The Supreme Court shifts and businesses suffer

For more than 25 years, Internet businesses in the United States have enjoyed a big break: If a customer in another state buys something online, the company doesn’t need to collect state sales tax or file taxes in that state unless they have operations in that state such as a warehouse or branch office.

That is about to change, thanks to the recent South Dakota v. Wayfair ruling from the Supreme Court. This essay by a tax expert explains the situation and the impact pretty clearly. I draw your attention to the concluding paragraph (note: nexus is the ability of a state to require businesses to be responsible for taxes):

Many states have enacted economic nexus rules for income taxes that create a filing responsibility based on the amount of sales in a state. These amounts have generally been set at $500,000 and above. Now, states may seek to lower those thresholds to impact more sellers, and states that have not sought income tax nexus may move forward with new legislation.

I own a small business and use the Internet to sell goods to customers all over the country. The Supreme Court ruling is going to be a big headache. I don’t have a problem with paying taxes, but I do have a problem with dealing with 50+ entities (including states and territories) that have different filing requirements that will likely entail a lot of red tape. I don’t have a full-time accountant or staff that can deal with this stuff, so it falls on me to implement systems and processes to handle state taxes outside of Massachusetts.

I blogged my thoughts on this topic in As a small business owner, this is what I fear post-South Dakota vs. Wayfair, but the end result may mean not selling to customers in states whose red tape is too much of a pain … which hands even more power to big Internet businesses like Amazon.

Amazon Marketing Services has a metrics problem

Over on the Lean Media blog, I’ve written a post titled Why you can’t trust ACoS metrics in AMS (and two alternatives). AMS is Amazon Marketing Services, the powerful self-serve advertising platform that vendors can use to advertise their wares next to Amazon search results, on Amazon product pages, and even on the lock screens for Kindle e-readers.

The problem with AMS is the metrics are terrible. In the blog post I specifically noted the problem with “ACoS” (Average Cost of Sales) and even made a video that demonstrates how a seemingly innocuous ACoS rate may be hiding a money losing campaign. Other problems include poor reporting capabilities, including no easy way to compare a campaign’s performance from one period to the next. By comparison, Google AdWords certainly has its own problems with misleading small businesses about the locations of people clicking ads and click fraud, but at least it’s possible to do a deep-dive into AdWords metrics to compare campaigns and time periods.

What’s the solution to misleading ACoS metrics? As described on the Lean Media blog, I created two other indicators, ACoN (Average Cost of Net) and ACoP (Average Cost of Profit). The problem with these metrics, however, is they have to be manually created. Here’s a sample from the actual Google Sheets page that I use for the task:

AMS Tracker for ACoN and ACoP screenshot
The spreadsheet I use to create alternate AMS metrics (ACoN and ACoP)

Amazon could actually create one of the metrics with the data that it has. Average Cost of Net refers to net revenue remitted to vendors, so if the company swapped out “Sales” (gross sales on Amazon) with projected net revenues to the vendor, that would give a much better idea of performance.

Pros and cons of traditional book distributors

Getting books onto bookshelves with traditional book distributors

Amazon has been disrupting the book industry for more than two decades. Sometimes the public hears the complaints as disputes boil into the open, but much of the restructuring of the industry is taking place quietly, without much public angst. In the post, I will discuss one of the casualties of the new world order for publishing, book distributors.

Distributors are an unseen force in many industries. They are responsible for bringing products to retailers. In the grocery and liquor industries, distributors are the companies whose trucks pull up to the loading dock in the back early in the morning to drop off a wide variety of goods that shop managers have ordered. In the book industry, distributors are the companies that arrange for certain titles to be available in Barnes & Noble, airport bookstores, and independent bookstores. Other services are available, too – there’s a good overview from the Independent Book Publishers Association (IBPA) titled “Working with Distributors.”

It’s important to note that distributors don’t represent everybody. They choose which producers they want to include in their catalogs, and take a cut from any sales that occur. They also demand exclusivity – if you sign a deal with a distributor, that’s the only outlet for your product in a particular geographic area. Obviously, if you have a distributor, you can get onto shelves in retail outlets, which increases your chance for retail sales. If you don’t have traditional distribution, you’re probably out of luck, unless you can work out a deal on your own with a shop or chain of stores.

