I have been collaborating on a new podcast series on competitive thinking and business wargaming with Terry Frazier who blogs at CompetiitiveThnking.com Here is the audio from a short discussion we had on how to do real competitive analysis with a summary of the key points that includes three things to stop doing to make time for three things to start doing.
Stop collecting information on competitors: Terry believes that too often we are swamped with information like stock fluctuations and press releases that is essentially redundant. Without a clear strategy for how to analyze it it’s a waste of time. The reality is that your team already knows 90% of what you need to know to craft a competitive strategy.
Stop relying on SWOT (Strengths-Weaknesses-Opportunities-Threats) analysis: Terry observes that these are too often performed from a purely ”internal perspective” that fails to take into account customer, prospect, partner, and competitive perspectives. It can be a “silly way of thinking” if you are not careful.
Stop assuming buy-in and cultivate it: Terry cautions executives not confuse a lack of opposition to a plan as agreement with or approval of the plan.
As an employee at several large firms I was a flying monkey for various evil emperors. My duties frequently involved gathering data on competitors and doing–and re-doing–SWOT analyses. I next asked Terry what I should have been doing instead.
Engage managers effectively. Terry suggests involving them early; ask them to help define the questions and the approach.
Filter and focus competitive information: Terry stresses the need for clarity on key intelligence topics: what are the key one or two drivers for your industry.
Encourage debate that looks for where the plan is wrong: Terry believes that you need for a structured approach to encouraging dissent: require at least one manager to play the devil’s advocate. Someone needs to ask, “where’s the evidence against what we are planning to do?” As a senior manager you need to ask your managers to bring you contrary evidence and advise you where the weaknesses are in the plan. Separate your plan from your ego to enable you to accept criticism as suggestions for improvement.
This last strikes me as very rare and probably the most valuable.
Overview: exploring how to identify some key problems in communities where the presenters members, trying to understand how to research them, and how to contribute to solving those problems. Two very different people facing analogous situations: one is a researcher looking for action research topics in the KM4Dev community, the other is an entrepreneur who wants to make athletic contests more engaging for contestants and the audience by providing more information that is mobile device friendly.
Attempting to find a mutually beneficial way of facilitating researcher-practitioner interaction.
Usually a (social) researcher (from an external institution) is perceived as an “outsider” that sees his collaborators as either “means to an end” or as the objects of the study.
This is due to a generally perceived separation between researchers and practitioners. In this model the practitioners usually deliver or are themselves the data for analysis.
The findings of research then either stay within the realm of research or are distributed back via, for example, reports.
This not only makes learning cycles very long but also means that there are things the researcher “is blind to” by not being closely embedded in the context that is being studied (this has its advantages and disadvantages).
In the particular the present situation involves a community of practitioners in a collaborative manner.
Have offered 2 hours a week until next May to spend on research projects of their choice.
However, since then discussion on the most popular topic started and participation rates have been low.
Part of the reason might be the internal dynamics of the community, which are hard to completely understand but there are many other potential issues.
High levels of engagement on both sides
Mutual learning about content and process
Continuous feedback to the research process so that further research can incorporate (reiterative process)
Personal development of researcher
Basic research – exploration of impact of academic work
Experimenting – developing experience for questions that are motivated by practioners concerns
Criteria for acceptance of a project
Poll the community for popularity
Within the KM4Dev concerns (broad thematic area)
Researcher has to be in both worlds
Researcher has to be intimately involved with the research subjects
Framed within the KM4Dev topic
Alternative next steps:
Abandon the whole idea as “too difficult”
Make questions more specific/have a clearer thematic focus
Have more explicit objectives
Make people aware that there is a free resource that they are not using
Ask people if they question researcher’s ability/capacity to come up with valuable contributions
Ask community members if they have no capacities to dedicate to the process (mainly time)
Ask why they do not prioritize this activity vis-a-vis their other activities
Drive topics that have been chosen and only have low levels or participation constrained to specific points in time (rather than ongoing)
NOTES Not much response after the initial survey. Lots of ideas and votes in the survey, but the social network site (Ning) has had little or no participation Sean: offering service at no charge, letting them set the agenda. . Howard: trying to get an understand what an ideal research project be? what kind of research design? Philipp: participatory action research. looks at matter, gathers data, comes up with findings, brings it back. assess changes. Then the cycle repeats. John: what does research mean to this community, 2-3 hours a week for 6 months may not match their expectations for a project, consider offering a research-related task (as opposed to undifferentiated “research”) e.g. data cleaning so that you avoid the challenge of not matching expectations or running up against problematic ideas of “research.” Sean Is there a concern about asking for credit in results? There IS a problem on the academic side with a self-assessed view of academics that are irrelevant. Sean: making a comparison with Eugene’s case: trying to make things easier, but not changing behavior. Assessing speed. making things go farther. Philipp: KM4Dev is focused on practice; other communities dominated by academics. Research might be out of the norm; people are oriented toward peer-to-peer exchanges. Using Barb’s question: why should people change? is there a clear blockage or missing piece that research can address? Originally this was just a probe: “what would the reaction be?” So far: any outcome is interesting. but not prepared to give up. Payoff given the challenge of understanding Philipp’s process. How do open source management of volunteers? Is there a pattern for organizing volunteer labor that could be harnessed / re-purposed for KM4Dev? Challenge of figuring out how to leverage 2-3 hours a week may mean focus don’t invest effort in engaging if payoff is small/problematic Howard: in a nonprofit where GIS data described a watershed that was intact in BC. Tried to engage community around protecting the watershed. When leaders from the nonprofit traveled there and met with community representatives, they found potential interest, but more interested in issue of teen suicide — a much more immediate threat than the logging companies coming in. That was a real learning experience for the nonoprofit. Shifted the organizations focus to partnering with them through a focus on their issues. [Added post-call: My quick summary of this nonprofit experience glosses over the fact that, for the nonprofit, the discovery that community members had completely different priorities represented / might have represented an enormous challenge for the organization. The nonprofit had no expertise on the issue of teen suicide, and this issue could easily have been seen as beyond the scope of the organization's mission, which was at the time more environmentally oriented. It was the willingness to listen to community needs and to be flexible in responding that enable the organization to move forward.] What does the community view as a key problem ? Where are KM4Dev’s priorities and how does Phillip’s expertise and experience align for best contribution. Philipp’s feeling of pain and surprise means he has learned something. Complexity of the KM4Dev ecosystem that Philipp is working with. same thing for Eugene. In both cases, people see the offer through very different lenses. How open up receptivity to alternative ways of working together? The challenge is getting a group of people to change.
