Archive for August, 2012

Quotes For Entrepreneurs–August 2012

Written by Sean Murphy. Posted in Quotes, skmurphy

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August is  Neal Stephenson (the “warrior monk of speculative fiction“) month at SKMurphy with quotes from a number of his books making their way into blog posts. For more on “warrior monks” see TV Tropes “Warrior Monk” entry. Here are some other blog posts that contain quotes from Neal Stephenson:

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Constructing a Fortress of Internet Deprivation so that I can get some work done.”
Neal Stephenson (@nealstephenson)

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“Do not make mistakes about character.  Better be cheated in the price than in the quality of goods.”
Balthasar Gracian from “The Art of Worldly Wisdom

More context:

Maxim 157: Do not make Mistakes about Character. That is the worst and yet easiest error. Better be cheated in the price than in the quality of goods. In dealing with men, more than with other things, it is necessary to look within. To know men is different from knowing things. It is profound philosophy to sound the depths of feeling and distinguish traits of character. Men must be studied as deeply as books.
Balthasar Gracian from “The Art of Worldly Wisdom” translated by Joseph Jacobs [1892]

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“Projects are the cumulative result of hundreds of minor and major Eureka moments.”
Tom Fishburne in “The Wiki Wall

This is an abridged version of

“Projects are not the result of one Eureka moment at one point in time. They are the cumulative result of hundreds of minor and major Eureka moments throughout a project.”

h/t to a tweet by Dorai Thodla

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How many eyeballs are passing by is a useless measure.
All that matters is, “how many people want to hear from you tomorrow?”
Seth Godin in “Converting Viral Traffic

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“People who succeed are often those who do the little, everyday things that others won’t.”
Henry Todd

h/t Ben Nesvig’s book review of Accidental Creative

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“Software development, like professional sports, has a way of making thirty-year-old men feel decrepit.”
Neal Stephenson in “Snow Crash”

more context

“He recognizes many of the people in here, but as usual, he’s surprised and disturbed by the number he doesn’t recognize–all those sharp, perceptive twenty-one-year-old faces. Software development, like professional sports, has a way of making thirty-year-old men feel decrepit.”
Neal Stephenson in “Snow Crash”

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“Traditions are solutions to problems that we forgot we had.”

I originally wrote this in “Building Codes for Software” and recycled it in “Serious and Competent People

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“What can do we do to combine the agility we learned in the past decade with the requirements of the App Store?”
Andrew Chen in “Mobile App Startups Are Failing Like It’s 1999

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Good luck is what is left over after intelligence and effort have combined at their best. Luck is the residue of design.
Branch Rickey in Sporting News, Feb. 21, 1946. (per Yale Book of Quotations)

Often shortened to “Luck is the residue of design.” A longer version of this same quote is contained in several books from the 1990′s (including “Basic Concepts for Managing Telecommunications Networks: Copper to Sand to Glass to Air” by Lawrence Bernstein, C.M. Yuhas and “Branch Rickey as a Public Manager: Fulfilling the Eight Responsibilities of Public Management” by Robert D. Behn, in the Journal of Public Administration Research and Theory, J-PART 7 (1997)) it reads:

“Things worthwhile generally don’t just happen. Luck is a fact, but should not be a factor. Good luck is what is left over after intelligence and effort have combined at their best. Negligence or indifference are usually reviewed from an unlucky seat. The law of cause and effect and causality both work the same with inexorable exactitudes. Luck is the residue of design.”

Longer version used as opening quote in “Five quotes From Branch Rickey for Entrepreneurs

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“To keep is more important than to make friends. There is no desert like living without friends.”
Balthasar Gracian from “The Art of Worldly Wisdom

More context:

Maxim 158: Make use of your Friends. This requires all the art of discretion. Some are good afar off, some when near. Many are no good at conversation but excellent as correspondents, for distance removes some failings which are unbearable in close proximity to them. Friends are for use even more than for pleasure, for they have the three qualities of the Good, or, as some say, of Being in general: unity, goodness, and truth. For a friend is all in all. Few are worthy to be good friends, and even these become fewer because men do not know how to pick them out. To keep is more important than to make friends. Select those that will wear well; if they are new at first, it is some consolation they will become old. Absolutely the best are those well salted, though they may require soaking in the testing. There is no desert like living without friends. Friendship multiplies the good of life and divides the evil. ’Tis the sole remedy against misfortune, the very ventilation of the soul.”
Balthasar Gracian from “The Art of Worldly Wisdom” translated by Joseph Jacobs [1892]

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“And being an excellent commander, about to go into a real battle, he had the wit to bring along a few people who could actually get things done for him. It may seem hard for you to believe, but mark my word–whenever serious and competent people need to get things done in the real world, all considerations of tradition and protocol fly out the window.”
Neal Stephenson in “Quicksilver”

Used as the opening quote for “Serious and Competent People

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“Everyone is a prisoner of his own experiences. No one can eliminate prejudices — just recognize them.”
Edward R. Murrow

