Quotes For Entrepreneurs–December 2010

Add comment December 31st, 2010

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Don’t tell me the sky’s the limit
There’s footprints on the moon
Paul Brandt “There’s a World Out There“

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“People won’t pay you to solve problems that you know they have,
only the problems that they know they have.”
William Pietri

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“It’s no trick to play upon fears. It’s not a useful trait in an advisor.”
Sean Murphy

This is the preferred selling style of many lawyers, financial planners, and insurance agents.

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“Summer ends, and Autumn comes, and he who would have it otherwise would have high tide always and a full moon every night”
Hal Borland

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“There can be no knowledge without emotion. We may be aware of a truth, yet until we have felt its force, it is not ours. To the cognition of the brain must be added the experience of the soul.”
Arnold Bennett

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“The greatest test of courage on the earth is to bear defeat without losing heart.”
R. G. Ingersoll

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“Don’t fool yourself that important things can be put off till tomorrow;
they can be put off forever or not at all.”
Mignon McLaughlin

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“No winter lasts forever; no spring skips its turn.”
Hal Borland

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“The hardest part of the “selling” process is not getting the sale. It’s getting the meeting.”
Josh Kopelman in “Everyone I Spoke With Loved The Idea“

More context (bold in original):

It happens almost every day.  I’m talking with an entrepreneur about their business idea (say, for example, a new enterprise security software product).  And at some point in the meeting, they tell me about the conversations with people they had in their target market (say, for example, 13 CIOs) who all thought it was a great idea and want to beta test the software.

After seeing many of these companies fail to get traction in the market, I’ve come to realize that the key challenge is not “convincing” your customer — it’s reaching your customer.  Customers are inundated with options and choice — and the hardest part of the “selling” process is not getting the sale.  It’s getting the meeting.  And while marketers have learned that it’s all about the “message,” I think it’s all about the “attention”.  How do you get your customer’s attention?

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“Customer Development requires a willingness to be surprised.
Sean Murphy

Virtual and On-Line Are As Superfluous As Horseless and Electric

Add comment December 30th, 2010

I think “virtual team” is rapidly becoming redundant: just as “horseless carriage” became car I think “virtual team” will become just team. Most project teams will have a virtual component (e.g. on-line workspace, chat histories) and geographically remote members, if only to involve suppliers, partners, and customers more seamlessly.

More broadly I think that virtual and on-line are fast becoming as superfluous as adjectives like horseless and electric.

Certainly virtual in the sense of simulated or on-line is losing meaning as cyberspace everts and interpenetrates our daily life. On-line constructs are intertwined with “real life” to the extent that on-line and connected is our default waking state.

The Snow Lay Round About, Deep and Crisp and Even

Add comment December 26th, 2010

One of the things it took me a long time for me to get used to living in Silicon Valley was the lack of snow.  Not snow that you could visit in places like Tahoe but snow that visited you.  A few years have seen snow in the foothills but nothing like winter mornings in St. Louis where the landscape would be entirely transformed by snow and/or freezing rain.

We have a week left in 2010. This is  a short post to collect some odds and ends on the day after Christmas, also known as  Feast of St. Stephen or Boxing Day depending upon where you are reading this.

We have the last three  Bootstrapper Breakfasts® of 2010 this week:

• Mon-Dec-27 Mountain View (Holiday) 9am register
• Wed-Dec-29 Chicago 7:30am register
• Thu-Dec-30 Sunnyvale (Holiday) 9am register

I was interviewed last week by Justin Vincent and Jason Roberts for their 96th Techzing podcast. It’s about 90 minutes and covers a wide ranging set of topics, including:

• Some common mistakes that bootstrappers make
• Our startup stages model
• Key long term trends in the evolution of technology entrepreneurship
• Why product market fit is a fraction not a bit (I think it’s a measure of the relative fitness at a point in time for how well a product solves a problem for a particular customer set)
• Why threatening to kill your product works against the trust needed to establish an ongoing business relationship
• Operating plans for a startup vs. a fund raising “business plan” and how to evaluate funding alternatives.
• A detailed walk through of Jason’s pricing model and insertion strategy for AppIgnite

If you prefer to read we will have a cleaned up transcript available by mid-January.

Let Men Their Songs Employ

Add comment December 25th, 2010

I have been thinking about different kinds of teams and team work.

What is it about a choir that their voices blend and combine to create an effect that any one singer could never achieve. Each singer is playing a different part in a common synchronized script. A pit crew servicing a race car achieves a similar effect, each member playing a tightly scripted role for a common purpose.

