Scaling Up: Build For Scale: Strategies, Tips + Tactics For Ridiculously Rapid Growth

Build For Scale
Strategies,Tips + Tactics For Ridiculously Rapid Growth
#tcs2016 @RolandFrasier
Roland Frasier

Idea Incubator Snapshot Q4 2015
• 211 Employees
• Add ~13k Customers Per Week
• Ship 5k – 8k Packages Per Day
• 1 Billion Emails
• 10,000 ft2 Warehouse Austin & LA

This is a sample of bold
text on a full color slide.
This is good for quotes,stats,
dividers,etc.
Focus On
Strategy

We spend a lot of time doing this…

dividers,etc.
Scaling
Valuation

What Business Are You In?
Industry
Edu. Services
Publishing
Bus. Services
RE Services
Multiple
8.5
10.18
12.52
16.13
Industry
Entertainment
Diversified
Finance Serv.
Retail Internet
Multiple
12.61
19.82
35.29
42.14
$33.64 Million Industry Classification Spread!
Total Market = 11.45
Source: valuationacademy.com/industry-specific-multiples

Which business would you rather be in?
Industry Multiple EBITDA Valuation
Education 8.5 $1 Million $8.5MM
Publishing 10.18 $1 Million $10.18MM
Business
Services
12.52 $1 Million $12.52MM
Real Estate
Services
16.13 $1 Million $16.13MM
Diversified 19.82 $1 Million $19.82MM
Financial
Services
35.29 $1 Million $35.29MM
Retail Internet 42.14 $1 Million $42.14MM

Idea Incubator Circa 2012
Industry Multiple Company EV Per $100k
Publishing 10.18 $1,018,000
Bus. Services 12.52 $1,252,000
Total Market 11.45
Weighted Average Multiple Was About 10.5x

Idea Incubator 2015+
Industry Multiple Company EV Per EBITDA
RE Services 16.13 $1,613,000
ELearning 13.5 $1,350,000
Finance Serv. 35.29 $3,529,000
Retail Internet 42.14 $4,214,000
Total Market 11.45
Weighted average multiple is now about 28.6x
=272% valuation increase from changing the model

Top Quartile Gets A 3x-6x Bump
1. YOY Growth % TL/BL
2. Emp. Depth + Tenure
3. Audited Financials
4. Legal / HR / SOPs
5. EBITDA > $10MM
6. Proven Team
7. Lots of Blue Sky Left
8. Defensible IP
9. Prod/Cust Diversity
10. Risk Profile
Source: DenaryCapital

Or Turn Your
SOPs Into A
Product…

dividers,etc.
What’s Your
Value Curve?

dividers,etc.
Pre-Initiative
Planning

Where do you want to be in 2016?
Profit Center Revenue Target Unit Sales Required Needs
PC #1 $XXXXXXXXX ########### ????????????
PC #2 $XXXXXXXXX ########### ????????????
PC #3 $XXXXXXXXX ########### ????????????
PC #4 $XXXXXXXXX ########### ????????????
PC #5 $XXXXXXXXX ########### ????????????
$ GOAL
Is there anything you should cut that doesn’t move you toward your goal?

How will you get there? What’s the roadmap?

How will you get there? What’s the roadmap?
Services / Products
Existing Extended New
Markets/Customers
ExistingExtendedNew

Planning Your Initiatives
Initiative Template
Initiative Name: Date:
Initiative Leader: Strategic Goal:
Describe how this initiative will advance the
company’s strategic goal(s) / strategic
objective(s).
Provide a clear statement of the desired
outcome(s) of this initiative in “SMART” terms.
What does success look like?