Questions from the audience : First question is what’s research in many organizations where KM4Dev members work research is a restricted activity takes a certain status and has some inherent separation from “work in the field.” So the first suggestion is: how about offering elements of research but not calling it research? That could include data gathering and analyzing data, or a literature search or many many other bits or pieces that would be useful but are dis-aggregated. Second suggestion is that: KM4Dev members come from many different organizations and they play different roles in those organizations. Getting them to agree on one research agenda or on one perspective going forward is an impossible feat. The community will never “agree.” So what’s behind both suggestions is the idea of dissolving as a strategy: to breaks down research tasks into elements on the one hand and to break down the KM4Dev community into sectors with distinct interests.
Presenter #2: Eugene Chuvyrov
Have 14 years of programming experience, with 3.5 of those being an independent consultant.
Built many web-based and several mobile products – love technology, not just programming, and I can see myself programming robots or wearable devices just as eagerly as I do mobile dev.
Ran a Software Architecture group in Florida and I help organize a cloud computing group here in the San Francisco Bay area.
A year ago, Eugene and two former colleagues from Florida broke ground on what I wanted to be a new way to engage the competitors and fans in amateur athletic competitions.
As a bodybuilding competitor of 6 years, it always bothered me that:
the process of registering for competitions was archaic,
there was no way to see who was competing beforehand, and that sometimes competition results would not be posted for weeks.
I also thought that the competitions were boring for the audience, since many were not familiar with competition rules or competitors.
I wanted to start with the sports I am very familiar with (strength events) and expand into other sports from there.
I showed a simple prototype of my mobile app to one of the more prominent competition organizers and he stated they’d use it. (Facepalm) that was all the validation I needed to get going on executing the idea.
It took us 6 months to build a website and a mobile app, and I have been promoting it for another 6 months now.
I promoted http://we-compete.com via contacting competition organizers who I knew directly, or via friends who are also competitors.
I also contacted many competition organizers whom I didn’t know, after noticing that
they still had either .pdf files to download for competitor registrations,
or they tried to integrate EventBrite/other ticketing software into their offering with an iform
I established contact with heads of federations that have 50-100 competitions each year and solicited their feedback.
I also invested in Facebook and Google ads, but those generated close to 100% bounce rate.
We had half a dozen competitions created on the platform. Since we waived all fees for the initial batch of users, I cannot reliably say people would use us if we had charged them our 2.5% fee per registration/ticket sold.
I expected our offering to go viral after the initial batch, but that did not happen.
Currently, I resorted to more traditional marketing.
I am helping a few competition organizers pro bono with basic web/technology stuff. I sponsored bodybuilding federations,
I am getting more active on social media and doing promotions in e-mail newsletters/magazines.
I am also weighing executing on a consumer play related to We Compete via creating mobile apps for competitors, and having those mobile apps feed data into the centralized database (if competitors choose to share the info, of course).
I am also evaluating partnership with competition content creators (video, photo, general information) and seeking ways to get on podcasts and YouTube channels.
I am very passionate about this space and would love to continue executing on my ambitious vision, but not if I have to live under the bridge while doing that.
NOTES Sean: does the app enrich the experience for an audience. (business model would have to follow) Eugene: lots of pictures as a form of engagement, no centralized location. Notice LOTS of mobile devices at any event. The idea is to function like a meetup. Competition is emotional experience… Eugene is connected in the competition space… direct approach response has been good. But so far people won’t pay. Business model is like http://eventbright.com
the price/payment is before
the benefit comes afterward
Consider attending a high school re-union to compare behaviors, rituals, and business models for somewhat different kinds of events. The app is really changing some of the dynamics of competition – knowns and unknowns for participants – what is the value of changing that, how to position it going forward and eat own dogfood in organizing a competition – that might be a business How to characterize users / clients
heads of established federations and contests – they may not be in much pain (yet?)
people considering a new contest for fun or profit – organize a competition “in a box’ similar to how Meetup lowers cost of coordination
Notice the monopoly structure of the business… populated by people that are not very tech-oriented
What is the mobile app about:
Barb: I’m also thinking that this needs some change management theories applied to it… I think that Eugene is right in showing the benefit Why should people change the way they do things, when they work so well so far? Sean: more like meetup than eventbright. Can you provide unique or more curated content? or just additional content? …so that profiles persist across competitions… Could competitors be encouraged to pay for the profile? What’s the value of a profile to other competitors? Can other sites be integrated? Do those other sites support the mobile side? And what are their business models? and do people look at those other sites during a competition? status quo; organizing iframing eventbrite. in some ways we-compete is a threat, in others a collaborator: complex ecosystem of organizers, athletes, audience Howard: “Create a competition in a box” may be inadvertently taking position of disrupter, so a threat. What you are hearing is that you should continue to explore, more by making offers than writing code
Questions from the audience: ? unique content vs. basic mobile app with pictures ? transition from “probably not a good idea” to “late” Philipp: What about assessing information needs ground up?
Terry Frazier is Principal and Senior Competitive Analyst at Cognovis Group. He has been studying, writing about, and consulting on competitive and industry issues since 1998. His work has been used by both Fortune 1000 businesses and international analyst firms. Today he writes at http://CompetitiveThinking.com. He offered the following as background for the discussion:
Situation: I am working on a structured service/educational offering to create lasting competitive advantage and reduce competitive risk for the mid-size enterprise. The offering takes proven principles and techniques that have been used for decades by the Fortune 500 and packages them into what I call the Competitive Management Process which makes them accessible, affordable, and attractive for smaller companies.
Challenge: The best source of competitive information any company has is its own middle management and field staff. Yet very few companies have any structure for harnessing and directing this resource, much less channeling it into long-term competitive advantage. In most companies competitive strategy and competitive decision making are deemed to be the sole responsibility of senior (usually C-level) management. There is reluctance, on both sides, to engage lower-level managers and staff in an ongoing collaboration that challenges assumptions and feeds real-world perspective into the process. This barrier to meaningful ongoing exchange is something I need to overcome with almost every prospect.
