It’s 2013 – the wheels are in motion, the train is gaining steam – and reality is starting to set in for those in the world of business. Welcome to The New 20%.

What is The New 20%?

They are the brands that will be meaningful enough to exist tomorrow. Despite the fact that most execs and entrepreneurs believe their companies are at the top of the charts, the reality is that the public wouldn’t care if 70% of today’s brands ceased to exist tomorrow.

According to a recent study by Havas Media, consumers only care about the existence of < 20% of the brands, as the majority fail to bring anything real and meaningful to them.

For some, this may come as a bit of a shock. You certainly wouldn’t garner this type of sentiment by scouring the Linked-IN profiles of the hordes of self-proclaimed entrepreneurs and businessmen out there. Nor would you be able to tell by flicking on the business channels and watching CEOs gloat about quarterly profits in times of such turmoil. From an outsider’s view, it seems that many businesses are back on track following the 2008 crisis.

And yet, the people – the ones who buy the product, support the companies and sustain the economy – could care less if 70% of companies cease to exist.

And why not. 70% + of what’s out there is missing the mark – badly.

How come?

Because businesses are not listening ; they are out of touch.

The majority of companies continue to remain myopically focused on profitability – at the expense of basically all other factors.

But times are changing and the pushback has begun.

In their mission to find something more meaningful and build a deeper connection with brands, consumers are beginning to search out new alternatives and build communities around those companies they care about most.

A new agile crop of customer-centric companies are blossoming up through the cracks and weaving their customers’ expectations and conversations into the very fabric that the brand is made of, rather than dictating how they ‘should be’ perceived.

“Brands must foster interconnectedness and collaboration, it must show that their activity is interconnected with those who invest their time in the brand” (paraphrased from video).

Ultimately, the only way to achieve this is by building trust. To build trust in today’s world, you need to be a legit company whose interests are aligned with those of society and be willing to engage with consumers at all levels to develop a dialogue that goes beyond simple pleasantries.

The New 20% are driving the dialogue, the other 80% are on the edge of a cliff.

What is your business doing to stay on right side of the divide?


+ The Advent of Collaborative Commerce+
+ Business Model Breakdown : ETSY

Crowdfunding Strategy – Summary


Building Blocks – PLAN – the Business Model

Business Model Breakdown is back and this time we’re going to get a little crafty as we examine the Etsy business model. The once tiny website that helped small-scale artisans and merchants sell their creations online had a sizzling hot 2012 and now grows at rates equal to E-Bay. That’s why we’re going to break out the canvas and start putting together the pieces behind the irresistible Etsy.

Small is Beautiful.

It’s a phrase that encapsulates what Etsy is all about. But what happens when you put together thousands and thousands of small & beautiful things together on one site?

An (artsy) explosion of e-commerce.

In 2012, Etsy sales were up 70%, new buyers increased 80% and there were 10M new members. Jewelry was the highest-grossing category, while furniture was the fastest growing. With almost 800,000 sellers and about 22 million members from about 200 countries, this enterprise is showing that handmade & homegrown is much more than just a niche category.

While companies like Amazon have built their empires on aggressive pricing strategies and questionable business practices, Etsy has kept it real from day one and focused on putting tools into the hands of its community to empower them to sell:

“The site was started to help support small creative businesses … It’s always been that way, but we just keep finding new paths to reach that end goal.” ETSY Seller Education Lead

The question is, how have they done it?

There are three key aspects to the Etsy business model:

  • community engagement is at the heart of their strategy
  • they continuously develop tools and educational materials to empower sellers
  • they are a mission-driven company that balances altruism with tactful strategy

If you were to ask the average seller what brought them to Etsy as opposed to alternative options (ie. Ebay, independent stores, etc.), the majority would tell you it is because of the community.

People who list their products on Etsy want to do business in a friendly and sustainable way. In the same way that many people yearn for the olden days of walking down the street, popping into local shops and seeing friends and neighbors, Etsy’s sellers want to create an authentic and highly personalized feel to their online stores. It is that sense of personal relatability and trust between not just buyers and sellers, but also sellers and sellers, that has allowed Etsy to build one of the most cohesive communities on the web.


Etsy seller’s breakdown …see the full Etsy infographic here

There is so much love in the Etsy community, in fact, that a whole new network (We Love Etsy) was spawned to share the feeling.

The company has gone far and beyond just providing its members with social tools, such as forums and blogs, to swap tips. They have built their community into their business model and given its members the power to influence and engage other members. From simple social media programs like the Guest Pinner program, to the merchant-driven Etsy Success Symposium, an annual gathering held ever year to help Etsy sellers increase their sales and reach. A quick look at the Etsy Teams page and you would see how Etsy’s community roles.

But none of these community-building initiatives would matter if a large number of people in the Etsy community didn’t have the ability to drive significant sales. That’s why Etsy has put a lot of emphasis on education and the development of tools to streamline the sales process for its sellers.

With materials such as the Etsy Seller’s Handbook, Etsy Success Newsletter and Etsy Online Labs, the company is ensuring that anyone with a handmade product to sell can learn how to / have the tools to drive sales using Etsy.

