Posts filed under 'Books'
June 28th, 2010
Angela Maiers wrote a book called Classroom Habitudes (hat tip to Dorai Thodla) that I picked up last year and finally got around to reading. Maiers defines habitude as “a combination of habit and attitude. ” I was struck by how entrepreneurs would also be well served to cultivate them. She defines her six habitudes as
- Imagination. Discovery, innovation, creativity, and learning all begin with imagination.
- Curiousity. Champion learners are curious about everything. This inquisitive attitude fuels their unrelenting quest for continuous learning.
- Perseverance. Learners cannot go the distance without resolve, determination, firmness, and endurance.
- Self-Awareness. Knowing yourself, knowing your strength, preferences, and areas of need is a critical characteristic of a successful learner.
- Courage. Courageous learners understand that safe is risky. Success is the byproduct of taking risks.
- Adaptability. The world opens up for adaptable learners, as they approach each task, each challenge willing to be a beginner.
Maiers’ book reminded me of a great book by Gordon Mackenzie: “Orbiting the Giant Hairball.” He also talks in practical terms about fostering creativity and learning, but his focus is on the workplace. Mackenzie makes the point early on that if you go to a class of first graders and ask how many are artists , everyone jumps to their feet. By the sixth grade only one or two in a class of thirty will even raise their hand.
He observes “every school I visited was participating in the suppression of creative genius.” Both books offer some prescriptions for how schools and firms can remedy this.
Don’t let your workplace and management style have the same affect on your partners and employees.
April 30th, 2010
You can follow @skmurphy to get these hot off the mojo wire, wait until the end of the month when they are collected on the blog, or purchase the E-book version at http://www.leanpub.com/skmurphy2
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“There was a long silence on the other end, a silence peculiar to conference calls when an entire group stops to think.”
Clay Shirky in “The Collapse of Complex Business Models“
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“Ignorance is always ready to admire itself. Procure yourself critical friends.” Nicolas Boileau-Despreaux
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“Whenever you see a spike in self-employment in this kind of economy, you know that is involuntary entrepreneurship,” Jared Bernstein “Defying Forecasts, Job Losses Mount for 22nd Month” (September, 2003)
Cited by Chris Anderson in “The New New Economy: More Startups, Fewer Giants, Infinite Opportunity” (May 2009)
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“Hasten slowly, and without losing heart,
Put your work twenty times upon the anvil.”
Nicolas Boileau-Despreaux
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“Companies aren’t generally structured to access, absorb or utilize customer insights since they are organized by product, not by customer.” Ranjay Gulati in “Seeing Customers as Partners in Innovation“
Full quote:
“Being customer-driven doesn’t mean asking customers what they want and then giving it to them. It’s about building a deep awareness of how the customer uses your product. Companies aren’t generally structured to access, absorb or utilize customer insights since they are organized by product, not by customer.” Hat tip to Mac Fowler
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“Look for an enterprise problem so bad that people will pay you to solve it and let you keep the software“.
Bill Paseman
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“There are really two killer apps for the next era of IT tech: collaboration and correlation”
James Watters in April 11 tweet
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“Honor is like an island, rugged and without a beach; once we have left it, we can never return.”
Nicolas Boileau-Despreaux
Quoted in “Honesty in Negotiations”
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“We are like machines made up of redundant components, many of which are defective right from the start.”
Leonid Gavrilov & Natalia Gavrilova in “Why We Fall Apart” (IEEE Spectrum article)
Full quote:
“The quest to understand and control aging has led us, two biologists, to draw inspiration from what might seem an unlikely source: reliability engineering. The engineering approach to understanding aging is based on ideas, methods, and models borrowed from reliability theory. Developed in the late 1950s to describe the failure and aging of complex electrical and electronic equipment, reliability theory has been greatly improved over the past several decades. It allows researchers to predict how a system with a specified architecture and level of reliability of its constituent parts will fail over time.
