Archive for September, 2010

Quotes For Entrepreneurs–September 2010

Written by Sean Murphy. Posted in Quotes

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.

+ + +

In the realm of ideas everything depends on enthusiasm.. in the real world all rests on perseverance.
Johann Wolfgang von Goethe

+ + +

Time zones matter more than miles: if you are not in the same room then circadian rhythm offset matters more than geography.
Sean Murphy from “Beat the Clock”

+ + +

“If you chase two rabbits, both will escape.”
Chinese Proverb

+ + +

“Success is the culmination of failures, mistakes, false starts, confusion, and the determination to keep going anyway.”
Nick Gleason

+ + +

“Difficult to see. Always in motion is the future.”
Yoda to Luke in Star Wars V: The Empire Strikes Back

+ + +

“Organization and good planning are just crutches for those who can’t handle stress and caffeine.”
Evan Steeg

+ + +

“Goodwill is the one and only asset that competition cannot undersell or destroy.”
Marshall Field

+ + +

“When kind men grow angry, things are about to change.”
Jim Butcher

+ + +

“Being poor is knowing exactly how much everything costs.”
John Scalzi in “Being Poor

Bootstrapping gives you a pretty good idea as well. “Being Poor” is a poignant blog post by Scalzi from September of 2005 and well worth reading. For another perspective see TJIC’s “Leftist Propaganda.”

+ + +

“The right word may be effective, but no word was ever as effective as a rightly timed pause.”
Mark Twain

+ + +

“We shape ourselves like clay from someone else’s dream.”
Danny Elfman “Not My Slave” (lyrics)

hat tip to Brad Pierce’s “The Paradox of Values.”

+ + +

“The truth is, start-up-land is littered with mavericks, iconoclasts, dropouts and misfits.”
Sramana Mitra in “The Real VCs of Silicon Valley”

As I read that quote again I think to myself, yes, that’s me, these are my kind of people.   I mentioned this in “Highlighting Matt Maroon’s Why Not To Do A Startup

+ + +

“The world is divided into people who do things and people who get the credit. Try, if you can, to belong to the first class. There’s far less competition.”
Dwight Morrow

+ + +

“It takes a lot of courage to show your dreams to someone else.”
Erma Bombeck

Sean Murphy to Moderate Panel “Will Work for Equity – the World of Startups” at Silicon Valley Code Camp 2010

Written by Theresa Shafer. Posted in Events, skmurphy

EVENT ADVISORY for San Jose, CA – Sean Murphy, CEO at SKMurphy, will host the “Will Work For Equity – the World of Startups” panel discussion at the 2010 Silicon Valley Code Camp at Foothill College, Los Altos Hills, CA.  The panel will outline important tips and issues to consider if you are investing your time in a startup.

Silicon Valley Code Camp is a wildly successful community unconference event. The Code Camp is about coding and software development where developers learn from fellow developers. The 2010 Silicon Valley Code Camp will have 193 sessions with presentation topics suggested and voted on by attendees.

A panel of three startup CEO’s will offer their perspectives on finding co-founders and answer questions from the audience.

  • Peter Hoffman CEO of Interactive Mobile Solutions. IMS helps event planners enhance their attendees’ conference experience through an innovative, mobile technology solution called ConferenceConnect.
  • Merc Martinelli CEO of Verdafero. Verdafero Inc. has developed a SaaS platform that can be used for sustainability planning, energy efficiency and carbon management services for small and medium enterprise businesses.
  • Matt Cameron CEO of Corporate Catapult. Corporate Catapult Inc, a career acceleration tool that is presently in private alpha.

Who:   Sean Murphy, CEO, SKMurphy Inc

When: Sunday, October 10, 2010 at 2:45 pm

Where: Silicon Valley Code Camp at Foothill College, Room 8402

12345 El Monte Road
Los Altos Hills, CA 94022

Register: http://www.siliconvalley-codecamp.com/Register.aspx

About SKMurphy Inc.

SKMurphy, Inc. helps early stage startups and consultants market and sell the intangible, whether it is software or services. The company serves as advisors to dozens of startups, helping them explore new options, and to identify early customers and early revenue. Its clients offer software products or services in a wide variety of industries, including engineering, legal, health care, EDA, workgroup collaboration tools, financial, cellular, and text analytics

Mavericks, Iconoclasts, Dropouts and Misfits

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

“The truth is, start-up-land is littered with mavericks, iconoclasts, dropouts, and misfits.”
Sramana Mitra in “The Real VCs of Silicon Valley”

I have come to the conclusion that most entrepreneurship is involuntary. Either someone is an entrepreneur from the time they are young, which was my personal experience, or they are thrust into situations where their old career path(s) are foreclosed to them and they have to become entrepreneurial.

