“Less is More.” Robert Browning
(often attributed to Luwdig Mies van der Rohe)

“Less is Often More.” Christoph Martin Wieland

I see so many blog posts lately about how to do more with less. I get announcements for events on how to do more with less. It’s always seems like a good idea.

I don’t think it’s possible in a downturn if you have already been paying attention to your personal and team productivity.

Startups survive because they can live on the scraps of a market (a niche) that larger competitors ignore or would be unable to pursue profitably. This is doing less with less.

The trick is to minimize the amount of wasted effort. The challenge is to launch new initiatives and projects that build on existing relationships, knowledge, and successes. I was not a huge fan of dogster as a business because I had felt that the founders had been fundamentally unserious. But I was extremely impressed by a post on their blog “10 Tips for Building a Profitable Business.” Some key points:

1. If being a business person is not your goal find a business partner immediately. Without someone on the team that relishes sourcing customers, closing revenue deals, perfecting sales messages, it will always be an afterthought.

I have seen it happen too many times that a technical team believes that they can invent their way out of a problem. If you have a customer you can be extremely inventive. But if you don’t have customer interest it’s difficult. Or it’s not yet the right time to give consideration to the business model. You can have a sequence of models you may want to try, but I think you have to have a plan for how you will make a profit before you found a firm.

2. Consult anyone you know that has run a earnings-based business (VC funded companies are rarely helpful here). The concerns of a restauranteur, law firm, or even landscapers are entirely applicable when it comes to long-term strategies for profitibility. Anyone running a business for years will know volumes about hiring, cashflow, and compensation.

I think is overly broad, in particular software and Internet companies have a very different physics from manufacturing and retail businesses but have a lot in common with service businesses. But it always helps to compare notes on the nuts and bolts of running an earnings based business. This is one of the advantages of Bootstrappers Breakfasts as well you have a chance kibitz with other entrepreneurs who are focused on organic business growth based on customer revenue (vs. how to raise (another) investment round).

7. Don’t lie to yourself. We find a lot of entrepreneurs practice their elevator and investor pitches for so long they believe their rosy sounding forecasts are actually going to happen. The only thing you know is what you’ve proven. Everything else are items that still need to be proven or listed as false starts. While it’s important to strive for the big potential, it’s critical you protect yourself against the much more likely realities.

This is extremely difficult. Entrepreneurs are naturally optimistic. Russell Ackoff’s “decision record” methodology is a great way to calibrate you and your team’s ability to plan and forecast. When you make a decision have everyone write down what they believe the likely outcome will be in what time frame. Collect what they have written so that there is a record. Check back every week, month, or quarter depending upon the scope of the decision. When you compare what actually happened with your prediction it allows you to get better at appreciating the likely impact of decisions that don’t have fast feedback.
One of the real risks of “doing more with less” is that you are tempted to try new things–many new things–as the one roll of the dice that will solve this month’s problems (or this quarter’s or this years). I have seen a number of teams succumb to a plan based on an untried method or technology and embrace it by “testing the depth with both feet.”

Another variant of doing more with less is taking advice from venture capitalists about how to stretch your funding instead of raising another round. I blogged about this in “Save $189 On Your Next Breakfast”

When you are invited to a roundtable on “How to Manage the Downturn” that’s held at the Stanford Park Hotel in Menlo Park and put on by folks who until recently were focused on “get big fast” you have to wonder. It’s unusual to have to spend $189 to get advice from a VC in a crowded room.
That same $189 will pay for more than a year of breakfasts at the restaurants where we meet, and you can compare notes with other entrepreneurs who understood how to manage their cashflow before it was trendy.

One of the key pieces of advice John Doerr is reported to have offered at the event was

“Renegotiate any contracts that you can. Everything is negotiable.”

If this means that you are no longer viewed as trustworthy the money you save may not amount to much. When everyone is hurting I would be very careful about the contracts you commit to, whether written or verbal, but I would be even more cautious about breaking your word. Goodwill and reputation are very hard to recover once lost. And people don’t tell you when they stop trusting you, especially if it’s based on the way you are treating someone else or another firm.