The theory is so general in scope that it can be applied to understanding aging in living organisms as well. In the ways that we age and die, we are not so different from the machines we build. The difference, we have found, is minimized if we think of ourselves in this unflattering way: we are like machines made up of redundant components, many of which are defective right from the start.
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“Startups explore novel practices in chaotic environments, winnowing them into emergent practices for complex environments.”
Sean Murphy
I was inspired by Steve Blank’s “startups are the search to find order in chaos” and influenced by Dave Snowden’s Cynefin framework
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“It is better to ask some of the questions than know all of the answers”
James Thurber from ‘The Scotty Who Knew Too Much” in “Fables for our Time“
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“The best money during the nascent years of a business is patient for growth but impatient for profit.”
Clayton Christensen in “The Innovator’s Solution”
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“The test of a vocation is the love of the drudgery it involves.”
Logan Pearsall Smith
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“That knowledge which stops at what it does not know, is the highest knowledge.”
Chuang Tzu
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“Startups are new businesses–not development projects—that need to discover a sustainable business model.”
William Pietri in “Responsible Technical Debt: Not an Oxymoron“
Full quote:
Startups are about learning. For this to make sense, you have to understand two things:
- Startups—even software startups—are businesses, not software development projects.
- The point of a startup isn’t to create a software product; it’s to discover a sustainable business model.
In a startup, software development isn’t an art for its own sake; what makes sense from a pure engineering perspective may not make sense more broadly. That’s true for any business really, but it’s especially true for a startup. That’s because the main goal of a startup is to discover a valuable business. Discovery requires experimentation, and the amount you can learn is a function of the cost of your experiments.
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“Pricing is the moment of truth—all of marketing comes to focus in the pricing decision.”
Raymond Corey
April 4th, 2010
I started blogging on this site October 1, 2006 with “Welcome Entrepreneurs” and have written almost 600 blog posts since then. My opening paragraphs are still applicable to today:
This blog is dedicated to entrepreneurs at any stage of their journey. Both as individuals, in teams, and collectively we all hope to create a better world for our customers, our employees, our stakeholders, and our children.
My focus is helping startups find early customers for emerging technologies. This is very different from the traditional sales and marketing at established firms. Correctly identifying early customers who can be references to others is key to introducing emerging technologies.
Although emerging technologies change the rules and often enable far reaching growth most early adopters are focused on near term risks and benefits, and it is to those concerns entrepreneurial teams need to speak to get a foothold. The decision to act as a “beta” software site or early user of new software tools often resembles a hiring decision (does the prospective customer want to “hire the team”) more closely than a technology adoption decision.
Emerging technology marketing is a distinct domain from classical product marketing, most of the traditional market assessment techniques are not effective: focus groups, surveys, etc… Emerging markets require a strong commitment by the founding team to
- appreciating the prospective customer and customer’s view,
- rapidly evolving the product specification in response to feedback and customer experience,
- ongoing refinement and delivery of customer focused solutions.
Frankly I think that there is a lot of content that entrepreneurs would benefit from if only they could find it. One approach to addressing this need is to convert this blog into a book or two. Here is where I can use your help.
I am currently re-reading the blog from the beginning with an eye to extracting some key themes that would serve as a focus for a chapter or two. I think I want to use our “Startup Stages” as one model for organizing topics, here are three others:
- Looking at Team, Technology, and Traction as the building blocks for a bootstrapped startup.
- Looking at “Working Capital” as including not only financial capital and likely revenue but also intellectual capital (know how, experience, expertise) at an individual and founding team level and social capital (trust, connections, social navigation skills) at an individual and team level.
- The importance of customer development proceeding in parallel with product development until the startup can make the transition to a proven business model with the completion of customer validation and technology proof of concept.
Here is where I can use your help. Please contact me with any blog posts that you feel should be included as part of a chapter, any entrepreneurial stumbling blocks that bootstrapping entrepreneurs need to overcome you would like to see addressed, any blog posts you have found to be useless or misleading that you would want to see omitted or reworked extensively before they were included, and any other suggestions you have for extracting a useful narrative out of this set of 600 blog posts.
