Archive for August, 2007

Prioritizing Your Target Market Niches

Written by Francis Adanza. Posted in Events

Tuesday of this week I attended an online workshop hosted by Cheryl Downing, founder of Cheryl Downing and Associates. The topic of the workshop was “Prioritizing Your Target Market Niches.”

From the workshop I learned:

1. Why you should select your top 3 target market niches
2. Why to focus on the top 3 characteristics of each niche
3. How to prioritize your market niches

It is important to select what you believe are your primary markets because most offerings really have more than one niche. Additionally, the different niches have a common thread which ties them together. Choosing three niches gives you flexibility in case one niche is not profitable and it provides room to make mistakes. In the early market, companies are trying to figure out what is and what is not working. Thus the importance of exploring and testing markets simultaneously.

After you choose your three niches, you want to find three characteristics within each market. Ideally, you want these categories to have as many characteristics as possible in common. Using these characteristics as a guideline will help you identify prospects faster.

Now that you have identified the characteristics of each niche market you want to prioritize them in order of which you believe you are solving the most compelling pain. This is the market in which you want to delegate the most time. Cheryl suggests that 60% of your time should be focused in this market. Subsequently, she suggests that you should spend 30% of your time in the secondary and 10% of your time in your tertiary market niches.

Cheryl has also blogged about this topic in “Prioritizing Your Target Market Niches.”

Another Perspective on Paul Saffo’s Talk Aug 28

Written by Francis Adanza. Posted in Events

Two days ago I attended the Churchill Club breakfast presentation featuring Paul Saffo. It was a very insightful and thought provoking talk that revolved around his Harvard Business Review article “Six Rules for Effective Forecasting.” From his talk I took away three points

  1. You can’t predict the future!
  2. I don’t care if it succeeds or fails. What does it mean?
  3. It takes 20 years to become an overnight success…

You can’t predict the future!
In the talk, Saffo explained that you will never have 100% of the information. The best you can do is collect as much data as quickly as possible and then systematically prove yourself wrong until you are left with enough information to make an educated decision. Paul recommends that one should use his six rules as a tool to help make good forecasts.

In our experience in working with startups, small teams face this challenge everyday. Since resources are limited, the ability to collect and analyze data effectively in a short period of time, is a necessity for founding teams. There will always be uncertainty in every decision, but if you wait until you have all of the data it is usually too late and you missed the opportunity.

I don’t care if it succeeds or fails. What does it mean?
There are a thousand and one great ideas, cool inventions, and incredible breakthroughs. Saffo does not care about whether or not it works, but what are the indicators that are driving the thought process. Saffo actually brought in a prototype for a $99 laptop. His point was it didn’t matter whether the particular implementation succeeded or failed, it was an indicator that meant the industry will develop a low cost product that will end up in the 80% of households that don’t currently own a PC.

It takes 20 years to become an overnight success…
Saffo states, change rarely unfolds in a straight line. The most important developments typically follow the S-curve shape of a power law: Change starts slowly and incrementally, putters along quietly, and then suddenly explodes, eventually tapering off and even dropping back down.

Saffo’s example: the Internet. It was almost 20 years old in 1988, the year that it began its dramatic run-up to the 1990’s dot-com eruption. So having identified the origins and shape of the left-hand side of the S curve, you are always safer betting that events will unfold slowly than concluding that a sudden shift is in the wind.

Oblique Strategies for Startups 1

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

Here are ten strategies to help get you and your team unstuck. The first line is the oblique strategy, in some cases I have added additional commentary of my own.

  1. A line has two sides.
    I think of Kurt Lewin and his force field analysis where the team collaborates on constructing a diagram to represent the forces holding the system at it’s current equilibrium point (keeping the situation stuck and preventing it from advancing in the direction you would like it to go). You draw a vertical line down the middle of a piece of paper (or a flip chart or a white board depending upon how many folks are involved). you then draw arrows representing the forces working in your favor and against the change you want to take. Each force (arrow) is assigned a “strength” either by it’s length or putting an explicit number next to it. Initially most teams focus on strengthening the forces working in your direction, but it’s often as fruitful to consider how to diminish or neutralize the forces working against you. Sometimes you can reframe the problem so that some of the forces that were working against you are now working with your (“Don’t fight forces, us them” advised Buckminster Fuller).
  2. Abandon desire
    I think it’s as important to let go of fear as greed.
  3. Abandon normal instructions
    Startup teams can be too quick to reach for this one. Most successful breakthrough teams don’t “break all of the rules,” just the ones that are truly getting in their way, and they understand the risks and likely consequences. I think it’s only fair to consider this once you actually have normal instructions for your situation. Don’t reach back to the way you did things at a larger firm, come to an explicit decision about what “normal instructions” are so that you know what you are abandoning. This is a variation on the observation “if you don’t have a plan, how do you know what you are changing?”
  4. Accept advice
    If you don’t have an advisory board or at least an informal kitchen cabinet, use this situation to start to assemble one.
  5. Back up a few steps. What else could you have done?
    If you are relying purely on your memory, now is the time so start keeping decision records. Russell Ackoff suggests that a decision record incorporate the following items (and that it’s more important to document when you decide not to do something so that you lay the groundwork for tracking “errors of commission”). This explicitly lays the groundwork for a postmortem at the expiration of the time frame to see what actually did occur and what can be learned from it.