Notes on Terry’s Discussion Plus Audience Questions
Change within a company required to use competitive tools. Technology as enabler and hindrance to improved competitiveness? Two kinds of tools:
technology for data collection, feeds, screen scraping, etc
conversation for contextualizing, sense-making (the challenging.part; Human intelligence is lacking. )
Sean: companies see it too much as a data/technology problem, not enough as a conversation, inquiry problem Lack of structure in conversation is a problem so “war games” strategy helps organize thinking. Role-playing in a game forces people to adopt a perspective. Example: Michelin Run Flat tire failure due to channel / ecosystem from “Wide Lens” by Ron Adner Key hypotheses -
How can I explain to firms what effective competitive intelligence looks like?
What is the smallest possible intervention (a taste of the experience)?
Q: how can you spend time with key personnel (who are the important actors in the marketplace in the company: suppliers, regulators, customers)
Q: What are instances of effective action / positive deviants already in place you could use as acorns or seedlings?
Where is this already working?
Are there existing meetings or teams you can focus on for insertion?
General pattern not available: so start looking at an individual company to pursue the seedlings to learn about the conversations that exist.
Terry has been looking at existing forums: sales managers (line level up to senior VP of sales). Have not located online watering holes where such people meet. No clear titles / water holes – need an existence proof.
Q: this is a key hypothesis to test – where are some aspects of these conversations already taking place? For example industry organizations or executive offsites.
Q: Is the question how to find the prospects? Or how to convince them they need field level competitive data? What are the tools for gathering the field managers’ perspective?
Yes: find the prospects (previous work based on job titles, which is not quite the criterion Terry wants). prospect needs to be influencer not so much decider.
Yes: convince them that they need this.
Launching a new product into a new or adjacent market (with a 70% failure rate)
Terry: Fancy tools not needed for this. E-mail and blogs are enough. Finding perspectives and the people who hold them is the challenge.
Q: Find out the response to the explainer videos.
Q: Sounds like the war games process is the situation when Terry gets to harvest understandings from people across the organization? I wonder how this process might become the basis for a more ongoing conversation?
Q: Consider inviting people from outside the organization as participants in the gaming.
John: In consulting knowledge transfer is often the “afterthought” sacrificed at the end of a project. Companies need to internalize the skills to have these conversations.
Q: Is the question how to find the prospects? Or how to convince them they need field level competitive data? What are the tools for gathering the field managers’ perspective?
Q: Sounds like the war games process is the situation when Terry gets to harvest understandings from people across the organization? I wonder how this process might become the basis for a more ongoing conversation? It seems like there are community-building techniques that might be woven into Terry’s existing process…
Dixie Griffin Good is director of Shambhala Online, a global learning community connected by the meditation teachings of Sakyong Mipham Rinpoche. For 15 years she consulted with local, state and national education organizations on the educational use of technology. She has a masters in Future Studies and enjoys managing and studying change processes.
Situation: We’re developing a series of online courses that I’d market beyond the Shambhala to broader communities
The Product: Way of Shambhala Online courses, 8 courses; 5 to 6 weeks long
Meditation In Everyday Life, Contentment IEL, Joy IEL, Fearlessness IEL, Wisdom IEL
ID Most likely courses (what are the door openers)? Dixie: mediation in everyday life
experiment: live event free and recording for a price?
Local centers offer the same courses live – so almost competitors
What’s the synergy between the local centers and Shambhala Online?
Online as Gateway to local center?
Criterion: “how far from a local center do you live?” establishing more centers and more members as a desired outcome.
Goals/impacts for Shambhala Online going forward:
synergy with local centers
more interest/ signups for advanced programs
Notes on Dixie’s Discussion Plus Audience Questions
John: is Shambhala Online as a “smart pipe” for delivery or does it contribute to content creation?
Could it be an asset for teachers / experts / masters ?
deliver feedback on audience reaction to talks?
Sean: consider flipped classroom model: basic tools are available, but face-to-face plays its role. What is the relationship with local centers: how do you create as much synergy as possible and minimize competitive overlap?
John: Who is the voice or carrier on Facebook? who looking for? Role of local centers? minimize conflict or maximize collaboration / mutual support. Dixie’s strategies:
Newsletter not just for upcoming programs
Meeting of center and group leaders (use 10 minutes to inform and enlist support)
Adv’t template carries message
Sean: look beyond “spiritual” aspirations to determine real pain/need. Can you discern patterns in who’s attracted, stage of life, other characteristics.
Current demographic skewed toward elders but target market is younger professional people in their 30′s or earlier.
Centers on college campuses? May need to use intermediate generations. Look at new members in last 2-3 years.
John: mechanism talk re Facebook is important, but the important stuff is prior experience in growing a community with 12,000 members.
Sean: 12-step programs are worth focusing on if they are currently a source of folks interested in mindfulness and meditation today.
Q: maybe instead of “war games” in Dixie’s context, situation , the metaphor might be “scenario planning”
Greg Heffron (Technology Leader, Shambhala Online): We’ve been looking into Facebook marketing. I’m curious if others have used FB marketing to expand into new markets.
Dixie: great idea about understanding the data we already have. I’ll make a point of searching our database for demographic info on recent members.
General debrief from both sessions in MVP Cliinc
John: time required?
Terry: like format, conversational style. useful to hear questions
It’s hard because the early MVP phase is very much about sense-making in a fog, so things tend to ramble a little bit
Dixie: surprised that these ideas hadn’t occurred to me before. Very different perspectives. appreciating the questions.
Dixie: visual thinker: would appreciate faces, diagrams, drawings.
Sean: MVP conversation is inherently tentative and entrepreneurs are at a loss for words. Can’t just calculate the derivative of a formula to find the answer.
to audience – if you want to take part let us know
consider a repeat session with Terry and Dixie: what have you learned in the last 90 days?
My key take-away from the session: when you are in the middle of defining your MVP things are often very confused. It’s not immediately obvious what insights are valuable. Just because you are wandering around trying to map a new market does not mean you are lost.
