Archive for July, 2008

“Better” is the Enemy of “Good Enough”

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

This phrase is attributed to Sergey Gorshkov, the commander in chief of the Soviet Navy from 1956 to 1985, who managed it’s dramatic expansion during the Cold War. Perfectionists get this wrong, siding with “Better.” Entrepreneurs who prosper, for the most part, side with “Good Enough” and keep improving.

I was reminded of this quote when I read a recent blog post “Vaporware” by Chris Crawford, who is working on new start-up called Storytron in the interactive storytelling space.  I have a lot of respect for Chris Crawford, who is an innovator in the computer gaming field. I subscribed to his “Journal of Computer Game Design” and took away a number of useful insights.

In particular his 1992 article “Lessons from Patton Strikes Back” outlines several useful concepts that most early stage and niche software companies should keep firmly in mind, what follows is a lightly edited summary of his five lessons:

  1. Start with a clear mission statement. The essence of game design is decision-making; a designer makes thousands of decisions during the course of a project. Your choice is always between options with different merits. This is one advantage of the clear mission statement: it simplifies the decision-making process. Instead of asking, “Which option is better?” you need instead ask only, “Which option better fits my mission statement?” This latter question is more precise, more specific, and therefore easier to answer. More important, it is faster to answer. The bulk of a game designer’s important work is making decisions about what to include and what to pass up; anything that makes this difficult process faster and more reliable is worthwhile.
  2. Plan then code at a program level, code then plan at a feature level. Hacked code is so brittle that, over the long run, it takes more time to debug and maintain than properly structured code. [Planned, well structured code] can be easily modified and corrected after it has been written. The early stages of a game project have us writing code that we know will change considerably later on. However, there is another time scale to consider: the short-term time scale in which we write up a single feature. Most game programming is in some way experimental; any feature that is fully understood is probably obsolete in our fast-moving industry. You can’t plan such code in advance; you just have to wade in and hack until you figure it out. The conclusion I came to is this: hack first, then recode it right.
  3. Don’t be seduced by the cleverness of your own ideas. This was the single biggest mistake I made. I came up with a truly clever idea…and I was justifiably proud of it. But it caused too many problems. [It] turned out to be clumsy to use. Most players eschewed it. I should have had the courage to dump a clever idea that, in the final analysis, created more problems than it solved. I didn’t, and the game suffered for it.
  4. Bake the cake first, then add the icing. Publishers sell games in the same way that bakers sell cake. The customer doesn’t taste the cake until he gets it home; all he sees in the store is the icing. So bakers don’t sell cake; they sell icing. In the same way, most publishers don’t give a damn about gameplay (cake); all they care about are the graphics and sound (icing). With Patton Strikes Back, I baked the cake before I even showed it to any publisher. I designed and developed the game first. I finished all the basic game structures, wrote and tuned the artificial intelligence, even got much of the play balance worked out. Only then did I show it to publishers. Guess what they wanted? More icing! At that point, it was easy. Having finished the cake, it was easy to pile the icing on.
  5. Make sure there is a market for your product before you develop it. Patton Strikes Back was a “wargame for the rest of us.” It received excellent reviews. Unfortunately, it has not sold well. It would seem that “the rest of us” aren’t buying computer wargames. The aficionados certainly hated it. Without their support, the game withered…I will never make a significant income from the game. Lesson #5 is, I think, the most important lesson to learn from Patton Strikes Back.

Real candor and some valuable lessons. Two I take to heart are to stay clear on the mission and to guard against being seduced by my own “clever ideas.”

I am of two minds about Chris Crawford’s Storytron effort. It’s possible that they will make a huge breakthrough, certainly he has done several very innovative interactive games to date. His 1982 book “The Art of Computer Design” is out of print but still worth reading on-line for it’s insights into how to create engaging interactive environments, appropriate for anyone developing advanced analytics or social software. But it increasingly looks like an effort that’s suffering from “mission creep.” What follows are some selections from his “Vaporware” post, highlighting the team’s issues with traction and “making things better” (bold text in original):

Perhaps you have noticed that Storytron seems to be suffering from a bad case of the vapors. Our very first business plan called for us to publicly launch everything on January 1st, 2008. That didn’t happen. We pushed the launch date back to March 15th…and we pushed back the launch date to May 15th…once again I went back to the drawing board and came up with major changes… despite the fact that our official launch date has been pushed back repeatedly, our progress has been relentless.

It’s easy to stand on the outside and criticize, so let me just make what I hope is a constructive observation. If you have slipped four times you need to start to radically shrink the mission and focus for your first version.

The website. The Storytron website has quite a few special capabilities that require some custom programming. There’s nothing earth-shattering, to be sure, but it is not a collection of HTML pages. There’s a lot more going on underneath the hood. Louis has been doing lots of coding to make all this work properly, and Pati and Laura have been deeply involved in organizing the overall effort.

If a simple collection of HTML pages would make a “good enough” impression I would consider pushing out a dynamic website to a later version of the product/company. A basic demo has to be central to the mission, but they may be aiming much too high for their initial release.

The reference material and tutorials. This pile is huge. Worse, the technology it explains has been constantly changing. We made changes in April and May that required Pati to completely rewrite large portions of the tutorials. All in all, the content of the materials on the website adds up to about the size of a book — which Pati and Laura have generated in a matter of months.

It’s not clear what the changes were, but it doesn’t sound from the context they are keeping their focus on a simple app and demo for their first release. Again, hindsight is easier but if you find yourself re-writing the manual significantly before the product is in customers’ hands you should consider sharpening your focus and deferring features.

So how much longer will Storytron remain in vapor? How much longer will we give you promises that we later break?

If you find yourself worrying that prospects no longer believe you–and therefore no longer trust you–you need to change methods. Trust is hard to earn and too easily lost. I would think that they could sort their early users by risk tolerance and relevant technical skill levels and release the current “deficient” version to those it’s unlikely to turn off.

The board of directors discussed this matter at length at its recent meeting, and we hammered out the details of how we’re going to handle the launch. This time, though, we really want to be sure about our promises.

