Archive for February, 2010

Quotes for Entrepreneurs – February 2010

Written by Sean Murphy. Posted in Quotes, skmurphy

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“When two men in business always agree, one of them is unnecessary.”
William Wrigley Jr.

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“Your brand is the promise that you keep.”
Kristin Zhivago

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“Plans are made, unmade, revised, and recast through action and interaction with others on a daily basis.”
Saras Sarasvathy

See also “Saras Sarasvathy’s Effectual Reasoning Model for Expert Entrepreneurs

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“Ask for input only if you plan to do something with it or about it.”
Richard Moran “Nuts, Bolts, and Jolts

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“Simple ain’t easy.”
Thelonious Monk

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“One competitor to customer development is a co-founder’s belief that product development, in and of itself, creates value.”
Sean Murphy

See also “Customer Development Proceeds in Parallel with Product Development

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“Sometimes I am blocked by things I can see, other times by things I cannot. Too often, it’s just my fear of the unknown.”
Sean Murphy in in “Iron Bars, Plexiglass, and Masking Tape

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“From a distance you look like an aircraft carrier, but as you get closer it becomes clear you are really a thousand canoes. ”
Rick Munden recounting a vendor’s description of TI

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“Opportunity is missed by most people because it is dressed in overalls and looks like work.”
Thomas Edison

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“The surest way to be cheated is to think oneself cleverer than other people.”
La Rochefoucauld

Use Wikis for Team Projects

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

  1. Wikis dissolve voice and authorship. Use them where there are rewards and incentives at a team level, where a team is being held accountable for a result.
  2. Blogs and forums preserve voice and authorship. Use them where knowing who said what is important.
  3. Start with frequently updated information that is also frequently accessed:
    • Meeting agendas and minutes (avoiding the bottleneck of the designated note taker and/or overlapping amendments in different e-mails that then have to be reconciled),
    • Early and still evolving specifications
    • Project status in a dynamic environment
  4. Projects end, products are shipped and end of life, problems get solved. At some point in the business world many wikis must be congealed into a document or document set and either archived, frozen as a static HTML tree, or transferred to a content management system where more formal revision and change control methods are more appropriate. Unlike Internet wikis, older project or product wikis are often better preserved as read only archives.
  5. Wikipedia anchors a lot of expectations in a use case that is rarely appropriate to a team that is not building an encyclopedia. Hope that useful content will be curated in a general purpose wiki is unlikely to be satisfied.
    • Use many small team level wikis, each for a distinct project or purpose, where the team membership is clear and there are shared incentives for cooperation and success.

EDA Chiefs Hazard No Guesses on 2010 Market

Written by Sean Murphy. Posted in EDA, skmurphy

I covered the EDAC CEO Panel last Thursday for EETimes, what follows is a copy of the article I wrote for them “EDA Chiefs Hazard No Guesses on 2010 Market (02/19/2010 7:12 PM EST)” It differs from the version on-line at EET only in that I have added some links for context.

SAN JOSE, Calif.—With the EDA industry stuck in negative growth, leaders of its three largest firms struck a somber note Thursday (Feb. 18) during a panel discussion at the EDA Consortium (EDAC)’s Annual CEO Forecast and Industry Vision event.Panelists addressed trends affecting industry growth, but left forecasts for the upcoming year to Jay Vleeschhouwer, a senior software analyst with Ticonderoga Securities, who chaired the panel.

Vleeschhouwer predicted “mid-single-digit growth for the year” and was the only one to offer a prediction. Also on the panel were Aart de Geus, Chairman and CEO of Synopsys Inc., Lip-Bu Tan, president and CEO of Cadence Design Systems Inc., Walden Rhines, chairman and CEO of Mentor Graphics Corp, and John Kibarian, president and CEO of PDF Solutions Inc.

Robert Gardner, executive director of EDAC, pointed out that in spite of seven quarters of declining industry revenue, buying a market basket of EDA stocks in Jan. 1, 2009. and holding them for a year would have been a good investment.

While the EDA executives did not speculate on future industry growth, they did offer recipes for growth for their own firms. Tan characterized Cadence as a sales-driven company that is listening to its customers and their need for productivity and profitability. De Geus identified Synopsys as an R&D company that would continue to innovate to maintain leadership. Rhines suggested that Mentor excels at identifying niche applications to allow it to be the leader for those segments. Kibarian positioned PDF as key to semiconductor industry plans to transition to new process nodes at 45 nanometer and below.

Rhines pointed out that engineering headcount growth was 4 percent a year, which might be a constraining upper bound on industry growth unless new market segments can be opened. The panel agreed with the need to explore new market segments, but cautioned that new segments require sustained effort and considerable patience.