March 13th, 2010
I got an e-mailed question from someone who had watched my “The Limits of I’ll Know It When I See It” video.
Q: In your talk you say “Most recurring problems are a combination of an unsolved technical problem and an unresolved emotional component to that problem.” Is there more about this in Ericsson’s “The Role of Deliberate Practice in the Acquisition of Expert Performance” or in the Gary Klein’s “Sources of Power“?
A: It’s actually from another great book: ” The Art of Learning” by Josh Waitzkin. I found this quote on page 108:
“The aim is to minimize repetition as much as possible, by having an eye for consistent psychological and technical themes of error.”
but he is a little clearer in two other interviews, the first is Scott Barry Kaufman’s “Learning About Learning: An Interview With Josh Waitkzkin“ (yellow highlight added)
S. In reading your book, it seems as though your major strength in Tai Chi Chuan is the way you put your mind into the game. You were able to beat players much stronger than you by “getting into their mind.” I find this fascinating. Why do you think you were so good at psyching people out? Was it because of your early chess experiences?
J. Sure, my chess experience taught me a lot about the psychology of competition. World-class chess players are incredibly brilliant people who have spent their lives figuring out ways to get it your head, to break you down. Usually every high level chess error is accompanied by a psychological break of sorts-to survive, you have to understand the inner game. I am always looking for where the psychological and the technical collide–that surely comes from my chess study. But frankly, I think I really got good at the psychological game after chess. Chess taught me how to be relentlessly introspective, how to unearth tells in myself and in opponents, but then I really took that foundation and put it into dynamic action in the martial arts. I work on being a heat seeking missile for dogma. If you unearth or instill a false assumption in an opponent, they are in a lot of trouble unless they feel you getting into their head and kick you out fast. Of course this eye for false constructs is an important tool in the learning process as well.
The second is Thomas Huynh’s “Interview with Josh Waitzikin” (yellow highlight added)
Q: Did you find the skills or outlook you gained from first learning chess on the streets of New York City (Washington Square Park) helped you to outmaneuver those who only had classical training?
A: [...] To survive in the park you have to be a fighter. You have to be able to handle any kind of distraction. Honestly, I think those early lessons lay the foundation for my most intense world championship fights years later. I learned early that just about every error has a technical and psychological component, and if you get good at discovering those connections, you’ll be a step ahead of the competition. And of course as a kid, facing other 7, 8 and 9 year olds in National Championships felt like a piece of cake compared to what I dealt with every day in Washington Square.
Here the implications for the roots of a recurring error or consistent mistake in play coming from both a technical and a psychological blind spot are clearest. Robert Pirsig wrote something along the same lines in “Zen and The Art of Motorcycle Maintenance” which also applies to entrepreneurs building companies:
“Peace of mind isn’t at all superficial, really. It’s the whole thing. That which produces it is good maintenance; that which disturbs it is poor maintenance. What we call workability of the machine is just an objectification of this peace of mind. The ultimate test’s always your own serenity. If you don’t have this when you start and maintain it while you’re working you’re likely to build your personal problems right into the machine itself.”
For more of Robert Pirsig’s insights see “
Entrepreneurs Need Gumption to Succeed” and “
Some Great Quotes Collected by Tim O’Reilly.”
February 6th, 2010
This is a start articulating a set of resources that are for the most part not yet part of entrepreneurial thinking but that have had a significant impact on my perspective. I welcome any suggestions or lists from readers for what has influenced you, and opened you to new perspectives on your entrepreneurial journey.
What follows are my two year old answers, in no particular order to a question on Hacker News: Articles, Ideas, Books and/or Concepts that have changed your life.
I developed the list thinking about my approach to business and entrepreneurship, which is narrower than “life” and accounts for a lack of spiritual, marital, self-mastery, and personal improvement books and ideas.
