July 31st, 2010
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“Americans claim a psychic strength: hard times create a collective response.”
Peter Goodman “The Great Rupture” quoted at length in Fourth of July 2010
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“Remember, the customer will usually forgive any mistake you admit, except a lie.”
Ken Robbins on twitter 5:35 PM May 13th
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The good news is that unemployment has fallen to “only” 9.5 percent. The bad news is that the jobless rate is down only because so many people have given up hope of finding work. Perversely, the jobless who aren’t actively looking for jobs are not counted as “unemployed.”
Perhaps there should be a new category titled “mired in existential despair.”
Let me put it in terms that Washington understands: The party that begins to treat the unemployment crisis with the hair-on-fire urgency that it deserves is the party that will do well in November.
Eugene Robinson in “Fiddling While Economy Burns“
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“Can the US re-energize the real mainsprings of American power: technological innovation and entrepreneurship?”
Niall Ferguson in “The Future of America’s Economy“
More context:
“Unlike Britain in 1945, which was crushed by debt and slow growth, doomed to imperial decline, I think there is a way out for the United States. I don’t think it’s over. But it all hinges on whether you can re-energize the real mainsprings of American power. And those two things are: innovation, technological innovation, and entrepreneurship. Those are the things that made the United States the greatest economy in the world, and the critical question is: Are we going to get it right? Can we revive those things in such a way that, in the end, we grow our way out of this hole the way the United States grew its way out of the 1970s and, of course, out of the 1930s?”
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“There is no such thing as a self-made man. You will reach your goals only with the help of others.”
George Shinn
With a hat tip to Jordy Mont-Reynaud
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“If you have the same problem for a long time, maybe it’s not a problem. Maybe it is a fact.”
Yitzhak Rabin
Quoted by Clay Shirky in “It’s Not Information Overload, It’s Filter Failure” (Video: http://web2expo.blip.tv/file/1277460/ )
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“Ability is a rare article. But there is something that is much scarcer, something finer far, something rarer than this quality of Ability. It is the ability to recognize Ability.”
Elbert Hubbard
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“Success, like happiness, cannot be pursued. It must ensue. And it only does so as the unintended side effect of one’s personal dedication to a cause greater than oneself.”
Viktor Frankl
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“It’s amazing how long it takes to complete something you’re not working on.”
R.D. Clyde
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“Community precedes commerce.”
John Hagel in “It Takes a Village to Make a Mall“
Highlighted in Kevin Kelly’s “Predicting the Present, The First Five Years of Wired”
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“Base your strategy on things that won’t change in the next five to ten years.”
Jeff Bezos
More context from “Jeff Bezos on Strategic Planning”
- What I have found—and this is an empirical observation; I see no reason why it should be the case, but it tends to be—is that when we plant a seed, it tends to take five to seven years before it has a meaningful impact on the economics of the company.
- It helps to base your strategy on things that won’t change. When I’m talking with people outside the company, there’s a question that comes up very commonly: “What’s going to change in the next five to ten years?” But I very rarely get asked “What’s not going to change in the next five to ten years?” At Amazon we’re always trying to figure that out, because you can really spin up flywheels around those things. All the energy you invest in them today will still be paying you dividends ten years from now.
- Whereas if you base your strategy first and foremost on more transitory things—who your competitors are, what kind of technologies are available, and so on—those things are going to change so rapidly that you’re going to have to change your strategy very rapidly, too.
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“If you behave like a disease, people develop an immune system”
Kevin Marks in “How Not To Be Viral“
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“That thud of the back against the wall is a fantastic motivator.”
Christopher L. Smith
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“Waste anything but time. Time is the one thing we do not have.”
From When Worlds Collide
Hat tip to Rafe Needleman’s post “The Most Valuable Resource” where he noted:
The business lesson of the camp Sci Fi classic, When Worlds Collide, was this sign at the spaceport where the plucky humans were building the ship that was supposed to rescue humanity before the Earth was destroyed: “Waste anything but time. Time is the one thing we do not have.”
The Internet Movie Database credits Edwin Balmer (writer on screenplay), Sydney Boehm (writer on screenplay), and
Philip Wylie (for novel).
July 29th, 2010
We focus on strategy and business development for software startups. We’ve been fortunate to develop strong relationships with firms who also serve startups but offer complementary services, as well as firms who focus on larger clients but whose expertise is also of benefit to startups.
We work with a number of partners to create value for our clients. We take a long-term view of each partnership, believing that establishing close, mutually beneficial relationships with our partners is the best way to give our clients the best service possible.
We have been doing joint projects with Chris Finnie for more than six months and she has proven to be a very effective collaboration partner.
