Archive for April, 2010

Quotes for Entrepreneurs – April 2010

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

You can follow @skmurphy to get these quotes for entrepreneurs hot off the mojo wire or wait until the end of the month when they are collected on the blog. Enter your E-mail if you would like Feedburner to deliver new blog posts to your inbox.

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“There was a long silence on the other end, a silence peculiar to conference calls when an entire group stops to think.”
Clay Shirky in “The Collapse of Complex Business Models

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“Ignorance is always ready to admire itself. Procure yourself critical friends.” Nicolas Boileau-Despreaux

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“Whenever you see a spike in self-employment in this kind of economy, you know that is involuntary entrepreneurship,” Jared Bernstein “Defying Forecasts, Job Losses Mount for 22nd Month” (September, 2003)

Cited by Chris Anderson in “The New New Economy: More Startups, Fewer Giants, Infinite Opportunity” (May 2009)

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“Hasten slowly, and without losing heart,
Put your work twenty times upon the anvil.”
Nicolas Boileau-Despreaux

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“Companies aren’t generally structured to access, absorb or utilize customer insights since they are organized by product, not by customer.”
Ranjay Gulati in “Seeing Customers as Partners in Innovation

Full quote:

“Being customer-driven doesn’t mean asking customers what they want and then giving it to them. It’s about building a deep awareness of how the customer uses your product. Companies aren’t generally structured to access, absorb or utilize customer insights since they are organized by product, not by customer.”
Ranjay Gulati in “Seeing Customers as Partners in Innovation

h/t  Mac Fowler

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“Look for an enterprise problem so bad that people will pay you to solve it and let you keep the software“.
Bill Paseman

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“There are really two killer apps for the next era of IT tech: collaboration and correlation”
James Watters in April 11 tweet

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“Honor is like an island, rugged and without a beach; once we have left it, we can never return.”
Nicolas Boileau-Despreaux

Quoted in “Honesty in Negotiations

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“We are like machines made up of redundant components, many of which are defective right from the start.”
Leonid Gavrilov & Natalia Gavrilova in “Why We Fall Apart” (IEEE Spectrum article)

Full quote:

“The quest to understand and control aging has led us, two biologists, to draw inspiration from what might seem an unlikely source: reliability engineering. The engineering approach to understanding aging is based on ideas, methods, and models borrowed from reliability theory. Developed in the late 1950s to describe the failure and aging of complex electrical and electronic equipment, reliability theory has been greatly improved over the past several decades. It allows researchers to predict how a system with a specified architecture and level of reliability of its constituent parts will fail over time.

The theory is so general in scope that it can be applied to understanding aging in living organisms as well. In the ways that we age and die, we are not so different from the machines we build. The difference, we have found, is minimized if we think of ourselves in this unflattering way: we are like machines made up of redundant components, many of which are defective right from the start.

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“Startups explore novel practices in chaotic environments, winnowing them into emergent practices for complex environments.”
Sean Murphy

I was inspired by Steve Blank’s  “startups are the search to find order in chaos” and influenced by Dave Snowden’s Cynefin framework

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“It is better to ask some of the questions than know all of the answers”
James Thurber from ‘The Scotty Who Knew Too Much” in  “Fables for our Time

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“The best money during the nascent years of a business is patient for growth but impatient for profit.”
Clayton Christensen in “The Innovator’s Solution”

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“The test of a vocation is the love of the drudgery it involves.”
Logan Pearsall Smith

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“That knowledge which stops at what it does not know, is the highest knowledge.”
Chuang Tzu

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“Startups are new businesses–not development projects—that need to discover a sustainable business model.”
William Pietri in “Responsible Technical Debt:  Not an Oxymoron

Full quote:

Startups are about learning.  For this to make sense, you have to understand two things:

  1. Startups—-even software startups—-are businesses, not software development projects.
  2. The point of a startup isn’t to create a software product; it’s to discover a sustainable business model.

In a startup, software development isn’t an art for its own sake; what makes sense from a pure engineering perspective may not make sense more broadly. That’s true for any business really, but it’s especially true for a startup. That’s because the main goal of a startup is to discover a valuable business. Discovery requires experimentation, and the amount you can learn is a function of the cost of your experiments.

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“Pricing is the moment of truth—all of marketing comes to focus in the pricing decision.”
Raymond Corey

Startup Lessons Learned Conference Coverage Roundup

Written by Sean Murphy. Posted in Customer Development, Events, skmurphy

Update July 24, 2012: you may also be interested in

Overview

The Startup Lessons Learned Conference (#sllconf) was Friday April 23rd, 2010.  This post is an effort to capture  press coverage and blog commentary on the conference that will be of use to entrepreneurs.  I will update it periodically through the end of May 2010 as I become aware of new blog posts. Please feel free to contact me and suggest a post you have found useful.

The conference was streamed live to more than 60 locations by Justin.tv, their video archive is at  http://www.justin.tv/startuplessonslearned/all If you missed the conference and are planning to watch the videos I would encourage you to read this blog post first:  “Tips for Getting the Most Out of the Startup Lessons Learned Conference (SLLConf)

Welcome and Opening

by Eric RiesStartup Lessons Learned Blog

Keynote: To Agility, and Beyond

by Kent Beck, Three Rivers Institute

Continuous Deployment Case Study: WiredReach

by Ash Maurya, Cloudflare

Agile Development Case Study: Grockit

by Farb Nivi, Grockit

Case Study: But Does It Scale?

by James Birchler, Brett G. Durrett, and Tim Fitz, IMVU

Panel “But What About Design?”