- Myers-Briggs Model for Personality
- “Four Steps to the Epiphany” by Steve Blank
- John Boyd’s OODA Loop as a model for competitive decision making
- Decision Analysis techniques: in particular decision trees, expected value of perfect information, and “good decision, bad outcome.”
- BATNA (best alternative to a negotiated agreement) concept for negotiation planning
- “Secrets of Consulting” by Gerald M. Weinberg
- “Bionomics: Economy as Ecosystem” by Michael Rothschild
- SimCity computer game
- Analysis of Competing Hypotheses methodology
- wiki (social process) model for small team collaborative document development
- community of practice model for knowledge management
- “The Moon is a Harsh Mistress” by Robert Heinlein (in particular TANSTAAFL)
- activation energy, catalyst, and phase change concepts from physics/chemistry
- Amplify Positive Deviance model from Jerry Sternin (Save the Children)
- “The Empowered Manager” by Peter Block, in particular his trust vs. agreement matrix
- “Crossing the Chasm” & “Inside the Tornado” by Geoffrey Moore
- “Maneuver Warfare Handbook” by William Lind
- “Change Your Brain, Change Your Life” by Daniel Amen
- “Micromotives and Macrobehavior” by Thomas Schelling
- Appreciative Inquiry Techniques
Here are a few more techniques or perspectives that I have added upon some further reflection.
- Russell Ackoff’s Decision Record Model
- Gary Klein’s Premortem Technique
- Saras Sarasvathy’s Effectual Reasoning Model from What Makes Entrepreneurs Entrepreneurial
- Andrew Grove’s “High Output Management” in particular “always review drafts” and his model for one on one meetings.
- “Computers, Networks, and the Corporation” by Tom Malone and John F. Rockhart (1991 Scientific American Article)
- “The Computer and the Dynamo: The Modern Productivity Paradox in a Not Too Distant Mirror” Paul David (1989)
- “Gunfire at Sea” Elton Morison
- “Persistent Forecasting of Disruptive Technologies” by National Research Council (2010)
- “Technology Singularity” by Vernor Vinge, in particular the “Intelligence Amplification” section
December 15th, 2009
Q: Does anyone have a customer interview script that they use? What is the focus of the interview and can some of that interaction be replaced by really evaluating analytics (for web based enterprises)?
This question came up on the Learn Startup Circle List recently and I took the time to answer it.
I think the “Appreciative Inquiry” model offers a very effective model for early customer interviews. At a high level it’s
- “What problems are you having?”
- “What’s working around here?”
You need to focus on their pain and problems but build on their strengths. While there is a whole methodology/discipline you can follow at the Appreciative Inquiry Commons with “What is Appreciative Inquiry” a good place to start, I found the “Thin Book of Appreciative Inquiry” to be $8 and two hours well spent. It’s only 63 pages long but I found myself stopping several times and realizing I needed to change what I had been doing.
The “Amplify Positive Deviance” model developed by Jerry Sternin is another useful one to determine what the real status quo is for a category of prospect. Here are two good sources of information
I have transcribed the 7 steps in the “Positive Deviant” article and added a customer development interpretation for some of them in parentheses.
- Don’t assume you have the answer (treat your approach as a hypothesis to be validated, updated, or refuted)
- Interview folks in settings where they are most likely to be forthcoming
- Encourage small steps using a new approach/tool/technology (get simple product in customers hands)
- Identify current status quo
- …and how positive deviants depart from it (different between early adopters and pragmatic/late majority)
- let deviants get others to adopt new tools / techniques (customers / word of mouth is most effective sales technique)
- Track results, keep score (add clear ROI to anecdotes from early adopters)
Sorry if this is too theoretical, but I think it’s more about a mindset or frame of reference you bring to the conversation than a particular script or set of questions. Here are five related blog posts about early customer interviews:
October 6th, 2009
I continue to run into folks who find themselves encouraged to launching a consulting career by their former employer and what is proving to be a very deep recession. Here are three books I recommend to them to help get some perspective on the career they now find themselves in.
