Archive for September, 2007

Bob “GoDaddy” Parson’s Rules for Business Success

Written by Sean Murphy. Posted in Founder Story, Quotes, skmurphy

Bob Parsons of GoDaddy blogged his “16 Rules for Success in Business (and Life in General)” in July of 2006. A question he received at a 2004 speaking event–”What advice do you have for someone who is just starting a business?”–kicked off an effort by the serial entrepreneur to codify the principles he was living by. I have selected what I think are the best half dozen (the full list is absolutely worth reading), preserved Parson’s numbering and lightly edited his text.

2. Never give up. Almost nothing works the first time it’s attempted. Just because what you’re doing does not seem to be working, doesn’t mean it won’t work. It just means that it might not work the way you’re doing it. If it was easy, everyone would be doing it, and you wouldn’t have an opportunity.

3. When you’re ready to quit, you’re closer than you think. There’s an old Chinese saying that I just love, and I believe it is so true. It goes like this: “The temptation to quit will be greatest just before you are about to succeed.

These two echo famous advice from Winston Churchill and Eric Hoffer. First from Winston Churchill’s speech at Harrow School on October 29, 1941:

But we must learn to be equally good at what is short and sharp and what is long and tough. It is generally said that the British are often better at the last. [...]

You cannot tell from appearances how things will go. Sometimes imagination makes things out far worse than they are; yet without imagination not much can be done. Those people who are imaginative see many more dangers than perhaps exist; certainly many more than will happen; but then they must also pray to be given that extra courage to carry this far-reaching imagination. [...]

“Never give in. Never give in. Never, never, never, never–in nothing, great or small, large or petty–never give in, except to convictions of honor and good sense. Never yield to force. Never yield to the apparently overwhelming might of the enemy.”

And Eric Hoffer in “Reflections on the Human Condition” (aphorism 157) on the temptation to quit:

“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.”

Parson’s suggests another way to prevent being defeated by your own fears of “undefined consequences.”

4. Quantify what the worst thing could be, with regard to whatever worries you. Very seldom will the worst consequence be anywhere near as bad as a cloud of “undefined consequences.”

This is also the antidote to mindlessly continuing the same course of action, I suggested a similar approach in my review of Seth Godin’s book “The Dip” Save Your Money

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.

The following are a matched pair as well.

7. Never stop improving. Never stop doing something new. The moment you stop improving your organization, it starts to die. Make it your goal to be better each and every day, in some small way. Remember the Japanese concept of Kaizen. Small daily improvements eventually result in huge advantages.

9. Measure everything of significance. I swear this is true. Anything that is measured and watched, improves.

One of the challenges is to measure the things you have under your control. So while it’s tempting to measure just revenue it’s more useful to include the precursors that you have more control over: sales calls, demos, benchmarks, ads run, forum postings, conference talks, proposals generated. The most important thing for a startup team to measure is how time is spent. Time, much much more than money, is the lifeblood of a startup. Whatever your stated objectives or focus is, make sure that you measure how you spend your time to ensure that you are aligning your efforts with your desired results. If you haven’t blocked out time on the calendar in the next two to three weeks it’s not a priority.

8. Be quick to decide. Remember what General George S. Patton said: “A good plan violently executed today is far and away better than a perfect plan tomorrow.”

Quick decisions are much easier in the context of well thought out strategies. This is clearly one advantage that startups should strive to maintain over their larger competitors. If you dither as a team and concede this advantage you have to be very very good. One key is to discern whether a new development represents a real change in your state of information and really requires a response. It’s probably as important to base decisions on what’s not likely to change as to chase new and probably evanescent developments in your market. Also, one your decide you have to act, and to get your team to act in concert.

Peter Cohan’s Great Demo on Oct 13, 2007

Written by Theresa Shafer. Posted in Events, Startups

We are hosting a Peter Cohan event: “Create and Deliver Surprisingly Compelling Software Demonstrations” . Peter Cohan, a nationally recognized expert on software demo development who normally only consults to Fortune 500 firms. He offers only two “open enrollment” seminars every year that smaller companies can attend at a very reduced price, this one on Oct 13 is his last one for this year. He does offer shorter webinars on his methodology but this would be the last chance this year for a startup to get their demo critiqued by Peter.

