Today I have the pleasure of interviewing a good friend and fellow Next Gen market Research entrepreneur Kristin Luck.
Today I have the pleasure of interviewing a good friend and fellow Next Gen market Research entrepreneur Kristin Luck. Many of you who attend the research industry conferences will already know her well. Kristin is President at Decipher a firm I’ve had the pleasure of working with on a few recent occasions. Prior to Decipher Kristin was one of the original pioneers of the multi-media online research business when she joined ACNielsen to assist in the development of proprietary capabilities for testing full screen video and other multi-media materials securely online. She then went on to co-found the highly successful OTX (Online Testing Exchange) which became the fastest growing research company in the US in 2002 and 2003 (Advertising Age, Honomichl Report). OTX was acquired in January 2004 by Zelnick Media Group and Pilot Group for $30MM and again, in January 2010 by Ipsos for $65MM.which focused on the entertainment industry.
Kristin is a 2010 recipient of the American Marketing Association’s 4 Under 40 Award, a 2010 Stevie Awards finalist and was recently named to Oregon’s Accomplished Under 40. I asked Kristin a few questions about being an entrepreneur in marketing research, an area I know several in the Next Gen Market Research group are very interested in.
How did you get started in market research?
My first market research gig was in 2006 at Lieberman Research Worldwide. I’d been working at a social science research firm in Oregon after graduating from UO and decided to move to Los Angeles on a whim. I was really fortunate to land at LRW- it was like boot camp for market research. I think the three years I spent there were likely the most valuable of my career because I was able to get a grasp the entire research process and had the fortune to work with a group of really smart people who not only loved what they did but took great pride in delivering exceptional research. I’m thankful that LRW gave me the opportunity to grow and learn so quickly in a fast paced environment- I’m not sure I would have had that experience at any other firm.
I know what you mean, I had a similar experience with Nielsen and NFO. A goof foundation is so important. Then in 2000 you founded your own company OTX, why?
I co-founded OTX with a fellow Nielsen employee as a response to a lack of online research solutions at the time for the entertainment research industry. Although there were definitely a lot of firms conducting online research at that time, no one had really addressed the unique needs of entertainment clients, who really required quick turnaround and secure multimedia surveys online. OTX evolved to embrace advertisers over time but our attention to innovation and our ability to push the research industry to embrace new technology solutions (in the face of much resistance!) really solidified us as a market leader in a very short period of time.
What were some of the major mile stones in starting OTX?
We had two major hurdles when we started the company – clients and technology. In 2000 there was a lot of reluctance in the entertainment research industry to embrace online methods and traditional firms like NRG were really doing their best to scare clients into thinking online couldn’t be a viable (and better) substitute for face to face research in malls. Dan Rosen at Warner Bros, was instrumental in supporting us by pushing his research online- he really took a risk because he believed online was the future of research and because of his leadership, all the other studios eventually followed suit.
Technology was challenging as well. In 2000 there weren’t a lot of online research platform options and we really struggled to work within the limited confines of an off the shelf platform. Making the decision to design and develop our own suite of tools (online survey platform, online reporting, etc.) cemented our ability to innovate and stay ahead of the pack. Our open site architecture and amazingly talented development team ensured that we were always one step ahead of the competition.
There were many other online providers at the time though, GreenfieldOnline, Harris Interactive, InsightExpress which was spun out of NFO are a few that come to mind. How did you differentiate yourselves?
I think we really managed to differentiate ourselves by being better, faster and cheaper – everyone was offering cheaper but not so much faster and better. 2000 was sort of the “wild west” of online research so we really excelled at offering all three to clients- and this was also before the day of the $2 respondent. Back then we were buying sample for $8 a pop which was considered a steal compared to phone or face to face. Obviously that strategy wouldn’t work today- the rule of thumb is that you have to pick to (quality, price or timing). Also there really wasn’t any online offering in the entertainment research space so we really just rolled in and owned it from day one.
How did you get the word out/market yourselves?
Amazingly we didn’t really market ourselves at all – there was no advertising or marketing plan or budget until a few years in. Initially we grew strictly by word of mouth. A few years in we started hosting think tanks and consortiums which generated attention around what we were doing but we steered clear of any traditional marketing spend (advertising, conferences, etc). We figured out that the best way to get more work was to do good work. Word of mouth is ultimately the most valuable (and inexpensive) advertising!
