Archive for December, 2010

Quotes For Entrepreneurs–December 2010

Written by Sean Murphy. Posted in 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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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

Written by Sean Murphy. Posted in Rules of Thumb

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

Written by Sean Murphy. Posted in Events, skmurphy

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.

steaming hot coffee and serious conversationWe 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:

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

Let Men Their Songs Employ

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

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.

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

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

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

Written by Sean Murphy. Posted in Rules of Thumb

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

Written by Sean Murphy. Posted in Quotes, skmurphy

A couple of quotes on the limitations of cleverness. Don’t just be clever, be kind and make  things of beauty with care.

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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 CrawfordLessons 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

Written by Sean Murphy. Posted in Books

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 DillardPilgrim at Tinker Creek

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

The Venture Lifestyle Business

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

“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.

“Every time I read an About or Team page I think, ‘Why do they need so many people?’ Oh right, they have to. They took funding.”
Ed Weissman @edw519

Keeping the Ball Rolling With Prospects

Written by Sean Murphy. Posted in 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, Consulting Business, Customer Development, skmurphy

Most of our clients offer complex software products, frequently in combination with some amount of consulting services. Their sales are not the results of credit card transactions but a complex orchestrated sales process. Frequently their prospects need to see a custom demonstration or a benchmark that relies on their own data, not just the standard demo our customers routinely perform.

Prospects are often very busy and it can be difficult to determine if they are slacking off or overwhelmed, at least temporarily, with other priorities.

Here are five steps we try to get out customers to include in their sales process to keep the ball rolling with busy prospects.

  1. Get a commitment for when the prospect will send the data or other inputs that they need either for a custom demo or custom proposal. For example “so do you think you can get that to me by next Tuesday?”
  2. Get permission to call them back or follow up: “so if I don’t hear from you is it OK if I call you back on Thursday to make sure this doesn’t fall through the cracks.” Notice that you give the prospect some slack from their committed date.
  3. Understand what the ultimate deadline is that they are working to. That way in the call backs you can mention “I just want to be clear; you indicated you wanted us to finish the evaluation by the end of October to meet your deadlines. If we can’t get your specs and input data  and get started we can’t meet your date.” Be especially wary of “we need this yesterday” as  due date. It may mean that they have been living with the problem for while and have no firm plan to proceed. Worse that that, yesterday is not a day that will ever come.
  4. Always put an expiration date on any quotation or proposal. This gives you two more chances to follow up, once a few days before it’s due to expire to remind them, and once a day or two after it’s expired to give them one last chance to buy and to determine, if possible why they delayed or decided not to buy.
  5. There is a temptation when a prospect slows done to push for near term dates or to try and pull the timetable back in. The prospect is really in charge of the sales timetable so these efforts are often useless or even counter-productive.  Instead you should offer a date that is even farther out and see if they pull it back in. If they tell you that they plan to get back to you in four weeks after you have been “playing ping pong” and iterating rapidly over earlier requests, suggest that you will check in in three months if you don’t hear from them. This pushes the date out even further, if they are serious about buying it’s better to let them pull the date back in instead of pushing for an earlier date if they start to feel overwhelmed.

Lack of response is not the worst outcome for a startup.  The worst outcome is that you first invest time in a detailed customized demo, perhaps followed by  a detailed proposal, and then find that the prospects are maintaining radio silence. Before you invest a lot of your team’s time,make sure that there is a strong business reason that will force them to make a decision.

Narrowcast Early Product Announcements

Written by Sean Murphy. Posted in 2 Open for Business Stage

My bias is to “narrowcast” in the beginning. Choose websites, forums, newsgroups that are tightly focused on your target market. You attract less competition, your message cost is normally cheaper per prospect, and you often learn faster by taking part in the conversations in a focused community.

It’s not so much about being stealthy as sending a message to a tightly focused audience.

And, let’s face it, you know the least about how to talk about customer problems/needs in the beginning. Broadcasting your weakest message widely does you little good.

See also “Find Early Customers in Forums

Quick Thoughts on Selling For Software Engineers

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

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

Simple Sales Model
A very simple sales model is that your prospect has to understand what your offering does, believe that you can deliver, and then find a reason to act. Technical expertise and experience can contribute significantly to the first two steps (although the ability to clarify benefits is critical) but “sales” is normally more important for understanding how to get a prospect to act/purchase.