You have a lot of conversations that are tentative and exploratory and you often find yourself at a loss for words. And that’s why we tried this format as a way to walk around the issues. There is not a simple formula for moving from point A to point B with a new product. I thought the session captured the process of groping toward insight.
We have planned three more MVP Clinics for Social/Community Applications
Make of list of the critical tasks that you need to accomplished: these cannot be delegated.
Understand the skill level and relevant experience of the person you plan to delegate the task or function to. Even though the task may be an appropriate one to delegate you may spend as much time closely monitoring someone who is not experienced.
Focus on the real business risks you are facing:
Does a market exist for your product?
Do you have a compelling value proposition?
How can you find prospects, determine if they have a need for your product, and convince them to pay for it?
Business structure questions and scaling issues should be deferred until key risks have been addressed.
Join other entrepreneurs for serious conversations about growing a business based on internal cashflow and organic profit at a Bootstrappers Breakfast®. Paul Spaan, CEO of Spaan Enterprises, will offer a seven minute briefing on “3D Printing For Boostrappers” and circulate examples of prototype products he has printed. Paul’s briefing will be followed by our regular roundtable discussion format.
When: 9:00am to 10:30am Fri-May-24 Where:Red Rock Coffee, Mtn View (2nd Floor) Cost: $5 RSVP, $10 at door (order your own coffee downstairs).
Paul Spaan worked as a mechanical engineer for more than two decades at major Silicon Valley technology firms before launching Spaan Enterprises to explore his long term interest in 3D printing. He will share some lessons learned from the installation and bringup of two 3D printers and bring examples of prototypes he has designed and printed for a seven minute “show and tell” and take part our regular roundtable discussion.
Paul anticipates that 3D printers that now cost less than $20,000–and in many cases much less than $20,000–will enable new categories of small scale manufacturing businesses in the same way that personal computers and high performance workstations enabled new kinds of information and knowledge processing businesses.
Bring your questions about the business opportunities forbootstrappers that 3D printing is now enabling.
Paul believes that we are in the midst of a price performance transition that will have as significant an impact on product design
and production at small firms as low cost laser and inkjet printers combined with desktop publishing software did for the design and production of product printed content.
Theresa Shafer met Ari Halberstadt at a Bootstrapper Breakfast in SF earlier this year and was very impressed with his approach to his new startup, Catalee. Ari volunteered to talk with me about Noam Wasserman‘s “The Founder’s Dilemmas” as well as Catalee. Here is a 12 minute podcast and transcript of our phone call.
Sean Murphy: Sean Murphy here with Ari Halberstadt. We’re talking about Noam Wasserman’s “The Founder’s Dilemma” and Air’s new startup, Catalee. Ari, do you want to take a minute to introduce yourself, tell us a little bit more about Catalee?
Ari Halberstadt: Catalee is a startup that will help people improve their use of energy, basically reduce the use of energy in existing buildings and save people money at the same time. I’m looking at residential customers and, initially, small commercial market. These are markets that are somewhat underserved but they are quite large. There’s a large number of buildings and they tend to use energy quite inefficiently. Saving can be quite significant, cost effectively. But there are a lot of barriers to getting it done and I aim to streamline that process for the customers.
Sean: We’ve been talking about Noam Wasserman’s The Founder’s Dilemma. I was going to read a little bit from a short passage on page 331 that I thought captured the essence of the entrepreneurial journey. He says,
“The path from founding to success is a long and winding one with dilemma after dilemma forcing founders to make decision after decision all with the important, and sometimes surprising, short-term and long-term consequences.”
He elaborates on that, a few pages later, and says,
“At each fork in the road, the decision that maximizes value tends to threaten the founders control and vice versa. There is inherent conflict between maintaining control and building value in high potential startups because the latter requires value added players who demand more control.”
At this point, you’re actually looking for cofounders to help you bring Catalee to its full potential. Is that fair?
Ari: Yes, that’s right.
Sean: Can you talk about what you’ve accomplished so far, what the next milestone is you’re aiming for, and where you’re looking for help?
Ari: I’ve looked at the market, and I’m working on approaches that I think could help consumers streamline this process as well as provide potential investment opportunities. I really need to turn that into a testable product, something that is a minimally viable product as well as find some customers to start using that. I’m really in that transition from idea phase to actually having a product out there. That’s basically where I am right now, and I need people to work with me on that process.
Sean: When you look at this market, the clean tech energy-saving market’s been around for a while. I think that there’s a general proof of need. What led you to focus in particular on residential and small business?
Ari: Those are very large markets. The residential one is the largest, particularly the single-family homeowner, where you actually have a person that owns that property and could make decisions. It’s quite heterogeneous.
There are a lot of people out there who are at times neglected. Large companies that can come in and help a university or a hospital set up their energy efficiency have been less interested in helping make it simpler for homeowners to access those resources. There’s a very large market with a lot of potential savings.
The small commercial firms represent a smaller market. It’s still a large number of buildings in the commercial sector, but it also has similar needs to home owners who face challenges finding the right services to get energy efficiency projects implemented. Some of the smaller businesses tend to be quite energy intensive.
Sean: As you think about how your first offering is going to be both minimal but somehow differentiated from what’s out there, what do you see as the key difference or the two or three key differences between what you would offer and what’s already available to the homeowner or the small business owner?
Ari: First of all, it would be simpler. The homeowner would not need to spend a lot of time trying to figure out certain attributes of their property. We would also not require too much hands-on, up front, from contractors. The service would actually predict in advance what the energy savings could be for a property. That would help to save time and streamline the process.
It would also lead people through the entire process, which right now is so fragmented that people will try to upgrade and sometimes just give up. It can be a cumbersome and confusing process: I’ve spoken to people who just gave up because it’s too hard for them to go through the hassle when they don’t don’t see the benefits.
Catalee will connect homeowners with the resources, the people, the products, and the services that can help them: there are contractors, there’s financing available as well as incentives that can be hard to actually get sometimes. It’s so fragmented.
Sean: So in terms of the full product road map, that comes into play even more? You’re looking both for an insertion point and then a way to build out a much richer system beyond that?