Conversation: “Getting to Plan B”

with Eric Ries and Randy Komisar, KPCB

Minimum Viable Product Case Study: Aardvark

by Damon Horowitz and Max Ventilla of Aardvark/Google

Pivot Case Study: Flowtown

by Ethan Bloch and Dan Martell of Flowtown

Pivot Case Study: KISSMetrics

by Hiten Shah, KISSMetrics

Customer Development 2.0: Why Accountants Don’t Run Startups

by Steve Blank

Is Customer Development Marketing? Food on the Table Case Study

by Manuel Rosso, Food on the Table

Customer Development Case Study: Dropbox

by Drew Houston, Dropbox

Customer Development Case Study: PBWorks

by David Weekly, PBworks

Customer Development Panel: But Who Should Actually Get Out of the Building?

Summaries & Overviews That Apply to More Than One Talk or Session

Remote Sites Recap

I will update this list periodically through the end of May 2010 as I become aware of new blog posts. Please feel free to contact me and suggest a post you have found useful.

Lean Software & Systems Conference Recap

Written by Sean Murphy. Posted in Events, skmurphy

I came across an interesting conference going on today that seems related to tomorrow’s Startup Lessons Learned Conference: the Lean Software & Systems Conference with a hashtag #lssc10. It looks like this is the second year and last year it was held in Miami in 2009. It’s managed by the Lean Software and Systems Consortium.

Don Reinertsen gave the keynote on “The Easy Road to FLOW Goes through a Town named LEAN.” He is co-author (with Preston Smith) of “Developing Products in Half the Time” and “Managing the Design Factory: The Product Developers Toolkit” and more recently “The Principles of Product Development Flow: Second Generation Lean Product Development.” I last blogged about him in 2008 “Don Reinertsen: Priorities Are The Last Refuge of the Inumerate.

I will track blog posts for this conference through the end of May, it looks like it may be addressing many of the same lean software development principles that the SLLConf folks are trying to implement in their startups.

Tips For Getting the Most out of SLLConf (Live or Streaming)

Written by Sean Murphy. Posted in Customer Development, Events

I blogged about the “Startup Lessons Learned Conference on April 23” about three weeks ago and now the  conference is tomorrow (April 23rd) in San Francisco. Whether you are planning to attend in person or at a remote streaming session (more than 60 locations are available see http://www.sllconf.com/streaming ) I think the best way to take advantage of the conference material would be to read two chapters from Steve Blank’s “Four Steps to the Epiphany” (cheaper at http://www.cafepress.com/kandsranch):  Chapter 3 on “Customer Discovery” and Chapter 4 on “Customer Validation. Ash Mauyra has also written three blog posts from his entrepreneurial perspective that I have found to be the best description, “from the inside out” of what customer development feels like. I would encourage you to read the following in advance:

Now, write down your current key hypotheses and identify which of these you are going to test in the next two to thirteen weeks. Come up with a rough plan of attack before you come to the conference or watch the video. Here are some key hypotheses you may want to test;

  • Who is your target customer? What are some simple tests or questions that can identify them?
  • What problem or need of theirs do you address. What are symptoms–from your target customer’s perspective not yours–that they will admit to about the problem or need?
  • What’s the minimum feature set you need to address the target customer’s need. What is the customer’s perspective on the benefits that it will offer?
  • How do these benefits compare to your target customer’s status quo and currently available alternatives? How will you differentiate your offering?
  • How will they value your offering? How much can you charge?

There are a number of good presentations planned for the day, see http://www.sllconf.com/program and review the description of the session against the hypotheses you want to test in the next three months. Schedule time now with your team and/or advisors to sit down for an hour or two sometime next week and revisit your hypotheses (maybe a talk has suggested a more important one you should address first) in light of what you hear at the conference. Update your plans accordingly.

If you are attending the conference in person I will be there all day and would be happy to spend some time to review your key hypotheses and near term set of experiments to measure and assess them. Please bear in mind my experience has been startups selling to businesses so there may be other mentors with more appropriate experience if you are launching a media or consumer oriented offering:  I am certain any of the other mentors on site would be happy to review your plan of attack as well. If you are watching remotely please feel free to send me an e-mail outlining your key hypotheses and intended course of action for the next two to three months and we can schedule a short call to review them.

If you are organizing a Lean Startup Circle event in May or June these might be some useful topics to address:

  • What I Learned at the SLLConf and Changed Plans Accordingly
  • What We have Learned about key hypotheses from experiments in the last Month

You are also welcome to discuss these topics at a Bootstrappers Breakfast if one is available in your area.

I hope this will help entrepreneurs get the most out of the SLLConf experience and accelerate their businesses. Please feel free to approach me at the conference, I always enjoy comparing notes with entrepreneurs. We are rolling out a new service for folks trying to make sense of the electronic design automation industry in partnership with a semantic technology firm: I will be using the conference to walk through key assumptions we are making about the offering to ensure I haven’t overlooked something.

Update April 23: I am attending Steve Blank‘s talk at the Startup Lessons Learned Conference and I was reminded I have a number of posts on customer development that may help to offer a perspective on Customer Development 1.0 to provide context for his 2.0 version.

Update April 25: I have posted a “Startup Lessons Learned Coverage Roundup” that I will update through the end of May with news coverage and blog posts about conference sessions.

Do You Want to Track 200+ Electronic Design Automation Feeds?

Written by Sean Murphy. Posted in EDA, skmurphy

We are working with a semantic technology firm to develop a new portal that will track EDA related blog posts and other content announced via an RSS,  Atom, or other feed protocol . Our goal is to provide a richer level of aggregation and analysis than an RSS reader with 200 feeds offers today (see for example my list of 238 in my July 11, 2009 post “EDA Bloggers 2009“).

