Some of you may have been wondering about online affiliate marketing, and whether you can run a successful online business based on commissions of affiliate sales alone. I’m here to tell you that yes, you absolutely can. Small-time bloggers all the way up to multi-million dollar companies are now cashing in on affiliate sales. So what exactly does online affiliate marketing consist of? Breaking it down into simple terms, it begins with writing about a product or service (promotion), which typically includes a special tracking link (referral) to that product or service. If the reader clicks that link, and then makes a purchase, you earn a commission. Depending on the affiliate program you belong to, you can earn anywhere from 1-50% or more!

Imagine you just bought the perfect pair of headphones and you want to recommend it to your readers. Simply write a blog post and add an affiliate link to the product from your website. If one of them buys it, you make money. One of my favorite affiliate programs is through Amazon, which pays a commission anywhere from 2-10% depending on the number of sales you make and the type of product being sold. The Amazon Associates Program is a great choice for beginners. Not only is this a highly-popular, and well-trusted brand, but Amazon sells a vast range of products in a number of niches. Whether you’re interested in books, electronics, or gardening tools, I bet Amazon has it. Some people pick a small niche and focus on that. For example, is all about electric shavers, razors, and other shaving accessories.This can be referred to as a “niche” site. They go into great detail reviewing all of the top shaving gear, and they make a pretty penny doing it.  In fact, it was sold in the not-too-distant past for over $60,000 on Flippa. Not too bad considering we’re talking about the promotion of shaving accessories! Other product review sites take a much broader approach to affiliate sales, and may include products anywhere from headphones and laptops or other electronics, automotive accessories to garage tools and gardening equipment. This is different from a “niche” site, because there are a number of different “categories” all within the same website. Both approaches seem to work, though picking a “niche” is probably cheaper to manage and requires knowledge on a much smaller range of topics. If this is your first attempt at online affiliate marketing, picking a “niche” that you are passionate about and familiar with is probably the best way to go about it.

As you can see, the number of different products that are found on Amazon alone are quite advantageous when it comes to making the sale and targeting a wide range of customers. There seems to be no sale in the recent past of that website, but based on the number of visitors they receive each month and the high price tag of many of the items they promote (cameras, TV, etc.) I can bet they are doing better than most.

amazon associates programRemember, you don’t NEED to have a website to do this. As long as you can send visitors to Amazon through that affiliate link, you can make money. Maybe you have a large email list that is targeted for products in your niche. Maybe you are a social media guru. Regardless of how you plan to capitalize on your traffic, Amazon will pay you if you can make them sales.

While it may sound easy, achieving success in online affiliate marketing isn’t always that simple. Many people have tried and failed to make a decent living. Others have been able to quit their jobs and make a full-time income off their affiliate sales income. Whatever your hopes and dreams may be, the Amazon associates can help bring in some cash if you are produce valuable content and can successfully send readers to make a purchase.

As a growing business, one of the most important things you do each day is identify people who will help you take your business where you want it to go. Recruiting in this job market is challenging and applicants have many options.  Learning as much as you can about their background, skills and experience while providing them an opportunity to find out about you and your business may be a tall agenda for an interview.  There are a few tips you can use to make the most of the time you spend with each candidate so you know if they are right for your business.

interviewing 101

Basic Structure of a 1 hour interview:

How Long? What are you doing?
What’s the goal?


5 minutes Introductions Small talk, make the candidate feel welcome
5 minutes Describe the position and it’s role in the company Applicant has a clear understanding of what they are interviewing for
10 minutes Get an overview of the background of the person you’re interviewing Ask the candidate to provide you a brief overview of their career – – focus specifically on the companies and/or positions that have the most similarity to the role or organization that you are interviewing for.
25 minutes Is this the right person for you? Based on the information you learned above, ask specific, open-ended questions that look for examples of the type of experience,
behavior, skills, etc. that you are looking for (see below for examples)
10 minutes Find out what they want to know and sell the candidate on your opportunity Leave time for closing the candidates – – they’ll want to ask you questions about the job, the business, expectations, etc.   This is your opportunity to sell the candidate on how great this job is for them, if you are interested in pursuing them for the role
5 minutes Closure and next steps Put closure on this phase of the interview – either let them know that they will be considered and what the next steps are (further interviews, references, etc.) or let them know when they should expect to hear back from you regarding their status.


A few notes about the type of questions to ask:

The concept of “behavioral” or “experienced based” interviewing is that past performance is best predictor of future performance. In other words, if a candidate can describe to you, in detail, how they solved a particular problem or developed a product or dealt with a difficult employee issue, you have a better understanding of how they will perform in a similar situation in your organization.

Asking questions that have a yes/no answer won’t get you the kind of specific details you’ll need to make good decisions. Be sure to look at the whole picture. No candidate is good at everything, but it’s important to know where their strengths and development opportunities are so you get a balanced perspective on what they will be capable of.

What kind of questions can you ask when you don’t know where to start??

  1. What was the most challenging role in your career and why?
  2. What job do you feel is the most similar to the one at our company and why?
  3. What did you learn in that position that will help you be successful here?
  4. One of the challenges our business faces today (or expects to face) is XXXX.   Have you dealt with a similar situation in the past? How did you resolve it? What specific actions did you take?
  5. Tell me about your specific experience working with XXXX (whatever systems, tools, technology, etc. that is important to your business or this job).

Are you asking them to manage people?

