Note: This was originally written as a guest post for The Next Web

On Tuesday Feb 9 I attended the Venture Capital by Design seminar out of curiosity (and the insatiable need for knowledge that can benefit Sponge clients). Not having any endeavours that require additional capital at the moment made me an exception amongst the two parties of investors or capital seekers that filled the room.

The board was loaded with an experienced mix of investors and entrepreneurs who could offer great advice: Michael Zimmerman, Rob Fitzpatrick, Chris Hitchen and Ilkka Tales. Their profiles can be found on the event site

After the general introductions, Anthill founder James Tuckerman, who MC’d the event, posed an awesome question to the panel. Given that entrepreneurs are mainly divided into two camps (shown to be fairly even amongst the attendee show of hands), those who focus on the strong business technology/idea, and those who focus on the strong marketing plan, if only one could be chosen, which is more important?

The panel unanimously agreed on the strong marketing plan although there is an obvious advantage to having both types within the management of your business.

As the event progressed, it was clear that there were 3 key areas that were being focussed on:

• What you need to get the money
• Where to get the money
• What not to do when trying to get the money

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What you need to get the money

• If you are tech startup looking for capital, you need to be passionate and have some of your own skin in the game. Your business must be scalable, a product, process, or system that can be sold again and again to any number of people. It cannot rely on the people or their available time. Remember that investors want a significant return on their cash, so you need to right size your investment capital to the scalability that is possible for your business at exit (when you return the cash).
• For a web based business,  build a community and demonstrate a revenue stream. Keep in mind that there is a massive oversupply of display ad space and it is extremely difficult to sell, even on a website with millions of visits. Do not put it in your business plan as a core revenue raiser.
• Knowing your industry and being realistic about your competitors and understanding their roadmaps is important as well as having runs on the board, personally, or within your management team.
• Demonstrate an understanding of the landscape of your industry and possible roadmaps of your competition; and
• Have an existing revenue generating marketing plan that you can implement

Most investors would like to see some patentable ideas or technologies, but it is not important. It is often about being better at executing rather than the idea itself. Being first to market on the web doesn’t always mean you have the advantage.

IP (Intellectual Property) can be a critical part of establishing value in an entity, particularly if you plan for a trade sale exit. IP can be patents, know how, and trademarks. Know how, or how your company does what it does, is pretty critical. Patents can enable you to block off and monopolise a market sector. If your business has IP, consult an IP lawyer. There are some great IP lawyers in Australia, with even better ones in the US.

Create an advisory panel, or board, as they can add a wealth of experience to your business. Members can often become an Angel investor once they have been infected with your idea, but they need to have skin in the game along with any expertise or advice that they contribute. With skin in the game, there is an added level of commitment.

With advisory panel members, board members, or VCs, listen to their advice, but don’t necessarily take it. You need to show you have a plan, you have the ideas.

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Where to get the money

Angel investors can include “Friends, fools and family”, high net worth’s in your network, or the professional angel community e.g. Sydney Angels . Typically this funding is for 10 to 100K. For greater amounts a Venture Capitalist is needed, for 40 million plus you need to go global. Overall the VC industry hasn’t been that successful in the last 10 years, so looking forward there will be far less able to raise money.

You can hire someone to do a capital raise. Be prepared to pay 3.5% to 5% of the amount raised as a success fee, but try to avoid any monthly management fees. Do due diligence on who they are going to target and tie them down for a two month period. Like real estate, if your house is on the market for more than two months, it goes stale. The same goes for a revenue raise. Giving them a deadline to work to creates a sense of urgency.

Smart money is when you take on an investor who can add value to your business with their knowledge, experience and networks. You need to quiz your investors as to how they can help you as much as they quiz you about your business. It is important that they fit in your company and culture, because you don’t want someone to come on board that becomes your boss.

It can take a long time to find the right investors for your business and build a relationship, so start talking to potential investors early. It takes a lot of coffees and a lot of talking. Keep in mind that trust is reciprocated and is needed to get a contract signed, so it is advised to give your investors a bit of trust up front.

