Archive for May, 2007

Applying Design Automation Tools Beyond Semiconductors

Written by Sean Murphy. Posted in EDA, skmurphy

Steve Levitan wrote a great opinion piece in this week’s EE Times: “EDA Can Shine Beyond IC Borders” that nicely expressed some future possibilities for EDA professionals.  

EDA methodologies, techniques and tools are unique in that they approach problems in terms of levels of abstraction, which gives us the power to work on complex problems from a high-level representation. We see complex systems as hierarchies of interacting components. This is reflected in our second strength: the modeling of very large systems by extracting their key behaviors in efficient representations for simulation.

The EDA industry also excels at developing techniques to solve large, complex optimization problems. And we are willing to tackle the black art of synthesis.

These key techniques of abstraction, extraction, optimization and synthesis from the EDA toolbox can be used in a broader context than just for electronic systems design. They are also applicable to other problems characterized by the complex behavior of large numbers of interacting components, in fields as diverse as routing systems for vehicular traffic, drug design, biology and health care. I believe that EDA has a great opportunity in the next decade to apply the tools we have developed for electronic systems design to these and other complex problems.

I think there may be as much, or perhaps even more opportunity these days in applying the skills and methodologies that honed in EDA–abstraction, extraction, optimization, and synthesis–to other fields that would benefit from richer modeling and automation.

This is not to say that we don’t remain interested in assisting EDA startups. Ever since they passed Moore’s Law, the electronic systems design problem continues to get more interesting every year and established firms are continually forced to redesign their product every two to three years to keep up with the semiconductor roadmap. But many other fields languish for the lack of these same techniques applied in an appropriate fashion.

Seth Godin’s Book “The Dip” Save Your Money

Written by Sean Murphy. Posted in Books, skmurphy

There are some good insights in Seth Godin’s The Dip, his slim new volume devoted to excellence, perseverance, and organized abandonment. Godin doesn’t say “organized abandonment” which is a concept developed by Peter Drucker, but “quitting.” Godin offer’s three checks to perform before you quit and backs into the need for a plan with his third:

Three Questions to Ask Before Quitting (pages 66-71)

  1. Am I Panicking? Decide in advance when you are going to quit.
  2. Who Am I Trying to Influence? A person or a market? Markets value persistence far more than an individual.
  3. What Sort of Measurable Progress am I Making?

The key point is to decide what failure looks like before you start (and unexpected success, which for an entrepreneur signals that a product deserves more investment, potentially even third party investment in addition to re-directed internal resources) so that you know when to quit.

Even at $7.77 on Amazon it’s a good blog post stretched out for 75 pages. Spend $13.57 on The Daily Drucker and get 365 one page nuggets of wisdom from Peter Drucker. The entry for March 14 on Universal Entrepreneurial Disciplines might well substitute for most of Godin’s book.

Every institution–and not only business– must build into its day-to-day management four entrepreneurial activities that run in parallel. One is organized abandonment of products, services, processes, markets, distribution channels, and so on that are no longer an optimal allocation of resources. Then, any institution must organize for systematic, continuing improvement. Then it has to organize for systematic and continuous exploitation, especially of its successes. And finally, it has to organize systematic innovation, that is, create the different tomorrow that makes obsolete and, to a large extent, replaces even the most successful products of today in an organization. I emphasize that these disciplines are not just desirable; they are conditions for survival today.

ACTION POINT: Abandon what is about to be obsolete, develop a system to exploit your successes. And develop a systematic approach to innovation.

Drucker wrote about this at greater length in his book Management Challenges for the 21st Century, the chapter on “Change Agents” was run as an article in Inc Magazine and is available free on-line. This excerpt elaborates on his core concept of organized abandonment. This model is especially important for entrepreneurs.

For being a change leader requires the willingness and ability to change what is already being done just as much as the ability to do new and different things. It requires policies and practices that make the present create the future.