A lot of people can string words together. But not everybody can do it in a way that positions your company and your product. That communicates a meaningful benefit to your target audience. That drives sales. Chris can. With more than two decades in high-technology marketing, she is quick to understand new technologies. She can scope out relevant benefits and the competitive landscape, with a full appreciation for marketing messages that support the business strategy, just as fast. Chris is a successful business manager and owner with deep experience as an agency creative director.
Chris has added a lot to our messaging capabilities and brings a complementary set of skills in copywriting and copyediting to our team.
July 28th, 2010
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The business buyer views software as the promise of a relationship.
This means that you need to assess not only the strength of prospects’ interest but also your customers commitment to the business relationship.
They often pay you not just for what your product can do today but for what you promise that it will become with their help.
This requires you to continually evaluate customer commitment to use, to pay for, to suggest improvements, and to offer testimonials and referrals that help your sales efforts. |
One natural approach to evaluating customer commitment is to ask directly. The challenge is to do so in a way that affirms your commitment not only to the product but to the potential relationship with a prospect or the current business relationship with an active customer.
The National Lampoon magazine ran a famous cover in January of 1973 that said “If You Don’t Buy This Magazine, We’ll Kill This Dog.” It sold a lot of magazines.
Startups that inadvertently communicate “if you don’t buy this product we will kill it” in the B2B space are unlikely to be as fortunate. A question that attempts to test the strength of the relationship by suggesting the loss of the relationship will signal a lack of commitment that can poison a business relationship that is otherwise developing well.
In particular asking them “if they would be disappointed if they could no longer use your product” may inadvertently plant doubts in their mind as to your commitment both to the product and to your relationship with them.
Please don’t use a survey or an e-mail to assess their commitment. Have a conversation: either face to face or on the phone. If you are trying to asses their level of emotional commitment it’s much more natural and easy to do so in a conversation .
If you actively listen for indications of their level of satisfaction and commitment to the product, their tone and speech patterns will tell you much more than any checkbox, radio button, or e-mail text. Open ended questions about what they value about the product and how to improve it will normally elicit useful suggestions from customers who are even mildly committed.
Note: magazine cover thumbnail from “Three Unforgettable Dog Photographs”
Here are six related blog posts about early customer interviews:
July 27th, 2010
This is the third in a series about my decision to move away from using Facebook. On June 4 of this year I wrote “Deprecating Facebook” where opened with:
I have decided to deprecate my use of Facebook . Because my decision is based on a lack of trust of the current leadership I will revisit it every six months or so to see if things have changed sufficiently to warrant a re-evaluation. I deleted about 80% of my connections tonight and don’t plan to add any until a I re-evaluate the service in early 2011.
Social networks are part of the “mission critical infrastructure” for a firm like ours. We had not been actively using Facebook for marketing or networking, for the most part I joined out of curiosity and accepted invites, many of which seemed to be generated by folks dumping their e-mail address books into the system. Something that I have never done on any social network.
Two days later I wrote “Deprecating Facebook Part Two“ Where I noted this insight from Anthony Jay:
In “Corporation Man” Anthony Jay suggests that there is a natural limit of 500 for a tribe size based on an analysis of human history. He offers one very powerful rule of thumb that I have come to see the wisdom of: use systems to replace and augment memory, but minimize systems that replace face to face communication.
Marcelo Rinesi is now blogging at PhaseLeap where he wrote “From Social Networks to Social Manifolds” back in May but I just came across it and thought he had done a better job of summarizing my misgivings about Facebook than I had:
In fact, contemporary society puts us in contact (regular or irregular, professional or not) with literally thousands of people in dozens of different ways, and neither our brains nor our software are at present capable of successfully dealing with this. Every online social network website attempts, more or less credibly, to become the standard clearinghouse for our social exchanges, but they eventually stumble against the same problem: our social lives don’t take place in orderly networks, but rather in complex manifolds with which we are constantly in contact.
We don’t need computers to manage our network of family and friends; humans have always excelled at this sort of social skills, and, if anything else, the size of our families and immediate circles is smaller now than it used to be. But the size, complexity, and dynamism of the more chaotic “social soup” surrounding this network has grown immensely, and, as anybody trying to cope with an online “friends list” of hundreds will assert, software isn’t quite useful in this regard yet.
Something analogous happened years ago, when the Internet grew so much that Yahoo!’s ongoing efforts to index and order it couldn’t compete with Google’s more successful approach of letting the content of the web itself reshape minute after minute how we interact with it. Every time we tell Facebook something about our social environment, we are trading something we worked hard at gaining (knowledge about a social relationship) for something of very little value (a tool to easily communicate with people we already have dozens of ways to communicate with).
We can handle our social networks just fine. It’s the rest of society we need software to help us with.
