Archive for February, 2008

We’ll be at SDWest Booth 318

Written by Sean Murphy. Posted in Events, skmurphy

Looks like we will be in good company. Whether you are considering leaving you day job for a startup, you are consulting while you develop a product, you are open for business and looking for early customers, looking for smarter customers, or you’ve found your niche and you are looking to scale up, drop by. We will also have a startup resource center that can help you if you need

  • to get your startup incorporated and on a solid legal foundation
  • to find a good name for your company (or your first product)
  • to make sure your taxes are in order (you still have a few weeks)
  • to find someone to help with your books
  • to find your first office (or maybe just rent a conference room)
  • to investigate whether filing a patent makes sense
  • to get help drafting a business plan that demonstrates why your firm deserves investment
  • to get assistance with a number of other challenges you face bootstrapping your software startup.

We are still focused on the “early customers early revenue” challenge, but we can recommend some good firms who can help you with some equally important concerns.

You can print this page out and bring it to get a free expo pass. Expo hours

  • Tuesday, March 4, 5:00 pm – 7:00 pm
  • Wednesday, March 5,
    • 11:45 am – 2:00 pm
    • Reopens, 3:00 pm – 6:30 pm
  • Thursday, March 6,
    • 11:45 am – 2:00 pm
    • Reopens, 3:00 pm – 5:30 pm

Join us at SDWest 2008 March 3-7, the conference offers with both business and technology tracks and has an interesting mix of sessions for software entrepreneurs. In addition to the technology oriented sessions you would expect, the conference has added a “Business of Software” track that should prove valuable to folks in–or planning to be in–a software startup. As a part of the business track, Steve Blank is speaking on Starting and Running an Entrepreneurial Company: Customer Development and he is always worth listening to.

Jotspot Emerges From The Bowels of Google

Written by Sean Murphy. Posted in skmurphy, Startups, Tools for Startups

Rob Hof notes–hat tip to Ross Mayfield–tonight in “Jotspot Returns as Google Sites: Wiki Style Collaboration” (emphasis added):

Ever since Google bought the wiki-based online application startup Jotspot in late 2006, people have been wondering if it had disappeared forever inside the bowels of the search giant. Tonight, Google’s launching Google Sites, using Jotspot’s technology to create a free group collaboration service that will be part of its online software suite Google Apps.

Like many things that come in one end and go out the other, it seems to bear little resemblance to it’s former self. TechCrunch observes in “It Took 16 Months, But Google Relaunches Jotspot” (emphasis added)

Google Sites looks absolutely nothing like Jotspot, other than the fact that both are hosted wikis. All of the structured data templates launched by Jotspot in July 2006 have been stripped out. Users now have a choice between just four basic templates – a standard wiki, a dashboard where google gadgets can be embedded, a blog-like template for announcements, a file cabinet for file uploads, and a page for lists of items. Instead of creating structured templates, users will now simply embed spreadsheets, presentations and word documents from Google Docs, as well as Google Calendars, YouTube Videos and Picasa Albums.

I had blogged about the Jotspot acquisition in “Jotspot Dissolves into Google Business Model” and later speculated that the “Dodgeball Duo Departure a Harbinger for Jotspot Wunderkinder” (although the earn out period still probably has eight months to run so this may still prove accurate). If Joe Kraus’ picture and his son’s lego creations weren’t splashed across one of the demo sites, it would require a vivid imagination to associate this new offering in any way with Jotspot.

The acquisition–and Google’s putting any further sites on stun and current sites into limbo–triggered our search for a new wiki/workspace provider. We’ve been pleased with our selection of Central Desktop and have built more than 100 private workspaces for use with customers since we converted. We’ve blogged about them in several different contexts and have them listed as a partner because they have become an intrinsic platform for our business. We probably don’t say enough good things about them.

Other coverage:

Express ROI In Terms Your Prospect Will Understand

Written by Sean Murphy. Posted in Events, Rules of Thumb, skmurphy

Peter Cohan makes the following points in his Great Demo! Seminar

  • C level execs think in terms of dollars (budget)
  • Managers think in terms of people and full time equivalents (FTE).
  • Individual contributors think in terms of time spent vs. time saved

So it pays to express the benefits of your application accordingly. There may be a few more dimensions we sometimes consider:

  • Scrap and re-work: process oriented folks can focus on this, quality assurance as well if they aren’t considering just errors.
  • Cycle time can also appeal to folks who understand how a more agile organization can win business and more rapidly respond to customers, events, and competitors.
  • An existing cost stream. Especially in an uncertain economy, it’s always best to attack a cost stream that is real. Future revenues are a possibility, costs, especially recurring costs, are a tangible reality.

Note: we have another Great Demo! seminar coming up Saturday March 8 at the Moorpark Hotel in San Jose (near 280 and Saratoga Ave). If you’ve been before (or you want to stay for the afternoon) we are offering an advanced topics session from 1-5 PM at the same location.