  1. Give me an example of a situation where you managed a large, diverse team.   What did you do to make sure the team worked well together?
  2. Give me an example of a difficult employee situation- – perhaps one where you had to discipline and/or terminate someone’s employment.   How did you handle the situation and what was the outcome?
  3. The workload for our business can be overwhelming at times. Provide me an example of how you kept your team motivated during a “crunch time”.
  4. What do you look for when you make hiring decisions for positions that report to you

Are they going to fit in well with your business culture?

  1. Describe the culture of the organization(s) in your previous jobs. What did you like the most/least about them?
  2. What is most important to you about the company you join and/or the person that you report to?
  3. How do you communicate most effectively to your peers/clients/team?   How do you want to be communicated with?

What can’t you ask? Those questions that can get you in trouble!

It varies slightly by state, county or city, but generally, anything that would require your applicant to reveal or provide information about:

Age, race, color, gender, ethnicity, sexual orientation, marital status, pregnancy, political affiliation, religion, handicap or disability, veteran status, etc.

If the applicant offers up this information – – i.e., my wife works for another company in this area OR Does this job require working on Sundays? My family attends religious services that day…..

Answer the question or acknowledge the comment, but move on to another, safer subject.

You’ll stay safe if you keep your questions focused on:

  • The content of the job
  • Their performance, experience, skills, etc. at other jobs
  • Their availability for the hours/shift/etc.
  • Their ability to perform the work with or without accommodation for a disability
  • Their requirements for a job (compensation, benefits, etc.)

Some Facts and Figures on Retention:

We all have enough challenges recruiting in such a difficult employment market – – it’s hard to find good people for new opportunities at your business, let alone having to fill positions opened up by those individuals that left for “greener pastures”.   Retention has become a key focus for many businesses.

Dr John Sullivan is a well-known HR “guru”, international speaker, author, professor and advisor to Fortune 500 and Silicon Valley firms.   Fast Company magazine even called him “the Michael Jordan of hiring”! He is currently the Chief Talent Officer at Agilent Technologies (the spinoff of Hewlett Packard) in Santa Clara, California. When asked recently what some of the costs associated with losing people are, John quoted some truly significant expenses that may surprise many managers:

  • The cost of losing one average software engineer in Silicon Valley ranges between $200k – $250k
  • The factors considered were many, but they included:
  • Cost to identify, hire, orient and train the replacement
  • Cost of lost “intellectual capital”, experience and knowledge
  • Cost to the business of not having someone in the role during the time to recruit
  • Cost of having other associates take time away to train the replacement
  • The dollar impact of losing one mid-level software engineering team leader — the highest example — to be over $29 million.

So why do they leave in the first place and what can you do about it? Most people jump immediately to pay and/or other compensation like benefits or stock. In actuality, pay only becomes a big issue if the person is significantly under the market for the skills and experience they have. For most people, it’s pretty far down the list.   According to Sullivan’s research, the prime retention tools that make the most difference are:

  1. having a great manager
  2. working on challenging projects
  3. learning and growing at the bleeding edge of knowledge (AKA working on “cool stuff”)
  4. being rewarded and recognized for their work
  5. 2-way communication (AKA people listen to issues and feedback AND keep them in the loop on what is going on in the business)
  6. degree of control, autonomy and ownership over their job (whether type of projects, when they come in, how they dress, or the way in which they get things done)


Value may be the most devalued word in our vocabulary, today. We have value pricing – a concept that leaves me scratching my head, value-days, valurama, and quality-time (an implicit promise of value). A rock song has the boy who has been dumped by his girlfriend sing, “I gave you value, didn’t I?”

What does value mean? To answer this question, I checked the dictionary (the one at hand today is a beat-up paperback called The New Merriam-Webster Pocket Dictionary, first printed in 1964). The fine folks who put this book together defined value as “1: a fair return or equivalent in money, goods, or services for something exchanged. 2: the worth of a thing: market price, purchase power, or estimated worth.” There are more definitions, yet these delve to the heart of the matter: value is what we use to measure a transaction. Not radical. Not new.


Before we embark on any transaction, we have to define value. For each transaction, we have to make a series of decisions that help us decide what constitutes a “fair return.” This proposed return is the value-proposition. We have already defined value, and proposition is simply “1: something proposed for consideration: proposal 2: a statement of something to be discussed, proved, or explained.”

The value-proposition answers the marketing questions of “so what, who cares, what’s in it for me?” To act, you must understand the value proposition presented to you.

At first thought, this should be easy: a no-brainer. Yet, everything provides us value – from the cheap junk that breaks before it is out of the box, to timepieces priced in the same range as a new Mercedes Benz. Were we unable to distinguish the value proposition of each, perhaps measure the item’s value in relation to ourselves, these two things might seem equally good buys, as would all the goods between these extremes.

To clarify and judge our value-proposition, we need to develop our value-choice questions. We have to sweep out the dross and focus in on the primary questions that are so powerful that anyone one of them could be the deal-killer. After we have the questions, we need to learn the answers. This is probably easier than it sounds. Either the answers can be derived from information readily available or you cannot get to the information. If we cannot possess the information, then it does not exist, and it is the same as a “No” answer.

When we know the questions and the answers, we need a tool that will put several equally weighted considerations into a format that allows us to move from the chaos of indecision, to the clarity of decision.


I find that it is easy to become lost in the process of making a decision. After I have asked all my value-choice questions, and assigned a time frame for realization of the value, I still can become lost in the process. When I am lost, I go over the questions to weight each choice to create a hierarchy.

A while ago, I developed a tool, a matrix, that fixes the various value-choices with numeric values based upon delivery of the value. Each of my value choices is measured against the time frame of when I find it acceptable to receive the values. I found that three time frames, that cover the range of time I might be willing to wait, work best. More than three time frames needlessly complicates the issue, and does not change the value-score.