Each team in tug of war combines their strength along a single dimension of action in what is probably the simplest example of team work.  A more complex collaboration is what an improv comedy troupe does during a performance in response to inputs from the audience. Soccer teams have fluid configurations that respond to the position and vector of the ball, combining individual skill in both offensive and defensive plays.

All of these teams are synchronizing their efforts to achieve a common goal, in most cases each member has a different role to play that leverages their talents and abilities. I think a high function startup team looks like this, balancing the efforts needed for product development, customer development, and company development in a dynamic environment that includes an evolving competitive response.

Best Wishes For a Happy and Prosperous 2011

1 comment December 24th, 2010

If Money Doesn’t Change Hands, You Can’t Call a User a Customer.

1 comment December 23rd, 2010

Here is another excerpt from my September interview with Gabriel Weinberg. This one focuses on why payment and testimonials are so important to differentiate users from actual customers.

yegg: So you are OK with a lower price for the first few customers, but you do want some money changing hands?

skmurphy: Yes, yes we do, typically a nominal amount that doesn’t trigger the need for budget escalation or other kinds of negotiations. And, we are talking about the very first few customers. We are more looking for success stories.

Where we start to negotiate much harder on price is where they say you can’t talk about this, we are not going to give a testimonial, and we are not going to act as a reference. The payment we are really looking for on the first couple has more to do with the ability to do test cases, testimonials, and work with them as a partner for at least a year or two to really understand the impact of what we’ve got.

yegg: Why insist on price at all then?

skmurphy: If money doesn’t change hands, you can’t call them a customer. Now, money changes hands maybe four steps or five steps in. You are trying to first get their attention, their time, get their feedback, and get data. You are asking for them to provide you an evaluation or a benchmark, maybe they do a pilot project–at that point then we start talking about money and testimonials. This is once they’ve actually seen that operate in their environment, which looks very different from a standard sales process.

yegg: This only applies for the first few customers?

skmurphy: Right, for the first half a dozen or so. And there can be a lot of work to find them. We work with a team that has a very innovative technology, and we must have talked to twenty people. It was a chip design application, and a bunch of them looked at us and said, you know this seems really interesting, but we have no use for this whatsoever. But the founders had come out of a chip design background and were confident many firms had the problem and more would over time. Sometimes it takes two or three dozen conversations to even figure out who you should really talk to and who really has the problem.

yegg: How low is too low for the price?

skmurphy: That depends on the company. In general, the lowest level of signing authority is typically $500 or $1,000.

yegg: You’d be comfortable going that low?

skmurphy: Oh absolutely. For a first customer who will use a new technology in production and give us ongoing feedback we have accepted $1,000 for a first license.

yegg: And these customers are also acting as references for you?

skmurphy: Yes, and we negotiate that much more carefully. The money is important in the sense that it’s not zero because that means it goes through a purchasing process, and it’s unambiguous that we can call them a customer, as opposed to my friend at XYZ Company evaluated it–that’s not that useful.

yegg: How do you go about negotiating the terms of the testimonial piece?

skmurphy: We’ll offer them very explicit options in writing, not a contract, but a kind of a set of talking points or an English language description of would you feel comfortable taking at least one call a month, would you be willing to allow us to write a blog post about this, would you be willing to let us release a press release about this? There are about seven levels or eight levels of endorsement that you can seek, and you find the level that they are able and willing to do.

A lot of times the problem is in larger companies, the people you are talking to are constrained in what they can do publicly. They may say, for example, I am happy to talk to three people a month, but I can’t do anything in public. And that’s typically workable. Sometimes you can get them to do a technical paper at a conference, or you can go to a specialty workshop or a niche technology discussion group here they can talk about it. That can be as useful as a press release in the early market.

yegg: And they are willing to do this because they feel they are getting a very good deal?

skmurphy: Yes, they are typically gaining some kind of significant competitive advantage, and they believe they are early in a technology cycle where the startup will continue to invest and develop for several years to come, so they are going to see increasing returns.

Now, if you sell more copies, those copies may go at higher prices, and as you proliferate in larger firms, things look different. I think where people get hung up is it’s a huge thing to get people’s attention, to actually get their data, to have them give you a real evaluation of what’s wrong with what you are doing, and to actually solve some kind of production problem using that technology.

We’ve been at this now seven years. I think maybe once after a pilot project, we weren’t able to close the deal. I mean where the pilot project was successful. Obviously sometimes, not everything new works, but for the most part in the B2B side if you can make a pilot project work, you can move things forward.

