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Archive for February, 2009
Yesterday’s post talked about traction as the ability to set and hit goals. Here are three tests for goals to determine if they well-formed for your startup team.
Investors don’t invest in businesses. They invest in stories about businesses.
If you want to raise money on favorable terms, you need multiple investment offers. How do you get multiple offers? Tell a good story to several investors at the same time. A good story can’t sell a pile of garbage, but it will keep a gem from going unnoticed.
You can tell a story in a sentence;
you can tell a story in a paragraph;
and you can tell a story in a 20-minute pitch.
Startups need to do all three.
It’s critical to boil your story down to a sentence and a paragraph as well as 20 minute presentation.
The major components of an elevator pitch are traction, product, team, and social proof. And investors care about traction over everything else.
Traction is a measure of your product’s engagement with its market, a.k.a. product/market fit. In order of importance, it is demonstrated through:
- pilot customers
- non-paying users
- verified hypotheses about customer problems.
And their rates of change.
These are also very good markers for your progress in bootstrapping a company
A story without traction is a work of fiction.
This is especially true of the stories that entrepreneurs tell themselves and the team’s perception of their progress. We cover this in our “Idea to Revenue” workshop, defining traction as “the ability to set and hit targets.” We divide this into internal and external traction. Where internal traction involves the ability to make decisions, to define and deliver to a specification on a schedule and get others excited enough to join the team. External traction is the ability to meet the commitments you make to customers and is measured by revenue and references.
They also encourage the very early engagement with the market that’s also required of bootstrapping.
Put your idea on a piece of paper and start testing it with customers: “Does this solve your problem? How much would you pay for it?”
Pitching Hacks a slim 83 page book that packs a lot of insight into each section. Many longer books have a good 4-5 page magazine article trapped inside, this book has already been boiled to the essentials. It’s a nice complement to the wealth of information on the Venture Hacks blog. Definitely worth $20 if you are wiling to follow at least one of the many pieces of advice in the book.
Looking for feedback on your website?
Want to improve your website?
When: Friday April 17, 2009 11:30 AM -1PM (Lunch Included)
Where: Plug & Play Tech Center 440 N Wolfe Rd Sunnyvale, California 94085
SKMurphy will host an upcoming Peer Review Event for Websites. Three fellow CEOs will present their website while the roundtable will provide feedback. This event is open to all. There are two ways to participate:
- Presenter (whose website will be reviewed by peers) click here to Request More Information http://app.icontact.com/icp/sub/survey/start?sid=1308&cid=155735
- Roundtable Reviewer Signup click here to Register for Reviewer https://www.123signup.com/register?id=zsgmk
Websites may be public or private beta, but we will send out the URL to all attendees in advance.
Costs (includes lunch):
- Presenter $66 (Discount if you attend previous Peer Reviews as a reviewer, we will credit up to 2 sessions)
- Roundtable Reviewer: Early Registration $22 Before April 8, $30 until event.
Three things I’ve learned about networking:
- Good questions sell.
- Listening sells.
- Networking is helping other people: carry more than your own card and connect folks who will benefit from talking to each other.
Ford Harding’s Rainmaking (now with 2nd Edition, see not below) has been a source of inspiration and insight for me, his focus is professional service firms but a lot of it is also applicable to any complex sale that involves orchestration and ongoing service and support. He has a good blog as well.
Related blog posts
- “Customer Development for a Consulting Practice in a Downturn” from October 2008 where I also suggested that
“One good book on consulting is Gerald Weinberg’s “Secrets of Consulting” (he also blogs at http://secretsofconsulting.blogspot.com/ ). He advises that in a week you spend two days doing work, two days marketing yourself, and one day getting better at what you do. If you are working on a product to complement your consulting you might modify that to three days doing work, 1 day marketing yourself, and one day developing your product. As work slacks off divide your time between additional marketing efforts and working on your product.”
- Networking and Referrals from August 2008 offers definitions for both
- Networking is the act of putting yourself in an environment to meet and interact with others.