Any number of value choices works, however the list must include only the primary “go/no go” issues. Secondary issues only cloud the process by diluting the primary issues, and I received useless results. This is no substitute for research and analysis of the problem to define the primary “go/no go” issues. These issues can be very specific, such as “additional net profits in excess of $500,000”, or general, “more net profits.” In the example, general considerations are used.

This will take time, but as you define your criteria, you may find that selecting the primary issues becomes almost obvious. If you are working with a board of directors or a committee, the committee as a whole chooses the primary “go/no go” issues. This may be the hardest part of the process, but it is worth doing right and coming to a lasting consensus.

The numeric value that you assign each of the “Yes” possibilities over the time frame must always be an even number. To keep it simple, I use 6, 4, and 2. The value of “No” at any point in the time frame before a “Yes” is always the same odd number. It must be less than the “Yes” value for the two shortest intervals, and greater than the value of the third time frame. With the “Yes” values of 6, 4, and 2, you must use 3. After a value point receives a “Yes,” no more points are assigned. The table below lays out all the possible choices.

More customers
Yes=6 No=3
Yes=4 No=3
Yes=2 No=3
More products
Yes=6 No=3
Yes=4 No=3
Yes=2 No=3
More capacity
Yes=6 No=3
Yes=4 No=3
Yes=2 No=3
More net profits
Yes=6 No=3
Yes=4 No=3
Yes=2 No=3

This table is one I could use with a client trying to make an acquisition decision. The value-points in this case are the classic reasons for a company to acquire another company – customers, products, capacity, and profits. The time frame is one commonly used in investment – now, within 18 months, or within 5 years. In this case, nothing beyond 5 years counts.

First, let us consider buying more customers and more capacity now, with a promise of more net profits within 5 years, but not within 18 months. This is a commonly touted strategy for growing a company.

More customers
More products
More capacity
More net profits

Total, separately, the “yes’s” and “no’s.” The totals are Yes = 14 and “No” = 15.

Second, let us consider acquiring a company that provides more product lines and more capacity now, and more customers and more net profits with 18 months.

More customers
More products
More capacity
More net profits

For this acquisition, Yes = 20 and No = 6.


For each of these deals, based on the values assigned to the value-decision matrix, the choices are clear. The value decision matrix shows that the value proposition for the first acquisition does not support it being done. It is simple, and it tells you right off what you should do – not pursue the acquisition. In the second example, even thought they do not get more customers or more profits until the second time level, within 18 months, because they immediately receive more products and more capacity, this is a good deal for the company.


You can come up of equal, or close scores, even though each of the sample acquisition configurations gives you an absolute answer: “No” for the first, and “Yes” for the second. If you are one of those people who try to wrestle with the neutral area, do not bother. I suggest a (for me) radical approach: if it is not a clear and resounding “Yes” or other positive indication or feeling, you are still experiencing “No.” Life becomes much easier when you only pursue strongly positive things, and make the ambiguous, neutral, and negative go away. If you think this is foolish, ask yourself how much time and money you really want to spend on iffy projects? After adopting this philosophy, I found that there were even more highly positive things for me to pursue than I had ever seen before, because they were crowded out by the mediocre and uninspiring.

The results of making a value-decision are immediate. You can clear piles of proposals, term-sheets, and business plans from your desk. I found that, as I seek the brutal truth, I find that my understanding of the situation grows. When I use the value-decision matrix, an unambiguous view of the value proposition of the situation comes into focus. Either the value proposition works or it doesn’t. That is all that matters.

What makes great Web sites sticky and attractive? Good, relevant content that is easy to use. Developing and implementing an effective content strategy takes time and resources, but the payoffs are great. Many more good, target customers will visit your site more often. Your customers will be more satisfied because they feel your business is responsive to their needs. Your sales staff will be happy because they will find their time with customers is more productive, and they can close more sales. By following a few simple rules, you can set your company Web site apart from your competitors’ ordinary online brochure sites.

First, think hard and plan well. Whom does your Web site cater to? Identify your distinct groups of target audiences: Who are these audiences? What are their objectives? What information do they need to meet their objectives? What is their level of understanding of your products and services? How sophisticated are they with Internet technology? If they are potential customers, for example, consider their decision making processes: What are their criteria in deciding whether to do business with you? How about your existing customers? What will make it easier for them to continue to do business with you?

Next, create a content strategy for each target audience. An aircraft manufacturer searching for qualified contractors may need to see evidence that the contractor has been duly certified by the Federal Aviation Agency and has demonstrated relevant capabilities. A homebuyer researching financing options may look for a mortgage broker who is knowledgeable, trustworthy, and familiar with the local market. Consider your web site from their perspectives: What pieces of information and tools will move them forward in the sales process? What can you add to your Web site that will increase its value to them? For example, by putting documentation of its capabilities online, the aircraft contractor helps customers confirm its qualifications quickly and streamlines the sales process. The mortgage broker may provide an online mortgage calculator, a glossary of financing terms, and ways for customers to provide financial data securely and confidentially to their loan officers so they can become pre-qualified for a mortgage. It positions the company as consumer-friendly, credible, and efficient.

Develop your content strategy around your calls for action – what you want your visitors to do in response to your web site. Do you want your visitors to research technical information about your products without needing to call your technical support staff? Do you want them to feel confident enough to place an order online? Do you want them to feel so excited about your products that they can’t wait to visit your stores? Build cues in your Web site to invite your visitors to answer your calls for action.