In response to question by Vleeschhouwer on whether EDA firms should further consolidate in response to consolidation in semiconductor industry, Rhines said he rejected the premise of the question. He said that in spite of many high-profile mergers and acquisitions in the semiconductor industry it had been on a consistent path of de-consolidation for the past 35 years. He supported this by noting that the market share for the top firm, the combined share of the top five, and the combined share of the top 10 firms had been constant or decreasing over the last 35 years. He added that every decade or so another major technology was driven by a new entrant, allowing them to become a top 10 player. He cited Qualcomm Inc.’s breakthrough in 2008 as the first fabless chip vendor to crack the semiconductor industry’s top 10 as the most recent example of this trend.

When asked by Vleeschhouwer to speculate on growth in the second half of 2010, all of the executives demurred, citing a lack visibility and uncertainty both in the electronics industry and the national economy.

The audience was equally subdued and did not have any questions for the panel.


Updates & Other Coverage

Iron Bars, Plexiglass, and Masking Tape

Written by Sean Murphy. Posted in 3 Early Customer Stage, skmurphy

I can always tell when I am feeling stressed because I dream about being back in school taking an exam I haven’t studied for. Although to be candid some of those dreams are closer to suppressed memories than unrealized anxieties bubbling up from my unconscious.

But a year or two ago I had a dream a while ago about a tiger that I keep turning over in my mind.

A tiger is pacing in a cage, but it’s not a square cage, it’s more of a maze.

It’s not in a zoo, more like a warehouse or strangely configured storage unit. The floors are smooth cold concrete.

The tiger is trapped in a maze of walls of iron bars and plexiglass.

The tiger starts out in a section that’s primarily iron bars with a few walls of plexiglass.

It leaps against the bars and can’t break out.

Then it sees what appears to be an opening and runs into a plexiglass wall, which it can’t break through either.

But running into the the plexiglass a few times makes it more cautious.

So it paces,
alternately sniffing and growling,
confused and angry,
trying to find a way out.

Finally it comes to an opening that just has strip of masking tape on the floor.

And there it sits, convinced that this is some new barrier that’s also uncrossable.


Any resemblance to recent legs of your entrepreneurial journey (or mine) is entirely coincidental.

Better, Impossible, and Unthinkable Products

Written by Sean Murphy. Posted in 1 Idea Stage, 4 Finding your Niche, skmurphy

I think that there are better products, impossible products, and unthinkable products.

Better products follow an established trajectory in an industry. They are “15 minutes ahead” and the easiest to sell…for a while. Examples include:

  • Faster computers with larger memory
  • Cars with better gas mileage

Impossible products find a way to relax one or two constraints that designers of better products have taken as fixed. They are harder to sell, not so much because they are hard to understand but difficult to believe, prospects will ask you “What’s the catch?” Examples include:

  • ATM Machines replacing human tellers to dispense cash
  • Ethernet over twisted pair

Unthinkable products are typically developed by someone from outside the target industry or are the result of repurposing a product from another industry. Their developers were not handicapped by the mental roadblocks that come from following established practices and patterns in an industry. They can be extremely difficult to get prospects to understand–much less believe in–as they are almost always incompatible with current practices and infrastructure. But they can create an entirely new category of product. Examples include:

  • IDDQ testing in semiconductors
  • The Reebok Pump shoe
  • Henry Ford realizing that a meat packing plant’s “disassembly line” could be run backward to assemble a car.

What are you working on?


See also

George Grellas Answers Questions at Feb-16 Bootstrapper Breakfast in Sunnyvale

Written by Sean Murphy. Posted in Events, skmurphy

steaming hot coffee and serious conversationJoin us tomorrow, Tuesday, February 16, in Sunnyvale where George Grellas will present a short legal guide for entrepreneurs. George is a veteran Silicon Valley startup business lawyer who heads a boutique firm that specializes in early-stage technology startups. Since 1984, as a founders’ lawyer, George has worked with thousands of entrepreneurs in helping them with their strategic planning, entity formation, IP protection, funding, acquisitions–the range of their startup legal needs for both deals and disputes.

George’s style is practical, direct, and down-to-earth, emphasizing a strong working knowledge of technical issues (including tax) explained in a manner that is made understandable and helpful for those new to startups as well as for seasoned entrepreneurs. He is the author of the Startup Law 101 series of tutorials for founders and entrepreneurs.

RegisterBring your questions for George and the other entrepreneurs around the table. As always, there will also be time for your general questions and concerns.

Update Feb-17-2010: George made some thought provoking opening remarks on his visit, in particular:

Startups are interesting. It’s a rather grim time in a macro-economic sense but for early stage startups it’s a pretty amazing time because the infrastructure has been built out. There is a lot of opportunity to launch companies creatively without the capital intensive needs that were there a decade or two ago.