Doing less with less. That’s our plan for 2009-10. Kill the initiatives that aren’t working, experiment cautiously, and be as careful of our social capital as our fiscal capital.

Law 1: Independence is the best hedge against a downturn.
Law 2: When times get tougher, quality counts.
Law 3: Free to be you and me? We’ve got to be you and me.
Law 4: You’re on the line. Where else would you want to be?
Law 5: Up isn’t the only direction.
Law 6: Bigger isn’t better. Better is better.
Law 7: Forget survival of the fittest. Think Golden Rule.

The three that I find most useful as guides are the importance of quality in tough times, that better is better (and sometimes different is better),  and that it’s really about the Golden Rule. We are all part of interlocking partially overlapping groups, networks and communities. We can really only prosper if other folks in our group/network/community also prosper. Not that there isn’t competition, and fierce competition in a downturn, but few other firms are your direct competitor, and many can be partners of varying levels of engagement.

• Model your relationship after the Save-the-Children Sponsor Program
  • Pictures
  • Thank you Letters
• Be proactive with Thanks
• Communicate on Progress
• Keep Them in the Loop
• Manage their Reputation
• Deliver for them
• Remember
  • they are sponsoring you
  • reputations are hard to build and easy to dent
  • you are creating “customers in common”
• Be clear on service demarcation (small overlaps are better than gaps)

“We started with two empty hands.” Icelandic expression

It’s hard to believe the frugal and hardworking Icelanders have gone bankrupt. I re-read Njal’s Saga every few years and find new nuggets each time. In Letter from Iceland, Robert Jackson reported November 14, 2008 in the Financial Times on the complete meltown of Iceland’s financial system.

There is no daytime TV in Iceland. Parents are at work and children at school, so the test card, that feature of a bygone age, is the only thing aired. For the transmitters to be switched on in mid-afternoon and a sombre-looking Geir Haarde, the prime minister, to appear behind a desk, a national flag at his side, it had to be serious – and it was. The country was on the verge of bankruptcy; the government was taking control of the banks and was going to assume far-reaching powers to secure the safety of the nation and its savers.

“Fellow countrymen … If there was ever a time when the Icelandic nation needed to stand together and show fortitude in the face of adversity, then this is the moment. I urge you all to guard that which is most important in the life of every one of us, to protect those values which will survive the storm now beginning. I urge families to talk together and not to allow anxiety to get the upper hand, even though the outlook is grim for many. We need to explain to our children that the world is not on the edge of a precipice, and we all need to find an inner courage to look to the future … Thus with Icelandic optimism, fortitude and solidarity as weapons, we will ride out the storm.

“God bless Iceland.”

Icelanders have seen their economy swell and shrink from time to time over the centuries, and always handled it calmly. Perhaps their heritage in fishing and agriculture enabled them to meet good years and bad with equanimity. Now they must cope equally well with an attack of economic bulimia. To understand what makes this crisis – kreppa, as it is known here – so unlike any other, a little history is needed.

For Icelanders, the golden years were the early years, shortly after the land was settled in the ninth century. The Viking tradition, the Althing – the legislative assembly dating to 930 – and the literary canon of Sagas and Eddas are the nation’s cultural bedrock. But after that, Iceland almost disappears from the history books. While the agricultural revolution, the Renaissance, the industrial revolution came and went, while the fine cities of Europe were being built, while artists from Michelangelo to Mozart were pouring forth their creations, while the great inventions and discoveries were being invented and discovered, Icelanders were hunkering down in their turf houses, meeting the hardest challenge of all – survival.

They survived plague, famine, earthquakes and volcanoes. There were times when some even considered abandoning the island. But they stayed on. They stayed and survived. Icelanders will tell you that only the fittest survived, but that is only half the story, because survival requires another key attribute: stubbornness. And Icelanders have it in spades. It is a national trait, and they view it not as a weakness but as a virtue. It comes from experiencing hardship and enduring it. It means finding satisfaction in a simple task done well and sticking to it; finding comfort and solace in family and kinship and being bound by those familial bonds and duties. And perhaps most important of all, it means believing in the independence of the individual as part of the fabric of nationhood, and fighting for that independence. Put simply, the country has values.

