Archive for September, 2012

Quotes For Entrepreneurs–September 2012

Written by Sean Murphy. Posted in Quotes, skmurphy

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“Life has not taught me to expect nothing, but she has taught me not to expect success to be the inevitable result of my endeavors.
Alan Paton

More context:

“What has life taught me after all? She has taught me not to expect too much, though not in the sense of the cynical beatitude, ‘Blessed is he who expecteth nothing, for he shall not become disappointed.’ Life has not taught me to expect nothing, but she has taught me not to expect success to be the inevitable result of my endeavors. She has taught me to seek sustenance from the endeavor itself, but leave the result to God.”
Alan Paton

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“A demo is not training. It’s a conversation with prospects that explores their needs and your software as a potential solution.”
Sean Murphy

An off the cuff remark I made in the “Lessons Learned implementing the Great Demo!” webinar that I thought was worth saving when heard it on the audio track.

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“If you don’t understand what you are losing, as well as what you are gaining when making a decision, you don’t understand the decision.”
Jabe Bloom @cyetain

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“Nothing is ever lost by courtesy. It is the cheapest of pleasures, costs nothing, and conveys much.”
Erastus Wiman

h/t  @QuoteDaily

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“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

Added as a closing quote to “The Venture Lifestyle Business

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“It is one thing to study war and another to live the warrior’s life.”
Telamon of Arcadia

I think this is also true of entrepreneurship. I saw this quote in “The War of Art” a great book by Steve Pressfield on the challenges of pursuing a career as a writer or artist. I suspect that Telamon is fictional as the only references I can find are to Pressfield’s novel “Tides of War.”

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“Uncovering a business model that works starts with wading through lots of things that don’t. Don’t stop at failure. Ask Why.”
Ash Maurya

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“Next to knowing when to seize an opportunity, the most important thing in life is to know when to forego an advantage.”
Benjamin Disraeli

Used as closing quote for De Tocqueville on Concept of “Self Interest Rightly Understood”

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“Innovation is all about people.”
Hans Haringa Shell Game Changer Team

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“The uncreative mind can spot wrong answers, but it takes a very creative mind to spot wrong questions.”
Antony Jay

h/t Gerald Weinberg (@JerryWeinberg)

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“The $60 billion bullet train they’re proposing in California would be the slowest bullet train in the world at the highest cost per mile. They’re going for records in all the wrong ways.”
Elon Musk quoted in “Elon Musk, 21st Century Industrialist

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“Deep learning doesn’t shine.”
Marie Von Ebner-Eschenbach

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“Life is not lost by dying; life is lost minute by minute, day by dragging day, in all the thousand small uncaring ways.”
Stephen V. Benet

h/t @QuoteDaily

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Emmett’s Law: “The dread of doing a task uses up more time and energy than doing the task itself.”
Rita Emmett

h/t Esther Derby (@EstherDerby)

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“We disagree well together. That’s what makes us great.”
Lisa Stone, CEO of BlogHer, speaking about her co-founders: Elisa Camahort Page and Jory Des Jardins.

h/t Lisa Kay Solomon (@LisaKaySolomon)

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“Good surveys spark conversations. They show commitment to exploring and solving a problem. Poor ones exhaust prospects’ patience. ”
Sean Murphy

Used as title for Good Surveys Spark Conversations, Poor Ones Exhaust Prospects’ Patience

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“Curiosity is one of the permanent and certain characteristics of a vigorous mind.”
Samuel Johnson

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“Turn insecurity into curiosity.”
Deb Mills-Scofield @dscofield

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“Seek not proud riches, but such as thou mayest get justly, use soberly, distribute cheerfully, and leave contentedly.”
Francis Bacon “Of Riches

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Real Innovation Requires a Community of Practice Fostering a Cascade of Inventions

Written by Sean Murphy. Posted in Community of Practice

In May of this year I was invited to take part in a month long group discussion on CPSquare where my consulting practice was the topic. This is the first question I answered, it was prompted by my opening statement.

Q: I was particularly struck by how the work you do tends to focus around communication and change.  I’m wondering if there are any emergent patterns in this area that you have uncovered? How do communities of practice facilitate your work (assuming that they do)?

A: Here are a couple of quick lessons learned:

  • Most sustainable changes are nurtured in communities of practice.
  • The idea of a lone inventor is accurate as far as it goes but most real innovation requires a reinforcing cascade of inventions.
  • The distinction between early customer and co-inventors or co-innovators is often artificial.

When we have a new technology we look very hard for communities that are already working with it, or related technologies or are focused on managing or addressing the problem or opportunity we would like to aim the technology at.