Startups survive because they can live on the scraps of a market (a niche) that larger competitors ignore or would be unable to pursue profitably. This is doing less with less. The trick is to minimize the amount of wasted effort. The challenge is to launch new initiatives and projects that build on existing relationships, knowledge, and successes.

“Life is pain, Highness. Anyone who says differently is selling something.”
Wesley to the Princess in “Princess Bride

Related blog posts

Cold Calling Won’t Find Your First Business Customer

Written by Sean Murphy. Posted in 3 Early Customer Stage, Consulting Business, Customer Development

I meet teams trying to cold call for their first customer and I just haven’t seen it work for startups selling to businesses.  Here is a relevant excerpt from  Gabriel Weinberg’s interview with me for his traction book.

yegg: So it is pretty rare that the first customer is from a cold lead?

skmurphy: I haven’t seen it. The challenge with a first customer for new software is that big unknown in the prospect’s mind is if the team going to perform. One of the best ways to attack that is through testimonials, but initially it’s got to be past performance, where somebody can vouch for the person–you know I’ve worked with Gabriel at this company or I’ve worked with so and so here.

yegg: You sit down with the warm lead for lunch. Is there anything productized at this point or are you in an open-ended discussion?

skmurphy: The first and most important thing is to figure out: do they have a problem that we can help them with?  Often that will initially look more like a mix of consulting and product operation.  So, the technology has to at least work when it’s in the founding team’s hands.  It’s nice if it can work if you give it to the customer, but the founders have to at least be able to make it work to solve a real problem for the customer that the customer will pay for.

yegg: You have no problem with a consulting aspect for the first few customers?

skmurphy: No, and I think other people have described that in different terms. There is this term Flintstoning, or Wizard of Oz–it’s not uncommon that the team has to either work around problems in the technology or on-the-fly improvise adaptations that look more like a service engagement. If you try and make your product perfect before you engage, you’ll run out of time.

yegg: Because you didn’t understand the problem?

skmurphy: Right. Another thing that can happen is entrepreneurs show us a datasheet or a feature list and they’ve got forty features listed. Maybe twenty of them are real and twenty of them are things that they are planning, and they want to go to a customer and say, what do you think of these forty features?

The reality is that if the first two, three, four, maybe five are not compelling, he is not listening to your next thirty. So, another thing we’ll help startups with is to focus on a core need or a core problem leveraging a core capability.

We help them focus on the delta between the prospect’s status quo and what their offering does to move them to a better level of profitability, level of revenue, lower error rate, faster cycle time, …. You need to proceed from some theory about a delta, some outcome you are going to create in the prospect’s business.

For more on delivering your solution as a service before trying to fully automate it in your customer’s hands see the  Aardvark talk from the 2010 Startup Lessons Learned Conference on  “Wizard of Oz” development. It’s 30 minutes long and worth viewing at http://www.justin.tv/startuplessonslearned/b/262666394 The WSJ also wrote up Aardvark’s approach at “How A Startup Grew By Paying Attention To What’s Behind the Curtain.”

Related posts:

The Limits of Legal Self-Help

Written by Sean Murphy. Posted in 2 Open for Business Stage, Legal Issues, skmurphy

Every bootstrapper has a limited budget for attorney’s fees. Attorneys can help you foresee problems and craft contract language, which looks remarkably similar to English but is in fact code that is executed by the legal system. Use them to protect valuable assets–intellectual property, source code, revenue streams–not create them.

A small digression

If you have no experience whatsoever with software licensing issues this can be very dangerous.

True story: we had one client–briefly in 2007–who had downloaded three contracts from different websites and created a Frankenstein out of the piece parts. The problem was that one of the contracts explicitly specified that their development efforts on the software product were “work for hire” which meant that they had transferred ownership of their technology to their first client.

The client was alas somewhat unscrupulous and happily signed the contract very quickly and with a minimum of negotiation. They felt great…for a while.

They engaged us to help them find more customers and as a part of our due diligence (and in assisting ongoing negotiations with their original client) we discovered that they had a serious problem and that their first client intended to wring maximum advantage from the contract. We helped them find a startup friendly attorney but the business negotiations with the original client ultimately foreclosed a market segment for that client’s exclusive use of the technology in exchange for giving them ownership back of their technology.

This was an “own goal” that some first time entrepreneurs are at risk for:  contracts may look like they are in English but they are not. You should at least take your English language “meeting of the minds” deal points and pay an attorney for an hour or two to review the basics. If you have a first customer, a clear scope of work or datasheet for the product, agreement on value/price, you should be able to find an attorney that would be willing to defer an hour or two of time to help prevent basic mistakes.