    1. A brief statement that justifies decisions, including likely effects and outcomes and the time frame that they should occur.
    2. The assumptions that the decision was based on.
    3. The information, knowledge, and understanding that went into the decision.
    4. Who made the decision, how it was made, and when.
  6. Be dirty
    “Go Ugly Early” a product marketing aphorism, author unknown
    “Early if Not Elegant” John Morgridge‘s version, as in “Cisco will be early if not elegant.”
  7. Be extravagant
    Waste money to save time, waste time to save money, waste either or both to improve morale (or customer satisfaction). In the early 90’s Cisco chartered a plane to get a part to a company with a network that was down at a price that exceeded the maintenance on one box for a year (but not the whole maintenance contract), it sent a message to customers we were truly committed to their success. It was an extravagance, but one that underscored a brand promise.
  8. Breathe more deeply
    It has a calming effect and gets more oxygen to your brain for clearer thinking.
  9. Change ambiguities to specifics
    If you have deferred a decision try and set a value on one or more particulars you have been avoiding just to see if you can at least find a feasible solution.
  10. Change specifics to ambiguities
    Sometimes a team gets locked on a particular process or price point or other decision that in fact doesn’t have to be made today, or you may be arguing pricing something at $50 vs. $55 when the real price should be in the range of $4-8 or $75-125 and you are getting prematurely anchored to a particular value that’s not important instead of asking what customer benefit(s) impact or are driven by this variable?\

Oblique Strategies grew out of the ongoing collaboration of Brian Eno and Peter Schmidt, they converted notes on rules of thumb for how to break deadlocks and resolve creative dilemmas into a card deck. An excerpt from the introduction to the 2001 edition

“These cards evolved from our separate observations of the principles underlying what we are doing. Sometimes they were recognized in retrospect (intellect catching up with intuition), sometimes they were identified as they were happening, sometimes they were formulated. They can be used as a pack (a set of possibilities being continuously reviewed in the mind) or by drawing a single card from a shuffled pack when a dilemma occurs in a working situation. In this case the card is trusted even if it appropriateness is quite unclear. They are not final, as new ideas will present themselves, and others will become self-evident.”

Kevin Kelly lists them as cool tools, Greg Taylor has a fan site for them, and a superset list is available at h2g2.

Paul Saffo on Forecasting Innovation in Silicon Valley

Written by Sean Murphy. Posted in Events, skmurphy

Paul Saffo came to the Churchill Club for breakfast and went beyond his HBR article “Six Rules for Effective Forecasting” to address forecasting innovation in the context of Silicon Valley. Currently on sabbatical from his day job at the Institute for the Future and teaching at Stanford, Saffo quipped that a well executed sabbatical required the same commitment as entering the federal witness protection program if you really wanted to get something new done: “you have to change your e-mail, your phone number, and never set foot in the office until you are ready to come back to work full time.”

He took pains to characterize himself as a forecaster or “professional bystander” and not a futurist or “advocate for a particular future.” He had to recover the lost art of speaking-without-PowerPoint since the Churchill Club folks told him it wasn’t allowed. He drew some compelling word pictures but it was ironic that we were in a nice big room at Fenwick where a rear projection screen covered the wall behind him–albeit partially obscured by two portable Churchill Club banners.

The interesting part of the S curve is the twenty years before the inflection point (“take-off point”), the real long tail is the twenty years it takes to be an overnight success. In Silicon valley the civilians are surprised only once. Nothing new ever works, which matches their expectations, but when it finally does they are surprised. Most technologists are surprised twice. They stand at the dawn of a new technology and underestimate how long it will take to succeed, become despondent close the inflection point and move on to something else, at which point they underestimate the pervasiveness of the diffusion.

Most things fail. Silicon Valley is built on the rubble of early failure. The Valley knows how to fail. If you were here for the dotcom crash you understand why we did better than Wall Street in 1929, their buildings were 40 stories tall looking out onto city streets, ours are two stories tall surrounded by grass; the worst we could do was sprain an ankle in the fall and have to hobble home.

If you want short term success look for something that’s been failing for 20 years. I spend my time looking for prodromes, early indicators of significant changes, and listening for the “doppler shift whistle” that things are about to take off.

Saffo brought two examples of early TV remote controls, one that was essentially a flashlight, and another that played tones and made the observation that the question to ask is not “will these succeed” or “why didn’t these succeed” but “what does this mean.” He also brought in one of the $100 laptops built by Nicholas Negroponte’s group: even though it may not succeed it has triggered a cascade of competitors who want to build a $99 laptop with different hardware and software. 80% of the world doesn’t own a PC so the market is there.

Silicon Valley can design products that can be “re-invented by consumers.”

