Posts filed under 'Founder Story'
May 1st, 2008
- What have you learned?
- How have you changed since you started?
- What key skill or experience did you lack when you started that has caused you the most problem?
- What has been the biggest surprise: what was one key assumption you made, perhaps even unconsciously, that has caused the most grief?
- What development, event, or new understanding since you started has had the most impact on your original plan? How has your plan changed in response?
Take 30 minutes and write down the answers to these questions for your current business (you can take another 30 and write them down for you last one as well if you like). Share the questions with your co-founders and ask them to do the same. Compare notes. Put the answers away in a safe place, answer the questions again in six months, and compare your first and second set of answers. Repeat as necessary.
I came up with these in response to “Need good interview questions for startup founders” on Hacker News, deriving them from questions we have been asking in our Founder Story series.
Inspired as well by “Forget your Blog: 5 Reasons to Keep a Personal Log”
There is a scene in the movie Weird Science where the main character looks up something in his so-called “log.”
“You keep a diary!?”, the other geek asks.
“No, of course not! Teenage girls keep a diary, I keep a log”.
- Full Freedom of Thought
- Spot the Connections
- Sum it Up
- Backtrack Feelings
- Make Growth or Decline Visible
April 4th, 2008
I first met Debra Willrett, founder of Expert Software Consulting, at the IEEE Consultants Network for Silicon Valley (CNSV) when she gave a great talk on the new CNSV website in February of 2006. When Francis and I learned that she was the inventor of the Macintosh application MacProject, an application that has defined a paradigm for interactive graphical project management tools for the last 25 years, we asked her for an interview for our Founder Story series. What follows is Debra’s experience of turning an application into a business.
Q: Inventing MacProject is quite an accomplishment. What problem were you trying to solve when you started?
The initial motivation was to manage software projects. I was working in the lab at Hewlett-Packard, and my manager at the time was drawing large Pert charts by hand and taping them to the walls of our cubicles. But having a project with multiple people and complex dependencies between the components is a universal problem which applies to building nuclear reactors, bridges or software systems.
At HP , I was the user interface developer for a PC-based CAD system, one of a number of similar projects at HP at the time. My job was to build a graphical layout program for printed circuit boards.
When I saw a pre-release of Apple’s Lisa computer, I realized I had the components in place for a business. I had the problem to solve, the system to build it on, and the skills to build a WYSIWYG application with broad appeal. I proposed my product to Trip Hawkins, a member of the Lisa marketing team at Apple. Trip immediately understood the concept and we worked out a contract to develop the first implementation of my idea, LisaProject. This contract gave me the courage to quit my job at HP and work full time on pursuing my dream. By the time the Mac was released I was on my second revision, MacProject.
Q: What aspects of the process were a surprise?
The process was more challenging and exciting than I anticipated. Within the space of a couple of years, I started my first business (SoloSoft), negotiated my first contract, became the first Independent Software Vendor (ISV) for the Lisa, and shipped the first ISV application on the Mac. On the technical side, I wrote the first version of LisaProject in 6 months and released it to a community of users which grew to number 5,000 within 2 years. While I was supporting LisaProject, I wrote a new version, MacProject, for the yet-to-be released Macintosh.
Q: What alternatives existed when you started? What differentiated MacProject from your competitors?
First of all, Microsoft Project did not exist when I wrote either LisaProject or MacProject. The competitors at the time were complex non-graphical products. It took a specialist to understand how to apply them and consultants to help you figure out the data. I wanted to build something clean and elegant that anyone could understand and apply, even on a very small scale. Whether you are building the space shuttle or planning an event with friends, you are working with a group of people on a schedule and you need a vehicle with which you can communicate and monitor your plan.
Q: Today are many project management tools on the market: do you use any of them? What do you see as some of the aspects of project management still to be addressed by software?
I’m not a project management specialist today, but I have been asked for recommendations about what to purchase. More often I get asked the question, where can I get something like MacProject today? I think the tool that you pick should be easy to use and quickly be of value to you. Many solutions are more complex than they need to be. Also, project management is not done by one person working alone, so the social networking of the Web should revolutionize the way we approach the problem. I haven’t seen anything which I really like, so I’m thinking about getting back into the business. Stay tuned.
Q: It is very challenging to be both the inventor and the entrepreneur. Can you talk about your experience at SoloSoft and how you successfully structured the Apple deal? At the time, what were SoloSoft’s biggest challenges in negotiating the Apple deal?
My first contract with Apple for the Lisa was enough to pay the bills and keep the lights on. More importantly, building LisaProject gave me experience and relationships with people in Apple. I was in the right place at the right time when the Macintosh was developed. It can take years of work to make your investment pay off and many people get discouraged too early.
Another problem occurs if you ask for too much at the beginning. Until you demonstrate both your ability to deliver and the viability of your idea, you don’t have much leverage. The terms of the customer’s proposal for the first contract will reflect this. when They often feel that their work is worth more than it really is, and they walk away from a deal. I have also seen things fall apart when people get too fussy about every line on the contract.
You need to be flexible and realistic. In exchange, you can be firm about the issues which are important to you. One of the key terms of my contracts with Apple was that I would retain ownership of the software.
I also found that I could profit from being underestimated by others.
I requested a number of significant bonus incentives for meeting scheduled deadlines. Since software schedules are routinely slipped as additional features are added or the scope of the project changes, no one believes you when you say you will deliver something on time.
They will happily add terms in the contract which pay more for meeting delivery dates. And I happily collected on every one of my bonus payments. Of course, the customer also won, because having the new features earlier increased sales.
Once MacProject became a big success, there was pressure to restructure my agreement. Since I was making significant money, Apple wanted to reduce the royalty rate. Another consequence of success was that as the user base expanded, the list of desired features grew rapidly. I rejected many of these feature requests to maintain the elegance of the user interface. Nevertheless, the list of good ideas for new features eventually exceeded my ability to write the code. Tension developed between SoloSoft and Apple over this issue. I considered scaling up SoloSoft’s development team by hiring its first employee. Apple wanted to control the development by bringing it in-house. Apple offered to buy out the royalty stream. Any successful contract has to keep working for all the stakeholders. I was torn between my ambitions to grow SoloSoft into a large business and the demands of my growing family. I ultimately decided to sell MacProject to Claris, Apple’s spinoff of its software business, and went into a period of professional semi-retirement.