I have a related blog post from October of last year on “Customer Development for a Consulting Practice in a Downturn” and another one from July of 2007 on “Networking in Silicon Valley” that is still accurate.
September 29th, 2009
Fora.tv did a nice video of my Wed-Sep-16 talk at SF Bay ACM on “The Limits of I’lll Know it When I See it.” Here are the slides in PDF format (see below for an outline with hyperlinks to references).
The talk was well received and garnered the following comments on the feedback forms.
- “Nice distillation of fundamentals in applying expertise effectively.”
- “interesting ideas”
- “a bit too fast, would appreciate a list of references.”
- “Learned about new authors to check out, learned about new methods to work on teams.”
- “References are Appreciated”
- “Very Good Event!!”
Outline for The Limits of “I’ll Know It When I See It” Wednesday, Sep-16-2009 at San Francisco Bay ACM Chapter
- Overview
- Individual Expertise
- Effective Delegation
- Blending Expertise In a Team
- Questions for Audience: Role
- Individual Contributor
- Manager / Project Manager
- Consultant
- Solo Entrepreneur
- Startup Founding Team
- Questions for Audience: Discipline
- Engineering
- Sales & Marketing
- Finance & Operations
- Executive Management
- Individual Expertise
- I’ll Know It When I See It
- Unconscious Competence
- Not Available To Introspection
- “I’ll Know It When I See It” Examples
- Reading A Pap Smear
- A Gestalt: Whole Is More Than Sum Of Parts
- A Detail You See That Is Often Overlooked
- What is Expertise?
- “Experts perceive things that are invisible to novices, such as the characteristics of a typical situation. They make high-quality decisions under extreme time pressure. When difficulties arise, experts find opportunities for improvising solutions.”
- Source: Gary Klein “Sources of Power“
- Example Of Expertise: Physician
- Elicit Symptoms (May Include Tests)
- Offer a Diagnosis (Root Cause Analysis)
- Explain Differentials (Sensitivity Analysis)
- Suggest a Prescription (Course of Action)
- Outline Prognosis (Likely Outcomes)
- Use Outcomes to Refine Rules & Models
- Expertise: Personal Mastery
- Expertise: Holistic Intuition
- Unconscious Competence
- Pattern Recognition
- Muscle Memory
- Backtracking & Self-Evaluation
- What’s The Difference Between
- Talented Contributor & Effective Manager
- Solo Entrepreneur & Entrepreneurial CEO
- Answer: Effective Delegation
- Two Types of Delegation
- Crystallize & Codify
- Form A Small Team With A Shared Mission
- Crystallize & Codify
- Externalize Insights
- Formalize Approach
- Thought Process Available For Evaluation
- Basis for Self-Improvement
- Defined and Repeatable Process
- Approaches To Crystallize & Codify
- Sketch A Drawing
- Run A Google Search
- Craft A Metaphor (e.g. Computer Virus)
- Write A Program To Solve Part Of Problem
- Build A Spreadsheet
- Examples of Crystallize & Codify
- Rules Of Thumb
- Checklists
- Recipes
- Model or Simulation
- Now That It’s Out Of Your Head
- You Can Have Conversations
- Solicit Suggestions For Improvement
- Compare Notes With Other Experts
- Refine Based On Broader Experience
- Questions For Audience: Crystallize
- How Do You Capture Your Expertise?
- I Will Jot Or Sketch On a 3×5 Card
- Anyone Want to Offer an Example?