This is not intended to compete with any advertising supported sites, it will be a subscription service that will allow you to keep track of new blogs (including micro-blogs like twitter) and new blog posts on an ongoing basis.

If you are interested in tracking blog posts and new announcements in the design automation arena, I would like to schedule a short call to get your perspective and feedback on our plans.  You can use the contact form to reach me by phone or E-mail.

Jack of All Trades

Written by Sean Murphy. Posted in 1 Idea Stage, skmurphy

In Poker a Jack is as good or better than about 3/4  (OK 76.92%) of the cards in the deck, losing only to Queen, King, and Ace.  So a “Jack of all Trades” is good at many things. The full verse is

Jack of all trades, master of none,
though ofttimes better than master of one.

Scott Adams offered “Career Advice” in July of 2007:

But if you want something extraordinary, you have two paths:

  1. Become the best at one specific thing.
  2. Become very good (top 25%) at two or more things.

The first strategy is difficult to the point of near impossibility. Few people will ever play in the NBA or make a platinum album. I don’t recommend anyone even try.

The second strategy is fairly easy. Everyone has at least a few areas in which they could be in the top 25% with some effort.

I think this second strategy is a better one if you want to be an  entrepreneur. It enables you to identify and take advantage of brokerage and translation opportunities: you can link folks who might not otherwise connect because of your ability to understand that even though they are working in different fields there is a mutually beneficial relationship possible.

There is a risk that skills and know how that you use infrequently  can go stale or diminish in relative value depending upon how rapidly a particular field is advancing.  The half-life or perishability of a skill is normally a function of the rate of innovation and any demographic changes in domain: how quickly does new knowledge emerge and old masters retire. Soft skills like how to run a meeting or how to manage tend to decay more slowly because people don’t change as much as technology. Adams suggests this in his closing advice:

At least one of the skills in your mixture should involve communication, either written or verbal. And it could be as simple as learning how to sell more effectively than 75% of the world. That’s one. Now add to that whatever your passion is, and you have two, because that’s the thing you’ll easily put enough energy into to reach the top 25%.  If you have an aptitude for a third skill, perhaps business or public speaking, develop that too.

It sounds like generic advice, but you’d be hard pressed to find any successful person who didn’t have about three skills in the top 25%.

One more risk being a “Jack” is that the knowledge in any one field does not enable you to differentiate yourself. So you need to consider how the various cards you have are going to combine in a useful way that is also differentiating.

There may also be a “meta” domain that you are actually mastering by exploring a variety of its facets. E.g. if two fields are going to interact more strongly over time (think biology and computing) then knowledge of both fields is helpful. It’s also useful for fostering innovation in an arena you are new to if you can transplant working methods and technologies that are established in a field you another field into your new domain. This knowledge brokering can  also be the basis for your next startup. For an interesting perspective on this see Andrew Hargadon‘s  “Firms as Knowledge Brokers.”

Do You Use a Wiki to Deliver Services or Develop Content?

Written by Sean Murphy. Posted in Blogging, skmurphy

I would be interested in talking with other consulting or professional service firms that are using Central Desktop or other wiki systems to collaborate with clients or deliver services. For example, when we give workshops we also put the text of the relevant workbook into a custom workspace for each attendee. Also, as a part of our ongoing support for their customer development efforts we give each client their own workspace to keep our e-mail inboxes from becoming a default document repository.

I am also interested in talking to anyone who is using Central Desktop or other wiki system to develop / refine content for a book or larger document. I am working on converting a series of blog posts into a book and using a Central Desktop workspace as a refinery to review existing content and add new and linking material.

I would be happy to set up a conference call to compare notes on lessons learned and best practices. This is not a prelude to a solicitation for services or competitive intelligence gathering, it’s a an honest attempt to compare notes with other firms or authors wrestling with the same issues that we are. You can reach me at 408-252-9676 or skmurphy@skmurphy.com if a few folks are interested I will set up a teleconference, happy to compare notes just pairwise as well.

Great Demo! Workshop on Sept 15, 2010

Written by Theresa Shafer. Posted in Demos, Events, Sales

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

When: Wednesday, Sept 15, 2010 8 am – 5 pm
Where: Moorpark Hotel, 4241 Moorpark Ave, San Jose CA 95129

Cost: $590
Before Aug 28: $566

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!

Register Great Demo

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:

  • 8:00 AM Breakfast & Registration
  • 8:30 AM Workshop begins
  • Noon Lunch
  • 1 PM Workshop Continues
  • 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

Common Mistakes in New Product Introduction Demos

Written by Sean Murphy. Posted in 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, Demos, Rules of Thumb, skmurphy

A baker’s dozen of common mistakes that I have seen founders make in preparing, delivering, and evaluating a new product presentation/demo.