Again, you always want to be sure about your promises. One of Gerald Weinberg’s key observations for consultants and other change agents–and make no mistake about it, Chris and the Storytron team are trying to trigger a revolution in interactive entertainment–is that “people don’t tell you when they stop trusting you.” And once you’ve lost their trust, there is little basis for the kind of relationship that’s needed to convince early adopters to work with you.

Therefore, all we are saying at this time that the launch will NOT occur before August 18th. We are HOPEFUL that it will occur by September 1st. And that’s the best we can say at this time.

It’s better to give a “blood date” (vs. one written in pen, pencil, or crayon) and then work to beat it. It doesn’t sound like the team has a date that they are committed to hitting. This can be the death of many of promising start-up.

Please do not conclude that we couldn’t meet a deadline to save our lives. In every case, we have deferred the launch in order to improve the quality of our products. We could in fact have launched on January 1st, 2008, as originally planned — and the product we had ready at that time was better than what was originally planned.

This may be a slow death by good intentions. No development team ever slips a product to make it worse (in their own mind).

However, we deemed it to be unacceptable, so we pushed the deadline back.

As a rule of thumb the second time this happens you have to start to reduce the scope of your efforts and the mission you are trying to accomplish. In particular, bootstrappers have to sell what they have. Gordon Bell writes about the “Schedule Fantasy Factor” which he defines as the ratio of the time allocated to a particular task divided by the time it actually took. His belief is that a ratio above 1.2 puts a project in trouble: if it’s above 2 he believes that you are doing research, not product development.

The same thing happened in mid-March; Swat and Storyteller were better than we had expected back in January — but they still weren’t good enough. The changes we have been making have dramatically improved our technology. Yes, it’s frustrating to have to wait. You think you’re frustrated? However much you’re frustrated, I’m frustrated a lot more. But we only get one chance to show off to the venture capitalists, and we want to make this our best shot.

Normally the venture capitalist’s question is not “can you make this work?” but who wants to buy it, how much will they pay, and how many of them are there? Remember lesson 5, the real risk is not that you can’t ultimately do what you have set out to do, but that once you have a working technology you  will discover that the market you anticipated for it does not exist. It’s a risk that many innovative start-ups face.

Update Dec-31-2008: the Vaporware blog post is still up on the Storytron blog site but none of the permalinks for the individual posts resolve correctly. To read the post go the blog and look for July of 2008 in the archives.

Quotes for Entrepreneurs – July 2008

Written by Sean Murphy. Posted in Quotes, skmurphy

Continuing my twitter experiment from April, May, and June more quotes about the challenges of entrepreneurship.

Enter your E-mail if you would like Feedburner to deliver new blog posts to your inbox.

Here are my choices for July:

+ + +

“Find your place on the planet. Dig in, and take responsibility from there.”
Gary Snyder

I thought this was more poetic than “find a niche and fill it.”

+ + +

“Strategy is a hypothesis. Metrics are the data for testing the hypothesis. It is a continuous feedback process.”
Glen B. Alleman

This is a condensed version of a set of bullets from a 2003 presentation “Using Balanced Scorecard to Build a Project Focused IT organization” he gave at an IQPC conference. The net effect is to get IT to take a more entrepreneurial approach to serving end users. It’s no wonder his blog is called “Herding Cats.”

  • Strategy is a hypothesis. Metrics are the data for testing the hypothesis.
  • Strategy is making a hypothesis about a desired outcome, constructing the measures to test the hypothesis, deploying the experiment to test the hypothesis, then making adjustments based on the metrics.
  • The concept of strategy as a hypothesis and the experiments to test the hypothesis may be new to many. But this approach puts strategy in a different light.
  • Strategy is not something you do then go off to execute the plan. It is a continuous feedback process. Always testing the strategy with metrics derived from projects.”

+ + +

“The true object of all human life is play. Life is a task garden, heaven is a playground.”
G. K. Chesterton

Truly creative problem solving, the kind that fuels an entrepreneur’s “creative destruction” is playful.

“The need to write comes from the need to make sense of one’s life and discover one’s usefulness.”
John Cheever

I find that writing down my thoughts and experiences have allowed me to get a better sense of perspective on my life and various business activities. I actually think I do my best story telling at a whiteboard, at least for the first few drafts, but presentations ultimately have to become articles and essays to have broader influence. Re-reading what I’ve written, perhaps edited from a transcript of a talk or a presentation, allows someone as extroverted as myself to really hone my thinking.

+ + +

“Business is more exciting than any game.”
Kitty O’Neill Collins

I believe that too many technically oriented entrepreneurs neglect the business model and relationship aspects a making a start-up successful. In particular software engineers become accustomed to the total control of their environment, an expectation that does not hold for activities that involve negotiation and persuasion such as sales, marketing, and business development. Activities that are vital to business success.

+ + +

“You learn something every day, unless you’re careful.”
Tom Van Vleck

Vleck has a great website, I thought this gem was pithy restatement of Fred Brooks’ observation that “Good judgment comes from experience…experience comes from bad judgment.”

+ + +

“When will you know you have enough, and what will you do then?”
Barbara DeAngelis

I am suspicious of entrepreneurs who are only motivated by money. I am not against wealth, but the Irish proverb “there are no pockets in shrouds” is a gentle reminder of the need to base your life on higher purposes than accumulation and consumption.

+ + +

“Getting an idea should be like sitting down on a pin. It should make you jump up and do something.”
E. L. Simpson

Imagination is necessary but not sufficient for successful entrepreneurship.

+ + +

“All we have is our time. How we spend our time is our priorities, our strategy. Your calendar knows what you really care about.”
Tom Peters

Especially for bootstrappers, we’ve come to appreciate that how you spend your time is much more important that how you spend your funds.

+ + +

“More important than talent, strength, or knowledge is the ability to laugh at yourself and enjoy the pursuit of your dreams.”
Amy Grant

I think I get better at tasks where I enjoy the deliberate practice that improves my skill and I am able to maintain a sense of humor about my shortcomings. This is not always that case at three in the morning when I wonder why I left the security of a big company, but I think that security is an illusion and no matter what course of action you embark on you can have second thoughts. I have been at this latest venture for five years and continue to make new mistakes, so I am not in a rut.