Your content strategy should be an integral part of your Web site architecture. For each target audience, there should be an easy path beginning in the homepage that takes them to the information they need, and prompts them to take the action you intend them to take. Organize the information in cascading levels from broad and general to in-depth and specific. In this way, your visitors can choose to scan through quickly, or to research deeply in areas they care about. The goal is to give them control over the quantity of information they wish to consume.

Keep in mind also that people process information presented on screen differently from that presented in print. The objectives and messages for each screen should be clear. When preparing content for the Web, the most important points should come first. Short sentences and short paragraphs are preferable. Different people also respond to different cues and presentation methods. Graphical presentations like icons may be important to some, while text may appear more credible to other readers.

The Internet creates a more level playing field for consumers who now have easy access to information they did not have before. Play it to your advantage. Good, relevant content that is easy to use sets apart effective sites that attract, keep, and bring their visitors back time and again. Empower your customers to make the right decisions to do business with you, and you will build long-term profitable relationships.

Deciding Who Does The Work

Deciding who will carry out your web strategy once it’s developed is a major step. Maybe you have in-house staff with the skills and time to do the job, but if not, perhaps you should consider outsourcing part or all of the implementation. Here are some questions to consider when facing this decision.

What about the in-house staff?

What are their skills? Are they capable of doing the work? What training
would they need and how productive would they be?

What is their interest level? Are they inspired and passionate about new
technology? Do they want to do the work?

What is the methodology?

Is there clearly a team here and do they work well together? Do they have a record of completing projects successfully? Can they come together at crunch time to produce?

What is the team’s expertise level? What have they done before?

What would the team makeup be? Do you have team bios?

What is the staff availability? Are they working on too many other projects or can those projects be re-prioritized?

What’s the long-term strategy? Is the intent to have administration and maintenance done in-house?

Is there company-wide support, particularly among management, for the in-house staff doing the work?

What is the projected return on investment?

What outside resources are available?

Are customer references favorable?

What are the specifics of the contract? For example, who would own the code?

Are there any work guarantees?

Will there be ongoing support agreements?

Identifying the project team is probably the most critical decision you’ll make in terms of implementing your web strategy. Close behind in importance are your decisions about project process or methodology. In essence, you need to decide to employ only one.

Ensuring You Have A Methodology

In an ideal world, the people selected to do the project would be accustomed to following a process and you’d be home free. But, like most business propositions, web implementations are usually not of an ideal world. You might have to convince the people doing your implementation you want them to – and they need to – follow a formal process. I’ve included a synopsis of a methodology we use at CTR called 4dM to which you may refer. It’s a well-honed and comprehensive methodology we’ve been refining for years. “4d” stands for define, design, develop and deploy. The “M” stands for management — project management.

Getting Everyone Onto The Same Sidewalk: The Define Stage

The purpose of this stage is to ensure your requirements have been defined correctly before the actual work begins. The project team must understand your objectives and special requirements, and the team’s schedule must be realistic and acceptable to you. The define stage also seeks to eliminate misunderstandings that might otherwise arise between you and the project team, and consists of:

  • definition
  • scope of work
  • project plan

Coming Up With The Blueprint: The Design Stage

While the define stage generally states what the project team is going to do and how it’s going to do it, the design stage results in functional and technical specifications. In other words, it says, “This is exactly what we plan to do. What do you think?” The design stage consists of:

  • preliminary design
  • pilot or prototype
  • detailed functional and technical design

Creating The Solution: The Development Stage

During the typical development phase, developers write code and configure your website and back-end systems. This is the stage during which planning and design becomes the functional product. The development stage consists of:

  • programming and configuration
  • testing and quality assurance
  • documentation
  • functional code and system configuration

Delivering A Working Solution: The Deploy Stage

With the arrival of the deploy stage, the site and back end systems are essentially finished. Only training, testing and final “tweaking” remain. The deploy stage consists of:

  • training and preparation
  • final testing
  • the system in use
  • the project wrap-up
Minding The Store

Earlier, I mentioned the “M” in our 4dM process name stands for project management. We include it prominently because project management is, as it should be in any process, a defining feature of our process.

Typically, project managers handle scheduling, resources, cost, and quality concerns. They track new issues and changes in the original project specifications and deal with exceptions to the project’s scope. They also handle ongoing project documentation including system configuration details, meeting notes, reports, form and data examples, procedural guides, system and process analyses, flow charts, entity-relationship diagrams, prototype screens and reports, and so on.

Project managers issue periodic status reviews so everyone involved is aware of progress. They also document problems for quick correction. These reviews record completed tasks, tasks not completed according to schedule, key issues and decisions made during the week, and exceptional issues or events that may affect project outcomes.

I suppose it’s possible to implement a web strategy without a formal process or a project manager — but I wouldn’t give a plugged nickel for its chance of success. Defining and deploying a Web strategy could be the most important business step you’ve taken or will take in a long time. Why not give yourself every chance of success?

Biotechnology has been in the news lately, with initiatives like the South Lake Union development and the Technology Alliance’s Bio 21 recommendations. There is another promising technology on the horizon – nanotechnology. At a panel presentation on February 24 moderated by Lee Cheatham, executive director of the Washington Technology Center, Jim Moore, managing partner of Avogadro Partners, and Dr. Viola Vogel, bioengineering professor at the University of Washington, discussed nanotechnology and why we should care. In a separate interview, Frederick Morris, Governor Locke’s policy advisor for science and technology, also discussed what is happening in the state. Their comments have been combined into an overview of this exciting frontier.

nanotechnology and entrepreneurship

What is nanotechnology?