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What not to do when trying to get the money

VCs, or Angels dislike it when you say you have an idea that is so amazing, but cannot tell them (because you are scared they will steal it), or that you want you to sign an NDA first. The VC industry has a standard NDA, but this will only be signed in the later stages of negotiations.

Saying that you are only aiming at 1% of the market is a common error. And having a fixed value in your head for what your business is worth. The market will determine how much it is actually worth.

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So there’s my summary of the event.

Many of you will already know a lot of what’s included above, for some of you it may be new. Either way it’s good to hear from the experts (again…), in a clear fashion, what’s key if you’re seeking funding.

My congratulations also go out to the organisers, Anthill Magazine and Mitchell Lake who, despite the rather bleak funding environment for tech startups in Australia,  put together a great event to help those seeking capital to increase their chances of success.

I would love to get your take on VC in Australia.

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After much thought and discussion amongst our creative team we have decided to conduct a series of success interviews for this blog. In the coming months you will get to know some of our favourite people, hopefully gaining insight into the characteristics that makes them successful. The first interview will take place in the next week and should appear here shortly after. Our intention is to do one or two per month, all things willing.

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There is a certain joy that comes from working for, and alongside, professionals with an excellence mindset. Is it the raising of your own game to suitably complement? Is it the mental stimulation that comes with the high level conversations? Maybe it is a bit of both, as well as knowing that you may be able to contribute to their success.

One of the things that I personally enjoy from these relationships is learning what they believe have been the critical factors to their successes. Whether it be a particular knowledge, philosophy, practice, mindset or marketing strategy. Anything that can be modeled, learned and replicated is pure gold.

I have been engrossed in this as of late, with the view to produce a report (or book if time allows) for Sponge clients. My hope is to be able to share a set of proven excellence practices that can be used as something of a tool kit for even greater success.

More to come on this. Stay tuned.

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I have been talking a lot lately about the legitimate incorporation of a social media strategy for businesses. To put it into a context that can be easily understood I recently wrote a post under the title of this post. If you have not read it already, I urge you to jump over to Anthill or thinksocial.com.au and give it a read.

I want to briefly add that in order to compare it I may have given the impression that social media is an easily quantifiable marketing exercise. It is so much more than that, which brings me to a few key hard to measure benefits for businesses active in the social media space:

Managing Your Online Brand Reputation

People are (or should be!) talking about your brand online right now, and social media gives you the ability to listen and be involved in the conversation directly.

Create a Community of Brand Advocates

Create brand advocates & advisors by keeping them active with frequent contact. Be where your audience is and expand your database. Create online brand communities who will continue to market you to the web.

Become a Knowledge Leader

Be seen as the leading edge in your industry and share your perspective and expertise. Learn of new developments as and when they happen around the world. Monitor what your market is really thinking and saying about your competitors.

Customer Service

Respond to your client’s and potential client’s queries live and direct, either publicly or in private depending on the impression you wish to make or whether it can help others at the same time.

Secure your Social Media Identity

Similar to branding through domain names. Have you secured all your social media profiles?

Display Business Intelligence

Social media trades traditional media spend for labour cost. By activating your social media strategy you will be seen as maximising your existing expenditure (staff) which in this economic climate is critical.

Open a Recruitment Channel

Create an online identity that can attract like minded people into your organisation.

So whether or not you think that Social Media may be where the bulk of your market is, the comparison in the linked post identifies it as a similar channel to a print publication, where the exact same question can be asked. The question I put to you now is which medium of the two is growing right now?

So how have you started using Social Media in your business? If you need help: thinksocial

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Recently it has come up in conversation that our brand design process is unique to that of our competitors. While we agree that it is a highly successful process, because it is the only way we know, it seems the natural way to work.

To understand what sets The Sponge apart and how time after time we achieve such striking and more importantly effective results, you can simply immerse yourself in the following narrative of our uniquely creative process and imagine how well it will work for you too.

Soaking it up

One of our friendly team meet with you to discuss your goals and objectives, as well as a carefully selected set of questions, focusing special attention on your Vision, Mission & Values. Our first and most important goal is to uncover your core message, or the pieces from which it will be masterfully created. This only comes through a comprehensive understanding of who you are (as an organisation/business) and what you intend to be as a brand. Only those who are prepared to invest the necessary resources, honestly bare all and then trust us to deliver will make the cut.