  1. Don’t keep giving the same presentation if it’s not working. I am surprised when I ask teams who have presented to two or three dozen prospects, “How has the presentation changed since the first time you gave it?” and I am met with blank looks.
  2. If prospects don’t understand your presentation it’s possible that you are talking to the wrong people but just as likely that there are serious problems with your presentation.
  3. Do not keep giving the same presentation if it’s not working. That’s not a typo, it bears repeating. Working means that you are not only getting expressions of interest but your sale is actually advancing. I know that when you talk to experienced sales folks that they will tell you that “sales is a numbers game” and you just have to keep pitching until someone decides to buy. There is one very important qualifier to the “numbers game” approach, and that is that you are using a presentation and sales approach that has actually been proven to work in a repeatable fashion.
  4. Give the demo to people you trust who can act as proxies for your target prospects.  Ask them how to improve it. If someone introduces you to a prospect, be sure to reconnect and ask them how the prospect felt and what could be done to improve the presentation. The prospect may be much more willing to be candid with a third party that they trust; most folks don’t want to give bad news to you directly.
  5. A lukewarm response is the worst of all. You can’t get any feedback on what to improve–unless you were introduced by a third party you can ask for help– and the sale is not advancing.
  6. You can tell that the sale is advancing if you are learning more and more about the customer’s problem.  The prospect gives you data to run a test. They ask for an evaluation license and can give you a timetable and a list of experiments that they want to run. If these things are not happening your presentation is not working.
  7. Before you give a demo, make sure that you can clearly state the prospect’s view of the problem they are hoping to solve with your software. Confirm this by stating it and asking you have understood their situation correctly. Don’t give a demo if you don’t understand the problem that they are trying to solve. A demo is not an opportunity to train someone on your software; it’s an opportunity to offer either a vision of a solution or proof  that your software can solve their problem.
  8. If you have raised some money, perhaps in an angel round, do not take your investment presentation and use that to attempt to close business. I know it can be hard to believe that something that was so useful when talking to investors won’t have a similar powerful effect on prospects. But let me be clear:  you need to throw your investment presentation away and start from scratch.
  9. Keep copies of each presentation that you give. Always have two people at a presentation. One to give it, the other to observe. They can trade off but one should always be watching the prospect(s) to determine what’s resonating and what isn’t.  Take time after the presentation to de-brief and write your thoughts down. Save a copy of your notes with a copy the slide deck that you used.
  10. On the title page for your presentation you should include: key audience member(s), company name and date of presentation; these should also be burned into the footer of each page. Three benefits:
    1. It gives the impression of personalization and prior custom preparation. Doing this should force you to at least think through what’s needed for this particular audience.
    2. It’s the minimum information you will need to keep you various presentation distinct. This allows you to keep an archive of all of your presentation and watch how it evolves over time.
    3. If you are asked for a soft copy of the slide, provide a PDF version of the talk, instead of PPT, with this info burned into it then the audience is more careful  about who they circulate it to.
  11. Include your company name, URL, and copyright  on each slide. They may become detached from the deck.
  12. Probe for a date or impending event that may drive a decision. Be cautious of people who tell you that they need something “yesterday” since yesterday will never come.
  13. Always have an engagement checklist and implementation timetable (if only at a high level) ready. Rehearse presenting it but keep it in backup slides. Do not have the prospect ask you “what does it take to get started” and stammer out “I’m not sure, no one has ever asked that before.”

Building an Expertise Based Startup (Part 2)

Written by Sean Murphy. Posted in skmurphy

I asked two weeks ago in “Are You Building An Expertise Based Startup?” about a model for an expertise driven company that I have been working on for more than year. Have come across two other references that I think bear the concept.

From a post by David Foster on the Chicago Boyz blog ” Myths of the Knowledge Society

Walter Wriston pointed out that “A person with the skills to write a complex software program that can produce a billion dollars of revenue can walk past any customs officer in the world with nothing of ‘value’ to declare.” And this is true. But the ability for a person to carry knowledge of huge economic value in his head is by no means new. An interesting example is provide by the U.S. textile industry, which basically began in 1789 when Samuel Slater left England for America with his vast knowledge of how textile machinery operated. (In order to protect what we would now call intellectual property, emigration of textile workers was actually prohibited by British law)

In 1959 Peter Drucker wrote  “Landmarks of Tomorrow” where he first talked about knowledge workers.  He wrote “Management Challenges for the 21st Century” in 1999, on page 142 he defines six factors for knowledge worker productivity (emphasis in original):

  1. Knowledge worker productivity demands that we ask the question: “What is the task?
  2. It demands that we impose the responsibility for their productivity on the individual knowledge workers themselves. Knowledge workers have to manage themselves. They have to have autonomy.
  3. Continuing innovation has to be part of the work, the task and the responsibility of knowledge workers.
  4. Knowledge work requires continuous learning on the part of the knowledge worker, but equally continuous teaching on the part of the knowledge worker.
  5. Productivity of the knowledge worker is not — at least not primarily — a matter of the quantity of output. Quality is at least as important.
  6. Finally, knowledge worker productivity requires that the knowledge worker is both seen and treated as an “asset” rather than a “cost.” It requires that knowledge workers want to work for the organization in preference to all other opportunities.

Each of these requirements–except perhaps for the last one–is almost the exact opposite of what is needed to increase the productivity of the manual worker.

What are you doing to develop and codify the knowledge in your business?

  1. What opportunities do you give everyone to teach others about their tasks and what they have learned?
  2. How do you measure the quality of each person’s work?
  3. One test I would suggest you consider is that any information that can be discovered in a Google query will not give you competitive advantage  even for a shot period of time, much less on a sustainable basis, because if Google can find it or correlate it then it’s been commoditized.

Self-Mastery, Expertise, Connections, and Perseverance

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

Cal Newport writes in “Corrupted Callings: The Subtle Difference Between Finding Your Life’s Work and Loving Your Life” that, based on “Self-Determination Theory,” the keys to personal happiness are

  • Autonomy refers to control over how you fill your time.
  • Competence refers to mastering unambiguously useful things.
  • Relatedness refers to a feeling of connection to others.