By which I think he means that we design for end user customization as a source of differentiation. He also brought a device made by Faber-Castell that was an electronic calculator with a slide rule on the back and observed

“most people looking at this today misunderstand what was going on with this, the slide rule was there for functions that were too complex for the level of sophistication that early silicon chips could support. More importantly, slides rules continued to be used by the engineers and other professionals that knew how to use them, but they remained very complicated to learn and operate accurately. Calculators replaced pencils and paper: they were used by regular people who far outnumbered the experts, so the market was much bigger. And since calculators were based on silicon chips, the cost advantage went to the semiconductor companies not the existing slide rule firms.”

He had one very provocative observation.

“Analytical forecasting methods are now getting robust enough to effectively complement the primarily intuitive techniques that most forecasters have relied upon to date. The Singapore military establishment has developed “horizon scanning” technology that has allowed them to anticipate and neutralize a number of incipient threats.”

He may have been referring to the SenseMaker software developed by Dave Snowden of Cognitive Edge. Snowden and Valdis Krebs were on a recent call sponsored by Plexus Institute, a summary follows:

SenseMaker – Software supported by methods and an international network for managing uncertain and complex environments.

The ideas behind the software originated in knowledge management, the work of Cognitive Edge in the use of narrative and in understanding the basic patterns through which human beings make decisions….We will always know more than we can tell and we will always tell more than we can write.

The development has been funded by the US and Singapore governments in the context of risk assessment, horizon scanning and the detection of weak signals. A basic assumption of applications of the software is that there is little difference, from an organizational point of view, between a terrorist, an ordinary citizen, an employee or a customer. They all represent the problem of asymmetry, in which an organization has to understand multiple interactions and decisions from large populations which cannot be predicted or controlled by that organization.

The software and linked methods allow a collection of multiple sense making items, which can be anecdotes, web sites, pictures, or blogs. They can be tagged, or labeled, to provide sophisticated metadata. This data is combined with visualization tools linked with methods and models that permit users to sense complex patterns and anomalies that would not be otherwise visible. It is a “pre-hypothesis low-cost research tool, a knowledge repository, and a decision support system” in one package.

This is one of the few software systems built on the basis of natural science rather than management science. It is designed to accompany, not replace, human decision making. “it enables serendipitous un-biased encounters with data in the context of need.”

  • This is designed to enable a symbiosis of machine and human decision making.
  • It enables a quantitative approach to motivations and others issues that have traditionally been handled by qualitative approaches.
  • It provides for “identity marketing” and “ethical and cultural auditing.”
  • It is based on complex adaptive systems theory and an understanding of non-causal, unpredictable systems.

A couple of quick observations. Saffo was careful to point out the he did “real work for real clients who want real answers” and I was left with the impression that they like a nice single narrative. His cone of uncertainly model seems to unfold around a single trend, or one trend giving way to another (television creates broadcast media, time sharing creates e-mail as a media, client-server computing erects the World Wide Web on the wreckage of a billion dollars wasted on interactive television, and sensor networks create smartifacts or blobjects that are the next generation media). His article works within Thomas Kuhn’s “paradigm shift” model where a single dominant paradigm in a field of science gives way to a new one based on accumulating evidence and the death of older scientists who clung to the old theory.

But I think an approach based on “analysis of competing hypotheses” (ACH) might be a stronger platform, especially when it comes to technology markets which may have multiple segments served by multiple competing technologies. In other words, instead of thinking is the present giving way to this new technology, you could look for multiple trends that are reinforcing and competing for resources in different markets. For example, in the “Gunfire at Sea” chapter of “Men, Machines and Modern Times” by Elton Morrison makes the point that the modern naval gunnery was enabled by the intersection of metallurgy advances that could build longer strong gun barrels giving improved range, improved optics so that you could see and range find what you were aiming at since it was a mile or more away, an elevating gear to compensate for the rolling motion of the deck.

Together these three inventions enabled a continuous aim firing method that saw 175x increase in the rate of effective fire in 6 years”

After twenty-five minutes of banging away, two hits had been made on the sails of the elderly vessel. Six years later one naval gunner made fifteen hits in one minute at a target 75 by 25 feet at the same range–1600 yards; half of them hit in a bull’s eye 50 inches square.

It was a great talk and there were a number of excellent questions from the audience. When Churchill Club puts up the audio I will update this with a pointer.

September Bootstrapper Breakfasts

Written by Sean Murphy. Posted in skmurphy

This month we continue our regular schedule of “first Friday” in Palo Alto and “third Tuesday” in Sunnyvale. We will start at 7:30am and end at 9am. Your cost is your meal + 20% tip; in each location we have a small back room to ourselves. Attendees are typically in early stage software startups, primarily founders, with some consultants who plan to develop products. The promise is serious conversation and a chance to compare notes on operations, development, and business issues with peers.

Please pre-register as we can only fit 15 (these are small back rooms): you don’t want get up this early and be turned away because we are full. The SKMurphy team facilitate the conversation–and from time to time put our own issues on the table. We don’t make a sales pitch of any kind. Consultants are welcome if you are consulting on the way to developing a product or plan to add products to your offering mix.