Each of the key members of our senior creative team is briefed with your answers.  We openly discuss them in the first of many forums in preparation for our chilli chicken session (a ritual of brainstorming over spicy Thai cuisine), so that each of us is crystal clear on the objectives. Any questions that arise are asked immediately of you via phone, email, or IM and the answers hungrily devoured.

Studying your competition helps reveals how and where you fit in the marketplace. If it is unclear, then we focus on what you do differently and/or what makes you unique, so as to position you in a space of your own. The team playfully explore “sticky” (memorable) words, or phrases that best communicate your position, to find a core message/positioning statement to build your identity around. The ideas generated here are shared amongst the team and used to fuel for the pre-brainstorm deep dive.

Pre-brainstorm deep dive, or lateral researching, readies the team with many possible design directions. We do this by deep diving in thesaurus, dictionary, quote books, Google search, photo stock, etc. Each new link is laterally explored, following each connection until we hit an end, then we jump back to a fork and follow a different connection until all avenues are exhausted. Every moment an inspired idea is revealed, it is documented or sketched for discussion at the chilli chicken.

Chilli Chicken

Even if it simply becomes a part of a custom typeface in a logo type, designing the symbol first is our first objective when creating your brand. A huge amount of potential communicating power resides in a strong symbol. We believe in thinking globally for your brand because of global trade and the reach of the internet. A graphic symbol crosses some borders far easier than words, for example we all know the flying kangaroo and we know the golden arches. There are a great many factors that come into consideration when designing an international symbol, i.e.  the nationalities and global demographics you are targeting, or hope to target in the future and their social, religious or cultural differences. Another veritable minefield is the international trademark databases and processes that need to be checked and navigated.

An open forum begins where each team member shares their findings from the deep dive and ideas and concepts are voiced. Ideas are quickly sketched with coloured markers onto the largest pieces of bond paper we can organise, the aim is not to create a masterpiece, but simply to convey the core ideas and open up a free flow of creativity. Dozens of ideas are scribbled down, discussed, improved, diversified, contracted, discarded or marked for development. Each idea is continually measured against the core message/positioning statement. Once we have well and truly pushed past the point of exhaustion of directions, as a group we decide which concepts are worthy of being taken to screen.

To Screen

The ideas that were selected are worked up in black and white in illustrator by our skilful designers.  It is important to get the design right in one colour first, for its many applications i.e. Engraving and Stamping. It also forces a certain level of simplicity, and enables a brand to own a single colour, something that is common amongst many of the world’s top brands i.e. Coke, IBM. Dozens of versions of each design are explored. Painstaking variations in size, shape, proportion, stroke, etc, are tested, each projecting a subtle change in response.  At this stage the concepts undergo further scrutiny as to whether they best communicate what they are intended too and what possible changes may enhance their appeal and concept strength.

From these many refined visual ideas we funnel down once more and select what we as a team consider to be the three most powerful and compelling visual ideas to progress onto typographic application. Careful thought is taken to choose a varied selection of fonts and typographic layouts that compliment the brand’s image and message. With thousands of typefaces to choose from, there are usually a handful that, with a little modification, capture the essence of the brand and compliments the icon well. If a suitable typeface cannot be found, a custom typeface will be designed.

From the assortment of typographic options of each of the final concepts, a further grading is done by the team. This new shortlist of designs conveying different character and strengths are carefully tested for balance by inverting on black so that the negative shapes become the focus. This highlights the balance of the shapes that create the logo, both internally and externally and enables further refinement. The designs that have the opportunity too, are refined further and tested again, and we still haven’t introduced colour yet.

Concept Podium

We move those concepts on to the next level of refinement where taking into consideration the tone we believe you need to convey, we explore colour applications and layout many variants and combinations. Each is judged by our team for the emotional and logical response the colour options command. Further suggestions are made and trialled. An official vote is conducted amongst The Sponge team as to which option works best for each of the three final concepts. The final choices are worked up as finished concepts and displayed in our proprietary Concept Podium presentation system. This is where we apply your new potential brand identities to present to you, showcasing them in various applications to give you a feel for each design and demonstrate the flexibility of each concept. The concepts are placed on the Concept Podium in our recommended order of Gold, Silver & Bronze as democratically voted by our team. The Concept Podium also provides a detailed written rationale of each idea and its intent.