Abandon yesterday. The first step for a change leader is to free up resources that are committed to maintaining things that no longer contribute to performance and no longer produce results. Maintaining yesterday is always difficult and extremely time-consuming. Maintaining yesterday always commits the institution’s scarcest and most valuable resources–and above all, its ablest people–to non-results. Yet doing anything differently–let alone innovating–always creates unexpected difficulties. It demands leadership by people of high and proven ability. And if those people are committed to maintaining yesterday, they are simply not available to create tomorrow.

The first change policy, therefore, has to be organized abandonment. The change leader puts every product, every service, every process, every market, every distribution channel, every customer, and every end use on trial for its life. And the change leader does so on a regular schedule. The question it has to ask–and ask seriously–is “If we did not do this already, would we, knowing what we now know, go into it?” If the answer is no, the reaction must not be “Let’s make another study.” The reaction must be “What do we do now?”

In three cases the right action is always outright abandonment:

1. When you think that the product, service, market, or process “still has a few good years of life.” It is the dying products, services, markets, or processes that always demand the greatest care and effort. And we almost always overestimate how much “life” actually is left. Usually, they are not dying; they are dead.

2. When the only argument for keeping a product, service, market, or process is that “it’s fully written off.” To treat assets as being fully written off has its place in tax accounting, but for management the question should never be “What has it cost?” The question should be “What will it produce?”

3. When for the sake of maintaining the old and declining product, service, or process, the new and growing product, service, or process is being stunted or neglected.

For every product, service, market, or process, the change leader must also ask, “If we were to go into this now, knowing what we now know, would we go into it in the same way we are doing it now?” And that question needs to be asked about the successful products, services, markets, and processes as regularly–and as seriously–as about the unsuccessful products, services, markets, and processes. It applies with particular force to distributors and distribution channels, which, in a time of rapid change, tend to change faster than anything else.

From a career planning perspective (and a management perspective), the two book set by Marcus BuckinghamFirst, Break All The Rules” and “Now, Discover Your Strengths” focus on discovering and building on your unique strengths to achieve personal excellence.

InfoWorld: Social Media and B-to-B; Over-hyped or Under-executed

Written by Francis Adanza. Posted in Events

This morning I attended the InfoWorld Media Group Technology Breakfast, at the Palace Hotel in San Francisco. The topic was: “Social Media and B-to-B; Over-Hyped or Under-Executed”. Below is my summary of the question and answer discussion.

Moderator: Paul Calento, SVP/Strategic Development InfoWorld

Panelists:

Q: What does social media mean to you?

Younger: It is information that I want to seek out, and it is information that seeks me out. I want personal privacy, yet I also want rich media and information when I want it.

Hahn: Media and content created by users. At LinkedIn, the content is created by users and the people consuming it are interested in business issues.

Walsh: It allows people to build brands about themselves and others. It is a two way conversation.

Jaquette: Social media is an on-line community. At Intuit, it allows users to connect in a place we can monitor and participate in the conversation.

Hines: Social media is about giving users a platform to create their content.

Q: How can advertisers and marketers align with the website opportunities?

Hines: You have to be able to measure the community and manage the conversations.

Hahn: You need to be able to add value to the equation. You have to be sensitive to the community and not flood the conversation with irrelevance. What can you bring to the table?

Walsh: Most advertisers are attracted to the big market websites. I think the opportunities are in the niche communities. In these niches you can be highly targeted and focused.

Q: When it comes to building a social media website, in what order would you rank importance: Presentation, Communication, Style, Technology?

Hines: Communication is most important because it is the type of user you are attracting to the community. Then style because after you communicate the message, the style is what draws the user in. Next presentation, because it has to be simple and easy to use. Last is technology because it is invisible. The user does not care what the site is comprised of, they only care about using it.

Jaquette: I think it is the exact opposite of how Virginia described it. The technology is where it begins: without the technology you would have no website.

Younger: I believe it is the quality of the communication because it is about socializing and without communication, people cannot socialize. I think the style and presentation go hand in hand. It is the style and the presentation that attracts the type of audience. Technology is being commoditized, so I do not think it is that important. The only thing important about the technology, is that it needs to be stupidly simple to use.