We have been facilitating this breakfasts since October of 2006. We started at Coco’s and branched out to a second meeting a month in Palo Alto in January of this year to meet increased demand.

Update Dec 11: The Bootstrapper Breakfast website is now up.

Five Things to Remember When Selling A New Product

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

As you are developing–and more importantly refining your presentation in response to feedback–you want to keep the following things in mind.

  1. What criteria led you to select this prospect? Why did they agree to be your audience? Why do you believe, before you start your presentation, that they have a problem that your product addresses. Start out by confirming this before launching into a description of your solution.
  2. How does the prospect describe the problem? Listen carefully to how they respond to your problem statement. Start with a description of a few key symptoms, as perceived by the prospect, before offering your diagnosis and prescription. Pay particular attention to how they describe the problem, if they substitute different terms to describe the problem, or restate it form an entirely different perspective. You are not there to win an argument over whose nomenclature is correct (the customer’s description has the right of way).
  3. What data are they willing to share about the problem (and how they will know you have made it better)? As important as their verbal description of the problem, actual data that they are willing to share with you constitute the “facts on the ground.”
  4. What is the next step? A serious prospect will be able to outline at a high level what’s involved in the evaluation and purchase of your product. At the same time you need to be prepared to outline the process you would like to follow. If the prospect says “This sounds great, how do we get started?” your answers are not “Cut us a check” or “No one has ever said yes before, we weren’t really expecting to have to answer that today.” Have your own plan of action prepared to be able to demonstrate real results even if, and especially if, this is your first real interested prospect.
  5. Are You Wasting Their Time? People, especially in Silicon Valley, are much more willing to forgive you if your product doesn’t work as advertised on their problem (at least initially) than if you waste their time. If it’s clear it’s not a fit or you cannot help them today, politely cut the meeting short with a promise to return when you are confident you can help them.

Being an engineer, here a flowchart of the process:

. SalesPitchFlowchart

3 Tips for Choosing a Logo

Written by Theresa Shafer. Posted in Consulting Business, Rules of Thumb, Startups

  1. Text Treatments: text logos are simple, the company name is always right there. Most high tech logos are text treatments, they are clear and simple. With text logos you have instant impact, customers don’t need to decipher anything. Another benefit of text treatments are logo aspect ratio comes naturally with words. They always seem to work whether you are shrinking or stretching them. Examples are Google, IBM, Intel, and eBay.
  2. Icons: symbol logos can be recognized faster, our brains process images quickly than words alone. But they require more  work and $$$ on branding and presence before people have the connection between symbol and company. Examples are Nike‘s swoosh, Apple‘s apple and Linux‘s penguin. Notice these logos have nothing to do with the companies product: they are about being different and being memorable. They are also very simple designs.
  3. Keep it Simple:  like many other types of design, the best logo designs are elegantly simple. They shrink, stretch, or twist without losing their intangible emotional resonance. Color may add to the design, but they still look great in black and white. In fact, most logo designers use grayscales to do the initial design, then move it to color. They have to look good on your business card, on literature, and on your website.

We’ve already blogged about how adding a logo to your business cards and website improves your credibility (and makes you more memorable), we used logoworks  and were very pleased with the results.

FSA Panel on Fostering, Funding and Focusing on the Future of Innovation

Written by Sean Murphy. Posted in EDA, Events, skmurphy

I attended today’s Fabless Semiconductor Association Distinguished Speaker Series Luncheon Panel on “Fostering, Funding and Focusing on the Future of Innovation.” It was time well spent. It was moderated by Brian Fuller, the former Editor-in-Chief of EE Times, and now a VP with Blanc & Otus.

Brian opened with an analogy between the US railroad industry before and after the first transcontinental connection was completed in 1869. Considered the greatest US technological feat of the 19th century, the railroads’ focus shifted from engineering to operations and marketing. It was a panel with deep experience in the industry.

The economics of a new (fabless) semiconductor startup (note that integrated semiconductor fabrication operations are the province of a few major players, these days fabs are funded by governments) requires tens of millions of dollars of risk capital to reach a break-even operation level. A mask set alone may set you back between two and three million dollars. New ventures are the province of serious folks with deep experience, as Chris Rust remarked of other VC firms that had shifted new investment focus away from semiconductors “the tourists have gone home.” It’s a very different proposition from starting a software company, although EDA is more challenging than Web 2.0.

Getting More Customers Workshop Offered Sep-9-2007

Written by Sean Murphy. Posted in Consulting Business, Events, skmurphy

We are offering our “Getting More Customers” workshop this fall in collaboration with the Professional and Technical Consultants Association (PATCA). The workshop covers ten proven marketing techniques for growing your business: attendees will select one or two that fit their style and develop a plan to implement them in their business in the next 90 days. As a part of your workshop registration, we will also follow up via e-mail and brief phone calls at two weeks, four weeks, 8 weeks, and 13 weeks to help you track your progress. You will leave with a one page action plan, a workbook, and 90 days of access to a private workspace with the workshop materials to enable you to execute one or two marketing strategies to bring your business more customers.

