their initial business idea flopped. how did these entrepreneurs get it to a different winning concept? and the creators of locker lookz take us step by step through the process of getting your product onto the market. more ways to help make your small business successful coming up next on "your business." small businesses are revitalizing the economy. and american express open is here to help. that's why we are proud to

present "your business" on msnbc. hi everyone i'm j.j. ramberg and welcome to your "your business" where we give you information and advice to help your small business grow. every spring tech entrepreneurs from around the country gather together at the south by southwest festival. it's become a national testing ground for start-ups and investors. two years ago, we followed the founders of a hot new start-up as they pitched their product and courted investors. that venture fizzled. but in the nick of time they pivoted and ended up turning it into a business that's disrupting the job hunting industry. >> when you guys were last here

we were getting ready to go to south by and we entered that pitch competition. we did well. >> two years ago when we first met tom he was polishing the pitch for yabbly his promising new start-up a consumer to consumer advice site. >> and i am going to go right now. i'm tom from yabbly and what i'm about to tell you is a 100% true story. >> tom and his co-founder ian shaffer had just been invited to the prestigious south by southwest accelerator pitch contest held every spring in austin, texas. and they were riding in the fast track. >> right now, we have the team from yabbly. and yabbly are working on changing the way people shop for products. please give it up for yabbly. >> i'm tom from yabbly. what i'm about to tell you is a real story. >> fast forward two years, and a lot has changed. >> the current name of the company is poachable. and it wasn't always named that.

>> from yabbly to poachable. but the name was just the start. they actually changed the entire company. they shifted from providing a service and product for consumers, to job hunters. >> it allows employed people to explore new opportunities without revealing their identity. >> shifting the business or pivoting from consumer advice to job hunting, was a huge change. but it's not as random as it seems, because the core function connecting people with common interests, is still the focus. >> a pivot is some fundamental assumption about the business is wrong. but, we're going to repurpose some of the work we've done and try something kind of slightly different, but still has a lot of the dna of the original idea. >> tom says he and ian actually knew they had to pivot yabbly way back before they got the south by invitation. >> we just weren't seeing enough traction.

but then when the south by invitation came in we said oh, well, we can't change now, i mean, clearly we're on to something. and well look we're on tv yada yada, right? so it delayed the realization that the core -- the initial business was flawed. >> when they returned from austin they finally faced flaws so ugly they considered shutting down the company. >> you can't continue to nurse something that isn't going to grow, is going to die. your job is to move on to something that is going to grow. >> tom says his advisers weren't generous with their tough love. >> he's not afraid to tell you, it's kind of ugly. he's been awesome. >> that is what you o'to your investors, your employees, and to yourself. >> at some point businesses probably have two options, either fail at what they're trying to do or go and find something new to do. >> managing director of fell swoop also worked with tom to help him find a way to meet the demands of the marketplace. >> with a start-up it's all

about trying to find that market fit. >> with very limited traction and their funding all by gone tom and ian were running on empty. >> there were some dark times. we were trying to sell the company. we were getting close, but we weren't getting any offers. we knew that the clock was ticking down. yabbly, the original idea was not working. >> finally, they made a deal to sell what remained of the business. and take what they could get for their investors and employees. >> we were planning a, what people call a soft landing. which is kind of a mercy killing for a start-up. but we said look it's july you know fourth weekend, we're not going to close a deal until july 25th. let's use this time to throw a couple hail marys. >> that's when they hit on the idea of poachable. it was one of those last-ditch efforts. and to everyone's surprise it got traction even before they completed the website. >> it was a single landing page.

and a form that any high school kid could build, honestly. and a matching algorithm at the time was me sitting at my desk trying to match members and companies. >> ryan schroeder noticed it and right away he went from being an adviser to becoming a client. >> when this poachable thing came out i was like oh, man that's something that we need that's a couple hundred pucks to get people that aren't on the open market and it's been hugely valuable for us. >> then with only five days left to finalize the sale of the company tom took a long hard look at the numbers on poachable and re-evaluated the sale. >> it was like one page website. and we just bought the domain poachable.co, and the next thing you know people started signing up. and it was almost instant. it was crazy. and i remember sitting in this office saying to the team this has never happened before. back against the wall he kept calm, made the right, rational

decisions and was able to spot the opportunity when there was one and got it up. >> today seven months in and with a new round of investment they now have 28,000 users, and more than 200 companies actively recruiting. >> it feels very different. with previous businesses we felt like we were pushing a string. like we would do everything we can, and oh, nothing would happen. with this one, we feel like the wind is at our backs, and now our job is to not screw up this opportunity. >> many success much small businesses started out as one thing and then pivoted into something more successful. let's get our board of directors in here for some more incite. mike michalowicz is the ceo of a group of accountants book keepers and coaches that drive businesses globally. he is also author of the book profit first a simple system to transform any business from a cash eating monster to a money making maushen.