Ari: Yes. I’m looking to interact with the entire system of home building performance. There are existing systems out there, but I want to connect them more efficiently. One of those would be a contractor. Another is the finance, which actually would have an opportunity for investment in these kinds of efficiency gains which, currently, it’s hard for them to access.
It’s actually a system that can be addressed more holistically. By doing that, you actually unlock a lot of additional opportunities.
Sean: When we talked earlier you felt that your top three strengths were technical software development, an understanding of the science and an ability to look at the problem as a system. Do you want to elaborate on that a little bit?
Ari: I have a background as a software engineer. I’ve worked in that field. That helped me see the utility in how software can analyze the information. A lot of this problem is an information problem. People don’t have the information. It’s necessary to analyze the opportunities available. There are actually tools out there, but they’re cumbersome to use. I can look at these things and say, “We need to put these things together.” Software is a way to do that. I have a background as a scientist. That gives me some understanding of scientific processes and thinking. In terms of the system, I look at the problems as interconnected components, not just one small element that often people might try to address.
Sean: When you look at all the other skills or key skills that are going to be required to build a successful first product, take it to market and close some business, what are the key skills you’re looking for in one or more co-founders to help you get there?
Ari: I need someone with sales experience, how to develop the sales and products. Somebody, more generally, with business, especially somebody with experience in the energy efficiency and energy field, would be very helpful. That’s an area I think I’m a little less experienced in. They would understand how to sell the products and develop the markets.
Sean: So you’re looking for folks that have an energy experience or some contact or understanding how that works? The ability to do more detailed financial analysis, as might be applicable to either a homeowner or a small business? And then, sales and marketing strength to help you actually go to market and close business?
Ari: Yes. Those would be key skills that would be necessary to help the business. I’ve tried to approach the problem from, rather than building prototype software, straight out, I’m actually analyzing the market, getting a better understanding of it. And looking at what existing tools I can start using to build an initial product offering. Or maybe even a service.
Sean: Is that more what they call a concierge or a Wizard of Oz model where you take existing tools and knit them together?
Ari: Yeah, that’s actually something that I’m exploring at the moment to see how I can leverage some of the existing tools. There are actually many tools out there or programs for building performance analysis. But they tend to be one off or building-by-building solutions are very time consuming for people to work with. I’m exploring ways to work with the underlying engines, for instance, to make that more efficient and streamlined.
Sean: Are there any key values you’re looking for in terms of recruiting a team? When you think about shared values or values you’re looking for, what would you say would be one or two key things you would look for in a partner or cofounder?
Ari: The one thing is I’m very dedicated to dealing with is waste of energy that’s leading to climate change. Somebody who shared that kind of a vision would be important, to understand that that’s a key element that’s driving my interest in this business and where the focus should remain.
Sean: At the Bootstrapper’s Breakfast we talk about founder who are looking for missionaries or for mercenaries. So one of the high-order bits for Catalee is you want to have an impact on the global warming problem.
Sean: You’re looking for missionaries.
Ari: Yes, and I think that these markets are big enough that we could actually have a big impact on a large scale.
Sean: Well, this has been very interesting. Thanks for taking part. If folks are interested in contacting Ari Halberstadt they can reach him at Catalee.com
For some clients we record our working sessions so that they can play them back later and we can listen to them and improve the quality of our interaction and improvisation.
What follows is a 90 second snippet from a recent working session that contains a true story about a conversation I had several years ago with a former co-worker who asked me to do him a favor and look at the demo of a new startup he had gone to work for.
We have always talked about “early customers, early revenue.”
The new product introduction problem, the new product sales problem is a distinct problem from the scale up problem.
Getting those first six to twelve B2B sales is a very different problem from scaling.
Whether you want to it call it an exploratory approach or discovery driven sales, it’s a very different sales process than most sales guys are used to.
Very early on I got called in by a guy that I had worked with who had been VP of sales at a billion dollar software company who had gone to a startup. He had gone through 30 sales calls.
We sat down and he took me through the demo. He had two other engineers working with him and they some interesting technology. It was a little bit of a kitchen sink product but it was in an area where VP of sales had connections and they had had 30 visits to prospects.
And the demo went on for about 90 minutes. Afterward I said, “Can you show me the first version of this demo that you gave to the first prospect?”
They asked “What do you mean?”
I said, “Can you tell me how the demo has changed since you started showing it.”
He looked at me and said “That’s the problem! We need to find smarter prospects!”
True story. I realized that when he had worked in sales at large companies they didn’t a sales pitch that doesn’t work. So most sales guys assume that what they need to do is handle objections not change the basic pitch.
For the most part for early stage entrepreneurs the objections are actually data: they offer insights for how to improve the pitch.
Take aways for first time entrepreneurs thinking about hiring a sales person:
If you are selling a product that is form, fit, and function compatible with existing offerings you can hire someone who has sold to your customers a similar product and probably do well if you check references and go on sales calls with them for a few weeks.
If it’s a novel product or a new market you need to learn how to sell it before you can hire somebody to sell it for you. You need to develop the sales materials and appropriate checklists for qualifying an opportunity, planning a sale, and closing the opportunity. Once you have closed a few sales you and you have a basic process you can then hire a sales person and teach them how to sell your product. Not how to sell, but how to sell your product.
Six to eight minutes is a good running length for a basic demo. If that triggers more questions or comments then you can take as long as the prospect is interested. But you need to get your key points across in the first few minutes.
Pete Tormey and I decided to do a podcast to address a number of team formation, business formation, and early revenue issues that we have seen in our own startups, in our practices, or hear questions about at the various Bootstrapper Breakfasts® meetings we take part in.
Update Fri-Apr-5: Thanks to some sound editing work by Steve Wasiura I have an updated MP3 that cleans a low hum from the file. Steve has a blog post about the talk with his notes at “How to Bootstrap Your Startup” on his blog. He writes:
CEO, FactorLab, Inc. FactorLab helps teams engage in the good practices that give them a competitive advantage. Helped over 100 organizations- bridge the gap between good processes, good people and good execution
Jolie Rollins,, Consultant Healthcare Information Technology (HIT) and Change Management Leader.