In the book industry, distributors used to wield a great amount of power. Nearly every publisher had a book traditional distribution deal, or had a sales force to sell directly to the big book retailers. Amazon pulled the rug out from under that model, allowing publishers to offer books for sale directly to consumers. Retailers were hurt, and distributors were decimated. The book distributors who are left are now far more picky about the publishers they work with.

Do you need a distributor for your books?

At one time, I thought I needed a traditional book distribution deal for my company. This was not only to get access to new retail markets, it also seemed like a mark of industry respectability, which is important to growing companies. I did the dance with several distributors, but they didn’t work out. One bailed when it decided it didn’t like the way I managed ebook ISBNs. I pulled out of another offer when I realized the terms wouldn’t work out unless each title sold thousands of copies (many do, but some don’t). A third company completely ignored some of my requests for information, and just shoved a contract in front of my face to sign.

Ultimately, as I thought things through, it became clear to me that I didn’t need book distributors as much as I thought. It wasn’t just the cut they demanded, or the less-than-ideal business relationship. Other factors included:

  1. Once I went with a distributor, I would no longer consider readers to be my customers — it would be the distributor and their clients, the bookstore managers and buying teams.
  2. Distributors demanded a cut of ebook sales, even though they added no value to working with Amazon or other channels.
  3. There were also changes I would be forced to make to accommodate book distributors. My IBPA board colleague Leslie Browning outlines some of them here, including the necessity to have ARCs (advance review copies) ready at least six months before the publication date.

I don’t have a distributor now, and I don’t see it as holding back my business. In fact, I had the best year ever for my company last year, thanks to strong sales via Amazon and other online channels.

It would certainly be great to have my company’s books show up in big-box retailers or airport gift shops or B&N, but the sacrifices I would have to make dealing with book distributors — not to mention dealing with retailers returns — lessen the attraction of traditional book distribution.

 

 

 

 

Whatever happened to the Lean Media framework?

(Updated) I received a message from a European media executive about my Lean Media framework proposal from a few years back. Here’s what I wrote at the time:

A few years ago, before the mobile startup, I heard Eric Ries give his Lean Startup stump speech at MIT. It immediately clicked with me. His focus was software development, but I realized that the things he was saying about product development, feedback cycles, and speed applied not only to software, but to media content as well. I had seen it with my own eyes. Print content, websites, video, music and other products/projects that were developed with these qualities in mind had many positive qualities. They were cheaper to produce, they made it to market more quickly, user feedback loops started sooner, and if they were new brands, they got a huge head start. They were also more fun to work on.

Conversely, products that took the big media approach — bloated teams, top-down directives, planned by committee, limited feedback cycles, etc. — encountered problems. They required huge staff and budget commitments, took years to complete, and seemed to have a higher rate of failure.

Almost immediately I realized there were some issues I had to think through (see Lean Media: The Importance Of Intangibles And Brands and The Lean Media mindset: Can it work for large companies?) even while I found more examples of lean media such as Led Zeppelin (who started lean) and The Deftones (who returned to lean).

Earlier this year, I started writing a book about lean media, but quickly realized that the idea still needed to be refined. This is what I told the European executive:

Thanks for reaching out. I started to write a book about lean media but stopped because A) I have too many other things going on with my business and B) it was hard to think through some aspects of the framework.

For instance: talent/creative can make such a huge difference in the success of a lean media project but “dream teams” with lots of resources can fail. “Creative” is also hard to measure, which in turn makes it hard to translate into actionable advice

Another intangible aspect: “Brand.” It is so easy to create in the lean media world but how it fits in with existing brands (if it is part of a corporate effort) gets very tricky.

There is also the issue of scaling a lean media project into a true business, if that is the goal. Perhaps it is beyond the scope of lean media, though, because more resources and coordination is required.

As you can see I still have some thinking to do about this. Ideally, at the end of the day I want to have a simple framework that managers/companies/entrepreneurs in all kinds of media industries can apply. But I am not sure if such simplicity is possible.

What I probably should do is talk with more people in the trenches. I know there is something here, but expressing it cleanly will talk more contemplation … and perhaps collaboration.

November 2015 Update: I am expanding Lean Media into a book. Read sample chapters here, or sign up for the lean media newsletter.