For the complex business to business products that most of our customers are developing for their customers, we find it increasingly important to leverage social software (e.g. blogs, wikis, forums) to foster a community of practice (CoP) for early customers and prospective customers. This puts us in the under-executed camp as to the ultimate impact of social software on the definition of the “whole product” for a B2B software offering.

While the current focus at many established companies is to use social software for cost avoidance (avoid help desk calls and e-mail by going beyond a FAQ to setup an on-line forum or wiki where “users can help users”) we believe that it’s ultimately going to be far more effective as a product marketing and product planning tool, helping software firms to identify not just what bugs to fix but what features to add (and delete) and what new niche uses to support.

Cultivating Calmness in a Crisis

Written by Sean Murphy. Posted in Quotes, Rules of Thumb, skmurphy, Startups

I had breakfast this morning at the Palo Alto Creamery in downtown Palo Alto. It’s a great place for breakfast (or lunch) with a nice ambience on the corner of Emerson and Hamilton. I had a 9:30am meeting with a client in Palo Alto so I packed up Russell Ackoff‘s “The Art of Problem Solving,” dropped my older boy off at school and strolled into the Creamery at about 8:20 with an took an hour to read, jot some thoughts, and enjoy a great breakfast.

I like Ackoff’s writing. His clear explanations of systems thinking renew my energy and sense of purpose. The 9:30 meeting was likely to be contentious: we were facing a crisis and startup founders, as they discuss strategy, can sometimes shed more heat than light on the future.

“Try to relax and enjoy the crisis.” Ashleigh Brilliant

It’s been a relatively recent discovery of mine that I am a more effective advisor when I remain engaged but calm. I used to think if I made my points forcefully they were more likely to get through. But it’s become clear that question in a calm voice and a request to review whatever data is available more often leads to real change. To be calm in a meeting, it’s easier if I start out calm. To start out calm I find it’s useful to relax and do a little lateral drift before a meeting instead of thinking through all of the things that are wrong, going wrong, or likely to go wrong–it’s good to have a firm grasp on contingencies but it doesn’t always induce equanimity. Most startups have crises, some are a perpetual crisis (for a while).

“It May Look Like a Crisis, But It’s Only the End of An Illusion”
“Rhonda’s First Revelation” from Gerald Weinberg’s book Secrets of Consulting

If a crisis can get a team to continue to eliminate illusions (mental constructs or hypotheses that are invalid), in particular anything that looks like a boundary condition but isn’t, then they can become opportunities.

“Creativity is the ability to identify self-imposed constraints, remove them, and explore the consequences of their removal.” Russel Ackoff

“It AIN’T so much the things we don’t know that get us into trouble. It’s the things we know that just ain’t so.” Josh Billings

But my ability to identify these illusions–Ackoff’s “self-imposed constraints”–is predicated on calmness; actually that’s not true. I can see them clearly when I am energized or angry, I am not particularly effective in communicating them in a way encourages other people to act on them. The normal sensation I feel in a crisis is a call to action, immediate action. Adrenaline is flowing and it’s time for action: we can’t be paralyzed by analysis, we have to take action. But the most frequent alternative to “analysis paralysis” is “extinction by instinct.” So what to do.

“You can’t believe that a plan is real until you’re vaguely disappointed.” Rhett George

I think if you can see a way forward that’s not perfect but workable (or the “least bad” alternative”) and you can get to a working consensus it’s more likely if folks remain relatively calm. It’s also key to make sure you have enough data. Startups have to make most decisions with 10-25% of “perfect information.” If you wait for 80-90% perfect information you are normally making your decision way too late. So if working out, walking, meditating, a quiet hour of reading, watching a favorite movie, going to a museum, getting enough sleep, or some other way of relaxing and clearing your mind helps you prepare for an important discussion then take the time to do so, especially when you don’t feel like you have the time. Rhonda’s remaining two revelations (again courtesy of Gerald Weinberg) are also worth bearing in mind in dealing with change.

Rhonda’s Second Revelation: When change is inevitable, we struggle most to keep what we value most.