We are yet to find a client who has not been exhilarated with our concepts and we challenge you to test our abilities. We love to be challenged and we love understanding new and different businesses.

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A friend of mine sent me a advanced release of his new book a couple of weeks ago. After reading it I feel compelled to give you 3 reasons NOT to get this book. When you read it and are inspired by the information contained within…

1.  You will have people all around the world talking about you!

2. These people will visit your website and buy from you!

3. You may even become the authority in your profession.

…all by simply harnessing the power of the internet and creating a World Wide Rave. Who would possibly want such things?

The book is called World Wide Rave and it is written by a friend of mine named David Meerman Scott. The truth is that this is a short, entertaining and easy to read book that will leave you with a list of things to try yourself (or talk to your design team to assist you with). I have to admit, here at The Sponge we have used, and continue to use David’s wisdom and suggestions on many of our clients online strategies.

You may want to look at some of David’s previous books and ebooks too at his blog.

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We have received some great feedback and now the new and improved BrandPulseCheck tool is officially live. Thank you for your help! Now it is ready for you to use it, benefit from it and share it!

This new tool allows us to freely share our knowledge with millions of people and gives you the ability to check your brand’s pulse in less time than it takes to make a cup of coffee. In that short time you can have your own personalized report, bursting with actionable information in any area which could do with improvement. The brand pulse check and personalized report are all completely free.

Enjoy!

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After some solid blocks of work we are ready to show you our brand new online tool. It is called the Brand Pulse Check and it does just that. When you visit BrandPulseCheck you will spend less than 6 minutes answering multiple choice questions about your brand.After you are done with the questions you are given your Pulse (and a breakdown). You are also given a personalised PDF report with information and action steps for the areas in which you have room for improvement. The best part for you, it is FREE!

We have not officially released it yet and I would love to get your opinion on it before we do.

[Much respect to all the business people and authors whose ideas have inspired our practises and this tool.]

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I’m sitting on a park bench in the twilight of a summer day in Sydney. My favourite colour blue in the sky, with a cool breeze and inspired thoughts buzzing through me.

I’ve got a brand new goal for The Sponge for 2009 and I have to share it. It is to expand my team and client base in such a way that I am able to split our work on a 50/50 basis. Meaning an even division between profit generating and pro-bono work. Naturally my team and I enjoy the fun, exciting and stimulating work we get paid to do by our amazing clients. We want to balance it this year with spiritually rewarding work that genuinely helps people change their circumstances and possibly saves lives.

Our vision is to create a more beautiful world… and this is the way we will do it this year.

So, I guess apart from this being a declaration of intention, it is a call out of sorts to those who need our help. My team and I would love to meet you. Drop us an email if you are inspired.

Peace
Luke

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At this time of year (or shortly for some) we are able to pause for a moment to take a good long look at what we’ve done since starting 2008. I plan to spend a few days sitting on the beach doing just this. What earth shattering, ground breaking ideas did you come up with this year? If you are at the top of the tree, how many ideas like this made their way up to you? Which of these did you take a stand for and push through the approval chain to bring to fruition? Chances are likely that it is none or not many.

Is it the case that pushing boundaries is not part of your job description? Should it be? But doing just that could mean the end of your job, or at least it may feel like it. It is understandable that you don’t want to mess with the status quo. It is safer to stick with the way something has always been done rather than insisting on a new and better way.

I think the fear of stirring the pot stops many a good idea from even leaving the mind of the thinker. Wouldn’t it be easier for an independent ideas consultant to come in, with no weekly paycheck at risk and uninhibited by company politics, to sift out the great ideas and make the hard pitch. Similarly, without the need to cover ones own ass, there is great liberty to think openly and freely, so this consultant role could be extended to that of the creator of the ideas, with the right input of course. Food for thought.

Whether the great ideas gets implemented by the powers that be, well that is another question entirely!

From all of us here at The Sponge, have a merry christmas (or whatever it is you celebrate!) and a happy and prosperous new year!

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