Q: Should I Get A Normal Job Or Work At A Startup?

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage

Q: I saw that you were hosting this “working for equity” panel but I am not in Silicon Valley so I won’t be able to attend. I understand the normal protocols for working at normal jobs but am now considering whether or not to apply for work at startups. What level of salary/benefits should I expect? I understand that at many startups, equity is used as a substitute for salary.

A:  like many compensation issues, it’s a negotiation. Deciding how to value the equity in a very early stage company can be quite challenging. Most people become early employees at a startup because they like the freedom of the work environment and they hope to learn enough to start a business of their own at some point.

Unless you really like the team or are confident you will learn something by working at an early stage startup you are probably better served to work at a venture backed startup. This can be very similar to working for an established company. Many of these firms fail but they can normally pay competitive salaries to regular employees. Officers and executives may take a pay cut but have substantially more equity than the average employee (e.g. 10-40X).

Joining a team that’s bootstrapping means that you have to collaborate with them to create and market something of value that customers will pay for.

Entrepreneurship gets a lot of hype but it’s not for everyone, in the same way that we need doctors and accountants and public safety officers but these careers require different personalities and strengths. I have been entrepreneurially inclined since my early teens, much to the disappointment of my father and grandfather who were both attorneys.  I have done stints in big companies but migrated to opportunities for intrapreneurship–new business units, new products, new services–and have come to the conclusion entrepreneurship is not a voluntary career.

For the most part bootstrapping a startup is not the path to riches but to autonomy. Some people value that more than others.

If salary and benefits are of utmost concern you will probably be more comfortable working as an employee in an established firm. Most people do and they are what keeps our society running.

But even venture backed firms and large enterprises have layoffs and go bankrupt. I don’t think there are any careers that you can hope to work in for more than decade without continuing to improve your skills. Medicine, law, teaching at both the K12 and college level are all likely to undergo tremendous change in the next decade. The only security is to keep learning and to focus on areas where you can offer your employer or your customers value.

Startup Founders Announced for Working For Equity Panel at SVCC 2012

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, Events, Founder Story, skmurphy

For the third year in a row I will moderate a panel of startup founders sharing lesson learned bootstrapping a technology startup at Silicon Valley Code Camp. This “Working for Equity” session will be on Sunday Oct 7 at 9:15am.

Here is the announcement

Many of us in Silicon Valley seek to found or be an early employee at a technology startup. If you aspire to create a startup come take part in a conversation with four  startup founders about what’s really involved in leaving your day job and striking out on your own or with partners. The startup founders range from serial entrepreneurs to first-time CEOs, they will share their vision, drive and passion as they discuss the nuts and bolts of following their dreams to building something that will change the world.

  • Lenny Greenberg CTO of Assityx, Inc.
    Lenny Greenberg is founder and CTO of Assistyx, leading developer of assistive communication products, including the award-winning TapToTalk app that help individuals with physical and mental challenges reach their full potential. A serial entrepreneur, Lenny has led organizations in planning and developing advanced technology-based products.
  • Ruoting Sun, co-founder of Temvi, Inc.
    Ruoting Sun is co-founder of Temvi, a Mountain View based startup focused on simplifying social discovery. Temvi enables users to easily find, share, and experience cool events that are happening around them, based on their interests and passions. Routing is a first time entrepreneur heading a team of 5 others in creating a mobile app that gamifies social discovery.
  • Sam King, CEO of ExpressMango, Inc.
    After working as a key contributor to many startups, Sam King co-founded Express Mango, a the social networking appointment system. Express Mango’s online scheduling and appointment reminders reduce no shows. The facebook virtual receptionist helps grow your business 24/7/365.
  • Giacomo Vacca, CEO of Kinetic River, Corp.
    Giacomo Vacca founded Kinetic River to focus on products and services at the intersection of laser optics, microfluidics and medical diagnostic devices. He earned his B.A. and M.A. in Physics from Harvard University, and his Ph.D. in Applied Physics from Stanford University. His most recent honors are having been elected to Senior Member of the Optical Society of America and to Research Fellow of the Volwiler Society at Abbott Laboratories.
  • Moderator: Sean Murphy, CEO of SKMurphy Inc.
    Sean Murphy has taken an entrepreneurial approach to life since he could drive. His firm specializes in early stage and emerging market technology companies who are challenged either by new product introduction or the need to diversify beyond their initial success.

Silicon Valley Code Camp is an amazing experience that has improved each of the five years that I have attended. It’s held at Foothill College (12345 El Monte Road,  Los Altos Hills, CA 94022) and this year will convent the weekend of Saturday October 6th and Sunday October 7th. There is no charge to attend.