Q: You have started a new firm: can you tell us a little about what you’re doing with Expert Software Consulting?
Expert Software Consulting builds web applications for various types of clients. I like being my own boss. I enjoy the challenges of running a business, and I hope that some of my ideas today will enable me to make a larger contribution in the future. Recently a group of Stanford students led by B.J. Fogg created Facebook applications and found out that they had an installed base of millions of users within weeks with applications like “Kiss Me” or “Hug Me.” The Web is a phenomenal playground, and things are changing all the time. It’s exciting and fun to be a part of, and I enjoy going to work every day.
March 14th, 2008
I re-read David Packard’s book “The HP Way” recently and was struck by the “Sonoma Meeting” section in Chapter 5: “From Partnership to Corporation”
Another significant event that occurred early in 1957 was the company’s first off-site meeting of senior managers. This was a two-day meeting that took place at the Sonoma Mission Inn, about 70 miles north of San Francisco. About twenty people attended.
Packard lists three reasons for the meeting:
- Get key managers together at least once a year to discuss policies and problems, to exchange views, and to make plans for the future.
- With 1200 people in the company, the founders could no longer personally manage all of the key issues. They still wanted to maintain a small company atmosphere.
- Get agreement on key objectives so that they would steer in a common direction. Allow everyone to comment and have a hand in developing them, with an eye to periodic revision.
They started with six but in 1966 they were revised into the following seven; reading them again I thought this would make a good default set for any technology startup:
- Profit. To recognize that profit is the best single measure of our contribution to society and the ultimate source of our corporate strength. We should attempt to achieve the maximum possible profit consistent with our other objectives.
- Customers. To strive for continual improvement in the quality, usefulness, and value of the products and services we offer our customers.
- Field of Interest. To concentrate our efforts, continually seeking new opportunities for growth but limiting our involvement to fields in which we have capability and can make a contribution.
- Growth. To emphasize growth as a measure of strength and a requirement for survival.
- Employees. To provide employment opportunities for HP people that include the opportunity to share in the company’s success, which they help make possible. To provide for them job security based on performance, and to provide the opportunity for personal satisfaction that comes from a sense of accomplishment in their work.
- Organization. To maintain an organizational environment that fosters individual motivation, initiative and creativity, and a wide latitude of freedom in working toward established objectives and goals.
- Citizenship. To meet the obligations of good citizenship by making contributions to the community and to the institutions in our society which generate the environment in which we operate.
Obviously the management team would have to decide how they were going to keep score in detail on each of these (#1 is fairly obvious but the others are a little more complex). For more background see the HP Memory Project and HP History Links at the HP Alumni site. It’s also interesting to compare the seven from 1966 with HP’s current corporate objectives which feel padded and much less action oriented.
February 20th, 2008
I recently I enjoyed a conversation with John Nash, co founder of the Color Vision Store. I met John at our Great Demos! workshop in October ‘07. While doing our due diligence on the workshop registrants, I came across John’s website. Although I am not color blind, I was drawn by his niche market objective. A Google search on “color blindness” will retrieve less than 200,000 hits. Seems like an opportunity waiting to unfold.
Q: Are you color blind? Is that what led you to develop the site?
Yes, I am colorblind. I developed the site with my brother Keith–who is also color blind–over a decade ago as a channel to sell an educational guide that he developed, called the Color Vision Guide. Our goal then was to provide easy to comprehend information on color blindness and create awareness about related issues.
My brother was also a bit of a color blind activist. He took a swipe at the City of Palo Alto when they debuted their color-coded downtown parking zone scheme using purple, blue, lime and coral. My brother said “You know what that does. Makes color blindness a crime.” He got Herb Caen, the San Francisco Chronicle’s famous columnist, to print that.
When the website first launched we just took orders by mail: for the first couple of years there was not a shopping cart built into the website. But once we figured out how to take credit cards and add cart features, the site started carrying clinical color vision tests and other screening instruments. Slowly but surely the tenor of the site was less about education and more about providing tools to the commercial sector designed to screen color blind people from jobs. I’ll be the first to admit I may not want a color blind person reading the color-coded strips on dialysis machine, but over time I think we drifted from our mission of awareness and community for those with color blindness. So after my brother decided to move on to do other things and my mother, who was taking our orders to the post office, became too elderly to keep up the day to day business, I opted to scale back and take us to our roots: return the Color Vision Guide to the forefront, license our original illustrations, and start a blog with a bent toward supporting those with color blindness, not excluding them.
Q: I’m not color blind, can you help me understand some of the challenges you face?
I have a red-green hereditary (genetic) photoreceptor disorder (color blindness of the red-green type), also known as deuteranopia or Daltonism. I fail the Ishihara tests every time I take them. The challenges I face with my impairment are, fortunately, not too severe. In my daily work, as a consultant in the social sector, I don’t have a great deal of issues that need to be resolved due to my color blindness. I work on the computer a great deal, and some interface designers make poor selections when it comes to color that are hard for me to distinguish. I cannot generally tell the difference between purple and blue, and many times I can’t distinguish green and tan even when they are right next to each other. They just look like two shades of green. I recently posted a couple of examples on my blog of instances where color choices made by Google and Apple do not impart information as intended by their designers for people who are color blind.
As a child I dreamt of being the pilot of Boeing 727 and was eventually told that people who are color blind can’t be pilots. However, there are many documented cases of color blind pilots now. The issue comes down to how the aspiring pilot is tested. Many pilots who are color blind fail the clinical printed tests, but pass the practical light test which is conducted while standing in an airfield and identifying lights shone from a control tower. So maybe it’s not too late for me–although I might aspire to pilot something else besides the 727 now.
Q: Your site offers some great resources to other links, informative articles, and products. Is your business model a combination of ads and e-commerce?
Yes–that’s a fair assessment. The color blindness business, such as there is one, tends to be a bit seasonal. We see a big uptake in orders for the Color Vision Guide around the time that schools are sponsoring their annual science fairs. Color blindness is a great science project topic for school children. In between the market swings on our Guide sales I would like it if people visited the blog, commented on the articles and, yes, clicked on few ads.
