Cultivating Mindfulness

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

Cultivating mindfulness requires you to maintain situational awareness and realize when your reflexes may trigger a reaction that is not as thoughtful as the situation requires.

“Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom.”
Viktor E. Frankl

Bud Caddell has developed a nice diagram for Frankl’s insight:

mindfulness_explanation
Fight, flight, or freeze are reactions we see in both people and organizations. In short, reaction is action without meditation (cognition and awareness).
Bud Caddel in “The Mindful Org

I think this definition of mindfulness, and Caddel’s diagram explaining it, are a very useful way to conceptualize how you start to engage in real learning. If you cannot interrupt your unconscious reaction you have no way to put new approaches into action. It’s inserting the “Orient and Decide” between Observe and Act in the OODA Loop.

Like a mindful person, a Responsive Organization is constantly sensing its environment and itself, yet relying on awareness of both to form a response rather than mindlessly react. In an organization, this is a process that involves both systems thinking and sensemaking – to understand the organization’s environment, to understand the forces behind those conditions, and to estimate the outcome of a response.
Bud Caddel in “The Mindful Org

Extending this to an organization level is key to a startup’s ability to not only take effective action but learn at a team and business level, hopefully faster than competition that may be locked into “autopilot” responses. If you focus on the fastest action possible then you are relying on reflex and reaction, bypassing orientation and conscious deliberation. This does not lead to superior performance but “extinction by instinct.”

It’s not the fastest reaction, it’s the decision that leads to the first effective response.

Related

Q: We Already Have a Prototype, Can We Still Do Customer Development?

Written by Sean Murphy. Posted in 3 Early Customer Stage, 4 Finding your Niche, Design of Experiments, skmurphy

Q:  We have already implemented the first prototype of our product, but we need to know that we are either on a good course or need to change.

A: If you long for certainty you should not be doing a startup, pick a regulated utility or government bureaucracy as a career. Lean Startup and Customer Development techniques can help you to reduce risks by identifying them and developing mitigation strategies but it’s not a guarantee. Any real market attracts competitors and you don’t get to write their plans so it’s not just a question of understanding the prospect’s status quo but being able to identify and react to competitive threats. The view that product-market fit is a ratchet that you cannot fall back from neglects the impact of competitive response, new entrants, and continued changes in technology and customer preference.

Q:  Perhaps I overemphasized our desire for certainty; we understand a startup is uncertain. Should we use our current prototype as an MVP?

Yes. I would  start with what you have and use it as a probe to refine your understanding of the market and customer needs.

Make a distinction between the product, your message, and your target customer. You can talk about your product in different ways, adjusting your message to highlight and test key hypotheses. You do not have to make any changes to your product to this. Any product by definition–or at least any short enough for a prospect for prospect to listen to willingly–of necessity highlights some aspects omits others. You can also use different messages on different target customers or present different message to different prospects of the same type as a way of refining your understanding of what they view as important.

It’s critical that you have conversations with prospects and not simply present messages and see what they react to. It’s only in conversation that you can truly be surprised (you have to be listening, it’s not a monolog) and often the most surprising and useful thing a prospect can do in a conversation is to ask you a question you have not considered before (that’s why it’s called a conversation not an interrogation). When you are looking for early customers the value hypothesis is critical. You may reach them using non-scalable methods that don’t address your first real growth hypothesis.

My take on the distinction between hypothesis and assumption, your mileage may vary: A hypothesis is what is being tested explicitly by an experiment. An assumption is tested implicitly. By making your assumptions as well as your hypotheses explicit you increase the clarity of your approach and the chance for learning. The two things that can trip you up most often is an unconscious assumption that masks a problem with your hypothesis or an unconscious bias in whom you are testing the value hypothesis on. In particular you may have defined your target customer by certain selection criteria but your actual choices for whom to speak to (or who will speak with you) are not sampling from the full spectrum of possibilities.

Q: Or should we build another or several other smaller MVPs to  test only the most important  assumptions? Should we build various tests in parallel to test the needs of different types of customers?

I have come around to the approach of testing several hypotheses in parallel, I think you learn faster and are more likely to identify a good opportunity more quickly. After you take your current prototype and use it to have conversations,  I would explore a few different potential customer types in parallel. One good article on this is by David Aycan, “Don’t Let the Minimum Win Over the Viable,” where he offers a comparison between three approaches:

Traditional linear approach:

linear
Standard sequential pivot approach:
pivot
His recommended approach:
recommended

I am also a huge fan of Discovery Kanban  as a way to manage a set of options and experiments in parallel with managing commitments to customers and other execution targets. It actually gets harder as you start to gain some early customers and need to continue to explore the market and refine your understanding in parallel with keeping your current customers satisfied.

Bootstrappers Turn Time Into Resources and Possibilities For Customers

Written by Sean Murphy. Posted in 3 Early Customer Stage, 4 Finding your Niche, Rules of Thumb

I am a huge fan of Neil Perkin’s blog  “Only Dead Fish” and his two newsletters: “Your Weekly Dead Fish” (archive) and “Fraggl.” I followed a link from his post on “Complexity and Simplicity” to a thought provoking presentation by Possible Health on “Our For Impact Culture Code.

Here is my take on some key concepts from the deck  (emphasis in original) that would benefit bootstrappers –as well as “non-profits.” I have added my observations in italic:

  1. “Non-profit” is a legal structure, not a way of doing things. And we don’t believe that we should define ourselves in the negative. Instead, we exist to create impact.
    Observation: bootstrappers are often motivated by a desire to make an impact (in addition to a desire for autonomy) and have to focus on impact as a way to prove credibility and establish their firm as a viable alternative worthy of consideration.
  2. We treat efficiency as a moral must.
    Observation: in the non-profit world this avoids the trap of excusing poor and/or inefficient execution because you are working on a “good cause.” For bootstrappers it’s second only to impact for viability.
  3. If building effective healthcare systems for the poor were easy, everyone would do it. We do this work precisely because it is labeled as “impossible” by many.
    Observation: you can substitute “effective healthcare system” for whatever you own Big Hairy Audacious Goal (see “Building Companies to Last” by Jim Collins for more on this term). Bootstrappers have to work in riskier and more challenge environments because established firms are less willing to invest effort when markets with a clearer return are accessible.
  4. When your outcome is impact, time  is a terrible thing to waste.
    Observation: as I have outlined in the Chalk Talk on Technology Introduction, prospects use their estimate of your “time to impact” as the single best indicator of the amount of risk in your solution. Days to weeks beats months to quarters.
  5. When you’re working in the world’s most challenging environments under constant uncertainty, the way to maximize learning is to minimize the time to try things.
    Observation: any environment with high uncertainty is challenging, running smaller experiments minimizes the cost of failure and speeds learning.
  6. It’s everyone’s job to turn time into resources and possibility for our patients.
    Observation: all that bootstrappers have in the beginning is their time; if they cannot create an impact and a sense of possibility in prospects they won’t prosper.