and jennifer hill is an entrepreneur start-up attorney and strategic adviser she is also the co-founder of a gaming platform for adaptive learning. so good to see both of you guys. >> great to be here. >> pivot is a term that we hear a lot particularly in silicon valley. pinterest started out as something entirely different. it was a shopping app. what makes me think about is you have to have a good team. you cannot pivot unless you have a team that can pivot with you. >> absolutely. and you have to give them direction where you want to go. i'll tell you there's a flaw to pivot. pivot is such a popular term right now. and what people are interpreting means, adjusting to what the customer wants. right? if the customer doesn't want it you can't sell. so we adjust adjust. then we neglect our own values. what the team wanted originally and we get out of alignment. i suggest don't pivot a line. move to what the customer wants but stay true to what your organization wants to achieve. i've seen people pivot into businesses that yeah maybe they're growing but they hate the business itself because it

doesn't serve what they intended to do. >> what we did is we basically had a series of products and found one of them that was working, and then go with that one. so we might have started here and now we've moved here because we found that this was working. >> that's actually what groupon did. they started out as a platform for advocacy campaigns and one of the products they came up with to actually fund that platform was a daily deal site and they realized that was where the momentum was. what was critical is they had a team that was really good at activating with groups of people which was why shifting to that idea was still in alignment with the team. >> that's what they talk about in the piece also right? you're not changing the entire company. you're still using some of the resources, the back end, the values. >> that is the greatest lesson. pivoting doesn't mean turning 180 degrees or 360. it's usually a 5% change. they took the same products they had. same element they had, the same team members, just adjust a little bit and then pushed

forward. when you do it in your business adjust slowly selectively, then pick the small things to exploit and grow on. >> and also to be sure that you're giving the original product time for product market. pivoting is not just constantly iterating for the sake of iterating. it is having a team that understands what your values are and what the customers want and where you can shift and find that new opportunity. >> absolutely. all right, great guys. i love that piece. it was fun to follow those guys over the last couple of years. once you've developed an app for your small business it is still far from the last step. you then need to get it accepted into apple's app store. here now are five tips to keep in mind in order to avoid being rejected and having to resubmit your app courtesy of all-business.com. one, detail. one of the main reasons apple rejects an app is because of a lack of information. be sure to include instructions on how it works, what it's designed for and how it's supposed to be used. two, bugs.

double and triple check your software. if apple encounters any hiccups there's a high probability you'll be flat-out reswrekted. three, ratings. because of strict parameters, apple has set for game ratings make sure your app complies with the proper rules. four, demos. apple will automatically reject a test app so don't even think of submitting one for consideration. and five, metadata. make sure all details you provide match the app. the description, title and any scree shot should be relevant or you'll most likely be turned down. here's something we hear from our viewers all of the time. i've got a great product but how do i bring it to market. there are a lot of steps you have to take to achieve that. and so we followed the makers of a product called locker look a few years back and they walked us through the ups and downs of the process. turning a clever idea into a marketable product can seem as uncertain as the spin of a wheel on a children's board game.

but, right at the start of these two dallas mothers, joann brewer and christi sterling, didn't even seem like players. >> this was the first time we ever did this. it was just a completely new adventure for us it was just birthed out of our own experience with our daughters. >> they were going into sixth grade and wanted to decorate their locker and there wasn't a lot of cute stuff out there. and so christi went to work and came up with some concepts, and here we are. >> their daughters loved these home made school locker decorations. and so did their friends. >> on the first day of school the phone started ringing from other parents saying where did you get that stuff? we want it. how do we get it? and we realized there's a market for this. >> they knew they couldn't do it themselves. and so their first step was to get some help. they met with marketing consult consultant kyle priest. >> we worked more on the tenets of the business and the goals,