Q: We highly recommend that people introduce their offering into a niche, it seems like you found one. What are some of the challenges you face in promoting your website?
One challenge lies in trying to determine who our readership is. Since I’m trying to wear the white hat and appeal to those with color blindness and others who would like to know more about it, it’s not crystal clear to me how big that audience is. On the other hand, statistically one in eight of your male acquaintances is color blind in some fashion. In pure numbers, about 10.5 million men have the problem I have: cannot distinguish red from green, or cannot see red and green differently. So they’re out there. I just have to find out what they want to know or hear.
Q: What are some strategies or methods you have found useful?
I’ve been touching base with other bloggers in the color blind community. I’ve also been working with a talented writer who helps sift through the myriad of Google alerts I get on everything related to “color” and “colour” blindness.
Q: Are there any practical tools for website and interface designers? Which ones do you recommend?
There are several good tools out that help programmers with normal vision create interfaces that are truly accessible to all. I have listed quite a few on my blog, but two come to mind. I have a post about a tool by Cal Henderson as well as well as a tool called a color decoder for color blind users who want to identify the color they are looking at.
January 30th, 2008
Last week I had lunch with Mike Lanza, a serial entrepreneur, who I met at the SDForum Startup SIG in September ‘07. He gave a thought provoking presentation on his entrepreneurial career, bootstrapping a company, and working with VC’s, which I blogged about here: Mike Lanza: Starting Companies Without Venture Capital. I thought a more in depth personal analysis of his “Lessons Learned” would be a great addition to our Founders Story series.
Q: What are your thoughts about partners compared to going at it alone? Did you have co-founder(s) for any of your companies? If so, how did you find them?
I have seen several approaches to starting a company. Some founding teams are formed before they think of the idea. A group of really smart people join forces, brainstorm a bunch of ideas, pick one and then go. I think I am more of a visionary, so I like to think of the ideas first and then assemble the team. I believe the idea is the core of the business and that you need the idea to attract the right people.
I have built companies with and without partners. Once I come up with something, I start off by informing all my contacts about my idea and plans. Then I ask them to spread the word to see if anyone is interested in joining the team. At first, I always try to find partners, but if I can’t find partners I hire doers. In the early stages, its more about execution and follow through. If you have too many senior people on the project, nothing ever gets done because its all strategic.
Unless I happen to find the perfect partners, I like to hire more mature junior personnel rather than experienced veterans.
Q: For those looking to hire ambitious junior personnel, can you share any tips on recruiting, retaining, and managing them?
When you interview them, figure out whether they can take a particular project tomorrow and make a big impact right away, without a lot of supervision. These are the ideal first employees. I call them “heat-seeking missiles.”
As for retaining and managing them, people like this thrive if they are constantly given new challenges. Don’t give them challenges that are too big – give them things that are a bit outside of their comfort zone, and let them knock down success after success. If you’ve got the right person, you’ll find them growing tremendously in a very short time.
Q: After you figure out the idea, develop the team, and hire the necessary people, how do you start building a company?
Most important thing you can do is manage your time. In early market exploration, I believe most of your time is spent evaluating the market and incorporating customer feedback into your product development efforts in order to get a purchase decision. Reference customers are key. After you have identified a target market, figure out who in the market will serves as a reference to other potential prospects. Make sure your first reference customers are not too big. Big reference customers take a long time to close, beat you up on price, require additional services, and extra support. They will consume all your resources and you won’t even have the time to use them as a reference for new prospects. You don’t want a big brand name, otherwise you will get killed on the deal.
A good reference customer is usually a company that is roughly the same size as you. They will help you refine your product and your technology will play an important role in their success. For as much as you put in for them, you will get out in return. They will vouch for your offering and put a name behind the testimonial. Another strategy I use is what I call a “throw away customer.” This is a prospect whom you have a lot of bargaining power. Consider walking away from the deal early but come back later when you get a favorable price.
You need to realize that you’re not going to do a very good job with that customer initially, so you want someone who is a cutting edge enthusiast, familiar to you and understanding when you fail to deliver perfectly. There’s no away around the fact that you’ll learn a lot from servicing this first customer, so you don’t want to do this first project for the largest potential customer in your market.
Q: What was the hardest decision you had to make in any of your ventures?
At 1 View Networks I realized that a bubble was forming and it was a good time to get out of the business. Word got out that the company was going to be acquired. There was a group of employees that approached me and threatened to quit if they were not given more stock.
At the time I had a convertible note from investors that were pleasant to work with. I had a short window of time to issue them stock so that they could participate in the acquisition benefit. I was basically juggling a group of disgruntled employees, trying to sell a company, and do good for some investors who I wanted to do business with in the future.
I did not want the employees to quit because it would look bad to the acquiring company. However, the three that were threatening had all been there less than six months, so I felt that they had not even earn what they were asking. Ultimately, I gave in to the blackmail. It was one of the toughest decisions I’ve ever made, but it was the right one. Unfortunately, my most loyal employee resented me intensely for this. So, I got no love from anyone for this decision – the blackmailers just took the stock and ran, and the person closest to me ended up hating me. However, we closed the deal. Welcome to the loneliness of being a CEO…
Q: What were three things that worked from Just In Time Solutions that you implemented into 1View Network?
- Sell to big, fat customers that don’t have adequate internal resources but have big budgets. Then, go “crazy” to satisfy them, but bill for every minute you spend.
- In the sales discussions, tell them exactly what you think they need. Don’t give a “here are our capabilities – we can do whatever you want” presentation. Remember – you’re trying to build a company, not a one-off project, so you need to sell a product vision that works for your entire market.
- Always be true to your ideals, even in the most tiring of management situations.
Q: I am sure there are many problems, but if you could just pin point one thing you learned from Just In Time Solutions that you made sure to avoid in starting 1View Network, what would it be?
I would avoid raising venture capital as long as possible. Most of the time the founders get replaced. Also people associate raising capital as a form of success. I have seen founders raise capital and then set the speedometer on cruise control. People begin to spend money carelessly. If money is around, companies tend to start spending it and relax a bit, even if their largest challenges lie ahead of them.
Q: What are you up to now?