Related Startup Culture posts:


Update June-28-2014: Guillermo Marqueta-Silbert (@guillemarqueta) tweeted a comment to the effect that the exchange rate for entrepreneur hours to impact was a function of entrepreneurial skill. I think this is a great insight and suggests a more nuanced understanding that it’s not just trying anything but trying things that flow from a deep understanding of customer situation and needs, competitive landscape, relevant technology alternatives, and market evolution. In an OODA Loop formulation–Observe-Orient-Decide-Act–the key differentiator that expertise brings is a richer and faster Orientation to the situation.

Q: How Much Attention Should I Pay To Potential Competition?

Written by Sean Murphy. Posted in 3 Early Customer Stage, 4 Finding your Niche, Customer Development, skmurphy

Q: When I introduce the idea for my business a lot of my friends are quick to ask: “are you sure there is no one else doing this?” In today’s fast and disruptive business world, I think it is very hard to come up with a business idea that is 100% unique, and utilizes a completely new set of technology features. I constantly find myself arguing that it doesn’t matter if someone else also has the same startup or business idea, it’s how you go about executing your business idea that matters.

What are your thoughts on competitors and how put off should I be when I find out another company has a similar product and mission to my startup?  

Your friends are trying to help you but you may be asking them to comment on a problem where they have little expertise. Evaluating a new business idea is challenging even for professional investors and firms already in the target market–how many times have new entrants been underestimated or new technologies view as far more promising than they turned out to be. It’s a hard problem.

You are being encouraged to look left and right at potential competition, I would try and walk around the table and look at the situation from your prospect’s perspective.

Perhaps a more important set of of question for  B2B are:

  • What is your prospect doing now to solve the problem?
  • Are they satisfied with their current solution or do they still view this a critical business issue?
  • What other solution options are available to them?
  • Which of these other options have they also evaluated and rejected and why have they done so?
  • Are you providing a capability or solution for what they consider a critical need.

Execution only matters in the context of a particular category of customer with a distinct and identifiable problem or need.

Working to develop new capabilities when it’s not clear who will pay for them may give you the illusion of progress for a while but ultimately won’t let you build a business.

My suggestion is to pay close attention when prospects ask you to explain why your product is superior or at least different in some useful ways from what they are currently using or have available to them.

My question is why are you talking to your friends instead of having serious conversations with prospects? What are your prospects asking for or telling you?

Building a Business Requires Building Trust

Written by Sean Murphy. Posted in 3 Early Customer Stage, 4 Finding your Niche, 5 Scaling Up Stage, Sales, skmurphy

“Don’t take business advice from people with bad personal lives.”
Frank Chimero “Some Lessons I Learned in 2013

One of the hallmarks for success in a business-to-business market is the ability to form personal relationships as well as professional business relationships. I am always dismayed when I read advice that advocates bait and switch or other forms of con games that erode trust and make it difficult for any startup to build relationships.

Anyone who always puts themselves first ends up with bad personal life. Startups that are only clear on their own needs rarely outrun the same fate. It’s the difference between a focus on funding or an “exit” and a focus on building a business.

Working with bootstrappers sometimes puts us on teams that are in desperate circumstances. Where they are able to translate time pressure and resource starvation into a bias for action from a change in perspective they often succeed–or at least move beyond the current crisis: success, like the horizon, is an imaginary line you can approach but never seen to cross. But where they use it as an excuse to take shortcuts that abuse prospects trust we sometimes have to part company. It does not happen very often, and it hasn’t happened in more than a year, but perhaps three or four times in the last decade we have had to walk away from a sales or marketing strategy we didn’t feel was in the long term best interest of the startup or their prospects.

“Fame is something that must be won.
Honor is something that must not be lost.”
Arthur Schopenhauer

Related posts

  • Treat Social Capital With The Same Care as Cash
  • De Tocqueville on Concept of “Self Interest Rightly Understood”
    You meet people who have a clear understanding of their own needs and seem to spend no time on anything else. But the deals that they make seem to based only on fear and threat. To create real opportunities in your own business requires that you explore and understand the needs and aspirations of your current and potential customers. To bring them ideas that will improve their lives and businesses requires that they trust you have their interests at heart when they talk about current problems that may expose their weaknesses and shortcomings
  • Keeping Your Customers’ Trust [Includes a Recap of Weinberg's 11 Laws of Trust]
    I think B2B software is often purchased by firms hoping to achieve–or avoid–some sort of change. Like consulting, software is the promise of an ongoing business relationship.  The two essentials in a mutually satisfactory business relationship are trust and an exchange of value.
  • Sustaining Is More Important Than Starting
  • David Foster Wallace: The Only Choice We Get is What to Worship especially this section from Wallace’s talk:
    But of course there are all different kinds of freedom, and the kind that is most precious you will not hear much talked about in the great outside world of winning and achieving and displaying. The really important kind of freedom involves attention, and awareness, and discipline, and effort, and being able truly to care about other people and to sacrifice for them, over and over, in myriad petty little unsexy ways, every day. That is real freedom. The alternative is unconsciousness, the default-setting, the “rat race” — the constant gnawing sense of having had and lost some infinite thing.
  • Honesty in Negotiations
    One of the key tasks we help early stage teams with preparing for and executing successful negotiations.  There is a belief among some engineers that the best marketing and sales people are the most accomplished liars. In my experience nothing could be further from the truth. Most negotiations have long term consequences and involve interacting with people that you will encounter again and who know others you will encounter in the future.  I always assume that at some point in the future the folks I am negotiating will know the full truth of the situation and that very few secrets remain that way for long. In George Higgins‘ novel “Dreamland” a character remarks “I never forget and I always find out. ” I assume that about anyone that I am negotiating with.

Video from Lean Innovation 101 Talk at SF Bay ACM Nov-20-2013

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

The video from my “What is Lean–Lean Innovation 101” talk is up:

Here is the description for the talk

“Lean” provides a scientific approach for creating a product and developing new businesses. Teams can iteratively building products or services to meet the needs of early customers by adopting a combination of customer development, business-hypothesis-driven experimentation and iterative product releases. This talk covers:

  • Why more and more companies are using Lean
  • What is Lean, what it is not
  • Key concepts
  • Get Out Of Your BatCave
  • Use an initial product (MVP) as a probe to explore the market
  • Build-Measure-Learn
  • When and how to pivot
  • Rules of thumb for successful lean innovation

I want to thank Alex Sokolsky for his outstanding effort on behalf of SF Bay ACM doing the video capture and editing.

Q: Resources For A Lean Approach to Sales, In Particular New Product Introduction

Written by Sean Murphy. Posted in 3 Early Customer Stage, 4 Finding your Niche, Sales, skmurphy, Workshop

Q: We have started selling and are looking for resources for a lean approach to sales, in particular for new product introduction.

Scott Sambucci and I presented a workshop at Lean Startup 2012 on “Engineering Your Sales Process.”
The deck is posted at http://www.slideshare.net/SalesQualia/engineering-your-sales-process

About 70% of the workshop is interaction with attendee on their specific early sales challenges so it’s not something that we video record.