Rhonda’s Third Revelation: When you create an illusion to prevent or soften change, the change becomes more likely–and harder to take.

Office 2.0 Opportunities and Challenges

Written by Francis Adanza. Posted in Events, Tools for Startups

Today, while at the Software 2007 conference at the Santa Clara Convention Center, I attended a great Breakout Session on Office 2.0: Opportunities and Challenges. The session was comprised of four CEO’s, one moderator and three panelist. Below is my summary of the presentation.

Question to the panel: What is Office 2.0?

Ken Rudin, CEO of LucidEra
Office 2.0 is not only about collaboration but it is a shift from IT control. Now employees can purchase software and tools without IT’s permission.

Mark Suster, CEO of Koral (acquired by Salesforce.com)
I believe office 2.0 is a combination of usability, participation, and user control. The issue is to make things more beneficial for the end user vs. the economic buyer. We are trying to make software easier for the end user. IT has a list of benefits that the product has to meet before they buy. Because of this, IT usually over specs the product. Most users only use about half of the features IT requires.

Steve Papermaster, CEO of BSG Alliance
Office 2.0 is about simplicity. The users are not technologist, so we need to design products that are straight forward and easy to use. People get too carried away with the technology and forget that the software is primarily a tool used to fill a need.

Audience Question to the Panel: Is it important for the application to work offline?

Ken Rudin, CEO of LucidEra
For the most part, the only people who want offline access are airplane travelers. Until a customer asks for it, it will not be in our roadmap.

Mark Suster, CEO of Koral (acquired by Salesforce.com)
I believe the product should work offline because a majority of the people still work on their PC’s. We want to make the transition to hosted as easy as possible for the users. Silicon Valley is very different from the rest of the world. Most people in business work pervasively offline.

Steve Papermaster, CEO of BSG Alliance
Even with the amount of mobility we have today, I cannot get connectivity all the time. The issue is not whether or not the application works online or offline. The problem is do I have access to the data when I need it? It does not matter if I am online or offline, all I care about is having access to the information when I need it.

Question to the panel: Is the enterprise ready for Office 2.0?

Steve Papermaster, CEO of BSG Alliance
The enterprise is not ready for Office 2.0 because of compliance. With Sarbanes Oxley, it will be difficult to justify user restrictions and security issues with applications outside the firewall.

One Google Hiring Policy Startups Should Avoid

Written by Sean Murphy. Posted in skmurphy

I am on the Cisco Alumni Yahoo Group (link requires registration) which had this message from a recruiter forwarded to it today.

I am looking for a Sales Manager for the Central USA for Google

Compensation – $150K / $300K, with options

Locations – Dallas, Houston, or Atlanta

Requirements – These are the ONLY 3 musts…

  1. MUST have a high GPA of 3.4 or above from college.
  2. MUST be with or have come from a TOP Tier software company: (Oracle, Siebel, SAS, PeopleSoft, Microsoft, or our search competitor Autonomy)
  3. Managed teams for the last 7 years.

There are many criteria you might consider for hiring a sales person, but their college GPA has to be one of the least useful indicators of future success. I think there is a temptation to mimic the policies of successful companies, but not every policy actually contributes to success.

Silicon Valley: Not as Nuts as 99…Yet

Written by Sean Murphy. Posted in 2 Open for Business Stage, Rules of Thumb, skmurphy

So we are starting to pump a little hot air back into the bubble every week now. The streets of Silicon Valley witness young entrepreneurs looking for department store Santas venture capitalists to listen to their list of needs and make their dreams come true. It’s “not as nuts as 99″ but not as sane, or dour, as 2003. Roger McNamee blogged for the better part of 2004 on “The New Normal” with this as his inaugural post:

Wake up and smell the coffee. This is not your father’s economy. And it’s not the boom that inflated our expectations and then exploded. But it’s also not the doom and gloom we’ve been mired in for nearly three years now! So, wake up. Pull yourself together. Get on with it. With what you ask? With the rest of your life. It’s a bright, fresh world full of opportunities. I know that runs counter to many of the opinions all around us, but it’s true, and I can show you why. It’s true for the investor, the entrepreneur, the CEO, the unemployed, and the human being seeking balance. This blog will be dedicated to insights and discussion about life, business, and investment in what I call The New Normal.
Please join in!