Of course there are many situations where you have capital intensive needs and that occupies the traditional VC realm. But there is a huge and expanding area in the last decade, and the last few years in particular, where with creativity and innovative focus on areas like enterprise people can leverage very interesting business models in ways that used to be unthinkable without a lot of money.


Related Links:

Customer Development Helps Entrepreneurs Assess the Value of an Invention

Written by Sean Murphy. Posted in Customer Development, skmurphy

Colin Cherry in “The Telephone System: Creator of Mobility and Social Change” makes the point that the full impact of an invention is very difficult to predict (emphasis added).

Inventions themselves are not revolutions; neither are they the cause of revolutions. Their powers for change lie in the hands of those who have the imagination and insight to see that the new invention has offered them new liberties of action, that old constraints have been removed, that their political will, or their sheer greed, are no longer frustrated, and that they can act in new ways. New social behavior patterns and new social institutions are created which in turn become the commonplace experience of future generations.

Such realization does not come easily, quickly, or even “naturally,” for the new invention can first be seen by society only in terms of the liberties of action it currently possesses. We say society is “not ready,” meaning that it is bound by its present customs and habits to think only in terms of its existing institutions. Realization of new liberties, and creation of new institutions means social change, new thought, and new feelings. The invention alters the society, and eventually is used in ways that were at first quite unthinkable.

I think that we are now at a transition point in our use of web applications: the larger challenge for software entrepreneurs is not inventing a new technology, but determining how to apply the last two decades (Tim Berners-Lee had the first webserver working in 1990, SLAC had one in 1991) of invention to business problems in new ways, many that would have been unthinkable earlier.

This is what customer development helps entrepreneurs to understand: how to apply inventions to problems that customers will pay them to solve.

New Firms in Silicon Valley

Written by Sean Murphy. Posted in First Office, skmurphy

Companies names have sure changed in the last year or so. I was noticing today how many signs outside of office buildings seem to be branch offices for these firms:

  • Move In Now
  • First Month Free
  • Your Name Here
  • Available for Lease
  • Space for Rent

Here are two directories that list available office space for Silicon Valley:

We use Pacific Business Centers and have been happy with them.

I Don’t Understand, We Won the Argument, Why Didn’t We Win The Sale?

Written by Sean Murphy. Posted in 3 Early Customer Stage, Customer Development, Rules of Thumb, skmurphy

Three true stories:

We were driving back from a sales call and the CTO said “I don’t understand. We won the argument. Why didn’t we win the sale?” He was very disappointed at their stupidity and stubbornness.

Different startup, I had been recruited by a new CEO as a part of a turnaround. A team had gone off to meet with a new prospect and I asked the sales rep how the meeting had gone. He said “It was one of those meetings where the actual purpose of the meeting became figuring out who the smartest person in the room was: one of our guys or one of theirs. After a while it was time to leave.”

About a decade ago while I was still at Cisco I got invited to a large meeting with an outside vendor. Cisco had two software vendors providing similar but incompatible tools that solved the same problem in different ways. Times were tight:  folks were being laid off and projects were getting canceled. Our inability to be able to share scripts and models between these two tools meant that management had decided we needed to standardize on one. This was a meeting for all of the supporters of tool A to compare notes and develop a common set of reasons why it should be the standard. The vendor sent a large contingent and there were perhaps two dozen engineers from different groups who were concerned. What a disaster. The vendor essentially started off by implying that the users had done a poor job of educating management as to the value of the tool and listed a number of improvements and techniques that they had “taught” us. After perhaps ten or fifteen minutes, someone spoke up and said, “Hey, wait a minute, that was an idea that we gave you! You incorporated into version 7, but we had that first.” The meeting degenerated into an angry shouting match and the default plan became engineers would refuse to switch to the other tool. Not a winning strategy in a downturn as it turned out.

Diagnosis: in each case the startup didn’t view the customer as a partner, and somehow believed that they would succeed by convincing them that they were smarter. This is called the “bringing fire to the savages” sales and marketing model. Variants include viewing your product as a luxury good “not everyone can own our product” or an IQ test (“not everyone is smart enough to be able to use our product”). None of them are particularly effective in generating revenue or reference customers but they do preserve the world view of the founders that they are all a bunch of really smart people.