The techniques covered are appropriate for professional and technical consultants and early stage software firms. This is a real workshop that has about two hours of presentation and two hours of individual and small group exercises. Past workshop attendees have been pleasantly surprised that it wasn’t just a sales pitch for our services but an actual working session where they are able to learn about some proven techniques and then develop a plan to use one or two in their business starting immediately. We also include breakfast and lunch breakout sessions to give attendees a chance to network informally and de-brief on what they have learned.

This will be the third and final time we will offer this workshop in 2007. Our full workshop schedule is here: http://www.skmurphy.com/services/workshops/
Date: Saturday, Sept 8, 2007 8:00 AM – 1:00 PM
Location: Keypoint Credit Union Center, 2805 Bowers Ave., Santa Clara, CA 95051
Cost: $75 PATCA members, $95 non-members, $95 guest of member
Register here

Agenda:

  • 8:00 AM Breakfast & Registration
  • 8:30 AM Workshop begins
  • 12:30 PM Lunch & De-brief

Seating is Limited to 18 so please register in advance

By the Numbers: How I built a Web 2.0, User-Generated Content, Citizen Journalism, Long-Tail, Social Media Site for $12,107.09

Written by Francis Adanza. Posted in Events, Founder Story, skmurphy

Last night I attended a BayChi event held at the PARC auditorium. This presentation featured Guy Kawasaki, Founder of Truemors and Managing Director at Garage Technology Ventures. His presentation was titled “By the Numbers: How I built a Web 2.0, User-Generated Content, Citizen Journalism, Long-Tail, Social Media Site for $12,107.09.

You can find the entire PowerPoint slide deck on Guy’s blog.
http://blog.guykawasaki.com/2007/06/by_the_numbers_.html

Since Guy is such a great entertainer, I could not tell if it was just his sarcastic humor or if he was sincere when he said he had no plan when putting this website together. In addition, I was shocked to hear a renowned marketer claim to have spent $0 dollars on marketing. However, his reasoning behind this dollar figure was, so far money has not been necessary. For twenty-four years, Guy Kawasaki has been building relationships, evangelizing, public speaking, and doing favors for others. It took him half his life to become a Silicon Valley icon and now he is trying to cash in on it. He has built up enough branding of his own name, that the fact that he is starting a company is selling itself.

Guy claimed that the website is a place to post comments (rumors) to share real time up to the second information with others. Although there seems to be a wide array of useful information, it seems like most users find the technology to be a convenient way to post jokes and tabloid worthy current events. The website was developed on WordPress making it easy to blog. However, the posts do not seem like true blogs but more like simple pointers to other blogs or websites. In the short time I spent navigating the website, it seemed like most of the posts were vanilla cut and paste excerpts from the original source.

Questions & Answers

Guy spent about 40 minutes answering questions from the audience. Here are my notes on his three most memorable answers.

1. Why do you believe it is a good time for entrepreneurs?

It is so cheap to develop software these days. Look, I did it for 12k and I was not even penny pinching. If you are a developer, you probably could have done it for the cost of the legal fees. If you really wanted to be cheap you could have thrown something together and incorporated after you got traction. Since the dot com meltdown, investors have become much more conservative: we fund acceleration for the most part, not development.

Ideas do not build companies, execution is what builds companies. There are way more good ideas than people who can actually execute on them. We can’t bear the risk of funding an idea. We want to fund a company that needs help scaling and accelerating growth. This is better for entrepreneurs because they can work out all of the kinks in the product and the business. This way when you deserve investment, you get to keep more of the company.

2. What if you have a great idea that can change the world, but you can’t find the money to make it happen?

Honestly, in today’s world with all the resources available, if money is the only thing holding you back you probably are not going to be successful anyways. Look how Jobs and Gates made it happen. They both stole research out of here (PARC) and each created their own operating system. They worked out of their garage and coded on used worn down computers.

Being an entrepreneur is not making an even playing field. You need to find ways to tilt the field in your favor. Beg, borrow, steal, so be it. Part of being an entrepreneur is convincing others to buy into your concept. If your family and friends don’t believe in you, the chances that an investor will are slim.

3. How important do you think it is to have patents?

Patents mean nothing. They are only good for litigation purposes or to add value to the company when you get acquired. As a startup you don’t have to worry about either of these issues unless you are successful. Then if you are successful, you will have enough money anyways. So again it does not matter if you get sued or the company is valued for a few million more dollars.

Paul Saffo at Churchill Club Breakfast Tue Aug 28

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

The goal of forecasting is not to predict the future but to tell you what you need to know to take meaningful action in the present.” Paul Saffo

Paul Saffo is speaking at a Churchill Club Breakfast on Tue Aug 28 7:30am to 9am at Fenwick ( 801 California Street, Mountain View, CA 94041) on “Forecasting the Future to Make Better Decisions in the Present.” Register here.