Now I regularly have conversations that remind me of 1997-2000. I am routinely admonished that “the old rules no longer apply” and advised that successful firms spend much of their treasure on PR social media and viral marketing (regular marketing is a waste of money since viral marketing is free). YouTube’s 1.6 billion dollar exit is the exemplar burned in 10 mile high neon letters into the back of everyone’s retinas.

This is not a lament nor a longing for the early 90′s (or early 80′s), now is the best time to be alive and an entrepreneur. It’s a wish that more firms would aim for creating value for their customers.

Note: This is cross-posted from  “Report from Silicon Valley” on FunMurphys, my brother’s blog.

No More Than Four Items on Your To Do List

Written by Theresa Shafer. Posted in Rules of Thumb

From Tom Peters Blog “The Single Most Important Thing

Consider these Four Cardinal Principals:

  1. Time is more important than money. (It is the only truly constrained resource.)
  2. You = Your Calendar. (You are What You Spend Your Time On as much as … you are what you eat.)
  3. “To-Don’ts” are as important, or more important, than “To-Dos.” (What’s not on the list is perhaps more important than what is.)
  4. Your To-Do List must never be more than 4 items long. (You can have an “errands list” but the real To-Do List must never run beyond four.)

 What I really think he means here is that you should never have more than four top priorities. The Marine’s “Rule of 3” (never give a squad more than three objectives) is even more conservative, and perhaps more appropriate to startups. Finally, a successful project manager never gives a meeting more than three objectives.

Founder Story: Acquisition Integration at 60 days

Written by Sean Murphy. Posted in Founder Story, skmurphy

We have been doing some joint projects with Ann Marcus recently, who is a real pleasure to work with, and a very effective interviewer. She sat down last month with the CEO of a recently acquired software firm, who has asked to remain anonymous due to the candor of his remarks. There are some real lessons here for any startup contemplating the path to an acquisition.

This is the first in an ongoing series of “lessons learned” stories from founders: if you founded or were an early employee of a software startup and would like to contribute your story, please use the contact form or give me a call and we can arrange an interview.

Interview with a CEO of a recently acquired small company. 4-9-07 

Ann Marcus (AM): Acquisition is becoming a useful strategy for many organizations. What did you see as the benefits of acquisition for your organization and the company that acquired you?

CEO: Exit was the key benefit. We were only an eight-person company. Being so small we had few resources but had a very good technology. We lost one person actually to the acquiring company just before the acquisition, but now that person is so to say back in the fold.

Because of the resource limitations, the crew was antsy and didn’t feel that we were moving forward. Also, being 65 I am ready for retirement. So we started looking about a year and a half ago for a company that would be interested in our technology (Design automation solutions using CAD as the output device).  We wanted to find a company that would allow the technology to survive and let the shareholders to get some money out of the company.

There were two CAD companies that were good candidates:

The larger of the two candidates ($1 billion+) didn’t show much interest. The other somewhat smaller company (approximately $400 million) did. One of our products fits directly into their product portfolio and allows them to retain their competitive edge over their primary competitor who is offering similar technology.

AM: What aspects of the process did you not anticipate or plan for?

CEO: The heavy involvement of lawyers…I didn’t anticipate that would cost us roughly 10% of acquisition price in legal fees. For a small company, we couldn’t expect too high of a valuation, so for us 10% was a large chunk. That was painful.

I’ve done business in Europe and it’s very different. Europeans honor their gentleman’s agreements.  Here, the lawyers, rather than the business people on each side, negotiated the entire deal and that doesn’t seem quite right. The Acquirer really forced this situation. Our lawyer warned us early on that even if we try to keep things simple, it will still get complicated; people are going to require all kinds of indemnities and there will be all kinds of negotiations. There were. It was painful not only because it was expensive but also because it took so much time.