Sell Results Not Method
If they don’t want the result your software delivers you have a problem. If they do, focus on the outcome much more than how you do it and make sure they want the result.

Historically SaaS Started at the Bottom
Most of the large SaaS firms owe much of their early success to “bottom up technology adoption.” For example: Salesforce, Webex, NetSuite, SugarCRM.

Make Sure Customer Acknowledges Your Description of Their Problem
Make sure you communicate a clear understanding of their problem. There is a strong temptation to leap to your solution, try more focus on making you sure you understand their problem and that they know you understand it. Then offer proof that you have solved similar problems for firms like theirs. Here is where case studies, testimonials, references can help. Finally, try and determine a trigger for action: is there a date or event where their situation will get worse? For example, April 15 for taxes, summer vacation driving trip for oil change, adding a new employee for a payroll service.

Sell With Your Ears
If you are talking you are not learning. To discover more about the other party’s needs, constraints, and objectives ask questions. Listen patiently–do not answer for them. For products above 100K in particular, introverts do much better because they are much more willing to listen to the customer and then work on meeting their needs. It’s a dangerous myth that introverts cannot sell. You sell with your ears.

Fun Getting More Customers Workshop Today

Written by Theresa Shafer. Posted in skmurphy

We have a very fun group of entrepreneurs today in the workshop.  Every time we give our workshops, I learn so much from our attendees.  Today, I learned about a couple of new tools I am planning to check out:

I also was given the idea to use twitter as a guide to figure out which blogs have the most influence. We also talked about checking competitors’ backlinks to look for directories that we should be listed in.

Thanks again to Rob Dang at FortisGC for hosting us.

Deformation Professionelle Of The Software Entrepreneur

Written by Sean Murphy. Posted in Rules of Thumb

Howard Rheingold in “Succinctly Spoken” from the Aug-27-1989 New York Times Magazine

Four people gaze at a steeple.

A minister sees a religious monument.
A mechanical engineer sees a balance of forces and materials.
A psychoanalyst sees a Freudian symbol.
The person who has to climb 70 steps to clean the belfry sees something  else.

The same object, but each observer has a different take, depending on his or her deformation professionelle.

Harrap’s New Standard French and English Dictionary defines deformation professionnelle as “‘professional idiosyncrasy; vocational bias.” But Harrap’s secondary definition–“‘distortion of map projection, photographic image'”–hints at the term’s broader meaning: a view of reality biased by one’s profession.

I was reminded of this reading the opening paragraph to Jason Fried’s “How To Kill A Bad Idea

Are you in the software business? I bet most of you would answer no. So let me put it another way: Do you have a website? If the answer is yes, you’re in the software business. A website is software. It has utility, and that utility is accessed via an interface on a computer or mobile device. That’s software.

Jason is a software entrepreneur and sees everyone whose business relies on software in any fashion as a peer. The problem is that software is not only substituting for paper and furniture, but rooms and entire buildings. Think about how words like report, dashboard, desktop, workspace, and storefront all have meanings that encompass physical and virtual or on-line representations. As William Gibson has one of his characters observe in Spook Country,  “cyberspace is everting.” It’s interpenetrating our everyday reality to the point that on-line is our normal waking state.

In that context we have to reserve “software business” for a business that is meaningfully innovating in software.

Most businesses with a website–how many businesses are left that don’t have website–are no more in the software business than they are in the electricity business or the plumbing business or the furniture business, even though without these things they would not be able to operate.

If there is a burned out light in my restaurant or one of my faucets does not work or a chair is broken, my customer will hold me responsible. These are end user configuration problems or subcontractor management problems. I am in the restaurant business because I am trying to differentiate my business with good food, fast and friendly service, perhaps decor, and certainly location. I may hire a graphic artist to make my menus look distinctive, and print them fresh every day to reflect today’s specials, but this does not make me a publisher or printer.

Two decades ago Apple combined the personal computer with specialized software and a laser printer to create “desktop publishing.” This was a simplified form of publishing that allowed for substitution away from real printing presses.