We routinely recommend that bootstrappers talk to Robert Dang or Joey Tran at FortisGC in Redwood Shores or George Grellas in Cupertino. All three have experience helping bootstrapping startups, are highly knowledgeable, and a pleasure to work with.

“Work For Equity” Panel at SVCC Set For Sun-Oct-10 2:45pm

Written by Sean Murphy. Posted in Events, skmurphy

If you are considering joining a startup or are in the process of building out your initial team I am moderating a panel at Silicon Valley Code Camp with three startup CEO’s that you should find helpful. It’s scheduled for Sunday October 10 at 2:45pm and you can sign up here.

We  will explore:

  • Practical difference between employees, contractors, alliances, partners and co-owners.
  • How to define the key roles in a startup: who is wearing which hats.
  • What partners need from you.
  • How to pitch to a co-founder.
  • What it means to join a global team.

Panel:

  • Matt Cameron CEO of Corporate Catapult, a career acceleration tool in private alpha.
  • Peter Hoffman CEO of Interactive Mobile Solutions. IMS helps event planners enhance their attendees’ conference experience through an innovative, mobile technology solution called ConferenceConnect.
  • Merc Martinelli CEO of Verdafero, which is a SaaS platform that can be used for sustainability planning, energy efficiency and carbon management services for small and medium enterprise businesses.

Silicon Valley Code Camp is free an open to the public.

Please register so that we can get an accurate gauge of interest and get a room that’s an appropriate size.

Related blog posts:

Pete Tormey on the Benefits of Attending a Bootstrappers Breakfast

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

steaming hot coffee and serious conversationPete Tormey moderates the Dublin/Pleasanton Bootstrapper Breakfasts® (along with Richard Moerschell) and fills in from time to time in San Francisco as well. I asked him what he felt some key benefits attendees gained at a breakfast and he sent me a great three minute podcast that I have embedded below. He identifies three benefits he see attendees gaining from the conversation at a Bootstrappers Breakfast:

  • Being around other bootstrapping entrepreneurs renews your enthusiasm
  • Serious suggestions from other attendees can spark your own creativity in addressing business challenges
  • Comparing notes can give you peace of mind knowing that many folks are wrestling with the same issues.

Or download directly: PTormeyBB100920

We also have three Bootstrapper Breakfasts® this week in Silicon Valley

  • 7:30am to 9:00am Tue-Sep-21 at Coco’s at Lawrence and Oakmead in Sunnyvale
  • 7:30am to 9:00am Thu-Sep-23 at Athens Burger Restaurant in Dublin
  • 9:00am to 9:00am Fri-Sep-24 at Red Rock Coffee in Mountain View

These breakfasts cost $5 if you register in advance (plus the price of your own food and/or drink) and give you a chance to compare notes with other technology entrepreneurs.
Register

The Future, Arriving Yesterday, Remains In Constant Motion

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

“Difficult to see. Always in motion is the future.”
Yoda to Luke in “The Empire Strikes Back”

Michael Malone’s “The Future Arrived Yesterday: The Rise of the Protean Corporation and What it Means for You.” was published in May of 2009. It offers a vision of the future of the corporation that builds on his earlier “Virtual Corporation,” written with Bill Davidow,  and “Bill and Dave.”  The last book offers a number of unique insights into the success of Hewlett Packard and supplies complementary information to David Packard’s “The HP Way,” another book that is well worth reading.

There is a good 15-25 page article in “The Future Arrived Yesterday” but I don’t know that I can recommend reading it before you have read “Bill and Dave” and “The HP Way.” There are a few key ideas that I think are coming true. As Marcelo Rinesi has observed, “The future is an abstraction, all change is happening now,” and we can see the shape of the future today.

Proteus was a shape changing sea god in Greek Mythology. Wikipedia advises:

From this feature of Proteus comes the adjective protean, with the general meaning of “versatile”, “mutable”, “capable of assuming many forms”. “Protean” has positive connotations of flexibility, versatility and adaptability.

Malone starts out with 6 premises:

  1. The pace of technological change will continue; Moore’s Law will continue to drive semiconductor technology for at least another decade.
  2. The number of consumers in the world economy will triple to three billion by 2015, thanks to the Internet and cheap mobile phones.
  3. Industrialized nations, but especially the United States, are becoming more entrepreneurial.
  4. A new generation of young people, with different attitudes toward institutions and authority, is entering the workforce.
  5. Companies, by their very nature, want to grow and endure.
  6. Human nature has not changed.

He identifies two forces at work that will transform these premises over time:

  • Centrifugal forces that are pulling corporations apart: technology, culture, and demographics.
  • Centripetal forces that are drawing corporations together: human needs for socialization, commitment to a larger purpose, continuity and constancy, and a sense of legacy.