Don Reinertsen: Priorities Are The Last Refuge of the Innumerate

Written by Sean Murphy. Posted in Quotes, skmurphy

Don Reinertsen, co-author (with Preston Smith) of “Developing Products in Half the Time” and “Managing the Design Factory: The Product Developers Toolkit” has a great article about managing products “Priorities: Last Refuge of the Innumerate”

Priorities: Last Refuge of the Innumerate

What is our highest product development priority, cycle time or unit manufacturing cost? To even ask this question, suggests a fundamental misunderstanding of product development economics. If cycle time takes priority over unit cost, then it follows that we would prefer the smallest improvement in cycle time to the largest improvement in unit cost. If unit cost takes priority, then we would prefer the smallest improvement in unit cost to the largest improvement in cycle time. Does this make any sense? Of course not. When we prioritize we give strict precedence to one objective over another. Such strict precedence leads to bad economic choices.

The value of cycle time and the value of unit cost must be expressed in the same unit of measure: life cycle profit impact. It is only with this quantification that we can make good economic decisions to trade one for the other. Setting priorities for individual measures of performance is simply avoiding the important job of understanding how performance influences economics.

I really like this because it encourages founders to develop a simple model for what profitable operation looks like.

Reinertsen also coined the phrase “Fuzzy Front End” for the early part of the the design process in “Blitzkrieg product development: Cut development time in half.” Electronic Business, January 15, 1985. He later proposed some methods for “Taking the Fuzziness Out of the Front End.”

Some other variations on “X is the last refuge of Y”

  • “Patriotism is the last refuge of a scoundrel.” Samuel Johnson
  • “Violence is the last refuge of the incompetent.” Isaac Asimov (said by Salvor Hardin in Foundation)
  • “Consistency is the last refuge of the unimaginative.” Oscar Wilde
  • “Entrepreneurship is the last refuge of the troublemaker.” Natalie Clifford Barney

Mission College Business Department Advisory Committee

Written by Sean Murphy. Posted in Events, skmurphy

I was invited to take part in the Mission College Business Department Advisory Committee for 2008 last Tuesday; it was a very interesting experience. There was a cross section of folks from education and business, both large and small. I was impressed by the diversity of perspectives and everyone’s commitment to assisting the college.

Community colleges in California have a complex mission, offering not only degree and certificate programs for high school graduates who may continue on to a four year college but also offering continuing education classes for mid-career and new career needs. The college offers a rich mix of instructional modes to meet the needs of its students: traditional classrooms, on-line, one day intensive workshops, and teleclasses.

I made two suggestions that I thought the department might consider.

  1. Survey some of the graduates who had been out for 3-5 years to see where they were and how well Mission College had prepared them for the next step in their careers, whether it was attending a four year college, getting their first real job, getting a promotion, or getting a new job.
  2. Consider extending the intern program to allow Mission College students to work as virtual interns for out of region companies who may have need of people who can work on the ground in Silicon Valley. In this age of increasingly global projects, on-line teams, virtual admins, it would seem that there might be a virtual intern model that would also work.

Although it only seems like a few years, it’s been a while since I was in a college classroom; it was an interesting experience to be on a campus that is at ground zero geographically in Silicon Valley.

If you have started your company or are in the planning stages, I would encourage you to take a look at the Mission College Business, Management, and Marketing courses. In particular, some of the one day courses might round out your understanding of key issues for your business:

We offer four hour workshops for entrepreneurs to analyze and plan their businesses in a structured fashion, network and compare notes with other entrepreneurs, and get exposed to concepts and methods for business development from a very practical “do it in the next 90 days” perspective. We provide each attendee with an on-line workspace to continue to refine and enhance the plans they draft. But it’s a very specialized instruction model compared to the different objectives that a community college has to satisfy.

10 Reasons to Write a Press Release

Written by Theresa Shafer. Posted in Rules of Thumb

Here are 10 common reasons to issue a press release.

  1. Announce a strategic partnership or alliance
  2. Issuing a statement on a hot issue
  3. New client acquisition
  4. Holding a seminar or workshop
  5. Availability of white paper or article
  6. Company revenue, sales, or profit
  7. Announce new member of board of directors or board of advisors
  8. invitation for a special offer
  9. Participation in local event or tradeshow
  10. Winning an award

Normally, I only do a top 3 list, but I thought there were a number of good reasons to issue a press release.

First Office: Arwen Funk, Real Estate Broker

Written by Francis Adanza. Posted in First Office

In earlier interviews Frank Bailey and Ed Correia each recommended using a broker as the most effective approach to finding an office. So I called Arwen Funk, a commercial and residential broker, to get some background. Arwen pointed out some potential land mines in leasing contracts such as property tax protection, methods of pass-throughs, and options to grow or adjust their office space. The Q&A that follows is an edited transcript of our call.