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“It is better to sleep on things beforehand than lie awake about them afterwards. ”
Balthasar Gracian from “The Art of Worldly Wisdom

More context:

Maxim 150: Think Beforehand. To-day for to-morrow, and even for many days hence. The greatest foresight consists in determining beforehand the time of trouble. For the provident there are no mischances and for the careful no narrow escapes. We must not put off thought till we are up to the chin in mire. Mature reflection can get over the most formidable difficulty. The pillow is a silent Sibyl, and it is better to sleep on things beforehand than lie awake about them afterwards. Many act first and then think afterwards–that is, they think less of consequences than of excuses: others think neither before nor after. The whole of life should be one course of thought how not to miss the right path. Rumination and foresight enable one to determine the line of life.
Balthasar Gracian from “The Art of Worldly Wisdom” translated by Joseph Jacobs [1892]

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“One must treat theory-in-use as both a psychological certainty and an intellectual hypothesis.”
Chris Argyris and Donald Schon in “Theory in Practice: Increasing Professional Effectiveness


One must regard any theory as tentative, subject to error, and likely to be disconfirmed; one must be suspicious of it. However, one’s theory-in-use is his only basis for action. To be effective, a person must be able to act according to his theory-in-use clearly and decisively, especially under stress. One must treat theory-in-use as both a psychological certainty and an intellectual hypothesis.”

Full quote referenced in “Jabe Bloom Offers a Sip from a Firehose in ‘Failing Well’

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“Entrepreneurship is the launching of surprises.”
George Gilder in “Unleash the Mind

Used as the title for “George Gilder: Entrepreneurship is the Launching of Surprises.

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“Never surrender opportunity for security.”
Branch Rickey

Closing quote in “Five quotes From Branch Rickey for Entrepreneurs

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“Without ducking responsibility, what’s wrong with medicine today is that it is predicated on providing treatment, not on reducing suffering. Not on solving problems.”
The Last Psychiatrist in “Ramachandran’s Mirror

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“That we occasionally violate our own stated moral code does not imply that we are insincere in espousing that code.”
Major Napier in Neal Stephenson’s “The Diamond Age”

An extract from a longer passage quoted in “Neal Stephenson on Distinguishing Different Motive for Hypocrisy

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If the Coastal Republic had believed in the existence of virtue, it could at least have aspired to hypocrisy.
Neal Stephenson in “The Diamond Age”

A quote I included in drafts of “Neal Stephenson on Distinguishing Different Motive for Hypocrisy” but ultimately edited out.

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“…the ancient character of the neighborhood began to assert itself, as the bones of the knuckles reveal their shape beneath the stretched skin of a fist.”
Neal Stephenson in “The Diamond Age”

His model of past as a palimpsest for the present also applies to the evolution of technology, where obsolete functions are sometimes re-purposed as skeuomorphs,  retained as vestigial affordances,  or re-emerge as atavisms. See also “Design Algorithms: Skeuomorphs, Spandrels & Palimpsests

Great Demo! Methodology Offers a Lean Approach to Sales and Presentations

Written by Sean Murphy. Posted in Books, Demos, Sales

I had an epiphany recently about the congruence between Peter Cohan‘s Great Demo! methodology and a lean approach to sales and presentation practices. I use the following simple definition for lean practices from Wikipedia:

[Lean] considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, “value” is defined as any action or process that a customer would be willing to pay for.

The simplest definition of the Great Demo! is  “Do the Last thing First

Which means that you should focus a demo on the critical element of your offering that your customer is interested in. This normally means that you have a plan for covering the following in about six to eight minutes.

  1. Introduce – Summarize Situation
  2. Offer an illustration or example of the result or outcome the customer wants
  3. Do The Last Thing First – show how to achieve this result as directly and in as few steps as possible.
  4. Answer questions, this may include peeling back the layers on other features or needs.
  5. Summarize the key take-aways and next steps.

Your hope is that step 3 turns step 4 into a much longer conversation but you are prepared to pack up and leave if they are not interested in the key results you can offer them.

But why is this lean? There are normally two good reasons why a startup wants to demo their offering to a customer:

  1. To offer a vision of a solution to trigger a conversation about a problem that the customer is interested in solving and to gain a deeper understanding of their needs and objectives.
  2. To offer technical proof that your offering can solve their problem and trigger a conversation about how they can implement and roll out the solution in their business.

In both cases you are focused on understanding what the customer needs and is willing pay for: your vehicle for this is the conversation that occurs after you have illustrated your solution with a key example that communicates your understanding of their needs. The summarize step is a critical part of that communication. By summarizing what you have heard you allow them to correct any mistaken impressions you may have gathered, and by summarizing your message again briefly at the end, you have an opportunity to focus more specifically on their needs with what you have learned.