Three specific antidotes:

  1. Focus on understanding the customer’s problem. Make sure you can describe their problem before you start to describe your solution. Test for other symptoms that they have not mentioned that you have heard from other customers. Do all of this before you mention any features or benefits of your offering.
  2. Understand specifically what steps they have already taken to address the problem and what constitutes their perception of the status quo.
  3. When you propose your solution, make it as compatible with their current work process and practices as you can, and incorporate any of their ideas into your product roadmap that you believe may benefit other customers or prospects. This minimizes their transition cost and their sense of loss.

We help software firms explain their new product to the right prospects in ways that convince them to become reference customers.  If you have a new product and are having difficulty getting people to understand what it can do, please give us a call: we can help.

Related posts:

Verdafero Profiled by SJ BizJournal “Sustainability Planning Over the Web”

Written by Sean Murphy. Posted in skmurphy

I was pleased to see that Verdafero, a firm we have been advising for about a year, was selected last Friday by the San Jose Business Journal for their “The Pitch” column. The article, “Palo Alto’s Verdafero Offers Sustainability Planning Over the Web,” ran in the February 5th print edition:

THE BUSINESS: Verdafero has developed a software-as-a-service platform that can be used for sustainability planning, energy efficiency and carbon management services for small and medium enterprise businesses. Customers use the tool to develop a sustainability plan by analyzing best practices and specific savings potential in their energy and material use as well as the environmental impact of their products and associated waste byproducts. Verdafero says it helps its customers stay ahead of supplier approval requirements, increase competitive advantage and improve profitability through cost reductions across their business operations.

MANAGEMENT TEAM: CEO Merc Martinelli is a certified sustainability consultant and previously worked at Cisco Systems Inc. where he led the new product introduction department within the enterprise line of business. Chief Operating Officer Alastair Hood is a business, technology and energy efficiency consultant, and he has worked with emerging companies in the U.K., Ireland and Australia. Previously he worked at Agilent Technologies Inc. and was a founding team member and development director of Nanosight Ltd., a U.K. nanotechnology startup, where he helped raise in excess of $10 million in startup funding.

A note on the name Verdafero: In the global language Esperanto: Verda = Green and Afero = Business. Verdafero™ – We Green Business.

Related posts

  • Visualizing Sustainability a list of 138 different visualizations of sustainability. Hat tip to David Sibbet who notes “a full panorama from simple to complex, mapping onto every conceivable base map. I’ve contended for a long time that a sustainability mindset requires systems thinking, and that systems thinking requires visual thinking—even if the display is just between your ears.
  • Green Software Unconference

Saras Sarasvathy’s Effectual Reasoning Model for Expert Entrepreneurs

Written by Sean Murphy. Posted in 1 Idea Stage, 4 Finding your Niche, Customer Development, skmurphy, Startups

Update Feb-24-2011: Since I first wrote this in 2010 the Effectuation.Org site has been considerably upgraded and contains a lot more information on Saras Sarasvathy’s research.

Recapping ideas, papers, and books that had changed my life yesterday reminded me of Saras Sarasvathy’s Effectual Reasoning Model from her 2001 paper “What Makes Entrepreneurs Entrepreneurial” (There is an annotated version on the Khosla Ventures site at http://www.khoslaventures.com/presentations/What_makes_entrepreneurs_entrepreneurial.pdf )

What follows are some quotes from “What Makes Entrepreneurs Entrepreneurial.”

Effectual reasoning, however, does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with.

Effectual thinkers are like explorers setting out on voyages into uncharted waters.

All entrepreneurs begin with three categories of means

  1. Who they are–their traits, tastes,and abilities;
  2. What they know–their education, training, expertise, and experience
  3. Whom they know–their social and professional networks.

In our “Idea to Revenue” Workshop we talk about three kinds of capital that startups begin with: intellectual, social, and financial. We don’t call out what she refers to as “human capital” or “who they are–their traits, tastes, and abilities” as a resource but instead encourage teams to “begin in phase two.” That is, to build on prior accomplishments and long term interests so that early customers view the startup as a continuation of earlier efforts and focus.

But I like this model of bootstrapping entrepreneurs as foragers: living off the land as hunter-gatherers until they can find a market to homestead. Bootstrappers have to start from where they are and search for opportunities. Pasteur advised that “Chance only favors the prepared mind” so you have to open yourself up to possibilities and be prepared to be surprised (which is another way of saying you have learned something new). Some more quotes from her paper:

Using these means, the entrepreneurs being to imagine and implement possible effects that can be created with them. Most often they start very small with the means that are closest at hand and move almost directly into action without elaborate planning.

Plans are made and unmade and revised and recast through action and interaction with others on a daily basis. Yet at any given moment, there is always a meaningful picture that keeps the team together, a compelling story that brings in more stakeholders and a continuing journey that maps uncharted territories.