Q: Why do firms hire a commercial real estate broker?

There are a number of pitfalls in the leasing process; renting an office is not a cut-and-dry process. There is a lot of paperwork, sometimes with land mines you can run into from a leasing perspective. It can really help to someone who understands the process and helps you to prepare, explaining issues as you go and often alerting you to the implications of a situation. You should keep in mind, more often than not, it’s the landlord who pays the commission: so finding yourself a representative is normally effectively free. But even when you pay the commission, the up-front expense is normally worth it relative to how much an experienced broker can save you in unexpected costs. When you do it yourself, the three areas you can often get caught on are: property tax protection, reimbursements of operating expenses, and planning for their future.

Q: How are property taxes a risk area?

In the state of California, any property–commercial or residential–is assessed property taxes by its county government. When Proposition 13 passed in 1978, it limited California property taxes to no more than 1% of the assessed value at the time it was purchased, with increases no more than 2% annually. The assessed value is not necessarily the purchase price: people sometimes overpay or underpay, so each county has the authority to reassess for tax purposes if it believes that market value was not paid. In addition to the base property tax of 1% of assessed value, there are usually several bonds and assessments that are also on a property tax bill. These additional fees fund school districts, street work, sewer systems and other local public items. They all add a little bit to your property taxes, but it’s very rare for someone’s total property tax to be more than about 1.25%, normally it’s around 1.15%. As long as the same owner owns the property, the property tax can only go up by a maximum of 2% every year.

If you are a tenant in a building that is sold to a new landlord, however; property taxes get adjusted to a new baseline and this higher cost is passed through to all tenants in the form of expense reimbursements. Assume your landlord bought the property twenty years ago and has only had a 2% increase ever year since. The property taxes are low but the property’s value may have quadrupled in that time. When you started to rent, your property tax expense reimbursement was quite small. It’s a proportional share of the landlord’s total tax bill based on how much of the total property you actually occupy. When the property sells for four times what the original landlord paid for it, this resets the assessed value and the new owner’s property taxes, and therefore your proportional share, will increase significantly.

A broker can help negotiate “Prop 13 protection” for you as a tenant. This protection allows you to set your property tax amount so that you only have to reimburse the landlord at a certain base level, usually the price when you first leased the space. This way no matter how many times the property is sold or how much people paid for it, you will never pay more than the negotiated baseline, plus the 2% increase every year, for the term of your original lease. If the property is sold, the new owner absorbs the expense of those new property taxes. Thus, new tenants that sign after the property sells will probably pay more in property taxes whereas you will be locked in at the contract rate.

Q: Can you explain about reimbursement of operating expenses?

Normally when you need an office you will look at a variety of different spaces on the market that might fit your size requirements. These spaces will be offered for varying lease rates and the rates quoted will either have a letter “G” after the amount, or they will have an “N” or sometimes three N’s. The “G” is for gross and the “N” is for net. Three N’s stands for triple net, but it’s really a net lease, just a finer distinction. In a gross lease, the rate quoted is the gross amount, which means it is the base rent plus the reimbursements (also known as pass-throughs) for all the expenses the tenants owe to the landlord such as electricity, water, property taxes, insurance, common area maintenance, and more. You will not get other bills for other things from your landlord under a gross lease. A net lease, conversely, has these expense items invoiced separately. The rate quoted in a net lease will be the base rent amount only then the tenants will receive a separate bill for all of the expense reimbursements. A broker can help you understand what you are agreeing to as a tenant and get the best deal possible.

Another aspect of expense reimbursement is understanding the pro rata calculation (the portion the tenant leases in relation to the total building space). For example, assume your office is in a 5,000 square foot building, and you’re a tenant using 1,000 square feet. Therefore you use 20% of the pro rata square footage of the building. Subsequently, you will probably be asked to reimburse the landlord for 20% of the electrical that’s used for common areas. Depending on how a property is setup, the tenant might contract with PG&E directly. The important thing to remember is that nothing is free.

Q: What should I look out for in terms of planning for the future?

If you’re in a startup with three people you may only need a small space, say 500 square feet. It is wise to build in some kind of growth pattern for at least the next lease term. For example, you lease a space for $1.00 per square foot, and you lease it for two years. Right next door to you is suite that would be a perfect configuration if you needed to grow and add one or two people – you could simply knock out a wall and add it to your suite. When you negotiate your lease, request if that space next door becomes available during your current lease term, you want to lease it for the same rate that you pay on our current space. More so, you could negotiate for an option to extend the lease on both spaces when those two years come up.

Other ways to protect your costs for future could be to negotiate lease extensions with fixed lease rates (rather than risking paying the higher market rate when the time comes). Or to negotiate for the Right of First Refusal to Lease on other spaces that come available in the same building. Some tenants who plan for big success even negotiate options to purchase a property if the landlord ever wants to sell. Obviously, these options are all key to the future success of small businesses to allow them to plan appropriately for growth.