It seems to me that this translates to the following for entrepreneurs:

  • Self-mastery or control over your desires
  • Expertise
  • Connections

I think the core of self-mastery is the ability to be true to yourself.  I have seen too many people compromise hoping that the right job or the next funding round or salary increase or some other big bag of cash will allow them to move to a better lifetime.  The more pernicious aspect to this is putting your creative life on hold to make money. As Robert Service observed “There are no pockets in a shroud.”

Expertise comes in many flavors but starts with your unique perspective.  There are many different perspectives in the world:  craftsmen and brokers, salesmen and engineers, inventors and curators, therapists and carpenters, just to name a few. It took me a long time to realize that I had an entrepreneurial frame of reference and that many folks around me didn’t. Entrepreneurs can see possibilities that many other folks don’t, but the same is true of artist, engineers, and architects as well. I think entrepreneurs focus their imagination on business possibilities, where an artist may work in metal or an engineer in silicon. The key to expertise is deliberate practice, to predict and correct and remain unsatisfied until you see improvement in your ability not only to manage challenges but accurately predict your performance.

The importance of connections is one of the reasons I started the Bootstrappers Breakfasts® as a way for bootstrapping entrepreneurs to have serious conversations and feel a sense of fellowship and connection. It takes a village to help a founding team get their startup operational and profitable, effective entrepreneurs recognize their obligations to their community and networks that they are a member of, even if it compromises their ability to unfettered unilateral action from time to time.

I think one attribute left out of the model may be the most important: perseverance.  Steely Dan’s “Any World (That I’m Welcome To)” opened with “If I had my way, I would move to another lifetime.” But this is a teenager’s fantasy of getting away from home. Marriage and child rearing are not easy, much harder in many ways than doing a startup. But creating a decent workplace that provides a good living for your employees and value for your customers is easier when you have a spouse, friends, and a family.

Entrepreneurial Opportunities for Innovation in Medical Care

Written by Sean Murphy. Posted in skmurphy

Medicine and Electronic Medical Records are way overdue for improvement/disruption.

My analysis is that the primary barrier is the economic model most practices operate under is focused on insurance reimbursement not patient satisfaction or outcomes.

My hypotheses for this area that the starting niches for truly disruptive offerings would be doctors or medical practices that:

  1. are paid directly by their patients
  2. are focused directly on outcomes (and/or measured on outcomes) and therefore have an incentive to improve outcomes

Here are a couple of areas to consider:

  • Cosmetic Surgery – direct pay for most part. Huge productivity improvements in laser eye surgery for example.
  • Veterinary Medicine – direct pay, robot doctors for dogs will take another decade or two to make it to mainstream (probably via military applications first)
  • Workers Compensation for companies that are committed to “return to work” not “medical cost minimization.” Here the focus is on evidence based medicine that gets results to allow employees to return to work.
  • Military (enormous innovation in surgical supply chains in Iraq theatre as an example, Atul Gawande goes into some detail in “Better” about how much better medical personnel in combat zones maintained patient info than anything he had seen in private practice. and it has had an enormous impact on patient outcomes).

One good blog in this area is by Jay Parkinson, MD who has now started a design and consulting firm for health: The Future Well.

One other interesting development is the “Archimedes Model” developed by Kaiser. It brings the same simulation (or in silico biology) modeling approach to modeling health care decisions that is used for the design of complex systems on a chip.

The Archimedes Model can analyze a wide variety of questions for health care decision makers that would be impossible to address empirically because of the enormous cost, number of people, and time required. The Model provides a method to explore important questions at a fraction of the cost and time of empirical methods, with a high degree of realism and accuracy.

The Archimedes Model is fully customizable and can be tailored to represent the population of a region, a target market, or even an entire country. Clients can also provide their own data to represent processes, behaviors, and costs customized to their settings.  The Model addresses the full range of variables and outcomes that are important in making healthcare decisions:

  • Populations
  • Clinical physiology, biomarkers, signs and symptoms, clinical outcomes
  • Prevention, screening, diagnosis, treatment, follow-up care
  • Physician and patient behaviors, performance, and compliance
  • Protocols, guidelines, practice variations
  • Delivery systems, logistics and utilization
  • Quality of life
  • Financial costs

Honesty in Negotiations

Written by Sean Murphy. Posted in skmurphy

Daniel Isenberg asked “Should Entrepreneurs Lie?

An experienced VC fund manager I have known for years told me recently that if a person does not know how to seriously twist the truth from time to time, he (she) cannot be an entrepreneur

One of the key tasks we help early stage teams with preparing for and executing successful negotiations.  There is a belief among some engineers that the best marketing and sales people are the most accomplished liars. In my experience nothing could be further from the truth. Most negotiations have long term consequences and involve interacting with people that you will encounter again and who know others you will encounter in the future.  I always assume that at some point in the future the folks I am negotiating will know the full truth of the situation and that very few secrets remain that way for long.

In George Higgins novel “Dreamland” a character remarks “I never forget and I always find out. ” I assume that about anyone that I am negotiating with.

Edward G. Wertheim, Associate Professor of Management and Organizational Development, wrote a great article “Negotiations and Resolving Conflicts: An Overview” (which alas no longer appears to be available on the web) where he addressed the question “Is it ethical to ‘lie or bluff’ in negotiations?”

In poker and in general negotiations one is not expected to reveal strength or intentions prematurely. But discretion in making claims and statements should not be confused with misrepresentation. In general, in our culture, our “rules” forbid and should penalize outright lying, false claims, bribing an opponent, stealing secrets, or threatening an opponent. While there may be a fine line between legitimate and illegitimate withholding of facts, there is a line and again we are distinguishing between the careful planning of when and how to reveal facts vs. outright lying.