Right now, I am working on a project that is more of a cause than a business. Who knows, it might turn into a business, but I right now I am having fun and doing something that I have always wanted to do. I am developing an online community for parents who want their children to go outside and play, but are frustrated with the lack of opportunities in their particular neighborhoods. It’s called Playborhood.
Our goal is to reach out to people who seek better play-based communities and neighborhoods for their children. So many families now have structured play all the time and neighborhoods where they don’t feel safe letting their kids play outside unsupervised. We’re lucky to find the rare place where they can. So Playborhood aims to become a great community resource where parents can go to find the right neighborhood for them and engage others in that neighborhood in the process of creating a safe, inviting Playborhood.
January 29th, 2008
The founding team for a startup typically provides the basic intellectual capital, and frequently the initial seed capital. But a young team often has to rely on advisors for social capital, that is existing relationships based on mutual trust and prior shared success. These relationships act as points of departure for market exploration and social navigation. One early example in high technology is Fred Terman’s role in the formation and early success of Hewlett Packard. In “The Engineer Who Jump-Started Silicon Valley” a 1997 Business Week article by Joan O’C. Hamilton it’s clear that he provided the founders with considerable social capital:
Packard’s recollections complete the picture: “We built the first production model by Christmas, and I clearly recall having [the first oscillator production unit] sitting on the mantel above the fireplace,” he wrote in “The HP Way.” “There we took pictures of it and produced a two-page sales brochure that we sent to a list of about 25 potential customers provided by Fred Terman. We designated this first product the Model 200A because we thought the name would make us look like we’d been around for awhile.”
Social navigation, or the ability to navigate in a population and gain cues and guidance from individuals both directly and by their actions, is a key skill that founders must develop. As much as they want to focus on technology, finding prospects to validate that they are solving a real problem and that their solution is compelling is twice as important. Navigation requires that you know where you are, where you want to go, and how you want to get there. It may also involve experimentation and exploration of the market, and in many cases for a startup’s founders, one or more revisions to your destination.
Postscript: just so it’s a little clearer that a few of the names that Terman supplied became customers, here is another paragraph from same “Litton Answers the Call” section of the “Garage Becomes Workshop” chapter of the “The HP Way” the first excerpt above came from.
“We weren’t expecting much from our first mailing, but amazingly enough, in the first couple of weeks in January back came several orders…and some were accompanied by checks.”
January 25th, 2008
I interviewed Dave Stubenvoll late last November as a part of our Founder Story series. I first met him at the Streaming Media 2006 show and was immediately impressed by him. Sean invited him to be on a panel at Startup Epicenter on “Scaling Up Your Product Development” and Dave made some of points there that he expands on in this interview. What follows is an edited transcript with hyperlinks added to provide context and background for some of Dave’s remarks.
Q: You’ve been through 5 startups; can you compare and contrast your experiences between them?
Three of them were independent startups: GALT Technologies, Freeworks and WOWZA; two of them were intrapreneurship projects, that is new businesses within large companies. The two intrapreneurship projects were in different companies that looked at things very, very differently. The first one was when I was at Intuit leading the payroll business application set, and we knew we were absolutely starting a new line of business, no doubt about it. The second one was when I was at Adobe and it was a skunk works project: let’s see what we can do in this area.
As far as the startups, the first one, GALT Technologies, was a website for mutual fund information. We were venture-backed, but didn’t raise very much money at all. It took less than a million dollars in total. I was not actually a founder for this one. I was the third person in the firm and was lucky enough to get a very reasonable sized equity stake. I joined in 1993 and to tell you the truth, nobody really knew what the heck they were doing. This was during the early days of the web and we kind of just built something and stumbled into some good situations. We ended up selling the company to Intuit in 1995.
The first company that I founded was Freeworks, which did not work out so well. We raised significantly more money, but it was during the dotcom bubble, and the company ultimately folded when the bubble burst. We offered an ad-supported suite of free services targeted to individuals working in small businesses. We were trying to develop marketing collateral automation for small business employees.
And now, with WOWZA, the only commercially available alternative to Adobe’s Flash Media Server, we have not taken any venture money at all. We just did it ourselves and became profitable very, very quickly. In terms of comparing and contrasting the three experiences, I definitely kept the same sort of cost methodology and management philosophy
Q: Can you please elaborate on your cost methodology and management philosophy?
For example during Freeworks, we had a Business Week interview. The reporting crew came in, interviewed us, and wrote an article comparing us to a startup in San Francisco. Honestly the reporter came in and said, “Dave, I don’t want to offend you, but this place is a dump.” For our team, this was the nicest office any of us have ever had. It’s about understanding the value of the capital that you have or don’t have. And it’s about using your capital properly to get the best people and to invest in the right projects, for example a marketing vehicle or product feature set. With WOWZA we were able to read the market, react quickly, and reach profitability: as a result we did not need to raise money.
The management philosophy was really refined during Freeworks. It’s really about letting people make decisions. It’s not all about me, it’s not all about the other founders, it’s about everyone making the best decisions that they can to move it forward. Micro managing people becomes time consuming. You have to have faith and trust that you have surrounded yourself with the best people and just let them work.
Q: Your cost methodology and your management philosophy make a lot of sense. Besides raising money, what were some of the things you made sure to avoid in starting WOWZA?
One thing that we work darn hard to avoid is running out of runway, which is wrapped up in a number of other things. It’s about making sure that the company is going to be here for the long term and that we are not going to be dependent upon any specific event or any other single party.
Many people tell us constantly, “You know you are building this to sell.” Part of my response is, “if I was dependent upon the sale of this company to some single entity, I probably wouldn’t survive.” If their comments were true, I would be doing things to sell as opposed to doing things to make sure that the business is around next year and the year after, and the year after.”
At WOWZA, we’ve taken a much more pragmatic approach. It begins with, what do customers want? What do customers want today and what are they willing to pay for now? The number one job is making sure we have products people want to buy. Then layering on top of that, what do we think they are going to want to buy two years from now? How can we gauge where the market is going? The number two job is having a really good architecture for our products and aligning our product roadmap with our customers’ objectives. If we do this successfully, we can assume that the company is going to be around years from now.