and then put those into a planned structure. i think sometimes people make the mistake of grabbing a template, and completing it to create a business plan. and they forget the human side of things. and realities of how to structure a plan that they can live with. once we had the business plan in place and the brand identity solid it was immediately time for them to get into sales mode. >> their next move was to head for the dallas market center. robin wells is one of the executives in charge. >> oh, yeah if you create a product and you want to take it to market there's several ways but the age-old way of bringing it to a trade show showing as many people as you can and finding someone to help you sell it, that's what goes on here ten times a year. when we came to the dallas market we were overwhelmed by how much stuff was here. we were pretty clueless, but one of the advice that we did get was try to find a manufacturing rep or a sales rep that can distribute your product, and that has relationships with retailers. >> as they walked through the trade show they found a

manufacturer's rep listed on the fourth floor. without an appointment, and without any referrals, they took their chances, and asked to speak to the owner of dallas based diverse marketing greg harding. >> they just came up to my door and asked to speak with me and said that they had a great idea in this little box they were carrying. the next move for us was we had some initial meetings, and we had a retailer come in that we had a good relationship with hastings out of amarillo. and showed it to her, and she goes i think this is great. i want to do an order. i said well we haven't made it yet. she goes i still want to give you an order. >> with a business plan in place and a major retail order in hand the next step was manufacturing the product. they contacted ray's son a chinese manufacturing broker and the owner of dallas based china advantage. >> we are the bridge between ideas and the products. so if we want to return the idea

to to production in the first stage you have to give us a design. you have to give us a drawing. >> we had to decide how much of the product we wanted to get made then he put this team together to source all the different components of the product and came back to with us a price. >> with ray's help the factories in china were all lined up. while the retailers were waiting to receive their orders. the next step? select a fulfillment company to do the receiving, packing and shipping of the merchandise. that's where they landed in serious trouble. >> unfortunately, it was a complete disaster. and they shipped about 80% of our product incorrectly in that first year. so it's a very tough year for us. >> those shipping errors nearly cost them the business. but they got back in the game when they reconnected with another shipper. craig clay of maryland based total biz fulfillment. >> you don't have a good fulfillment company in place, your customers could receive the

wrong merchandise. they might not receive it in a timely manner. the way they receive it may be just look like it's in a box and it's damaged. >> if we had it to do over again we would look for a shipper that was accustomed to shipping to the type of retailers that we sell to. >> with the new fulfillment service in place joann and christi landed on their first goal, their product now hang on retail store racks across the country, and the two are ready for their next move. did you know that companies in nearly any industry from home contractors to florists can build subscriptions into their business models? now if you think that you're in a sector where that just will not work but you are envious of the recurring revenue that a subscription service brings our next guest is going to tell you how to do it. john warrillow is the founder of the value builder system where he advises business owners on how to increase the value of their company, and he is also author of the new book the

automatic customer creating a subscription business in any industry. so good to see you. >> thanks for having me. >> okay and i'm fascinated by this. when you look at something like flowers, right, there's always been like wine of the month and beer of the month and fruit of the month and starbucks has a new subscription service. i get that. that's very clear to me. but, a home contractor? what kind of subscription service do you have there? >> right. well hassle free homes is a good example of that washington, d.c. based company where they go in and on a subscription basis will manage your home for you. change the lights when they go out. fix the pool filter when it's a problem. and they do it on a subscription basis. so they get recurring revenue which is what drives the value of the company. >> and how do they then price it out? how do they figure out the right amount to to charge someone presumably they might you know make money on someone one month and lose money on someone another month. >> well yeah you've got to look at your entire lifetime value of the customer. that's the benefit of a subscription business is it

generally increases the lifetime value of the customer so you get to price out your services based on how much it's going to cost over the lifetime of their subscription with you. >> what is the downside? what do i need to be worried about? >> you know what? in some industries your employees may be the biggest impediment. they may be clinging to the old industry way of doing business. and while you as an entrepreneur may get it that recurring revenue is going to improve the value of your company, sometimes your employees don't necessarily see that. so you've got to paint the picture for them as to how it's going to benefit them. primarily that's by showing an easier business it's going to be to run. how much less of a stress for them as employees it's going to be based on knowing how many customers you've got coming up. >> okay give me some other examples then of ones that i would not expect. >> well sure you mention flowers in the beginning. i mean flowers is a tough business to be in. you imagine running a flower store you've got inventory that rots. you've got you know it's very difficult to get customers other than mother's day and valentine's day. but there's a company called h-bloom that created a subscription business for