+ + +

“The difference between one man and another is not mere ability, it is energy.”
Thomas Arnold

Especially the energy to continue to experiment until you persevere.

DIY Marketing Leads Fall Workshop Schedule

Written by Theresa Shafer. Posted in Events

Getting More Customers (a Do-It-Yourself marketing and self-promotion workshop) leads SKMurphy’s fall workshop schedule. SKMurphy workshop combine lecture, written exercises, and interaction with a roomful of entrepreneurs. We guide you through your one-page plan and provide time dedicated to your business. You leave with a one-page action plan that’s based on sound principles, reflection, and review and feedback both from us and peers..

  • Thursday August 21, 2008 8:15-1:00pm Getting More Customers Sunnyvale CA
  • Saturday Sept 13, 2008 8:15-1:00pm Great Demo San Jose CA
  • Wednesday Sept 24, 2008 11:30-1:30pm Financial Modeling for Start-Ups Sunnyvale CA
  • Tuesday October 14, 2008 8:15-1:00pm Engineering Your Sales Process Redwood Shores CA
  • Dec 2008 Idea to Revenue (TBA)

This workshop has consistently enjoyed very positive feedback and the last couple have sold out, so register early.

Opportunities for EDA Startups in Cadence’s Acquisition of Mentor

Written by Sean Murphy. Posted in EDA, skmurphy

I researched an opinion piece for SCDSource about three weeks ago that is up on the site today at “How Cadence’s Mentor buy would impact EDA startups.” I start from the following premise:

I believe that the merger will be consummated, but that Cadence will not remain as one of the top three players in the industry within two to four years. I have three reasons:

  1. EDA is an R&D intensive business and it will be hard to retain talent in a hostile takeover. Moreover, there is considerable overlap in a number of product areas, which means that many Cadence employees will also be concerned for their continued employment, injecting uncertainty and slowing work on both sides of the merged company.
  2. Cadence is taking on significant debt and will have to focus on near term revenue at a time when design methodologies, development practices, and computing paradigms are all undergoing significant shifts. Their ability to nurture the new products they will need in two to four years will be limited.
  3. New customers are coming into the market as electronic systems incorporate more software at all levels of integration. Cadence’s ability to market and sell beyond the hardware engineering groups, and to invest ahead of revenue from relevant software teams, will be limited.

By coincidence today was the Cadence Q2 earnings call, available at http://biz.yahoo.com/cc/7/94067.html (and transcript here: http://seekingalpha.com/article/86645-cadence-design-systems-inc-q2-2008-earnings-call-transcript?source=yahoo&page=-1) for the next week and then on the Cadence site. They have revised revenue downward for the year from $1.5 Billion to $1.12 Billion, with minimal profitability. One thing I had overlooked in the earlier analysis was that they have spent about $500 million buying back their own stock from the middle of last year through March of this year: stock that is worth perhaps 35-50% less now, and money that might have been used to offset the $1.1 Billion in borrowing they need to consummate the merger with Mentor.

As of today’s call they were still full speed ahead on merger plans, as of July 11 they have acquired  4.7 million share of Mentor (about 4.3% of the outstanding shares). With that possibility still very real, I want to highlight two key strategies that I also covered in the article:

  • Think longer term. Because Cadence/Mentor will be focused even more ruthlessly on near term revenue, now is the time to focus on long term opportunities and relationships.
  • Focus on revenue opportunities where turmoil at Cadence/Mentor will cloud the future of many products, and slow if not inhibit a competitive response until they determine who is in charge. You will more likely be able to snatch emerging technology areas where revenue opportunities are smaller from a Cadence/Mentor perspective but still very attractive for a startup.

Postscript Aug 1: Seeking Alpha has the Cadence quarterly earnings calls transcripts available for Q4/2005 onward here: http://seekingalpha.com/symbol/cdns/transcripts

What Happens When 70 EDA Blogs Become 500 in 2011

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

I just added Cadence to the list of companies with blogs on my May 28 post “Bloggers Covering Design Automation.” I didn’t see any announcement but they appear to have re-designed their website in the last three or four weeks and now highlight a community of bloggers on their home page.

My simple projection is that within three years every EDA company, large or small, will have at least one blog, and EDA consulting firms of all sizes will add a blog to their website. So that says we are on track to grow from 70 to over 500. I base this in part on the speed on adoption of the web by EDA firms and what’s already happened for web startups and many other emerging technology spaces: entrepreneurs consider a blog a core component of their corporate identity.

Making sense of 500 feeds will be no easier than surfing across 500 television channels to find something new and worth reading. I mentioned David Lin’s experimental Netvibes page in my “Primer on Blogs for EDA Start-Ups” and it certainly represents a good start. But I think an opportunity exists for community lens approach similar to what Hacker News provides web entrepreneurs (which is different in some important but subtle ways from digg and reddit that allow it to avoid the death of the lowest common denominator topics migrating to the home page). Other models are certainly viable as well, based on forums, wikis, and new forms both emerging and yet to be invented.

Paul Saffo’s 1994 Wired article “It’s the Context Stupid” (also available on www.saffo.com/essays/contextstupid.php)  makes the point that the value is as much in providing context as the raw content.

“It’s the content, stupid.” This catchy apothegm [is] now the mantra of an infant new media industry. […] As compelling as this phrase may be, it is also dead wrong. It is not content but context that will matter most a decade or so from now. The scarce resource will not be stuff, but point of view.
[…]
The future belongs to neither the conduit or content players, but those who control the filtering, searching, and sense-making tools we will rely on to navigate through the expanses of cyberspace.