I think the combination of advanced content management systems and richly configurable applications are removing the need for many entrepreneurs to get into the software business proper just to leverage the power and flexibility of software in their business. It’s spawning new categories of business like “SaaS-enabled services” and “multi-firm workflows that deliver expertise on demand.”

The implications for startups is that software has become a medium whose functionality has to be in service of meaningfully differentiated value.

In “Management: Tasks, Responsibilities, and Practices” Peter Drucker offers the following definition of the basic functions of a business:

“Because the purpose of business is to create and keep a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

If you accept his logic, which I do, then to be in business is to be in the marketing and innovation business. Which indicates, I suspect, that my deformation professionelle is that of the marketing subtype of software entrepreneur, not the developer subtype.

Update Dec-9-2010: Great comment by Brad Pierce I want to highlight:

That Drucker quote may be misleading without a second Drucker quote,

“Marketing is not only much broader than selling, it is not a specialized activity at all It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer’s point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise.”

It’s from Drucker’s “The Practice of Management

Orienting, Observing, Doing Homework, and Paying Dues

Written by Sean Murphy. Posted in skmurphy

Paying dues is a concept used by people who’ve worked extremely hard to try and slow down people who work extremely smart.
Scott Kubie in “There Are No Dues To Be Paid

I agree that “you need to pay your dues” can be code for “sit down and shut up” but it can also mean other things.

Many teams work on complex projects that can take a while to appreciate. Sometimes there are aspects of taking responsibility for a situation or a piece of a project that are not obvious until you have experienced them yourself.

Sometimes it’s a polite way for someone to tell you that you have not demonstrated the necessary competence or results to ask for more responsibility.

There is also quotation G. K. Chesterton’s in “The Thing” (in the chapter entitled, “The Drift from Domesticity”) that’s worth remembering when you plan to recommend a change to a system:

“In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it.”

h/t American Chesterton Society

Building and Managing a Learning Process

Written by Sean Murphy. Posted in skmurphy

In response to yesterday’s post on “Seven Quotes on Learning and Measurement from Marty Neumeier”   JP Rosevear asked:

Is there more context to:
“In an age of accelerating change, how you learn is more important than what you learn.” Marty Neumeier

I understand that building a learning process is key, but applying it to the wrong things seems just as much a dead end as having no learning process.

If you accept that premise that we are living in an age of accelerating change, which I do for the many areas now affected by Moore’s Law, then I think you have to accept a couple of corollaries:

  • The half-life of facts and knowledge is shrinking, so if all you are good at is memorizing facts you are already running the Red Queen’s Race (“faster and faster just to stay in one place).
  • You have to get better not just at memorizing facts but at “learning how to learn” and more importantly “learning how you learn most effectively.”

Seven Quotes on Learning and Measurement From Marty Neumeier

Written by Sean Murphy. Posted in Quotes, skmurphy

In July I posted “Ten Design Thinking Quotes From Marty Neumeier. Mr. Neumeier has continued his drip irrigation of brilliant insights on twitter at @MARTYneumeier so here are seven of his recent ones related to learning and measurement.

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“Instead of viewing an acquired company as an uneducated child, view it as an inspired teacher.”
Marty Neumeier

Even though I have  been through a number of acquisitions on both sides of the transaction I find this insight very powerful. Before I read this I assumed that the best that could be done was to leave the acquired unit with as much autonomy as possible. There is a strong temptation for employees of the buyer to settle disagreements with acquired employees  with “just remember, we bought you.” This is a much better model for acquisition integration

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“In an age of accelerating change, how you learn is more important than what you learn.”
Marty Neumeier

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“If an opportunity is off the charts, there’s no point in saying it’s two times off the charts. ”
Marty Neumeier

It’s also probably more important to identify what you are going to sacrifice or stop doing so that you can pursue it.