- Recap: The Difference Between
- Talented Contributor & Effective Manager
- Solo Entrepreneur & Entrepreneurial CEO
- Answer: Effective Delegation
- Two Types of Delegation
- Crystallize & Codify
- Form A Small Team With A Shared Mission
- Keys To Forming A Small Team
- A Common Mission or Desired End
- Metrics For Measuring Progress
- Shared Situational Awareness
- Each Member Can Link Actions to Goals
- Limit of “I’ll Know It When I See It”
- Problem Grows Bigger Than One Person
- You Need a Team
- Often With Several Experts
- Product Team Example
- One Table / Two-Pizza Meeting
- Need Different Engineering Experts
- Power, Mechanical, Software,
- Engineering Is About Trade-offs
- Cost, Performance, Development Time
- Individual Expertise vs. Team Decision Making
- Two Key Differences
- Trust
- Shared Situational Awareness
- New Challenge: Blending Expertise On A Team
- Models That Blend Expertise For Team Decision Making
- Recognition Primed Decisions – Klein
- Principles of Maneuver Warfare – Lind
- Decision Tree Model – Howard
- Analysis of Competing Hypotheses – Heuer
- Recognition Primed Decision
- Useful in Emergencies and Crises
- Depth-First Search of Possibilities
- Agree On a Model of Situation
- Generate Possible Courses of Action
- Select First One That Works
- Source: Klein “Sources of Power” & “Intuition“
- Principles of Maneuver Warfare
- Useful For Rapid Decision Making
- One Mission / One Main Effort
- Push Decisions Down (Close to Facts)
- Reconnaissance Pull: Guided By Facts
- Source: Lind “Principles of Maneuver Warfare“
- Decision Tree Model
- Used to Organize Sequence of Decisions
- Helps Bound Uncertainty
- Identify Choices and Probable Outcomes
- Each Outcome In Term has New Choices
- Example: Fault & Diagnostic Trees
- Source: Howard “Decision Analysis” (See also Howard’s papers)
- Analysis of Competing Hypotheses
- Offers Clarity on Facts & Key Hypotheses
- Avoids “A vs. B” Thinking; More Options
- Make a Table
- Hypotheses In Columns, Facts in Rows
- Cell: Fact Supports, Contradicts, or No Effect
- Shifts Focus to Getting New Facts
- Source: Heuer “Psychology of Intelligence Analysis“
- Improving Team Decisions
- Gary Klein’s Pre-Mortem Technique (See “Performing a Project Premortem“)
- Assume Project Has Failed
- Identify Possible Sources of Failure
- Add Risk Mitigation Efforts to Address
- Russell Ackoff s Decision Record (see Chapter 21 of “Ackoff’s Best“)
- Each Participant Writes Down Separately
- Reasons for Decision, Likely Outcome(s).
- Review As Impacts Become Clear
- Recap: Limits of “I’ll Know It When I See It?”
- Moving Beyond Personal Expertise
- Two Types of Delegation
- Crystallize & Codify
- Form A Small Team With A Shared Mission
- Effective Teams Have Many Experts
- Requires Clarity on Facts and Hypotheses
- SKMurphy - What We Do
- We Offer Customer Development Services
- New Technology Introduction
- Focus: Early Customers & Early Revenue
- We Assist On Strategic Decisions
- Niche Identification and Selection
- Pricing
- Negotiation Sequence and Framework
- Please Turn In Evaluations
- Help Us Improve The Recipe for This Talk
Update Sat-Mar-13: For an elaboration on the Expertise / Personal Mastery slide’s “Master Not Only The Technical But Also Emotional Aspects Of a Problem” see “Recurring Problems Have Both Technical and Psychological Roots“
February 26th, 2009
Although it’s aimed at startup entrepreneurs who are seeking investment, the Pitching Hacks e-book from the Venture Hacks team has $20* of advice for bootstrappers as well.
Investors don’t invest in businesses. They invest in stories about businesses.
If you want to raise money on favorable terms, you need multiple investment offers. How do you get multiple offers? Tell a good story to several investors at the same time. A good story can’t sell a pile of garbage, but it will keep a gem from going unnoticed.
You can tell a story in a sentence;
you can tell a story in a paragraph;
and you can tell a story in a 20-minute pitch.
Startups need to do all three.
It’s critical to boil your story down to a sentence and a paragraph as well as 20 minute presentation.
The major components of an elevator pitch are traction, product, team, and social proof. And investors care about traction over everything else.