Customer Development Requires a Willingness to Be Surprised

1 comment December 22nd, 2010

And by “surprised” I mean:

• able to admit that your assumptions are wrong
• open to new insights from prospects
• willing to change your plans for your product or your startup
• willing begin again with a better frame of reference

Inspired by Bob Lewis’ “Holiday Card to the Industry, 2010”

In business we expend tremendous effort to avoid surprises. It wouldn’t be wrong to define professional management as the discipline of surprise prevention. The best-run businesses understand their marketplaces and inner workings well enough to predict the impact of every initiative they envision before they put them into practice.

This, in fact, is why business theorists have been so fascinated … obsessed might be a better term … with process design and management. Process is supposed to provide repeatable, predictable results.

But that isn’t where value comes from. Value comes from uniqueness, and from surprise.

Quotes On The Limitations of Cleverness

Add comment December 21st, 2010

A couple of quotes on the limits of cleverness.

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“Now goblins are cruel, wicked, and bad-hearted.
They make no beautiful things, but they make many clever ones.”
J. R. R. Tolkien “The Hobbit“

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“Don’t be satisfied with being merely clever.
Make something beautiful.”
John Cook “Don’t be a Goblin“

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“The customer does not give a damn about your cleverness, the algorithms you have implemented, or your credentials. The customer cares only about satisfying their own need.”
Ken Imboden in “Ken Imboden on Lessons from MMC, Candlestick, and NuSym“

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Don’t be seduced by the cleverness of your own ideas. This was the single biggest mistake I made. I came up with a truly clever idea…and I was justifiably proud of it. But it caused too many problems. [It] turned out to be clumsy to use. Most players eschewed it. I should have had the courage to dump a clever idea that, in the final analysis, created more problems than it solved. I didn’t, and the game suffered for it.
Chris Crawford “Lessons from Patton Strikes Back“

See also “Better is the Enemy of Good Enough”

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“My grandfather looked at me, and after a bit of silence, he gently and calmly said, “Jeff, one day you’ll understand that it’s harder to be kind than clever.”

“What I want to talk to you about today is the difference between gifts and choices. Cleverness is a gift, kindness is a choice. Gifts are easy — they’re given after all. Choices can be hard. You can seduce yourself with your gifts if you’re not careful, and if you do, it’ll probably be to the detriment of your choices.”

from “We are What We Choose” Remarks by Jeff Bezos, as delivered to the Princeton Class of 2010

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

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Annie Dillard on the Appreciation of Grace and Beauty

Add comment December 20th, 2010

There seems to be such a thing as beauty, a grace wholly gratuitous. About five years ago I saw a mockingbird make a straight vertical descent from a roof gutter of a four-story building. It was an act as careless and spontaneous as the curl of a stem or the kindling of a star.

The mockingbird took a single step into the air and dropped. His wings were still folded against his sides as though he were singing from a limb and not falling, accelerating at thirty-two feet per second per second, through empty air.

Just a breath before he would have been dashed to the ground, he unfurled his wings with exact, deliberate care, revealing the broad bars of white, spread his elegant, white-banded tail, and so floated onto the grass.

I had just rounded a corner when his insouciant step caught my eye; there was no one else in sight. The fact of his free fall was like the old philosophical conundrum about the tree that falls in the forest. The answer must be, I think, that beauty and grace are performed whether or not we will sense them. The least we can do is try to be there.

Annie Dillard “Pilgrim at Tinker Creek“

It’s not too late to  notice the grace and beauty around you and count your blessings.

The Venture Lifestyle Business

Add comment December 14th, 2010

“Some buildings need air conditioning because they have air conditioning. Because they were designed to be air conditioned, they have no natural ventilation and would be miserable to inhabit without air conditioning.”
John Cook in “Maybe You Only Need It Because You Have It“

I wonder if the same thing happens to some fraction of venture backed startups.

If  the founders don’t start with a focus on revenue and organic growth but instead seek funding, I think it can sometimes create this ongoing focus on fund raising.  It’s nice if they can raise an initial round as this enables salaries and a number of other perks. But, like a man who has lost his balance and is running faster and faster to regain it, they continue to plan on new funding to maintain their “venture lifestyle business.”

I first noticed this a couple of years ago when we first offered our “Getting More Customers” workshop. We attracted a venture backed team that was running out of funds. Their whole focus was to document strategies in their updated business plan that would justify incremental investment. They were not interested in actually trying to get more customers, just to be able to demonstrate that they had a plan that they could execute if they were able to raise another round.

I am not against Angel or VC funded startups.  But I am disappointed when founders focus on writing a business plan–meaning one that’s a sales pitch for investors not an actual operating plan for their startup– instead of building a business that merits investment.