Q: So a tenant can negotiate to keep future costs down over certain period of time?

Absolutely! As in any industry, a layperson doesn’t know all of the possibilities–that’s why whole industries of “experts” are born! Somewhat who is not very familiar with real estate won’t know to ask for protections in the form of future options. If you own and operate a startup, you’re probably more concerned about operating your business than spending time learning real estate 101. Your worries more likely include funding, market timing, delivery, fulfillment, employees, customers, etc. You assume the business will take off, need ramping up, and ultimately be successful. Well, what do you do if you have signed a five-year lease, but you’ve only got a thousand square feet, and suddenly you are busting at the seams? Now you need more space, but rents have gone up so much that now you are competing with every other tenant in the world who comes up for that space just next door to you in your multi-tenant building. You are stuck and with leasing rates rising (theoretically) you won’t be able to grow without a large increase in your overhead which may stunt your growth. Now is when you’ll wish you’d had a broker who had negotiated some options for you to grow, move, etc. There are a lot of ways to anticipate and negotiate for future needs, the important thing to remember is that almost anything that you can imagine doing in leasing has been done at some point and a skilled representative will help you be prepared.

A good agent will know how to write options for extensions, refusals, expansions, and Prop 13 protection in your original lease.

Q: Founders are often starved for time, how much time would you normally would save a first time tenant?

Hiring a commercial real estate broker will save a newcomer dozens of hours–and headaches–depending on the situation. But I believe that the hours are not the main savings. Hiring an expert in any field is not just about the actual hours that are required to do the job, it’s also the years of experience that allow an expert to do it properly!

When hiring an expert it can be hard to understand what to ask for and what to expect. One way to mitigate the risk is to meet with the person and make sure they have a very clear understanding of what you need. A good broker will go out and do most of the leg work for you. All you need to do is look at a couple of spaces that your broker will have selected for you based on your needs and see which one you think is going to work best. Then listen to your representative’s assessments. They should be able to assess the type of owner of a particular building; is the landlord someone you could work with? Your agent can speak with other tenants on your behalf for feedback or aid you in those interviews. How are they in the negotiations; are they cutthroat or are they pretty easy to work with? Most properties have different people negotiate the leases and manage the property.

Founder Story: John Nash, CEO Color Vision Store

Written by Francis Adanza. Posted in Founder Story

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.

Raphe Patmore, CEO of Buzka, On ANZA

Written by Francis Adanza. Posted in Events

I was able to sit down with Raphe Patmore, CEO Buzka, recently and talk about his experience of participating in the ANZA Gateway Program. Buzka was one of about a dozen companies that were selected to enter the program in Fall ’07. Raphe was also a co-winner for the Guy Manson Hottest Technology Award for innovative Australian and New Zealand companies.

Buzka is an Australian based company that offers web-based software products that allow you to share your favorite web stuff. You can save and organize all your favorite web pages by creating Spots on any interest or topic. Each Spot is a collection of pages that can be shared with family, friends, colleagues and anyone on the web. Below is the Q&A from our conversation.

Q: What were your three biggest concerns about entering the US market?

  1. How to ensure that we really understood the market.
  2. How to understand the demand for our product.
  3. How to access the US market: e.g. people and resources required.

We were also concerned about operational issues such as legal requirements and migration fees.

Q: What were the three biggest surprises from your visit to Silicon Valley?

Well, this was my first time here. I suppose there were too many surprises to list. My overall perspective is that this is turning into a much more intensive operation than I anticipated. The week I spent with my mentor was enlightening and stimulating. I came away with the feeling that we had to think bigger: if we raise the capital necessary to enter this market we will have our work cut out for us.

Q: It sounds like the program gave you a sense of larger possibilities?

Yes. Coming from Perth, there is a tendency for us to understate our ambitions. We did feel we were reaching our limits in in that market, and we had been playing it conservatively, we certainly were not overambitious. After meeting the experts with the ANZA program, I came away thinking that we can be considerably more ambitious.

Q: How specifically has ANZA helped you with this transition?

The Gateway conference the panel discussions focused on specific areas such as legal issues and venture capital. Through these panel sessions, I have made contacts with experts and very experienced people. They have helped me formulate my market entry strategy. They have helped me position the business better for investment and introduce me to prospective customers. Additionally, it’s given me more confidence that what we are trying to do has some validity in this market. The interest from so many people has given our team the confidence to really push to be in this market. ANZA is currently helping us prepare for the DEMO conference. We have a full team attending; the Production Manager, the Vice President of Technology, who is the co-founder, and the Senior Programmer.

Q: What have you liked about the ANZA program?