Register your interest in attending Code Camp at http://www.siliconvalley-codecamp.com/Register.aspx

Register your interest in attending the  Sunday Oct 7 9:15am “Working for Equity” session at
http://www.siliconvalley-codecamp.com/Sessions.aspx?sessionid=942

Joel Mokyr on Creative Forces and Cardwell’s Law

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

Excerpts from an essay by Joel Mokyr on “Creative Forces” in the May 1993 issue of Reason Magazine.

The engine of economic growth is, was, and will always be technological creativity. Of course, other things are necessary for an economy to grow–capital accumulation, skills, motivation, well-functioning markets, and so on. But all other factors tend to have short-lived effects. They can increase income, but they tend to burn out after a while. Technology is the only thing that does not run into diminishing returns. There are no known limits to the human ability to control and manipulate the forces of nature.

[...] Technological progress, even in civilian technology, is often made in tooth and claw. Without the pressure of competing neighboring states, societies may lose their cutting edge. Closed large empires, such as China, Russia, and the Ottoman state, though not entirely impervious to progress, could not sustain their creativity in the long run. In Western Europe, political fragmentation and the “states system” prevented such stagnation. [...]

The threat that a new idea would be adopted by a rival nation and that innovative subjects would migrate elsewhere if ill treated was a powerful incentive to overcome the inevitable opposition to progress from conservative circles or vested interests. [...]

A stronger version of this theory relies on what I have called “Cardwell’s Law,” after the British historian Donald Cardwell. This law states essentially that every society, when left on its own, will be technologically creative for only short periods. Sooner or later the forces of conservatism, the “if-it-ain’t-broke-don’t-fix-it,” the “if- God-had-wanted-us-to-fly-he-would-have-given-us-wings,” and the “not-invented-here-so-it-can’t-possibly-work” people take over and manage through a variety of legal and institutional channels to slow down and if possible stop technological creativity altogether. Technological leaders like 17th-century Holland or early 1 9th-century Britain lost their edge and eventually became followers.http://www.skmurphy.com/blog/2010/08/25/ed-weissman-on-b2b-opportunities-for-startups-part-2/

I want to explore two implications, one for Silicon Valley and one for entrepreneurs.

Implications for Silicon Valley: I think Silicon Valley remains “a nicely furnished room in a house that’s burning down, the state of California.” I think California’s government has become very complacent  what’s required to focus technology innovation and will face increasing competitive pressures from other lower tax business friendly US states and other countries. For evidence see this report from the Manhattan Institute,  “The Great California Exodus: A Closer Look“, by Tom Gray and Robert Scardamalia. It documents a migration of 3.4 million residents out of the state since 1990.

Implications for entrepreneurs: don’t be afraid to attack well established and much larger firms that have become sclerotic.  See for example remarks by Sequoia Capital’s Jim Goetz  at TechCrunch’s Disrupt Conference in mid-September: “It’s shocking we don’t see more engineers and entrepreneurs interested in enterprise. There are fewer competitors and they are large, slow and flatfooted.”

See also:

Q: Can a Custom Solution Be The Basis For A Product?

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

Q: I was contracted to develop a custom software application that I delivered with a minimum set of features the client requested so that it was simple to use.  Once my client is satisfied should I try and market it? There are similar products available but mine is simpler and I can afford to offer it at a lower cost.

A couple of quick questions and suggestions:

  1. Was the work done under a “work for hire” or other contract that assigns all rights to the customer? You may not have the right to sell the software to someone else if you didn’t negotiate for this up front.
  2. Do you know why the firm that contracted you decided they needed a custom solution instead of using or adapting an off the shelf package to their needs? Understanding what led them to the decision may allow you to identify other prospects.
  3. If they are OK with you selling it to other firms then you should ask them for both a testimonial or case study and referrals to other firms that might be in the same situation that they were.
  4. There may be products that are similar but there must be some points of differentiation between your solution and the others, who else really needs the particular feature set you have written?
  5. I would try and sell what you have to prospects that have a similar characteristics to your first customer on the theory that they may have a similar view of their needs.

This is a common way to get started and it’s often a good idea to negotiate the right to sell what you have developed to other firms than your first customer, even if you have to agree to avoid certain named firms or a category of firms that your first customer views as a competitor. Sometimes this exclusivity can be negotiated to a certain time period (for example a year or 18 months).  The other trick is to do what you did here and focus on the minimum feature set that the customer is willing to pay for, and start to sell it to others once you have clear uptake and acceptance at your first customer site.