Scott Sambucci has two books out that address early sales issues:

Here are two articles that offer useful overviews of what’s needed to define a sales process:

In addition here are some other books you may find helpful:

Here is a long interview I gave to Gabriel Weinberg on early stage B2B sales that many entrepreneurs have found useful: Sean Murphy on the first six enterprise customers

All of these resources talk about a systematic approach to selling for new products.  I continue to offer “Engineering Your Sales Process”® as a workshop for early stage teams. Please contact me if you would like to arrange for a workshop.

Getting More Customers Workshop on March 25, 2014

Written by Theresa Shafer. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, 5 Scaling Up Stage, Events, skmurphy, Workshop

Getting More CustomersLet’s face it, finding customers can be quite a challenge. In this interactive workshop, we will cover a variety of proven marketing techniques for growing your business: attendees will select one or two that fit their style and develop a plan to implement them in their business in the next 90 days.

  • Speaking – small groups, large groups, conferences, …
  • Writing – blogging, newsletters, articles, …
  • What Other People Say About You – referrals, testimonials, case studies, …
  • Getting Found When and Where Prospects are Looking: adwords, Craigslist, trade shows, SEO/SEM, …

March 25, 2014 9am-12:30pm
Sunnyvale, CA
$90 includes lunch

Register Now

“This workshop provided great material to bounce off of. SKMurphy created a fertile space for me to think about my business and plan a concrete step forward. Thank you.” Paul Konasewich, President at Connect Leadership

Getting Unstuck

Written by Sean Murphy. Posted in 4 Finding your Niche

I had a conversation today with a good friend I had not seen in a while. Normally cheerful, he was feeling “stuck” in his startup

I have started several businesses,  tried to start quite a few more, changed direction more often than I ever planned and shut down more than a few–sometimes even before they really got off the ground. I am familiar with a sense of getting stuck, of things not working.  It’s hard to discern and harder to admit what is working and what is not. But at some point I had to acknowledge the need for change and tinker with my approach.

I gave him three suggestions that I have worked for me when I find myself stuck:

  • “Put one foot in front of the other” for two to three weeks: close out small tasks, don’t look at the big picture but schedule a time to look at it candidly and let your subconscious work on it.
  • Find a way to dramatically break the pattern of your day: fast for a day, volunteer somewhere for a day, go along an all day hike, spend a day at a museum or art gallery, etc…It’s not about getting away from the challenge as much as finding a way to get some emotional distance on the constraints you are wrestling with
  • Make a list of what you have accomplished in your life and the people you have enjoyed working with. Often when I have a setback I forget what I have done and tend to focus on the things I have screwed up.

I wrote about “Bouncing Back” a few years ago and suggested

Exercise and a break from the computer are both a good idea.

I think you have to reflect on what happened but with some emotional distance.

Remember Thurber’s observation that “humor is emotional chaos remembered in tranquility” and write down your lessons learned once you can laugh about it (at least a little) so that you are not just re-opening wounds.

Some amount of lateral drift (reading books, seeing folks you’ve neglected as your firm was failing, etc..) can also give you perspective on what to do differently next time.


Update Thu-Jan-30 I guess I like this title, I have used it once already. In 2011 I wrote about “Getting Unstuck” that focused on perfectionism and an inability to let go of stalled opportunities to nurture new ones. An excerpt:

Sometimes I don’t want to take the next step because I can’t face the downside: I would rather live with the possibility of an outcome than take the necessary steps to determine if it’s actually going to happen. When I was younger I would sometimes hold off on selling a stock that had dropped because “it’s not a loss until I sell it.”

When I had a business in the mid-90?s I was slow to prune my sales funnel of prospects that had stalled, I see this same behavior in clients now. Once you do you realize that you have to generate more leads and that often forces you to explore new options or approaches you have hesitated on because the pipeline looks full.

Perfectionism is a very dangerous trait in a startup founder. Two ways that we address it in both our own operations and in our client engagements is to use wikis and shared calendars. Every draft of a plan or document goes into the wiki from the beginning: everyone’s drafts and progress (or lack of progress) are visible to everyone else on the team. But because we are on the same team we can help each other out. Shared calendars and gives team members permission to help with phone calls and meetings you are avoiding scheduling.

Recap Semifore MVP Clinic: Selling To A Team of Diverse Experts

Written by Sean Murphy. Posted in 4 Finding your Niche, 5 Scaling Up Stage, Audio, skmurphy


Series profile
Thinking about this using an OODA loop model – — Observe -> Orient -> Decide ->  Act

  • Orient part is sensemaking — its own kind of fast learning
  • Often takes a long time in a complex situation (e.g., all situations where learning is involved); subject to error because it’s “culture bound”
  • What we do
    • Asking what you see
    • Asking what are interactions (including between people, process, platform, and practices)
    • focused on  asking good questions / suggesting questions to research;  avoid giving advice
  • Audience: other entrepreneurs

Hosts

Presenter profiles (see extensive write up a “Semifore Execs Share Bootstrapping Lessons and 2014 Scaling Up Plans at Jan-17-2014 MVP Clinic)

  • Robert Callahan, COO Semifore, Inc.
  • Herb Winsted VP Business Development and Customer Care, Semifore, Inc.
  •  Semifore, Inc: niche software player in Electronic Design Automation founded in 2006 with a focus on tools for memory map management

Initial questions

  • How do we scale and grow the business
  • What strengths or accomplishments will you build on
  • What existing or constructed vantage-points (data-collection opportunities) have been or will be most useful?
  • What capabilities need to be developed
  • What’s the primary barrier or key challenges you need to overcome
  • talk about product and challenges -    cross functional nature
  • talk about what you have learned – making sense of current experience
  • look ahead 2014 talk about plans

Problem profile

  • complex sales environment
  • education / learning involved
  • many prospective clients have rolled their own
  • side issues = standards, interaction with purchasing
  • Usually find a pre-existing culture / product team /  team
  • more complex sales and adoption problem
    • touches hardware team (e.g. system architect, RTL developers)
    • software developers
    • documentation specialists
    • documentation consumers – e.g. verification and validation team
    • plus “team in larger team or org issues”

This is a mid-course correction conversation. We have a viable product that’s now robust

How do you scale the business?
Competitors are “in-house” solutions – first generation build out.  Semifore product replaces spreadsheets and in-house Perl scripts that represent a career path for internal tool developer

Questions from Audience 
Q: How many employees does Semifore have?
A: five direct plus some other outsource teams we draw on for specialized resources

Q: Do you monitor feature usage and see which ones are used and which ones are not? Do you remove unused features?
A: it’s on-premises software, there is no monitoring except in conversation with customer. Will be deleting some obsolete standards but have to provide a lot of legacy support and backward compatibility

John observed: consider inserting learning & feedback loops here.

Q: Do you have any services revenue?
A: We have  a hybrid license. basic level charge, tiers of users (groups of 10). we sell licenses in batches of 10 with a decreasing cost per incremental seat even as total site license fees go up. We have some project support service fees; there are also fees for “global license”

Q: Tips for growing from small groups to more users in the companies.  How to encourage spread inside customer
A: We believe the following have been key to our success:

  • spend face time with customers
  • dealing with the internal script-writers “who can do stuff.”
  • sales opportunity: when the script-writer leaves

Q: What percentage of customers did you have pre-existing relationships with (from Magma, as an ex-employee of that company, etc.)?
A: really only first customer, most of the rest were “cold starts”

Q: Also, is the tool compelling to any functional area as is, or is it compelling primarily because there’s a lack of resources for the previous internal approach?
A: a bit of both.  solutions exist in organizations that are not visible to management.