Planning Your Initiatives
Initiative approach – Provide a high level summary of
how you will get this done.
Define the roles and accountabilities of key
departmental and cross departmental participants.
Identify the Key Tasks – Using a Work Breakdown
Structure (WBS) – Determine accountability–
Estimate the duration of each task.
Timeline Summary– Major Milestones Use the IS&R

For Each
Profit Center,
Do This…
Target PC Income? $
Product Price? $
Target PC Income / Product Price = # Sales Needed
# of Sales Needed #
Conversion Rate? %
(# Sales Needed) / CR = # Leads Needed
# Leads Needed #
Click-through Rate? %
# Leads Needed / CTR = # Clicks Needed
# Clicks Needed # CPC = $
# Clicks Needed x CPC = Monthly Ad Spend
Monthly Ad Spend $

For Each
Profit Center,
Do This…
Target PC Income? $100,000
Product Price? $50
Target PC Income / Product Price = # Sales Needed
# of Sales Needed # 2,000
Conversion Rate? % 25%
(# Sales Needed) / CR = # Leads Needed
# Leads Needed # 8,000
Click-through Rate? % 2%
# Leads Needed / CTR = # Clicks Needed
# Clicks Needed #400,000 CPC = $0.20
# Clicks Needed x CPC = Monthly Ad Spend
Monthly Ad Spend $80,000

Creating the
Perfect
Marketing
Calendar

Iterate Through Split-Testing: Track + Improve

Evolve Business Models: Bigger Picture…
• Are you currently in the right industry?
• Should you change your model to bump valuation?
• Are you maximizing the 10 valuation increasing factors?
• What are the major profit centers and PC targets for your business?
• What should your ad budget be to hit your revenue goals?

dividers,etc.
Set Strategic +
Tactical Initiatives

dividers,etc.
Strategic + Tactical
Initiatives

Micro to Macro
Brand Elevation
Deconstructed Growth
Affinity and Seasonality
Domain Strategies
O2O
Continuity 2.0
Leverage Content
Strategic Partners
Embrace Trends
Strategic Initiatives for 2016

Native Commerce Growth
2012-2018
2013: 257% 2016: 112%
2014: 127% 2017: 124%
2015: 109% 2018: 105%

dividers,etc.
Micro To
Macro

Evolve Business Models: Micro to Macro
2012-2013 Survival Life 3MM Preppers Base
2014 Survival Life 40MM Campers 13x Increase
2015 Native Commerce 141MM Outdoor Sports 47x Increase

2014 REWW 7MM Active REIs Base
2015 REWW 37MM RE Industry 5x Increase
2016+ VOXIENT 165MM Investors 24x Increase

What’s your broad market offer?
Target Sale Broad Market Broad Market Offer
RE Data Sub. Investor “Connection Economy”
DM Lab Sub. Bloggers “212 Blog Post Ideas”
PD Course Women “Inspirational Jewelry”
Beauty Assoc. Women “Make Up Brushes”
Gun Assoc. Gun Owners “iPac T-Shirt”

Broad Market Offers: T-Shirts  ASSOC  OTO2
iPac Shirt  AGA + HR15  Tacpen
Created on Oct 23, 2015

Broad Market Offers: Free T-Shirt

Broad Market Offers: Want More Than One?

Broad Market Offers: Association + Premium

Broad Market Offers: Inspirational Jewelry  Self-Help

• How big is your current market?
• Where are the growth opportunities?
• How can you expand to increase market size?
• What is your broad market offer?

dividers,etc.
Brand
Elevation

dividers,etc.
Build your brand,
Not yourself.

Evolve Business Models: Guru to Brand

dividers,etc.
Fire the gurus,
Hire the celebs.

