New venture outsourcing blog

It has been a busy week for us here at Inventure.  Once in a while we step back to find ourselves making news on two continents…

First, our very own Vishal authored a great piece which is likely to become an Inventure White Paper:

The Search for Results in India’a Business Standard
The artcle is on search engines, web marketing, and the future of business..

Second, some US business sources have covered our ever-growing team:

Forbes

Morningstar

Yahoo! Finance

Business Wire

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Just when I thought I had seen enough of it, a hospital surprised me with its pricing policy. My brother was recently admitted to a hospital. He was moved from the general ward to a private room after a couple of days. The private room, was obviously, more expensive. The real surprise, though, came when I was looking through the final bill after we reached home.

The doctor’s consultation fee for the private room was 150% of fee for the general ward. He did exactly the same thing, spent same amount of time and yet charged much higher to those who indicated a willingness to pay more by staying in a private room. While I am not sure if its ethical, it was clearly a very clever way of price discrimination. What do you think?

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I recently got in to quite a discussion with an aspiring entrepreneur.  He was fairly certain that Search Engine Optimization (SEO as it is often called) was, to paraphrase, taking advantage of the information asymmetry that exists between IT service providers and their clients.  That is, those of us that do SEO are duping our unsuspicious customers into paying for something they don’t really need.  While this could easily have turned to a discussion on business ethics, I promised him a blog post instead…

The advice we (frequently) give entrepreneurs is to listen to their customers.  If you want to know how to price a product, how to improve your design, how to add complimentary goods or services, or even how to enter the marketplace, ask your customers!  Time and time again, successful ventures have been acutely aware of their customers, have been able to reach out to them, and been responsive to their needs.  SEO fits in with this fine tradition of enhanced communications with your customer(s).

Effective SEO, which results in higher rankings on popular search engines (such as Google or Yahoo), along with targeted paid advertising campaigns, brings your business to where the customers are looking.  For example, a search for ‘plumber’ on Google results in over 10.4 Million links.  By systematically updating the content of your webpage, modifying keywords, using statistically valid advertising keywords (paid ads), and some other strategies you can stand out from this crowd.  If I were working for RotoRooter or their closest competitors it would be important for me to have an active presence where my future customers are looking…

This is obviously a cursory top-down view of SEO – this may be the first in a series of posts on SEO.  Future topics may include Statistically Rigorous SEO Methods, SEO on a tight budget, and a comparison of organic and paid search results.

Thoughts?

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We often find ourselves at the nexus of invention - our clients are often inventors and entrepreneurs, our service and product offerings are typically innovative software, and we have had the pleasure of sharing a number of inventor success stories.

An article in the Marketplace section of todays Wall Street Journal offers a step back in time.  Cynthia Crossen profiles Raymond Yates - an inventor and author of numerous books.  Amazon has a few, but the one mentioned, 2100 Needed Inveitons, may be a bit harder to find.

Mr. Yates’ idenitification of real needs, 65+ years later are coming to life.  At the time, far-flung ideas such as the “a personal television receiver that would fit into a vest pocket” are being realized.

The most encouraging aspect of this article isn’t Mr. Yates’ incredible vision in identifying very real societal needs — no, it is his insistance that execution is a vital part of the invention process.  Afterall, many of us have good ideas, what sepereates the successful ones from those who complain is, in his words, what makes successful ventures:

“Why I could have thought of that years ago and made a lot of money with it!

Certainly you could have — but you didn’t.”

So, as Yates said: “Get your thinking cap on!”

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I am a strong believer in two simple tests for business ethics which goes as follows:

1) If you find yourself asking “Is this ethical?” then chances are that it isn’t.
2) If the independent outside observer would view situation as potential unethical, it probably is.

With these in mind I thought it would be fun to share a story I heard from a student. There is a local entrepreneur who is running a very successful business in the collegiate tutoring space. So what you ask? Here’s the rub — he who shall remain nameless makes a habit of collecting old homework assignment and old midterm and final exams. He has been doing so for some years and has amassed a large pool of questions. Students pay per review session to go over questions that are likely to appear on exams or to work out homework questions with the tutor. Those who are able to attend the tutoring sessions (for a fee) generally do extremely well on the assignments (that were worked out for them) and well on the exams (as the tutor knows the types of questions each professor has a propensity to ask). Those who do not attend the sessions study like the rest of us did…

So what?

In the face of this competitive learning establishment, a certain department has assigned virtually no homework assignments (as many students were submitting nearly identical solutions). As long as professors exist they will draw from old exams and question pools, and as long as the entrepreneur exists there will be an industry set up around even the finest academic institutions - the questions is how much is too much?

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going on now at the WSJ Small Business Link Forum

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Which just happens to be our specialty. We have helped new and growing businesses launch websites, e-commerce, and innovative software.

Here is what the Wall Street Journal has to say about this…

Contact us - we may be able to take your business to the next level for less than you think!

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Till Capital One came along, every credit card issuer in US used to charge a flat interest rate to all its customers. But Capital One changed all that by matching interest rates to customer profiles- people who paid on time but had balance on the card were most sensitive to interest rates. So Capital One charged them less. People who paid on time but did not carry balance did not bother about the rates anyway. The differential pricing allowed Capital One to wean away interest paying, profitable customers from other banks and become one of the most successful card companies ever.
A big, luxury hotel in India offers meal vouchers worth $40 /day for guests staying in the standard rooms but does not give anything to guests staying in rooms priced 50% higher. If you think you are special and are willing to spend $125 more on the room per day, then you probably don’t need the $40 voucher!
Starbucks uses the same tactics- if you order a cup of mocha with chocolate topping, you are telling them you are special and don’t mind spending a little extra. So your coffee is priced significantly higher even though the cost of producing it is probably only a couple of cents more.  
The Big Question - can you think of a way to price your product/ service differently? The first thing you need to understand is, who may pay higher prices and why. May be you need to sell to a different market (think of drug companies selling the same thing for much higher in US than in Canada). Or you may want to use Starbucks style pricing, where someone may pay substantially higher for a product that costs only marginally higher to produce.  
If you are selling software, then you can offer free trial versions, online only version, license vs subscription, base version, premium edition, bundled help desk etc. Over a period of time, you can see which customers are buying a particular version of the product. This will help you further refine the pricing model.
If you operate a tourist attraction, you should charge different admission fee for locals and outsiders. Since outsiders have already come all he way to your place, they probably don’t mind paying a little extra but locals will need some incentive to keep coming back.
Still not sure how to do it or whether you can do it at all? Write to me and I will show you how to do it.

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well, maybe something that would be helpful to the entrepreneurs we’re working with and that read our blog.

The April 30th Wall Street Journal has an excellent speical section entitled “Small Business: The Journal Report”.

Highlights include:

“In Search of Traffic (about SEO)”

“Here, There and Everywhere (about virtual office space)”

“Early Options (on Seed stage funding - mentions the Tech Coast Angels here in Southern California”

“It Seemed like a good Idea (on the downsides of Guerrilla Marketing)”

“Calling All Customers (on cell phone marketing)”

and some others…

 

I hope you find this reading enjoyable 
and informative…

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