Bluffing, while it may be ethical, does entail risk. The bluffer who is called loses credibility and it can get out of hand. Also remember, that most negotiations are carried out with people with whom you will have a continuing relationship. Again, while our culture supports and encourages those who are careful about how and when to disclose facts, out culture does not condone outright lying.

An old British Diplomat Service manual stated the following and it still might be useful

Nothing may be said which is not true, but it is as unnecessary as it is sometimes undesirable to say everything relevant which is true; and the facts given may be arranged  in any convenient order. The perfect reply to an embarrassing question is one that is brief, appears to answer the question completely (if challenged it can be proved to be accurate in every word), gives no opening for awkward follow-up questions, and discloses really nothing.

Skilled negotiators develop techniques to do this. A favorite one is to answer a question with a question to deflect the first question.

George Grellas posted a masterful answer on Hacker News that I am reprinting here with his permission:

Hyping, shading and puffing are normal in entrepreneurial circles and, properly limited, are probably expected to some degree. People discount the statements accordingly.

Misrepresenting material facts or omitting to disclose something major (like the loss of your major customer the day before a funding) constitutes securities fraud and can get you in a heap of trouble, notwithstanding how it may have worked out in a particular case such as that cited in this piece.

There are also limits to hyping if it amounts to misrepresenting material facts. I was once approached by an entrepreneur whom I turned down as a client and who later got busted for securities fraud for having done a demo claiming that certain of his company’s whiz-bang technology was in fact doing something stupendous when it was in reality just a rigged demonstration designed to simulate what he claimed his technology could already achieve. Having raised $7 million based on such demonstrations, mostly from gullible investors, he went to jail for his “over-hyping” of his product.

When it comes to issues such as lying, there are moral issues and there are legal ones. If you are an entrepreneur who wants to avoid serious problems, the rule should always be: never lie in a way that amounts to fraud or misrepresentation (legally speaking), no matter what the supposed benefit. It is not worth it.

Concerning moral issues, the issue for me is one of integrity. Just as we all can stretch something when it helps us, and just as we all do so to some degree, so we can stretch it to the point where it amounts to a pure fabrication. Mild stretching might be considered a gray area. Fabrication is a character issue that can reflect badly on the entrepreneur. Of course, this depends on context as well. If it is clear you are speculating (such as about growth rates), that is one thing. If you are knowingly misrepresenting facts, the natural thought that occurs to people you are dealing with is, “If he will do that once, how can I trust him not to do it again.” You might think it is innocent in your mind, but crooks make a living off such misrepresentations. And there is no percentage in aligning yourself with that which is unseemly. I have repeatedly seen the consequences of such activity in courts of law, and they are not pretty in cases when things do blow up.

I don’t know if either my efforts or Professor Wertheim’s or George Grellas’ words will convince you of the value of candor. At some level if you have to explain to someone why lying is a bad idea more than half the battle has already been lost, probably somewhere around kindergarten, but it’s nonetheless worth the effort.

“Honor is like an island, rugged and without a beach; once we have left it, we can never return.”
Nicolas Boileau-Despreaux

Cost Effective Approaches to Trademarks

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

We had a situation earlier this week where a potential competitor started to use the name of a client’s service for a similar offering. Fortunately the client had registered the trademark it last year and we were able to politely bring this to the incipient competitor’s attention. They have notified us that they will stop using the name.

There are inexpensive ways to file for a trademark, the direct application fee is $325 and you can search for free on http://www.uspto.gov/ as well as use domain name as a proxy with tools like  http://domaingroovy.com/

These legal services will check more and charge you $130-$500 for a search:

A name audit (see for example http://www.brighternaming.com/Name_Audits.html at $300 ) by a naming firm can be extremely cost effective at helping you prevent problems with a name that you have chosen. If you pick the product name to equal the company name then you only have to spend marketing effort to get one name into a prospect’s awareness. That’s probably the most cost effective thing that you can do, along with putting  a TM on it right away which signals your intent to register at no cost.

I think it’s worth spending a small amount of money to get feedback from a naming firm on potential problems with your name before you commit to it. In particular if folks cannot spell your name when they hear it then your ability to leverage word of mouth will be lower.

Net net I would make my product name the same as the company name, get some advice on potential problems (note this is not a 10K or 50K “Branding study” but a few hundred dollars for an audit) and at least TM it if not register it.

Be Wary of Relying on a Ramjet For Early Growth

Written by Sean Murphy. Posted in skmurphy

There is something very seductive about a ramjet engine, it has no moving parts, and all you need to do is pour jet fuel into it: the fuel catches fire and generates a tremendous amount of thrust.

This is the attraction of the two sided market.  Just get enough “users” or “prospects” or “buyers” and the sellers will show up and pay you to reach them.

What can get neglected is the need for the ramjet to be moving close to if not above the speed of sound. Otherwise the fuel does not catch fire, it just dribbles out the end.

Two sided markets are the same way, when at least one side of the market achieves critical mass then both sides can  start growing profitably and it’s a wonderful thing. But too many times you are below critical mass and do not have the money to acquire enough users/customers to get your startup to reach a critical mass for take-off.

What Goes On Your Business Card in 2010?

Written by Sean Murphy. Posted in skmurphy

It’s hard to believe that I still walk around handing out pieces of paper to new people that I meet. Of course when you wanted a nice resume in 1980 you had to have it typeset–no laser printers yet–so sometimes things do change. What follows is a list of changes by decade for what has gone on various business cards I have had. The one shown is circa 2005, if I were to redo this year I would add Skype.