Prior management roles at gloStream, Allscripts, Misys, and Medic; BA Accounting, North Carolina State University
Organizer: Sean Murphy, SKMurphy, Inc.
CEO SKMurphy, Inc. Consults on technology market creation and new technology product introduction. Earlier at Cisco, 3Com, AMD has BS Mathematical Sciences, MS Engineering-Economic Systems, Stanford University
Moderator: Peter Cohan, The Second Derivative
Founder, The Second Derivative. Provides sales training with a focus on “Great Demo!” method. Prior executive roles at Symyx Discovery Tools, Elsevier, and MDL Information Systems. BS Chemistry University of California at San Diego
Overview of Great Demo! Method
A Great Demo: Do the Last Thing First!
2 Types of Demos
Key Steps in Great Demo
Introduce – Summarize Situation
Do It – Do The Last Thing First
Q&A: Peel Back the Layers
Preparing For a Demo: Agree on Customer Situation (“Situation Slide”)
Job Title and Industry
Critical Business Issue
Specific Capabilities Sought
Delta over Status Quo
Time Frame / Impending Event
Questions that panel addressed:
Q: You mention win, loss, and “no decision.” What is your definition of “no decision” and why is the “no decision” rate important?
Q: What is a critical business issue?
Q: What are good questions that uncover specific capabilities sought and time frame for decision?
Q: What was a key challenge you had to overcome to implement the Great Demo! methodology at your company?
Q: Is it easier for startups before they have customers?
Q: How do you convince startup engineers to discuss only a few cool new features?
Q: How do you get entrepreneurs to focus on the customer in a demo and not the product?
Q: What bad demo habits are the hardest to get rid off?
Q: What good demo habits are the most important to develop?
Q: How do you handle it when someone says “I’ve been selling/doing demos for a decade, you can’t tell ME how to do them!” ?
Q: What’s the best way to respond to “I already know this, I don’t need training!” ?
Q: How do you change someone’s mind when they say ““This demo is too critical to try out something new…” ?
Q: Final take away from each panel member
Q: We see other startups creating short 60-90s animations to explain their product, any thoughts on this?
Q: How do you use this method at a trade show when many demos are blind dates? You have to be assessing prospect’s situation in parallel with giving the demo?
I remember watching this film in high school and having it change my perspective. I thought I would try and look at not distances but durations in the context of planning tasks and individual (and organizational) objectives. I set one hour as the zero point and looked at a factor of 10,000 in either direction. The yellow background cells are the powers of ten, the blue hold other durations that I thought should be included for “human scale” activities.
Other useful durations in minutes: 10, 15, 20, and 30
a medium task
0 to 1
Other useful durations: 90 minutes, 2 hours, 4 hours
one day’s work
1 to 2
Other useful durations: 2 days, one week
two weeks or a fortnight
2 to 3
Other useful durations: one month, one quarter (13 weeks), six months, nine months
20 weeks (no natural analog)
2 to 3
Other useful durations: one year, 18 months, two years
4 years – a career at one company
a high school or college education
enough deliberate practice to develop expertise
40 years – a career
I think the time scales break down into five overlapping domains:
Mission: significant accomplishments that require sustained effort over a long period of time.
Plan/Strategy: objectives that require a written plan that is revised in response to results to accomplish.
Flow/Proficiency: short term objective that can be accomplished as the result of a single concentrated effort, the plan can essentially be kept in your head, and one outcome is often learning and increased proficiency.
Habit: an action that is done autonomously and often without conscious awareness or control.
Checklist: a sequence of actions that may overload short term memory or is executed under significant time pressure or with high risk of failure. Normally written down to ensure compliance.
There are also recurring cycles that are not accounted for that can trigger habits or team or organizational actions
This is an attempt to map out project and process duration as well as task length and an individual’s ability to remain in flow. Whether you are planning a meeting, your day, a project, a startup, or your life, time is the single irreplaceable resource. Understanding how different durations stack and recur in cycles is part of that.
Pete Tormey moderates the Dublin/Pleasanton Bootstrapper Breakfasts® (along with Richard Moerschell) and fills in from time to time in San Francisco as well. I asked him what he felt some key benefits attendees gained at a breakfast and he sent me a great three minute podcast that I have embedded below. He identifies three benefits he see attendees gaining from the conversation at a Bootstrappers Breakfast:
Being around other bootstrapping entrepreneurs renews your enthusiasm
Serious suggestions from other attendees can spark your own creativity in addressing business challenges
Comparing notes can give you peace of mind knowing that many folks are wrestling with the same issues.
If you take away nothing else from tonight, it’s that going from your beta to your launch requires that what used to take an enormous amount of effort to achieve a level of performance has to become routine. You cannot rely on heroics once you are scaling the company: you have to build process and procedure into it. So, we are going to talk now about how you grow after launch in three areas:
at company level
in customer development (sales, marketing, and business development)
in product development
At a company level, what’s the challenge after launch? The challenge is that you have to build an effort that you can sustain and scale, which means you have to develop things like process and metrics and dashboards.
So…process, metrics, and dashboards…most of you probably have left big companies where you had process dashboards and metrics, and you are thinking “I don’t want any more of that.”
Just as little process as possible is a good thing, but you can’t get away from it completely.
After launch, you grow from a small team of generalists to a larger team of primarily specialists, because with that comes division of labor and the ability to scale. You can’t just keep hiring generalists, utility infielders who are comfortable in the white space on the org chart–an org chart that used to be pretty much entirely white space now has a lot of boxes on it. You’ve got to hire people that are outstanding in that one particular box, in part because they can rely on the folks in the boxes around them to be outstanding as well.
In the beginning, as you are adding customers one by one, you are just trying to get that next customer. After launch it’s about next quarter, it’s about a business plan; it’s about a revenue target, it’s no longer one by one.
In the beginning there are only one or two people–typically the CEO and CTO–who can actually make a binding commitment. But for your company to scale up, a whole bunch of people start to make promises to a lot more customers. This means two things:
If you don’t have a plan, it’s like running a development effort without a source code control system: you don’t know what you are changing, so you need a plan.
If you don’t agree how you’re going to change that plan; if you don’t develop a change process, you are going to spend more time arguing about how to change the plan, then on the merits and drawbacks of the change that is being proposed.