For example, we are porting our Pro offering to the new Amazon virtualization servers, Amazon EC2. We are going to host our product there. As we are developing it for beta, which will be released shortly, we will run the standard evaluation questions. Can we do this? Should we do this? What are our options? Which one is more flexible? Which one is going to constrain what we can do in the future? Which one is going to let us do more in the future? Since it’s also about gauging the market, how good do we have to be to start the beta? It doesn’t have to be perfect for the beta, because we really don’t know what people want. But it does have to be good enough.
Q: It seems like you have had a clear sense of priorities with WOWZA?
With WOWZA our focus is on three key things: making sure that we will be around, making sure that we are meeting customer needs today, and staying flexible enough to meet customer needs for the future.
Q: I talk to many entrepreneurs who take a “if I build it they will come approach.” We met just over a year ago, before you had even launched. Can you talk about the amount of preparation, the strategies, and your implementation plan just to get ready for launch?
This time with WOWZA, launch was sort of a crazy thing for us. We basically started the company because we wanted to explore the possibilities for new applications that emerging media technologies enabled. Originally, we never actually expected to make money with what we built. Not really your typical way of starting a business.
My co-founder and I had prototyped a hybrid video blogging system. It was this unholy hybrid of WordPress, the Adobe Flash Communication Server, and then Flash Media Server. While messing around, we found out that Adobe Flash Communication Server, Flash Media Server was just not good enough. The product wasn’t stable enough, it was unreliable, it had lousy performance, it was ridiculously expensive, and it just was not good enough for us. So, we decided to write our own, and we put that into our product.
Prior to launch we did all the standard things like press releases, some advertising, having reference customers, having customers ready to buy on the launch date, and building up the market. However, we did not pour boatloads of money into the initial marketing. For two reasons: first we figured we would get it wrong at the start, and second we felt that this was a one off product. Our primary intention was to establish the company and build a reputation. We want to be the guys who know what they are doing, tell you the truth, and deliver a damn good product. The truth is with a one off product there are going to be problems, no doubt about it. We went ahead and launched in February 2007, got out there, got press in a couple of places, people came, and we made sales.
Our first sale started with a twenty minute phone conversation where I sold our first customer the ability to license our server for fifteen hundred dollars a month for a maximum of seventy-five connections. It was ridiculously expensive compared to where we are priced today. Our server was performing phenomenally well, and we exceeded our forty-five day sales goal, which was insane. So far it’s working out well, in October we revised our estimate for our 2007 revenue. That was six weeks or seven weeks ago, and then yesterday we reached that goal. It could be that I’m a really poor forecaster, but we are extraordinarily pleased.
We continue to evolve both our marketing and the product. Our focus is on three things; market development, product development, and organizational development. We are finding that if you take an evolutionary approach to organizing yourself to ensure survival, performing enough trials so that no one mistake can kill you, you get stronger.
Q: Can you elaborate on this evolutionary approach? What led you to start the company?
My founding partner, Charlie Good, and I enjoy working together. We were working with a venture capital firm, Kleiner Perkins, on some projects they were incubating and we decided to explore video blogging. We created the corporate shell so we wouldn’t put our personal assets at risk.
There is a great book, “The Origin and Evolution of New Business” by Amar Bhide. It’s a very dry academic tome that talks about how small businesses get to be big. He looked at the Inc 500 instead of the Fortune 500–which I think is a more accurate approach than looking at a big business–and wondered “how did it get that way?”
What Bhide found was that there are basically three sources of new businesses: large businesses creating new businesses, venture backed startups, and the crazy entrepreneur. What was surprising was that you get the greatest returns from the crazy entrepreneur hitting it big. Large businesses only invest in other businesses that are guaranteed to be large: think about Toyota investing billions to develop and introduce a new car. Venture capitalists invest millions in a startup but only if they believe their return is going to be large: they have to see a billion dollar market from the beginning. With so much money at stake they can’t take large risks.
When you look at the businesses created by entrepreneurs–which include Cisco, Intuit, and arguably Google–it wasn’t with the expectation of a large return but structured for survival. These entrepreneurs didn’t quit their day jobs. They took an evolutionary approach that spread a large risk over many small experiments. When Google started, Yahoo owned search. Who in their right mind would start a search company? I haven’t met the founders but they are certainly very smart and they created something that was interesting and ultimately compelling: when they made it available people were clamoring for it. They wouldn’t have received Venture Capital funding if that hadn’t happened, right? They were able to prove success on a shoestring just with their interest. Then they had to decide whether to build the company or finish their doctorates. That’s what success looks like: you can consider quitting your day job because your side project has taken off to the point where you can make that decision.
Q: So, do you compare what you are doing with WOWZA going up against Adobe’s Flash to what Google did to Yahoo?
Ha, that’s a good question. I’ll put it like this, if you asked Larry and Serge when they started writing the algorithm if they were going after Yahoo, they’d probably say no, we just think this is kind of interesting and I have no idea where it’s headed. We started out just to meet our own need. We created the server because we needed it to get our little video blogging application working.
Even today as WOWZA Media Systems, still a very small company, we are not trying to take on Adobe, just pursue opportunities as they present themselves. I don’t think it’s a valid to compare us to Google except that we started this venture doing things that we wanted to do, and found out that other people were interested in it. We were not and are not trying to take on Adobe. That said, we are able to fit into what many people want.
I believe this is a common thread for software startups. It’s pretty rare when someone sits back and says, “I’m going to create this new market.” OK, a few people say it, and it might make all the sense in the world, but most of the time it doesn’t actually happen. Look at Intuit’s QuickBooks business. It is a huge, phenomenal business. Do you know how it started? They had Quicken, a personal finance manager, and found out that many of their customers were actually using it for their own small businesses. So they designed a new product that’s focused on small business instead of just household checking. And the customers loved it. It’s about reacting flexibly when you get nudged by customers, keeping your eyes open to a new opportunity, and making sure that whatever you do is isn’t going to kill you.
I like this “Do Not Run Out of Runway” approach. However, I have also heard fail fast. How do you fail fast if you never run out of runway? How do you measure progress?
Our approach is fail fast and fix. It’s an evolutionary approach where you tolerate a lot of mistakes, but you make sure that none of them are fatal. The truth is, this methodology of infinite runway is really hard to do. Fundamentally it’s based upon not quitting your day job until you are certain you can cover your living expenses. It’s hard to do these things when you quit your day job. The team has to be able to invest time in the idea and not rely on outsiders to get it up and off the ground.