So I’d advise someone about to embark on this path to be prepared for a lot of business machinations and a lot of attorney involvement. And even more to the point, if your business is doing well and you don’t have a compelling, immediate reason to sell it, then don’t. Keep it going. Sure, you can test the waters, but don’t sell unless the price is really right and you can settle on terms that work for you. Being a small entrepreneurial company can be fun. In big companies, things seem to freeze and don’t go anywhere.

AM: So, you have stayed on with the Acquirer?

CEO: I promised to stay on for one year; the primary techs signed on for 2 years and we have a non-compete agreement for a year after that period. My job now is really to promote our company, its people, and its technology inside this bigger Acquirer…but it seems the techs are already frustrated of the low level of interest. I do what I can to fix this but in reality I’m just waiting to get out as I have a really hard time to get anyone to listen.

AM: Were there other elements that were unexpected?

CEO: I sensed that there were issues prior to acquisition; the business people seemed to take very little interest in our business which seemed odd. And once the letter of intent was signed, that didn’t change. Our lawyer said that part was unusual. It most cases, according to him, acquiring companies want to secure the arrangements and the relationships before the deal goes through so they act as though they are courting them. But in this case there didn’t seem to be a very strong level of interest other than a willingness to go through with the acquisition. And it seemed that even some of the positive pictures the new company painted have turned out to be pie-in-the-sky stuff…they haven’t really followed through on them.

I told them many times that they should bring our people in on their ideas and visions and let them know what expectations they had, but it really never really happened. I asked that there be some sort of forum where the acquiring company would let our people know what they would be doing in the future. As you can imagine in a small company of eight people, everyone has a key position who know that what they’re supposed to be doing and that their contribution is important to the entire team. In my opinion it is very important to understand that when you are buying a company, it’s the people that are most important…not the code they’ve written. It is unfortunate that our people weren’t handled with care. The Acquirer did finally, as an afterthought, create what they called a “Retention Bonus” however to prevent the non-shareholder technologists from leaving.

AM: In what way would you advise others prepare to avoid the challenges you encountered–words of wisdom, tips, etc.?

CEO: You need to have a clear vision of what are you going to do with you own company; something that you can use as a guide to follow up on and measure against.

You need to keep your people as well informed as you can. In our case, we tried to keep our people informed, but then we weren’t getting much information back from the Acquirer, so our people waited and waited but no much information was forthcoming. Since the Acquirer is privately held, they didn’t want to reveal too much.

AM: Did you find that it created uncomfortable working conditions for you and your people?

CEO: Well it has only been two months, and yes, it has been difficult; I am constantly trying to update my new boss on what should be done, what should be fixed, what should be communicated…essentially defending my troops. I should have been better prepared for the changes that were coming…it’s a large company that grows by acquisitions. You would think that they would make integrating people an important part of their process, since they seem to do this all the time. But because the staff is made up of people who have all been acquired, there is little cohesion. And management there is fairly lean. A company isn’t a unified thing, it’s a bunch of people and if those people aren’t prepared, if they haven’t been properly trained to train others and make newcomers feel welcome, then who knows what will happen.

AM: What went well?

CEO: Well, we’re just two months into the process. I have been working directly with the Company’s sales people. Money talks. My thinking has been that if they sell some of our products then my team will get more of the focus they need, because the Acquirer will then take more notice of what we’re doing, or trying to do. We are also approaching our existing customers and asking them to discuss our products with the Acquirer’s key sales people. I bring them on sales trips to our customers and of course, the sales people will have an interest in what the customers are doing, what they say and what they need. We’re essentially using our customers to get the company to treat my team well. To do it any other way doesn’t seem to work…

AM: What insights will you take away from the experience?

CEO: If I hadn’t been in the present situation (needing to retire and the company short on resources), I wouldn’t have promoted this option as strongly across my company.

There were signs of problems prior to the deal. I had and still have the sense that there is no real interest in what we are doing, but they just needed us for the competitive advantage. Just another check mark.

