra (a discussion we had after Liron had a case about it in Sloan). They had to make the patient aware of the situation (he probably was) then he had to acknowledge it (and not have excuses like stress, work etc'), then go to the Doctor and ask for it and lastly ask at the counter a very specific drug with clear association -and you think selling SABI might be a challenge...
That's it for now
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Building a brand vs. Building a product

Today's thought I wanted to put into writing is why did I opted for building a brand and not directly going into product.
This question can also be restated as the feedback I sometime gets from potential investors:"We really like the idea but show us some products" - That again brings the point that I was focused firstly on finding areas in which I can focus my products on, and that it is more about building a good brand, which worth something, rather than one specific product which is usually not sustainable.

I looked in my research for different product categories I want to try and focus on (there are potentially more):

1. Kitchenware - Probably we won't focus on it early on, several good competitors including OXO and Kitchen Aid and more
2. Living room products - This is an area where we will focus on later if we believe we have great products, that answers unmet needs or solve things better than other - also we would look for a category and not just one product (we have several great ideas there)
3. Bathroom products - I think this is an interesting area to focus on
4. Pharmaceutical support - This is our initial area of focus and where we have great discussions with several leading retailers
5. Leisure products - Very broad category and quite similar to the living room products
6. Auto aids - Similar to the living room products
7. Bed room products - Similar to living room products

Naturally there are quite a few others such as gardening, personal care, supportive products, maneuverability products and many more.
We decided to choose which one to focus on based on the following criteria:

• If we have a great products that we believe are simple and easy to use
• Maximum gap between need and current availability of solution in the market (basically a combination of most pain point bundled with the competitive landscape in the area)
• Least challenging sales channels, or areas which we either have good rapport with some buyers or track record
• Highest potential margins

This is in a nutshell were we will focus our brand, the idea is to launch between 5-10 products in the chosen category and later do smart merchandising to see which ones work and fine tune the ones that don't and push more in areas which we feel we have something that is working.

Again - we are about building the leading lifestyle enhancing brand for the aging population and not just about coming up with the best product
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The seniors market - or why this is the market Sabi decided to pursue

Firstly, and I know I know I know this is a challenge - NO ONE SEES ITSELF as a senior. There are tons of question marks??? regarding what is considered senior - I am looking at 50+ although I don't view them as seniors just using this term (sorry sorry sorry). There are several other names but non of which is really good - seniors, maturing, greying, aging, 3rd age - let me know which one do you think is best. Within these markets there is the 50-75 and the 75+ populations - we will use the term the boomers for the 50+ for now.

You (which is probably just me since I am very skeptic anyone is reading this blog) are asking yourself, why go to such an unsexy market - the aging population???

Here is some info:

• Seniors are the fastest growing and largest age group (aprox 40% of the population) - Every eight seconds, an American turns 50
• 50+ are responsible for more than 40% of retail spending
• Seniors today are very different from the previous seniors - the first boomers -- members of the generation born between 1946 and 1964 - just turned 60
• Seniors’ attitudes towards age are changing - For example, the average age of first time Harley Davidson owners has risen to 59 years and Ferrari are now designing cars to
  make them easier to get in and out of so as to appeal to Seniors
• The Economist reports that 95% of marketing and advertising budgets are still aimed at consumers under 50 years old (2007)
• A survey by OMD UK finds that 86% of seniors feel ignored by marketers (2008)

This is a combination of research findings from McKinsey, Economist, Barron's, DataMonitor and more

For me all of the above data shows there is a space for an interesting play here

What I discovered is that there is a lack of brands catering to this space -most of the brands I found were either pharma (Viagra) or luxury cars (BMW, Merc etc') and there are no real consumer brands or very very few of them that are actually catering to them.

One such brand is OXO http://www.oxo.com/ , which I love and has done an amazing job with targeting this population but with the help of amazing products and smart design created a universal design that fits everyone. Another interesting brand I recently found is Arc42 (couldn't find their official website but can be seen in several shopping sites) http://www.yoursif.com/acatalog/Online_Catalogue_ARC_42___New_Saucepans_1.html

SABI is all about creating cool and innovative brand of products to help and improve the quality of life and easy living of this growing population

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So why non-tech??? - for me

In my past I worked as a Venture Capitalist (a junior one at that) at Intel Capital, and discovered that although I really like the work and enjoy it since my background was not in engineering etc' I am always lacking the level of understanding I have compared to more technical people (especially in Intel were one is surrounded by top technical people).

While I believe that smart people can learn ANYTHING and quite fast if they set their mind to it (After working in McKinsey NYC this was basically my biggest revelation), I think that a person should work in and come from the main backbone of the organization - what this mumbo jumbo means? - If you want to work in a bank be a banker, if you want to work in a CPG (Consumer Packaged Good) company be a marketer etc'- since I believe in entrepreneurship and not the biggest believer in the new Web 2.0 start-ups (I guess now I will need to publish a thread on that) I wanted tp pursue areas of business I am strong in - hence non technology ventures.

Secondly, I discovered in my short life that if one is passionate about something he will be way better than someone who is equally smart and capable but not passionate, moreover, someone who is passionate about something, I believe, will be way better than a way more qualified individual even - since I discovered that my hobby is business (Reading the FT, WSJ, and any business book around like it is the best thriller novel has been something I loved forever) I wanted to pursue a business venture rather than an application, component or more technical venture. Something more tangible which I can relate to.

Lastly, I believe that most of the talent (especially in Israel) currently lies within the High-Tech world. This is where the pay is better from the start, it is global (usually) from day one and your mind is competing with similar minds worldwide - hence the best talent goes there. According to my education in University of Chicago GSB it means that there is a gap someplace else - and I believe that place to be the low-tech side of the world (I specifically mean the start-up world and less in the leading corporations)

Just my 2 cents
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So What is SABI?

Let's start with what is SABI??? and later I will explain how I got to think of it...

So SABI is a Japanese term for " beauty or serenity that comes with age, when the life of the object and its impermanence are evidenced in its patina and wear, or in any visible repairs"

I decided to create a brand catering to the growing aging population in the world, and wanted to find a name that was:

• Cool and easy to pronounce
  
• Not ecessarily associated with age (preferabally not at all)


• I wanted to have a nice Asian flavor to it due to both the aesthetic view they have and the way the Japanese treat their seniors

On the left you can see the overall look and feel of the logo and the brand - The products will incorporate another couple of colors but we wanted a more iPod look, crisp, cool, young and slick

The great (or atleast I think it is great and dozens of focus groups I help as well :-)) design was made by good personal friends of mine Herstein-Cassuto studio http://www.hc-branding.com/ a husband and wife extremely talented team of brand designers

Later I will explain what the brand is and how I got to the idea
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Blog 101

OK,
So I figured it is time to set up a blog...
Why?

1. Because I thought this will help me set my thoughts in an organized manner
2. I met the founders of a company called Hubspot www.hubspot.com - this company is pushing a theme regarding in-bound marketing, which basically states that today the out-bound marketing (the traditional route) is quite obsolete and one can build great presence by being active on the web (SEO, Blogs, Twitter etc')
3. I keep discovering that while it isn't easy to get money for a technology venture - I believe it is way harder to get funded for a non-technology venture and wanted to post my thoughts in here (if it interest anyone)
4. It is an interesting and exercise and my curiousity to better understand it took over me

That's it for now

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