Are subscription models the future of retail?

If you follow my business interests either through twitter or facebook posts, you know that I love subscription/recurring revenue models. I absolutely love them. Seriously. SaaS or PaaS or whatever you want to call it, is the future for stabilizing cash-flow models and distributing software in my opinion. Now the question is, does this model translate to retail goods?

Dollar shave club is one of the new kids on the block doing this for men’s shaving products. Effectively DSC is trying to become the bathroom subscription for men. They are selling razors, shaving creams, butt wipes, and I am sure they have a handful of other products in the pipeline. DSC is clever in that they don’t even make unique razors, they resell DORCO brand razors and mark them up 200%. One of their most direct competitors, Harry’s (who I prefer), even recently bet so big that they bought the factory that makes the razors and raised over $100 Million in capital.

There is a big opportunity in becoming the subscription source for consumables for people, as the margins may not be high, but the volume is consistent, and these are long term customers. The lifetime value of these customers is the real beauty of the model though. This is something I’ve been thinking about a lot over the last year, and if I had a team of MBAs with backgrounds at P&G or Unilever I would attempt this.

Imagine a business like DSC that grabs teens or young adults, and then evolves with them, or graduates them to their older brands as they age. Imagine AXE doing subscriptions. They hook teens to using their razors/shower-gel/deodorant on a subscription basis at 16/17 (using their parents credit cards), and then grow with them for the next 10 years until they migrate them into the James Bond themed brand of skincare/bathroom products. The revenue potential for these customers could be huge. The kicker is you keep these customers OUT of forming the habit of going to target/walmart/cvs/walgreens to buy consumables and make them think it is ridiculous to not have your bathroom consumables come to you.

Once you can figure out the model for customer acquisition costs (could be high), lifetime value of the customer (could be huge), and the logistics costs, this could be a giant business.

So why isn’t someone tackling this for girls? Or other verticals? Off the top of my head I see a ton of subscription businesses that could be built and branded (key is branding, otherwise amazon eats your lunch): razors, feminine hygiene, adult diapers, kids diapers, vitamins/supplements, the list goes on. More importantly why aren’t local retailers taking a look at this?

* Photo credit


Simple business research hack

OR What to do when Google fails you

The other day I was brainstorming an idea for a web business I’m doing this summer with a few friends, and we were stuck on a critical piece of data. We couldn’t wrap our heads around how to find a key piece of data we needed. We tried searching on google, but weren’t getting the RIGHT results. Remember google and other search engines are as much about how you define your request as what you’re searching for. It is all about the parameters.

Then all of a sudden I remembered reading a snippet from a book written by Seth Godin 10+ years ago about how when he was in college in the pre-internet age, he would call long distance late in the night to the University of Hawaii research library, which was 6 hours behind time wise, and ask their research librarian to help find stuff. Since I was searching for this information on a Saturday afternoon, I quickly started googling universities I knew of a few time zones back, and found one that was open on Saturdays. One phone call later, and a quick 2 minute conversation later, and I had the source site I needed and the key data I wanted in order to build out my biz model. The research librarian was able to help me uncover the dataset I needed incredibly quickly.

So next time you’re building out a business model/plan, and need a key piece of data and google is failing you, turn to your librarians. They are the original search engines after all.


Obstacle race with me

I’ve been taking a hiatus since early february on racing/running due to injuries and a busy work schedule. Now that I’m back to 100%, I decided to dive back into endurance racing with a few obstacle races (my favorite kind). That being said, I would love to see you guys running with me. In order to make that happen, I’m going to give away an entry to one of you to run with me on Sunday April 13th in the Miami Spartan Race. In mid April I’ll be doing the obstacle race equivalent of the Disney Goofy marathon challenge, 2 races, in 2 days.

So Saturday April 12th, I’ll be running the South Florida Tough Mudder race, which if you want to join our team “Participants” let me know via email. There is a LivingSocial deal for Tough Mudder which you can pick up here.

Tough Mudder is a 12+ Mile obstacle course, which aside from the ice bath and electric shock obstacles, that isn’t as challenging as it would seem. If you can run a few miles continuously, you can finish a tough mudder (they do an excellent job of keeping you hydrated and fueled).

Sunday April 13th I’ll be racing the Miami Spartan Race (8 mile race). If you want to run this with me, I have 1 free pass, and 15% off discount for anyone who wants to join me.

If you’ve never done an obstacle race before, read my training guide. Don’t worry, if you race with me, my team will make sure you finish.

It is going to be interesting to see how I accelerate recovery post first race, so that I’m good to go for the second day’s race. I’m going to need to eat clean, lots of protein, and get a lot of sleep the first night. The next two weeks are going to be an intense training regimen filled with running, lifting, and lots of focus on getting in a variety of different types of exercises.

So what are you waiting for?


Creating customer personas

So as promised I decided I would document much or most of what I’ve been doing with regards to Lavado, my new startup. Of the things I worked on this week (building a billing system, copywriting, starting out the site, creating a budget), one of the most important things was the development of my customer personas.

So for those of you who aren’t familiar with what customer personas are, and I honestly wasn’t an expert on this, you are effectively trying to paint a picture of who your potential customers are. You want to build a profile of each person because that will help you know how to market to them and segment your marketing efforts and track your ROI and all that. Prior to launch, you don’t really know exactly who your customers are ,and you might end up being surprised. So in this case with lavado, I was trying to think, who are people who would:

a. not be likely want to do their own laundry
b. not be in a situation where someone in their household is doing laundry for them
c. would have enough to disposable income in order to afford laundry service.
d. value the time savings they get by not doing laundry

What I’m building with Lavado isn’t an impulse buy. This isn’t something you just say, ‘Alright it’s not a no brainer.’ It’s pricey enough that you have to justify doing it but if you are in a certain sort of sweet spot, it actually is a no brainer. At least that’s my assumption from a time and cost perspective.