- Referrals happen when someone introduces you to a third party who might benefit from what you have to offer.
- “Networking in Silicon Valley” from July of 2007 where I observed:
“One of the secrets to navigating Silicon Valley, is that it’s actually a very small place with many connections: some that can take a while to discover are nonetheless quite potent. That being said the single most important thing to avoid is wasting people’s time. Time is more scarce than capital, technology, or knowledge.”
- “Continuing Education in Entrepreneurship” from October 2006 suggests networking offers “knowledge that isn’t written down” (and not to be found in Mr. Google’s basement):
“I had this epiphany that I had spent the last dozen years or so, since I started attending Software Entrepreneur Forum (now SDForum) and Churchill Club meetings, in this ad hoc program in continuing entrepreneurial education. Books are valuable, and not enough entrepreneurs do enough reading, but there is also a category of knowledge that hasn’t been written down yet. And you can gain wisdom from listening to someone who has played the game–even if it’s just their mistakes–that you would otherwise have to gain from your mistakes experience.”
Malcolm Gladwell offers a perspective on networking in “Six Degrees of Lois Weinberg” about the true nature of excellent networkers.
“…people like Lois aren’t bound by the same categories and partitions that defeat the rest of us. This is what the power of the people who know everyone comes down to in the end. It is not — as much as we would like to believe otherwise — something rich and complex, some potent mixture of ambition and energy and smarts and vision and insecurity. It’s much simpler than that. It’s the same lesson they teach in Sunday school. Lois knows lots of people because she likes lots of people. And all those people Lois knows and likes invariably like her, too, because there is nothing more irresistible to a human being than to be unqualifiedly liked by another.”
Update February 19: Ford Harding E-mailed me a reminder to link to his second addition of Rainmaking, called “Rainmaking Attracting New Clients No Matter What Your Field” which has 40% new material in preference to his older addition of “Rainmaking.”
Sean Murphy is speaking at Bay Area Business Growth Meetup on “Leveraging Your Referral Network to Grow Your Business”.
Thursday March 19, 2009 4-6pm
Pacific Business Center
19925 Stevens Creek Blvd Suite 100 Cupertino CA 95014
Referrals from satisfied customers are the best way of generating new business. In the context of established relationships, tools like Send Out Cards, iContact, LinkedIn and others allow people to connect with others and foster networks of friends or colleagues. Sean will walk through a simple referral exercise and also offer a model for how business owners can leverage a customer’s referrals to drive more business.
Getting More Customers – A 90-day Plan
Update Mon-Mar-30: Sold Out. Sorry No Walk-ins (Register to be notified of upcoming events)
Tuesday, March 31, 2008 8:15 AM – 1:00 PM (Lunch Included)
Pacific Business Center 2225 East Bayshore Road Palo Alto CA 94303 650-320-7600
Click here to Register: https://www.123signup.com/register?id=zbmdv
We will cover a variety of proven marketing techniques for growing your business: attendees will select one or two that fit their style and develop a plan to implement them in their business in the next 90 days. As a part of your workshop registration, we will also follow up via e-mail and brief phone calls at two weeks, four weeks, 8 weeks, and 13 weeks to help you track your progress. You will leave with a one page action plan, a workbook, and 90 days of access to a private workspace with the workshop materials to enable you to execute one or two marketing strategies to bring your business more customers.
Cost (Lunch Included):
- Early registration: $76
- After March 14 $98 and free online workspace
- After March 28 $145 and online workspace $28
Click here to Register: https://www.123signup.com/register?id=zbmdv
“This workshop provided great material to bounce off of. SKMurphy created a fertile space for me to think about my business and plan a concrete step forward. Thank you.”