Thinking back now, what are two things you did that were especially critical in your success?
The team of engineers and client service people we hired were the most instrumental to our success. We had a vision for OTX but it would never have been executed without a tremendous amount of dedication from our staff who literally worked around the clock and had amazing passion for what we were building together.
There were a lot of challenges to what we were building and certainly some very discouraging setbacks but we never strayed from our vision and our team was exceptional at powered through- we’re reassess, reset and push on.
I also can’t downplay how important it was for us to involve our team in product development. Rather than telling our team what to build, we gave them a general idea of what we wanted to accomplish and then let them come back to us with ideas. I’d say 9 out of 10 times they came back with something more unique and interesting than what we ever originally envisioned and I think blending the mindsets of researchers and technologists really gave us an edge in the space. I think most of my favorite conversations with our team during that time began with “I think your idea is great but what if we….”. Empowering our team to be creative thinkers and developers, not just order takers, had a huge impact on our success.
What are two specific things that you wish you would have done differently?
When we started the firm we were financed by IFILM.com which was basically a holding company- great source of support but didn’t really understand our business. I think in hindsight we could have self financed and not struggled so much with the IFILM management team who was really focused on their media/entertainment properties….but hey, getting a paycheck right out of the gate was nice.
While I was on my way out of the firm at the end of 2005 there was a push to drop our proprietary survey software and move to the Dimensions platform. I’m not sure the full transition over ever occurred but certainly I think a move to an “industry standard” platform diminished the customization and flexibility angle that OTX built its brand on. Certainly if we’d built out the interface for the platform and licensed it our valuation would have increased significantly during both acquisition events.
What three things would you suggest as a first step for an aspiring market research entrepreneur?
I see announcements every day of the week for new research firms but in many cases there’s no unique point of differentiation. Figure out your niche and how to effectively communicate that to clients. If you can’t explain how you’re different and what your offering is in under a minute you probably don’t have something sticky enough to really resonate with clients.
What are three things that you think many entrepreneurs do/invest in initially that aren’t really necessary? I know I can think of a few in retrospect, and it seems to be a question that’s rarely asked.
Office space (you can work from home initially). Staff (be prepared to do a lot of the grunt work yourself for the first year). Mini-fridges (just buy the full size refrigerator for Chrissakes…you’re going to need it eventually)- I know this sounds funny but it was literally the first tip someone gave me when I launched my consulting firm…naturally I ignored it but they were absolutely right!
In essence do anything you can to preserve capital. Most importantly, lose your ego. I did a lot of things in year 1 (both at OTX and my consulting firm) that I didn’t want to do simply because I was too cheap to pay someone else to do it. Just remember that there’s definitely a fine line though between spending too much time doing the grunt work and concentrating on the areas where you can really add value (i.e. I’m not sure cleaning the bathrooms myself was such a great use of time….but I did it).
What tips would you give market research entrepreneurs in regard to financing?
Take on as little money/financing as possible. The most valuable asset you have is your equity. Keep in mind that early money is expensive money and by that I mean, you’ll give up a lot of equity to get very little cash right out of the gate. If you can bootstrap and self finance short term until you have a proven track record you’ll be able to give up less to get more. The SBA is also an invaluable resource. If you have collateral (i.e. a house…which is what I pony’d up to get my loan) and good credit it’s relatively easy to get a loan or line of credit. I’d recommend a line of credit over a loan so you’re not paying interest on the full amount of a loan that you may not need from day one.
And how about harvesting/exiting? I find few of us think much about that up front.
Finding a buyer isn’t necessarily that hard- it’s finding the RIGHT buyer that can be challenging. Making sure your goals are aligned with the buyer is paramount. Are you selling with the intent of immediately exiting the business or are you planning on staying on for a period of time? Are you looking for cash, stock or a combination of both? If you’re staying on, are your goals for the company aligned with the new owners? There are also firms that specialize in M&A deals who will find potential buyers for you for a percentage of the sale price- not a bad way to go if you’re looking to lessen the legwork and maintain some degree of confidentiality in the marketplace.
A Next Gen Marketing Research Entrepreneur