Eventually certain of the emerging effects coalesce into clearly achievable and desirable goals–landmarks that point to a discernible path beginning to emerge from the wilderness

Seasons entrepreneurs, however, know that surprises are not deviations from the path. Instead they are the norm, the flora and fauna of the landscape, from which one learns to forge a path through the jungle. The unexpected is the stuff of entrepreneurial experience and transforming the unpredictable into the utterly mundane is the special domain of the expert entrepreneur.

One of the reasons that we run the Bootstrapper Breakfasts as 90 minute unconferences–where folks introduce themselves and put issues on the table they would like to discuss–is that it keeps everyone in an entrepreneurial frame of mind:

  • When you hear someone describe a challenge that they are facing, it gives you much better insight into their thinking and allows you to evaluate what they might be like to work with.
  • Often as not they are describing a common problem, or aspects of a common problem. Hearing their perspective just on the problem can give you new insights into how to solve it.
  • It’s good practice to learn how to ask for advice and insight. Entrepreneurs need to do a lot of that in the early market especially.
  • Explaining how you managed an issue or situation can deepen your understanding of you solution, it forces you to put it into terms others can use and understand. This is good practice for scaling up (e.g. adding your first employee).

Sarasvathy stresses the cooperative nature of entrepreneurship in the paper, a perspective that I share. Often an entrepreneur is attempting to obsolete an aspect of the status quo, but they have much less competition and much more opportunity for collaboration than is appreciated.

Markets are stable configurations of critical masses of stakeholders, who come together to transform the outputs of human imagination into the forging and fulfillment of human aspirations through economic means.

Effectual reasoning may not necessarily to increase the probability of success of new enterprises, but it reduces the costs of failure by enabling the failure to occur earlier and at lower levels of investment.

Entrepreneurs are entrepreneurial, as differentiated from managerial or strategic, because they think effectually; they believe in a yet-to-be-made future that can substantially be shaped by human action; and they realize that to the extent that this human action can control the future, they need not expend energies trying to predict it. In fact, to the extent that the future is shaped by human action, it is not much use trying to predict it–it is much more useful to understand and work with the people who are engaged in the decisions and actions that bring it into existence.

She highlights three key differences between effectual reasoning and traditional startup management models:

  • Risk taking
    • Traditional: expected return, work the plan to deliver results to your investors (“Ready Aim Fire” can become “Aim–not big enough–Aim–not big-enough–Aim…”).
    • Effectual: affordable loss, make many small mistakes as early and cheaply as possible to speed learning (“Ready Fire Steer“)
  • Focus:
    • Traditional: competition
    • Effectual: strategic partnership (especially with early customers)
  • Value Creation
    • Traditional: rely on pre-existing knowledge to aim for a known market you can dominate and exploit
    • Effectual: leverage contingencies; create opportunities as you map a new market

She goes into some detail on the “affordable loss principle” and offers extracts from an interview with an expert entrepreneur’s approach to a new market:

While managers are taught to analyze the market and choose target segments with the highest potential return, entrepreneurs tend to find ways to reach the market with minimum expenditure of resources such as time, effort, and money. In the extreme case, the affordable loss principle translates into the zero resources to market principle. Several of the expert entrepreneurs I studied insisted that they would not do any traditional market research, but would take the product to the nearest possible potential customer even before it was built. To quote but one of them, “I think I’d start by just… going… instead of asking all the questions I’d go and say.. try and make some sale. I’d make some… just judgments about where I was going — get me and my buddies — or I would go out and start selling. I’d learn a lot you know..which people.. what were the obstacles.. what were the questions.. which prices work better and just DO it. Just try to take it out and sell it. Even before I have the machine. I’d just go try to sell it. Even before I started production. So my market research would actually be hands on actual selling. Hard work, but I think much better than trying to do market research”.

In finding the first customer within their immediate vicinity, whether within their geographic vicinity, within their social network, or within their area of professional expertise, entrepreneurs do not tie themselves to any theorized or pre-conceived “market” or strategic universe for their idea. Instead, they open themselves to surprises as to which market or markets they will eventually end up building their business in or even which new markets they will end up creating.

This is also an approach that favors older entrepreneurs to the extent that they have larger social networks (based on more shared work experience with more people) and deeper professional expertise. The one caveat is that they have to be open to new possibilities and not be blinded by what they “know” to be true in the face of new information.
This 2001 paper offers another perspective on bootstrapping entrepreneurship that is independently derived and predates “Four Steps to the Epiphany (2003)”, “Blue Ocean Strategy(2005)”, and the “Sales Learning Curve (2004).” But all four are clearly addressing different aspects of the same core paradigm that takes a scientific or hypothesis driven approach to new products and new markets.

I will leave with two final quotes from the paper which highlights the value of establishing enduring relationships.