All too often however, startups offer one of these demos instead:

  1. An IQ test: that asks the prospect “can you figure out how you might use this product to create value in your business.?” Here the focus is not on a vision of a solution that will create value for your customer but an explanation of your technology.
  2. A smorgasbord of features: that asks for a lot of time to explore your product and offers a “proof by exhaustion” that there must be something in the product that they will find useful. These can degenerate into training sessions that make the assumption the customer has seen the value already instead of offering technical proof of a result you know that they will value.
  3. Their funding presentation: the investors liked it so the customers should as well, never mind that they are two distinct audiences with very distinct needs and objectives for doing business with your firm.

There is quite a bit more to the Great Demo! methodology than I have outlined here, but at root it encourages you to save your customer’s time by getting to the point quickly with an example of a solution you believe that the customer will find valuable. The real goal of a demo is a serious conversation: either about a customer’s  needs or how they can they implement your offering in their business.

Learn More Tue-Sep-4 at Noon PDT when we have Book Club for Business Impact on “Lessons Learned implementing the Great Demo! methodology“, join us live to take part in a roundtable conversation. Update Sept 6:Recap and Audio from “Lessons Learned Implementing Great Demo! Methodology

Learn More Wed Oct-10: Peter Cohan’s next Great Demo Workshop in Silicon Valley is October 10-11, 2012.

Note on “Customer” vs. Prospect: I use customer throughout this post when most of the time they are actually prospective customers or prospects, I normally reserve customer to mean someone who has paid you but felt customer provided a better linkage with the lean definition.

Update Sep 3: I was reminded that I also blogged about the “Situation Slide” formulation used by Great Demo! to guide pre-demo discovery of customer needs. See “Worry About Scaling After You Find Your Niche

Update Sept 6:Recap and Audio from “Lessons Learned Implementing Great Demo! Methodology

Book Club: Lessons Learned Implementing “Great Demo!” Methodology

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

Book Club For Business Impact logo Live roundtable on lessons learned implementing the “Great Demo!” methodology Tue-Sep-4-2012

  • 12:00 p.m. Pacific / 1:00 p.m. Mountain
  • 2:00 p.m. Central / 3:00 p.m. Eastern
  • 8:00 PM London / 9:00 PM Paris & Berlin


Update Sept 6: “Recap and Audio from “Lessons Learned Implementing Great Demo! Methodology

Cohan Great Demo

Great Demo!: How To Create And Execute Stunning Software Demonstrations

by Peter Cohan

Great Demo! provides sales and pre-sales staff with a method to dramatically increase their success in closing business through substantially improved software demonstrations. It draws upon the experiences of thousands of demonstrations, both delivered and received from vendors and customers. The distinctive “Do the Last Thing First” concept generates a “Wow!” response from customers.

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Additional Book Reviews

Managing Oneself Article
Boyd-OODA The Lean Startup
Moore's Darwin and the Demon HRB article
Cohan Great Demo
Origin and Evolution

Five Quotes from Branch Rickey For Entrepreneurs

Written by Sean Murphy. Posted in Quotes, skmurphy

I picked up a copy of Branch Rickey’s Little Blue Book by John Monteleone as a part of my research on sourcing “luck is the residue of design” to Branch Rickey. Here are five quotes from Rickey that I think entrepreneurs will find useful.

“Things worthwhile generally don’t just happen. Luck is a fact, but should not be a factor. Good luck is what is left over after intelligence and effort have combined at their best. Negligence or indifference are usually reviewed from an unlucky seat. The law of cause and effect and causality both work the same with inexorable exactitudes. Luck is the residue of design.”

I think I like this sentence the best: “Good luck is what is left over after intelligence and effort have combined at their best.”

I heard a manager say: “Well, if he didn’t have that particular pitch, he would not even be in professional ball, and here he is, going in the majors or he’s in AAA.” Well it’s just as sensible to say that if Padrewski couldn’t play the piano, he’d starve to death.  The thing Padrewski’s doing is the thing he’s practiced since he was eight years of age, for approximately 8 hours a day in the first twenty years of his life, solemnly sitting at a piano preparing to do this particular thing. The mark of distinction that the man reaches is earned; if he couldn’t do this thing he would be no good. The fact is–he’s paid  a tremendous price to be able to do this particular thing.

You can’t be good at everything. Pick methods and skills that your team is willing to practice enough to master that can be a basis for differentiation.

First of all, a man, whether seeking achievement on the athletic field or in business, must want to win. He must feel that the thing he is doing is worthwhile; so worthwhile that he is willing to pay the price of success to attain distinction.

Teams are motivated by a sense of mission, of working on the worthwhile. When they have a why you will find the how.

Don’t take away the confidence of a man in what he now  has  until he agrees with you that he he has won’t do. You better be on the safe side and urge him to keep what he has until what you are working on as a substitute proves better. Don’t force him to abandon bad form until you have substituted good form.

Good advice for managers, especially for managing knowledge workers.

Never surrender opportunity for security.

This may be a good definition for the entrepreneurial mindset: entrepreneurs are unwilling to give up completely on the opportunity to make things better to cling to what they have now.