Paul Konasewich, President at Connect Leadership
About the Workshop Leaders
Sean Murphy has taken an entrepreneurial approach to life since he could drive. He has served as an advisor to dozens of startups, helping them explore new options and bring their businesses to new levels. His firm, SKMurphy, Inc., focuses on early customers and early revenue for software startups, helping engineers to understand business development. Prior to SKMurphy, Sean worked in a variety of areas including software engineering, engineering management, application engineering, business development, product marketing and customer support. He has worked for Cisco Systems, 3Com, AMD, MMC Networks, Escalade and VLSI Technology. Sean holds a BS in Mathematical Sciences and an MS in Engineering-Economic Systems from Stanford University.
Steve Moore has over 25 years experience in the RF/wireless industry including roles in design engineering, product management, applications, marketing and sales. He has worked for both large companies (Watkins-Johnson, Trimble Navigation, Symbol Technologies and Micro Linear) as well as for small start-ups (Wireless Access, SiRF Technology and Telencomm). He has a BS in Electrical Engineering from U.C. Berkeley and a MS in Management from Santa Clara University. Steve has spoken on practical aspects of RF/wireless integration strategies at numerous conferences worldwide and has 6 published articles.
- 8:15 AM Breakfast & Registration
- 8:30 AM Workshop begins
- 12:30 PM Lunch & De-brief
Seating is Limited.
For more information contact: Theresa 408-252-9676 email@example.com
100+ EDA Blogs: I have updated the “Bloggers Covering Design Automation” list so that it now has over 100 listed. I think remain on track for 500 blogs by 2011 as I had predicted in “What Happens when 70 EDA Blogs Become 500 in 2011.” It’s clear that this will create a number of opportunities for new aggregation sites.
- Private company consolidations because you have alignment on values and valuations have collapsed in a recession so no argument on price.
- Possible federation of IP companies around a common channel.
One key point he made in the blog post was “In my opinion, there is a substantial untapped System-Level IP opportunities in block level interconnect and memory control–the architecture through which IP is integrated and IP interoperation is achieved.” Hogan also had a long interview in December with Peggy Aycinena as “The Audacity of Design” that’s worth reading.
Wally Rhines had a great keynote at DesignCon 2009 “Common Wisdom Versus Reality in the Electronics Industry” with a couple of key points:
- 1990’s growth rates in teens, average for last ten years about 5%.
- Top three vendors maintain 70-75% market share for least 30 years.
- VC’s continue to invest $200-300 million, this may have changed in 2008/9
- About 50 new EDA startups created every year
- “Recessions are the time that the greatest innovations occur because they have to occur.”
- EDA revenue has “consistently been 2% of IC revenue for the last two decades.”
- Ann Steffora Mutschler’s “EDA Common Sense…Or Common Myths”
- Dylan McGrath “Rhines challenges pessimistic prognosis for EDA“
I am still looking for a copy of the slides.
- “Not everything that counts can be counted; and not everything that can be counted, counts.”
William Bruce Cameron
- “In physical science the first essential step in the direction of learning any subject is to find principles of numerical reckoning and practicable methods for measuring some quality connected with it. I often say that when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely in your thoughts advanced to the state of Science, whatever the matter may be.””
William Thomson, Lord Kelvin (see Kelvin Quotations for more).
Relationships are not best managed by control charts: in some arenas Lord Kelvin was wrong. Complement surveys and metrics with serious conversation and passionate engagement with your customers.
I found myself wandering on a dark road in the rain last night, looking for a meetup organized by Tatyana Kanzaveli that featured a talk by Rob Weltman on “Cloud Computing: Using the Open Source Hadoop to Generate Data-Intensive Insights.” The event was in a banquet room at the Samovar Deli at 1077 Independence Ave in Mountain View, which is tucked into a light industrial pocket in Mountain View that’s dark at night (don’t be fooled by Tri-City Glass at 1077 #C, there is another 1077 that’s the Samovar). Inside it was bright and warm and there were about two dozen folks already eating.
It was a friendly group and after I had sat down and warmed up I thought to myself, here was a microcosm of Silicon Valley, twenty very technical people gathering for a good inexpensive meal and talking about the future of technology, all with an eye to influencing it in some way. Silicon Valley keeps on going despite any downturn or recession. I was reminded of the JRR Tolkien’s “Riddle of Strider”
“All that is gold does not glitter,
Not all those who wander are lost;
The old that is strong does not wither,
Deep roots are not reached by the frost.”
