Jiva Technology

The door-to-door business model

Something is afoot in the world of internet business models. There seems to be a sudden increase in the number of people selling internet products … door-to-door.

Almost all of the products on offer have been ‘food services’ on subscription, companies like Hello Fresh and Flower & something-or-other. In principle, it’s a very direct way to recruit new users; once you know what the customer lifetime value is, a simple calculation yields your commission rates etc. Most of the companies seem to be using university students or school leavers as the basis for an enthusiastic salesforce, which is no bad thing and probably works for both parties. It keeps costs down for the provider and it’s a valuable commercial education and handy extra cash for the sales team.

I’m tempted to keep a record of how many knocks on the door I get. If the business model works, I’m assuming I’ll see more on my doorstep. If it doesn’t, the modern day Willy Lomans’ will go the way of Arthur Millers fictional character and once again we’ll see the death of a salesman.

Stick to your knitting

“You should stick to your knitting” is a slightly odd phrase, particularly in an age when even the hipsters aren’t knitting (cue torrent of statistics proving that knitting has never been more popular). In a business sense, it usually means working out what you’re good at and sticking to it or in the business school parlance, defining your core competence.

It sounds like a great idea, but as with most things, the real world doesn’t work that way. Despite the common sense that you should stick to your knitting, there’s always pressure to move into fields that are ‘hot’ and generate investor interest.

Microsoft is a great example. Despite creating one of the greatest technology franchises in history with WINtel, they’ve always struggled with that whole internet thing. It never felt like their ‘knitting’. They just weren’t cool enough. Despite great effort, first with IE and then with Bing and a whole multitude of other products, they’ve always been on the back foot with the web, even though they’ve been quietly making piles of cash from SQL Server back ends, .NET web developments, Azure and the like.

Recent announcements show they they’re quietly withdrawing from businesses like programmatic display advertising and maps. Common sense suggests that Microsoft made a mistake in getting into these businesses (mainly through acquisition), but that overlooks the original clamour from investors to get into these areas when they were considered fast-growing and cool. Perhaps getting involved in these areas is a way of showing that you are willing to listen to investors, even if you think they’re a fad-driven bunch. Generating lots of cash from your core businesses and putting a slice of it into new areas isn’t exactly sticking to your knitting, but it does make for a quiet life.

Perhaps we should modify the saying, “stick to your knitting but don’t be afraid of a bit of embroidery on the side”. Or maybe not.

The A, B, C of the start-up

When you start a business, you take a giant leap into the unknown. Some of the questions you will be asking include whether there is a market for what you want to offer, how much are people willing to pay, what technology is required.

It’s a thankless task – one thing you can be sure of is that most of how you think you know about the market, technology and your business will be incorrect. Worrying isn’t it?

Start ups

As someone who has been through this process, what tips would I pass on to budding entrepreneurs starting their adventure into start-up land?

My advice falls neatly into A, B and C. It’s not based on a 2×2 Business School matrix or consultancy jargon, but it’s what I think is important.

I think that the important things are: assume nothing, believe only what you know to be true and challenge everything.

Assume nothing

One of the biggest mistakes you can make is think at the outset that you understand the market, and know precisely what customers want. This will not be true. Assume nothing – start by asking yourself the key questions what, how, where, when and why. Keep on asking these questions until you get down to what’s really going on. Don’t rely on Google – get off your backside and ask those people already consuming and providing the service or product in the market you are focusing on.

My best advise is to build a set a business assumptions – which taken together become part of your hypothesis of how your business will work. Be prepared for this to take weeks – no shortcuts.

The lean start-up fraternity use terminology such as customer and market hypotheses, which lead to the development of a Minimum Viable Product – something that people will want to buy.

Believe only what you know to be true

Be careful not to take what people tell you as true. Sometimes they are plain wrong, or have hidden agendas. Google can be a nightmare in this respect – just because someone says it’s true, don’t take it as gospel.

My best advise is to triangulate information. If three unrelated parties come to the same conclusion, then the chances are they may be correct. Only when you have your own data can you come to an informed decision on the validity of the data.

Challenge everything

You are constructing a neat model (spreadsheets come into their own here) of how you see your business idea operate and make money. The most important thing is to continually check each assumption in the model. This challenge process needs to be evidence based: quantitive (from your website and Google Analytics) and qualitative (via verbatim feedback).

Follow these tips and you will stand a fighting chance of getting your business off the ground. Don’t follow them, and you need to hope that you are one of the very few businesses that get it right first time.

If you take my advice, don’t leave it to chance, remember to run through the A, B, C for your start-up.



One for fellow entrepreneurs

Start-ups are fashionable at the moment and the internet is awash with advice, some of it conflicting, on how to make your forthcoming venture as big as Google or Facebook.

It’s hard to find reliable sources of information – to sort the wheat from the chaff, so to speak. One place to look for reliable and road-tested advice is the Canadian Innovation Centre. It’s a not-for-profit in (not surprisingly) Canada that has spent the last 35 years supporting entrepreneurs with new business ideas. They have a particularly useful page of tools for all stages of the journey. I especially like the “Eight Critical Factors for Success”.

As we all know, many ventures fail, and when you’re starting out, it’s difficult to combine the enthusiasm and energy you need to succeed with the clear headed thinking to fold bad ideas and focus and on what you need to succeed. The eight factors the CIC considers are: product features & benefits; market readiness; barriers to entry; likelihood of adoption; supply chain; market size; management experience and financial expectations. None of this is earth-shattering, but it’s presented in a way that makes you think.

The CIC appears to be a great idea – a way for Government to support new business creation without putting money in directly; having to choose winners and losers themselves. In the UK, with our financial services heritage, we have taken a more investment-led approach with Regional Growth Funds and the like. Given the somewhat lacklustre reputation of those initiatives, it might be time to look elsewhere for inspiration, to look at something like a UK CIC.




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