Small Business Development Theatre

NPR was interviewing a dot.com founder on an upcoming meeting with the President, to discuss something to do with business development.  What I heard was along the lines of

We tell the story of the new product to the retailers.

Wait, retailers could care less about a story, what they want is to test out products on the only opinion that matters, and that is the customers.  So ever looking for changes and differences,  I looked up stories on The Grommet.  If you look at this on the 18th of June, you'll see in their home page splash the celebration with the White House.

Now, what we would expect is first and foremost success stories...  and what do we get, from the Q&A...

On The Grommet's US-made and eco-friendly focus, and why it's not being picked up by major retailers:We noticed five years ago that there was going to be a really strong interest in shopping by values. It was created by our disappointment with large institutions, whether dealing with an economic crisis or leaders who let us down. People were stepping back and saying "What am I participating in here when I purchase?" Even if not consciously, people understand it's the strongest way to take action—which businesses you support. There wasn't really a focus for it and we really invented the idea of overtly and easily shopping by values. You can decide on our site what your most important criteria is and shop that way. Big guys have a DNA, it's different. A large retailer might be leading with price or operations. If you're Fab you're leading with design, not with values. With Etsy you're leading with handcraft or vintage. We're leading with values and nobody else is doing that.

"We noticed ... there was going to be..."  How?  What was the objective data?  And of course big business does not want what they offer.  But small business is not going to want "stories" either, they want sales.

On sourcing vendors:It's half people submitting a product that's not their because they love it and want us to know about it; we look at everything they submit. And then it's half submitting their own product—there's a spot on the site with a gallery for it. We've received a lot of attention for our use of Pinterest, because we have a group board where we invite people to contribute and people suggest grommets there and it's a high yield place for us for great ideas. We're very active on the crowd-funding platforms and we partner directly with Indiegogo so we get involved early, even pre-production and do a little funding. We've launched probably 10 or 15 products off those platforms.

Signal to noise.  "A lot of interest..." " half the people..." "high yield..interest"  "very active.." "We've launched probably..."  how come no hard facts.  This is dot.com talk all over again. And then, how to process all of this as a business?

At this point the products we launched in 2009 that became big—Soda Stream, Alex & Ani, Bananagrams—those are products that many people know and you can find in major distribution.

Hang on, Soda Stream is a product invented in 1903, and has worldwide distribution, was bought by Israeli investors in 1998 who produce it controversially in the occupied territories.  Perhaps SodaStream used Grommet as yet another promotional venue as kickstarter is being used by well-funded companies, but to say Soda Stream was launched by Grommet is a bit of a stretch.  I mean a huuuuuuuge stretch.

What is the success rate, are they making money?

We have a perfect visibility on that because we've built such a great community that tells us within 24 hours of launching a product whether it will have high appeal commercially or socially. That data is our goal, and sharing it with new companies launching. It gives them a lot of credibility when they want to get further media or retail support, even manufacturing. They are all watching us like a hawk.

Doesn't Amazon do this far better?  And expect no fees?  And what is "high appeal socially?"  I think this may be what Ogilvy condemned, "eyeballs' vs "sales."

And this I can make no sense of...

I don't see us as a retailer; that's what retailers do. If they have a good idea they try to hide it, it's a competitive business. But they are human beings too and they do want to support these kinds of companies but you can't do it until some of the risk is taken out. Increasingly we've been working directly with larger retailers to let them know these companies can handle operationally what they are doing, they are proven, here's our experience with them. We're like the ambassador for these companies; it's meaningful. We're a weird company in that we cooperate. It's interesting to get into the economics of it. It protects the next little guy coming along. I like to affiliate with companies that change something and we've stuck with the same idea for a long time.

What little might make sense is alien to the reality on the ground, and I hope it is just bad journalism, not reflection of the thoughts of the founder.  But it sure sounds like more noise to signal.

She goes on to say she trademarked "citizen commerce."  Unh...  "let's make this for the people by introducing violence to the scenario."  What possible value does trademarking a slogan bring to the scenario?  And what does it mean?  As opposed to government contracts?

And it may not matter, the goal may have been achieved, because she sold a majority to Japan investors:

The news this week is that Lexington, MA-based Grommet has a new majority owner—Japanese e-commerce giant Rakuten—thanks to an unspecified new investment. Rakuten led the startup’s Series B round last September, and Grommet also has raised about $6 million in angel investment ($4.4 million paid in capital).
And next month, the startup—which has grown from 10 to 43 employees in the past year or so—will move into new digs right on the Cambridge-Somerville border, near Davis Square. Its new mailing address will be in Somerville to reflect “more of a hacker/maker community,” Pieri says.

More money, let's blow it.   They should have moved to Peoria.

And while Grommet’s mission hasn’t changed, it does need to serve its new master. “Our role in life is to discover and curate the best ideas and products out there, and help them scale,” Pieri says. “We de-risk them to help them move forward to Rakuten’s store” and other large retailers.

Two problems here and one surprise.

1. Curating is a fun buzz word, but that is too big of a job for one company.

2. De-risk is the work of the entrpreneur, essentially handled in design, and cannot be farmed out.

3.  Surprise: she has divined that entrepreneurs never take risks.

Rakuten is sometimes referred to as the “Amazon of Japan.” But it sells itself culturally as the opposite of Amazon. “Rakuten doesn’t undermine its partners,” Pieri says. “A lot of our vendors have a problem with Amazon.”

No they don't.  I've been a supplier to Amazon for a decade, and they have never undercut me or anyone else as far as I know.  So this is a false premise.  And she indicates her stable is a self-selected group of people who did not work well with Amazon.  Not sure that is the group you want.

Also, Japan's experience in retailing in USA is not stellar.

And then this:

 “Most of shopping isn’t transactional, it’s about discovery or connecting with the creator of a product. It’s about walking down that cool street in a town, it’s all about story and personal experience. Amazon can’t retrofit around that, that’s not its business.”

If you narrow the idea of shopping to browsing in specialty stores, then there is some of that walking down that cool street in town, but that is in specialty stores and galleries.  Online can bring nothing to this experience, but nonetheless, this is what the Grommet proposes.  Also, if amazon cared for this business, it need not "retrofit" it would simply step in and take it too.  With unlimited debt creation, it can do as it pleases.

The funny thing is, those cool streets  have gotten shorter as cities and the feds destroy the middle class and the architecture to support it.  We need a crash in commercial real estate so we can get back to rational rents and small business thrive again.  FED policy and tax laws are killing the middle class, and capitalism is over, it is just a matter of what event triggers the crash.  In the meantime, small businesses will be exponentially more valuable as they fill in.

This is people not succeeding, or at least extending a false economy, celebrating in the White House with people who want to crush small business.  It makes sense.

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