I blogged about Paul Saffo in January “Ready Fire Steer,” he is a firm believer in Peter Drucker’s maxim that the best way to forecast the future is to carefully look for events that have already occurred but whose full effects have not been felt. His talk appears to be based on an excellent article “Six Rules for Effective Forecasting” that ran in the July-August 2007 Harvard Business Review. To motivate you to set your alarm clock a little early in two weeks, here is a high level summary of article’s description of the rules:

  1. Define a Cone of Uncertainty. The art of defining the cone’s edge lies in carefully distinguishing between the highly improbable and the wildly impossible. Outliers–variously, wild cards or surprises–are what define this edge. A good boundary is one made up of elements lying on the ragged edge of plausibility. They are outcomes that might conceivably happen but make one uncomfortable even to contemplate.
  2. Look for the S Curve. Change rarely unfolds in a straight line. The most important developments typically follow the S-curve shape of a power law: Change starts slowly and incrementally, putters along quietly, and then suddenly explode, eventually tapering off. S curves are fractal: very large, broadly defined curves are composed of small, precisely defined and linked S curves. For a forecaster, the discovery of an emergent S curve should lead you to suspect a larger, more important curve lurking in the background.
  3. Embrace the Things That Don’t Fit. The early part of the S curve before it explodes with indicators that subtly hint at things to come. The best way for forecasters to spot an emerging S curve is to become attuned to things that don’t fit, things people can’t classify or will even reject. We tend to ignore indicators that don’t fit into
    familiar boxes but anything that is truly new won’t fit into a category that already exists. Indicators frequently look like failures, so if you want to look for the thing that’s going to come whistling in out of nowhere in a few years and change your business, look for interesting failures–smart ideas that seem to have gone nowhere.
  4. Hold Strong Opinions Weakly. In forecasting a lot of weak but interlocking information is vastly more trustworthy than a point or two of strong information. Traditional research is based on collecting strong information, but once researchers have gone through the long process of developing a beautiful hypothesis, they tend to ignore any contradictory or disconfirming evidence until it becomes overwhelming, causing a paradigm shift. Thomas Kuhn documented this nonlinear process in The Structure of Scientific Revolutions. Forecast often and be the first one to prove yourself wrong by discovering new data that overturns your old forecast.
  5. Look Back Twice as Far as You Look Forward. Marshall McLuhan once observed that too often people steer their way into the future while staring into the rear view mirror because the past is so much more comforting than the present. McLuhan was right, but used properly, our historical rear view mirror is an extraordinarily powerful forecasting tool. The texture of past events can be used to connect the dots of present indicators and thus reliably map the future’s trajectory–provided one looks back far enough.
  6. Know When to Make a Forecast. It can be a liability for forecasters to confuse novelty for change. Even in periods of rapid transformation, much remains constant. Consider the 1990s dot-com bubble: underneath the many new things happening were fundamentally unchanging consumer desires and–to the sorrow of many a start-up–unchanging laws of economics. By focusing on the novelties, many forecasters overlooked that consumers were using their new broadband links to buy very traditional items like books and engage in old human activities like gossip, entertainment, and networking.

Any one of these rules deserves it’s own post (not a bad idea for a series), but I will hold off until I have had a chance to hear the talk. The Churchill breakfast events are typically more intimate (for those of us able to get up that early) than their dinners and give you a real chance to meet and assess the speaker. Register here.

Some Great Quotes Collected by Tim O’Reilly

Written by Sean Murphy. Posted in Quotes, skmurphy

Tim O’Reilly had a great post yesterday, “Surprises on the Bookshelves of CEOs” that also included quotes for entrepreneurs that he has collected over the years. Three great quotes that I hadn’t seen before that I found thought provoking were:

“Hope is definitely not the same thing as optimism. It is not the conviction that something will turn out well, but the certainty that something makes sense, regardless of how it turns out.”
Vaclav Havel

“It is well to remember that the entire universe, with one trifling exception, is composed of others.”
John Andrew Holmes

“History is a wave that moves through time slightly faster than we do.”
Kim Stanley Robinson

The Future Comes Up From Behind

This last one becomes clearer as one gets older. O’Reilly has used it in an earlier piece “Levels of the Game: The Hierarchy of Web 2.0 Apps” where he also discussed James Fallow’s experiment in using only Web 2.0 apps for a week. It reminds me of a longer passage from the afterward to the tenth anniversary edition of Zen and the Art of Motorcycle Maintenance by Robert Pirsig.

This book has a lot to say about Ancient Greek perspectives and their meaning but there is one perspective it misses. That is their view of time. They saw the future as something that came upon them from behind their backs with the past receding away before their eyes.

When you think about it, that’s a more accurate metaphor than our present one. Who really can face the future? All you can do is project from the past, even when the past shows that such projections are often wrong. And who really can forget the past? What else is there to know?

Ten years after the publication of Zen and the Art of Motorcycle Maintenance the Ancient Greek perspective is certainly appropriate. What sort of future is coming up from behind I don’t really know. But the past, spread out ahead, dominates everything in sight.