flowers. their little niche is going after hotels and spas that want to put flowers on their desk and they do it on a recurring basis so they replenish the flowers for these hotels and spas every couple of weeks. >> give me another one. >> amc theaters just watched in january an all-you can watch movie subscription. their challenge is getting young people back into the movie theater. and so they're saying great, we'll allow you to come in as many times as you want in a month. just got to pay a subscription fee to do that. >> snart. one more. put you on the spot for one more. >> yeah netflix is one that we all know right? so clearly many of us have consumed what we call the all you can eat model there's nine examples in the book and that's one of them the all you can eat. another example that is maybe lesser well known would be new masters where they teach on a subscription basis how to do art. how to do water color painting. and sculpturing and so forth. but you can do it on a subscription basis. you subscribe pay your $30 a month and you get access to

these tutorials about how to learn how to do you know art as a as a hobby and again it's a subscription basis and all you can eat category. >> what give me some like just a couple best practices when you are thinking about having a subscription model. >> sure. so, i mean when you're thinking about your subscription model you want to think about ten "x" versus 10% nobody's going to subscribe to your service that nay could buy a la carte just to save 10%. but if you can make the value proposition ten times better that's when you start to get uptake. so for example netflix you could make an argument that rather than downloading movies or tv shows one at a time from itunes netflix is a ten "x" value proposition. the art class folks you know the comparative set is to have to go to a college and spend $600 or $800 on a live event. for them it's a 10 "x" value proposition. that's one of the things to think through. how to make it ten times better

than buying a la carte. >> good to see. >> we answer your questions on preventing employee -- >> and is there such a thing as a pricing formula? american express for travel and entertainment worldwide. just show them this - the american express card. don't leave home without it! and someday, i may even use it on the moon. it's a marvelous thing! oh! haha! so you can replace plane tickets, traveler's cheques, a lost card. really? that worked? american express' timeless safety and security are now available on apple pay. the next evolution of membership is here.

this week's your biz selfie comes to us from erin blakley from the glass door salon in winston-salem winston-salem, north carolina. now we would like to see yours. so just get out your phone, take a selfie of yourself and your business and send it to us at yourbusiness@msnbc.com or tweet it to us @msnbcyourbiz. don't forget to use the the #yourbizselfie. it's time now to answer some of your business questions. mike and jenna are back with us. the first one is about getting more customers in the door. >> we're seeing a pretty significant drop-off in traffic in craft stores all over america. and my question would be what can we do as independent retailers or as an organization to re-establish that traffic

pattern for all of our stores? >> retailers have been doing a lot of neat stuff to get people in the door. and with craft stores i think there's a lot of opportunity. >> huge opportunities. there's a fundamental lesson you have to understand about human behavior. that when we as a customer see things of the same online or the store i can buy the same thing, it's human nature to go to the easiest path. it's just easier to go online. the way to stand out is by always being different. don't try to be better or cheaper price. it doesn't make it stand out in the customer's mind. you have to be radically different. home depot is a great example. they do craft shops. can you come and build a birdhouse with your family at the store itself. and then you're inside buying stuff. so they have an opportunity to put on small events, do things that stand out. that's something that can't be acquired online and customers will come because it's different. >> i think that's right. i also think that what independent retailers also need to be aware of though is more customers are actually looking online because they want to go offline. they want to be able to find you. it may be as simple as getting a

higher rank in a google search or having a home page that reflects your band. also seeking information. for a craft store, pinterest is a fantastic way for a business to differentiate itself. simply to share knowledge and be a resource of knowledge can be a really compelling way for people to know about you and want to make that effort to go to your store. >> there's a real opportunity to build a community, right? give people information they want to know about here's a new craft you can build and have events as you were saying. >> yeah embrace the community and get out and participate with them. the advantage a store has is it's real face-to-face time. so exploit that. don't just have your events at your store. get out in the community and have events where they're already assembling. >> also make sure that your customers understand that it's that face-to-face connection that makes things so important. that makes it even easier so stand out because you have an ability to have your employees be a differentiator. >> let's move on to the next one, it's about securing your business. >> we obviously are still having some issues with theft or shrinkage. so i'm looking for ways and tips on how to have better security