I think for most entrepreneurs, the most attractive part of the program was giving VC style five minute pitches in front Silicon Valley VC’s and media. Of course, there was some mentoring to help you through this process. I believe that ANZA exceeded their promises: we are very pleased with the outcomes. We didn’t anticipate a term sheet from investors because we thought we were still too early stage. What we learned was that it was perfect timing because we were in the early phases of building our stage two product. We received positive feedback regarding the value and prices. This good news gave us more credibility with our shareholders. Other results included further investments from the current shareholders, a market entry plan, and a product development roadmap. The program helped us to focus on our core product benefits. Working with experienced people has helped us refine our strategy. Our team is comprised of very talented and and creative programmers. However, they are not experienced marketing people, and real issue was could we turn this technology into a viable business?

Q: Is there anything ANZA could have done to improve your experience?

I think they could have better prepared us for the program. From speaking with the other attendees, no one anticipated how rigorous it was going to be. I think more feedback, not just from the mentors, would have been beneficial. I was hoping for more structured feedback from the VC’s regarding the presentation. I was also interested in what the mentors thought about the other companies. Some sort of debriefing later on a case by case basis in a peer group would have been interesting. There were several interesting companies in the program and I wanted to understand the differences in strategy, approaches, strengths and weaknesses for each.

Q: Can you talk a little bit about the Fast Track Program you are in now?

ANZA gave us a twelve page document on market entry strategy requirements. It has been both thought provoking and energizing for the team to fill out. Our temptation can be to over analyze and develop an 80 page business plan, but in the Valley, it seems you just need something that fits in your back pocket. A document like this at the outset of the Gateway program would have helped to sharpen our thinking before we came to the Valley.

Clearly, there were one or two companies who hadn’t done any real deep thinking about their product’s core benefits. I believe it was even more difficult for those who do not have business backgrounds. Some of the folks that came from engineering backgrounds appeared to struggle with the review material provided. They never really thought about looking at the business from other perspectives.

Q: Any tips for other entrepreneurs who might be thinking about working with ANZA?

If you are thinking of entering the US market, then it’s well worth joining the program. Also, if you are thinking about raising capital in the States, definitely join the program. You will quickly realize that it rapidly it expands your network of useful contacts. Folks who can help you frame your strategy, sell your product, and certainly improve your business. In terms of preparation, first decide if you want to enter the US market, because it will probably mean a lot of people moving to the US. Some people from Australia may think they are working hard now, but they will be surprised by the work culture once they get here. A big difference between here and Australia is the amount of networking.

Paul Graham’s Six Principles for Making New Things

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

This article compares Paul Graham’s “Six Principles for Making New Things” with Bob Bemer’s “Do Something Small But Useful Now”,  Gary Hamel’s Innovation Hacker, and Peter Drucker’s list of seven places to search systematically for opportunities.

Frank Bailey, Sales VP at RTDA, on First Office Experiences

Written by Francis Adanza. Posted in First Office

Today Sean and I sat down with Frank Bailey, VP of Sales from Runtime Design Automation. RTDA offers automation tools that manage all design resources such as licenses and CPU’s in order to streamline workflow. RTDA products track all licenses in your network, capture all jobs in your project, and automatically dispatch the jobs in the farm, all with one-click simplicity.

Q: I understand that you have had to change offices three times. Can you share a little about your first experience in finding an office?

Well, when Andrea and I first started the business, we were each working out of our homes. Andrea lived in the east bay and I lived in Mountain View. I cannot speak for Andrea, but I did not find this effective because of the distractions from television, the telephone, and the ability to run errands at will.

You could say that our first office kind of found us. One of our early customers, Exemplar Logic, was nice enough to give us space in their facility. Located in Alameda, we utilized the free space for eight months until they were acquired by Mentor Graphics. After the acquisition, we were forced to move out. It was not until this point that we actually had to find a place.

Q: What were your three primary concerns in finding the right first office?

  1. We wanted to be close to our customers and prospects. We spend a significant amount of time on the customers premises.
  2. We wanted something that had conference rooms. By this time we had hired a couple of employees. Not all conversations should be heard, so we wanted something with private meeting rooms.
  3. Finally, we wanted something that was near places where you could get a quick bite to eat. We basically lived at the office so being able to get something that tastes good, but not unhealthy was an issue.

Q: How did you get started when you began searching for an office?

I pulled out a map and drew a perimeter from San Jose to Mountain View and tried to find a place that was central to our customers, accessible from various directions, and easy to find from the street. We found a place on Apollo Way in Sunnyvale. This was a great location because it intersected Central Expressway and Lawrence. It was also close to 101. In 1995 this was the heart of the Valley.

We were there for about three years before the property was acquired by another company. The acquiring company raised the rent, so we moved to a place in Fremont which was about half the price. What we at first anticipated was a bargain on space turned out to be a disaster. Our office building was right next to a probation office building who we shared the same parking lot. It seemed like there were always questionable people hanging around the lot. Often, strange people would walk in and out of our building in search for the probation building. We only had a few theft incidents, but there were several vandalized cars. This office did not have conference rooms so it made meetings with visitors difficult. I observed that our visitors were hesitant to speak out, since they were not sure who was listening. Another problem of being in Fremont was dealing with heavy traffic on 880. It took at least an hour to get to San Jose to visit a customer and an hour back to return to the office.