An action plan for telecommuters and their managers

Mary Meeker’s latest report on Internet trends was recently released. While many observers are pondering the some of the big stats relating to the size of the digital economy and the big companies that stand to benefit, I was interested in a data point that pretty much slipped beneath the radar. Buried on page 126 of Meeker’s slideshow was this finding, relating to freelancers:

Freelancers = Significant & Growing Portion of Workers @ 53MM People, 34% of USA Workforce

She broke down the numbers further, relying on data from oDesk/Upwork:

Mary Meeker Internet trends freelancers vs telecommuters and virtual office action plans

If these numbers are correct, it represents a huge change in the way Americans are working. Certainly, the data shows that freelancers are ready for virtual work, if tens of millions are already doing it.

But are companies ready? The slide did not break out the telecommuting workforce. Millions work from home on a full-time or part-time basis for employers located elsewhere (ranging from across town to the other side of the globe). But it’s a drop in the bucket, compared to the numbers of people who could be telecommuters if their companies allowed it.

As author Melanie Pinola pointed out in her book The Successful Virtual Office In 30 Minutes: Best practices, tools, and setup tips for your home office, coworking space, or mobile office, most jobs that take place in front of a computer screen are candidates for being done remotely. But not all companies are on board. She cited the example of Yahoo, which killed its teleworking program in 2012 because its new CEO thought collaboration and innovation were suffering.

As Melanie noted, “Good collaboration and innovation don’t require you to be within touching distance of your coworker.” If companies have the right team in place, and the right tools, telecommuters can not only be productive, they can successfully collaborate and innovate, too. Melanie’s book covers many of the tools and best practices that can help a virtual team — as well as individual contributors, their managers, and their freelance partners — operate at peak efficiency. She has also written Virtual Office Action Plans, which describes strategies and approaches for telecommuters, freelancers, and business managers.

What’s the best home office setup for a virtual office?

I’ve worked out of three home offices in the past ten years. I’ve been able to get a lot accomplished in these offices, including writing a graduate thesis, managing a virtual team, and starting my own publishing company. However, if Melanie Pinola’s The Successful Virtual Office In 30 Minutes had been available at the start, I would have been able to get a lot more done in terms of getting the best possible home office setup. This blog post will serve as a review of the book, albeit a biased one — while I really did get a lot of useful information from Melanie’s guide, I am the publisher of the In 30 Minutes series.

best home office setupMelanie is the author of a top-selling LinkedIn book and writes about home offices, telecommuters, and virtual work for Lifehacker. She’s also About.com’s mobile office expert. As a virtual worker for decades (she started working from a home office in the 1990s) she knows the virtual mindset and what’s required to have a successful virtual office. It’s not just a matter of wanting to work from home, or assuming a Wi-Fi connection and laptop is all that’s required. She methodically works through the different aspects of setting up and maintaining a high-performance virtual office, starting with legal and technical requirements and finishing with a list of Top Tech Tools for home offices. Specific topics include:

Finding the best place to work and creating an efficient home office or remote workspace (Chapter 1)

  • Recommendations for setting up the ideal virtual office, based on the latest research.
  • How to use alternative offices such as coffee shops and libraries to get more done.
  • Four elements of a productive home office.
  • Ergonomics (or how to stay healthy)
  • Must-have supplies for your home or mobile office.

Learning strategies to help you work more effectively on your own and as a virtual team member (Chapters 2 & 3)

  • How to ward off roommates, spouses, children, pets, phone calls, and other daily distractions.
  • Crucial time-management tips.
  • How to work well with other virtual team members.
  • Best practices for effective communication across a distributed team.
  • Dealing with resentful coworkers.
  • Coping with isolation.

Using technology to help you stay productive and connected (Chapter 4)

  • Useful apps for real-time collaboration.
  • Software that can make you work more efficiently.
  • How to secure your digital data.

Applying the tips for the best home office setup

Reading Melanie’s book, I immediately picked up some tips that I could apply right away to my home office setup. They included installing a door to keep out family distractions (especially in the evening, when I am most productive) and dusting off an old space heater to keep my home office warm in the winter months (much cheaper than cranking up the heat for the entire house). The recommended applications included a few that I want to explore further, including Slack. There was also an extensive list of tools and apps relating to coworking spaces, which is a popular mode of work these days (see my review of the Cambridge CIC).