This leads to a “Protean structure” of:

  • A small core of employees with real guarantees of a lifetime job. Perhaps a few dozen to a few hundred employees.
  • An inner ring of “regular employees who look like today’s regular employees. They don’t have a lifetime employment guarantee (but then very few do). Perhaps 10-20% of the total employee count.
  • An outer ring (or Cloud) of temporary workers of all sorts. They may have contracts  or a relationship that may last from a few hours to a decade or more, while monthly turnover may reach 50%. This is 80-90% of the employees.

This looks a lot like an early stage startup:, a few founders, a handful of full time employees, and much of the work performed by contractors or consultants or a variety of highly specialized business process outsourcers.

Malone observed:

Successful companies of the future must find a way to continuously and rapidly change almost every one of their attributes–products, services, finance, physical plant, markets, customers,  and both tactical and strategic goals–yet at the same time retain a core of values, customs, legends, and philosophy that will be little affected by the continuous and explosive changes taking place just beyond its edges.

Key take-aways for startups.

  • Read the “The HP Way
  • Read “Bill and Dave.
  • Plan for global competition and a global workforce from the get go.
  • Give some thought to the key values that will shape your culture, and ultimately your competitive posture and your ability to attract new  employees.
  • Understand where you fit in the clouds of other enterprises and how they can be the source of not only revenue but partnerships based on shared development of offerings that are core to your firm and important but off strategy for the larger firm.

Reminder: “Tips for Keeping Informed” Webinar Thu-Sep-23

Written by Sean Murphy. Posted in Events, Tools for Startups

Just a quick reminder that I will be presenting on “Feed Readers De-Mystified: Tips for Keeping Informed” this Thursday, September 23, 12:00-12:45 PM PDT. If you are not using feeds and alerts to track your competition, stay on top of  developments at major customers, and keep abreast of significant developments in your industry, then you are missing out on low cost–and often free–methods for keeping informed.

Register here:  People On the Go’s Free Lunchtime Webinar “Tips For Keeping Informed

We Cannot Sate Your Hunger For Certainty But We Can Increase Your Odds of Success

Written by Sean Murphy. Posted in Customer Development, skmurphy

I have not found a hunger for certainty to be well correlated with an entrepreneur’s ability to make decisions in a timely manner or tolerate the ongoing level of ambiguity and uncertainty that they are likely to face.

Most markets that are of any size or grow to any size become a “Red Queen Race” where you have to go faster and faster just to stay in place. Product-Market fit may be achieved early but requires a significant amount of effort to maintain in the face of new competitive offerings and emerging requirements in your customer base and from new prospects. The half-life of a market insight is perhaps six months.

Both incumbent and challenger firms enter into a co-evolving ecosystem of partners, suppliers, customer expectations so that even for a successful company last year’s approach is often in need of improvement.This requires you not only to continue to learn, but to learn faster than your competitors.

To borrow and analogy from medicine, it’s less like an appendix removal where everything is more or less in the place and the risks can be anticipated and therefore mitigated, and more like infection control in a hospital where the bacterial population evolves responses to whatever cleaning, material handling, and antibiotic regimens are instituted.

So what can we guarantee if you ask for our assistance? Not that your new product or new business will be successful, alas.

We have developed considerable expertise in helping consulting firms productize their service offerings and software firms identify the best niche for their current products and new markets where their current technology base and core competencies will give them an advantage.

We have an emotional distance from your product that can often provide a perspective that will complement the insights that your team has. In many cases new products fail not from lack of invention but from a lack of understanding of who will gain the most value, what firms are more likely to make an early decision in your favor, and which early customers can act as a gateway to a new or emerging market where you can prosper.

We have several diagnostics that we can take you through including:

  • The first seven questions your product plan should answer
  • A critique of your current demo and ways to improve it.
  • An analysis of your current sales pipeline and process with an eye to cutting time to revenue and increasing your win rate as well as decreasing your “no decision” rate.
  • Interview your current customers–as well as firms that selected someone else or who decided to stay with their status quo–to assess your current targeting and engagement process as well as provide you with a deeper understanding of what’s working and what successes you can build on.

We like working with early stage teams because everyone is effectively customer facing and although may sometimes be sharp disagreements everyone can sit around one table and hash things out without the politics and corporate kabuki of who is right instead of what is right that larger firms can sometimes fall victim to. We have helped teams at larger firms and public corporations where the dynamics mimic those of a startup.

Many startups transit the stage of finding their first dozen customers and then scale a formal sales process, never looking back. We are comfortable operating in the highly uncertain and ambiguous early markets, where startups have to act on the reasonable probability that an opportunity exists. If they wait for certainty they lose the chance to be further down the learning curve than other nimble small competitors and may face larger competitors who, now that the market opportunity is clear, can bring considerably more people and resources to bear.