This isn’t a sales pitch by Peter as he doesn’t ordinarily work with startups, this is very cost effective way for your software startup members to work on improving their demos based on a proven methodology and individual critique in a workshop setting.

Details: http://www.skmurphy.com/services/workshops/cohans-great-demos/

Register: https://www.123signup.com/register?id=xsqkb

First Customers: Targeting The Right Customers To Build And Sustain Your Business

Written by Francis Adanza. Posted in Events

Today I attended a lunch event hosted by SVASE and Pillsbury Winthrop. The title of the event was “First Customers: Targeting The Right Customers To Build And Sustain Your Business.” The featured panelist were John Witchel Of Prosper & Bruce MacNaughton Of Crosslink Capital. It was an informal questions and answer discussion between the crowd and the panelist regarding ideas on targeting your first customers. There were several good questions and answers, however the two I found most beneficial are below.

Audience Question: Can you share your opinion on launching a business to consumer website?

John Witchel’s Answer: For those of you who think all you need to do is put up a website and something will happen, let me make it clear for you… nothing will happen. Launching your website is so crucial to the success of your company, especially in the consumer space. In our model we needed two types of users; the lenders and the borrowers. In planning we learned that we needed more than just lenders and borrowers, we really needed a community of leaders who would monitor specific groups. Therefore we created group leaders who would be responsible for certain types of loan relationships.

I spent months on the phone convincing people to be lenders, borrowers, and group leaders. I asked every favor I could of everyone I knew just so the website had content and an engaged community prior to launch. I had to deal with people concerned about fraud, security, model won’t work, you name it. All I could do is promise that it will work and sell them on the vision.

Really, what do we do? We mediate a transaction for a loan to take place. There are a thousand and one different places you can get loans. We do not loan money, we solve problems. Everyday people need cash to fix a car, build a deck, pay off a credit card. We solve these problems. Lending money allows us to solve the problem but the customer does not think their problem is getting a loan. Their problem is having enough cash to buy a flat screen to host the biggest super bowl party.

The point is nothing just happens, there is always an inside job. Your role as the founder is to orchestrate everything and make it happen.

Audience Question: What does the “right first customer” mean? Isn’t the point to collect revenue?

Bruce MacNaugton: Everyone knows that your first customers are usually your friends and family, so you are not fooling anyone. You need to understand that you have not successfully closed your first true customer until you have sold to a complete stranger.

Your first customer is important because they will help you figure out which features are important and which they do not need. We often see people startups build products with too many features. They have a solution for everything. This really means they have a solution for nothing.

John Wichtel: There are some businesses that are primarily consulting firms that have some IP but not a working product. Then there are product companies that chase the consulting dollars to keep the lights on. Picking your first customer is very important because you are going to feature this customer as a super star. You want to find a customer that you can develop a story around. The next set of customers will want to know who is using your product and if they have the same problem as the person you previously helped.

CINACon 2007: A Great Conference For Entrepreneurs

Written by Sean Murphy. Posted in skmurphy

We exhibited at CINACon 2007 over the weekend, and took turns rotating through the sessions. It was a great conference for entrepreneurs and it was a great conference for us: we had the opportunity to talk to a number of very early stage firms (including some of the other exhibitors in the Rising Stars Showcase) and were very pleased by the conversations. We also stayed for the dinner and had the opportunity to share a table with some of the NUSEA volunteers as well as a number of other entrepreneurs. It was a very energizing event. There wasn’t much other blog coverage, the only real review I could find was by TechTsunami.

All in all CINACon 2007 was a great experience, I always find it energizing to be around folks with an entrepreneurial approach to life.

Paul Miller to Speak Future of CMP Support for EDA Companies at EDAC Wed-Sep-26

Written by Sean Murphy. Posted in skmurphy

EDAC has announced a program for Wed-Sep-26 on “The Future of Media and What it Means to EDA Companies.” So far so good, but they’ve invited the crew that laid off Richard Goering. I am much more interested in getting advice from the team that hired him. The EDAC announcement reads (links added)

Paul Miller, President of CMP’s Electronics Group will address this question and others such as:

  • Where is effective marketing going on the web?
  • How is the world of print changing?
  • What is the future of the B2B space?

Media is quickly changing how we do business. Come hear from one of the largest media companies what they are doing to address these changes, and what current advice they have for the EDA community.