To start of our first customer persona, I’ll start looking at single males. If I’m following along stereotypes i would assume single males are the ones who are most likely to not want to do their own laundry.

So then let’s break it down to you further. ‘Single males’ is great but there are tons of them, it’s such a wide audience.

Now let’s look at single males who are between the ages of 23 and 40. Then I want to look at perhaps jobs that could afford someone the disposable income. Because single males between 23 and 40 who works at McDonalds as fry cooks are not going to be able to afford this. But some of the single males who are attorneys or doctors or bankers will be able to afford this. So I started narrowing down different jobs and see who is a good fit.

Then the next thing I start looking at was, where do these people shop? Or what activities do these people do? So I started looking at gyms and the key here is I want to look at gyms or activities that are expensive. So clearly you have a lot of disposable income if you’re spending $200/month on gym membership vs. a $10/month planet fitness membership. This test doesn’t really indicate you’re a in a position of greater purchasing power, however this is not an exact science (yet). Now we have these different factors, I can create a profile and I can look for businesses where my potential customers might be patrons.

miami real estate heatmap
Next up, I looked at different geographic attributes. So I want people who live in certain zip codes (I looked at heat maps like this to get a better idea of rental pricing)
. The reason I’m doing this to target certain zip codes is that I’m trying to roll this out in selective areas first rather than county-wide. By selecting a few zipcodes to start my trial with, I can also control the variables better and not have to drive all around town to problem solve, should that arise.

So my customer personas could be dozens and they should be dozens. Because you want to better see and accurately track who you’re targeting and why and what makes sense logically to as far as marketing through these people. Because I could very easily just try and target any male in Florida but that doesn’t really help because I’m also targeting women. There is a big sector of men and women who are used to outsourcing services; you know cleaning services, yard services, cooking services, etc.

So at the end of the day I ended up with close to 20 different customer personas. Whether or not they’re too narrow or not, that remains to be seen but we’ll find out soon enough which ones make the most sense, which assumptions were correct and which ones weren’t and whether or not I need to reanalyze or refocus my marketing campaigns.

Here is a sample of one of my personas (I’m tracking them all in Asana):
Mike the crossfitter: 24-28 year old, crossfit fan, likes paleo, bmw, and lives in 33131. There are probably only 500-1000 Mikes in this zipcode (but there are easily 20,000 people living in this zipcode so I can create 5-10 personas for this zipcode if I wanted to).

Once I have my list of personas, I can start targeting ads at them, and see which people convert more often to which ads, and hopefully hit the sweet spot of ROI on my marketing. I have zero intention of spending money on ads which don’t convert well or generate a profit.

Now there are tons of guides on how to do this more efficiently, or effectively. Here are a few:

header image credit Ogilvy


Rebooting entrepreneurship

For the last year I’ve been slacking when it comes to my personal business, it runs itself by and large, and my awesome team has been taking care of most of the day to day. This has allowed me to spend an inordinate amount of time working on things like community building, and helping other entrepreneurs solve their problems. As fulfilling as all that work has been, and arguably well worth it for the sake of the Miami tech/startup community, I felt like I was missing something. I’ve always been an entrepreneur; ever since I started selling candies in 4th grade. Entrepreneurship is a piece of me, and something I missed dearly. So I’ve decided for the month of March 2014, I will be diving back into entrepreneurship in a serious way and documenting everything along the way.

A big part of this experiment is really about learning from my past mistakes, not repeating them, and becoming a better entrepreneur. At the end of this journey I am hoping these blog posts will serve as perhaps a guide others can follow on their quest to be successful entrepreneurs.

So how will this work, and what will I actually be doing? For the first few weeks I am going to be focused on turning my new project Lavado from idea into reality. That means I need to go through and prepare everything that Lavado needs to be successful, and document it all along the way. Think of this as you all getting a backseat ride on the building of a hopefully money making successful startup in real time. I will do my best to share what worked, what didn’t work, why I tried various things, what roadblocks I run into, etc. Along the way I hope you all will provide feedback and hopefully act as my network of mentors. If you have ideas on what works or what I should try, email me or comment on these posts.

So a bit of background on the project. Lavado is a home/office laundry delivery service. We will be charging customers a weekly fee, which covers a regularly scheduled pickup and drop off of a laundry bag. All of their clothes will be washed, folded, and returned the next day.

I normally post 1-2x a month. My goal this month is to post 2-3x a week. So this first week, here are my goals, and hopefully by sharing them with you all, I will keep myself accountable. Make sure to tweet me and ping me to keep me going on the right track.

So what are the goals for this week 1?

  1. Create mini validation test (with money)
  2. Develop customer personas
  3. Develop budget/forecast spreadsheet
  4. Write content for the homepage, signup page, landing pages
  5. Negotiate with minimum 5 vendors, hopefully sign 2
  6. Order laundry bags to be printed
  7. Configure billing system (starting super low tech on this)
  8. Design an order/inventory management spreadsheet (yes starting low tech)
  9. Write canned emails (signup/welcome)
  10. Setup phone system for incoming support/sales calls.

So I hope you follow along and enjoy these posts. Much of this is inspired by the AppSumo How To Make Your First Dollar Course, which I highly recommend for any aspiring entrepreneur.

I’ll be sending out these posts first via email. So if you want to get advanced copies of them, get on the mailing list below:

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