Jabe Bloom Offers a Sip From a Firehose in “Failing Well”

Written by Sean Murphy. Posted in skmurphy

Jabe Bloom (@cyetain) has made his “Failing Well” video publicly available. It’s a detailed exploration of some key challenges outlined by Chris Argyris and Donald Schon in “Theory in Practice: Increasing Professional Effectiveness

  1. How can one test theories that prescribe action? How can norms or values be tested?
  2. Given that theories-in-use tend to make themselves true in the world, how can they be tested?
  3. In a situation of action (particularly in a stressful situation), we are required to display a stance of action–that is, confidence, commitment, decisiveness. But in order to test a theory, one must be tentative, experimental, skeptical. How can we, in the same situation manifest the stance of action and the experimental stance.

The third challenge is the key one that entrepreneurs need to manage; what Paul Saffo has called “betting on strong opinions weakly held” and Argyris and Schon describe as follows:

One must regard any theory as tentative, subject to error, and likely to be disconfirmed; one must be suspicious of it. However, one’s theory-in-use is his only basis for action. To be effective, a person must be able to act according to his theory-in-use clearly and decisively, especially under stress. One must treat ‘theory-in-use’ as both a psychological certainty and an intellectual hypothesis.”

There is a lot in here and it’s a synthesis that I suspect Bloom will continue to explore and refine for a while. It’s hard to boil it down to a few conclusions but here are a few things that I took away.

  1. Failing well produces more information than failing poorly. It’s not enough to fail fast.
  2. Failure must be an option: you must be willing to abandon your approach in the face of new information.
  3. Diversity of opinion, both maintaining an open mind about concurrent plausible hypothesis and a willingness to explain your situation, and in particular your failures to others is essential to getting unstuck.
  4. A willingness to look at the facts of a situation (problem or opportunity) as distinct from your opinions and hypotheses, is a requirement for evolving any solution.

It’s an hour long but well worth your time.

Update Aug-24-2012: there is a lot in here,  it’s a  wide ranging exploration of insights from thinkers like:

It’s worth another blog post or two to unpack several of the problem solving methodologies he offers entrepreneurs.

Update Aug-28-2012: in addition to his Jabe Bloom blog, he also blogs at

George Gilder: Entrepreneurship is the Launching of Surprises

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage

I found a recent essay by George Gilder “Unleash the Mind” very thought provoking. I have selected some key excerpts and added my thoughts as to how they are particularly applicable to startups.

America’s wealth is not an inventory of goods; it is an organic entity, a fragile pulsing fabric of ideas, expectations, loyalties, moral commitments, visions.

This is also a good list for what’s needed for a startup to succeed: ideas, expectations, loyalties, moral commitments, and visions.

Capitalism is the supreme expression of human creativity and freedom, an economy of mind overcoming the constraints of material power. [...]  It is dynamic, a force that pushes human enterprise down spirals of declining costs and greater abundance. The cost of capturing technology is mastery of the underlying science. The means of production of entrepreneurs are not land, labor, or capital but minds and hearts.

Entrepreneurs succeed when they create a sense of mission that captures the hearts and minds of an early team with the requisite skills.

Under capitalism, wealth is less a stock of goods than a flow of ideas, the defining characteristic of which is surprise. Creativity is the foundation of wealth. [...]  Entrepreneurship is the launching of surprises. [...] Creativity cannot be planned because it is defined by information measured as surprise.

Early stage teams have to identify and exploit emerging market situations characterized by a high degree of uncertainty, they have to be ready to be surprised and to improvise solutions to unexpected problems and seize unanticipated opportunities.  I observed in “Early Markets Offer Fluid Opportunities“ that startups see fluid opportunities in dynamic environments, but no certainties before opportunities pass or the “situation changes.”

Entrepreneurial knowledge has little to do with certified expertise, advanced degrees, or the learning of establishment schools. [...] [Entrepreneurs succeed] “not by leaving it to the experts but by creating new expertise, not by knowing what the experts know but by learning what they think is beneath them.”

It’s this willingness not only to sweat the details but to be wrong or at least be thought of as wrong–perhaps for a very long time–that characterizes the powerful kind of entrepreneurial persistence

As Peter Drucker has written, within companies there are no profit centers, only cost centers. Whether a particular cost yields a profit is determined voluntarily by customers and investors. Capitalism feeds on information that is outside of the company itself and therefore under the control of others. Only an altruistic orientation can tap the outside incandescence of information and learning that determine the success of capitalism’s gifts.

You have to care about your customers enough to aspire to create value by serving them. This aspiration can sustain you as you venture into the uncertain and the ambiguous opportunities. You hope at least  to survive surprises you find, if not to be nimble and creative enough to take advantage of them.

Some related blogs posts on exploring ambiguous situations and surviving if not exploiting the surprises they hide:

Clients In The News

Written by Theresa Shafer. Posted in Clients in the News

Below are projects we have help work on with our clients.