And this is what sets this catastrophe apart from the earthquakes and plagues of former years. This is a man-made disaster and worse still, one made by a small group of Icelanders who set off to conquer the financial world, only to return defeated and humiliated. The country is on the verge of bankruptcy and, even more important for those of Viking stock, its international reputation is in tatters. It hurts.

At a key point in Njal’s Saga has Njal observes “With law, the land shall be built; without law, the land shall be laid waste.” I am afraid that the next decade will sorely test Iceland.

When you are very angry, think about how momentary a man’s life is.
Marcus Aurelius

I worked in the router software marketing group at Cisco in the early 90’s. I had left engineering and taken up residence in the marketing department. I was playing asteroid to a number of dinosaur protocols: we had realized that it wasn’t about supporting as many different protocols as possible (PUP, Chaosnet, Arcnet come to mind as examples) but to be really good at supporting IP. At one point I sent out an e-mail with the subject line “The following protocols are ‘on the roof‘.”

We had male admin named Ken. Cisco was a rapidly growing company then, with the stock doubling every year, and the culture was tolerant of a high level of direct conflict, what we would refer to as “a full and frank exchange of views.” Ken maintained a small but durable force field of calm in the midst of the frenzy.

I made him a sign for his cubicle wall (clearly I didn’t have enough to do):

“Boy Scout in Residence: Odd Jobs With An Even Temper”

He was always prepared and never rattled. He came from a family of four boys raised by a single mother. He told me a story of the time that his mother had saved up and bought a couple of gallons of yellow paint to re-decorate the kitchen. The boys woke up early and decided to paint her Volkswagen bus with the latex paint. He said “she went right past anger to tears. She was so angry and then she just started to cry. It took a while to get most of the paint off the windshield and windows, the rest of the car stayed more or less yellow.”

Ken passed away a few years later. It was a sad death for so young a man. I am not sure how he maintained his calm, perhaps it was such a huge opportunity for him compared to where he started that he was just grateful to be there. Or he may have been blessed with equanimity.
I think every startup above a certain size needs someone who can do “odd jobs” with an even temper. Especially as things get tougher in Silicon Valley, don’t underestimate the value of small kindnesses, a sense of humor, and cultivating calmness.

Asking for references is something I’ve never felt especially comfortable with (gasp - what if they say no!) but can be crucial in getting your foot in the door with a new client. You’ve done a good job categorizing the types of references and describing how one might go about including the possibility of a reference in an initial contract. It seems like most of the above would work for product companies, but would be more difficult for service companies. Any thoughts on that?
Thanks Sean, JL

I wouldn’t start by asking for a reference, I would ask for feedback on the quality of your services and the business results that you enabled. If it’s positive you then have the basis for asking for a reference. If it’s negative then you have a chance to remedy and ask after they are satisfied.
We do most of our work with early stage software firms. They often have to wrap their technology in a thick protective blanket of services to protect their customers from jagged cuts by the rough edges of tomorrow. So to their early customers a young software firm can look as much like a consulting company as a technology company.

One of the key concerns that early customers have about a new company’s offering is not whether it works–they know “nothing new ever works” from Secrets of Consulting

The first line of defense is accepting that the new system will fail, possibly in several ways. When I find myself thinking, “I must have this change because I can’t afford failures,” then I’m in big trouble. If I can’t afford some failures, a new system won’t help. And neither will an old one.

Nothing new ever works, but there’s always hope that this time will be different.