If you are a lone entrepreneur it’s better to team up: far, far, far better to team up than to do something alone. With two, you both can commit a certain amount of time to it, but keep your day job. Slowly this side project develops and you just keep plugging at it, plugging at it, plugging at it. Eventually, if you are reasonably smart, you’ll find something. Listen to the market, be aware of opportunities, and make sure nothing you do absolutely kills it. It’s hard to do. It takes a lot out of you, but it’s definitely possible.
Q: You mentioned how valuable it was to find partners and team up. How did you find your co-founders?
Well, the GALT guys found me. The two founders asked me to join, which was wonderful and worked out well. There were three of us there, and we sold the company to Intuit. Then Freeworks was founded by me and three other guys, two of whom were with me at GALT. The fourth person was part of the department that GALT merged with at Intuit. The four of us made a great team and had great chemistry. I still believe Freeworks had a chance, but bottom line is we ran out of runway. At GALT, I took a chance because I really didn’t know the founders well. I got lucky, but be careful because after six, eight, ten dinners with someone and you think you know them and you don’t; you just don’t.
By the time we started Freeworks, I knew these guys well. I knew them all for years, and that was a good thing. We were all very comfortable working together. People change over time and all that, but we had the type of relationship where we didn’t hold back, everyone was brutally honest with each other. We just got along well, we could yell and scream when we disagreed on something, and then go out to lunch and have a great time. We understood how each other worked; we understood that it was okay to be confrontational.
Now, with WOWZA, Charlie and I have known each other for several years. We met at Adobe and ended up working on a Marketing Collateral Automation project. He turned out to be a guy that I certainly trust. We are very similar in a lot of respects, but our skill sets are very different. So, we fit very well together as a team, and I think it’s vitally important that you don’t go through this alone. If you’ve got to start something, you need to get a buddy.
Q: WOWZA sounds like it’s starting to take off. What do you see as the significant challenges ahead?
Our product focus today is Flash centric; the WOWZA Pro is a Flash streaming server. When you mention Flash most people think of Adobe because they acquired Macromedia the inventor of Flash. We have a cordial relationship with Adobe, frankly because we are still way too small for them to worry about us. They need to pay attention to and react to Microsoft. But streaming media is becoming more and more important; it’s becoming a bigger industry, which raises the stakes. Adobe, Microsoft, and others continue to make significant investments in the space.
It’s hard to believe, but we were selected as the number three player in this space. The 2007 Streaming Media Magazine readers’ choice poll voted Adobe, Microsoft and WOWZA as the top three choices for streaming media servers. Behind us were Apple and Real, who are both much larger companies.
If you look at all four of the major players–Adobe, Microsoft, Apple, and Real–they all care more about other things than their streaming media server. They care about particular codes, particular clients, operating systems, and all of these other things. We are the only independent streaming media software company out there, and we think that that’s a significant opportunity as this market evolves. Our mantra as we enter 2008 is any code, any protocol, any device, any client. Going forward we plan to deliver the necessary components to wherever the customer needs to stream content, whether it’s the desktop, a mobile device, or the living room. We believe we are in a unique position to be able to provide that.
Q: It’s been quite a journey for you. What advice would you give to others, so that they can avoid any of the challenges you encountered in your experiences? Any words of wisdom, tips, gotchas?
I think the two biggest pieces of advice would be: (1) get a partner you can trust. (2) figure out how to get things rolling without quitting your day job. I know people don’t want to hear that second one, but it’s that infinite runway that is your absolute, absolute greatest strength. It allows you to fail fast and fix.
November 30th, 2007
We have all heard of brand names like Google, Cisco, Nike, Starbucks , and Lowe’s. Have you ever wondered how these companies got their names? You probably haven’t heard of Ansearch , N-TRON, InSport International, Caribou Coffee, and Handy Andy. To me Ansearch sounds more like a search engine than Google, N-TRON seems more like a network router than Cisco, InSport is closer to sports apparel than Nike, Caribou Coffee appears more relevant to coffee than Starbucks, and Handy Andy sounds more like home improvement than Lowe’s. We all know there is more involved in marketing than just names, but I wanted to learn how developing the right name can improve my marketing effectiveness. Today, I was able to sit down with Athol Foden, Founder of Brighter Naming, to pick his brain for naming insights. Athol has over 15 years of experience in helping clients name companies, products, services, and taglines. Please visit his website for great articles on name generators, characteristics of good names, and naming biases and influences.
In addition to this blog, Athol will be joining us next Friday, December 7th at the Bootstrappers Breakfast in Palo Alto. Come join us and engage in a round table discussion and ask Athol your own questions.
Q: How does a strong company name influence presence in the marketplace?
It allows you to stand out from the crowd, gain quick and clear customer mindshare, and shorten all your sales and marketing messages.
Q: What do you think is more important, a name or a logo?
In retail, a logo (or even more importantly a color scheme) are the most important when you are selling “off the shelf” via packaged goods. For items where the logo cannot be seen, for example fashion clothing, the name recognition is more important. In high tech, when selling via the internet or phone, the name is more important. In some cases, the icon (mini logo) may be also very important e.g. embedded in a website, cell phone, etc.
Q: In our experience we see startups rollout a product name which is different from the company name. We believe they should put all their weight behind one name instead of confusing people with multiple names. What are your thoughts about this strategy?
Most startups only have so many marketing dollars at their disposable, so it is often easier and cheaper to have one name to initially promote. However, if the company will have a number of product lines in the near future (under 18 months), then you need a naming architecture that plays off the company name, or you need separate product names.
Q: It seems like naming the business is an emotional step that most founders want to own, how do you convince people you can produce a better result?
Many smart founders waste many, many hours before they call for help. Very few have the talent, experience and knowledge to do it themselves (unless they will always be a small Mom and Pop). This is especially important for a business that will go nationwide soon. The legal costs and risks alone are enough to have many ask for help. However, they still own the process and final decisions. All we do is enable the creativity, provide names that are legally clear, and facilitate the decision making process.
Q: Your website says you can help a startup come up with a name in three weeks, how much of the founders time does this require for you to deliver?