One example of a hybrid model of journalism is what John Byler is doing at Chip Design magazine in adding 8 blogs to complement his print publication. I was particularly impressed by a recent post by Grant Martin on “Leibson’s Law in Action? Cadence returns to ESL with new synthesis tool” because he did something that is natural for a blogger and highly unusual for an article in an on-line paper or magazine: he links to whoever has the best information on the topic, even it’s a competitor to Chip Design. It’s not only a very useful summary that places several recent ESL announcements in context, but Martin links to the source material on-line, regardless of where it came from: EE Times, SCDSource, EDN, and Chip Design Mag. And he has comments from a number of key players ESL.
I was talking to a well respected EDA PR professional recently who was waiting for the EDA blogging ecosystem to sort itself out and pick a dozen “A” blogs so that it would resemble the good old days of print (and EDA PR could “return to normal”). I said I didn’t think that would happen because blogging uses links for context in a way that print didn’t (and can’t). On any given topic there may only be a dozen well respected bloggers, but there would be a lot of topics with different sets for each. It’s different when you have knowledgeable practitioners writing directly on the web.

I believe Grant Martin’s post is a harbinger for a very different kind of “sense-making mechanism” than both traditional EDA print journalism and the press release aggregation model that’s practiced on a number of websites.  Not necessarily better (or worse) but different.

We have time to get ready, and since we are all steering we may end up somewhere else. But I think 500 blogs (plus or minus 250) is likely by 2011 because it they don’t depend upon a business model transition: blogs are like weeds, they don’t require cultivation to thrive. I think they create a substrate that complements and potentially displaces the press release with the RSS/Atom feed as the quantum unit of information distribution for (social) media.

Notes from July 19 IEEE Cloud Computing Event

Written by Sean Murphy. Posted in Events, skmurphy

I spent most of Saturday July 19 at “Cloud Computing-the New Face of Computing-Promises and Challenges” which I have already blogged about on last Thursday. There was a large turnout for a Saturday morning in July: Cubberley holds about 400 and it was between half and three-quarters full.  There were a number of excellent presentations from practitioners in both industry, commercial research labs, and academia. Many of them are now up on http://www.ewh.ieee.org/r6/scv/computer/

The slides from the keynote by Dr. Hamid Pirahesh, an IBM Fellow in their Almaden Research Center, on the “Impact of Cloud Computing on Emerging Software System Architecture and Solutions” are not up yet, which is a shame because it was an excellent overview of cloud computing. One thought to take away: Dr. Pirahesh postulated breakpoints in computing architectures and methodologies at 20, 300, 2,000 and 10,000 processors. Certainly the first, and possibly the second are amenable to multi-core techniques, but the last two are going to rely manycore approaches.

This isn’t Web 3.0, this is something else. Mano Marks, the Google Developer Advocate who talked about the Google App engine made an offhand remark that brought me up short: “ten years ago was the late 90′s.” We’ve moved beyond the web boom (and bust) and fiber build out and are getting a glimpse of a new kind of application that I believe will be as transformational as the initial rollout of the Web was. But it will be used to solve different problems.

Several of the speakers talked about using cloud computing models for processing log files of all sorts, in particular web site clickstream logs and system error logs. The Hadoop project is one example of a ground up re-examination of how to leverage a low cost computing infrastructure composed of fast but unreliable (because they are low cost) processing units. Ashish Thusoo’s presentation on how Facebook is using it to track user activity recorded in web logs is a representative example of this new approach to computing.

My challenge is moving beyond my mental map of existing computing paradigms. I blogged last August about Robert Pirsig’s afterword to the 10th anniversary edition of Zen and the Art of Motorcycle Maintenance where he describes the Ancient Greek perception of time. Time carries you on the back of an oxcart, facing the road you have already travelled:

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?

It’s difficult navigating by an outdated mental map of a landscape that is undergoing radical transformation. It’s hard to believe but Salesforce is also a decade old.  I was disappointed that Jim Rivera, VP of Product Management at Salesforce.com, misjudged his audience and spent an unfortunate 30 minutes giving a sales pitch that stood in contrast to the rest of the speakers on Saturday. He managed to mention “multi-tenant hosting” so many times that I thought I had taken a wrong turn after the coffee break and ended up at a different event. It’s unfortunate when a company misses an opportunity to engage a technical audience as effectively as the other speakers did.

If you missed the event the presentations are quite detailed and worth a look.

Fall Workshop Schedule Announced

Written by Sean Murphy. Posted in Events, skmurphy

We have our fall workshop schedule up:

Thursday August 21, 2008 8:15-1:00pm Getting More Customers

Description: We will cover a variety of proven marketing techniques for growing your business: attendees will select two or three 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.

Saturday Sept 13, 2008 8:15-1:00pm Great Demo

Description: This is an interactive workshop with Peter Cohan geared especially for startup entrepreneur. Bring a copy of your demo and be prepared to present it. As a part of your workshop registration, we will also follow up via e-mail and brief phone calls to track your progress.

Tuesday October 14, 2008 8:15-1:00pm Engineering Your Sales Process

Description: Building a repeatable sales process is key to a sustainable business, understanding how to scale your sales process is key to revenue growth. Learn how to synchronize your sales process with your customer buying process. We will look at ways to shorten your sales cycle. This highly interactive session allows you to analyze and debug your sales cycle.

December “Idea to Revenue” still finalizing date/location

If you would like to be notified of upcoming workshops you can sign up here. If these times/locations don’t work for you but you are interested in attending please give us feedback to help us picking better times/locations for workshops.

What Can I Do to Build Referrals?

Written by Theresa Shafer. Posted in Consulting Business

Consulting is a referral business. Four things you can do today to build referrals:

  1. Make a list of at least 30 people you have had shared success with. Go back at least 15 years or college/university. Taking the time to go back to your first job is worth it.
  2. Contact those people and tell them
    • What you have been up to
    • Here’s what I am looking for, please refer people to if they are looking for my services
    • Please let me know what you have been up to and call if there is anything I can do to help.
  3. Keep their needs in mind and pro-actively notify them if you run across articles, people, events, or opportunities that are relevant or likely to be useful.
  4. Write 2 testimonials for people in the shared success category in LinkedIn

IEEE/NATEA Event on Cloud Computing July 19 at Stanford

Written by Sean Murphy. Posted in Events, skmurphy

I have become convinced that “software above the level of the device” whether it’s called Grid, Farm, Cluster, Multi-Core, ManyCore, or Cloud Computing represents a significant opportunity for application development by start-ups. The IEEE Stanford (Student Chapter), IEEE Computer Society (Santa Clara Valley Chapter), and NATEA are jointly sponsoring an event this Saturday that offers an excellent set of speakers on various aspects of cloud computing. The announcement is here http://www.ewh.ieee.org/r6/scv/computer/ it’s 8:30 to 3:45 at Cubberley Auditorium on the Stanford Campus.