I think that technology is quickly changing many businesses, including media. What’s funny is that EE Times was an on-line pioneer, putting a website up in 1994 and treating their archived articles in a way that preserved their brand by making them freely available. EE Times as a print publication runs 1/3 the page count it routinely had five or six years ago. It’s like an old friend who has now lost so much weight you no longer feel comfortable congratulating him on his diet because you fear he has cancer.

Mike Lanza: Starting Companies Without Venture capital

Written by Francis Adanza. Posted in Events

Do you need venture capital to build a successful company? Mike Lanza does not think so and he has several experiences to prove it. Last night I attended the SDForum Startup SIG to learn how Mike started four companies without venture capital. It was a interactive presentation where Mike addressed his observations and experiences of entrepreneurship.

Mike’s Entrepreneurial Career

In 1986, fresh out of school Mike started Lanza Laser Publishing. It was a graphic design company which employed Mike and a part-timer. It was not Mike’s intent for this to be a high growth company, but he ended up selling it in 1988.

In 1993 Mike started Digital Newsstand, an online news service. In this venture he had large aspirations of building a high growth company, but ended up spending two years on it without ever hiring employees or launching a product. Although the company folded, Mike started it with his own capital and no outside investment.

In 1995 Mike founded Just in Time Solutions, an online bill presentment and payment system, which is now known as Avolent, Inc. He grew the company to 65 employees and $6+ million revenues. In 1998 he left the company shortly after he took his first round of venture financing.

In 1999, right in the middle of the dot com bubble, Mike founded 1View Network. It was an online financial information consolidation company which he grew to 20+ employees and $1.5million/yr revenues. He raised $1.3 million in angel financing. A year later, in 2000, he successfully sold the company to Digital Insight.

Mike’s most recent experience was developing Click.TV, a web video technology. He founded the company in 2006 with his own capital and grew it to five employees. He recently sold the company with zero revenue. The acquisition has not been disclosed to the public yet, but you can read Christine Herron’s and Michael Arrington’s blogs for more Click.TV coverage.

My three takeaways from the presentation

  1. The value of software patents
  2. Successfully bootstrapping your company
  3. Exit strategies for non venture backed companies

Patents: Mike believes that “patents do not do anything except create work for attorneys; if your technology is so unique and innovative process the paperwork but focus your time on running the business.” I agree with this statement because in my experience, I see too many technologist spend more time worrying about patents rather than building a business. Patents are only as strong as the amount of money you have to back them. Most companies use patents as defense mechanisms in litigation engagements. Your customer will never ask you if your technology is patented.

Bootstrapping: an attendee asked a question regarding his methods for bootstrapping a company. Mike said, the best form of financing is through revenue. In the beginning all of his early sales were consulting jobs. He eventually refined the product and his process so that it could be productized. In Gerald Weinberg’s book “The Secrets of Consulting” he coins the phrase “nothing new ever works.” This is especially true for technology. When the technology is introduced into the market it takes many revisions before it actually leaves the inventors hands. We believe that selling the tool as a consulting service is an effective method for jump starting the sale and finding your early adopters.

Exit: when you finance a company on your own, you have the opportunity to sell whenever you want. When you raise venture capital, sales opportunities are usually ignored until the money dries up. Most selling decisions take a long time because your investors will have to approve the deal. Its just how the economics work when you play the venture game. VC’s will not settle for the moderate gain unless they have to. If you take money early in the fund, they do not want to sell early because then they have to give the money back to their limited partners and they won’t be able to charge as much management fees.

My net net: these days it seems like the trend is to develop a ten slide PowerPoint presentation and try to raise venture capital. From the pitch preparation and networking events I have been to throughout the valley, it seems like most entrepreneurs do not have a real plan for spending the money. My observation is that many of the entrepreneurs are trying to raise money to pay themselves a salary while they entertain an idea.

Startups Should Sign Their Work

Written by Sean Murphy. Posted in 2 Open for Business Stage, 3 Early Customer Stage, skmurphy

A great post by Tim Bonneman on “Startups Without Face Nor Name

I always find it surprising:

You sign up for a beta invite. Time passes. One day, you get an email after all stating the app, project whatever is now live. You sign up, you log in, and then, when you try to see who’s behind all this — nothing. No names. No pictures. No (real) address. No background info whatsoever about the founders or the team or the management or the backers or the first customers or their mother or their cat. Nothing. Nada. Zilch.