See also

Howard Tullman on Distinguishing Mistakes From Failure

Written by Sean Murphy. Posted in Rules of Thumb

Howard Tullman writes the Perspiration Principles blog in Inc. His recent post “Who Said Failure was Fashionable? Frankly, It Sucks” made four great points:

Mistakes vs. Failures
Somehow, it has become cool to brag about how your last business failed–and what a wonderful learning experience it all was. But that’s a crock. You only fail when you give up, and giving up is something that winners never do. In my opinion, only cretins celebrate their failures.

Making mistakes, on the other hand, is something you have to do from time to time. It’s a sign of a healthy, active and risk-taking business. Mistakes are a critical part of growing and expanding your company and, if you’re not stubbing your toe from time to time, you’re not pushing forward. Rapid growth and constantly changing circumstances are inherently embarrassing – you need to get used to it. A thick skin helps a lot in a start-up.

If you have a plan for what you will do if your current course of action does not bear fruit it’s much harder to fail.  It’s when you believe you cannot lose or you decide to put all your reserves on one last effort that you can fail. Trust and relationships can survive mistakes, but not if you actively misled your partners or customers.

1. Make cheap mistakes but be selective-don’t try to do things cheaply that you shouldn’t do at all.

Prototypes are cheap mistakes. They are designed to capture a significant aspect or fraction of the total challenge at much lower cost than the final solution. Like crash test dummies prototypes can also be instrumented in ways that would compromise the final product. New mistakes are better than repeating old mistakes at lower cost.

3. Don’t dwell on the past.

This is one that I have trouble doing well. I revisit old mistakes so that I can learn from them, but I sometimes find myself reliving the emotions in a way that’s not productive. I can tell when I am under stress because I start to dream that I am back in school faced with an exam I have not studied for.  But there is a great feeling of contentment when I revisit an old mistake and unlock an insight for an new approach next time. I think that may be the reframing that’s essential: from “if only I had not…” to “next time I will..”

4. Distinguish between mistakes (errors that happen once) and systemic problems (errors that happen over and over again).

I think it’s common to attribute systemic problems to a one time occurrence. I remember when I was at Cisco the compiled system image grew too large to fit onto the EEPROMS that system booted from. We had not anticipated this so we were not tracking image size growth and were surprised that we could not ship new upgrades. We did some quick re-arrangement of the code to buy ourselves a few weeks and then came up with a workaround where a small boot module was included with a compressed image to uncompress it at system startup.

Of course we didn’t start tracking image size so 9 months later we were surprised when even the compressed image would not fit. When we plotted code base size and image growth  we discovered that growth it was correlated with the number of active developers.  We had been adding staff continually so the image was growing faster and faster.

The first time the image grew too large it was arguably a mistake, the second time it was clearly a systemic error.

Kurt Lewin on Insight

Written by Sean Murphy. Posted in Books

I came across a great essay on insight,  “Behavior and development as a function of the total situation (1946)”, written by Kurt Lewin in a collection of his papers published as “Resolving Social Conflict & Field Theory in Social Science.”  Here are some excerpts and commentary:

Insight can always be viewed as a change in the cognitive structure of the situation. It frequently include differentiating and restructuring in the sense of separating certain regions which have been connected and connecting regions that have been connected.

Entrepreneurs rely on insights for new products, new markets, new customers, and new business models because insights re-arrange our understanding of how things work and enable them to see new possibilities and previously unappreciated connections. Insights obsolete some old understandings and enable new ones. Because they are often sudden and preceded by a feeling of being trapped, stuck, or confused their arrival is hard to predict.

I think the net effect of an insight is to lengthen your time horizon and improve your morale. Sometimes insights show a shorter path, but often they show a path where you couldn’t see one before, even it’s a long way around. Insights can be acted upon immediately but this new course of action may take some time to have an effect.

Becoming emotional frequently leads to a narrowing-down of the psychologically existing area. A state of strong emotionality should, therefore, be detrimental to finding solutions. A distance sufficient to permit a survey of the larger situation helps in the solution of intellectual problems.

When you are feeling stuck, forcing yourself to zoom out, to breathe deeply and relax, to drift a little, can help to lower the psychological and emotional stress you may be placing yourself under. For the most part entrepreneurs don’t have to manage physical stress (e.g. submerging yourself in an bathtub full of ice water) but do need to manage psychological stress, which is the bodies’ involuntary reaction to the way that a situation is perceived. If you can reframe your perception, you indirectly impact reactions that are not under conscious control.

Being in an unknown surrounding is equivalent to being in a region which is  unstructured in the double sense that neither the quality nor the subparts of the present region, nor the immediately neighboring regions, are  determined.