Speakers include:

This looks to be a very good overview on various aspects of Cloud Computing.

It’s only $65 ($60 for IEEE and NATEA members, $30 for students) sign-up at the NATEA registration page.

Common Questions about Advisory Boards

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

What is an advisory board?

An advisory board is a formal or informal group of advisers who give advise, contacts, and feedback. Unlike the board of directors they do not have a fiduciary responsibility but are critical for start-ups. Also see Forming an advisory board.

How can they help me?

There are three broad ways that an advisory board can help you. The first is domain or technology knowledge. Secondly, industry knowledge advisors will understand the real ins and outs of how your market works and what the market needs are, they may also be able to open doors. Domain or technology folks maybe able to open door to potential partners and suppliers, but market knowledge folks maybe able to bring in the prospects or at least have you talk to people that prevent strategic misfires as you go into the market. And thirdly, if neither of the other two groups have been in a start-up before, it’s good to have at least one person either on your team or as an adviser who has rapid growth. So, if you are fortunate and you start to really takeoff, you have some somebody that helps you make decisions in a timely way and understands what to look out for and how to scale the company.

What do I give them?

Normally advisors which add credibility to your firm in a variety of ways, will trade expertise or services for equity.You typically are going to give them founders’ equity stock which is coming out of your pocket. It is frankly a negotiation, how much time they give you or how much equity they get, and that brings anywhere from 0.1% or 1%, in some very rare cases perhaps 2%, that’s the negotiation. Usually there is some kind of vesting schedule maybe on a 2-year or 3-year schedule with a 3 month or 6 month cliff. Because you want to make sure that things are working out, you don’t have a values’ conflict or getting value, you normally have a 3 or 6 month cliff. If things do not work out, then they walk away and they don’t get anything. You can consider those early few months a probationary period that allows you to make a final mutual assessment.
How do I use them?

You want to actually bring them together as appropriate to do at least a quarterly meeting, might be a phone call, might be a nice dinner. This time you can brief them on your business, dry run your demo, and get feedback on your plans.  you would like to be to able get some introductions. They are a great source for contacts for employees, partners, prospects, or investment partners.

What do I ask of them?

  • You are looking typically for 2 hours a month, 4 hours a quarter. Schedule either monthly, or twice a quarter, once a quarter formal meeting where you present a briefing for them.  These become a proxy for your real board meetings until you have a real board of directors, this is a board of advisors.
  • You want to be able to call them when urgent things come up. They are busy people, so you only want call for urgent things, but when urgent things come up, you want to be able to reach out to them.
  • You want to negotiate use their name. You would like to announce in a press release that they have joined you, would like to be able to use their name on your website, you would like to be able to have folks call them to get their opinion of you, it might be investors or it might be a major prospect you are talking to.

Normally about two-thirds of that value is the advice they give you and one-third is the doors they open and the value that their reputation sheds on your company.

VentureHacks has three relevant posts that are more focused on VC related issues than bootstrapping but still worth reviewing:

Quotes on Communication

Written by Sean Murphy. Posted in Quotes, skmurphy

Two from “Knots” by R.D. Laing

“What Jack says about Jill,
Says more about Jack,
Than it does about Jill.”

If I don’t know I don’t know, I think I know
If I don’t know I know, I think I don’t know

Three that I have not been able to source:

“Listen for what isn’t being said.”

“Most communication is indirect.”

The primary barrier to communication is the belief that it’s occurred.

Suggestions From The Marketing Lab Monday July 14 at SDForum

Written by Sean Murphy. Posted in Events, skmurphy

I have netted out a couple of key suggestions I made to the three presenting companies at Monday’s SDForum Marketing SIG “Marketing Lab” so that they are more generally applicable. I was impressed: all three start-ups were well prepared, they managed their presentations to the time limits and were serious about their businesses.

It was a good format: my only change, given how well everyone managed their time, would be to allow 5 minutes of audience questions after each pitch as well. It was a very enjoyable event.

Debra Willrett at Tomorrow’s Bootstrappers Breakfast

Written by Sean Murphy. Posted in Events, skmurphy

I first met Debra Willrett, founder of Expert Software Consulting, at an IEEE Consultants Network for Silicon Valley (CNSV) when she gave a  great talk on the new CNSV website in February of 2006. Later I learned that she was the  inventor of the Macintosh application MacProject, an application that has defined a paradigm for interactive graphical project management tools for the last 25 years, and we asked her for an interview for our Founder Story series that we posted in April of this year.

She is coming to tomorrow’s Bootstrappers Breakfast, please RSVP as we have limited space.  She has prepared a couple of remarks and then, like all Bootstrapper Breakfasts, it will be a serious discussion on growing a business based on internal cash flow. I hope to see you tomorrow at 7:30AM in the back room at Coco’s in Sunnyvale on the corner of Lawrence and Oakmead in Sunnyvale (1206 Oakmead Parkway, Sunnyvale, CA 94086).

You Have Five Minutes: Practice

Written by Sean Murphy. Posted in Customer Development, skmurphy

I am always surprised by how unprepared CEO’s and founders were to meet the time limits, typically five or six minutes, that they had been given at various conferences to get their point across: Office 2.0, Under The Radar, and Struct08 to name a few that come most readily to mind.

This is not an artificial limit.

Peter Cohan, in his Great Demo! methodology, stresses the need to get through a basic demo in six minutes. Get the audience’s attention with a glimpse of what’s possible that can help them satisfy a real business need.

On a trade show floor you have perhaps a minute to a minute and a half to capture prospect’s attention, after you’ve gotten them to stop and listen to that much.