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“There are no generally accepted accounting principles for new ideas.”
Marty Neumeier

I think it’s worse than that. In “Better, Impossible and Unthinkable Products” I blogged about three kinds of products:

  1. Better products follow an established trajectory in an industry. They are “15 minutes ahead” and the easiest to sell…for a while. Examples include faster computers with larger memory and cars with better gas mileage.  The ideas associated with these products tend to represent incremental improvements along established trajectories and normally represent opportunities that are comprehensible within the established accounting and business models for a firm. They are also typically the smallest opportunity but the easiest to generate and implement so you end up doing a lot of them.
  2. Impossible products find a way to relax one or two constraints that designers of better products have taken as fixed. They are harder to sell, not so much because they are hard to understand but difficult to believe, prospects will ask you “What’s the catch?” Examples include ATM Machines replacing human tellers to dispense cash and Ethernet over twisted pair. Some of the constraints that these products obsolete may be baked into your accounting model, which is normally the scorekeeping mechanism for your business model, and may trigger a response similar to a “divide by zero” exception in a spreadsheet.
  3. Unthinkable products are typically developed by someone from outside the target industry or are the result of repurposing a product from another industry. Their developers were not handicapped by the mental roadblocks that come from following established practices and patterns in an industry. They can be extremely difficult to get prospects to understand–much less believe in–as they are almost always incompatible with current practices and infrastructure. But they can create an entirely new category of product. Examples include: IDDQ testing in semiconductors,  the Reebok Pump shoe, and Henry Ford realizing that a meat packing plant’s “disassembly line” could be run backward to assemble a car. These product almost always demand changes in the business model and are ignored in favor of better products until a company reaches a crisis point where better is not good enough.

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“The problem with business metrics: measurability decreases as importance increases.”
Marty Neumeier

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“All innovations get measured by the marketplace. The trick is to get a preview before you launch.”
Marty Neumeier

The risk here is customer development and validation done wrong. You have no choice but to estimate and then validate likely market acceptance prior to investing in a major launch.

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“Measurement and imagination are locked in a dance they can do either badly or well.”
Marty Neumeier

I think you need intuition and imagination to leap away of a local maximum, a product which any small change seems to make worse. You have to have the insight into customer needs (perhaps customers in a new market) to make some big changes that may make the product even more attractive and/or more profitable.

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Bootstrapper Breakfasts in December 2010

Written by Sean Murphy. Posted in skmurphy

steaming hot coffee and serious conversationWe have added two Holiday Bootstrapper Breakfasts in the week between Christmas and New Years, continuing a tradition started two years ago of running two breakfasts that week at 9am.  Any of these December breakfasts are a great opportunity to take some time to not only recap 2010 but also look forward for 2011. Your plans should factor in continued economic difficulties in 2011.

Here is the Silicon Valley schedule for the rest of the year:

There are also breakfasts scheduled in Chicago at Cafe 300 in the Loop on Wed-Dec-29-2010 and in Minneapolis on Thu-Dec-16-2010.

What Are You Doing to Obsolete Your Product?

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

When I was interviewing to get hired at Cisco in July of 1990 my last interview was with John Morgridge, then CEO.  I recall the interview not going particularly well and I realized that I needed to do something make a  strong positive impression.

As we were wrapping up he asked,  “Any final questions for me?”

This prompted me to reply: “Yes. I don’t understand what you are doing to obsolete your own products.”

Cisco was newly public and already a hot company so he was a little taken aback. We talked about user interface complexity (which only got worse while I was there) and the level of hardware integration (which got much better).  It was a good discussion and I was offered the CAE Manager job.

I was reminded of this sitting in a R&D roadmap planning session with one of our clients.  Which prompted me to ask “What are we going to do to obsolete the current product in the next 18 months before one of our competitors does?”

It led to a good discussion.

Like cayenne pepper, it’s a useful question but a little goes a long way. Here are some companion questions as you consider your plans for 2011:

  • What can we stop doing to give us more time, budget, and focus on the things that our customers view as the most valuable or more differentiating aspects of our offering?
  • What have we learned in 2010 that we can apply to make us more effective in 2011?
  • What tools can we build to amplify our capacities or give us unique capabilities. 
    focus your tool making (or methodology making, or intellectual property creation) on the core of your product. Avoid the amoeba like instincts of a large company product team to absorb peripheral requirements into the product as you encounter them.  See also my notes on  “Bruce Mau’s Incomplete Manifesto for Growth

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