measures in our without alienate alienating my customers. >> and your employees, right? some of this could come from your employees. >> sadly, yes. the first thing, of course is to train your employees to spot things so they understand where products are traditionally stolen from. how to walk around the floor and make customers feel more comfortable. but, you know particularly understand that something as simple as just going up to a customer and saying may i help you? talking about a product. asking are you ready to pay for that yet? can be simple ways to diffuse the situation. >> you should know this up with miss ramberg. we did this one together. remember that bagel shop we went to? >> the mirrors? >> mirrors are a great way to prevent theft. the reason is when we see ourselves in a mirror we don't want to see ourselves committing a bad behavior. >> and also, you think that people can see you from this way, but they can also see you from that way, right? >> yep. one of your favorite authors, he wrote about a study where there was a candy jar or pot put out during halloween. and they let kids just take as

many as they wanted. oh, i'm sorry, there was a sign that said "please take one," but they took handfuls. they put a mirror behind it and kids started taking one. put mirrors in your store. >> both of these great ideas. finally, we have a question about pricing. >> i design and import new products for the invitation craft and event industries. they're totally innovative never been seen before and i have no idea how to price them. i've heard that there is a formula out there, but no one has really been able to pinpoint that formula. >> this elusive formula, mike. how do you figure out something like this? >> first of all, profit is everything. the most critical person they'll ever be in existence about your price is you, yourself, the owner. the owner's always most critical of them. there are rough numbers. if you're selling direct to consumer, two to four times markup is usually ideal. if you go to distribution, a one to two times markup on your

costs. >> i think you also have to think about where you want to be in the luxury, right, on the luxury spectrum. because if you want it to be seen as high end, you've got to charge more. if you want it to be more mass you have to charge less. >> that's true. does she understand exactly who her customer is? then what else are they buying that's kind of in that range? it's not the pricing that determines whether the product is going to sell. it's the product itself but also the sales process. instead of spending a ridiculous amount of time focusing on pricing, think about how you're going to get this product into the hands of the consumer and why it's so valuable for them to get it. >> then in essence there are some comps she could look at. >> there are indeed. even if it's a new product, what does it compare to? are there certain products within that own category to people who might buy this product like something else, look further afield? is it crafts? another luxury item? something for the family? look for other things that those people might buy and that can be a really helpful guide. >> see dollars spent as appreciation points spent.

so when a customer spends $100 they give you $1 they've given you 1 appreciate point. they appreciate your products so much more when they spend more, and they'll take more care of it and be more interested in it. higher price, people put more value into it. >> so good to see you both. thank you for stopping by. >> thank you >> >> thank you. and remember, if you have a question for our experts, send us an e-mail. the address is yourbusiness@msnbc.com. to learn more about today's show, just click on our website. it's openforum.com/yourbusiness. you'll find all of today's segments plus some web exclusive content with a lot more information to help your business grow. you can also follow us on twitter. it's @msnbcyourbiz. and we are on facebook and instagram, too. next week when we got the call from this cancer survivor business owner about her troubled cupcake business in denver, we brought in the makeover experts who volunteered

their help. >> it's bringing tears to my eyes, it looks so good. it really does. this is a part of the store i do so horrible at because i don't understand it. and it's overwhelming. and this looks so amazing. >> next week find out what this business owner needs to do to keep her doors open. till then i'm j.j. ramberg. and remember, we make your business our business. american express for travel and entertainment worldwide. just show them this - the american express card. don't leave home without it! and someday, i may even use it on the moon. it's a marvelous thing! oh! haha! so you can replace plane tickets, traveler's cheques, a lost card. really? that worked?

american express' timeless safety and security are now available on apple pay. the next evolution of membership is here. hillary's trust-me defense. all right. good morning to you. thanks for getting up with us this sunday morning. a lot we're going to get to in the next two hours on the show starting with just trust me. it's an argument we've heard before from hillary clinton. there is fresh blowback to the e-mail scandal this morning that shows that that might be a tough sell for her this time around. a lot more on that in just a moment. also ahead in the show one of the best reporters on the chris christie beat made quite a discovery.