With over 800,000 sellers on the platform, they cannot simply create more educational material and hire loads of people to educate the entire community, they must also rely on the help of their top sellers to bring new sellers under their wing. Imagine trying to do that without the backing of a fantastic, supportive community!

And with the increasing number of sellers comes a greater and greater incentive to find new ways to reach buyers. Etsy had started to notice a growing trend towards more and more mobile traffic to it’s site (~25%), especially around holiday times (33%), so early this year they purchased the mobile photo collage app MIXEL, which bears some resemblance to Pinterest. After we talked a little last week about the numbers behind transactions being driven through sites like Pinterest, you can see how this could be a big benefit for the Etsy community going forward.

+ The Advent of Collaborative Commerce+

And it is precisely at the intersection of the two sides, the buyers and the sellers, where Etsy makes its money. They take a 3.5% cut of the commerce generated on the platform in addition to a $0.20 fee for every product listed. The business model canvas below further breaks down the Etsy business model:

View larger image here or download the full PDF.

In the end, however, none of this – a vibrant community, educational material, a beautifully-designed platform – would matter if people didn’t believe in the company itself. The last thing the world needs is another online behemoth that pushes products from place to place at the lowest possible cost. People buy into Etsy because they believe in it and they want to be a part of it. Not just the sellers, but the buyers too:

“The buyers at Etsy are more interested in supporting creative small businesses. They come to Etsy because they want something unique, they want something that has a story; that when they wear it they’re going to feel really special and want to talk about it. They’re a different kind of buyer – it’s a totally different kind of market at Etsy.” ETSY Seller Education Lead

Etsy exists to help small businesses grow in this big, globalized world – their mission is to ‘enable folks to making a living making things, and reconnect makers with buyers.’ The fact that they generated $895.1 million in sales last year wouldn’t matter much if it weren’t part of a bigger story. Etsy is about impact, and as we continue to drive deeper into 2013 we will see that more and more businesses are becoming impact-driven because that’s where the real energy is.

+ The Reason to Empreender – Impact

Etsy’s commitment to the world of small & beautiful can be seen in every aspect of their organization, from their creative hiring initiatives to their listing as a certified B Corp. While not flawless by any means, it is one of the best examples of a highly visible company doing business to a different drumbeat. And what a business it is, which is why this business model is so worth studying.

Overall, the shift to a more collaborative and creative economy can be seen in examples like Etsy. The next generation of companies is building their business model to generate impact for their respective communities without sacrificing profitability, and making it fun in the process. As the movement grows and more and more entities make the shift, the effects will be exponential – the new era of business is only just beginning.


PLAN – the Business Model

The winds of change are blowing. The social, economic and political landscape are undergoing seismic shifts, every industry is being reshaped. The question is, what’s driving this change and what does it all mean?

On a fundamental level, people are upset – with big business, with the government, with each other. Questions are getting asked, discussions are being sparked and knowledge is being exchanged, the social movement has begun.

The medium to facilitate such a movement is the web, a network of nodes that is making borders seem irrelevant and distance obsolete. In its infancy, the web was a series of websites that was indexed and categorized by search engines – today, thanks to Facebook, Twitter and recently Pinterest, the web has become a social hub for everything that’s relevant. Communities are being created, content shared, and connections created, all in an effort to redefine the way we work, live and play together on this planet.

What does it mean for business?

Big things.

While five years ago, it was acceptable for a business to put up a website and tell the world what you had to offer, today things are different. People want to participate in the businesses that they are patronizing; everyone wants to take part in building the brands of the future.

Consequently, three key have emerged for the next generation of commerce:

Community

Community has always been an essential part of human interaction. Communities are being created everyday in new ways as people find overlapping interests, causes and circumstances; however, before the advent of social networks, communities were primarily created around physical interactions or boundaries (ie. a neighborhood community association).

With the social network boom, suddenly there is an exponential increase in the number of opportunities to discover new people with similar passions, beliefs, desires, etc. Today, people from all over the world who have never even met are forming communities. These communities are becoming the main pillar for a new era of commerce, as they become active participants in the brands they love and progressively build their clout to influence decision making.

Collaboration

Once communities have been created, collaboration begins. Thanks to a host of new technologies and applications, including VoIP (ie. Skype), mobile phones, social networks and the cloud, collaboration is being taken to a whole level. No longer confined to geographical or physical boundaries, people can erase distance and collaborate on projects, causes, ideas, etc. anytime, anywhere. Information and knowledge can be exchanged at light speed, thus collaboration is enabling new business models (ie. AirBNB), knowledge networks (ie. Wikipidea) and processes (ie. crowdfunding) to be created faster than ever.

Co-creation

Traditionally, companies have always developed their products in-house and delivered them to the market, then adapted their strategy or modified the product based on market reaction. Today, companies can collaborate with knowledgeable and loyal customers in their communities to develop new ideas, prototypes and products. Co-creation creates a new paradigm for businesses, as companies are now able to get customers before they even release the product to the market (ie. Quirky).

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Overall, the social web is redefining the way commerce is conducted, and it’s only the beginning. Now is the opportunity to get connected and start taking advantage of the social capital in and around your organization – get ready for the next generation of business!


+ Building Blocks for the New-Era Business
+ Finance 2.0 – Wall Street Meets the Web

Crowdfunding Strategy – Summary


PLAN – the Business Model