Traction is a measure of your product’s engagement with its market, a.k.a. product/market fit. In order of importance, it is demonstrated through:
- profit
- revenue
- customers
- pilot customers
- non-paying users
- verified hypotheses about customer problems.
And their rates of change.
These are also very good markers for your progress in bootstrapping a company
A story without traction is a work of fiction.
This is especially true of the stories that entrepreneurs tell themselves and the team’s perception of their progress. We cover this in our “Idea to Revenue” workshop, defining traction as “the ability to set and hit targets.” We divide this into internal and external traction. Where internal traction involves the ability to make decisions, to define and deliver to a specification on a schedule and get others excited enough to join the team. External traction is the ability to meet the commitments you make to customers and is measured by revenue and references.
They also encourage the very early engagement with the market that’s also required of bootstrapping.
Put your idea on a piece of paper and start testing it with customers: “Does this solve your problem? How much would you pay for it?”
Pitching Hacks a slim 83 page book that packs a lot of insight into each section. Many longer books have a good 4-5 page magazine article trapped inside, this book has already been boiled to the essentials. It’s a nice complement to the wealth of information on the Venture Hacks blog. Definitely worth $20 if you are wiling to follow at least one of the many pieces of advice in the book.
January 25th, 2009
Another excerpt from William Feather’s “Business of Life”
Dead Business
A neighboring grocery store went bankrupt, and a bookkeeper who was called in by the lawyers to help inventory the bankrupt stock says he never before realized the difference between a dead business and a going concern.
Here were cheese and vegetables and meat, he found, which would have been salable the next day if the store had kept open. Here were accounts with nearby customers which might have been paid by the next payday, but now would have to be turned over to a collection agency. Here were canned goods which could have gone to make up the weekday meals of a hundred families, but now would have to be sacrificed as “bankrupt stock.” No one who has not helped to salvage a disordered store and turn odds and ends into cash at a quick sale can realize how much it shrinks in value.
Every business accumulates a friendliness on the part of the customers which becomes part of its stock in trade. The habit of stopping at a certain store to buy, or the familiarity which leads one to ask for an advertised brand of anything, forms an asset as important as building and fixtures. It is this fact which enables companies about to issue stock for public sale to place a large value on their good will and to issue stock for its full amount. The money which has been invested in years of careful advertising builds up a fund of good will solid enough so that bankers lend money on it–when they lend money on anything.
My copy of “Thoughts on the Business of Life” is copyright 1949 with individual articles copyrighted between 1927 and 1949, so I can only limit the date of this article to between 1927 and 1949. It’s certainly still applicable today, and as applicable to knowledge businesses as it is to retail firms.
Entrepreneurs who are facing the challenges of closing a deal with their first few customers can be surprised how hard it is to get on prospect’s calendars and get them to return calls. Problems that will be an order of magnitude easier to manage once the prospects become customers. Credit relationships with suppliers, partners, and customers can also take a long time to establish and are equally valuable.
As you consider how to get through the recession of 2009 (or what I hope will be called the recession of 2009, instead of the recession of 2009-2010) Feather’s observations from perhaps 80 years ago are well worth bearing in mind. Find a way to continue to operate, even if in a reduced fashion, as a set of ongoing customer and supplier relationships have considerable value and act as a force multiplier on your other assets.
I close with two related quotes on reciprocal obligations from Margaret Atwood’s essay “A Matter of Life and Debt”
Debt–who owes what to whom, or to what, and how that debt gets paid–is a subject much larger than money. It has to do with our basic sense of fairness, a sense that is embedded in all of our exchanges with our fellow human beings.
We are social creatures who must interact for mutual benefit, and–the negative version–who harbor grudges when we feel we’ve been treated unfairly. Without a sense of fairness and also a level of trust, without a system of reciprocal altruism and tit-for-tat–one good turn deserves another, and so does one bad turn–no one would ever lend anything, as there would be no expectation of being paid back. And people would lie, cheat and steal with abandon, as there would be no punishments for such behavior.
Here are some earlier blog posts that include excerpts from William Feather’s “The Business of Life.”
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