Fire the gurus + Hire the celebs
• Spy Escape Case Study
• Product + Spokesperson Model
• Staff As Spokespeople
• Celebrity Brokers + IMDB

Fire the gurus + Hire the celebs

dividers,etc.
Evolve your business
models from generic to
brands

Evolve business models: Brand Elevation
• How can you move from guru brand to brand
• How can you move from generic products to
branded products?
• How can you use celebrities as product
spokespeople instead of you or a guru?
• How can you use your existing staff as
product spokespeople?

dividers,etc.
De-Constructed
Growth

2012 – 2013 2014 2015 2016 2017
SurvivalLife Add Affinity Sites Native Commerce Wholesale Distributors International Brands
1 Site Multiple Sites Unified Model Vertical Integration IP Integration
1 Market Multiple Markets Holding Company Leveraged Distribution Leveraged Licensing
Evolve business models: Deconstructed Growth

Evolve business models: Layering for Multiple Exits
Holding
Company
Major
Operating
Units
Individual
Media
Properties

Evolve business models: Layering for Multiple Exits
1 Exit
4 Exits
100+ Exits

Evolve business models: Deconstructed Growth
• Can your business support your ultimate
growth and revenue goals?
• Are there opportunities to segments for exit
or cash cow hold?
• Can you segment off trend based businesses
to exit and retain long term businesses?
• Can you divide based on function? Example:
Ops  Supply  IP

dividers,etc.
Affinity +
Seasonality

Evolve business models: Affinity + Seasonality
• Sell your customers other things
they already buy
• Make seasonal offerings
• Send existing customers to your
new media properties
• Obama’s out champagne
• Bourbon Street Pecans

AffinityTraffic Growth
Tabs provide a traffic path to related
sites + pass domain authority

AffinityTraffic: SimilarWeb.com

AffinityTraffic: TowerData.com + FacebookAudience
Insights

Evolve Business Models: AffinityTraffic Growth
• What sites do your customers visit before and after
they visit your site? (SimilarWeb.com)
• How can you send traffic from your site to support
your other sites?
• What are your visitors’/customers’ demographics?
(TowerData.com + Facebook Insights)
• What niches should you expand into next?

dividers,etc.
Domain
Strategies

Evolve Business Models: EMD  PMD  BDN
Diapers.com
WebHosting.com
CloudComputing.com
RentalCar.com
History.com
Loans.com
BoneLoss.com
OfficeSupplies.com
Plumber.com
Clothes.com

• EMDs and PMDs rank 11%> than branded domains
• BDNs need 35k> links to rank Page 1
• BDNs need 69%> DA + 22%> PA to rank Page 1
• EMDs reach #1 with half the content
• Beep vs CarLoans = 67%> in sales +35%< in PPC Ad Cost

Evolve Business Models: BassProShops.com
Hunting.com Ducks.com
Archery.com
Tackle.com

4x CTR + Lower CPC: EMD vs BDN

StudentLoan.com
Mortgage.com
Finance.com

Contacts.com EyeCare.com
Glasses.com ContactLenses.com

EMD “ElectricBicycles”=
45% Higher CTR than PMD “YourBikes”
105% Higher CTR than BDN “InAHurry”
Source: http://www.memorabledomains.co.uk/ppc-generic-domains.html

Almost any domain can be
bought for $100k e.g.
“Sewing.com”
You can pay in installments
You can lease / option
domains e.g. $40/month +
$18k in 18 months

• For services offered across multiple markets, BDNs are best
• For highly focused markets, EMD or PMD is best
• Faster SEO boosts EMD or PMD is best
• Highly focused market + SEO boost use EMD
• Extensive PPC in focused markets use EMD to increase CTR
and lower Ad Spend

dividers,etc.
What’s the traffic
worth?

dividers,etc.
$26,104,441.10
Per Month

• What’s your current domain strategy?
• Have you analyzed traffic and keywords to determine
if you could get a boost in traffic with EMDs?
• Could you aggregate EMDs under a unifying BDN to
maximize enterprise value?
We built ~$3MM in value doing this.

dividers,etc.
O2O

dividers,etc.
93% of Retail Is In
Physical Stores
Only ~7% of Retail
Sales Occur Online

Evolve Business Models: Online to Offline -Digital
2012 - 2013 Offer Driven Model (Broken)
2014 - 2015 Certified Partner Beta / Certifications
2016+ CPs Can Deliver + Make Money
General Assembly / Edu Model