I think this can also be experience as the sensation of being lost, or in the dark, or trapped.

Orientation is the structurization of the unstructured region.

Although John Boyd does not reference Kurt Lewin in his description of the Orientation process of the OODA Loop, I think Lewin’s description neatly summarizes what happens between observation and decision.

An unstructured region usually has the same effect as an impassable obstacle. Being in unstructured surroundings leads to uncertainty of behavior because it is not clear whether a certain action will lead to or away from the goal. It is undetermined whether the neighboring regions are dangerous or friendly.

I think an unstructured region is equivalent to what Snowden is referring to when he talks about chaotic regions in his cynefin model. The only way to proceed is to explore and experiment, where exploration may take the form of careful observation, talking with other people who may have relevant experience, being explicit about the questions that you need to answer to frame the “known unknowns”, and to take the time reflect periodically on what you have learned.

In another essay in the book “Action Research and Minority Problems” he defines action research as “a spiral of steps, each of which is composed of a circle of planning, action and fact-finding about the result of action.” This is also a good model for how to proceed when you don’t have a good mental model for your current situation.

“Sharing My Practice” Discussion with CPSquare: Intro

Written by Sean Murphy. Posted in Community of Practice, EDA, Rules of Thumb

In May of this year I was invited to take part in a month long group discussion on CPSquare where my consulting practice was the focus. This is the introductory statement I posted to explain a little bit about my background and what I do.

Intro

I worked in Electronic Design Automation on board, chip, and system design in the 80’s and 90’s. This gave me an appreciation of the value domain specific visual languages for representing geometric, physical, logical, electrical, and temporal properties and relationships. Since I had studiously avoided electronics and anything related to hardware in my education I had to concentrate on the poorly understood problems of data management and applying computers to the design of computers.

I also learned that electronic systems design required a team of experts from different disciplines collaborating to create something new. A chip design team needs to reach a working consensus on a range of problems in different domains. One paradox over the roughly two decades I worked in system design was that solving a problem in one domain moved the constraint to another one, so that you a group that was critical for one or two generations has to let others take the lead as new challenges dominate.

When I was getting ready to apply to colleges I had a long conversation with a friend’s father who worked as a fighter aircraft designer at McDonnell Douglas. He was an expert in materials and mechanical design. He said that one of the challenges his organization faced was that aircraft survivability from the 1940’s through the 60’s had been driven by airframe and engine design as combat took place at close range using machine guns. As Gatling guns gave way to missiles there were many fewer combat engagements within visual range: avionics and electronic counter-measures, which had become important starting in the second half of the World War 2, now came to dominate the equations governing survivability. The challenge was that the organization was dominated by folks with a clear understanding of airframe design and they needed to learn how to incorporate guidance from many new disciplines.

I think this challenge of integrating not only the evolution of  knowledge in a particular domain but fostering effective communication and collaboration among experts in different domains was what led me originally to CPSquare. I was working at Cisco in a hardware design best practices effort and I read an article by Etienne Wenger on cultivating communities of practice in the Harvard Business Review. It was eye opening.

These days I work primarily with teams of two to five engineers or scientists who are experts in a field and are challenged with explaining the benefits of their services or software so that they can get their startup off the ground. I spend some time trying to understand the details of the technology but for the most part try and draw a box around it and understand the inputs, outputs, timeframe, and costs that a prospective customer will need to appreciate before deciding to engage.

The incorporation of a new technology into a business process often changes existing political boundaries, frequently obsoletes old assumptions, establishes new processes and ways of working together, and requires shared experimentation between the customer and startup for shared learning.

I am happy to answer any questions folks may have on challenges I face or issues that I wrestle with. I have learned a lot from my participation in CPSquare events over the years and am happy to take part in this exercise.

For more background on my current practice and some of the things that have influenced me please take a look at some of these blog posts:

Mastermind Open House 11am Sat-Sep-22-2012 at GroundFloorSV

Written by Sean Murphy. Posted in Events, skmurphy

When:  11am to 1pm Sat-Sep-20
Where: Ground Floor Silicon Valley, 2030 Duane Avenue, Santa Clara, CA
Register: http://www.meetup.com/BayAreaMastermind/events/74068892/
Cost:  No Charge for Open House but a monthly charge will apply if you want to join a regular group

We launched two new Mastermind groups about six months ago in response to several requests from entrepreneurs who wanted to form an advisory board of peers with a deeper understanding of each other’s businesses and shared accountability. One group meets two  Saturday mornings a month, the other meets two Wednesday afternoons a month 4-6pm.