Advisory board

Growth & Consumer Acquisition

Speaking Assignments

Strategic Partnerships

Newsletters Articles

Product Introductions & Launches

Scott Sambucci at Bootstrapper Breakfast Tue-Aug-21 in Sunnyvale

Written by Sean Murphy. Posted in skmurphy

Hot Coffee and Serious Conversation with EntrepreneursWith the economy in Silicon Valley in the summer doldrums this is a great time to hone your selling skills. If your startup sells technology products or services to businesses you should consider taking part in discussions on how to gear up your sales efforts.

Scott Sambucci of SalesQualia will be a featured speaker at the next Bootstrapper Breakfast in Sunnyvale on Tuesday, August 21 at 7:30am. He will offer about five minutes of prepared remarks on sales tips for startups from his new book “Startup Selling” followed by a roundtable discussion with all attendees. We will have a drawing for two signed copies of the book. Bring your sales questions and situations you would like to discuss.

Cost: $5 in advance / $10 at door

I have blogged about Scott Sambucci’s insights on sales and entrepreneurship at

Serious and Competent People

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, skmurphy

“And being an excellent commander, about to go into a real battle, he had the wit to bring along a few people who could actually get things done for him. It may seem hard for you to believe, but mark my word–whenever serious and competent people need to get things done in the real world, all considerations of tradition and protocol fly out the window.”
Neal Stephenson in “Quicksilver”

What attracts me to working with startups is the sense of creative flow that comes from contributing to a small fast moving team that just wants to get things done.  It’s not so much about “breaking the rules” as focusing on what’s important and embracing a mission to make a difference. If protocol is “the customs and regulations dealing with diplomatic formality, precedence, and etiquette” then startups need to selectively break with tradition to succeed.

In “Building Codes for Software” I defined traditions as “solutions to problems that we forgot we had.” I think the challenge to breaking with tradition is making sure you understand the original problems that the tradition developed to prevent. This requires you to mentally simulate the impact of dispensing with a precedent or tradition before actually doing so. A team effort at imagining possible consequences will often outperform any one individual’s ability to anticipate likely outcomes.

The best startups are driven by a sense of mission, driven by a common purpose to move toward a better future, and not by a desire to rebel or to reject what may be obsolete methods and approaches without determining what can replace them. I think effective founders have a lot of order in their lives, stable relationships, self-discipline, and the ability to not only be creative but make and meet commitments.

Neal Stephenson captures some of this in a section from “Mother Earth Mother Board” describing a duo driving the Fibre-Optic Link Around the Globe (FLAG) project through Malaysia.

We first met Jim Daily and Alan Wall underneath that big Carlsberg sign, sitting out in a late-afternoon rainstorm under an umbrella, having a couple of beers – “the only ferangs here,” as Wall told me on the phone, using the local term for foreign devil. Daily is American, 2 meters tall, blond, blue-eyed, khaki-and-polo-shirted, gregarious, absolutely plain-spoken, and almost always seems to be having a great time. Wall is English, shorter, dark-haired, impeccably suited, cagey, reticent, and dry. Both are in their 50s. It is of some significance to this story that, at the end of the day, these two men unwind by sitting out in the rain and hoisting a beer, paying no attention whatsoever to the industrial-scale whorehouse next door. Both of them have seen many young Western men arrive here on business missions and completely lose control of their sphincters and become impediments to any kind of organized activity. Daily hired Wall because, like Daily, he is a stable family man who has his act together. They are the very definition of a complementary relationship, and they seem to be making excellent progress toward their goal, which is to run two really expensive wires across the Malay Peninsula.

Since these two, and many of the others we will meet on this journey, have much in common with one another, this is as good a place as any to write a general description. They tend to come from the US or the British Commonwealth countries but spend very little time living there. They are cheerful and outgoing, rudely humorous, and frequently have long-term marriages to adaptable wives. They tend to be absolutely straight shooters even when they are talking to a hacker tourist about whom they know nothing. Their openness would probably be career suicide in the atmosphere of Byzantine court-eunuch intrigue that is public life in the United States today. On the other hand, if I had an unlimited amount of money and woke up tomorrow morning with a burning desire to see a 2,000-hole golf course erected on the surface of Mars, I would probably call men like Daily and Wall, do a handshake deal with them, send them a blank check, and not worry about it.

For more on breaking with tradition and earning your place on a team see “Orienting, Observing, Doing Homework, and Paying Dues.

Update May 1, 2013: I received a question about this post

Q: An interesting paradox is that men like Daily and Wall challenge Neal Stephenson’s quote: “Software development, like professional sports, has a way of making thirty-year-old men feel decrepit.”

The question is…are they an exception to the rule or is the common notion that there is no place for thirty-plus-old men (and women) in a startup just plain wrong? I think it’s the latter. It’s true that younger people get more things done, but the older, more experienced ones do more of the right things.

I see advantages to mixed teams. Many of the soft skills required for success continue to accumulate with experience: e.g. management, sales, business development,…  I have a pair of posts that address this:

I think there is also a difference between something making you feel old and not being able to play the game. I think the larger challenge is not that startups require the energy that only the young can summon, but that experience can blind you to novel combinations between old and new technologies that meet customer needs in a way that creates distinctive value.