When you meet someone at a networking event and are asked “what do you do” you have perhaps 30 to 45 seconds to trigger a conversation. This is typically referred to as the “elevator pitch.” Entrepreneurs should bear in mind that most buildings in Silicon Valley are two to four stories, it’s a very short ride.

Even if you come have arranged a meeting in someone’s office for 30 minutes, the first five or six minutes set the tone for the balance of the time. Jill Konrath’s third story in her “3 Hard Earned Lessons from the School of Hard Knocks” post recounts an actual situation:

“Sit down,” he said gruffly. “You’ve got 5 minutes. Talk.”

“If you’re busy, I’ll come back,” I said, trying to be gracious.

“Nope,” he stated. ” 5 minutes. Tell me why I should buy your product. Your 5 minutes is starting now.”

I mumbled. I stumbled. I tried to engage him in conversation. I tried to explain that I needed more time. He wasn’t one bit interested. After 5 minutes, he arose and said, “Your time is up. You can leave now.”

[...] I couldn’t concisely state why he should listen to me.

I wanted to build a relationship and warm up the call. That made me feel better. He was a busy man who chose to use his time judiciously. I didn’t respect his needs.

There is really only one way to achieve this. Practice.

“It’s not the will to win, but the will to prepare to win that makes the difference.” Bear Bryant

Productive Larks and Creative Owls

Written by Sean Murphy. Posted in skmurphy

Tim Berry writes in Productive as a Morning Person, Creative as a Night Person

As a morning person, I’m generally more productive.
As a night person, I’m generally more creative.

Which I hadn’t considered before, but felt exactly right when I read it. I find I always feel productive when I am awake and working by 7:30AM–which may help explain why I believe we have “serious conversations with serious entrepreneurs” at the 7:30AM Bootstrappers Breakfasts.

We tend to schedule our hard core work sessions for the morning and defer phone calls and errands for the afternoon, one of the benefits of running your own business.

Late at night I tend to blog, although I will sometimes not publish a post until I have reviewed it “in the clear light of day.” Some startups (and VC firms) we have worked with have a “no E-Mail after 10pm” rule as folks can become more carried away. It’s one I try to follow as well.

Postscript: I submitted Tim Berry’s post on Hacker News and several folks commented, which led me to add some thoughts from that discussion as a postscript here:

  • In this context productive for me means “focused on closure” or “getting things done” and creative means “generating possibilities, exploring new approaches.” Obviously inspiration can strike at any time, and you have to find ways to get things done and even when you are not inspired. 
  • I notice that when I get enough sleep I will sometimes spend the last dream of the morning solving (or at least advancing on a solution) to a problem I have been wrestling with.
  • My dead time is after lunch until early evening, I try and schedule phone calls and interaction with other people to renew my energy.

First Bootstrappers Breakfast in Milpitas Friday July 11

Written by Sean Murphy. Posted in Events, skmurphy

Tomorrow we have a first Bootstrappers Breakfast in Milpitas at the Omega Restaurant, 90 S. Park Victoria Drive. Come join us for our shake down cruise at a new location. If you haven’t been to one here are some guidelines for first timers:

The breakfast starts at 7:30am and ends at 9am. Your cost is your meal + 20% tip; we get the “back room” to ourselves. The other attendees will all be in early stage software startups, it will be a chance to compare notes on operational, development, and business issues with peers. The format is as follows:

  1. Folks arrive and network until 7:30am
  2. We take seats around a single large table and order.
  3. We go around the room and everyone has 2 minutes to introduce themselves and their company. You can also put one or more issues on the table for discussion later.
  4. We recap and condense the discussion items into clusters as appropriate and then have the person(s) who raised the issue spend another minute or two explaining it in more detail.
  5. Other members of the group make comments, offer suggestions, or ask clarifying questions.
  6. We end promptly at 9am, there is time afterward for one on one discussions between attendees.

These breakfasts were designed for entrepreneurs to share ideas and leverage thoughts with other folks who are serious about growing their business. We facilitate the breakfasts as a service to the Silicon Valley bootstrapper community, so there is no sales pitch from us or anyone else who attends.

We also facilitate breakfasts in Sunnyvale at the Coco’s on Oakmead at Lawrence and in Palo Alto at the Hobee’s on the El Camino near Arastradero. See a Calendar of Events or the Bootstrappers Breakfast website for more details.

We have been doing these since October 2006 at Coco’s and March of 20007 at Hobee’s; I hope to see you at one when it’s convenient.

Startup Marketing Lab Next Monday at SDForum Marketing SIG

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

I have been invited to take part in a “Startup Marketing Lab” next Monday at a joint session of the SDForum Marketing and Startup SIG’s. Four companies with “a tiny marketing budget” want to get “best use of their marketing.” They have ideas for how to market “but want to get some second or third opinions from other experienced marketers.” I will be joining two “experienced marketeers” dispensing advice:

I have been asked to make my feedback “directly actionable and appropriate for a small budget” which I have assured the organizers is all that the bootstrapping start-ups we normally work with will tolerate. There will be four companies presenting and it should make for an interesting evening.

The event is at DLA Piper Rudnick Gray Cary LLP on 2000 University Ave., East Palo Alto, CA 94303

Registration and Networking start at 6:30 and the formal program begins at 7pm, with four companies presenting the program will run to 8:45PM. It’s free for SDForum Members and $15 for non-members.

A sad postscript: I learned late today that Barbara Cass, who retired as the volunteer coordinator at SDForum last December after more than two decades of service (starting with the original Software Entrepreneurs forum that subsequently merged with the Center for Software Engineering to form the Software Development Forum) passed away yesterday. I had the pleasure of first meeting Barbara in the early 90′s when I started attending the old Software Entrepreneur’s Forum meetings that were held at the old Palo Alto Elks club. I was immediately impressed at her charm and efficiency in “herding cats,” keeping a roomful of technologists organized and on track. She was the reason that I got involved in reviving the SDForum Marketing SIG in 2005/6. She had a strong sense of the traditions and values that have enabled the SDForum to continue providing value to it’s members over more than two decades of technology evolution and revolution in Silicon Valley.