Come to the open house and see if you feel comfortable with the other folks that attend

The difference between these mastermind meetings and a Bootstrapper Breakfast meeting is that anyone is welcome to drop in to a breakfast when they feel like it.  Mastermind groups are the same entrepreneurs meeting twice a month to compare notes and hold each other accountable for goals and commitments. Over time these entrepreneurs  will get to know each other better than the average breakfast attendee.

There is no charge for this open house but if you decide to join a facilitated small group there is a small monthly subscription.

Crafting Deals with Customers and Partners

Written by Sean Murphy. Posted in 2 Open for Business Stage, 3 Early Customer Stage

Bootstrappers prosper closing deals with customers and partners. Here are some tips if you are new to making deals.

  1. Focus on the opportunities that are in front of you. Deals can be steppingstones to larger and more important relationships but you need to close the deals with smaller players and meet your commitments to enable medium size deals, and to close and honor the medium size deals to be eligible for major deals.
  2. Establish a working rapport with the customer/partner, a deal should be the start of a long and mutually beneficial relationship.
  3. Maintain your balance, burnout is much more of a risk than losing any one deal in this environment.
  4. Don’t get into an adversarial relationship with your customer/partner.
  5. Focus on reaching a business agreement, start by drafting a short write-up in plain English of the deal points. Lawyers can advise you on business risks, but in the end it’s the entrepreneur’s call what risks to take.  A reasonable rule of thumb is that legal fees are worth 1% of the value of the deal
  6. Reach a joint understanding how you can end or undo the deal as a part of the deal. It’s important that you do this in the beginning before you sign. No deal lasts forever and you should outline the parameters for ending it cleanly.
  7. The business risk in a software license for the vendor is primary in the limitations of liability and indemnifications, source code escrow–in particular under what conditions customers will gain access to your source–is normally a bad idea for the vendor and the customer, and any warranty.
  8. Trust is built over time. If possible, establish a meaningful working relationship on a limited set of quid pro quo items before negotiating for a significant deal.
  9. The more predictable and transparent you are with customers and partners, the easier it is for them to forgive the natural mistake and miscommunications that accrue to any business relationships. Strive for mechanisms in the contract that encourage both sides to over communicate and stay in alignment.
  10. You may be looking for  a mix of revenue, know-how, endorsements, referrals and leads, revenue, market intelligence, channel partners, etc.. Be clear inside your team and with your customer or partner what your priorities are: build mechanisms into the deal that help to keep both sides on the same page about important issues and in alignment on common goals.
  11. Talk time to walk around the situation. Look at the deal from the other side of the table and try and interpret what you are offering and asking for in the context of the other party’s needs and objectives. Also look at what the deal will enable for your two firms in combination.
  12. There are broadly two kinds of deals, those that are personal with a key individual in another small firm, and those that a team or committee decision at a larger firm. There may be a key individual involved from the larger firm but there is normally more of a separation between who you approach for the deal, who decides to do the deal, and who is responsible day to day for implementing what is agreed to. Your firm may be large enough where different people may be involved in the approach and decision than the day to day implementation. You need to address the issues that are distinct in these three phases and have a plan for ensuring ongoing joint execution unless the goal is simply to make an announcement.

If you have other checklist items please add them in the comments

Here are some related posts on early deals:

Consider What’s Changed And What You Bring To An Opportunity

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

Q: I see a lot of opportunities for a startup, but I am not sure how to evaluate them?

A: Here is a short checklist we use to help entrepreneurs sort through where they are, this is typically most useful in the “idea / team formation” phase or in preparation for “open for business” and complements the “First Seven Questions” that focus more on the product than the team’s core competencies, the unknowns, or the plan.

  1. What is the Opportunity? Who is the customer and what is their need or problem.  You can read a blog post or trends article to find many of these but you cannot stop there.
  2. Why You? You are not a blank slate, you have skills, experience, and interests that can form a basis for a differentiated offering.
  3. Why Now? What’s changed either in the industry or in adjacent or supporting industries, that will enable new opportunities for an entrant to gain advantage over incumbents and other larger firms?
  4. Issues: what challenges do you face in going after this opportunity. The most two most common early issues:
    • Domain Knowledge: Either problem or customer intimacy or both.
    • Team: If you can’t make progress on your own pick a different idea, but you should use your progress to recruit other team members if you are working solo to increase your chances for success. The idea is only the first 1%, you might consider joining another team and working to help them refine and improve their idea. Finding a core team you can work with is as important as the idea.
  5. Key Assumptions: What information or missing pieces of the final solution do you still need to discover. Can you construct a simple model for your business as a sketch or a spreadsheet that models  just the key variables and their relationships? What do you know that you need to find out?
  6. Next Steps: what can you do with the knowledge you have, the people who are willing to help, and the time and resources you have to move your idea forward? You will  be working on your startup for at least a year or two, I would pick a problem that you find energizing and that at least one other person is interested on working on with you.