How big (actually, how small) is nanoscale? “Nano” is a prefix meaning “one billionth,” 1/1,000,000,000 as a fraction or 10-9 in scientific notation and in the case of nanotechnology, connotes one billionth of a meter. Angels may or may not dance on the heads of pins, but at nanoscale sizes, we can see the atoms and molecules that make up those pins.

According to Dr. Viola Vogel, if you took a single human hair and cut its diameter another 1,000 times you’d finally get to nano-scale sizes. In terms of time, I recall Rear Admiral Grace Hopper, one of computing science’s giants, handing out lengths of wire about 11 inches long, pointing out that light travels that distance in a nanosecond.

This means we have new opportunities for discovery in different disciplines with the quality of life and economic implications that implies. We’re used to creating things from the top down, as those in the field describe it. That is, we take existing raw materials like wood, ores, oil, earth, and the like and put them together in ways we find useful. This makes us dependent on the existing properties of those materials – if you make a glue to hold something together, it will pull apart given the right amount of force. Nanotechnology will allow us to move the actual atoms and molecules around in ways that will give us new materials with new properties. And we’ll be able to control what those properties will be. That’s working from the bottom up.

What’s the big deal about this small subject?

Considering the potential, the excitement about nanotechnology is fairly recent. While the concept was introduced in 1959 by the physicist Richard Feynman and the term coined in the 1980s by Eric Drexler while he was an MIT undergraduate, interest in nanotechnology surged only in the last several years. That’s because it wasn’t until the 1990s that researchers were able to see and work with individual atoms, with demonstrations like IBM’s creating its logo with 35 xenon atoms. Against the backdrop of discoveries like carbon nanotubes that can be stronger than steel but much lighter, a growing availability of tools for researchers, and creation of the National Nanotechnology Initiative, that decade saw the number of nanotechnology related firms grow from 10 to over 1,000. Government funding now approaches $1 billion per year by the United States alone with other governments close behind.

Lay people who might not fully understand the science behind nanotechnology get excited about the practical possibilities. For example, Dr. Viola Vogel, former director of the Center for Nanotechnology at the University of Washington, described how coli bacteria actually bind to surfaces in spite of quickly flowing fluids that should wash them away. This counterintuitive situation happens because the hairs on the bacteria contain nanoswitches that increase their hold on a surface if stretched. Research suggests we can use that property to make glues that get stronger as the pressure to pull apart increases.

While the science is nice, shouldn’t we be cautious? After all, everyone remembers the dotcom bubble and its results. Jim Moore, managing partner at Avogadro Partners, who has watched and participated in the business aspects of nanotechnology, pointed out some differences. There are higher barriers to entry in nanotechnology than with Internet based businesses. For example, someone can start an Internet business with a domain name, a hosting service, and an eCommerce service, but nanotechnology requires more specialized equipment and services, resulting in more capital expenditure as well as operations costs.

A much deeper and more specialized knowledge base is needed in nanotechnology. Advanced disciplines like physics, materials science, chemistry, and the life sciences are required to even make a go of a business proposition. The result is a much smaller group of entrepreneurs available to start companies. Compounding this are ethics rules affecting the ease with which people like university researchers can capitalize on their discoveries. Because of those constraints, it’s likely that there won’t be a massive rush like the dotcom boom, but that growth will more likely match the actual demand for products and services related to nanotechnology.

What is the current state of nanotechnology?

There is a lot going on in nanotechnology research and business these days and it’s picking up speed. According to Frederick Morris, Washington could be on the verge of being a major nanotechnology center, having just missed being named one of the nation’s top ten centers by Small Times magazine. What are some of the reasons behind that rising importance?

A strong research core connected to the rest of the nation leads the charge to significance. For example, the University of Washington’s Center for Nanotechnology brings together researchers from different disciplines and is among other initiatives like the PhD program in nanotechnology, the first of its kind in the US, and user facilities at the Washington Technology Center which allow organizations and businesses to create practical uses for the technology. Dr. Vogel highlighted the Joint Institute for Nanoscience & Nanotechnology created by the University of Washington and the Pacific Northwest National Laboratory (PNNL) as another example of the strong research efforts in the region.

And the business world is taking notice of the opportunities arising from the research. According to Jim Moore, in 2003 governments around the world invested an estimated $2.5 billion in nanotechnology and R & D. Private corporations invested an equal amount or more. By early 2004, there were 1,500 firms around the world focused on nanotechnology, 800 of which are in North America.

The current business environment is marked by several characteristics. While the downturn in early-stage investment seems to have bottomed out, the market is still highly competitive with private investors being very conservative and strategic investors only beginning to get more active. This means money tends to go to select firms. The recent upsurge in research efforts and budgets indicates another aspect of the business – it’s still in its infancy. In the United States., this means most of the investment is with public money, from the National Nanotechnology Initiative signed by President Clinton to the 21st Century Nanotechnology Research and Development Act recently signed by President Bush. Most of the business effort, meanwhile, is in staking out territory, creating diverse patent portfolios to hedge against anyone not panning out and to defend against competitors for the same application markets.

The early-stage nature of the research also means science and business players have to have deep knowledge of the disciplines to make wise choices about which avenues to pursue. That’s because they have to decide which ideas can return an investment in a reasonable time frame and which ideas, while interesting, may never have commercial applications.

What are the trends?