This new book practically pays for itself, in terms of the increased productivity and better insights into virtual offices. Whether you are a freelancer, consultant, small business owner, or are interested in telecommuting, this is a wonderful and effective guide for getting the most out of your home office.

The Startup Roller Coaster

In 2010, I heard a talk by angel investor and entrepreneur Howard Anderson about the emotional roller coaster that comes comes with launching a new technology venture. He explained how the highs are so high, while the lows feel really low.

For those of us in the room who had never been in the position of launching a company, it didn’t sound surprising. Of course the pressure will be intense, and incredibly risky. But how extreme could the highs and lows be?

Extremely extreme, as it turns out.

I worked in large organizations for more than a decade. A bad day at an established company might entail sharp-elbowed office politics, hurt feelings, and worry about career advancement or a raise. Worst cases involved the loss of a job. But in most situations at a large company, problems will eventually be worked out. Everyone knows the organization will endure.

Startup Roller CoasterNot so at a startup. Before you’re funded or generate revenue, the venture is fragile. Things move fast, there is too much to do, and the sense of responsibility is huge. Even minor problems feel big, and failure of the business can take many forms.

Conversely, the accomplishments feel huge. Hard work, a new product out the door, positive feedback from customers (or, in the case of my company, readers), and lucky breaks can really boost your spirits. When a bunch of things are working well at the same time, the feeling is spectacular.

Then the crash: reality checks, unforeseen problems, pushback, lack of alignment, and the flat-out “no” when you were hoping for a “yes.” These and other issues can really throw a wrench in the works.

There are ways out of the funk, though. Keep on executing. Work through or around the problems. Reach out to your partners or customers or mentors or anyone who might be able to help with a new approach or pivot. The wins begin to trickle back, and the cycle starts again.

A few years ago, I met an experienced startup founder at the Cambridge Innovation Center. She was very familiar with the entrepreneurial roller coaster, and offered some advice on how to handle it.

Highs and lows on the startup roller coaster

“For the highs and lows, be careful of what you do on those days,” she said. For instance, on a good day when you get a big win like recruiting a customer, call your investors and tell them about it.

She also alluded to things founders should not do on the bad days. She didn’t have enough time to explain what they were (it was at the end of a late-night meeting) but one of them I have been able to deduce from multiple sources (including Y Combinator founder Paul Graham), as well as Howard Anderson’s reminder at the end of his talk: “It’s always darkest before the dawn,” he said.

In other words, keep pressing ahead, even when the world seems to be working against you. And don’t give up.

The above image is a creative commons licensed image from Tanki on Flickr.

Experimenting with bulk orders targeting the educational market

LinkedIn User GuideThe experimentation continues. Last week, I launched a new marketing and sales experiment for LinkedIn In 30 Minutes, a LinkedIn book for newbies. It involves bulk sales of the paperback to a special audience segment: Career services offices of colleges and universities in the United States.

My hypothesis: Staff at career services offices of colleges and universities directly serve an audience we are already targeting: People who need to know how to improve LinkedIn profiles in preparation for a job search. Students and recent grads may not have much professional experience to begin with, or in the case of graduate students, they may have career gaps because they have been out of the workforce for several years. They want to present themselves in the best possible light to potential employers and LinkedIn recruiters, and having a rock-solid LinkedIn profile is critical. These are the types of readers we want for LinkedIn In 30 Minutes!

But the problem is: They may not know about the guide, or may not be looking for this type of guide. How can we reach them?

The bulk order pitch to career services offices

I decided to reach out to a few career services offices at universities, ranging from smaller schools such as Suffolk University in Boston to larger schools such as the University of Texas system. I found the contact information of some schools on the Web, and crafted a simple email pitch. Here are the elements:

  1. I am the publisher, and we have a new book. Here is a PDF sample to download for your personal review
  2. I would be happy to mail you a paperback copy. Just say the word.
  3. Here are some specific lessons that will help your students use LinkedIn
  4. Find out more on the book website
  5. We can also arrange for bulk orders

I was most interested in the response rate for the paperback book. If they asked for one, I figured that would indicate a strong interest for a bulk purchase. So, I set up some bulk purchase options for LinkedIn In 30 Minutes. Of the 5% who responded with a request for the paperback, I mailed them a copy with a cover letter outlining the bulk prices. So far, no one has indicated they want to purchase a bulk order, but I will follow up with a call next week (Update: three bulk sales so far!). I’m really interested in finding out whether the guide meets their needs, and if so, what sort of bulk purchase terms would be most suitable — for instance, payment by credit card or invoice, the size of the bulk order, etc.