Related Blog Posts

Get Great Quotes For Entrepreneurs Every Month

You can follow @skmurphy to get these quotes for entrepreneurs hot off the mojo wire or wait until they are collected in a blog post at the end of each month. Enter your E-mail address if you would like have new blog posts sent to you.

Understand, Believe, and Act

Written by Theresa Shafer. Posted in Books, Consulting Business, Favorites, Startups

The sales process may seem like a simple exchange – you convince a prospect to accept your product or service in exchange for their money. However, there are a number of overlapping processes running to get you to that point.

A few thoughts about one of them: the process that prospects go through to decide if they are going to buy from you. Jerry Weissman has framed this as Understand, Believe, and Act.

First a prospect must understand what you have to offer. This is straightforward when your product is a better, faster, cheaper version. But this is much more difficult when it is an innovative technology. Demos and sales pitches become critical. We joke that “If you are looking for smarter prospects who will understand your offer, then maybe your demo sucks!” Sadly, this is often the case (we have even had to apply it to our pitches from time to time).

Presenting an innovative technology in a way that’s understandable to a prospect is never easy. The language, the problems, and why it is better must be grounded in the prospects world. If you give a prospect a feature list, some will be able to “get it”, but not many. To reach most prospects, you must start from a problem that they know they have, and offer a solution they can understand.

Secondly, prospects must believe that your innovative technology will actually deliver them the benefits you promise. New technology always brings risk. They may risk losing their job–or at least putting a “dent in their career”–if you don’t deliver! The first people who will trust you are folks with whom you already have a prior shared success. They know you can deliver. Usually these people are the source for your early sales. When your first clients say “I used it and it worked” to their friends they give you credibility. Eventually you must get to strangers referring other strangers to buy. Testimonials on your website are critical for prospects believing your claims. Testimonials, like your demo, must be in the language customers use and from people who are credible.

Only after they understand and believe will customers ever act. But they act on their own cycle, whether it’s a certain point in the product development process, a certain time of year, or a phase of the moon. It’s their timing! Your challenge is to make sure they remember your offering when they are looking for it. For this reason you need a method of reminding those people that you have a solution. We call this percolating. This is the function that applications like Salesforce provide: you can set up a sales campaign to remind you to contact everyone who is percolating every 6 weeks or so (or whenever they wanted to hear back from you next). Another method we have seen work well are newsletters. If you can help your prospect and send them something useful every 6 weeks, people will join the mailing list and remember you when they have a problem you can help them solve. Be there when they are ready to act.

Ten Quotes To Help You Bring Order Out of Chaos

Written by Sean Murphy. Posted in Quotes, skmurphy

The following is a time capsule [Ed: more of a “tiny time pill” than a full capsule] from August 7, 2000.

I posted this as part of a personal home page on August 7, 2000 when I was working on a website for executive meeting agendas, presentations, and minutes in the Service Provider Line of Business. I was cleaning out some old files and thought most of these would actually be good advice for startup founders as well. I have added some links to earlier posts that have incorporated some of them as well as links to background on the authors.

Ten Quotes To Help You Bring Order Out of Chaos at Cisco

  1. Never mistake a clear view for a short distance.Paul Saffo
  2. “We must be the change that we wish to see in the world.” Mahatma Gandhi
  3. “Creativity is the ability to identify self-imposed constraints, remove them, and explore the consequences of their removal.” Russel Ackoff
  4. Do Something Small But Useful Now.” Bob Bemer (inventor of ASCII)
  5. “Sometimes you just have to take the leap, and build your wings on the way down.” Kobi Yamada
  6. “Better Never Than Late” Ray Kurzweil
  7. “A complex system that works is invariably found to have evolved from a simple system that worked. A complex system designed from scratch never works and cannot be patched up to make it work. You have to start over, beginning with a working simple system.” John Gall in Systemantics
  8. “You can’t believe that a plan is real until you’re vaguely disappointed.” Rhett George
  9. “In a time of drastic change it is the learners who inherit the future. The learned usually find themselves equipped to live in a world that no longer exists.” Eric Hoffer
  10. “The difference between a good career and a great career is the ability to leave some things unsaid.” Keith Herrmann

And across the bottom was a tagline quote from Kristin ZhivagoYour Brand is the Promise You Keep.

Startups Are Hard Work and Require Planning

Written by Sean Murphy. Posted in Quotes, skmurphy, TwoWeekSaaS

Guy Kawasaki had a great guest post “On The Other Hand: The Flip Side of Entrepreneurship” by Glenn Kelman, the CEO of Redfin, last week that was a well written counterpoint to some of the “make money fast in your spare time in your underwear” blather that Guy has been generating with “No Plan, No Capital, No Model…No Problem. ” Google Video of event here. Some of Kelman’s observations that really resonated with me:

Lately I’ve been thinking how hard, not how easy, it is to build a new company. Hard has gone out of fashion. Like college students bragging about how they barely studied, start-ups today take care to project a sense of ease. Wherever I’ve worked, we’ve secretly felt just the opposite. We’re assailed by doubts, mortified by our own shortcomings, surrounded by freaks, testy over silly details.