If your team is wrestling with the challenge of finding early customers, selecting a target customer set, or debugging a sales process that was starting to work and then seems to have stopped, we can help. Contact us.

3 Equations & 3 Unkowns: Target Customer is Key Initial Value

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 4 Finding your Niche, Customer Development, Favorites

I mentioned in “3 Equations 3 Unknowns:  Customers, Features, and Message” that we spend a lot of time on the early customer stage. It requires 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:

  1. Are you talking to the right people?
  2. Do you have the right features?
  3. Do those features translate into benefits that are going to be useful to them?

The customer discovery interview process can be tough to master. You are trying to determine if the customer has a problem that they will pay you to solve with your technology: do you have the right features and do those features translate into useful benefits.

But we actually see team often go wrong with the first question: are you talking to the right people. And this error is much harder to recover from. You can do a poor job interviewing the right prospect and get some feedback that allows you to iterate. But a great job interviewing the wrong prospect will tell you very little. Improving targeting, or at least validating you can identify a prospect, has a big impact.

When someone is describing their offering at the a Bootstrappers Breakfast we will often take them through the “Three Question Test” as a group exercise. We will say,

“OK, we have assembled a brain trust for you this morning, you have 12 people around the table who would like to help you. Please give us three questions that have yes, no, or number answers and tell us the combination that would indicate that you could offer the person they are talking to clear value.”

It’s harder than it looks. Most folks start with  something like “Do you want to save money on your car insurance.” This question is worthless. Any question that you can append “, you moron” to the end of is not a good question because it does not disqualify anyone (I suppose if you didn’t own a car you would not want to save money on your car insurance). The next iteration tend to start out much too broadly, ignoring geography, industry, customer firm size (whether measure in headcount, revenue, or some other transaction count), title(s) of buyer, and pain points that are actually symptoms that a potential customer is experiencing.

On this last point you don’t go to your doctor and say “I think I have diabetes” you say “my vision is sometimes blurry and I am getting really thirsty and I feel tired all the time.” Business prospects don’t want “a better website” they want “more leads from their website” or “fewer calls to the hotline–because the website allows customers to solve their own issues.”

Take a Minute to Recall 9 Years Ago

Written by Sean Murphy. Posted in skmurphy

I apologize for this detour from our exploration of entrepreneurial issues, but this anniversary of my complete confusion is one that I continue to observe, still attempting almost a decade later to make sense of it.

I am old enough to remember what I was doing when I learned that John Kennedy had been assassinated. I was in kindergarten playing at a friend’s house when his Mother sent me home. My Mother accused me of misbehaving until I convinced her to turn on the television with my wild story of an assassination.

I suppose I will always remember the morning of September 11, 2001 as well. Terrible events are emotionally salient. I recounted my memories last year in “Take a minute to recall 8 years ago,” I won’t do so again this year.

After my grandfather died my father remarked to me that his memories of him were formed from pictures of him.  William Gibson wrote in “Dead Man Sings” that “Time moves in one direction, memory another: we create artifacts to counter the natural flow of forgetting.” I think my memories of key events are mediated by flickering video images:

  • Six pixels are turning on and off inside a small oval shape on an ultrasound monitor marking a child’s heartbeat; two weeks the small oval shape’s color remains constant:  miscarriage.
  • Two unbelievably large buildings collapse that I was certain would outlast me. I keep thinking I will wake up and find I have fallen asleep reading the latest Tom Clancy novel. The Chinese curse “may you live in interesting times” is coming into crystal sharp focus.

In “Lesser Sons of Greater Fathers” I wrote

There was a mindfulness in Silicon Valley after 9/11 and the dotcom crash that I miss. I don’t miss the terrible turmoil and the anxiety and the 25% contraction in employment, but I do miss the mindfulness. I remember attending a Churchill Club program “Beyond the Bubble: the Future of Technology and Investing” that was held on September 20, 2001; it was a little over a week since 9/11 and there was a minute of silence to memorialize the dead that lent a candor to the program that followed. Edward Howe has observed that “a good scare is worth more to a man than good advice” and that was true in late 2001 and 2002 in Silicon Valley.

I will end with three quotes in an effort to summarize what I think I have learned from today’s period of reflection.