More on Barbara Cass: SDForum has posted a remembrance page at http://www.sdforum.org/barbaracass

According to her wishes, no services were held. Donations in lieu of flowers may be sent to the Palo Alto Medical Foundation, Oncology Department, attention Philanthropy, 795 El Camino Real, Palo Alto, CA 94301

July-24-2008 obituary in The Almanac: Barbara Cass created software entrepreneurs forum

Barbara Cass, a longtime Ladera resident who had a second career as executive director of software industry groups, died at her home July 8 of pancreatic cancer.

Her volunteer work at the Resource Center for Women in Palo Alto, where she counseled women re-entering the job market, sparked her interest in the fledgling computer industry. She eventually became an executive in several nonprofit associations in that industry, said Tom Cass, her husband.

Ms. Cass helped form Software Entrepreneur’s Forum (SEF), where software engineers and entrepreneurs exchanged ideas during monthly dinners. She became executive director of the forum in 1984 and started inviting industry luminaries to speak. She was named to the “MicroTimes 100″ several times in the 1990s.

In 1998, SEF and the city of San Jose’s Center of Software Development joined forces and became SDForum, a merger that was one of the proudest moments of her career, she had said. That same year, she helped create the prestigious annual Visionary Awards, which recognize the successes of luminaries in the technology field.

Ms. Cass retired last December as a result of her illness.

Born in San Francisco, Ms. Cass graduated from Lowell High School at age 16 and graduated from the University of California.

She married Tom Cass, whom she met while at Berkeley, a month after graduation. They lived in Washington, D.C., while her husband was in the U.S. Navy, then returned to Berkeley, and later lived in Paris while Mr. Cass completed postdoctoral studies.

Ms. Cass, a nursery school teacher during the early years of her marriage, later stayed at home to raise her young children. When the family relocated to California in 1970, she was guided to Ladera by her aunt Fanita Stendell, then secretary of Ladera School.

Ms. Cass became active as a parent volunteer at Ladera School. When her children were older, she began volunteering at the Resource Center for Women/Career Action Center in Palo Alto.

Her husband said her skills as a homemaker carried over into her professional life. She had a way of making everyone feel comfortable and welcome, he said, and as a hostess, she was always ready to accommodate one more.

Ms. Cass is survived by her husband of 49 years, Tom Cass; her mother, Norma Stendell of San Jose; a son, Peter Cass of Menlo Park; a daughter, Carin Zimmerman of San Francisco; and three granddaughters.

According to her wishes, no services were held.

Diane Green Out At VMWare

Written by Sean Murphy. Posted in Founder Story, skmurphy

I was sorry to read the “VMware Announces Change in Executive Leadership” press release today from EMC.

VMware’s Board of Directors announced today that it has made a change in the leadership of the company with the departure of Diane Greene as President and CEO. VMware’s Board of Directors has appointed Paul Maritz as President and CEO of VMware effective immediately.  Maritz was also named to VMware’s Board of Directors.

I heard her speak at a October 2006 Fireside chat at TiE and was extremely impressed by her low key style and forthright manner. She also said a number of smart things and as I blogged back then “I got a real sense of her as a genuinely caring leader (what Jim Collins would call a “Level 5 Leader” ).”

I always hate to see a founder get ousted from a company, especially one that’s still wildly successful (VMWare is expected to grow revenue almost 50% this year over last). I am interested in her perspective on events: she was against VMWare being acquired by EMC, mentioning it as one of the two “blackest days” she faced at VMWare during the Fireside chat, so I look forward to her being able to speak more candidly about the last few years once she is fully separated from EMC.

Update July 12: Ho Nam at Altos Capital has an interesting take–especially for a VC, but Altos is an unusual shop–in his post “Ousting the Founder.

I was shocked to learn this week that Diane Greene, the co-founder and CEO of VMWare was ousted. I was not alone. Except for senior management (who found out very late, the night before) the employees of VMWare read about it, just like I did on Tuesday morning. [...]

As co-founder and CEO, Diane Green built one of the all time great successes in Silicon Valley. Very, very few companies ever reach $1B in revenues. Even fewer in the technology industry. Even fewer in the software industry. And even fewer ever exceed $10B in market cap.

Why the hell would you fire her?? No, don’t tell me…I’ve heard all the reasons. VCs oust founders all the time. I’ve been in plenty of board level discussions around this topic! It’s almost a rite of passage in Silicon Valley. As a founder, you start a company, get VCs to fund you, recruit a “world class” management team…and eventually, find your replacement (or get ousted).

What people seem to miss, however, is that just about every great company ever created – in technology as well as low-tech, was built by a founder (or a CEO who happened to join the company very early in its growth phase) and a team of dedicated people who grew with their companies.[...]

I’d rather take my chances with the people who built the business and grew their companies than the “professionals” – the hired guns – the mercenaries – coming in, after the fact, to “fix” things or to “take it to the next level.”

We tell all of our companies this – if you want to build the leader in your industry, you have to have the world’s leading experts in your field working for you. But do NOT expect to find them outside of your company. Someone senior from the outside won’t come in to show you the way. They won’t save you.

What was Heroic Must Become Routine

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

I gave a talk on October 16 of last year at the KASE/KIN Entrepreneur Academy on “After Launch, Now What.” My theme was “What was once heroic must become routine” (podcast is here, it’s about 16 minutes if you would like to listen).

I was reminded of it when I came across the famous “This is Still a Start-Up” E-mail from June 2000 by Brendan Barnicle at MyLackey.com. Excerpts with my comments intermixed follow, along with some articles that detail how the story ended.

It is now 6:45 pm and there are only 12 people in our office. We have 65 people that work here in Seattle. This is totally unacceptable.

Barnicle is no stranger to hard work himself–he graduated cum laude with a B.A. in government from Harvard University and a J.D. from the University of Washington–but he seems unable to find the right words or policies to motivate his staff. Most importantly, he doesn’t put himself in the boat with them. It may be effective to criticize one or two individuals privately for poor performance, but when you start to berate the entire company via an e-mail it’s time to look in the mirror. Also, he is measuring an input (time in the office) not outputs. To build a successful start-up team you have to hold the team accountable for results, when you get too much into the “how” you may preclude them from finding a better way.