Notes from Live Session

Walking around the issues –

Rob: in the Valley back when disk drives looked like washing machines.  Finance roles, then managing channel and tech support.  EDA for last 15 years.  External advisor to Semifore, joined the firm a couple years ago.  growing the business from boutique to a real business.

Herb: business development VP — customer facing activities. started in the electronics business back in the ’70s. Projects in Europe, Japan, US, involved with Semifore since 2008. Semifore is the “right size” for connecting directly to customers.

Have both survived and added customers.  Tool crosses several different disciplines,  enabled by high level

Some standards IPXACT and System RDL but for the most part replacing either custom scripts or Excel input based techniques.
Rich Weber drew on experience at SGI, Cisco, Stratum One to create cross-compiler
selling to sw, firmware, and documentation teams proliferating from early beach heads

Respond to customers quickly. agile response.  Keeping customers.

Initial sell to a small team.  from 10 users to 100 in the same company. tool goes viral.  education challenges to begin using the tool.  Support requests are often enhancements to connect with their local requirements.

How to proliferate. Getting information early in the design / development process. Measure speed.  Perceiving the activity outside “my silo.”  It’s a blazingly fast product once it’s in place.

Q: does tool help to measure design cycle impact?
A: It’s really a technology driven company working with engineers who focus primarily on technology, but our customers live in a business environment. more recently customers are coming in and asking for automation of the creation of these architectural descriptions. Once the tool is adopted there is a shift from create the “perfect document” to ‘good enough distributed widely’.
Semifore enables a start from a terse description that can be elaborated.  EDA Process Workshop in Monterrey – need a good plan more than a good tool

Herbie: Making the transition from supporting a wide variety of design styles to a smaller subset that the industry as a whole seems to be converging on.
Sean: similar to what happened in networking where there was a convergence from “multi-protocol” to IP and Ethernet.

As an introduction strategy Semifore offers a sandbox model.

John: have you thought about a user conference where you can share lessons learned and foster “viral process”?

  • Rob: good idea, we could do it in the Valley
  • Herbie: one challenge is a lot of our customers are direct competitors and don’t allow us to talk a lot about what they are doing or even that they are using it.
  • John: breakfast at Coco’s might actually kick this off; talk about failure as much as glossy success. provides access to design ideas and source of marketing insights.
  • Sean: first Verilog user group was very low key.  It was at Denny’s.

Rob: engineer to engineer conversations have been of great benefit, but we have trouble translating that into business impact.

  • Sean: boiled frog problem- registers grow incrementally.  complexity ….  how to trigger the epiphany that “it’s getting hot”.  how describe the environmental question about increasing complexity.
  • Rob: we see people saying “we can’t manage any more. please help”
  • Sean: need to crystallize this customer’s business insight into tools for engineer customers at other firms (including prospects) into a compelling business proposition. Problem has scaled from hundreds to tens of thousands of registers

Sean: What is one thing that would change the equation:

  • Herbie: go to next level in revenues. A potential contract on the horizon would generate more human resource.
  • Rob: finalize and accurately describe tool functions, so can present / educate people at higher levels of the organization..

Q: What is your licensing model?
A:business predicated on one year licensing deals, renewals are based on internal uptake not multi-year contractual obligations. Avoids some issues where customers wait for end of quarter/year asking for large discounts

John: your great strength is your engineering view, but is this in some ways a weakness? Could you do more to see into the customer organization w/o more revenue?
Rob: A senior VP engineering has a P&L and a business view. We are a small tool in price, it’s hard to get their attention.

Take-Aways

  • Herbie: this session was out of our normal activity.  appreciate opportunity.  learned working inside orgs & managing projects: the reality of business situation, putting together the fifth team.
  • Rob: better mousetrap doesn’t always sell.  Semifore has good technology.  challenge is to refine the messaging.  describe “breakage is around the corner.”
  • Sean:  need to explain to prospects that they have gotten used to dealing with “broken”. I think Semifore’s challenge less in engineering more making business case to pragmatic buyers.

The Likely Consequences of Entrepreneurship Require Perseverance

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, Rules of Thumb, skmurphy

Justin Kan (@JustinKan) wrote “Startups Don’t Die They Commit Suicide” in 2011″ (mirrored on his blog here)  reflecting on what he had observed and learned as a serial entrepreneur. It was reposted on the Philly Startup Leaders list earlier this week which led me to write the following comments mixed with excerpts from Kan’s post.

Startups die in many ways, but in the past couple of years I’ve noticed that the most common cause of death is [when] founders/management kill the company while it’s still very much breathing.

I think this is right, two key requirements for building a business are team morale–shared vision, enjoyment of working together, hope for the future–and cash flow. And morale can get you through periods of poor cash flow  more than cash flow can compensate for poor morale and team dynamics. I think a lot of teams lose their “gumption” and give up.

Long before startups get to the point of delinquent electricity bills or serious payroll cuts, they implode. The people in them give up and move on to do other things, or they realize that startups are hard and can cause a massive amount of mental and physical exhaustion — or the founders get jobs at other companies, go back to school, or simply move out of the valley and disappear.

I think bootstrappers are in some way at less risk for this because they know it’s going to be hard, although perhaps not how hard.
A lot of times the founders don’t maintain their health and energy and cannot weather a setback or analyze their situation with enough emotional distance: debugging your startup requires peace of mind

Often the root problem can be traced back to a lack of product traction — it’s rare to find people willingly quitting companies with exploding metrics. But one thing that many entrepreneurs don’t realize is that patience and iteration are critical in achieving product market fit.

Keeping a ‘captain’s log’ or other journal can give you a place to vent your frustrations–and let them cool for later analysis–jot down your fragmentary insights for later revision and recombination, and allow you to look back at earlier crises you have managed and problems solved: record to remember, pause to reflect. We have worked with a couple of Finnish teams and they have a great word “sisu” that is the Arctic version of gumption.

Overnight successes might happen fast, but they never actually happen overnight.

I think a lot of the desire for overnight success  is driven by trade press accounts of young millionaires who clean up the real story to make it seem simple and inevitable. I have met a number of entrepreneurs who think that one deal or one relationship will be the point of departure for a rocket trip to the stars. That’s always the way the success narrative is cleaned up and presented, but the reality almost always–barring a few lottery ticket winners–involved a lot more hard work and the slow accumulation of many small insights, decisions, and advantages.

On the other hand, happy people don’t normally start new companies: as Sramana Mitra has observed, startups are founded by mavericks, iconoclasts, dropouts, and misfits.  In fact, I think Barry Moltz is right: you need to be a little crazy.

Still, I think morale at an individual and team level is a key resource, and the teams that persevere seem to be more driven by the thought of proving a new idea right than proving  former co-workers, bosses, or  relatives wrong. While 0roving folks wrong can be the start–bold action coupled with frank expression has inadvertently launched many a deeply felt entrepreneurial career–it’s rarely what sustains an individual much less a team.