I met Tatyana Kanzaveli for the first time, who proved to be a dynamo, and the buffet at the Samovar was very good. I also had a chance to meet Christophe Bisciglia of Cloudera who was also in the audience. Cloudera offers enterprise-level support for Apache Hadoop users. An ex-Googler (there seem to be more around these days, last year it was almost unthinkable), Christophe offered a perspective on Google’s use of Hadoop. He and Rob Weltman agreed that network design had had a much larger impact on cloud performance than early infrastructure designers had anticipated.
Cloudera’s Hadoop & Big Data blog offered a “State of the Elephant 2008” on Jan-5-2009 that offers a good perspective on the rate of change in the technology (Hadoop is just at version 0.19), here are two excerpts but the whole thing is worth reading if are following Cloud Computing:
At the beginning of the year, Hadoop was a sub-project of Lucene. In January, Hadoop became a Top Level Project at Apache, in recognition of its success and diversity of community. This allowed sub-projects to be added, the first of which was HBase, previously a contrib project. ZooKeeper, a service for coordinating distributed systems, and which had been hosted at SourceForge, became a Hadoop sub-project in May. Then in October, Pig (a platform for analyzing large datasets) graduated from the Apache Incubator to become another Hadoop sub-project. Finally, Hive, which provides data warehousing for Hadoop, moved from being a Hadoop Core contrib project to its own sub-project in November.
The number of open source projects in the distributed computing space continues to grow relentlessly. Here are some that came to prominence in 2008, and have some connection to Hadoop (if only because they are used in conjunction with Hadoop, or perform similar functions). In no particular order:
- Mahout, an Apache Lucene sub-project to create scalable machine learning libraries that run on Hadoop
- Jaql, a query language for JSON data
- CloudBase, a data warehouse system build on Hadoop
- Cassandra, a distributed storage service
- Cascading, an API for building dataflows for Hadoop MapReduce
- Scribe, a service for aggregating log data
- Tashi, an Apache incubator project for cloud computing for large datasets
- Disco, a MapReduce implementation in Erlang/Python
- Hypertable, a distributed data storage system, modeled on Google’s BigTable
- CloudStore, a distributed filesystem with Hadoop integration (formerly Kosmos filesystem)
By coincidence I received two other Hadoop related announcements today:
From Ajay Anand:
The next Bay Area Hadoop User Group meeting is Wed-Feb-18 at Yahoo! 2811 Mission College Blvd, Santa Clara, Building 2, Training Rooms 5 & 6 from 6:00-7:30 pm. Agenda:
- Fair Scheduler for Hadoop – Matei Zaharia
- Interfacing with MySQL – Aaron Kimball
And from Chris Wensel:
Our Hadoop 2 day Boot Camp, to be held on March 5th and 6th, is open for public registration. For a course overview: www.scaleunlimited.com/courses/hadoop-boot-camp. There are only 12 seats in the class. For pricing and registration see www.scaleunlimited.com/courses/hadoop_course_march_5th_and_6th
I sent Kevin Garber an E-Mail yesterday afternoon “I love the product, I would like to pay for it.” I had spent about twenty hours in the last week cleaning up typo’s on www.skmurphy.com and www.bootstrappersbreakfast.com (first of all who knew that there were so many different ways to spell bootstrapper and entrepreneur, to name two of the more embarrassingly frequent offenders). A couple of reasons why spellr.us is an outstanding product and definitely worth paying for.
I have to say first off that they have not announced their pricing, and I am not privy to it, so I am assuming that they will offer some plans in the $10-$50/month range that are appropriate for a firm like ours.
- It’s clearly been in production use for a while. It performed very well and there were a number of features that were the result of serious use.