Where is this all taking us? Frederick Morris is optimistic. While some might overestimate what nanotechnology can accomplish in the short term, he thinks the long term benefits may actually be underestimated, that being able to control the properties of what we build through nanotechnology tools and techniques may yield benefits beyond what we can imagine today. At the very least, nanotechnology promises to be a powerful enabling technology that can help build Washington’s economy through some of the state’s technology fields like computing, materials, and biotechnology. This comes from the increasing collaboration of normally different scientific disciplines when they work at the nanoscale level, says Dr. Vogel.

There will be even more collaboration in the future with Washington playing a large part because the Center for Nanotechnology is a member of the National Nanotechnology Network (NNIN), an integrated partnership of thirteen user facilities, supported by the National Science Foundation. The National Science Foundation provides extensive opportunities for nanoscience and nanotechnology research. The NNIN will support nanoscale fabrication, synthesis, characterization, modeling, design, computation, and hands-on training as well as allow qualified users to work in the open, hands-on user facilities of NNIN members.

Trends in the business sector, according to Jim Moore, show increasing activity and investment with rapid development in higher education and significant government funding under girding a 30% per year increase in VC funding as more start-up companies appear. The large corporate players have noticed as well, with increasing R&D investment and more investment reports covering the nanotechnology sector.

These developments have led observers to predict the number of nanotech companies to reach 2,000 by the end of this year. This commercial activity, with an expected $3.5 billion in government support to research and technology transfer, will attract up to $1 billion in venture capital.
Part of this activity will yield some commercial developments, specifically a carbon nanotube flat panel display (expected to be marketed by Samsung) and the first commercial nonvolatile RAM for instant-on computers. However, observers expect choppy waters as well, with some consolidation occurring to weed out the weaker companies. This year may see the first patent infringement lawsuits as the early instances of grappling with legal impact of nanotechnology.

The legal aspect of nanotechnology raises very interesting questions. In response to questions about the ethical implications of nanotechnology and the resulting translation into law and regulation, Dr. Vogel described some issues already being addressed in workshops under the auspices of the National Nanotechnology Initiative. For example, we expect that eventually humans will be ingesting nanoparticles in foods and medicines but aren’t sure if that should be considered an issue. After all, we ingest nanoparticles today in the form of pollution, aerosols, and the like. And currently, effects because of size are not regulated.

So what do entrepreneurs need to know?

Frederick Morris advises entrepreneurs to understand the research and make connections. Because of the higher barriers to entry, entrepreneurs need to be on their game – customers and investors need to be persuaded that a company can be guided through what is essentially uncharted territory.

Jim Moore listed some things investors are seeking. A company must be positioned to return a high payoff within the investment time horizon in a market in which large players are not significantly involved and be able to defend itself by locking up the proprietary rights to its technology (no small order considering that intellectual property law in this area is in its infancy). This calls for a credible management team working with key scientists.

Entrepreneurs have their work cut out. Nanotechnology offers an opportunity to get into a relatively new field that promises to bring about great change but requires significant intellectual and physical capital investment. Yet, the fundamentals remain unchanged – a sound business model, a well thought out business plan, and savvy execution will bring a new firm to profitability.

It does not appear there is anything stopping a bigger company with deep pockets from seeing what I am doing and going after my customers. Is this something to emphasize when I appeal for venture fund?

Dear Entrepreneur:

Your question points toward an issue that every entrepreneur must address – how will you compete in the marketplace. You can ask the question in other ways: How will you create barriers to entry or competition? What is your “unfair” advantage? Or, why will customers do business with you instead of someone else?

Here are some common strategies. You need to develop a strategy based on the specifics of your business and the market you intend to serve.

Intellectual Property Protection.

A lot of investors believe a patent or other intellectual property (IP) protection is the only true barrier to competition. And to a certain extent, they are right; a good patent will make it difficult for other companies to compete directly with you. They will have to offer a different product or service, and if yours is better, they will be at a severe disadvantage in the market.

But IP protection is not an absolute guarantee that you will “own” the market. A determined competitor can study the intricacies of your design (which you must publicly disclose as part of the patent process) and come up with another way of doing the same thing. This route may be costly and time-consuming for them, but if the opportunity is big enough, they might choose to do it.

But what if your business is like most others and does not have IP that can be legally protected? What other kinds of barriers can you create?

First-to-Market Position.

During the dot-com bubble, many businesses claimed “first-to-market” as their barrier to entry. The idea was they would be the first company to enter the market and by doing so they would tie up the distribution channels, negotiate exclusive deals with key business partners, become the “de facto” standard for the product, and so on. The trouble was, dozens of startups expected to be first in the same markets, and the ones that actually succeeded, usually found it to be a lonely place because the market did not yet exist.

So today, a claim of “first-to-market” is almost guaranteed to produce an ironic chuckle and a few snide remarks from investors. But their skepticism aside, first-to-market can be a very effective way for you to build barriers to entry. Assuming a market exists, you can find yourself in a good position to attract the strongest channel partners, negotiate favorable distribution agreements, capture the attention of thought-leaders and influencers, and establish your product or service as the market standard. Later-arriving competitors will be at a disadvantage because to unseat you, they will have to prove their product is clearly superior.

So being first-to-market has important advantages. You just need to be ready to endure a few sneers and then explain to investors in realistic terms how you intend to capitalize on the position.

But here again, very few businesses can claim to be first to market. So now what?

Business Execution.

Most new ventures must rely on barriers created by how well they do business. They must offer better service, lower prices, or other benefits that make customers want to buy from them and not someone else. They have to build a strong organization, efficient business processes, and out-market and out-sell their competitors.