“It’s only after you fail once or twice and learn to rely equally on thought, analysis, and anticipation–in addition to speed, talent, and execution–that you can really call yourself an entrepreneur. ”
Barry Moltz in “You Need to Be a Little Crazy

Semifore Execs Share Bootstrapping Lessons and 2014 Scaling Up Plans at Jan-17-2014 MVP Clinic

Written by Sean Murphy. Posted in 4 Finding your Niche, 5 Scaling Up Stage, EDA, Events, skmurphy

Semifore , Inc. was founded in 2006 by Richard Weber based on his system design experience at several startups and some larger systems firms. All of them struggled with the need for  tools and methods to keep the hardware architecture in sync with software architecture and to ensure that the development and customer documentation was up to date. He developed an application that worked from a common specification to generate high level hardware description language specifications, software source code, and human readable documentation for the memory maps and configuration/control register behavior. Semifore has bootstrapped growth since 2006 and has seen their offering adopted at a number of major semiconductor firms. and system houses.

  • What: Semifore Execs Share Bootstrapping Lessons and 2014 Scaling Plans
  • MVP Clinic Format: Webinar with shared note taking in a PrimaryPad
  • When: Fri-Jan-17-2014 10am PST
  • Cost: No Charge
  • Register: https://www3.gotomeeting.com/register/251287126
Register Now

We have two members of the Semifore executive team joining us 10AM PST on Fri-Jan-17-2014 for a discussion of what they have learned about their success so far as a niche player in the Electronic Design Automation space and their plans to scale up in 2014. You can register to take part in the conversation at

  • Rob Callaghan, COO of Semifore Inc.
    Rob was previously  Vice President of Operations for sales and technical support at Magma Design Automation. Prior to Magma, he was Group Director of Business Development as well as Director of Sales Operations at Cadence Design Systems. He has worked with other large electronics firms such as L.M. Ericsson, Amdahl Corporation, and Memorex Corporation in the functions of Product Marketing, Field Operations, Finance and Accounting. His expertise includes strategic and operational planning, operations management, market research, and financial operations for organizations such as direct sales channels, product marketing, R&D operations, corporate business development, corporate mergers and acquisitions and strategic investments. He has a BS in Finance from the Menlo School of Business and a MBA from Golden Gate University.
  • Herbie Winsted, Vice President of Business Development and Customer Care
    Herb is a veteran of over 26 years in the EDA and Semiconductor industries. He has held positions of Director Business Development and Director IC Implementation and various individual contributor assignments at Cadence Design Systems. He has also assumed management responsibilities for CAD teams and IC layout groups at National Semi, GEC Plessey, and AMD. Herbie has also lead hundreds of multi-discipline automated layout projects in different roles at Silicon Valley Research (Silvar-Lisco) working with major Semiconductor companies worldwide. He has excelled at team building and establishing both business and personal relationships at every level of the organizations he has serviced. He has wide experience in creating marketing messaging, training, and sales collateral. He has always put customer requirements as his highest priority and excels at finding practical solutions that satisfy all parties concerned.

Background for discussion

Semifore Inc. is a software startup in Palo Alto Ca. The company provides a software product platform that automates and manages the register information for the Hardware / Software interface during the definition, specification, implementation and verification phases of the ASIC and/or FPGA design process. The company is privately held and has no external investors. It was founded in 2006 by Richard Weber who is currently the CEO of the company.

Currently the company has over a dozen paying  customers which are using the platform to deliver their chip sets to customers. Logo’s such as Altera, AMCC, Microsoft, and other large firms have embraced the tool and associated design methodology to reduce their design cycle time and improve their product functionality.

Semifore’s products are used by Systems Architects and designers, Verification Engineers, Software Development Engineers, and Technical Publications teams inside of Semiconductor companies.

The company has been funded via “bootstrapping” and is operated solely from operating cash flow. This has provided sufficient funds to get through the product development and early customer engagements that allowed Semifore to market, test, and refine the technology to a state of high reliability and functionality with low post-sales support requirements. The product does what we say it does and once it’s installed the product often goes viral.

The company has relied on trade show attendance and word of mouth to secure additional sales leads to qualify and move to a product demonstration. The customers for this product, are for the most part, currently internally developing their own solutions in this space.

Market / Customer Challenges (Lessons Learned 2006-2013)

  1. Internal solutions are viewed as “free” and they get the job done today. The cost is buried across many functions within the customer and the time hits they take are part and parcel of the “design silos” in most organizations.
  2. The teams that have “created” the internal solution often have a vested interest in keeping them alive.
  3. The currently employed internal “methodology” touches many organizations that may not be the purchasing entity or the driver for the decision or have the ability to overrule and drive a central technical solution throughout the organization. Many large customers have several different of internal solutions in this design space.
  4. This design problem is very niche and eclectic and often is not highly visible to upper engineering management. It’s noise to them. Education at all levels is required for buy in on this kind of tool.
  5. Internal solutions tend to be limited to file transforms and depend on rigid input formats to produce useful results. Very little true design intelligence for detecting correct semantics and interface capability to other tools or standards.
  6. There is considerable confusion regarding the status and capabilities of the “standards” that support this particular design methodology that adds to the tendency to “wait and see “ before making buy decisions.

Key Goals for 2014

  1. Expand the adoption by existing customers who have embraced the tools and succeeded using them in production.
  2. Build on current success to add new customers, large and small.
  3. Determine level of participation in existing standards committees and explore offering our proprietary language as a standard with endorsement from existing customers.

Update Fri-Jan-17: here is the audio for the event.

Q: Customer Exit Interview Questions

Written by Sean Murphy. Posted in 4 Finding your Niche, Rules of Thumb

Q: We have a SaaS offering that has been on the market for three years now and we have several dozen paying customers. Our offering is useful for firms with more than a hundred employees up to several thousand and is licensed at a corporate level. We have only lost two customers, one was acquired by a much larger firm and the other went out of business. We now have a third customer that is leaving and I want to give them a call and get some feedback. Can you suggest some questions for the exit interview?

Here are some questions that I have found useful in uncovering issues you can act on and sometimes recover the account:

  • What were the most useful or valuable aspects of our service?
  • What were the last useful?
  • Did an event or incident or failure on our part trigger your decision to look for alternatives?
  • What new benefits or other value do you see the new vendor providing?
  • Is there a change we can make that would encourage your to revisit or alter your decision?
  • Any other comments, suggestions, or observations.

Trick is to understand reason for change and then determine if you can do anything to change the decision while being respectful of their decision. They may come back in a few months or even a year if you treat them with respect now. You should have the CEO or a founder call and email so that you communicate you are interested in understanding the situation and their needs.

Related posts:

Challenges in Analysing Market Structure and Competitive Landscape

Written by Sean Murphy. Posted in 1 Idea Stage, 3 Early Customer Stage, 4 Finding your Niche, Customer Development, skmurphy

This is a laundry list (not prioritized) for a set of challenges we currently wrestle with in helping clients monitor their external environment and craft strategies for new market creation and new product introduction into an existing market. I welcome any suggestions for resources or tools.