For a small business, we only engage the founder in meetings and discussions for about 3-4 hours a week during the project. Of course, they spend time (usually after hours) thinking about the names, discussing with colleagues, etc. We want to make sure they are very comfortable with the final name.
Q: What are the legalities of finding a name?
To register a small sole proprietorship, it only has to be clear at your local county business office. They don’t check with anyone else, or to that matter really care. To incorporate, it only has to be clear in your state. They don’t check with anyone else, not even their own counties! All this is OK, as long as no one else in your same line of business has the same name… and you will never run into them doing business anywhere in the world.
So the real protection is to do a thorough nationwide search, starting with both registered and common law (unregistered) trademarks, which provide Federal protection. A simple Google search is not enough.
Q: Without having to hire an expert, what are three pieces of advice you would share with startups to figure out a good name?
- Don’t try to find one name. First list as many as you can… 100+ is a minimum starting point.
- Don’t be naive. People have been naming businesses for years… and 1000 trademarks are filed a day. You will probably have to be somehow unique or different. Think outside the dictionary.
- Remember, you are naming it, not describing it. First list all the major players in your industry and all competitors. Make sure you don’t end up sounding like them.
October 11th, 2007
I first met Rick Munden more than a decade ago when we were both managers attending an Electronic Design Process workshop. I ran into him last December at an SDForum Emerging Technologies SIG meeting and we renewed our acquaintance. I invited him to our Bootstrapper’s Breakfast since he was mulling his new company Epiphyte. This interview grew out of several conversations that we’ve had in the last year. They have been condensed, spell checked, and hyperlinked for your reading pleasure.
Q: You’ve been entrepreneurial since high school. Could you talk about your first company?
My first legal business was a newsstand in Chicago’s Hyde Park neighborhood in 1965 when I was 15. I started it with a friend, Bob Katzman. It was a third kid’s idea but he was not inclined to follow through on it.
I sold my half of the business to Bob after about 16 months (and I was old enough to get a technical job). He grew the newsstand into a chain of bookstores over the following 20 years. Bob has written books about the newsstand and Chicago in that era and blogs at Different Slants.
Q: What were some of the key things you’ve learned from that?
The two things I took away from the experience were a respect for my customers–they are the most important part of any business– and the realization that retailing is not intellectually stimulating for me.
Q: You’ve also been involved in semiconductors, system design, and CAD/CAE for a number of years. What were some of the more interesting problems you had to solve?
I managed design engineering environments from 1987 till 2006, first at TRW in Redondo Beach, CA, then at Acuson/Siemens Ultrasound in Mountain View. During that time, although I had to support everything from chips to systems, including mechanical and software. I was personally more focused on board and system level design and verification.
I found the heart of any CAE system to be the libraries. In a company designing anything but the simplest boards, the libraries must be architected and optimized for efficient data transfer across a variety of tools, often from different vendors. The libraries I designed contained schematic symbols, PCB footprints, electrical information, purchasing information, signal integrity models, functional simulation models, timing information, and traceability information.
Q: What tools or methodologies did you develop that you still use?
The most important thing developed was the simulation modeling methodology. Fortunately, I had some very smart people working with me and we were able to come up with a modeling practice that has needed only a couple of tweaks over the past 12 years. We came up with a coding style based on VHDL/VITAL that allowed us to model a wide range of digital components that we could find no other way to accurately model. VHDL/VITAL was not the first thing we tried but, looking back, I think it was a fortuitous choice.
Q: You also started the Free Model Foundry, can you talk about what led you to do that?
When I was a manager at TRW, one of the engineering problems we had was how to simulate a board in order to reduce or eliminate the number of prototype board spins. Board spins were expensive and consumed way too much schedule. The biggest obstacle to simulation was the lack of models of the parts we wanted to use.
This was in the early ’90s so every tool vendor had their own proprietary simulator and models created for one would not work on any other. I had been writing models for several years but every time we switched EDA vendors I had to start over again.
Then VHDL came out. At first there were compatibility problems and none of the big companies could make simulators that implemented the full language. Eventually, a number of startups succeeded and were soon bought by the major players. In response, Cadence opened up Verilog.
Cadence had Verilog-XL and another product called Veritime that was a static timing verifier that read Verilog models. We thought “wouldn’t it be great if we could write one model that could be used for both dynamic simulation and static timing verification?”
We tried writing some models of small ECL parts in Verilog but could not model all the functionality. We hired some professionals to do the job but they also failed. Then we tried to netlist one of our Cadence schematics to Verilog and found out how difficult that was. We managed to get one design through the process but it was a very bad experience.
About that time, the VHDL/VITAL standard was being tested. One of my colleagues, Russ Vreeland, investigated and suggested we try it. The results were great. We could model our ECL parts easily and Cadence’s VHDL netlister was much better than their Verilog netlister. The next step was to populate our library.
There are a lot of digital parts in the world and people keep designing new ones. TRW did not want to be in the modeling business and at that time, neither did the IC companies. We thought if we documented a successful modeling strategy and published the models we created for our own use, other engineers would join in. Sharing models would be much more efficient than everyone re-writing the same ones. I have been a long time fan of the Free Software Foundation so I suggested we do something along those same lines for simulation models.
In 1995 two other TRW engineers and I incorporated the Free Model Foundation. Because we were trying to solve a problem rather than create a business, we incorporated as a not-for-profit. It took a couple of years to get our tax status set by the IRS and the State of California. In the process, our name was changed to Free Model Foundry.
For a couple of years, we wrote models at TRW and published them. But rather than the ground swell of models we expected to receive from other engineers, we started getting calls from IC companies asking if they could outsource their modeling to us.
It took a while to find the best resources for contract modeling but eventually we did and now model outsourcing has become FMF’s business.
Q: What have you learned about outsourcing? Any guidelines for what kinds of project should be outsourced and what shouldn’t?
I have seen many outsourcing projects go well and a few turn into complete disasters. Differences have been in project scope and the definition of the project deliverables. In general, small, well defined projects are more likely to be successfully outsourced than large poorly defined ones. Communications also plays a roll. The bigger the project, the more important good communications become and the more often it must take place.
I recommend a book titled “Global Software Development” by Dale Walter Karolak and published by the IEEE Computer Society. It covers all the basics in 158 pages.