It is easy to woo away unhappy customers, but it’s very difficult to win over happy ones. Customer inertia or resistance to change is a powerful force. So you can create a strong barrier to competition by building and retaining a large base of happy customers.

Unfortunately, many investors have a hard time accepting “business execution” as a meaningful barrier to competition, particularly venture capital investors. VCs want strong, well – defined, defensible barriers because they establish and protect the venture’s position in the market, and, maybe more importantly, they setup the exit strategy for the investors. If the new venture’s product is successful, strong barriers will allow the company to grow quickly, unfettered by competition. One of the competitors, not wanting to abandon a growing market, is then likely to step forward with an offer to acquire the company. This is the most common exit for venture-backed companies.

So getting back to the second part of your question (what do you say to investors if your business lacks strong barriers), you should talk about your strategy for business execution. Also, you should recognize that your company is not a likely candidate for institutional venture capital. You will have better luck seeking angel investors who understand your business and appreciate the power of execution barriers.

Good luck!

The Northwest Entrepreneur Network’s “Are You Ready?” Self-Assessment is a unique tool that will highlight your readiness for prime time–that is, your ability to make a successful pitch to potential investors or customers. This mini-assessment will help identify your strengths and weakness, your understanding of your own product and the market you hope to exploit.

Find it here.

Daniel Lee, founder of Odin Brewery, spoke at the September Lunch Buzz.  Daniel proclaimed his presentation a success even before he started, as he didn’t show a Power Point and he brought his own beer.  The beer was delicious and Daniel’s presentation was great!

Daniel was born in Korea, but grew up in Canada.  His first corporate position was with SC Johnson.  His business philosophies stem from his experience there.  He next worked at Miller, where he worked closely with the brewmaster.  Sonicare recruited him to come to the Northwest.  He left Sonicare to found the startup, Odin Brewery, in early 2009.

Daniel named his brewery “Odin” after the god of wisdom in Norse mythology.  Odin gave the gift of fermentation to mankind.

Daniel generously shared with us the emotional things he was going through as his startup progressed and what he wasn’t ready for.  He said that in corporate life, the breadth of emotion is narrow.  In the world of entrepreneurs, the range of emotion is so wide that it’s off the charts.  Just when he thought that he was as low as he could get, he discovered that there were several floors beneath him.

Daniel emphasized the importance of his network.  He said that his network was more important to him than his financial backing.  Without trying to be corny about it, he revealed that his startup story is a love story.  It’s love for the company and the brand, for his wife, for his family and for his wife’s family.  He had people that he could call in the middle of the night, tell them he needed $5,000 in two hours and they would come through for him, no questions asked.  The experience has been so much more than building a company.  It’s been a journey of getting closer to his family members.

Daniel and his wife have only been married two and one-half years.  During the darkest days, he would come home and describe his day to his wife.  She tried to help him by giving him ideas, which felt like criticism to him.  They had many conversations on how to give and receive feedback.  Daniel finally realized that he didn’t need more ideas – he needed solutions.  Once they passed that point, they were able to more effectively communicate and his wife actively participated in making things happen.

Daniel chose beer as a startup because he had experience in the beer industry and because he likes beer.  He thought he could bring something to the beer market, even though it’s a crowded market.  He thought about building a winery, but there are more wineries than breweries in Washington State.  With beer, once you get the equipment in place, you can produce beer in 30 days.  Wine takes longer.  Beer is asset heavy, but it’s a huge cash generator.  Daniel wants to use beer as a jumping off point for creating other products.  Beer equipment can be used to process sugar water, for example.odin brewery

In early 2009, Daniel was in a wonderful space emotionally.  The stock market tanked in October 2008, which allowed Daniel to become a net purchaser.  He bought his equipment for pennies on the dollar.

From January to June, Daniel worked on the planning, regulatory requirements and getting a building.  On July 1, construction started on the building.  Around that time, he hired a professional brewer.  The next few months were spent building the brewery.  For the first 6 months, Daniel had so much fun that he wished he had done it 5 years earlier!

Around September or October 2009, they started brewing their first batches of beer.  Daniel got the brewery’s name out by making a number of contacts in the local beer industry, including bloggers.  In the second week of November, he received an unsolicited call from an account in Redmond.  The account wanted to buy a keg.  Even though the beer was not finished and was “green” beer, this guy insisted on buying beer because he wanted to be the first to have Odin beer on tap.  Daniel still had money in the bank at that point and he was on Cloud 9!

That was the only unsolicited call Daniel received for a while.  Daniel hit within 2% of his original three year forecast.  The curve to get there was not what he had planned.  It took 18 to 20 months to get the cash flow to neutral.  He budgeted for 6 months.  From the 6 month to the 18 month period, he daily expected for the doors to be closed on his business or for his employees to leave.  Daniel referred to those as “the dark days.”

There were a number of things that Daniel didn’t know he didn’t know.  His ego is both his best friend and his worst enemy.  He thought that he had it down because it was on an Excel spreadsheet.  One of the things he didn’t know is that when you have a company that is made up of 3 people, if one of those people has a bad day, everyone in the company has a bad day.  It was a disproportionate impact that he was not prepared for.

One of Daniel’s key points is that entrepreneurs need to be aware of the kind of people they should surround themselves with.  When people enter a startup, they don’t think about the down side.  The fact is, most startups fail.  Daniel made a mistake in hiring the brewmaster he initially hired.  The brewmaster he initially hired was the sole wage earner for his family and had a wife and daughter with significant medical needs.  That man could not afford to be paid even one day late.  Daniel’s relationship with that brewmaster eroded and they split on very poor terms.