So post launch, there is much more need for a plan of record and a change process that people buy into.
Audience Question: Roughly, how long are these plans? It sounds like there is lot of work to develop these plans and targets and commitments and keep updating them.
So, one or two pages is reasonable length for a plan, that’s what most people can absorb. Especially for your near horizon, a one or two page written plan is normally enough to get you there; you don’t need a book. But, you have to have it written down and documented: it can be a wiki page, it can be something as easy as that to change–and track changes–but it has to be in writing.
How many people have sales guys in their company? [No one raises a hand.] Okay. Well, after you launch they may become more important.
Right now the sales incentive for Beta is very simple, if we make the sale we all get to keep our jobs. It’s a pretty easy thing to focus on. But, after you launch you get what you reward, so you want to pay very careful attention to whatever you put into that compensation plan, and how it aligns with your business model.
As you scale up, it’s more than just new accounts. Right now for most people that are in Beta or just have early customers, it’s all new accounts. Later on there are also renewals and upgrades, these require a different focus and different incentives.
So, we do a lot of work with software companies; this talk is aimed more at software companies than hardware companies. With hardware it is hard to add features to a chip once you’ve shipped. The point is that software startups are tempted to of accumulate a whole bunch of small features into some kind of shotgun blast full of birdshot, and hope that something will stick; some golden BB against the wall.
The reality is this that big features, important features, are what drive interest and adoption. So, as you are doing your planning, think about one or two things that are actually going to move the needle on prospects’ interest, and plan the release around that.
Also, just because you don’t know about the bugs you are going to have to fix in the next two weeks or four weeks or six weeks: they are going to show up. Leave some cushion in the schedule: don’t try and put eight pounds of feathers in an eight pound sack and discover another three pounds as you are half way down the road.
In the beginning, as we are going one by one for customers, a special for this customer makes a lot of sense. After you launch, when you are going after markets, this becomes a much more unattractive approach. You want to limit the amount of work you do for any one customer.
Early on, early adopters are very smart people, and they have a couple of wonderful features:
They are highly risk-tolerant.
They don’t mind if things don’t quite work–as long as you ultimately get them fixed.
They’ll actually buy the product without having to be sold.
Problem is they are just not enough to actually build a company on, but they are wonderful folks in the beginning. And, a lot of people think this is going to go on forever, and alas it doesn’t.
So, nobody had any sales guys, so right now the CEO is selling in your startups? Who is selling in your startups? CEO, alright; so typically one guy is kind of like the gorilla, the tall thin engineer whatever doing the selling, right? And, still figuring out what works in the sales pitch and what doesn’t.
The founders have to be directly and intimately involved in selling, because maybe it’s not the sales pitch, maybe the product sucks, right? Maybe the business model is not quite right for what you are trying to do. The founders have to be intimately involved to be able to make adjustments between the message, the product, and the business model. Also, if they are not involved now, they can’t manage later on as they scale its sales force. So, you have to learn what’s involved with managing the sales force. It’s not magic. It’s not hire the best liars you can. It’s a real art.
We sometimes talk to firms that have hired and fired several sales people. They don’t yet have a sales pitch that works, and they are just burning money. Don’t do this. A real sales guy will give the same pitch over and over again, because that’s what works in the corporate world, and that’s what normally works post-launch. Because, most of the time they have been handed the pitch that works, and so if it didn’t work with this prospect, then it’s the prospect’s problem. During beta and for your early sales, your pitch may suck and will need to be changed.
A lot of engineers we talk to say we can’t figure out how to get the sales guys to do what we want them to do.
We reason with them.
We talk to them.
We invite them to meetings.
We show them the corporate mission statement.
Let me explain you, it’s very, very easy to get a sales guy to do what you would like. You adjust his compensation plan; you pay for what you want and you manage against that. It’s very simple. If you don’t do that, you are wasting your time and his.
Now we are going to look at customer development in Beta versus after-launch. In the early market you are exploring; you launch when you believe you are going to accelerate. You’ve found a market; you’ve found a way to go.
In the early market, you’ve got a number of hypotheses that you are testing. After you launch, you better be working based on facts and metrics. Now, some people launch and nobody comes, I submit to you, you are still back in the early market.
In the early market, you are trying to adjust your business model, adjust your promise. After you launch, you are penalized for changing that promise a lot, so you better figure that out before you start to put the big megaphone in front of it.
In the early market you are trying to find a niche, you are trying to find some place to insert and get some foothold. After you launch, you are trying to find a big market. Don’t confuse those two.
Here’s an example of how I learned how sales guys look at problems. At the time I was running support at MMC Networks and over a period of about nine months we hired nine or ten new staff. We scaled support from about six to fifteen people. We were supporting more than sixty active design projects with more coming in every month.
I went to John the VP of sales and said, “we can’t support all the people you are bringing us, can we slow down? Can we focus on the big guys? Can we–you know–focus for effect?”
John would say “you know you are absolutely right.”
So I would say “Great!”
Next month more new evaluations.
Back I go to John: “We can’t support this many new firms, they are falling on the floor. We have so many that the thrashing in talking to them is taking more time. We are actually getting less done then if we had fewer evals.”
“You are absolutely right.”
Next month, more evals. Finally asked him, “John, how are you compensated? Are you compensated on revenue?”
He says “No, that’s way too hard to figure, that’s way too downstream. We are compensated on design starts.”
So, then I knew my argument was not with him.
How many people have heard of Jotspot? About two years ago they were kind of struggling against Socialtext, they announced three thousand beta users. Big press release, big news, big noise. Months go by, much testing, the development guys are very happy, because we are getting the product tested; this is great, this is great. Then they launch, and they say now that we are launched it’s not free anymore. You have to pay, or in thirty days we are going to turn you off.
They figure they’ll get probably half or at least a third of these beta users. It’s more like 2%. They have to go back into the garage and figure out how is it that you actually find guys that want to pay for the product, that don’t just want to use it for free.
For all of you that are doing free, freemiums, social networks, and all this free stuff, I would submit to you, there’s a hell of a difference between getting guys to use stuff for free than for a penny. You are better off now–day one, user one–figuring that out.
Finally, we get to product development.