July 22nd, 2010
Here is the transcript–edited for clarity and hyperlinked for context–for my recent interview with Floyd Tucker of DreamSimplicity Marketplace:
FLOYD TUCKER: Good morning, this is Floyd Tucker with DreamSimplicity. I am here with Sean Murphy, the CEO of SKMurphy, a consulting firm that focuses on high tech startups. Sean, you started SKMurphy back in 2003 and now have a team of six consultants helping high tech startups generate a repeatable, scalable business. You are also the founder of Bootstrappers Breakfast, which is now in eight cities.
Sean, thanks so much for being with us.
SEAN MURPHY: Good to be here.
FLOYD TUCKER: Sean, you have a passion for entrepreneurs: what drives your passion to work with bootstrappers and startups?
SEAN MURPHY: The neat thing about early stage startups is that everyone is really customer-facing.
It’s a small boat, there’s no place to hide. And for that reason, you are more able to take risks to get somewhere. You can’t stay where you are: you’ve got to move forward.
Big companies can solve harder problems in some sense, but they’re typically more constrained by politics and by other kinds of challenges. Small firms tend to be more innovative and more energetic.
FLOYD TUCKER: OK. Is there a certain formula for startup success or is each one unique and blazing their own trail?
SEAN MURPHY: Each team is unique. They have unique skills, unique talent, and a unique background. That being said, we normally a see five stages that teams go through.
FLOYD TUCKER: What are some of these milestones that you’ve been seeing?
SEAN MURPHY: In the beginning the real questions are:
- “What’s the problem we’re going to solve?”
- “What’s the product we’re going to develop?”
That’s the formation problem.
To get open for business you’ve got to figure out who’s going to be on the team. Who’s going to be part of this company?
Once you’ve got the team set, your next question is who will be the early customers. Who is your customer?
If you can close some business, you can now say, is there a niche we can identify, is there a business model we can sketch out here? Pricing points, all the things that are involved in actually creating a sustainable business.
And finally, when you’ve got it sustainable, can you make it a scalable business? Can we scale this up? Can we transition from heroic efforts to routine, excellent performance?
FLOYD TUCKER: I understand the formation around a product, and of course be open for business. Can you tell me a little bit about the early customer stage?
SEAN MURPHY: We just spend a lot of time on this. It’s a very different sales style than you’ll see later on. It’s a conversational sales style. It’s much more about understanding the problem.
You’re trying to solve three equations, three unknowns:
- Are you talking to the right people?
- Do you have the right features?
- Do those features translate into benefits that are going to be useful to them?
FLOYD TUCKER: What’s involved in the scaling up stage?
SEAN MURPHY: This is actually a hard problem for a lot of founders. Because most people don’t go to startups to create processes and establish structures. They go to startups to make their own rules and to improvise new solutions.
So the challenge is really the transition from the heroic to the routine.
I think the other aspect of that is that the people that tend to do well in the early stages of a startup tend to be generalists. To prosper, to scale up, you’ve actually got to hire specialists that are good in a particular position.
And you’ve got this transition to the need for more process and the need to hire specialists, so things are not as fun anymore. Now, they may be much more lucrative, but they’re not as fun.
FLOYD TUCKER: I feel I have a good understanding of the roadmap that we’re talking about. Can you give a couple of examples of some of the common issues that you’ve seen?
SEAN MURPHY: A lot of people when they start companies are in the grip of a vision. They see this full-featured product. They see this Death Star or “Swiss Army Chainsaw” that’s got all this stuff, right.
And the reality is that customers are only going to buy for one or two reasons.
So you really have to focus on “what’s the least that we can do to start to be able to sell?”
Because if you’re bootstrapping, you have to sell sooner rather than later. So what’s going to move the needle for the customer.? And it’s ultimately where you’re going to get their perception of value.
So the challenges are:
- slimming your features,
- understanding what the customer’s time table for buying is, and
- understanding what the customer values about what you’re offering.
FLOYD TUCKER: Given the fact that most startups have limited resources, with time, money, personnel being issues for them, why should they look to outside advisors?
SEAN MURPHY: Founding teams bring a lot of passion to what they’re doing. There’s often what you might call “a full and frank exchange of views” around certain topics.
It can be useful to have people you trust, whether it’s friends, acquaintances, people you have worked with. On an informal level, you can bounce ideas around with. That gives you a kind of emotional perspective, or emotional distance, right?
Formal advisors can do the same thing for you; they may also be more familiar with some of the early market issues.
As you formalize that process, half of the value is actually in the team coming together, agreeing on a set of objectives, agreeing on a story and then getting feedback as a result. It’s half in the preparation and half in the delivery. So I would say it’s perspective, it’s getting used to setting targets formally.
FLOYD TUCKER: So, Sean, as founders get closer and closer to market, what are some of the things that you see them getting stuck on?