What’s harder for them to assess is the level of commitment to persevere through the normal challenges of new technology introduction so that they don’t get a dent in their career. One of the ways that they make that assessment is your past performance and the best way to substantiate that is through customer references and testimonials.
I think that the suggestions I made yesterday would be appropriate for consulting to a large firm or a public firm. It’s very reasonable to address up front how you can talk about the engagement and ask them up front for an honest quote, endorsement, testimonial, or joint technical paper as an outcome. Certainly asking for a LinkedIn endorsement after a long engagement is very reasonable.

One other thing to consider is to have another member of your firm do a periodic ‘quality check’ on how the engagement is progressing, certainly at key milestones or deliverables. One reason to use someone else is that sometimes a customer may be more candid with a third party than they will with you directly (it’s also more credible when another member of your firm has a discussion about what is going well and less well as it implies a corporate commitment to customer satisfaction even if there are aspect of your performance that they are not happy with).

We will also do these “customer view” exercises when we are helping a new client build or verify a positioning. We not only interview customers but as many “near misses” or prospects that proceeded some way forward in the sales process and then dropped out as we can. We have uncovered examples of “reference customers” who were unhappy (and shouldn’t have been used as a reference until their issues had been addressed) as well as novel uses for a product, different perspectives on how to talk about a product and what the true benefits were.

I wrote about some aspects of this about a year ago in “Best Feedback From Early Customers is a Story” and built on Peter Cohan’s formulation of four categories of customer success story (with the applicability to consulting engagements in parentheses).

• Vision: what were their reasons when they gave you the purchase order (or statement of work).
• Initial Implementation (perhaps first or second milestone in a consulting engagement) what are the initial benefits and problems they observed.
• Consumed: what actually got used (what is the impact of your work on the overall project as it progresses)
• Evolved: how did they ultimately use the solution (when they look back in a final project after action or they start the planning or kickoff  for the next project, how do they plan to use your services).

When you consider the introduction of a new methodology or a new project that is early in your support of a new technology, the reference that a customer can give you is often what will tip the balance for future work: both with that same customer and with other prospects with similar challenges.

An internal project plan that addresses not only how to manage the delivery of quality consulting services but their substantiation by your customer is therefore an important component of your long term business success.

The current economic downturn will only exacerbate technology firms’ risk aversion. This will increase the need for  references to complement your credentials and technical competence as demonstrated by technical papers and professional presentations.

I advise entrepreneurs to secure a referenceability clause when entering into beta agreements with customers, and perhaps refrain from entering into a beta agreement if the customer is unwilling to serve as a repeat reference with investors or prospects.

I have had three conversations in the last two weeks about the fact that there are many levels of reference, so I have put the following list together to document my perspective. It starts with an agreement with an individual (potentially at a company that refuses to allow any mention of their use of your product) and work up to a full endorsement with a logo.

• Basic: Your customer agrees to take calls from new prospects. We normally specify a maximum rate (e.g. one a month, three per quarter) as this forces us to prioritize and not waste folks’ time on low probability events. You may mention their name, title, and company verbally and share contact info verbally or in an e-mail to a serious prospect.
• NDA only: You can use name, title, and company on a slide that’s part of a presentation that’s delivered under non-disclosure.
• LinkedIn: for service firms you can ask for a reference on LinkedIn.
• Web Release: You can use name, title, and company on your website with a testimonial statement.
• Press Release: You can issue a press release with an agreed upon quote or set of quotes.
• Other (Public) Document: e.g. a case study, white paper, joint paper for a technical conference. Consider other ways that a happy customer can support you and help to evangelize your shared success. These documents normally sidestep an highly territorial PR or corporate identity or branding group who will pay more attention to what’s being messaged directly to media and analysts.
• Joint Press Release: You and the customer issue a joint press release. This is a very big deal with a public company and can be difficult for an early stage firm to secure. We have helped clients do this but you need to start this negotiation as a part of the purchase as Steve Bengston advises above and be prepared to make concessions on price and other terms.
• Logo: Using a customer’s corporate logo is normally involves more effort than securing an endorsement or testimonial from an individual employee. It carries with it a stronger level of endorsement. It may be NDA only, or agreed to on a case by case basis for a particular web page or collateral piece. This is a very strong endorsement that we don’t normally try and negotiate as part of an initial purchase, although it’s very appropriate for other kinds of joint ventures and partnering activities.