[…]

Like the souls in Dostoevsky who are admitted to heaven because they never thought themselves worthy of it, successful entrepreneurs can’t be convinced that any other startup has their troubles, because they constantly compare the triumphant launch parties and revisionist histories of successful companies to their own daily struggles.

“Revisionist histories of successful companies” is something that’s not widely appreciated. Eric Hoffer cautioned against this tendency in his observation “Our achievements speak for themselves. What we have to keep track of are our failures, discouragements, and doubts. We tend to forget the past difficulties, the many false starts, and the painful groping. We see our past achievements as the end result of a clean forward thrust, and our present difficulties as signs of decline and decay.”

Most start-ups find an interesting problem to solve, then just keep working on it. At a recent awards ceremony, Microsoft CEO Steve Ballmer tried to think of the secret to Microsoft’s success and could only come up with “hard, hard, hard, hard, hard, work.” This is an obvious cliche, but most entrepreneurs remain fixated on the Eureka! moment. If you don’t believe you have any reliable competitive advantage, you’re the kind of insecure person who will work your competition into the ground, so keep working.

If you aren’t doing something worthwhile, you can’t get anyone worthwhile to work on it…You need a big mission to recruit people who care about what you’re doing.

If you can begin to enjoy the process of building a start-up rather than the outcome, you’ll be a better leader.

3 Key Questions To Ask Yourself Before Taking a Job with a Startup

Written by Sean Murphy. Posted in skmurphy, Startups

I got a call from someone who asked me “you work with a lot of startups, what should I think about before joining a startup?” I asked him to clarify if they were asking him to come on as a co-founder or an employee and he said that they had funding and were looking to hire him as an early employee. He wanted to understand what were the key questions he should be asking about “position, compensation, exit strategy, layoff chances?” It was his first startup and while he was excited by romance he wanted to know what the practical realities of the marriage might look like.

My answer was that these were the first three questions he needed to be able to answer before digging into finances etc..

  1. Do you like your boss and look forward to working for him?
  2. Do you like your team and look forward to working with them?
  3. Is the problem the firm is solving for it’s customers compelling for you to work on.

I advised him that these questions are no different than ones I would ask for any job. Picking who to found a company with probably changes #1 to “Have you worked with this person before and do you have confidence in his integrity and ability to deliver?” But I think two and three are the same. I told him that on a statistical basis the probability that you will get rich is very low, so make sure you are going to learn something, working with and for people you like and respect, and that the problem you are helping to solve is compelling for you.

Guy Kawasaki To Tell Truemors Story at Bay Chi Tue Aug 14

Written by Sean Murphy. Posted in Events, skmurphy

August, normally a vacation month, is host this year to a number of compelling events for entrepreneurs.

Guy Kawasaki is speaking at BayChi Tue Aug 14 7-9pm on “By the Numbers: How I built a Web 2.0, User-Generated Content, Citizen Journalism, Long-Tail, Social Media Site for $12,107.09″ where he will explain why and how he launched Truemors.com using open-source software, contractors, favors, and cajoling. He will also cover the current entrepreneurial and venture-capital funding conditions. Guy has blogged about the launch of Truemors.
There is an optional dinner at 5:30 in Palo Alto at Kan Zeman Restaurant on 274 University Avenue, there is no charge for the event but dinner attendees must pay cash for meal+tax+tip.

Expect a full report, Francis and I plan to attend.

Jerry Weissman On Persuasion: Getting From Point A to Point B In Your Presentation

Written by Sean Murphy. Posted in Books, Consulting Business, skmurphy, Startups

I wrote earlier in “Kierkegaard On the Art of Helping Others To Understand” about the need to understand where what Jerry Weissman calls “Point A” is for a prospect. Here is an excerpt from his book “Presenting to Win: The Art of Telling Your Story” (pages 6-7, emphasis in original) on persuasion.

Persuasion: Getting From Point A to Point B

All presentation situations have one element in common.

Whether it’s a formal presentation, speech, sales pitch, seminar, jury summation, or a pep talk, every communication has as its goal to take the audience from where they are at the start of your presentation, which is Point A, and move them to your objective, which is Point B. This dynamic shift is persuasion.

[…]

In psychological terms, Point A is the inert place where your audience starts: uninformed, knowing little about you and your business; dubious, skeptical about your business and ready to question your claims; or in the worst-case scenario, resistant, mentally committed to a position contrary to what you’re asking them to do.

What you are asking them to do is Point B. The precise nature of Point B depends upon the particular persuasive situation you face. To reach Point B, you need to move the uninformed audience to understand, the dubious audience to believe, and the resistant audience to act in a particular way. In fact, understand, believe, and act are not three separate goals, but three stages in reaching a single, cumulative, ultimate goal. After all, the audience will not act as you want them to act if they don’t first understand your story and believe the message it conveys.

Quick Links

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