Competitive Landscape

  • maintaining shared situational awareness at at team level on the external environment
  • understanding who prospective customers view as status quo / alternatives / competitive offerings to your product or service
  • monitoring emerging technology spaces for new entrants that may come into your space
  • monitoring your target market space for new entrants: especially discerning weak signals of a new competitor
  • counter-surveillance – staying off of competitor’s radar as long as possible (stealth is just one strategy here)
  • finding and monitoring forums where prospects are talking about current challenges and shortcomings of existing alternatives
  • identifying early adopters / earlyvangelists who are unsatisfied with an existing partner
  • understanding customer’s perception of the value proposition for competitive alternatives
  • using analysis of competitive hypotheses to discern competitor’s strategy from deceptive and ambiguous moves (by definition stealth or camouflaged moves are not detected, if they are they represent revealed strategy)
  • designing business wargames to explore complex ambiguous competitive situations and foster team alignment on strategy

Market Structure Analysis

  • modeling markets that don’t exist (yet)
  • creating markets where you have the potential to remain viable
  • developing segmentation strategies for existing markets
  • anticipating when a niche market may dissolve a larger category (either to your detriment or advantage)
  • cataloging all of the different descriptions and keywords for the same problem from different perspective in an early market
  • crafting and negotiating partnerships with incumbent players in an existing market
  • defining value chain and minimum viable footprint for a new offering (for more on these concepts see “The Wide Lens” by Ron Adner

Update Nov-26-2013: We continue to use and refine this list. One challenge that startups face (and established firms entering markets that are new to them) is that an existing firm has customer insights that they can more easily access and a value chain that has stake in their success which can provide peripheral vision and insights. Startups lack these assets and as competitors are much harder to spot.

The initial challenges are less about generating insights about new market opportunities and potential competitors and much more about curating the evidence and crafting a narrative that gets a team on board for common action. It’s also possible to fool yourself so looking for disconfirming evidence (e.g. analysis of competing hypotheses) helps to avoid self-deception and/or groupthink.

Price Based On Your Value To The Customer’s Situation

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

This is based on a real engagement that started with the conversation in “Living In Anticipation With Schrodinger’s Leads.”

The CEO placed a stack of about 30 business cards on the conference table: “See, here are all of the leads from the trade show.”

“Would you like us to put together a simple campaign where we e-mail them an update of what’s happened since the show and call them once or twice to see if they are interested in a longer demo or an evaluation?” I asked.

“No, that’s not why we asked you to come in, these guys will call when they are ready,” he answered, “We had a visit from someone in sales at BigCo [a large firm in Silicon Valley], he came by our office last week because they are interested in our product and we need your advice on the deal.”

I knew that the two founders had worked together at BigCo before striking out on their own two years earlier  when a downturn had triggered layoffs that they used it as an opportunity to launch their startup.

“I cannot figure out how to price the configuration,” the CTO spoke up for the first time, “I can’t figure out if I should charge $7,500 or $15,000. They could technically get by with one license but they should probably pay for two because they have come back and asked for some consulting to be bundled in to close the deal. We quoted had quoted them $7,500 but it seems like it may be a lot of work.”

For a brief moment I was reminded of an early morning ride to the airport on 280, the sun was barely up and the fog was very thick; we had left a little later than planned and were driving a little faster than visibility might have warranted. I really wanted to have the sun come up and burn off the fog.

“Can we just back up a minute and walk around the situation a little more? The guy from BigCo came to your offices? He didn’t ask you to come to his?” I asked. BigCo offices were only a few miles away but it would unusual for them to visit a small vendor unless they were serious about a deal and wanted to get a real sense of company size and activity level.

“Yes, Mike and I worked with him back at BigCo and he wanted to talk to us about deal for a license to help them with a contract they are working on with a Japanese company. He had called me earlier for a budgetary quote for a single license but now he wanted to negotiate a discount and get us to throw in some consulting to close the deal” the CTO elaborated.

“How much consulting?” I asked.

“They need us to convert the work in progress and library elements for a business unit of [a major Japanese company]. They are putting together a deal to sell software to about 120 engineers. If the Japanese engineers have to re-enter the work in the new system the deal won’t go through, if BigCo pays for outsource engineering time to do the translation by hand it’s probably a team of ten to twenty for three to six months. But they would do it by hand; if we use our tools it’s a week or two. The Japanese don’t like the idea of manual translation since the errors are unpredictable: if we do it automatically we also automatically verify, and if they find an error then we can fix our code and re-run. It’s cleaner,” the CTO concluded.

” OK, so aside from doing it with this outsource team do they have anybody else that can do the translation?” I asked.

“No one else has software that has already been used in production. We have two other customers using our tools to allow different teams to move this same kind of data back and forth between different systems,” the CEO explained.

We calculated that the deal was worth on the order of 2-3 million dollars in license revenue to BigCo and the outsourcer was probably going to charge between $60,000 and $240,000 depending upon the real scope and where engineering labor was located. So there was something like $1.5M to $2M in margin after cost of sales and support for the deal.

I suggested, “I think we should quote them between $400,000 and $600,000 for the translation, verification and support of the translation, and a license to access the translation technology on-site in Japan. You are going to be saving them direct cost of probably $120,000 or more, your approach is an order of magnitude faster, repeatable, scalable, and probably two to three orders of magnitude more accurate. You are enabling a $2M deal plus if they win this deal it means that they can flip other Japanese firms to their software. We will probably end up at half to two-thirds of the opening but we should start a the high end of a defensible value  range.”

“But we have already quoted them $7,500 for a license. How do I get to $400 grand?” the CEO protested.

I thought for a minute and then asked,”When does the quote expire?”

“I didn’t put an expiration on it,” the CTO said.

I said, “OK, we have to call your contact and send him an e-mail advising him that we will honor the quote for another 30 days but after further analysis of their requirements we think that they need a different product and some related consulting. We are happy to furnish them the license we quoted but we are not discounting it further and we are not throwing in any consulting to get the deal. We would like to request a meeting to fully scope the project but we anticipate  that it will cost between $400,000 and $600,000 to meet the quality and delivery expectations of his end customer.”

There was more back and forth but after we walked around it a few more times it was clear that they were bringing considerable value to BigCo to close this opportunity. We drafted and sent an e-mail to their contact and then read it aloud to his voicemail since it was now dark out and he had gone home.

We ended up in a meeting with at the BigCo site with folks from corporate and the lead salesperson from their Japanese distributor. This led to a month of serious conversations that uncovered some additional requirements that neither side had considered, allowed us to run some test cases that increased both sides confidence, and allowed us to develop a detailed multi-phase project plan that included not only our work but key tasks from their team and the Japanese customer.

It took another two months beyond that for BigCo to give us a purchase order–probably because the Japanese customer waited for the end of the year to squeeze the best deal out of them and they didn’t want to give us an order until then–for about $320,000 for a mix of licenses, a month of on-site work in Japan, and a year of support and follow up.

Especially when you are selling to enterprise you need to calculate the real value you are creating, this normally requires you to thoroughly understand their needs and constraints and develop what is typically a multi-phase project plan detailing commitments from both sides to make it happen.