You should start discussing the form of a reference as soon as it becomes likely that you are involved in a serious evaluation. One way to approach this issue indirectly is to ask how they supported or acted as a reference for other suppliers/partners. With a large company you may want to pursue a two track negotiation model where you at least secure a private agreement from your direct customer to act as a reference and answer some number of calls and e-mails. Normally your customers will want you to be successful: they don’t want to pay for all of your development efforts but see them spread across other customers. If your prospect has never acted as a reference for a vendor/supplier/partner at least at a phone call or e-mail level or is unwilling to do so it may be wise to invest effort elsewhere: if you can’t substantiate your success it gets hard to talk about it.

We never ask for a positive reference as a part of a negotiation, only an accurate one: the prospect will more readily agree to tell the truth than shill for you and it’s up to you to convince them with your performance and results that your product is worth bragging about to strangers.

After the fact we try and encourage the customer to be as positive as they feel, but in their own words. We do this by interviewing them and ask them for their perspective on a client’s performance and results delivered. This can sometimes be negative, in which case the issues have to be addressed directly and forthrightly to the customer’s satisfaction. There can be a temptation to “put words in the customer’s mouth” whereby they regurgitate your preconceived advantages. We have come into the middle of several situations where this didn’t end well: when the customer was called by a prospect they offered their real perspective, not the press release phrasing. This created a serious perception mismatch that stalled or killed the sale.

“We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm.”  Winston Churchill

A thank you to all of the men and women in our armed forces who make this Silicon Valley oasis of rationality and innovation possible.

Pippin: It’s so quiet.
Gandalf: It’s the deep breath before the plunge.
Pippin: I don’t want to be in a battle. But waiting on the edge of one I can’t escape is even worse.
From the movie “Lord of the Rings: Return of the King”

I worked with a sales manager once, years ago, who was unflappable. We had a meeting with a customer who was irate and I was not looking forward to the meeting. I asked him how he stayed calm. He said “I don’t think you know this about me: I flew fighter combat missions in Vietnam. I understand what trouble looks like and how important it is to stay in the moment and not worry about what might happen.”

“There’s no such thing as a crowded battlefield. Battlefields are lonely places.” - Lt Gen Alfred M. Gray

I will close with a Veterans Day post my brother wrote in 2005, it’s as true now as it was then.

Today is Veterans Day, the day we honor those who have served in the military and lived. Memorial Day is the day we honor those who died while serving in the military. While that seems like a big difference, the reality is that chance plays a huge role in which soldiers live and which soldiers die. So to all you veterans out there, thanks for the willingness to put your life on the line for all the things I hold dear.

It will be this Wednesday November 12, 4-6pm in the Fir Ballroom. It’s listed in the ICCAD program as an additional meeting: EDA Bloggers’ Birds-of-a-Feather

If you are interested in learning more about blogging or how it’s affecting the evolution of the EDA industry, please attend and lend your ears and your perspective. There will be plenty of time for a serious conversation with a number of bloggers from different points on the EDA compass–users, vendors, journalists, consultants…

Please contact me if you are interested in attending and want to put some questions or topics on the list for the open discussion forum.

Purpose

1. Promote blogging in EDA / ASIC Design Industry
2. Allow bloggers to meet and get to know one another in a community of practice setting.
3. Educate interested parties, readers and others interested in blogging.

Agenda

1. Opening remarks Juan-Antonio Carballo (our sponsor for the event at ICCAD)
2. One Minute intro by each attendee: Name, Company/Affiliation, Blog; Can Suggest Issues or Discussion Topics.
3. Three minute Lightning Talks
4. Open Discussion

Confirmed presenters (in alphabetical order by last name)

• Karen Bartleson http://synopsysoc.org/thestandardsgame/
• John Blyler http://www.chipdesignmag.com/blyler/
• John Busco http://jab-semi.blogspot.com/
• Mike Demler http://synopsysoc.org/analoginsights/
• Grant Martin http://www.chipdesignmag.com/martins/
• Rick Munden http://blog.freemodelfoundry.com/
• Sean Murphy http://www.skmurphy.com/blog/
• Warren Savage http://www.design-reuse.com/blogs/oncores

Cost: Free (since this a related event at ICCAD , it will not require ICCAD registration to attend).