Expert entrepreneurs [...] are actually in the business of creating the future, which entails having to work together with a wide variety of people over long periods of time.  [They fill their future] with enduring human relationships that outlive failures and create successes over time

This is largely ignored in our entrepreneurship curricula which tend to focus on market research, business planning, new venture financing and legal issues. As far as I know no entrepreneurship programs offer courses in creating and managing lasting relationships or stable stakeholder networks, nor on failure management.

Related Posts

Articles, Ideas, and Books That Have Changed My Life As an Entrepreneur

Written by Sean Murphy. Posted in Books, skmurphy, Tools for Startups

This is a start articulating a set of resources that are for the most part not yet part of entrepreneurial thinking but that have had a significant impact on my perspective. I welcome any suggestions or lists from readers for what has influenced you, and opened you to new perspectives on your entrepreneurial journey.

What follows are my two year old answers, in no particular order to a question on Hacker News:  Articles, Ideas, Books and/or Concepts that have changed your life.

I developed the list thinking about my approach to business and entrepreneurship, which is narrower than “life” and accounts for a lack of spiritual, marital, self-mastery, and personal improvement books and ideas.

  • Myers-Briggs Model for Personality
  • Four Steps to the Epiphany” by Steve Blank
  • John Boyd’s OODA Loop as a model for competitive decision making
  • Decision Analysis techniques: in particular decision trees, expected value of perfect information, and “good decision, bad outcome.”
  • BATNA (best alternative to a negotiated agreement) concept for negotiation planning
  • Secrets of Consulting” by Gerald M. Weinberg
  • Bionomics: Economy as Ecosystem” by Michael Rothschild
  • SimCity computer game
  • Analysis of Competing Hypotheses methodology
  • wiki (social process) model for small team collaborative document development
  • community of practice model for knowledge management
  • The Moon is a Harsh Mistress” by Robert Heinlein (in particular TANSTAAFL)
  • activation energy, catalyst, and phase change concepts from physics/chemistry
  • Amplify Positive Deviance model from Jerry Sternin (Save the Children)
  • The Empowered Manager” by Peter Block, in particular his trust vs. agreement matrix
  • Crossing the Chasm” & “Inside the Tornado” by Geoffrey Moore
  • Maneuver Warfare Handbook” by William Lind
  • “Change Your Brain, Change Your Life” by Daniel Amen
  • Micromotives and Macrobehavior” by Thomas Schelling
  • Appreciative Inquiry Techniques

Here are a few more techniques or perspectives that I have added upon some further reflection.

Two more after more reflection

  • TacOps computer game – you provide doctrine and guidelines to units with limited intelligence of overall situation but cannot micromanage.
  • Johari Window especially the blind spot and facade.

Great Demo Workshop on March 17 2010

Written by Theresa Shafer. Posted in Demos, Events

Rescheduled due to illness to April 9, 2010 8:15 – 5:00opm

Special Offer for Groups and Organization Members

Discounts are available for members of Bootstrappers Breakfast, Business Marketing Association, Women In Consulting, and organizations sending three or more employees: please contact us for discount codes.

Create and Deliver Surprisingly Compelling Software Demonstrations
“Do The Last Thing First” — the recipe for a Great Demo!

When: Wednesday March 17, 2010 8:15 am – 5:00 pm
Rescheduled due to illness to April 9, 2010 8:15 – 5:00opm
Where: Moorpark Hotel, 4241 Moorpark Ave, San Jose CA 95129

Register Great Demo

This is an interactive workshop with Peter Cohan geared especially for you who demonstrate B-to-B software to your customer and channels. Bring a copy of your demo and be prepared to present it — we’ll help you turn it into a surprisingly compelling demo!

Cost (includes breakfast, lunch, copy of Peter Cohan’s “Great Demo!” book):

  • Early Registration: $536
  • After March 4: $560

This seminar outlines a framework for the creation and delivery of improved demos and presentations to enable increased success in the marketing, sale, and deployment of software and related products. Whether it’s face to face, in a webinar, as a screencast, or as a self-running demo the ability to present the key benefits of your software product is essential to generating prospect interest and ultimately revenue. Peter Cohan of The Second Derivative gives us the recipe for a Great Demo!

“I am confident that with the insights gained from your workshop we will land more customers in fewer iterations.”
Lav Pachuri, CEO, Xleron Inc.