• What offline play(s) can you make with your existing
business?
• Who has an offline business that most closely
resembles your online business?
• What additional offer or changes can you make to
create offline opportunity?
Evolve Business Models: O2O

dividers,etc.
Continuity 2.0

Evolve Business Models: Continuity 2.0
Continuity
$XX/month
Content Sub.
Continuity 2.0
B2B = Certification + CE
B2B = Content License
B2C = Association
B2C = Buyer’s Club

Evolve Business Models: Continuity 2.0
2012-2013 Info Sub. Info Sub.
2014 Community Community
2015 Certification Association
2016+
Cert + CE + Offline
Classes
Buyer’s Club

Evolve Business Models: Preventing Churn
How can you change your continuity
program to reduce voluntary churn?
Involuntary Churn: When the
relationship ends, but neither party
wants it to.
We will talk about this in a minute.

90 Day On-Boarding Plan
Day 1-5: Consumption + Little Victory
(WalkMe.com / DMEngage)
Day 7-14: Show of Commitment
(stickers / transformations)
Day 21: Join me in congratulating
Day 31: Unexpected Gift
Day 40: Join me in congratulating
Day 45-60: Positive ROI
Day 75: Unexpected Gift

dividers,etc.
Show them how
to consume it

dividers,etc.
Leverage
Content

Leverage Content: In-House Content
Native Commerce
Studios
Digital Marketer
Studios
Florida Curated
Content Team
Philippines Design
Team

Leverage Content: Scripted.com & Contently.com
33% Increase in KW rankings * 72% Increase in web traffic *
200% Increase in Lead Magnet DLs *$300 - $500 Per Article *
Source: Scripted.com & Contently.com Case Studies

Leverage Content: ContentOro.com
$6k - $10k Per
Book Per Year
Text + Images
Kickstart Then
Replace

Leverage Content: Hire Your Own Editorial Team
Position Compensation # Needed
Editor In
Chief
$120,000 1
Property
Editor
$70,000 1 Per Site
Section
Chief
$35,000 Many
Expect five 1,000 word articles per day
“Super Employees” = US + PI

Leverage Content: Books,Periodicals,& Comics

Leverage Content: Branded Columns

Leverage Content: News + Audio/Video + PD
Embed Content
• Youtube.com
• Vimeo.com
• Slideshare.com
• Twitter.com
• Pinterest.com
• Instagram.com
• Flickr.com
• Vine.com
• Embed.ly

Leverage Content: Action Plan
• Create a content calendar and
determine who will create your original
content (in-house vs. outsourced)
• What content can you license that will
elevate your brand?
• What public domain and curatable
content can you use?

dividers,etc.
Strategic
Partners

Leverage Content: Strategic Partnerships
Reduce Inventory Costs
Tap Customer Base
Access Sales Rep Networks
Leverage Celebrity
Add Brand Affinity Credibility

Enhance Revenue: Equity Deals
Ozark Mountain Foods
Supplier Lockup +
Inventory Play
Ventury Capital EBITDAArbitrage Play
Positive You! Affinity Market Play
NewCo Physical Markets Play

Strategic Partnerships
• Which Strategic Partners Will You Pursue?
• Who Has Manufacturing, Sales, Marketing,
Distribution & Customers You Want?
• What’s the fit?