The interesting thing is we talked in customer development about how things change. The challenge you have in running product development post launch is, you want to hang on to the values and the things that got you where you were. So in fact, you don’t want things to change; in particular you still want a fast clock cycle in decision-making. And, you want to maintain as much creativity, flexibility, and intelligent reaction as you can. You want to fight bureaucracy as hard as you can.
In beta its really simple: does the thing work yet? No. OK let’s not ship it. Later on, you can’t do it that way, because you end up in an infinite loop where more bugs flow in, more feature requests flow in, and the release balloons into a whale that never ships.
Also, QA effort is a function of about the cube of the number of features. So, as that release grows large, your ability to test it gets away from you exponentially. What works: pick a date, stick with it. Let one or two major features drive that date, fix the problems you can; live with the rest until the next release.
There is always a reason to hold the release.
There is always a reason to hold the release.
Resist that it and get it out.
If you have a faster decision cycle, several things get a lot easier:
You don’t have to be as smart about the market, because you are going to be in contact with it sooner.
You don’t have to look six months ahead; you will have a product out there in two.
You don’t have to forecast customer needs; you are going to be bringing them ideas asking “what do you think?”
You don’t have to anticipate your customer’s actions next year, because you are going to be inside their reaction cycle.
Audience Question: So, what’s the difference between a faster decision cycle and a slower one?
Historically the on-premises software guys were working on an annual release cycle. I would submit to you that you guys should be looking at least quarterly and better monthly releases. That way you are moving well inside of their decision making cycle. It’s different for chips, different for other kind of companies; but you want to be much faster than your more established peers. And, you want to stay fast as long as you can, because the risk of somebody flying up your tailpipe is much more than somebody stepping on you.
Question for Audience: How many of you are working in a startup that can still fit around one table? Say, a table with eight people, OK?
If you have to have a meeting, everybody in the company can be in the room. The executive staff is the product team is everything else: conversation, fast decisions, everybody is there.
You get bigger, your temptation is to have the executive staff hang on to all of those decisions. But what you really have to worry about is growing the company, you need to delegate to a product team that has a representative mix of folks from the various functions to drive the product.
If you are one of the founders, you have to worry about growing the business; let the product team run the product. You might at some point have two products, or three products.
At Beta: not so many commitments, and actually a lot of the commitments you make don’t matter, because the customer doesn’t buy, you can forget about them. Later on, more people remember.
Early on when it’s ready you can ship it; later on you’ll go dead doing that. Early on what’s that guy need; later on you better be working to a plan: maybe one page, two pages long.
In the beginning you could be customer [deal] driven, but later on you have to be market driven. You can’t just satisfy a handful of folks, and somewhere around nine customers; a customer driven model starts to break down. So, unless nine customers gets you to where you want to go; you’ve got to be thinking about making a transition to a market focus.
What stays the same: fast decisions, stay creative, stay flexible.
Another story: we use WebEx Office, and we use that for our calendaring.
So, we invite our customers to come to meetings with us using WebEx Office, which was originally developed by Intranets.com. It was an intranet application where a manger would use it to send an invite to a subordinate. In that context you can say things like, “you are required to come to this meeting.”
Now, in a consulting context, when I require my clients to come to meetings, they write back and say “I don’t think it works that way, you can invite me to a meeting, but you can’t require me to do a damn thing.”
We call up WebEx and ask can you fix this, can we change that little piece of text you are generating with my name next to it, that’s pissing my customers off?
Roach motel: request goes in, no sound, no picture, who knows. So, knowing a little bit about things, I call the sales guy and say “you know we may quit paying you for this.” Because we pay them every month. So then, we get a meeting with product support, no roadmap, no tracking; and I get a lecture about how hard the product manager’s job is. I go hey I’ve got a hard job too.
If anyone knows a good alternative to WebEx Office I’d actually like to hear it. Don’t be these guys.
Who knows what a whole product? A whole product is everything that’s needed to solve the customer’s problem: documentation, interfaces, useful error messages, etc.. In the beginning you can have a partial product. You can have a product that geeks can love; later on it’s a product your Mom has to be able to use.
Audience question: How does a transition take place from where we are all running around ad hoc to where we are doing these one page plans that make it scalable and repeatable?
Typically there are one or more failures, some people lose their jobs, and then new people come in and things change. Don’t be those guys either.
Audience question: At what point, you know when you have a CEO that’s so hands on in the company, and then things start to specialize and differentiate. I mean is there any point at which CEO starts to delegate? Say for sales department for example?
There are a couple of challenges. The CEO is either sales oriented or development oriented or maybe customer support oriented. He may be trying to get out. The challenge comes above some headcount–say twenty-five–he’s got to learn to manage managers, so that happens pretty fast.
The first bottleneck is if he is the mobile sonic boom who closes business: you miss a quarter, you miss a deal. He has to be able to delegate, and teach other people how to sell. He’s got to be able to let go and other people run the product. But, that occurs pretty fast; I mean you can get to sixty people or eighty people, but at that point the wheels are going to fall off if you’re not able to delegate; so it’s pretty fast.
Another difference between beta and after launch is that normally, in beta, if you don’t have it, they won’t believe you. So, it’s much harder to fool your customers. Later on when you are a bigger company, maybe you’ve got some VC, you can show customers a roadmap and actually decoy them in ways that can do them real damage. So, meeting those commitments later on has to be done, because your customers are more trusting of you than in the beginning.
If it’s three guys in a garage, they are only going to believe what they see. If you tell them you are going to bring out a box, you can show them a picture but they are not going to give you money until they see the box. Later on if you bring out a second box, you might be able to have them pay some money, because you’ve given them the first box. So, commitment tracking becomes even more important after launch, because your customers become more trusting–fewer early adopters more mainstream users.
The other thing that happens is that engineering’s access to the customer gets more and more mediated. You’ve got more marketing guys, you’ve got more support guys, maybe you’ve got a customer advisory board. So, making that work, and learning how to work through intermediaries becomes more important. In the beginning, between somebody bringing the deal and what engineering wants to do, you can pretty much decide what’s going to happen. Later on, you get more input from other folks.
So we help very early stage software companies with strategies for customer and business development. We help them find early customers, early references, and early revenue.