Yanis Varoufakis: “Valve is an Enlightened Oligarchy”

Written by Sean Murphy. Posted in 4 Finding your Niche, skmurphy

Yanis Varoufakis is an economist-in-residence at Valve Software. In “Why Valve? Or, what do we need corporations for and how does Valve’s management structure fit into today’s corporate world?” makes this interesting observation.

Valve is a private company owned mostly by few individuals. In that sense, it is an enlightened oligarchy: an oligarchy in that it is owned by a few and enlightened in that those few are not using their property rights to boss people around. The question arises: what happens to the alternative spontaneous order within Valve if some or all of the owners decide to sell up? Granted that Valve’s owners do not intend to do this, the question remains, at least at the theoretical level.

One possibility is that Valve will divide and multiply into a number of different Valve-like companies, as its talented employees leave for greener pastures and, possibly, with the intend of re-creating the horizontal management structure that they grew happily familiar with. Another possibility is that the owners may actually sell their stake to Valve employees, thus combining the features of a co-op with the Valve management system.

I found this a useful postscript to my earlier post on Valve “Four Excerpts From Valve’s Employee Handbook That Belong in Yours.” There is also a comment by “Aaron on August 3, 2012 at 7:32 am” that suggests a narrower applicability for Valve’s model to other creative firms.

You seem to miss a key point about Valve, your products have essentially zero unit cost. The flip side of this is the products are only really useful with huge amounts of combined effort. I’ll pay for 20 minutes of on excellent chef’s time, that has far more value to me than 20 minutes of a valve engineers time. This differences is what separates Valve, Github, and 37 Signals from more traditional companies, however this minor point never seems to be brought up in discussions about them.

But I still find the Valve handbook a very thought provoking model for harnessing the creative energy of a team, in the same way that Hewlett and Packard developed a set of cultural practices that fostered innovation and were copied by  many other firms in Silicon Valley.

I didn’t find much of the rest of Varoufakis’ particularly useful, and George Grellas took particular exception to a number of his statements in a long comment left on Hacker News.

Here are two excerpts that agree with Varoufakis’ conclusions that it is an enlightened oligarchy but disagree that it can scale to other industries (echoing Aaron’s insightful comment)  or  even to a substantially larger size.

The author claims (a) that hierarchical managements lead to “corporate serfdom” and to “Soviet-like” dominance within the framework of the corporation itself, thereby crushing creativity and wasting resources, (b) that all this is made by possible by “toxic finance,” and (c) that it is all “co-dependent with political structures that are losing democratic legitimacy fast.”

Corporate serfdom? Toxic finance? Co-dependent on illegitimate political structures? This lumps every early-stage startup with every mega-corporation that has ever existed and, in effect, calls them all illegitimate. And that is a political assumption about “corporations” in the abstract, not an empirical analysis, because it cannot possibly be defended as an empirical analysis.


What, then, does Valve offer that makes it different? It too is a corporation. It is privately owned by a few persons who have had the luxury of screening all employees so as to hire only very bright, highly self-motivated persons to do predominantly creative forms of work. Working with such employees, Valve has been able to build a successful model by which these bright, motivated employees get to choose 100% of their projects and have complete freedom on how they manage their own time and on what results they seek to achieve. It all sounds like an amazing work environment but how many businesses get to focus in this way on creative forms of work or get to screen carefully to make sure they only hire self-motivated employees? And how many businesses have the luxury of doing this without needing to raise outside capital through their early stages? Moreover (and the author himself raises this point), to what extent can this scale? Can such a model work if the company grows a thousandfold and suddenly has 40,000 employees? Of course, the model inevitably breaks down at some point along the way because the environment in which the Valve employees currently function is highly unusual if not unique.

I agree with George’s analysis but I think that Valve still offers an interesting model for startups and small teams doing software or creating intellectual property to learn from.

Update Aug-12: Doug Withau left a comment suggesting some other resources for enlightened management:

Speaking on “Accelerating Your Sales” at Aug-9 Startup Sales Circle

Written by Sean Murphy. Posted in Events, skmurphy

I will be speaking on “Accelerating Your Sales” on on Thursday, August 9th at 6:30pm at GroundFloorSV Bring sales questions and situations you would like to discuss.

Bring any (or all!) of the following with you:

  1. A gnarly sales opportunity with an active prospect where you’d like some help;
  2. A prospect that you’d like to pull into a sales process but haven’t figured out how to crack;
  3. How and when to offer special pricing;
  4. How to maximize your product demos;
  5. How to identify and work purchasing committees;
  6. Or any old sales question that you have…

When: Thursday, August 9th at 6:30pm
Where: GroundFloorSV at 2030 Duane Ave, Santa Clara
Cost: Free

What Silicon Valley Can Learn From Grand Rapids

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

In 2011 Newsweek magazine listed Grand Rapids Michigan in the top ten of “America’s Dying Cities.”