This can also be a useful list of questions to revisit even as you are doing customer interviews and have early customers, especially if you learn something that challenges a key assumption about the business.

See You at Lean Startup Conference 2012

Written by Sean Murphy. Posted in Events, skmurphy

Here’s why I am excited about attending the Lean Startup Conference on Dec-3-2012 and offering a workshop there with Scott Sambucci on “Engineering Your Sales Process” on the day after.

Q: What aspect of lean startup methods most inspires you?

Lean Startup methods recognize that new markets in particular require a scientific approach that relies on thoughtful experimentation and iteration–what we used to call “trial and error”–to determine what will work and what won’t. It takes an engineering approach to defining the “known unknowns” about your customer, your product, and your business model but still respects the value of entrepreneurial vision and insight in crafting new hypotheses. It reminds every entrepreneur that they need to get out their Bat Cave and go and see the ground truth of their customer’s needs and market expectations.

Q: What makes it hard for companies to implement this process?

It requires opinions that are held strongly enough to act on but lightly enough that you are willing to revise them in the face of new facts and new learning. This is a hard balance for individuals to manage much less managers and executives who are expected to have the right answers. It can be very empowering for a manager or a leader to mark off the limits of what they know and ask the team for help in learning more. This behavior can violate expectations of employees, investors, and peers for the amount of self-confidence and passion that entrepreneurs and executives should exhibit.

Q: What will people take away from your “Engineering Your Sales Process” workshop?

The “Engineering Your Sales Process” workshop will teach them how to diagnose and handle common B2B sales problems. Attendees will leave with a scientific approach to understanding their customers’ needs and their buying process so that they can scale their business with a repeatable sales process. Attendees will take part in written and interactive exercises that will complement the lecture portions of the workshop and allow them to focus on sales situations that they are facing their own startups.

You can register for the Dec 3 2012 conference at http://leanstartupconf2012.eventbrite.com/, the workshop is one of several offered on Dec-4-2012 at the Intercontinental.  To participate in the workshops, you will need to buy a Gold or Platinum Pass.

The Lean Startup Conference is the re-tooled and expanded version of the Startup Lessons Learned Conference, see these blog posts for roundups from 2010 and 2011

Entrepreneurs and Traditionalists Help Society Avoid Stasis and Chaos

Written by Sean Murphy. Posted in Quotes

Here’s to the sane ones,
the responsible,
the mature,
the unsung heroes,
the pillars of society,
the ones who see what needs to be done and do it.
They’re not fond of recognition,
and they know the world is a messy place.
You can snub them, make fun of them, or ignore them.
About the only thing you can’t do is live your life without them.
They make the human race survive.
And while some may see them as the boring ones, we see love.
Because the people who are humble enough to serve are the ones who hold the world together.
John D. Cook “Here’s to the Sane Ones

For society to continue it needs entrepreneurs who are a little crazy and the steady and reliable who preserve traditions and do the equally important job of keeping calm and carrying on. Even entrepreneurs bent on changing the status quo need to take care not to break what’s working, to preserve the values that foster civil society, and to appreciate those that are slower to embrace change as providing an important balance. Related

Forming and Leading Teams of Experts at PMI-SV Sep-17

Written by Sean Murphy. Posted in Events

We do a lot of work with experts in a variety of fields including law, medicine, proteomics, genomics, electronic design, 3D printing and additive manufacturing, text analytics, process mining, subsurface modeling of oil and gas deposits, parallel and  heterogeneous computing, thermal engineering, design automation, and knowledge worker collaboration. This has led us to develop approaches for assessing experts, helping experts to reduce their insights to consulting and software offerings,  and fostering collaboration among experts in different disciplines.

I will be speaking at the PMI-SV dinner meeting on Monday September 17 on “Forming and Leading Teams of Experts.” This talk is a re-worked and improved version of my earlier “The Limits of I’ll Know it When I See It” and is aimed more directly at the challenges of identifying expertise and techniques for blending expertise on a team.