Q: You are involved in some EDA Open Source efforts. Can you talk about any that you find exciting?
Other than FMF, my involvement with other Open Source EDA efforts is limited to cheerleader and occasionally facilitator. I host a monthly dinner which is attended by people interested in OSEDA.
Q: How would you compare the impact of Open Source vs. Outsourcing on Electronic Design and EDA?
EDA users are a small community. This makes open source less viable for EDA tools than in other areas such operating systems. There are only a few large open source EDA projects going on. I think all of them consist of a single person doing more than 90% of the work and a number of less committed people giving feedback. Smaller projects, such as a Verilog mode for Emacs, work fine.
Projects that are easily outsourced are often also viable as open source projects if they benefit a large enough community. The two examples that come to mind are FMF and OpenCores. These are organized quite differently but they have similar benefits to the engineering community.
Q: For your latest company, Epiphyte, can you talk a little bit about your plans for 2008?
The new company is Epiphyte LLC. It is a platform for exploring various business opportunities. The expectation is that we will try many different things and fail (cheaply) at most of them. The stated purpose of Epiphyte LLC. is for the “rapid exploitation of emerging opportunities”. This roughly translates to “we don’t know what we’re going to do but, we have a lot of ideas”. Among the more likely opportunities are:
- Provide IT support for startups, small businesses and non-profits. We serve organizations that require less than one FTE.
- Provide outsourcing project management for small HW/SW projects. We advise clients on the suitability of the project, help finalize the specifications, find and contract with the performing engineers or organization, manage the communications between the customer and the performer. The trick is to know what can and cannot be successfully outsourced, how to specify the work, and manage the customer expectation. Of course, it also helps to know competent organizations that can do the work.
- Provide contractor management services to companies that desire to keep existing contractors beyond the one year limit HR departments set.
Q: Epiphyte is also supporting “Venture Coding.” What is this and why you are offering it?
We have created a new process to assist start up companies in getting off of the ground that we call “Venture Coding.” Early start up companies often face the dual problems of limited starting funds and the limited engagement (and interest) of short term developers. Venture Coding was conceived to solve both of these problems.
In exchange for equity in a start up, Epiphyte will provide software development resources. This allows a company to preserve precious starting capital and to ensure the continued availability of developer commitment to the success of the start up.s
September 30th, 2007
Bob Parsons of GoDaddy blogged his “16 Rules for Success in Business (and Life in General)” in July of 2006. A question he received at a 2004 speaking event–”What advice do you have for someone who is just starting a business?”–kicked off an effort by the serial entrepreneur to codify the principles he was living by. I have selected what I think are the best half dozen (the full list is absolutely worth reading), preserved Parson’s numbering and lightly edited his text.
2. Never give up. Almost nothing works the first time it’s attempted. Just because what you’re doing does not seem to be working, doesn’t mean it won’t work. It just means that it might not work the way you’re doing it. If it was easy, everyone would be doing it, and you wouldn’t have an opportunity.
3. When you’re ready to quit, you’re closer than you think. There’s an old Chinese saying that I just love, and I believe it is so true. It goes like this: “The temptation to quit will be greatest just before you are about to succeed.“
These two echo famous advice from Winston Churchill and Eric Hoffer. First from Winston Churchill’s speech at Harrow School on October 29, 1941:
But we must learn to be equally good at what is short and sharp and what is long and tough. It is generally said that the British are often better at the last. [...]
You cannot tell from appearances how things will go. Sometimes imagination makes things out far worse than they are; yet without imagination not much can be done. Those people who are imaginative see many more dangers than perhaps exist; certainly many more than will happen; but then they must also pray to be given that extra courage to carry this far-reaching imagination. [...]
“Never give in. Never give in. Never, never, never, never–in nothing, great or small, large or petty–never give in, except to convictions of honor and good sense. Never yield to force. Never yield to the apparently overwhelming might of the enemy.”
And Eric Hoffer in “Reflections on the Human Condition” (aphorism 157) on the temptation to quit:
“Our achievements speak for themselves. What we have to keep track of are our failures, discouragements, and doubts. We tend to forget the past difficulties, the many false starts, and the painful groping. We see our past achievements as the end result of a clean forward thrust, and our present difficulties as signs of decline and decay.”
Parson’s suggests another way to prevent being defeated by your own fears of “undefined consequences.”
4. Quantify what the worst thing could be, with regard to whatever worries you. Very seldom will the worst consequence be anywhere near as bad as a cloud of “undefined consequences.”
This is also the antidote to mindlessly continuing the same course of action, I suggested a similar approach in my review of Seth Godin’s book “The Dip” Save Your Money
The key point is to decide what failure looks like before you start (and unexpected success, which for an entrepreneur signals that a product deserves more investment, potentially even third party investment in addition to re-directed internal resources) so that you know when to quit.
The following are a matched pair as well.
7. Never stop improving. Never stop doing something new. The moment you stop improving your organization, it starts to die. Make it your goal to be better each and every day, in some small way. Remember the Japanese concept of Kaizen. Small daily improvements eventually result in huge advantages.
9. Measure everything of significance. I swear this is true. Anything that is measured and watched, improves.
One of the challenges is to measure the things you have under your control. So while it’s tempting to measure just revenue it’s more useful to include the precursors that you have more control over: sales calls, demos, benchmarks, ads run, forum postings, conference talks, proposals generated. The most important thing for a startup team to measure is how time is spent. Time, much much more than money, is the lifeblood of a startup. Whatever your stated objectives or focus is, make sure that you measure how you spend your time to ensure that you are aligning your efforts with your desired results. If you haven’t blocked out time on the calendar in the next two to three weeks it’s not a priority.
8. Be quick to decide. Remember what General George S. Patton said: “A good plan violently executed today is far and away better than a perfect plan tomorrow.”
Quick decisions are much easier in the context of well thought out strategies. This is clearly one advantage that startups should strive to maintain over their larger competitors. If you dither as a team and concede this advantage you have to be very very good. One key is to discern whether a new development represents a real change in your state of information and really requires a response. It’s probably as important to base decisions on what’s not likely to change as to chase new and probably evanescent developments in your market. Also, one your decide you have to act, and to get your team to act in concert.
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