+ + +

“There is a fatality, a feeling so irresistible and inevitable that it has the force of doom, which almost invariably compels human beings to linger around and haunt, ghostlike, the spot where some great and marked event has given the color to their lifetime; and still the more irresistibly, the darker the tinge that saddens it.”
Nathaniel Hawthorne in “The Scarlet Letter, Chapter V Hester at Her Needle

+ + +

“Now I am resigned, in advance, to the loss of an American city by a nuclear weapon. The End of the World now looks like a comic-book premise, a Heston-movie conceit. We feared it would all be gone in a day, our world upended like an Etch-A-Sketch. What we never considered was a long, slow war, a conflict that burned and sputtered, skittered from one spot on the map to the other.”
James Lileks writing on September 11, 2003

+ + +

“The United States is a global power and, as such, it must have a global view. It has interests and challenges beyond this region and certainly beyond Afghanistan. The issue there is not whether the United States can or can’t win, however that is defined. The issue is whether it is worth the effort considering what is going on in the rest of the world. Gen. David Petraeus cast the war in terms of whether the United States can win it. That’s reasonable; he’s the commander. But American strategy has to ask another question: What does the United States lose elsewhere while it focuses on the future of Kandahar?

The 9/11 attack shocked the United States and made counterterrorism the centerpiece of American foreign policy. That is too narrow a basis on which to base U.S. foreign policy. It is certainly an important strand of that policy, and it must be addressed, but it should be addressed through the regional balance of power. It is the good fortune of the United States that the Islamic world is torn by internal rivalries.

This is not dismissing the threat of terror. It is recognizing that the United States has done well in suppressing it over the past nine years but at a cost in other regions, a cost that can’t be sustained indefinitely and a cost that could well result in challenges more threatening than a rising Islamist militancy. The United States must now settle into a long-term strategy of managing terrorism as best as it can while not neglecting the rest of its interests.

After nine years, the issue is not what to do in Afghanistan but how the global power can return to managing all of its global interests, along with the war on al Qaeda.”

George Friedman “9/11 and the 9-Year War” (republished with permission of STRATFOR)

How We Help You Explore Whether to Hire Us

Written by Sean Murphy. Posted in skmurphy

My interview with Gabriel Weinberg has inspired a number of entrepreneurs to contact us about getting our help with their early customer acquisition issues.

I thought I would outline briefly how we help them get to know us better.

We work one or more of your issues with you in a phone call that lasts up to an hour. To make the time productive for everyone we ask that you either

  • Answer our “First Seven Questions” with at least one or two sentence answers
  • Fill out the Startup Maturity Checklist
  • Send in a copy of your latest customer facing presentation and a list of the hypotheses you are testing
  • Outline your current situation and one or two challenges you would like to discuss, providing enough context to enable a focused conversation.

I have found that entrepreneurs who can’t take the time to prepare to make the conversation focused won’t get much out of the conversation so it tends to be  waste of time for everyone. Of course we will answer any questions that we can about our approach and how we might be able to support your team.

We have a global practice, with about half to two-thirds of our clients in Silicon Valley at any one time.  We are comfortable with skype voice/chat and wikis as a way of managing distance collaboration.

We do sign NDA’s but not for the get acquainted meeting, if we ask you a question that you feel is proprietary just ask us to re-phrase it. We will normally be asking questions that we think a prospect will have.

We work almost exclusively with bootstrappers or funded firms in turnaround and understand the need to be cost effective. We do not bill like a law firm in six minute increments and prefer fixed price models because you can budget for them against your cash flow, it also encourages you to pick up the phone or send an e-mail or text message about an issue that we can help you mitigate or manage instead of trying to play catch up three or six weeks later.

We do have some advisory relationships that are based on equity but they have been the result of a longer term association (typically at least six months). We also do revenue share arrangements but they tend to be more complex and less appropriate for early project work together.

We have a global practice but very rarely travel outside of Silicon Valley. It allows us to be highly available and support remote folks using a variety communication tools.  We are up early, can stay up late, and will work on Saturdays and an occasional Sunday afternoon as the need arises.

If you would like to propose a specific project or set of issues you would assistance with we are happy to focus our initial conversation and initial project work on those.  Don’t assume that there is just one more thing you need to do that will make all of the difference: it’s more than likely going to require a combination of things applied diligently for months. After we have had a chance to de-brief on our initial conversation we can also suggest a project or two that we believe will target a critical need.


CA Proposition 65 Health Warning: it’s a long damn interview; if your sleep onset latency is less than 20 you are advised to read it lying down. Efforts to offer the audio as a podcast or CD had to be abandoned when we could not obtain liability insurance for listeners who were driving or operating heaving computing machinery. If a huge wall of text triggers your tl; dr glands consider one of these five minute videos instead:

Gabriel Weinberg Interviews Me For His Traction Book

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

Gabriel Weinberg is a serial entrepreneur (latest startup: DuckDuckGo), a Hacker Angel, insightful blogger, and frequent contributor to Hacker News. He is writing a book on how startups get traction and interviewing folks like Patrick McKenzie, Jimmy Wales, and Paul English to collect lessons learned from a variety of perspectives. I was delighted when he approached me to take part and found it to be a very thought provoking conversation.

