Archive for June, 2012

Cliche, Combat, Fellowship, Anarchy, Enigma

Written by Sean Murphy. Posted in Books, skmurphy

S. John Ross wrote a great short essay on “Five Elements of Commercial Appeal in RPG Design” (that I first read in “Things We Think About Games” by Will Hindmarch and Jeff Tidball) that suggested these elements were critical for creating a commercially successful RPG. I think they are also a good way to think about building a successful technology business.

Entrepreneurs Need a Community of Practice Not a Movement

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 4 Finding your Niche, Community of Practice, skmurphy

Entrepreneurs need a community of practice to improve their skills, not a movement they can join as a fad. I don’t consider myself a disciple or part of a movement. I consider myself a practitioner. I am a huge fan of Saras Sarasvathy, Clayton Christensen, Peter Drucker, Gary Klein, and Gerald Weinberg.

How To Run Experiments That Improve Your Business – On-Line Book Club June 20

Written by Theresa Shafer. Posted in Books, Events

Tomorrow, we complete our coverage of “The Innovator’s DNA”. We have a great panel who will share their tips and lessons learned running experiments that improved their products and business models.

Join us Wednesday June 20, 2012
12 noon – 1pm PST

Register at

How is SKMurphy Book Club different from other book review clubs?

There is a large gap between reading a business book or article and applying it to your work. We find entrepreneurs and business leaders who have applied the techniques and methods suggested by the authors and have a candid discussion about what they have learned.  The panel shares stories about what has worked and what hasn’t, offering insights you can act on. It’s a discussion that also includes questions and comments from the audience, with audience questions probing for real insights on how to use the ideas and principles outlined in the book.

Since we selected the Innovator’s DNA as one of the best business books of 2011, we have explored the key skills in five webinars:

Find other recorded sessions at  SKMurphy Book Club for Business Impact

Great Demo! Demonstration Effectiveness Workshop

Written by Theresa Shafer. Posted in Demos, Events


Establish a framework, including skills and processes, to create and deliver improved software demonstrations to increase success in the sales and deployment of your organization’s offerings.


  • Improve demonstration quality and effectiveness, by implementing a standard process and tools for demonstrations.
  • Establish and communicate clear objectives for each demo.
  • Increase probability of success for demo outcomes for real-life situations.
  • Improve communication, preparation and follow-up between sales and presales.
  • Reduce the cost of sales by using demos more judiciously.
  • Increase the average deal size and/or sell additional products and services.
  • Increase existing subscription expansion and renewals.


Participants will learn how to:

  1. Determine the right content for a demonstration, based on the customer’s business needs and objectives.
  2. Organize the content in a novel, logical progression that maps to audience needs and depth of interest – and engage and prove your capabilities within the first six minutes of the demonstration.
  3. Prepare demonstrations using the new method.
  4. Present demonstrations with the highest probability of success in achieving the desired objectives.
  5. Manage a range of real-life situations and scenarios.

Participants complete the Workshop equipped with:

  1. A newly constructed, highly compelling demonstration of your software, targeted specifically for a typical key scenario.
  2. The ability to apply the method to develop equally targeted and compelling demonstrations for other scenarios, products, and situations.

The Great Demo! methodology delivers targeted “what’s in it for me?” benefits right up front, followed by rapid, targeted proof, and then further, more detailed exploration in accord with the audience’s level and depth of interest.  This proven, highly successful method maps extremely well to the specific needs and constraints of audiences that can include senior management, middle management, end users, and IT staff.


1-Day and 1.5-Day Sessions:

The Workshop begins by introducing the method and typical results, generating interest in the participants to learn more.  An understanding of what constitutes demonstrations and the purposes for delivering demonstrations is developed, followed by exploring the reasons why demonstrations can fail and the resulting impact on the organization.

Next, a method is presented that provides the participants with the tools and processes to ensure that the qualification and discovery information necessary to create successful demonstrations is uncovered and communicated.  This segment introduces qualification and discovery steps and methods, and defines roles and expectations for Sales and Technical staff.  Customer-derived qualification and discovery information is then mapped to the specific capabilities to be demonstrated.

Role-play exercises are used to establish the concepts and skills in day-to-day practice for the participants.  The scenarios generated by the participants during role-play are developed further during the course of the Workshop.

The key components for a demonstration are then developed, including the Customer Situation, Illustrations, “Do It” and “Peel Back the Layers” demo pathways.  Components are created in exercises and presented by the participants to the Workshop attendees in role-play, cementing the concepts and establishing desired behavior.  The components are developed and added to the growing demo, with each subsequent role-play reinforcing the skills previously learned.