There is a mailing list for EDA bloggers at http://tech.groups.yahoo.com/group/edabloggers/ It’s is a very low traffic (1-2 messages a month) moderated E-mail distribution list for announcements and other notices of general interest to EDA Blogging community. It’s intended to help coordinate Birds of a Feather and other events for bloggers at EDA related conferences and other venues.

Most folks are choosing to talk about different aspects of what they have learned from blogging. This is a good cross section of folks and their talks should jumpstart a variety of interesting discussions in the two hours that we have.
Related links on this blog

• What Happens When 70 EDA Blogs becomes 500 in 2011? 
• A Primer on Blogs for EDA Start-ups
• Bloggers Covering Electronic Design Automation

Other Blog coverage:

• Bloggers to Fly Again at ICCAD  on DFTDigest
• Don’t Miss Bloggers’ BoF at ICCAD on The Standards Game
• See You at ICCAD on the System Verification Blog
• Bloggers Flock to ICCAD on John’s Semi-Blog
• EDA Blogger BoF at ICCAD on Taken for Granted
• Meet the Bloggers at On Cores
• Live Bloggers at ICCAD on Analog Insights

1. If you define success as making a lot of money quickly you should go into sales and cut out the middleman.
2. You can buy one lottery ticket and make a lot of money. You can buy many lottery tickets every day of your life and never recover the cost of your lottery tickets.
3. Most of the time the opportunity for “overnight success” is sold by folks who are interested in making a profit on your dreams without actually fulfilling them.
4. Of all the sources of funds for an early stage venture, revenue is the most compelling demonstration of traction. Too many entrepreneurs view fund raising as an accomplishment in and of itself.

I think a lot of the desire for overnight success (beyond the lure of easy money, which has a very strong appeal) 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.

I think it’s unfortunate but a lot of what’s written about Silicon Valley entrepreneurship is actually part of a sales pitch or positioning for the venture ecosystem. There is a lot of advice that’s designed to encourage the entrepreneur to start negotiations with an attorney or a VC in a very poor position. The Venture Hacks blog is a notable counter example: their posts on term sheet negotiations are delightfully practical and lately they have provided some excellent advice on bootstrapping and customer development. But many articles and blog posts are designed to convince an entrepreneur to seek early validation from a VC firm instead of a customer, or lately to take a worse deal because “Good Times RIP” (or maybe not.)

Not everything is sanitized hagiography of the founders (or current management) and there are some good entrepreneurial methodologies documented in books like “You Need to Be a Little Crazy” and “Four Steps to the Epiphany” (see the list of books in “Crucial Marketing Concepts” for example). But any of these books are ultimately as useful as reading a math textbook or a book of chess proverbs, or memorizing a set of Go joseki. It’s always valuable to understand the principles, and certainly for challenges in an idealized problem domain like Math or Go you can learn a lot from a formula or a proverb.

But many insights in life cannot be reduced to writing, especially those involving either self-mastery or other people (and startups, alas, involve both). Reading the history of an event does not compare with living through it. You cannot learn to ride a book from a book (or a workshop). Patient experimentation, deliberate practice, and not only rehearsal and pre-mortem but also after action and decision record reviews are all needed.

The challenge with a startup–like many other things in life–is that you need to integrate many different inputs, your own hopes and fears among them, and negotiate a working consensus with your co-founders to be successful.

And that doesn’t happen overnight.

Update: Eric Ries posted a good description of the Customer Development Model yesterday that I didn’t read until after I had posted this. It’s a good overview of some of the key points from Steve Blank’s Four Steps to the Epiphany.