Enhance Revenue: List Rentals
~20% of total
revenue
Identify Affinity
Markets
Get paid to test
new offers

Enhance Revenue: List Rentals
~$150,000 per
month
$0.10 per
subscriber
Get paid to test
offers

dividers,etc.
Embrace
Trends

Embrace Market Trends: Structured Data Language
Schema.org

Embrace Market Trends: App Indexing

dividers,etc.
How Will You Address the Uptick
In Involuntary Churn?
40% of subs will fail when
rebilled this year due to EMV
chips and reissuance.

dividers,etc.
“Our over-forecast in the US for Q3 was due to
slightly higher-than-expected involuntary
churn,which we believe was driven in part by
the ongoing transition to chip-based credit
and debit cards.”–Reed Hastings, Founder &
CEO

Embrace Market Trends: EMV Migration
1.5B Cards Replaced 2015-2016
Gross Approvals Down 17%
Invalid Acct Declines Doubled
Up to 39% Non-Reloadable

Recurring Transaction Indicator
The recurring indicator (all card types) increases
approvals of stale expiration dates; CVV not expected;
higher overall approval rates.

Account Updater
Visa/MasterCard (~80% cards on file)
Only pay for updates received
Discover account updater
Run your full file monthly
Run 10 days before renewal date
Run updater between every retry

Amex Card Refresher
Updates from AMEX –
AMEX sends continuous
updates when available
6 month lookback (annual
renewal?)

Banks are requiring exact
expiration date match
Account updater will supply
60%-80%
Increment expiration years
for the rest
Increment Exp.Dates

Have a Recycle Plan: Don’t Just Do 3 Immediate Retries
Retry #1: 3.5% (After Update #1)
Retry #2: 2.5% (+5 days)
Retry #3: 1.2% (+5 days)
Retry #4: 6.2% (After Update + 1st/15th)
Retry #5: 4% (+5 days)
Retry #6: 6% (After Update + 1st/15th)

Use Enhanced Auth.Data
Pre-paid Indicator: Reloadable vs. Non
Message to customer for alternate card
Debit/Credit Indicator:
If debit, retry logic expanded to include retries on 15th and 30th

Customer Contact
Incorporate a multi-channel customer
contact strategy to complement the behind-
the-scenes strategy.
Remind customers to update their payment
information (website alerts and emails)

Embrace Market Trends: Ad Blocking

Ad Blocking Strategies: Focus On“Un-blockable”In-App Ads?

Ad Blocking Strategies: Sleep With The Enemy?

Ad Blocking Strategies: Ad Blocking Action Plan
• Shift from display to native ads
• Shift from mobile browser to
mobile in-app ads
• Shift from ad-supported to
native commerce models
• Incorporate large platform
sites like Instant Articles,Apple
News + Pulse

Target the Ever Growing Hispanic-American Market
June 2015 June 2014

Embrace Market Trends: Hispanic-Americans
• There are 55.4M Hispanic-
Americans in the US today (17%
of the US population)
• By 2060 there will be 128.8
million (31% of the US
population)
• Get familiar with “acculturation”
Source: PewHispanic.org

Embrace Market Trends: Acculturation
Source: Hispanic-Marketing.com

Embrace Market Trends: Emerging Markets
Do you really want to ignore ~40% of CA & TX or 22% of FL?
Source: US Census Bureau

Embrace Market Trends: Emerging Markets
Hispanic-Americans generally prefer to use English online
So you don’t need to translate your sites
Source: ThinkWithGoogle.com

Target Spanish Keywords
Spanish language
question word
searches have
doubled
Source: ThinkWithGoogle.com

Target Spanish Browsers
Source: Neilsen: Google Adwords Case Study

Use Transposh Plugin for Wordpress: 47% Increase in Traffic
Source: quicksprout.com/2015/02/23/how-i-increased-my-search-traffic-by-47-from-translating-my-blog-into-82-languages

Embrace Market Trends: HA Markets Action Plan
• Target Your Keywords In Spanish & English
• Target Spanish + English Browsers
• Feature Hispanic Culture Contextually In Your Marketing
(Food, Future, Faith, Holidays, Family & Traditions)
• Use TransPosh to capture auto-index hundreds of pages in
Google + reach 91 additional language speakers

dividers,etc.
Thank you!

Scaling Up: Build For Scale: Strategies, Tips + Tactics For Ridiculously Rapid Growth

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