This company has far too much very important work to do to have virtually empty offices at 6:45 pm. If anyone thinks that everything we need to do as a company can be accomplished within an 8 hour day, then I think they fail to understand the scope and complexity of our venture. Anyone harboring such illusions should seriously consider a career change. I am sure that I could point to tasks for every single person in this company that would merit working past 7 pm every single night.

This for me is where he goes seriously off the rails. Now that MyLackey has launched and is scaling, what’s needed are systems and a business model that generates a profit without constant heroics on the part of the staff. They need scorekeeping mechanisms that are visible to everyone and allow each group to integrate their efforts into a profitable whole: dashboards and a workflow system that pinpoint what each person needs to be doing. By the time you reach a headcount of 65 you can’t have the CFO/co-founder running around telling everyone what to do. If you are a founder and find yourself exhorting everyone to work harder you should stop immediately and figure out what’s gone wrong.

We have an amazing lead on an outstanding business, but it will not last forever and we must move faster. As some of you know, we are lagging behind our revenue goals. We need everyone in every department working every day to meet and exceed these goals. We have similar goals in development, sales, business development, marketing, operations and every other aspect of our business.

What’s interesting is that at the time he is writing this, and certainly in subsequent conversations with his venture capitalists, he is asking for more money for expansion when he can’t get his Seattle operation profitable. I know that we have all learned the lessons of the dotcom era: expenses follow revenue, nothing new ever works, you can’t lose money on a product or service but make it up in volume.

This is not a bank; this is not Boeing. This is a start-up and we are all expecting to be rewarded for taking the risk of a start-up. But, there will be no rewards without exceptional effort.

There are normally only rewards for exceptional results. Effort and risk taking are necessary but only results are sufficient.

In transition from heroics you need a system that accumulates sustainable individual efforts in the same direction so that you actually get results. You can’t rely on heroics once you are scaling the company. If you are reading this blog you have probably left a big company where they had process, metrics, and dashboards and you are thinking to yourself “I don’t want anymore of that.” So as little of that as possible is probably a good idea, but just assuming that folks will do the right thing without guidance and feedback when there are more than a dozen on the team is a recipe for disaster.

Parts of the e-mail that was published were disputed as fabrications by MyLackey representatives. A provocatively titled article “Who Wants to Play ‘Which Dot-Com is Next to Die?‘” in the June 23rd 2000 Business Week (about a provocatively titled website) a paragraph was devoted to the MyLackey E-Mail, ending with:

A spokeswoman for MyLackey.com confirms that the e-mail did come from Barnicle, but says Kaplan’s posting of it had been “corrupted in some places.” She won’t elaborate on what that means.

An article in the June 22, 2000 edition of the Seattle Stranger entitled “The Boss’ Lackey

A spokesperson for Mylackey, Howard Barokas, called the e-mail “bullshit,” saying it was a tampered version of Barnicle’s original message. Barnicle himself told The Seattle Times that forcing employees to work 10 1/2-hour days was not part of the original e-mail.

However, neither Barnicle nor Barokas disputed any other part of the tirade, including a warning that the company was “lagging behind” its “revenue goals.” Mylackey recently grabbed $6.5 million in funding to expand its operations in other cities.

A May 5, 2000 article in the Seattle Post-Intelligencer “MyLackey to use capital to enter 11 new markets” noted (Bold in original):

MyLackey.com competes against Seattle-based ServiceStop, Alexandria, Va.-based VIPDesk.com and Denver-based Concierge Confidant. Earlier this week, ServiceStop announced new vendor agreements with Wondermaids, Cookies By Design, Gordon Biersch, Malesis Flowers and White’s Mobile Detail, bringing the total number of vendors to 250. The company, which has 50 corporate customers in Seattle, also announced the opening of a new office in San Francisco.

Only VIPDesk.com survives today. Their business model allows educated people to work from home part time. A far cry from cleaning houses on demand. A Tue Oct 24, 2000 article announces the shutdown–probably inspired by some 9/11 induced sobriety since they hadn’t run out of money but realized that that didn’t have a business model that was profitable.

With a catchy name, an aggressive marketing campaign and $8 million in financing, MyLackey.com appeared to be a rising star in the Seattle Internet scene. But when it came time to make money, the online errand service fell far short. So co-founder Brian McGarvey made the unpleasant decision Friday to pull the plug on the business and lay off its entire staff of 85 employees. [...]

MyLackey.com. The company, which raised a $6.5 million round of financing led by WaldenVC in April, could not persuade investors to provide more capital for the company’s expansion plans. So instead of blowing through the remaining cash, McGarvey and the executive team decided to close down.

“It has been a phenomenal ride,” said McGarvey, 32, who co-founded MyLackey.com just 16 months ago. “Of course, we could have done some things better. But who would have known. It had never been done before, and it wasn’t like there was a book you could open up for the answers.”

He said the company would not file for bankruptcy and employees will receive salaries for the rest of the month and benefits for the remainder of the year. “I still think this is a great idea and a great business,” said McGarvey, who is now consulting with Internet entrepreneurs. “But we just didn’t have enough time.”

Craig Weindling, owner of Smiley Dog pet food in Shoreline and a MyLackey.com service provider, said MyLackey.com is a classic example of a company that grew too big too fast. He said his 8-year-old company had opportunities to grow faster, but he refused to overextend the business.

“I don’t think the Internet companies are any different than other businesses,” said Weindling, whose three-member company is profitable. “If you don’t cover your bases, you ain’t going to make it.”

I am sorry to spend so much time recapping a dotcom era failure, but I encounter more and more entrepreneurs who are either unaware of, or oblivious to the lessons we all learned the hard way from 2001 to 20004 or so. We are a ways from a bubble, but too many folks seem to think an infusion of new capital will solve all of their problems, or that it’s the only thing holding them back.

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