Sean Murphy Business Card
  • 1980
    • Name
    • Title
    • Company Name
    • Postal Address
    • Phone (Main & Extension)
    • Telex
    • Logo
  • 1990
    • removed Telex
    • added Fax
    • added E-Mail
  • 2000
    • added Website
    • added Cellphone
    • Just Direct Phone
  • 2010
    • removed Fax
    • added Skype
Speculation for 2020

  • removed Postal Address
  • removed separate Cellphone; just one Phone #
  • added Head shot / Avatar
  • added Professional Network link
  • added Lifestream Feed (e.g. Twitter or news feed from social network)

My speculations for 2020 are that physical location does not matter for knowledge workers, you will just give out one phone number (many folks already do) and that whatever LinkedIn and Twitter have evolved into, as a professional network link and a lifestream feed respectively, will also be included. This post was triggered by a recent request for help I got from a friend who asked me “What do people put on their business cards these days” as his firm was re-doing theirs and he sent me a long list of options.

It would be interesting to compare what’s on your card with your  E-mail signature, but that’s a different blog post.

Real Business Planning Example: Re-Scheduling a Workshop

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

I want to share a real situation with planning and decisions that are similar to what many entrepreneurs have to make. It was “timed test” involving internal coordination, customer preferences, and resource availability.

I was walking into a client’s office, in the midst mental preparation for an advisory board meeting to review current sales forecast and logistics, when my cell phone rang.  It was Peter Cohan calling from Chicago. He was in the hospital and would not be able to fly back for a workshop that was scheduled for the next day. My first concern was his health and prognosis, both of which were good, although he was in a fair amount of discomfort so we kept it short.

We had  about two dozen people signed up that we needed to notify, several were flying in so we needed to update them, not only that tomorrow was off but that there was a new date scheduled.  But I had to put all that in a box and deal with it on the other side of the meeting I was going into. I told Peter I would call him in two an half hours and we would do some planning.

Here are what I viewed as the constraints:

  • We had about two dozen people who had paid for a now canceled workshop.
  • I needed to contact everyone who might be traveling pronto.
  • I needed to contact the venue and let them know we were not coming.
  • I needed to contact the film crew from DreamSimplicity and let them know we would not be filming.
  • I needed a new date that would maximize attendance, subject to availability at our venue and Peter’s other commitments.
  • I wanted to minimize customer confusion through concise communications: tell story once; present some options; and come back with a plan based on the best day for maximum attendance.
  • I wanted to be a good business partner with the venue, but not lose my deposit, so priority would be to re-book with them.

You may have been here yourself. Unfortunate events can test your ability to adapt your business planning to the situation. My approach was as follows:

  1. Call the venue and let them know we had to re-schedule (minimize any expense they could avoid).
  2. Call and e-mail those attendees who were not in Silicon Valley and let them know that we had to reschedule and that I would be back to them shortly with options for a new day. I didn’t want anyone to get on a plane or drive a hundred or two hundred miles  only to find out the workshop was canceled.
  3. Call DreamSimplicity and let them know we were re-scheduling the workshop.
  4. Call Peter and see what date range was for when he thought he would be able to teach and how long at most he wanted to slip the date. We decided earliest was first week in April, latest was last week in April.
  5. Call the venue and got the availability of the room we wanted for April.
  6. Present the venue availability  dates to Peter and get his top four choices. I was going to do two initially but it seemed more prudent to ask for four so that we have more options as to week of the month and day of the week. The original workshop was on a Wednesday but none of the Wednesdays were available in April.
  7. I then presented those four choices to all attendees and asked them to indicate any that would not work, advising them that we were going to pick the day that got the most attendance. I asked for an answer the same day because the hotel had agreed to give me the day to pick the best date in April.
  8. At the end of the day I called the hotel and said that I hadn’t heard from everybody, which was true, and that I needed the next morning to get closure.  They agreed which was a big help.
  9. By the next morning I had heard from everyone and most wanted an answer quickly because they would either need to re-arrange their calendar or they were holding one or more of the dates open and wanted to recycle them for other purposes as soon as they were able.
  10. I looked at the availability, selected April 9 as  the day that allowed the most number of people to attend.  I then e-mailed everyone with this date, giving them the option to attend on the new date or get a refund.  I called the two people who had indicated they would not be able to make it.  One decided to re-arrange their schedule and attend, the other decided to attend our next demo workshop on September 15.
  11. April 9 falls on the Milpitas Bootstrapper Breakfast so I arranged for Pete Tormey to facilitate there in my stead.
  12. We then redid the announcements on Workit and other calendars, added a new blog post, and updated the 123Signup page to reflect the new date.

Real plans anticipate a range of intermediate and final outcomes. They involve branches (“what if”) and sequels (“what next”) that anticipate varying degrees of success and failure. Successful startup plans look like decision trees, not a single sequence of tasks.  Most “Business plans” are sales documents to secure funding and bear little resemblance to real operating plans.  Here is my view of this plan as branches and sequels.

  1. Start:  We need to re-schedule.
  2. Sequels: notify Hotel and anyone traveling to minimize disruption and unnecessary cost.
  3. Branches:
    • When is hotel available, I want to minimize any loss of deposit by working with them to identify days that will work. Also by keeping the location the same I minimize the risk of an attendee deciding to cancel.
    • When is Peter available in the context of hotel availability. What are his preferences. He is in a lot of pain so one conversation that gets all the answers I am likely to need for the next 24-48 hours. His preferences only come into play if two or more days have the same number of attendees but let’s get them now. Get four days so that we don’t have to go back to him or the attendees if either of two days would produce unacceptable losses (or at least a dropoff that would make us look for more options).
    • When are attendees available in the context of Peter and hotel availability. Normally you might think to start here but since I don’t want to switch hotels and Peter is the only one who can teach the class this is the right priority.
  4. Sequels: pick the day with the highest attendee count, notify attendees, re-publish calendar announcements, update signup page.
  5. Sequel: wait for an hour in the lobby of the hotel in case someone didn’t get the message that class was off.
  6. Sequel: manage secondary conflicts with Milpitas Bootstrapper Breakfast.