When: 17 September 2012 from 5:30pm – 8:30pm
Where: Michaels at Shoreline, 2960 No. Shoreline Blvd, Mountain View, CA 94043-1357
Cost: $30 PMI members, $35 non-members (walk in rate)

Update Sep-18-2012: Slides and Audio from talk now available

Three Great Books on Generating Innovative Business Ideas

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

These three books contain a wealth of useful suggestions for generating innovative business ideas from observing, questioning, and networking with customers and others:

  • The Innovator’s DNA” by Christensen, Dyer, and Gregerson outlines a set of five skills that innovator’s use to develop entrepreneurial ideas: questioning, observing, networking, experimenting, and associating. They offer a number of suggestions for how to cultivate these skills. But even their formulation assumes a fair amount of iteration as candidate ideas are developed, tested, recombined to create novel value.
  • Customer Visits” by Edward McQuarrie goes into extensive detail about techniques and strategies for interviewing business customers not only to refine existing offerings but to identify new product opportunities.
  • Innovation and Entrepreneurship” by Peter Drucker suggests that you develop innovative business ideas by searching for changes that have already occurred but where the full effects have not been felt.  In particular in “Innovation and Entrepreneurship” he lists seven sources for innovative ideas in decreasing order of importance:
    • The Unexpected (e.g. unexpected success or failure of an existing product or service)
    • The Incongruous
    • Weak Link In Existing Process
    • Industry Or Market Structure Change
    • Demographics: Size, Age Structure
    • New Zeitgeist: Perception, Mood, Meaning
    • New Knowledge

Related Posts on Developing Innovative Business Ideas

Good Surveys Spark Conversations, Poor Ones Exhaust Prospects’ Patience

Written by Sean Murphy. Posted in skmurphy

About once a week or so I get a request that looks like:

Can you please fill out my 40 question survey to help me understand the market need for my new B2B product?

Here’s the thing. In B2B market you want the survey to start a conversation not to extract as much info as possible  but leave you without the potential for a relationship. What are the three most important things you need to know? Can you frame your questions in a way that communicates an understanding of the prospect’s needs  and a commitment to solving their problem?

If I don’t know you provide some links that point to blog posts or other indicators that you are real person with a deep interest in the problem you plan to address.  Give me some reasons to start a conversation with you if I believe that I have the problem you are asking about.

Entrepreneurial Passion and the Science of Startups

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

Q: How does taking a scientific approach to your startup allow you to feel passion for the product you are building. It would seem to place you in the position of taking orders from the customer: there is a quote by Henry Ford “If I asked the customer what to do, he would have asked for a faster horse carriage.” How can you unlock the ingenuity of your team testing hypotheses?

A: The Ford quote, although frequently written about is almost certainly false.

“A horseless carriage was a common idea…ever since the steam engine was invented…”
Henry Ford in “My Life and Work

Full paragraph for more context, for me this makes it seem very unlikely that he ever said the “if I had asked my customers what they wanted they would have said faster horses.”

Even before that time I had the idea of making some kind of a light steam car that would take the place of horses–more especially, however, as a tractor to attend to the excessively hard labour of ploughing. It occurred to me, as I remember somewhat vaguely, that precisely the same idea might be applied to a carriage or a wagon on the road. A horseless carriage was a common idea. People had been talking about carriages without horses for many years back–in fact, ever since the steam engine was invented–but the idea of the carriage at first did not seem so practical to me as the idea of an engine to do the harder farm work, and of all the work on the farm ploughing was the hardest. Our roads were poor and we had not the habit of getting around. One of the most remarkable features of the automobile on the farm is the way that it has broadened the farmer’s life. We simply took for granted that unless the errand were urgent we would not go to town, and I think we rarely made more than a trip a week. In bad weather we did not go even that often.

If  you want customers to adopt your offering you have to talk to them in the context of their current operating reality. Why do we measure electric lights in candlepower and electric motors in horsepower? Because that’s what they were replacing.

Successful entrepreneurs have a passion to see their inventions adopted as innovations not admired as works of art. That means that they have to appreciate the customer’s needs and their world view.

See also

Take a Moment To Remember 11 Years Ago

Written by Sean Murphy. Posted in skmurphy

The 9-11 attack may be the question for my middle age that “where were you when John Kennedy was assassinated?” was in my youth. Osama bin Laden is now dead but the forces he helped to organize are still at work.

Take a moment to remember 11 years ago and hope that our children can live in less interesting times.

See also these 9-11 related posts.


Update Sep-20-2012: I wrote “Osama bin Laden is now dead but the forces he helped to organize are still at work” the morning of Sep-11-2012 before a coordinated attack would leave our ambassador to Libya dead in Benghazi and the US embassy walls breached in Cairo and the US Flag torn down. This week has seen further attacks on our embassies in Yemen, Tunisia, and Pakistan, among others.

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