Total Population (2009): 193,710
Proportion Under 18 (2009): 24.8%
Change in Total Population (2000-2009): -2.1%
Change in Residents Under 18 (2000-2009): -2.2 percentage points

It was actually syndicated content from Mainstreet’s “America’s Dying Cities” where they noted in “Grand Rapids Responds To our Dying Cities Ranking

The rankings of our original article were based on two criteria: changes to the overall population of every U.S. city in the past decade with at least 100,000 residents, and the decline in population of residents 18 and under, both of which were based on census data.

Rob Bliss, Director & Executive Producer (Rob Bliss Events) comments on YouTube page for video

“The Grand Rapids LipDub Video was filmed May 22nd, with 5,000 people, and involved a major shutdown of downtown Grand Rapids, which was filled with marching bands, parades, weddings, motorcades, bridges on fire, and helicopter take offs. It is the largest and longest LipDub video, to date.

This video was created as an official response to the Newsweek article calling Grand Rapids a “dying city.” We disagreed strongly, and wanted to create a video that encompasses the passion and energy we all feel is growing exponentially, in this great city. We felt Don McLean’s “American Pie,” a song about death, was in the end, triumphant and filled to the brim with life and hope.”

What can Silicon Valley learn from Grand Rapids? The value of encouraging the heart.

Scott Sambucci: Seven Tips For Selling as a Startup Founder

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

Scott Sambucci of Sales Qualia recently self-published a great book on selling entitled “Startup Selling: How to Sell If You Really, Really Have to and Don’t Know How…” It’s a slim volume chock full of practical advice for entrepreneurs new to selling to businesses. Unlike many business books that have 20 pages of useful content puffed to 240 or 480 pages this is packed with useful rules of thumb, actionable insights, and tips for recognizing and diagnosing a host of early stage sales challenges. If you are an entrepreneur who wants to get up to speed quickly on selling to business, in particular selling software, this book belongs on your short list of “must reads.”

Here are his first seven rules that are often violated but easy to fix in ways that will immediately improve your sales effectiveness; I have added some commentary after :

1. For inbound calls and leads find out why the prospect is inquiring about your products and services

The why has two branches:

  • What is  the problem they are trying to solve or goal they hope to reach with your product. Their view of their need is the most important aspect of you should frame your offering.
  • What led them to contact you in particular. Too often we are tempted to jump into a sales pitch without understanding what led to a call, was it a website, a recommendation from a friend, seeing an on-line video, hearing a talk, reading an article, etc..

2. Jumping right into a sales demo on the first call is the kiss of death.

In my first job as a post-sale application engineer I was asked to help a developer introduce a new product to an existing account. We called on one of my accounts that was happy with our products and when invited to “tell us what you have for us” he excitedly jumped into a 15 minute high speed monologue explaining all of benefits of being able to simulate certain constructs in a design.  They were silent: they couldn’t tell if they could use it. Because we hadn’t asked them questions about their use of the constructs that we could now enable them to simulate, we spent another 15 minutes painfully backtracking and attempting to do some discovery of whether or not they had a compelling need for the product.

When we debriefed afterward we realized that we didn’t have a map of the target so we didn’t know where to focus our discussion. Before I took him to my next account I asked the contact some questions in advance to determine if and where they were in pain over the inability to simulate these constructs. We were able to focus on problems that they knew they had.

About a month later, after we had debugged our engagement process and had some interest from other accounts, I was able to bring him back for a second visit to the first account, that session was much more conversational and they decided to evaluate and ultimately purchase the product.

You have to elicit symptoms and offer a diagnosis before you offer your prescription

3. Use the telephone as the default mode of communication.

At first I thought Scott overstated this one but I think he is correct, to build rapport and advance the sale you have to have conversations. These can be face or face or over the phone/skype/VoiP but the need to be synchronous to get into the easy back and forth.

4. Speak human.

This one is hard because it means that you get rejected as a person. But if you don’t act like a real person and treat your prospects as people, you can rarely build the rapport necessary to closing a deal.

5. A lead is only a person of interest. A prospect is qualified individual for whom your product or service is a clear match.

A lead can satisfy some objective criteria – e.g a person with a particular title (or possible set of titles) in an industry and perhaps a particular location or geographical region. But to be a prospect you have to have some idea of the value your offering will deliver that value within their time frame and in excess of the total cost of your solution to them

6. A prospect’s decision criteria is a formative process. It will always take more than a single call to determine.

I would add buying process to decision criteria because it’s as important to determine not only their criteria but what will be required to actually close the deal.

7. It’s never about the money. It’s about the cost.

Scott makes some great points about calculating the impact of your features, packaging, delivery, and support process on their total cost of acquisition and ownership.  I think two other factors startups neglect hoping that they can cut price to compensate are the risks involved in the decision and the business, technical, and support aspects of the ongoing relationship. For software in particular, a sale to a business is the start of an ongoing relationship. And that relationship is not evaluated purely on price.

At $7 and 130 pages, “Startup Selling: How to Sell If You Really, Really Have to and Don’t Know How…” is not only a quick read but a useful reference (also available as an e-book) that belongs in your library if you are a startup founder new to selling.