Conclusions

  • Always mentally simulate the key steps in a process or plan before committing to it as a course of action. It’s not a question of optimizing, but of making sure you have a satisfactory solution given your time and resource constraints.  A decision is an irrevocable commitment of resources but understand that every communication costs time and every change can cost goodwill and lower partner and customer confidence in you.
  • You cannot rely  on things “working out” but have to allow for further slips, losses, and conflicts. Your plan does not have to be perfect, just good enough.
  • You have to consider how to manage potential branches in a plan, they are the logical responses to a reasonable range of outcomes.
  • Clear communications is critical. Keep it concise but complete.  Keep your partners, suppliers, and customers in the loop as a situation develops.
  • Everyone will be more understanding when you take the time to share your options and the reasons for a change. Often they can contribute creative options that you may not have considered.
  • You have to minimize the spillover from problems in one area and meet as many of your commitments as practical.  Do not let let worry and friction from problems in one area affect other parts of your business.

If you have faced a similar need to change plans or replan in a hurry, I would be interested to hear your about your situation and what you learned from it.

I Need Your Advice On Converting This Blog Into A Book

Written by Sean Murphy. Posted in Books

I started blogging on this site October 1, 2006  with “Welcome Entrepreneurs” and have written almost 600 blog posts since then. My opening paragraphs are still applicable to today:

This blog is dedicated to entrepreneurs at any stage of their journey.  Both as individuals, in teams, and collectively we all hope to create a better world for our customers, our employees, our stakeholders, and our children.

My focus is helping startups find early customers for emerging technologies. This is very different from the traditional sales and marketing at established firms. Correctly identifying early customers who can be references to others is key to introducing emerging technologies.

Although emerging technologies change the rules and often enable far reaching growth most early adopters are focused on near term risks and benefits, and it is to those concerns entrepreneurial teams need to speak to get a foothold. The decision to act as a “beta” software site or early user of new software tools often resembles a hiring decision (does the prospective customer want to “hire the team”) more closely than a technology adoption decision.

Emerging technology marketing is a distinct domain from classical product marketing, most of the traditional market assessment techniques are not effective: focus groups, surveys, etc… Emerging markets require a strong commitment by the founding team to

  • appreciating the prospective customer and customer’s view,
  • rapidly evolving the product specification in response to feedback and customer experience,
  • ongoing refinement and delivery of customer focused solutions.

Frankly I think that there is a lot of content that entrepreneurs would benefit from if only they could find it.  One approach to addressing this need is to convert this blog into a book or two. Here is where I can use your help.

I am currently re-reading the blog from the beginning with an eye to extracting some key themes that would serve as a focus for a chapter or two.  I think I want to use our “Startup Stages” as one model for organizing topics, here are three others:

  • Looking at Team, Technology, and Traction as the building blocks for a bootstrapped startup.
  • Looking at “Working Capital” as including not only financial capital and likely revenue but also intellectual capital (know how, experience, expertise)  at an individual and founding team level  and social capital (trust, connections, social navigation skills) at an individual and team level.
  • The importance of customer development proceeding in parallel with product development until the startup  can make the transition to  a proven business model with the completion of customer validation and technology proof of concept.

Here is where I can use your help. Please contact me with any blog posts that you feel should be included  as part of a chapter, any entrepreneurial stumbling blocks that bootstrapping entrepreneurs need to overcome you would like to see addressed, any blog posts you have found to be useless or misleading that you would want to see omitted or reworked extensively before they were included, and any other suggestions you have for extracting a useful narrative out of this set of 600 blog posts.

Startup Lessons Learned Conference April 23

Written by Sean Murphy. Posted in skmurphy

Logo For Startup Lessons Learned ConferenceEric Ries has asked me to help out as a mentor for B2B startup teams at the Startup Lessons Learned Conference on Friday April 23 from 8AM to 6:30PM. It’s quite a line-up and even if you don’t plan to travel to San Francisco there will be a number of streaming video sites that will be broadcasting the event live at very low cost.

I think the best way to take advantage of the conference material would be to pick up a copy of Steve Blank’s “Four Steps to the Epiphany” (cheaper at http://www.cafepress.com/kandsranch) and make sure that you and your team members at least read Chapter 3 on “Customer Discovery” and Chapter 4 on “Customer Validation.” Write down your current key hypotheses and identify which of these you are going to test in the next two to thirteen weeks. Come up with a plan and then revisit in light of what you hear at the conference. If you are selling to businesses I would be happy to schedule a short call to review your list before the conference and one follow up two to four weeks afterward to see what progress you have made against your goals.

Another good way to prepare would be to read these three blog posts by Ash Maurya

Registration is at http://startuplessonslearnedsf.eventbrite.com/.

I have blogged extensively about customer development as well.

Update Mon-Apr-19: I got this question from Joseph Fung:

Any idea if there’s a electronic copy of Four Steps to the Epiphany that can be ordered somewhere? PDF, MOBI or EPUB would each be ok…

I checked with Steve Blank and got this answer:

Short answer No.

Long answer is people who want an e-book version think the book is a novel. It’s not. The people who actually use the book have marked up, dog-eared, tattered copies.

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