He has posted the full transcript on his blog at “Sean Murphy on the First Dozen Enterprise Customers” here are two questions to give you a flavor:

yegg: What is your role exactly, i.e. when do you typically get involved and what are your typical responsibilities?

skmurphy: So, we get called in a variety of places. Sometimes folks that are trying to come together will contact us and we’ll help them with formation. We’ll refer them to attorneys, accountants, naming experts… Often they are underway: they’ve made a couple of sales but they didn’t realize why they were successful or what they are not doing. Sometimes they are just pretty close to giving up and they are trying to figure out should they go on or not.

It’s normally early market issues: they typically have fewer than six paying customers. We have worked with some larger firms that are doing new product introduction where they have a well-established product but they’ve “lost the recipe” for introducing a new product. And we’ve worked in a couple of turnaround situations where a new CEO has come in who is trying to figure out how to take with the technology in hand and find a market for it.

In most cases our model is the “sell what you have.”

yegg: OK, so let’s walk through an example. How do you help a team get that first customer?

skmurphy: Most of the time it’s going to be somebody that either they know or that knows somebody they know, or somebody that we know or knows somebody that we know. For the most part our clients are going into a market that they understand with technology that they have developed. We help them make a list of every project they’ve worked on and everyone they’ve worked with. They reach out and say, “Here is what we are doing, do you know somebody we should talk to that makes sense? ”

People who’ve developed expertise by working in a field for a while are typically able to get an initial meeting–cup of coffee or lunch, these kinds of things. Sometimes we encourage them to shift to a different market because we find out that the technology has more applicability and offers more value there.

Let me try and zoom in just a little bit more: one of the first things we help them with is to put together what we call a lunch pitch. This is a single piece of paper that has five to ten bullets and a perhaps a visual that helps them focus the conversation making sure they understand the prospect’s problem. The early conversations are all about exploring the prospect’s problem and pain points.

There is also a comment thread at http://news.ycombinator.com/item?id=1671852

Startup Advice in Three Word Doses

Written by Sean Murphy. Posted in Rules of Thumb

Dharmesh Shah posted 47 pieces of “Three Word Startup Advice” in January of this year. I picked these seven out as the most applicable to bootstrappers:

  • Watch your cash.
  • Pick founders carefully.
  • Guard your time.
  • Decide with data.
  • Accept imperfect data.
  • Protect your health.
  • Build a brand.

See also “Dharmesh Shah’s Pithy Thoughts for Startup Co-Founders

Ed Weissman added these seven when it was picked up on Hacker News

  • Find a customer.
  • Satisfy their needs.
  • Get their money.
  • Use their feedback.
  • Improve your software.
  • Hit your deadlines.
  • Never give up.

See also “Ed Weissman on B2B Opportunities” and Part 2

Here are seven I extracted and boiled down from the Cluetrain Manifesto

  • Markets are conversations.
  • Markets are human.
  • Networked markets self-organize.
  • De-cloak, get personal.
  • Talk with customers.
  • Listen to customers.
  • Share community concerns.

My contributions, none of which are original.  I like all of the above as well, these are meant to address additional areas:

No good links for learning curve.  I need to blog about learning curve effects, both in customer sites and their importance in considering competitive posture.  See also Self-Mastery, Expertise, Connections, and Perseverance.


Update Sun-Sep-05: a few more occurred to me that had not been mentioned

  • Define your hypotheses
  • Leave the BatCave
  • Test your hypotheses
  • Form Advisory Board
  • Understand Root Cause

Appreciate Why Prospects Say “Your Baby Is Ugly”

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

My second job out of college was with an  early EDA software startup, Silvar-Lisco. I was employee #13 and I was a “project manager, marketing and sales.” This meant that I did both pre and post-sales support.  Over time I focused more on post sales  support but in the beginning there were just two of us handling all of the prospects and customers from a technical support perspective.  They hired a third pre-sales support engineer and the three of us worked at common table with one phone. It made for a  lot of informal meetings and a lot of time spend more productively out of the office.

In one demo of our flagship product to a major semiconductor vendor there were two of us technical support folks giving the demo, a sales person, and one of the founders–and architect of the product–facing off against four engineering managers who were trying to decide whether to start a formal evaluation. This was their second demo and we were getting into it much more deeply.

I can’t remember what the exact remark was, perhaps something about how a feature had been poorly implemented and  should have been done a different way. My temptation was to ask  “how would that help you on your designs” but the founder stood up and went into a short but animated speech about all of the really good reasons why the feature had been implemented that way. The demo proceeded somewhat uneventfully from that point with the lead manager from the prospect saying something to the effect of “You have given us a lot to think about, give us a chance to discuss this and get back to you.”