Some personal issues cannot be explored during job interviews, but personal issues can have a huge impact on the success or failure of the startup.

Prior to the split with his initial brewmaster, Daniel built up contacts with local brewers.  He started “building a bench.”  He was able to hire the head brewer from Mac & Jacks.  That guy needed a month to leave his previous employment.  In the meantime, word got out and bloggers wrote posts about it.  Daniel’s initial brewer found out before Daniel planned to tell him and it was not a good situation.

Daniel was able to hire the head brewer from Mac & Jacks because Odin is much closer to the head brewer’s home than Mac & Jacks is and because the Odin job offered a greater opportunity to create more diverse products.

Daniel dug out of the dark days by making a couple of key additions:  1)  he hired the new head brewer and 2) he brought his brother in to act as CFO.  The initial brewer had issues with the equipment and thought that Daniel failed to support him by not buying the proper equipment.  The brewery was not set up correctly and they kept buying more equipment, trying to get work arounds in place.  At the end of his first week, the new head brewer told Daniel not to buy any more equipment or hire anyone else and to stay out of his face.  If Daniel did that, the new head brewer told Daniel that he could double production in a month.  After the new head brewer reorganized the brewery, the production was more than doubled in that month.

Bringing Daniel’s brother onboard gave the company a structure guy, but it also gave Daniel a person to tell things Daniel couldn’t say to other people in the company.  It gave Daniel a sounding board that he needed.

Where is Odin Brewery now?  The company just had 2 straight quarters of profitability.  A year ago, Daniel’s horizon for survival was 24 hours.  It was highly stressful.  Today, there are just as many problems, but he is looking at 3, 6 and 12 month horizons.

Thank you, Daniel, for taking us on your emotional rollercoaster and for sharing your beer!

Competitive intelligence originated with the first human cave dwellers, when one tribe tried to discover another tribe’s favorite fishing and hunting grounds. Since those early times several thousand years ago, competitive intelligence has evolved into a highly sophisticated world of competitive intelligence for entrepreneurselectronic surveillance, terabytes of stored information, and world wide intelligence-gathering operations. In addition, a few companies have developed deep information-gathering technologies on the level of NeuralTech Business Information, Inc.

The massive database libraries, global electronic operations, technological and human intelligence networks employed today by multinational companies cost millions of dollars to organize and maintain. While the price tags of large-scale competitive intelligence (CI) are usually too expensive for smaller entrepreneurial companies, start-ups and emerging growth companies can design and institute CI programs that produce the information they urgently need to succeed.

The cost-effective approach for smaller companies is to strategize a productive CI program that produces the information they need. This CI strategy consists of:

  • defining the breadth and scope of information needed about the competition, customers, vendors, and strategic partners
  • establishing a section or department designated as the center for CI
  • building a database for storing print and online articles, news releases, industry analyst reports, and other public information about competitors and the industry
  • creating a soft information center into which industry gossip and chat room rumors are gathered, evaluated and prioritized for further attention.

The person hired or assigned to manage this section needs to have the mind-set of a librarian to efficiently catalogue all of the incoming information as well as that of a savvy analyst to recognize hot news developments that warrant senior management’s attention.

In strategic planning, CI enables management to make better decisions because competitive analysis can be factored into the decisions.

In marketing and sales, CI enables management and staff to counter competitors’ strategic and tactical actions, discover competitors’ vulnerabilities and resulting opportunities, and to forge ahead armed with the knowledge gained from CI.

In production, CI yields valuable information on new production methods, procedures and technical applications that competitors and other companies are finding productively employed. You can adapt this information to boost productivity.

In purchasing, CI can be utilized to spot trends that provide a better understanding of short-term and long-term changes in supply and demand for components and other supplies. One example is a short-term decline on availability; the resulting spike in prices will be understood and purchases kept to a minimum during this short time period.

In the human resources area, CI can provide information that will help HR managers and recruiters negotiate better salary and terms for present and new employees.

In new business development, CI can discover competitive advantages and information about new prospective customers and markets that can accelerate new business development.

Everyone in every sector of the company needs to be aware of the importance of obtaining and reporting information to the company’s CI center. A snippet heard by a sales person added to comments heard by people in purchasing can alert senior management to a competitor’s growing problem or a new product about to be launched.

Incoming information flow from everyone in the company is critically important to the effectiveness of the CI center.

While most companies already utilize one or more these recommended practices, they need to have all of them functioning in one centralized operation. Otherwise, the analogy is driving on the freeway, looking straight ahead but being unaware of the cars in the lanes on either side of you.

It ought to be noted that disinformation spread by a competitor can sabotage a company almost to the same extent a lack of accurate information can. The rise in disinformation is the result of companies increasing their CI efforts. This disinformation often comes in the form of false rumors a competitor will plant to fool its competitors, understated information about its own new product or service to lull the competition into complacency, or misinformation about a new market the competitor is developing. Thus, it is very important for the CI center to spot the disinformation for what it is when it happens.

Quick distribution of information from the CI center to appropriate functions like marketing is not necessary, it is equally important for the marketing executive to distribute that information to everyone in marketing who needs it.

There are times when even a company with an efficient CI center finds itself unable to obtain the really deep information it urgently needs. This urgent situation calls for hiring an in-depth information company like NeuralTech whose technology and analysts can obtain information unavailable to those without the same capabilities.

Once a company’s formalized CI center has been functioning for at least a quarter, it ought to continuously produce information useful to corporate planning, marketing and sales, production, purchasing, human resources, and new business development.