Q: How did you measure or asses the quality of the office?

We compared a lot of offices before we settled on one. We basically looked at the image of the facility compared to the price. By image, I am referring to the neighborhood, the condition of the building, the common areas, and the amount of outside noise.

Q: Do you have any words of advice or things to look out for that people might over look?

Be careful of who your neighbors are and what types of businesses they are in. One of the businesses in the complex was a delivery service. They took up about a dozen parking spaces with their delivery vans. I would also stay away from sub leasing. We had an issue where we were sub leasing from a guy for six months. Turned out that this guy disappeared and never paid the property manager the entire time of our lease. We were not held liable, but the paper hassles and police reports were time consuming.

Make sure you have a separate machine room. Servers are extremely noisy and radiate a lot of heat. You want a separate room where you can set up a cooling system and keep all the noise regulated. I also recommend a place for miscellaneous stuff. Otherwise your office will look messy and cluttered.

I would recommend using a broker. I found a broker who I used for the next two office relocations. I much rather let an expert deal with all the fine line paperwork. This lets me concentrate on business objectives instead of worrying about none strategic busy work. A good broker will catch liability insurances, and other contract requirements that fluctuate from place to place. I recommend Jeff Rogers from Colliers International.

How much was the cost of the move? How long did it take for you to become operational?

There were five people in the company in Silicon Valley: with furniture, setting up the IT infrastructure, and paying movers, the total cost was $10,000. I would say we were fully operational in about four to six weeks.

Where did you buy your furniture?

I went to Repo Depo. People think they save money by purchasing the low end stuff at Office Depot. However, I think even though that furniture may be brand new, it can break down before the well built high end items you can get second hand.

Some Days You’re The Potter, Some Days You’re The Clay

Written by Sean Murphy. Posted in Quotes, skmurphy

A poem by Ted Mielczarek entitled 11/27/2001 (he dates his instead of naming them).

A man controls his destiny
Shaping it as the potter molds clay
His desires made concrete

So why do I so often feel
That I’m not the potter
But in fact the clay?

Successful entrepreneurship is an ongoing self-improvement project. But entrepreneurs must marshal more than their own resources and abilities to succeed. They need to involve other people with the necessary talents, experience, and knowledge. A successful startup is co-created not just by the founders, but in collaboration with other partners, suppliers, and especially customers.

Improving The Techdirt Insight Community

Written by Sean Murphy. Posted in Blogging, skmurphy

I originally wrote this on Wednesday November 28, 2007 in response to a set of questions posed by Mike Masnick to the Techdirt Insight Community. I had applied and been accepted into the community after it was announced at the 2006 Office 2.0 conference (I blogged about in “Born With a Face Made for Podcasting“). Those questions are in bold in the following text. Please note that under the terms of service, each blogger retained the rights to his own words.
Q: How to continue to grow the Community itself?

There is no substitute for a face to face meeting to build a real sense of community. I would suggest that you run a few events in 2008 (perhaps twice a year, perhaps quarterly) where they would be convenient for Techdirt folks and the blogger members of the Insight community to meet and get better acquainted. I think you might find that unleashes a lot of creativity around how to grow the community.

The competitive mechanism you have chosen doesn’t seem to foster as much discussion within the community on the topic. And frankly for the dollars you have put out there I am not sure I am as motivated as I would be by the opportunity for further on-line or face to face discussion with the blogger community you have brought together.

I also wonder if your Techdirt Greenhouse format might be appropriate for a set of your customers: have them present an issue, break up into smaller groups for focused discussion with two or three teams addressing the topic (perhaps two to three topics in parallel) and then come back to the main group for a summary and briefing. Obviously not every issue will be appropriate for this approach, but many of the “what’s going on in this market” or “how to you see things evolving in this technology landscape” questions that are more open ended or exploratory may be a fit.

Q: How to get existing customers to become repeat customers or regular users of the community.

What’s their perspective on the benefits they have gained from putting a question to the community?

One benefit a community model might offer is an ongoing surveillance of an issue from a variety of perspectives. In other words, instead of trying to reach a conclusion, use an insight community as more of a “what are recent developments in…” and let a number of folks submit links (perhaps rated/sorted/ranked/tagged by the community) in addition to their own comments/posts to provide their context. This might have the additional advantage that you could sell the same feed to several clients, and then sell a second tailored offering that addressed their particular situation. But ongoing surveillance of an emerging technology or market space is something that a community of interest does well.

Q: How to get more companies aware of what the Techdirt Insight Community can provide.

I think you have to use references/testimonials and find a way to offer a version of the service that is more general, such as the community of interest model I suggested above, so that they can get some idea of what’s involved.

Q: How to keep bringing in additional customers.