Engineering Your Sales Process Workshop Feb-8 Early Bird Closes This Weekend

Written by Sean Murphy. Posted in 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, 5 Scaling Up Stage, Events, Sales, skmurphy

Register Now Just a heads up that the early bird rates for our next “Engineering Your Sales Process®” Workshop close Sun-Jan-28.

This is the same workshop that Scott Sambucci and Sean Murphy offered at the Lean Startup Conference in December 2012 but we are limiting the attendance to 12 entrepreneurs to allow it to be even more interactive and in depth. Our focus is on entrepreneurs who are selling complex new products to businesses and face these challenges among others:

  • You can’t get potential customers to call back.
  • Prospects won’t make a decision.
  • Prospects like what they see in beta and ask for extensions but will not buy (yet).
  • Your deals stall.
  • Prospect stays with the status quo.

This interactive workshop will help you learn from these problems by using conscious planning and experimentation. Traditional sales training stresses “every no moves you closer to a yes.” Our approach to engineering your sales process says instead, “What looks like noise is often actually data.” Designing and debugging a repeatable sales process is key to a sustainable business, and we’ll address how to diagnose common problems to determine likely root causes. You will leave with a scientific approach to understanding your customers’ needs and their buying process so that you can scale your business in harmony with it.

ABOUT THE SPEAKERS:

Sean Murphy, CEO of SKMurphy, Inc. has taken an entrepreneurial approach to life since he could drive. He has served as an advisor to dozens of startups, helping them explore risk-reducing business options and build a scalable, repeatable sales process. SKMurphy, Inc. focuses on early customers and early revenue for software startups, helping engineers to understand business development. Their clients have offerings in electronic design automation, artificial intelligence, web-enabled collaboration, proteomics, text analytics, legal services automation, and medical services workflow.

Scott Sambucci is the Chief Sales Geek at SalesQualia, a company dedicated to improving sales performance. With more than 10 years in Silicon Valley and 15 years in sales, management, and entrepreneurial roles in the software and data industries, Scott merges the attributes of a successful salesperson and entrepreneur, putting his experience to work for SalesQualia clients every day. He’s lectured at numerous universities across the world, presented at TEDxHultBusinessSchool in San Francisco, and recently published  “Startup Selling: How To Sell If You Really Really Have To And Don’t Know How.”

Register Now

Impatience For Success Works Against Learning

Written by Sean Murphy. Posted in 4 Finding your Niche, 5 Scaling Up Stage, Consulting Business, skmurphy

Q:  We’ve sculpted our product in a niche that was  a subset of the larger target audience. But it is not a niche product–and our investors agree–it’s aimed at the the middle of the bell curve. We feel impatient with our progress and are considering a significant investment in a traditional PR firm; we hope this will dynamite our whole effort with a big splash.

Most successful products start out in a niche and move to a sequence of larger/adjacent niches. Some examples:

  • Facebook started at Harvard and moved to the Ivys before conquering the world.
  • Google is rolling out their high bandwidth fiber solution in Kansas City not nationwide.
  • Proctor and Gamble launches most new consumer products in a test market to learn more before scaling up.

This is normally because

  • your offering will provides more value to a small subset of the total population it may ultimately appeal to.
  • there may be to be ecosystem or supporting vendors/applications in place to really be useful
  • social proof and word of mouth are easier to establish in a niche and a new product lacks both, which retards its acceptance among pragmatics, early majority, late majority, and laggards.

I would be careful not confuse the demand curve you seem to be promising your investors with the current market you can readily access, and the subset of prospects who are willing to abandon their current solution to embrace yours.

Traditional PR involved actual relationships between the PR agency and journalists, analysts, and other opinion makers. The traditional PR professional would ask a number of tough questions of the client as a proxy for the journalists et al to improve the story before the client told it to anyone else. The PR professional had a reputation to maintain with the writers (who were few because they were associated with an expensive printing press or radio/TV station) and was careful to vet the story for “newsworthiness.”

With the rise of new media and dramatically lower costs of publication/distribution for text, audio, and video these relationships have changed. But it’s still important to cultivate relationships with writers, analysts, and other opinion makers whether you do so directly or with the help of an agency.

One of the better books on the changes that the Internet brought to media and marketing is The Cluetrain Manifesto which is available on-line at http://www.cluetrain.com/book/index.html

Most of the teams we work with are targeting niche markets (at least initially) where it’s more effective to take part in ongoing conversations in a few communities focused on the need, problem, or technology. There are very few true overnight successes and banking on a big bang launch over the steady accumulation of customer case studies and endorsements (both formally in your own messaging and informally through “word of mouth” in communities with a natural interest in your offering) seems shortsighted. At a minimum you should have a Plan B for what you will do if the “launch” fails in third party media–it should not be to go out of business.

If you cannot think of two of three alternatives to a “big bang” launch that spread the same budget and effort over a longer period of time that allows for experimentation and iteration–and therefore more learning–you should probably think harder.

As the Kamikaze pilot instructor said to his class, “I want you to watch carefully because I am only going to do this once.” It’s hard to learn from a big bang launch.

The goal of a marketing interaction isn’t to close the sale, any more than the goal of a first date is to get married. No, the opportunity is to move forward, to earn attention and trust and curiosity and conversation.

Seth Godin in “Free Coffee, Next Exit

Dr. Atul Gawande on Managing Complexity and Uncertainty

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

Excerpts from his commencement address at Williams College on Sunday, June 3rd, 2012 (Reprinted in New Yorker as “Failure and Rescue“). The entire talk is worth reading and offers a medical case history as a compelling context for his points.

“…the critical skills of the best surgeons I saw involved the ability to handle complexity and uncertainty. They had developed judgment, mastery of teamwork, and willingness to accept responsibility for the consequences of their choices. [...] We all face complexity and uncertainty no matter where our path takes us. That means we all face the risk of failure. So along the way, we all are forced to develop these critical capacities—of judgment, teamwork, and acceptance of responsibility.”

I think that the three skills Dr. Gawande mentions are also crucial for entrepreneurs to cultivate:

  • Judgment: the ability to develop a point of view and to use it to make decisions in a timely fashion as dictated by the implications of unfolding events. This may require making decisions with incomplete information, and that’s a useful distinction  to remember: if you have enough information it’s a choice based on your values, if you don’t, if there are uncertainties or ambiguities, it’s a decision.
  • Mastery of Teamwork: this requires effective two way communication, timely coordination, and establishing a level of trust that enables effective collaboration. It also requires alignment on goals, agreement on roles, negotiation of a common process, and a commitment to effective business relationships.
  • Accepting Responsibility for Consequence Of Your Choices: you can make a good decision based on all of the information you have in hand and still have a poor outcome. Sometimes a poor outcome is a possibility that can be anticipated and mitigated and sometimes it’s part of the “unknown unknowns” of a situation.

The last point, about the limits of risk mitigation, is a point of departure for Dr. Gawande’s core point: even with good judgment and teamwork, to truly accept the consequences of your decisions is to commit to resilient improvisation and rescue. It’s not enough to prepare for failures and take steps to limit their damage, you have to persevere and attempt to “retrieve success from failure.”