“Peter Cohan’s Great Demo method really works. It helped us win DEMOgod, and it has allowed us to explain our offering much more clearly to prospects.”
Chaim Indig, CEO, Phreesia
(See “DEMOgod Winner Phreesia Praises Peter Cohan Training“)

About The Speaker: Peter Cohan, Principal at Second Derivative
Community Web Site: www.DemoGurus.com

Peter Cohan is the founder and a principal of The Second Derivative, a consultancy focused on helping software organizations improve their sales and marketing results. In July 2004, he enabled and began moderating DemoGurus®, a community web exchange dedicated to helping sales and marketing teams improve their software demonstrations. In 2003, he authored Great Demo!, a book that provides methods to create and execute compelling demonstrations. The 2nd edition of Great Demo! was published March 2005.

Before The Second Derivative, Peter founded the Discovery Tools® business unit at Symyx Technologies, Inc., where he grew the business from an empty spreadsheet into a $30 million operation. Prior to Symyx, Peter served in marketing, sales, and management positions at MDL Information Systems, a leading provider of scientific information management software. Peter currently serves on the Board of Directors for Collaborative Drug Discovery, Inc. and the board of advisors for Excellin, Inc. He holds a degree in chemistry.

Peter has experience as an individual contributor, manage and senior management in marketing, sales, and business development. He has also been, and continues to be, a customer.

Agenda:

  • 8:15 AM Breakfast & Registration
  • 8:30 AM Workshop begins
  • Noon Lunch & De-brief
  • 1 PM Advanced Topics
    • multiple solution demos
    • presenting to a mixed audience with different needs or information requirements
    • vision generation demonstrations
    • handling bugs, crashes, and time challenges.
  • 5 PM Wrap up

Seating is Limited These are intensive sessions and we ask that you arrive at least 15 minutes before 8:30AM start time to ensure you will have a seat and won’t disrupt the session once it is underway.

For more information: Theresa Shafer 408-252-9676 events@skmurphy.com

Jenny Allen’s Story “I Got Sick Then I Got Better

Written by Sean Murphy. Posted in skmurphy

A client was kind enough to invite me to hear Jenny Allen present an abbreviated but very moving version of her one woman stage play “I Got Sick Then I Got Better” at a luncheon held by the Canary Foundation today. Mrs. Allen spoke candidly of her experience surviving cancer. Two different cancers actually. She was diagnosed with endometrial cancer and underwent a hysterectomy to treat it. Analysis of the tissue from her hysterectomy uncovered stage IIc ovarian cancer.

She is a writer so she kept a diary of her experiences. She went back to re-read her journal page for the day she was diagnosed with ovarian cancer, expecting to find her thoughts and impressions. All she had written was “Very Bad News.” That’s more than four years ago now and in the interim she has turned her emotional turmoil into a funny, painfully honest, and incredibly moving one woman stage play.

It moved me to tears more than once. I would hope to have the same strength of purpose to be able to transmute so much anxiety and suffering into something as honest and funny and uplifting. If you have a chance to see her play, I would not miss it.

And if during these recessionary times you can spare a nickel for improving the early detection of cancer, the Canary Foundation can put it to good use.

Sustaining Is More Important Than Starting

Written by Sean Murphy. Posted in 5 Scaling Up Stage, Rules of Thumb, skmurphy

Literature is mostly about having sex, and not much about having babies; life is the other way round.
David Lodge

Startup pundits have focused primarily on funding events and product launches, and not much about how viable the business model and scale up strategy are. Successful businesses are the other way around.

Jeff Nolan wrote in January 2009 about “Why the TechCrunch Economy Will Falter” noting (bold in original):

“…a fundamental flaw in the startup economy promoted by a wide swath of pundits and proponents, that starting is more important than sustaining.”

Martin Edic in the comments  noted that

The other half of this situation is the ‘pundit’ sites lack of aggressively asking companies exactly how they are going to make money. Endless coverage of start-ups that are more about a gimmick, reiteration of an original technology or an imitation of something else, without questioning the viability of the business model, helps create an environment where typically young entrepreneurs scoff at the need for revenue. When we hit a downturn like this and funds dry up, they are going to fold.

The good news it that most serial entrepreneurs fail at least once and return as much more knowledgeable and pragmatic business owners. So covering failure has its purpose.

It’s taken a little more than a year but Dave McClure notes yesterday in “Subscriptions Are The New Black

We have largely WASTED an entire web decade of time, energy & venture capital on extremely inefficient revenue models.  There have been a few interesting examples of startups acquired in the 00′s for large amounts due to amazing growth (eGroups, MySpace, Skype, YouTube) or advertising potential (aQuantive, DoubleClick, AdMob, RightMedia).  However, mostly the decade has been an uninterrupted string of uninspiring business models and small-time acquisitions of Web 2.0 startups filled with rainbows & unicorns, rather than those based on simple, transactional revenue models.

and he posits two key assertions related to startup business models:

  1. The default startup business model from 2000-2009 was based on growth (aka acquisition) and CPM- or CPC-advertising
  2. The default startup business model for 2010 & beyond will be subscriptions and transactions (e-commerce, digital goods).