Since we had such limited time, when it came to due diligence, the time was used to prepare our stuff for them. We didn’t really have time to do much background research on the Acquirer and find out about the individuals and the company culture. Even when we did request information it wasn’t forthcoming or was delivered in wishy-washy answers.

If I had it to do over again, I would likely convince those remaining to hold on to the company and make a go of it as it was. And if I weren’t retiring and had had more time, I would have been more thorough in having my discussions with the Acquirer’s business people who should have be interested in our people and our technology, rather than just discussing with their attorneys. That way I would have known that these guys really don’t have a sufficient level of interest.

I guess that if situation was different, and I had to do it over again, I wouldn’t

AM: What are some of the significant challenges / opportunities that still remain? 

CEO: My remaining challenge for me is to be the promoter of my people, their skills, and our technology in this larger organization and find a place for them where there is an understanding of their importance.

AM: Thank you!

Plug and Play Expo Startup Pitches

Written by Francis Adanza. Posted in Events, Funding

Are you trying to raise venture capital? If so, the Plug and Play Tech Center Expo is the place to be. The full day agenda included presentations from thirty-one companies to a panelist of investors from Norwest Venture Partners, Menlo Ventures, Foundation Capital, Amidzad Ventures, and Mohr Davidow Ventures. The Expo consisted of two parts; the presentation room and the conference room. Since the investors can only ask questions during the presentation, the conference room allows attendees to walk the show floor and speak with the presenting companies at their demo tables.

My overall thoughts and comments on the presentations:

It was obvious that most of these presentations were unrehearsed. It was shocking to see so many entrepreneurs stumbled over words, read word for word off their note cards, and speak completely on the technology. Overall, I felt with a little practice and more organization in the flow of their key points, many of the presentations could have been much better. However, from the entrepreneurs perspective; how do you know if your presentation needs improvement? One resource we highly recommend is Peter Cohan’s book “Great Demo! It is an outline for giving compelling presentations.

The reason why we stress the need for entrepreneurs to practice, practice, practice is because of the bigger picture. You do not get a second chance to make a first impression. Nine out of ten times, the investor is interested in you and not the technology. Besides understanding the market opportunity, the presentation allows investors to evaluate whether or not you would be easy to work with. If you can not clearly state the problem you solve, the value you bring to your customer, and confidently speak to strangers, it will be hard to obtain a second meeting. Remember the object of the pitch is not to sell them on the spot. It is to get the next meeting.

Crossing the Chasm – Look for a Niche in a Lot of Pain

Written by Theresa Shafer. Posted in Books, Rules of Thumb

Ev Rogers’ seminal book, “Diffusion of Innovation” describes how people adopt innovations, e.g. new technology. He assumed a normal distribution of risk aversion. Geoffrey Moore’s insight was the chasm:  the early majority is not influenced by early adopters, they want the comforts of an established market.

Human nature is risk averse: most of us don’t like change. We would rather struggle with the beast we know than risk our jobs on a new technology that may not deliver it’s promises. But if the current situation is painful enough, we will adopt something new and risk changing the way we have always done it.

So how do you cross the chasm between the risk tolerant early adopters and risk averse early majority when introducing new technologies?

Look niche markets of early majority prospects who are in a lot of pain. If people are in enough pain they will change their behavior and risk adopting something new.

Bowling AlleyAfter entering niche markets, we can move technology up and out by using the ones in the most pain as reference case studies to the others. Also notice you start with the smallest niche market. This will allow you to make your early mistakes on a smaller market. It also buys you time and expertise to develop a whole product. Early majority prospects will not invest very much time or effort (very little compared to early adopters) to get your solution to work in their environment.

One you are across the chasm into your first niche, you want to continue to evaluate adjacent niches (those that would have some members who would be influenced by your current customers) that still have a lot of pain. Moore refers to this as the Bowling Alley, we show a representation slightly different from his where we sort going from smallest to largest in the most pain to less pain.

Quick Links

Bootstrappers Breakfast Link Startup Stages Clients In the News Upcoming Events Office Hours Button