You have to expose some aspect of this “blogging ecosystem” on your site and in your ongoing marketing efforts. I worked on a project at Cisco about a decade ago to add a filtering/ranking layer on top of an incredible amount of analyst research that we purchased that was used by hundreds of marketing folks across dozens of business units. The challenge your clients may be facing is that they are getting too much insight and they need more sensemaking. I don’t know enough about your mainline services and how they are marketed and deployed to be able to comment effectively on how to generate additional synergies between the Insight Community and your other services, but it seems to be that you need to determine in your sales model what is the “portal” or “thin edge of the wedge” into a new customer and what’s the add on. Another way to think about it is how to re-purpose the existing content that’s been created over the last year, perhaps paying an additional success fee to the bloggers, to go after new customers. It’s a little hard to determine the “shelf life” or “half life” of some of the content, and longer half life content probably addresses different questions than gathering info to make a decision in a few months. I guess I don’t understand your current model to be able to suggest how to better integrate TIC capabilities and content.

One final challenge I have with your mechanism is that it does not foster interaction between the community members, I might have written this much sooner if I knew that other folks might read it, comment on it, and help me to evolve it. I think a wiki would be complementary to this forum of blog posts as refinery for issues that we all have a stake in, such as the continued health and growth of the Techdirt Insight Community. But I don’t think that it’s a technology issue as much as the natural consequences of the incentive set or mechanism you have established.

Postscript added as a comment to the forum “How to Improve the Techdirt Insight Community”

I guess I have reluctantly concluded that community is the wrong word for Techdirt Insight effort. The mechanisms established to make clear who owns each individual insight work against again real collaboration or shared contribution. It’s become a rolling essay contest more than a blogging community, which probably better suits Techdirt’s business needs but it’s not the reason I joined. I have appreciated the opportunity to take part and contribute.

Net Net: I have asked Techdirt to delete my account and donate the $18 credit I have earned from my contributions to the Salvation Army. At it’s root the Insight Community is a zero sum game, and this mechanism works against collaboration and community building.

Leveraging Your Social Network to Find Early Customers Monday Feb 11 at SDForum

Written by Sean Murphy. Posted in Events, skmurphy

I will be speaking next Monday at the SDForum Marketing SIG on “Leveraging Your Social Network to Find Early Customers.”

Social navigation is networking with a goal. Entrepreneurs will spend social capital navigating their way to getting trusted feedback and early sales. Like Google and web assisted selling tools, social network tools can improve the quality of your conversations by providing you with background information and context. In the context of established relationships, tools like Facebook, LinkedIn, and others allow people to connect with others and foster networks of friends or colleagues. I will walk through a simple social navigation exercise and also offer a model for how startup entrepreneurs and product introduction managers spend social capital to get critical feedback on product and business concepts.

I plan to mix some interactive exercises into the presentation to allow attendees to assess their social capital and social navigation skills. My hope is to keep it engaging and energizing. My perspective on Facebook and LinkedIn is that they are useful but no substitute for authentic relationships and real networking skills.

For marketing folks in both startups and established firms key elements of social navigation have less to do with “on-line social networks” and much more to do with face-to-face, phone, and E-mail conversations, each with their respective protocols and etiquette. My focus is more on leveraging bona fide existing relationships and not wasting the social capital that others are lending you to find prospects and ultimately early customers.

The Marketing SIG meeting starts at 6:30PM at DLA Piper DLA Piper Rudnick Gray Cary LLP on 2000 University Ave. (University Circle) in East Palo Alto. No charge for SDForum members, $15 at the door for non-members.
I hope to see you there.

Three Features For A Webinar Or Conference Call

Written by Sean Murphy. Posted in skmurphy, Tools for Startups

We have resisted doing webinar or phone versions of our workshops because there doesn’t seem to be an easy way to facilitate the pair discussions and highly interactive nature of the conversation in the room. I would like to see an integration between (VoIP/POTS) telephony and chat such that we could do the following during a conference call or webinar that has a related chat window:

  1. Let Someone Raise Their Hand and Speak: an attendee who wants to speak or ask a question can “raise their hand” in the chat window and then have their connection patched into the voice stream back to all attendees. This might require passing out a serialized password to each attendee (or on an 800 dial-in recognizing the number, or leverage Caller ID to determine who is who). This can be done on the honor system in a group that knows each other or is otherwise well-behaved, by using the chat window to control the queue to the mike, but often you would like to mute everyone but one or two speakers. Inspired by Clay Shirky‘s wiki+chat+phone pattern (see below).
  2. Break a Larger Group Into Small Groups and Then Reconvene: as an example break a group of 12 into six pairs or three groups of four and then have them join back into a single audio stream. Their status could either be communicated via the chat window (which should now be restricted to “just those in their small group”). This was suggested by an observation that John Smith made in 2004 that “what would really make our CPSquare class conference call effective is the ability to break into small groups and then come back.”
  3. Automatically Manage The “Queue for the Microphone” during the Q&A segment: offer a simple way to “get in the line for the mike” that allows everyone to see the backlog of questions.