SEAN MURPHY: Many times, the founders, in the beginning, will sell to people that already know them. And so, a couple of things happen as a result:
- They really don’t really understand why people buy. Because it could be that they were more “a friend doing you a favor”.
- They don’t realize how important the process of establishing trust is. And so they undervalue that, and it trips them up later on.
- And they don’t know who to sell to next, because they’re out of friends.
Another thing that can happen is that an early customer may use a product in a certain way that’s different from what the team anticipated. And the team is in the grip of the vision, their thing is “hey you’re using my product wrong!”
When in fact, what they may have done is to point you to where the market really is.
FLOYD TUCKER: Sean, I want to thank you for your time today, but I do have one last question for you. You know, to me you don’t sound like a traditional marketer. How do you differentiate yourself?
SEAN MURPHY: So, the people that come to us, that are bootstrapping, are unhappy with current level of revenue.
We focus on revenue. Whether that means that we are doing sales process, we’re doing marketing, we’re doing business development, what we call customer development that covers all of those.
FLOYD TUCKER: So Sean, thanks so much for spending some time with us. To learn more information about Sean, and SKMurphy, visit SKMurphy.com and bootstrappersbreakfast.com.
Related Links:
July 17th, 2010
Here are four movies that I watch when I need to refill my gumption or recover my sisu.
The Verdict
Paul Newman’s portrays of an alcoholic plaintiff’s attorney chasing lawsuits by attending wakes and funerals, he re-discovers his moral core and perseveres in a complex medical malpractice lawsuit. Near the beginning of the film he is offered a settlement to look the other way and he says “If I take the money, I am lost.” It marks the turning point of his recovery.
Apollo 13
Two scenes stand out that highlight the challenges of persevering as an engineer:
- Gary Sinise as Ken Mattingly, working in the simulator to determine a cold start sequence that will get the capsule operational without exhausting the remaining battery power.
- A team of engineers crowd around a large table that has a copy of all of the material available in the capsule. They need to find a way to adapt carbon dioxide filters from the Command Module for use on the Lunar Excursion Module (LEM) where the crew has taken refuge after an accident has disabled the Command Module. Gesturing first with a squat square filter and a longer thinner cylindrical filter, the lead engineer says, “OK people, listen up. The people upstairs have handed us this one and we gotta come through. We gotta find a way to make this fit into the hole for this, using nothing but that.”
The Dish
This is an extremely funny movie about the team manning the Parkes radio telescope in Australia, the dish is destined to capture the video for the Apollo 11 moonwalk. Many things go wrong (see official version) and a small team learns the value of both checklists and improvisation. Best line “”Failure is never quite so frightening as regret.”
The World’s Fastest Indian
The Indian is a motorcycle driven by Bert Munro that sets a land-speed world record on the Bonneville Salt Flats in 1967. The “World’s Fastest Indian” portrays a series of challenges that Munro had to overcome to set the record, as many related to raising money and battling bureaucracy (e.g. US Customs) as engineering challenges. The real Burt Munro was born in 1899 and 68 when he set the record, Anthony Hopkins goes a great job of portraying a tinkerer and a problem solver who continually modifies a motorcycle originally designed and manufactured in 1920 to achieve a world record.
July 16th, 2010
Seth Godin’s post today on “A Hierarchy of Failure Worth Having“ crystallized one of my concerns with some recent startup practices. Godin outlines the following desirable hierarchy of failures:
FAIL OFTEN: Ideas that challenge the status quo. Proposals. Brainstorms. Concepts that open doors.
FAIL FREQUENTLY: Prototypes. Spreadsheets. Sample ads and copy.
FAIL OCCASIONALLY: Working mockups. Playtesting sessions. Board meetings.
FAIL RARELY: Interactions with small groups of actual users and customers.
FAIL NEVER: Keeping promises to your constituents.
I think he gets it exactly correct. And I think a number of entrepreneurs, in particular in the early market, get it almost exactly backward by
- Putting up a landing page that promises a capability or extra feature that doesn’t exist.
- Focusing more on a potential solution when talking with prospects–using them to prototype– instead of ensuring that they really understand the prospect’s perspective on the problem.
- Looking for funding before they look for customers, using investor interest as validation for their business concept.
Godin concludes:
Most organizations do precisely the opposite…They rarely take the pro-active steps necessary to fail quietly, and often, in private, in advance, when there’s still time to make things better.
Better to have a difficult conversation now than a failed customer interaction later.
The foundation of a successful business is the ability to make and meet commitments to customers, partners, employees, suppliers, and other stakeholders. If you inform them in advance, “we are going to try the following experiment” they may or may not take part, but they can offer informed consent. I see too many instances more recently where founders undervalue a relationship with a customer based on mutual trust and commitment.