Monitoring sales of Dropbox In 30 Minutes

Dropbox user guideDropbox In 30 Minutes has now been available for about nine months. For nearly as long, I have been monitoring interest in the Dropbox user guide, by closely watching sales. At first the book was only available as an ebook for the Amazon Kindle, but by the start of 2013 it was available for multiple e-reader, screen, and paper formats, including:

  • PDF (first via e-junkie, now gumroad)
  • Barnes&Noble/Nook
  • Apple/iTunes
  • Kobo
  • Paperback (via print-on-demand distributor CreateSpace)
  • Direct purchases of .mobi and .epub (which bypasses Amazon.com, iTunes, and other corporate ebook stores)

It was fascinating watching the evolution of the readership, especially after the paperback edition of Dropbox In 30 Minutes was released last November. While the Kindle edition has been a strong seller from the start, sales have plateaued. Meanwhile, the paperback rapidly gained  fans and by February 2013 had overtaken the Kindle and all other versions. Note, however, that Amazon is also responsible for all paperback sales — it owns the POD service CreateSpace, so the paperback listing is automatically fed into an Amazon product page (which is now linked with the Kindle product page).

Monitoring a sales slowdown in ebooks

Getting back to the Kindle version hitting a sales plateau: I’ve been thinking a lot about what could be happening. Certainly, there is more competition for readers, both on Amazon itself and online. But there are other possibilities, including falling interest in Dropbox among my target audience. What could cause a once red-hot technology to slow down in popularity? Factors could include competition from giants in the space (for instance, Microsoft Skydrive OneDrive or Google Drive), negative publicity (such as security concerns), or a maxing out of the potential audience. For now, I am discounting the idea that Dropbox is dropping in popularity, and am more focused on the competition — and how to make Dropbox In 30 Minutes and the free online resources such as videos and blog posts even better.

Blogger default templates: Which one is the best?

Last week, I published my latest book, a a Google Blogger for Dummies alternative. I wanted to show small business owners how to cheaply and quickly build an informational website for their businesses using Google’s Blogger service. In the course of researching the book, I did a lot of experimentation with Blogger’s default templates. Which ones are the best?

Awesome, Inc. Template: This is one of the template types that I used to build a sample website in the book. It has a bold look in terms of the colors, fonts, and box styles used. Here’s what the sample website looks like, using the basic gray Awesome, Inc. template, as well as an orange Awesome, Inc. template:

Blogger Default Template Awesome Inc.Blogger Template Awesome Inc Orange

Simple Template: Blogger has a range of styles based on the “Simple” template. The colors and shapes are generally muted, but there are a few distinct types as well. Here are the Simple white and orange templates:

Blogger Template Simple White

Watermark Template: Finally, there are some playful templates that might fit certain types of businesses or business blogs. Here’s the “Candy Stripe” version of the Watermark template:

Blogger Watermark tempalte

What about the other Blogger default templates? Picture Window, Travel, and Dynamic Views are more oriented toward photographs. This is not a good fit more most small businesses, except for those which have lots of photographs to show. In addition, the Dynamic Views template is based on heavy use of javascript, which causes problems for some users.

Lastly, the Ethereal template is too gentle for most small businesses. I believe that most businesses need to make a strong impression, and Ethereal is just too emo.

What’s inside the book

My book explains how to choose different templates and customize them for static websites (that is, an informational website that seldom changes) or a small business blog. For people who are just starting a business, or don’t want to spend the time or money on an expensive website, this book will teach you what you need to know to get a small business website with its own .com domain for just $10 per year. You can see what’s inside the book here.

Of course, businesses with sophisticated design needs should go for a more advanced template. It’s possible to download custom templates for Blogger (I will write a post about this someday) but many businesses opt for WordPress. That’s fine, but note that WordPress comes with a much steeper learning curve, as well as additional financial and time management costs. I’ll be sticking with Blogger …