I welcome any feedback or suggestions on systems that already support this, or other ideas for how to go beyond the POTS conference call model.

We currently follow the wiki+chat+phone pattern that Clay Shirky identified in “A Group Is Its Own Worst Enemy” with client meetings but this is normally less than 6 people

“But since conference calls are so lousy on their own, I’m going to bring up a chat window at the same time.” And then, in the first meeting, I think it was Pete Kaminski said “Well, I’ve also opened up a wiki, and here’s the URL.” And he posted it in the chat window. And people can start annotating things. People can start adding bookmarks; here are the lists.

So, suddenly you’ve got this meeting, which is going on in three separate modes at the same time, two in real-time and one annotated. So you can have the conference call going on, and you know how conference calls are. Either one or two people dominate it, or everyone’s like “Oh, can I — no, but –“, everyone interrupting and cutting each other off.

It’s very difficult to coordinate a conference call, because people can’t see one another, which makes it hard to manage the interrupt logic. In Joi’s conference call, the interrupt logic got moved to the chat room. People would type “Hand,” and the moderator of the conference call will then type “You’re speaking next,” in the chat. So the conference call flowed incredibly smoothly.

Meanwhile, in the chat, people are annotating what people are saying. “Oh, that reminds me of So-and-so’s work.” Or “You should look at this URL…you should look at that ISBN number.” In a conference call, to read out a URL, you have to spell it out — “No, no, no, it’s w w w dot net dash…” In a chat window, you get it and you can click on it right there. You can say, in the conference call or the chat: “Go over to the wiki and look at this.”

This is a broadband conference call, but it isn’t a giant thing. It’s just three little pieces of software laid next to each other and held together with a little bit of social glue. This is an incredibly powerful pattern.

John Smith offers a well thought out set of “Conference Call Practices To Generate Knowledge and Record Learning” that refine and elaborate on Shirky’s wiki+chat+phone model. These are very applicable to any geographically dispersed team that is relying on periodic conference calls to keep a project moving forward.

Advanced Topics Session Added To The March 8 Great Demo! Workshop

Written by Sean Murphy. Posted in Events, skmurphy, Startups

In response to requests from prior workshop attendees we’ve added an afternoon session to the March 8 Great Demo! workshop that will address advanced topics. You are welcome to attend if you have attended an earlier Great Demo! workshop, or you can register for both the morning and afternoon sessions on March 8. Lunch is included in the morning session so you can make a day of it with us if you like.

Peter Cohan’s “Great Demo!” Advanced Topics Session

Create and Deliver Surprisingly Compelling Software Demonstrations
“Do The Last Thing First” — the recipe for a Great Demo!

In response to requests for assistance on demo delivery we have added an afternoon session to our March 8 Great Demos workshop. If this is your first exposure to the Great Demo come for the morning and get a great overview of the methodology and stay for the afternoon if you would like an opportunity for more interactive training on advanced topics such as multi-solution, multi-player demonstrations, and vision generation demonstrations. The advanced topic session as covers real life issues like handling bugs, crashes, and time challenges.

This interactive workshop with Peter Cohan of The Second Derivative is only available to people who have already attended the basic Great Demo! workshop or who also attend the morning session on March 8.

When: Saturday Mar 8, 2008, 1:00 – 5:00 pm
Where: Moorpark Hotel, 4241 Moorpark Ave, San Jose CA 95129
Cost $40 After March 1 $60
Register Here


  • 1 PM Advanced Topics
    • multiple solution demos
    • presenting to a mixed audience with different needs
    • vision generation demonstrations
    • handling bugs, crashes, and time challenges.
  • 5 PM Wrap up

ABOUT THE SPEAKER: Peter Cohan, Principal at Second Derivative
Community Web Site:

Peter Cohan is the founder and a principal of The Second Derivative, a consultancy focused on helping software organizations improve their sales and marketing results. In July 2004, he enabled and began moderating DemoGurus®, a community web exchange dedicated to helping sales and marketing teams improve their software demonstrations. In 2003, he authored Great Demo!, a book that provides methods to create and execute compelling demonstrations. The 2nd edition of Great Demo! was published March 2005.

Before The Second Derivative, Peter founded the Discovery Tools® business unit at Symyx Technologies, Inc., where he grew the business from an empty spreadsheet into a $30 million operation. Prior to Symyx, Peter served in marketing, sales, and management positions at MDL Information Systems, a leading provider of scientific information management software. Peter currently serves on the Board of Directors for Collaborative Drug Discovery, Inc. and the board of advisors for Excellin, Inc. He holds a degree in chemistry.

Peter has experience as an individual contributor, manage and senior management in marketing, sales, and business development. He has also been, and continues to be, a customer.

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