Sorry, but what do you think this is? Hide and seek?

I think it stems from a fear of failure. But unless you commit how can you expect other folks to spend time (and ultimately bet a chunk of their business and/or career) working with your application. I am coming to the conclusion that “stealth mode” as currently practiced by many firms (often a variation on “I’ve got a secret”) gets the team off on the wrong foot. I think it’s better to tell what truth you can and to say who you are.

Dharmesh Shah wrote about this in “Stealth Mode Schmealth Mode: the Real Reasons Startups Don’t Talk

  1. Lack of Direction
  2. Lack of Focus
  3. Lack of Commitment
  4. Lack of a Solution
  5. They Have a Secret

[...]

Before you decide to clam-up and guard your “super secret business idea”, make sure that you have something worth guarding, and that it’s in your best interests to do so. More often than not, you’re better not being coy, and doing some talking.

Look For Us At CINACon Sat Sep 22

Written by Sean Murphy. Posted in skmurphy

We will be exhibiting at the “Rising Stars Showcase” at CINACon 2007.

Register here for a great program that includes a keynote by Steve Westly on “The Past, Present and Future of Green” and these distinguished speakers:

Please Take Me Off Of Your E-Mail Distribution List

Written by Sean Murphy. Posted in skmurphy

This alas is a one line E-mail that I now find myself sending several times a week. It’s part of my effort shrink my E-mail backlog, although I have no more hope than Canute of stemming the incoming tide, but it gives me the illusion of progress.

Just because you can send a lot of E-mail using a sales automation tool and it appears that it cost you nothing, should you?

  • There are risks to your reputation (of which you only have one) if prospects feel that you are not authentic or are willing to waste their time.
  • There are risks of lowering the trust a prospect might otherwise give you if they feel that you are not genuine.
  • There are consequences that you get added to e-mail filters so that your subsequent messages are simply deleted before they are read.

Not everything needs to be a personal communication, and a form letter in response to an inquiry is different from an unsolicited offer. I think that these E-mails that pretend to be personal but are clearly bulk–I suspect this when my name is in ALL CAPS, or I am addressed as “Dear Colleague”–actually work against any trust the sender is (or should be) trying to build with me as a prospect. What I am objecting to is not a newsletter that is sent with an unsubscribe link–”it is what it is”–but mass produced E-mail generated from a database that attempts to be personal but clearly isn’t.

We use services like 123Signup and iContact because they have strong anti-spam policies and they include an unsubscribe link in every e-mail.

Alfred H. Peet 1920-2007

Written by Sean Murphy. Posted in skmurphy

I was saddened to read that Alfred Peet, the founder of Peet’s Coffee and Tea had passed away on August 29.

There was a time not so long ago in Silicon Valley, say August of 2002, when you could serve strong black coffee from Peet’s at your breakfast table and gather up enough talent to bootstrap a promising software startup. Now that Silicon Valley’s nuclear winter is giving way to another bubble, everyone wants “real salaries” and options, but back then it was enough to have a vision, offer some structure, and a pot of strong coffee.

At SKMurphy we embrace all faiths: emacs, vi, and notepad; PC, Mac, and Unix; Celtic, acoustic, and eclectic; Peet’s, Starbucks, and Stash. But reading his obituary it was inspirational to read about someone who had a vision for a substantially higher quality product than what was then available, who marshaled the resources and built the team to make it a reality. He started his business at the age of 46 in 1966, and became “the guru of the gourmet coffee revolution” according to Corby Kummer, author of “The Joy of Coffee.” and a senior editor at The Atlantic Monthly. “He was the big bang. It all started with him.”

In an interview in Inc. Magazine in 2001 Peet talked about his biggest mistake, in inability to delegate.

I always had good personnel. I paid more than the going rate. But I worked too hard, because I couldn’t delegate. I wanted to oversee everything. I said, “I know exactly where I want to go, but I can’t explain every thought, every idea I have for the future of this company.” Many people left. I was burnt out, so I had to sell. Do you know what it’s like when you’ve given so much, there’s nothing left?

I sold my business. At the time, it broke my heart. Coffee was my life. Now I’m over it. I have been consulting selectively. It’s a pleasure — more like a hobby, a love for me. I don’t get paid. It’s like talking with friends. If you can’t do it on that level, forget it.

But the revolution he started continued.

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