I blogged about Scott Sambucci’s August 2008 blog post on  “An Entrepreneur’s Lessons Learned” in November of 2008 “Scott Sambucci on An Entrepreneur’s Lessons Learned

Three Things I’d Like LinkedIn To Stop Doing Immediately

Written by Sean Murphy. Posted in skmurphy

Dear LinkedIn: I am not looking for a job or other full time employment. I have a business account that I pay for every month so you don’t need to try and make money by showing me ads that I don’t want to see. By the way, I don’t want to see any ads, but find the following particularly annoying because they take up screen space on things I have no interest in at all.

1. Please stop showing ads with my picture over a job title at a company. I have my connection requests set to

Contact Sean for: I enjoy working with entrepreneurs or small companies who have working technology and are wrestling with how to accelerate their business: I can provide sales, marketing, and business planning support. I have more information on my website at

  • consulting offers
  • new ventures
  • expertise requests
  • business deals
  • reference requests
  • getting back in touch

Notably not on this list are “Career opportunities” and “Job opportunities.”

2. Please stop showing me a list of “Jobs You May Be Interested In.” Same reasons as #1.

3. Please stop showing me a list of “Companies You May Want To Follow” Same reasons as #1.

Neal Stepheson on Distinguishing Different Motives for Hypocrisy

Written by Sean Murphy. Posted in 1 Idea Stage, Books, Rules of Thumb

An excerpt from page 183 of Neal Stephenson‘s “The Diamond Age” that have implications for the culture of a startup or an economic region.

“We take a somewhat different view of hypocrisy,” Finkle-McGraw continued. “In the late-twentieth-century Weltanschauung, a hypocrite was someone who espoused high moral views as part of a planned campaign of deception—he never held these beliefs sincerely and routinely violated them in privacy. Of course, most hypocrites are not like that. Most of the time it’s a spirit-is-willing, flesh-is-weak sort of thing.”

“That we occasionally violate our own stated moral code,” Major Napier said, working it through, “does not imply that we are insincere in espousing that code.”

“Of course not,” Finkle-McGraw said. “It’s perfectly obvious, really. No one ever said that it was easy to hew to a strict code of conduct. Really, the difficulties involved—the missteps we make along the way—are what make it interesting. The internal, and eternal, struggle, between our base impulses and the rigorous demands of our
own moral system is quintessentially human. It is how we conduct ourselves in that struggle that determines how we may in time be judged by a higher power.”

A few questions about your startup’s culture:

  • Is there one set of rules that everyone strives to adhere to or are there different rules for founders than other employees or for different groups of employees (e.g. managers, engineers, ..)?
  • Do you have a lessons learned process that allows people to admit mistakes of judgement without punishment?
  • Do you espouse a code of conduct because it’s what investors or customers or employees want to hear, but you have not instituted mechanisms with teeth to monitor and enforce this conduct?

Neal Stephenson on the Importance of Culture

Written by Sean Murphy. Posted in 1 Idea Stage, Books, Rules of Thumb

Two excerpts from Neal Stephenson‘s “The Diamond Age” that have implications for the culture of a startup or an economic region. These are from pages 24 and 25 and outlines two real life events as a part of the back story of one of the characters in the novel, hyperlinks have been added to provide context.

During his early teens, a passenger jet made an improbable crash landing at the Sioux City airport, and Finkle-McGraw, along with several other members of his Boy Scout troop who had been hastily mobilized by their scoutmaster, was standing by the runway along with every ambulance, fireman, doctor, and nurse from a radius of several counties. The uncanny efficiency with which the locals responded to the crash was widely publicized and became the subject of a made-for-TV movie. Finkle-McGraw couldn’t understand why. They had simply done what was reasonable and humane under the circumstances; why did people from other parts of the country find this so difficult to understand?


One summer, as he was living in Ames and working as a research assistant in a solid-state physics lab, the city was actually turned into an island for a couple of days by an immense flood. Along with many other Midwesterners, Finkle-McGraw put in a few weeks building levees out of sandbags and plastic sheeting. Once again he was struck by the national media coverage—reporters from the coasts kept showing up and announcing, with some bewilderment, that there had been no looting. The lesson learned during the Sioux City plane crash was reinforced. The Los Angeles riots of the previous year provided a vivid counterexample.

Finkle-McGraw began to develop an opinion that was to shape his political views in later years, namely, that while people were not genetically different, they were culturally as different as they could possibly be, and that some cultures were simply better than others. This was not a subjective value judgment, merely an observation that some cultures thrived and expanded while others failed.

A couple of questions to ponder about your startup’s culture:

  • Is there an open and free flow of information so that teams can self-organize around problems?
  • How important is for you to be in control: do you prefer inaction to mistakes in the absence of your specific instructions?
  • Are the common high level goals clear to everyone: can individuals abandon their individual objectives and metrics to respond to unfolding situations or do they wait for instruction?

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