I thought that the best places simply did a better job at controlling and minimizing risks—that they did a better job of preventing things from going wrong. But, to my surprise, they didn’t. Their complication rates after surgery were almost the same as others. Instead, what they proved to be really great at was rescuing people when they had a complication, preventing failures from becoming a catastrophe.

Scientists have given a new name to the deaths that occur in surgery after something goes wrong—whether it is an infection or some bizarre twist of the stomach. They call them a “failure to rescue.” More than anything, this is what distinguished the great from the mediocre. They didn’t fail less. They rescued more.

He cites a study in the New England Journal of Medicine from October 2009 “Variation in Hospital Mortality Associated with Inpatient Surgery” which concludes:

In addition to efforts aimed at avoiding complications in the first place, reducing mortality associated with inpatient surgery will require greater attention to the timely recognition and management of complications once they occur.

This excerpt from “Variation in Hospital Mortality Associated with Inpatient Surgery” provides some statistics on Gawande’s observation that the better hospitals had similar complication rates but lower mortality from major complications:

Rates of death varied widely across hospital quintiles, from 3.5% in very-low-mortality hospitals to 6.9% in very-high-mortality hospitals. Hospitals with either very high mortality or very low mortality had similar rates of overall complications (24.6% and 26.9%, respectively) and of major complications (18.2% and 16.2%, respectively). Rates of individual complications did not vary significantly across hospital mortality quintiles. In contrast, mortality in patients with major complications was almost twice as high in hospitals with very high overall mortality as in those with very low overall mortality (21.4% vs. 12.5%, P<0.001). Differences in rates of death among patients with major complications were also the primary determinant of variation in overall mortality with individual operations.

Startups Should Focus on Impact and Innovation Before Growth

Written by Sean Murphy. Posted in 1 Idea Stage, 3 Early Customer Stage, 4 Finding your Niche, skmurphy

“I want the definition of startup back. To be used by anybody who is willing to take the risk to quit their corporate job and go out and try and build an innovative, disruptive, tech-enabled business that tries to change the way things work in the world.

It’s OK to build a company that stays small, has a few million dollars in revenue and builds careers, bank accounts and enriches client experiences.

It’s also OK to raise venture capital and try to build a monster business. But know that if you don’t go “up and to the right” you might find yourself abandoned (unable to raise more VC) or even ousted (to bring in a CEO who can show rapid growth or die trying) in the name of growth and returns. It happens more than is reported.

It’s also OK not to raise venture capital. To aim at changing a small corner of your world or industry. Or your life.

And I applaud all of you who try.”

Mark Suster in “Is Going For Rapid Growth Always Good? Aren’t Startups So Much More?

I agree with Suster on this for several reasons:

  • Small wins can snowball into larger ones. If you can get started at the intersection of two or three new technology trends you can make a small difference initially and continue to explore.
  • Nature does not make leaps. Andrew Hargadon quotes this axiom repeatedly in his book “How Breakthroughs Happen” to explain how successful innovators really work.  In a blog post “7 Things Every Environmental Entrepreneur Should Know” he summarizes why this is important:

    4. Don’t make leaps.
    Most environmental entrepreneurs have visions of fixing entire systems–after all, that’s what’s broken–and design solutions that promise wholly new technologies enabling (and requiring) wholly new behaviors. Think hydrogen fuel cell vehicles, which require innovations in fuel cells, fuel, fueling stations, fuel companies, and fuel distributors, to mention just a few. But that’s where most promising ideas fail. Innovations succeed when they offer evolutionary, not revolutionary, changes in behavior. Create a design that provides small steps, easy changes, for your customers. Edison designed his electric light to look and act just like the gas lighting existing customers were used to. Only later did people start using electricity for other uses. Natura non facit saltum: Nature does not make leaps. Neither will customers.

  • It takes a long time to appreciate how a technology will mature. To do foundational work and move down the learn curve faster than your competitors in the early going requires patience. Bill Buxton offers several examples of this in “The Long Nose of Innovation” concluding

    “The bulk of innovation is low-amplitude and takes place over a long period. Companies should focus on refining existing technologies as much as on creation.”

  • Startups must pursue ambiguous opportunities to avoid competing with larger well-established firms. These of necessity require starting small.

Suster’s blog post is  a rebuttal to Paul Graham’s “Startup=Growth” which opens with

A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.

Two of the examples Graham points to are Apple and Google. Both of these had a long period of exploration early in the life of  a new technology (microprocessors and Internet Search) before they really started to grow. He also neglects the franchise model as a way for a brick and mortar or geographically limited startup like a restaurant or a barbershop to become a McDonald‘s or a Supercuts.

I agree with Suster that “Startup = Taking Risks & Creating Value.” Growth is an outcome of impact. Bootstrappers raise capital for a startup that both merits it based on demonstrated traction and requires it because of the growth opportunity that has now been identified.

But it was a startup when they took a risk to create new value for their customers.


See also

Update Oct-31-2012 George Grellas posted some great insights on a Hacker News thread on the original “Startup=Growth” essay by Paul Graham (referred to as “pg” his Hacker News account name in the post).

  • This is a superb essay delineating the attributes of a fast-growth, all-or-nothing type of startup. No surprise here. Who besides pg has had the depth and breadth of quality first-hand experience with such ventures over such a sustained period and in such an explosive context as that of recent years? He has here given us a classic analysis of the prototypical, Google-style startup.
  • I think the idea of a startup should not be so narrowly defined, however, and the big reason is this: many founders set out to build ventures that are tech-based, innovative, aimed at winning key niches via hoped-for rapid growth and scaling, positioned for outside funding as suited to their needs, and aimed at liquidity via capital gains as the primary ROI for their efforts . . . but who also place a huge premium on minimizing dilution and maximizing founder control. These are the independents. The ones who, by design, want to defer or even avoid VC funding so as to build their ventures on their own timing and on their own terms. Now this is not the Google startup model. It is, in a sense, its opposite. But it is not the model of a small business either. It is just a different type of startup.
  • The trend over this past decade has moved decidedly toward greater founder independence in the startup world. Back in the bubble days, as a founder, you had very little information available to learn how startups worked, you often had heavy capital needs (e.g., $2M to $4M) right up front to do such things as build your own server banks, and you would almost certainly have little leverage by which to minimize dilution or loss of control at the time of first funding. Today, this has completely flipped. Vast resources are extant teaching founders how startups work. Initial capital needs are often minimal. And it is relatively easy to get reasonable funding on founder-friendly terms. What this means is that, today more than ever, the independent-style startup is more open to founders than ever before.
  • Given the above, it seems to me that this is not the time to say that the only style of startup worthy of the name is that of the super-rapid-growth type. The rapid-growth type may be more glamorous by far but it really defines only the tip of the startup world. Beneath it is a vast world offering incredible opportunities to founders who want more control over the timing, scale, and management of their ventures and who seek to realize gains and manage risks accordingly.

Startup Founders Announced for Working For Equity Panel at SVCC 2012

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

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

Here is the announcement

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

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

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

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

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

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