What does this mean for the average bootstrapping entrepreneur?

  • More competition as fewer teams bet on “build it and they will come” models and start competing to deliver services that firms or individuals will pay for today.
  • Perhaps less derision when they tell other startup entrepreneurs that they plan to charge right away.
  • Craig Newmark’s answer “Our history is slow, continuous growth. In the race between tortoise and hare, well, we’re the slow guy” to “How Craigslist Spread” is worth keeping as your screen saver quote.

Related posts

Two Customer Development Examples: SixApart & WowzaMedia

Written by Sean Murphy. Posted in Customer Development, skmurphy

I answered a question recently for real examples of teams using customer development approaches to software startups and drafted the following reply
First Example: Michael Sippey of Six Apart

I blogged about an August 2006 talk by Michael Sippey of SixApart in January of 2007 at SVPMA (his slides are here http://svpma.org/eventarchives/SVPMA-08-2006-Packaged_Software_to_Being_a_Hosted_Service-Michael_Sippey.pdf )
If you read through Michael’s slides and my notes from his talk you will see that he offers four stories of new product introduction:

  • Moxy, based on getting out of the building and watching how customers used other products
  • A next generation jukebox, based on raising a lot of money and building something that was cool but not compelling
  • TypePad’s “Big Bang” where they launched a major release with many new features, some of which didn’t work
  • TypePad’s transition to a fast iteration model where they launch a few features on a two week cycle

Sippey never mentions Steve Blank or customer development but he is following many of the key methodology principles of customer development in his two success stories. For example, here are some of his key questions (note the focus on getting out of the building, a sequence of demos/prototypes, the focus on customer pain/problem, and asking the customer to prioritize features):

How we did it.

  • Find 30 prospects. Set up meetings.
  • Demo your idea / alpha / beta / product.
  • Ask questions. (Lots of questions.)
  • Take copious notes. Score your results.

Critical questions.

  • Do you have this problem?
  • Does this solve your problem?
  • How much would you pay for this?
  • Base hit or home run?
  • How would you spend $100 of our money?

Second Example: Dave Stubbenvol of Wowzamedia

I interviewed Dave Stubbenvol in January 2008. Dave is CEO of Wowzamedia and a five time serial entrepreneur. Again, without mentioning Steve Blank he outlines how he has followed customer development principles in building Wowzamedia to a successful bootstrapped company. Here is a long excerpt where he outlines their focus on trying things and seeing if they are of use:

Q: It seems like you have had a clear sense of priorities with WOWZA?

With WOWZA our focus is on three key things: making sure that we will be around, making sure that we are meeting customer needs today, and staying flexible enough to meet customer needs for the future.

Q: I talk to many entrepreneurs who take a “if I build it they will come approach.” We met just over a year ago, before you had even launched. Can you talk about the amount of preparation, the strategies, and your implementation plan just to get ready for launch?

This time with WOWZA, launch was sort of a crazy thing for us. We basically started the company because we wanted to explore the possibilities for new applications that emerging media technologies enabled. Originally, we never actually expected to make money with what we built. Not really your typical way of starting a business.

My co-founder and I had prototyped a hybrid video blogging system. It was this unholy hybrid of WordPress, the Adobe Flash Communication Server, and then Flash Media Server. While messing around, we found out that Adobe Flash Communication Server, Flash Media Server was just not good enough. The product wasn’t stable enough, it was unreliable, it had lousy performance, it was ridiculously expensive, and it just was not good enough for us. So, we decided to write our own, and we put that into our product.

Prior to launch we did all the standard things like press releases, some advertising, having reference customers, having customers ready to buy on the launch date, and building up the market. However, we did not pour boatloads of money into the initial marketing. For two reasons: first we figured we would get it wrong at the start, and second we felt that this was a one off product. Our primary intention was to establish the company and build a reputation. We want to be the guys who know what they are doing, tell you the truth, and deliver a damn good product. The truth is with a one off product there are going to be problems, no doubt about it. We went ahead and launched in February 2007, got out there, got press in a couple of places, people came, and we made sales.

These two data points for companies that still around and growing. They don’t mention that they follow “Four Steps” but both are clearly following the key principles of customer development for the customer discovery and customer validation phases.  This should help substantiate that successful firms have followed customer development principles.

We follow them in working with our clients (I should make clear that neither SixApart nor Wowza were or are clients) who are primarily teams of two to five engineers. They find a “scientific approach” to the early market that involves focused experimentation to be very useful.

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