- It’s very good at detecting misspellings, it can show you what it suspects by highlighting it in the original page, or in the HTML view if that’s necessary (some misspellings can be triggered by splitting a word inserting an HTML tag in the middle, this can be caused, for example by bolding a word in two passes or not linking the entire word.)
- It allows you to build a custom dictionary that’s all your own. Because of the great number of personal names we mention on this blog, plus a fair amount of obscure but valid nomenclature, I ended up creating a 1200 word custom dictionary that can be re-used when I scan this blog.
- It’s fast, the scan takes 1-2 seconds per page. It’s designed to be useful immediately and to run on a schedule to detect new mistakes you have added.
If you have a website of any size, I would encourage you to give it a try. It’s proven so useful for me that I will be happy to pay for it just to be able to rely on it (and to prevent them from deleting my dictionary).
Update Feb-16: Pricing plans posted, free for 20 pages, $24 for 2,000 pages, $47 for 5,000 pages, $267 for 15,000 pages.
In “The Challenges of Measuring Non-Existent Markets” Scott D. Anthony outlines four principal challenges in measuring non-existent markets:
- Data does not yet exist. When a market doesn’t exist, there are no baseline market research reports or time-series data sets to analyze.
- Lack of comparable products. Without existing data, there is a natural tendency to look for good analogies. However, for truly new markets, there typically are no good historical analogies to look for to estimate uptake rate and penetration. Basing estimates off flawed analogies can lead to dramatically incorrect conclusions.
- Existing consumers provide bad data. When a new product or service has disruptive characteristics – that is, it trades-off some dimensions of performance for new benefits around simplicity, convenience and low prices – trying to estimate the market size by talking to existing consumers in markets that appear to be similar to the new market is very dangerous. The existing consumers will naturally discount and denigrate the innovation because they compare it to products and services they are accustomed to consuming.
- New consumers provide unreliable data. Consumers are notoriously bad at visualizing the uses of products or services they are not yet using or do not exist. Because of this, the predictive value of consumer research into emerging markets is low. Furthermore, new markets often develop in surprising ways with surprising consumers, making it difficult to be sure that you are even gathering data from the right sources. Finally, consumers that are currently not consuming a product or service lack reliable reference points, making their reactions to prices somewhat unreliable.
I am aware of two other “customer development” models that are similar to Steve Blank’s “Four Steps to the Epiphany” that are designed to address early market exploration:
- Mark Leslie’s “Sales Learning Curve”
- See HBR “Sales Learning Curve” article
- See Venchar Blog Feb-4-2005 “Sales Learning Cycle” in particular http://www.venchar.com/files/markLeslieSLCslides.pdf
- See “Who Has Time for This?” Blog Sep-7-2005 “Best Startup Advice I have“
- SyncDev “Sell Design Build”
- See “Sell Design Build” White Paper
Slide 28 defines an Earlyvangelist customer
- Has a Problem
- Know they have a problem
- Has Been Actively Looking for a Solution.
- Has Put Together a Solution out of Piece Parts
- Has, or Can Acquire, Budget
Slide 29 Customer Validation: Four Big Ideas
- The goal is to build a repeatable sales process. Orders are proof the process is working.
- Only earlyvangelists are crazy enough to buy unfinished product.
- No orders? Back to discovery process.
- Early customers help spec version 2.
I am looking for other books, methodologies, tools that address the early market exploration problem. In particular that address Clayton Christensen’s observation in the Innovator’s Dilemma that “markets that don’t exist cannot be analyzed” by offering techniques for exploring emerging markets. In particular any recipes for what Christensen calls a parallel process to development (and what Steve Blank calls customer development):
Only by creating a parallel process for developing and shaping disruptive ideas—one that acknowledges their distinctive features—can companies successfully launch disruption after disruption. Such a process relies more on pattern recognition than on data-driven market analysis. After all, markets that do not exist cannot be analyzed. Even when numbers are available, they are never clear.
from “Six Keys to Building New Markets by Unleashing Disruptive Innovative by Clayton Christensen et. al.