I was not sophisticated enough, or cynical enough, to understand that they would not be calling back. I was talking about it afterward with the other support person and I still remember his critique

“Kim reacted like that guy was calling his baby ugly didn’t he? He shut down their interest in working with us.”

And it’s a phrase I have recycled many times about defensive instead of appreciative reactions to customer suggestions or criticism during a demo or a presentation.

Here are four other posts that elaborate in different ways on the challenge of listening to prospect’s criticism.

Dharmesh Shah offers a great perspective in “4 Quick Tips on Raising Startup Funding Without A Plan Or A PowerPoint

Accept That Your Baby Is Ugly: Just like most parents think they have beautiful babies, most entrepreneurs think they have beautiful startups. In reality, just about all startups are ugly in the early days. Don’t spend time trying to explain to others why your startup baby is beautiful. It’s not. Instead, spend energy explaining why your baby is going to grow up into something that’s beautiful. Describe how you’re going to tackle the problem of building the product, finding customers, dealing with support, etc.


A word from our sponsor: speaking of tips for compelling demos we have seats available in our February 29, 2012 “Great Demo” workshop with Peter Cohan.

Chalk Talk on Technology Adoption

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

I did this with the DreamSimplicity folks last month. It’s a chart I have been drawing in various customer meetings for the last several years or so and they thought it would make for a good short video. The challenge was lighting the whiteboard appropriately.  I think it came out well.

I welcome any feedback or suggestions for other topics.  A transcript for the talk follows:

I want to talk to you today about some of the challenges you may be facing with technology adoption.  With getting users to try and adopt your technology.  So in this chalk talk, I want to talk about how you get customers to try out your technology and use it.

Let’s assume that this is your prospect’s status quo.  And this way is the way they want to go.  This is more profitability.  This is more productivity.  General goodness.  With your solution,  you should be able to move them to a higher level of performance, higher level of profitability.  This difference is the benefit you’re promising.

So the question you’re really trying to figure out is, based on an analysis of where they are, is this where they’d like to be?  The most likely answer, optimistically, is yes.  In fact, “How do we get there? How do I get this into production?  How long it take?  What’s involved?”

So, one transition curve might look something like this.  Where they have to invest time, people time, focus, dollars.  And that takes away from their current status quo.  But that investment transforms the way they’re working to allow them to get to this higher level of performance.

However, when they look at this chart, when they hear this story from you, they make a couple of adjustments in terms of how they calculate this.  First of all, they assume that the costs are actually going to be higher, usually a little worse than you’re talking about.  Secondly, they assume that the benefits are not going to be as high.  So when they do a cost benefit calculation, they may come in at half or a third of what you’re promising them.  Your temptation is to attack this by adding more features, by doing more for them, by essentially promising them a higher level of benefit.  Say, “Well, what if we could do this for you?”  Right?

The problem with that is that your transition now looks like this.   There’s actually more cost involved. A bigger problem with this is that the time to get back to status quo has now been lengthened.  And as long they’re below this line they’ve made themselves worse off.  They put themselves at risk.  They put their careers at risk in larger companies.  This is a proxy for the amount of risk in decision to work with you.  And so what you’ve done is, you may not have substantially affected the cost benefit ratio but, you clearly added to the risk.  If Plan A was not acceptable, this new plan is probably less acceptable.

So let’s take another approach.  Let’s look at a different way to solve this problem.

So here’s our old friend, the prospect’s status quo.  They’re still trying to go up.  Still trying to get to this benefit that you promised them.  And here was the plan that you proposed.  Instead, break it up into phases.  Now, we’ve got smaller amount of cost.  They can look at this first transition and maybe this is just what you can do for them in two hours.   Maybe you can come in, take some data that’s readily available, and demonstrate a benefit.  Now they can judge the total curve by what you are able to do in a smaller amount of time.  Maybe this is a pilot project, maybe this is more than two hours, but this is not a bad approach.

Now, all they’ve got to bet is a small amount of risk.  See if they get somewhere near where you promised them.  If that works, they’ll likely take step two and step three.   So you’ve got an easy way to get them to move up and, they are more likely to take the first step.  Once they take the first step, if what you’ve told them is true, they’re more likely to move up.  So think about breaking up transition plans into three to five phases.

So we’ve talked a little bit today about how do you look at the technology adoption problem.   This is where we spend most of our time with clients.  We help them find early customers and early revenue.

This has been Sean Murphy from SKMurphy.  Thank you very much.

Quick Links

Bootstrappers Breakfast Link Startup Stages Clients In the News Upcoming Events Office Hours Button