The method developed up to this point in the Workshop is designed for “ideal” situations, providing participants with a simple, effective process to follow and generating confidence.  The next segments of the Workshop expand the participants’ toolkit to enable improved success with “real-life” situations.

Proven methods for handling questions, changes in agendas, and other interruptions are introduced and practiced.  The use of Demonstration Roadmaps is presented in conjunction with multi-solution and multi-customer-role demonstrations.

Wrap-up for 1-Day Session Participants.

1.5-Day Session:

The second morning provides sufficient time to extend role-play to embrace more “real-life” situations.  Participants incorporate the skills developed on Day 1 and present their new demonstrations “top-to-bottom” during the final role-play exercises.

The additional time also enables exploration of additional demonstration challenges and topics.  Example topics include Remote Demonstrations (e.g., via WebEx), Managing and Out-flanking Competition, Uncovering and Leveraging Value, RFP’s and Scripted Demos, New Product Roll-out Scenarios, Team Tactics (sales/presales choreography),  Managing POC’s and others.

Marcelo Rinesi: The Expertise Light Speed Barrier

Written by Sean Murphy. Posted in 1 Idea Stage, Rules of Thumb

The following article is copyright Marcelo Rinesi and was originally published in October 2009 on the now defunct “Frontier Economy” website as “There is No Quick Way To Win The World Cup.” It is republished here in it’s entirety with his written permission. I think his fundamental insight about how long it takes to develop expertise around a new tool or technology has profound implications.

Winning the soccer World Cup, or even just getting into its final stages, is a very difficult achievement. Some countries make it look easy, just like professional athletes can make extraordinary physical feats seem “just a bit above average,” but in fact it takes many years of concerted effort to arrive at that level of collective skill.

The key to the delay inherent in the development of world class performance, whether in sports or in other activities, is the often-mentioned rule of thumb of it taking about ten years of focused practice from an individual to become an expert in a discipline. This often requires people to begin training at very young age; professional sports is perhaps the most visible example of the tendency to professionalize the management of highly skilled individuals at ever-younger ages.

But turning young kids into young soccer cracks that will later become national heroes requires not only their raw potential, but also numbers (that is, a society large and interested enough in the sport that there is an ample pool of talent to select from) and teachers, which themselves have to be well-versed in what they teach. This can take at least a couple of “generations” of experts to develop, a development course that cannot be sped up much by applying more resources. For example, while wealthy countries routinely hire expert coaches and physical trainers, even well-defined activities like competition sports involve a complex network of skills and traditions which cannot easily be transplanted from one place to another.

The same rules of expertise acquisition apply to all endeavors in business and industry. While political and economic time frames are constantly getting shorter, a failure to take into account the basic rates of human capital accumulation can make leaders underestimate the time required to replicate a successful organization elsewhere. Recent histories of quick and sustained economic growth have generally been preceded by at least a decade of deliberate human capital accumulation, something not all political or management cultures are willing to support.

Also, it’s interesting to note that the Internet as a large-scale phenomenon is still very young; it doesn’t have much more than a decade. It could be argued that the “Web 2.0” explosion (which was, in fact, implied in much of the pre-Internet literature) could be at least in part related to the fact that only now does the world count with a large and highly skilled workforce with years of Internet-scale computing experience. This isn’t meant to disparage technologists of previous eras. It is undeniable, though, that the only way to gain experience with Internet-scale computing is to work with an Internet, and there wasn’t one available until recently.

So although technologies seem to appear at ever-faster rates, we still only come to fully dominate them years later. Will this gap ever be reduced? Should we manage to defeat the “expertise light speed barrier” and find ways to teach and learn much more effective than anything before, it would have an astounding impact on our societies and economies. Until then, we need to be wary of the time investment associated with the development of expertise… and realize that just because a technology has been with us for a few years, it doesn’t mean we are fully aware of what it can be used for.

Answering Questions About Your Product In An On-Line Forum

Written by Sean Murphy. Posted in Community of Practice, skmurphy

Situation — you have joined an on-line forum or e-mail list where participants discuss issues related to your product or applications or needs that your product is used for. Someone posts a question in an on-line forum along the lines of:

  • What tools are people using to solve problem X or need Y?
  • What are the pros and cons of choosing tool A vs. tool B (where you offer tool A)?
  • What are the strengths and weaknesses of solution B vs. solution C (where you still offer tool A)?

Recognize that you and vendor B and vendor C are all stakeholders in promoting the category: why do people select a commercial solution instead of rolling their own or using free or open source alternatives. In general you want to adopt the tone and perspective of a knowledge user not a cheerleader or advocate. This is a different situation than someone walking up to you at a trade show booth and asking for a sales pitch.

When there is very little context provided by the person asking the question it’s often better to start with some additional objective questions to better understand their particular needs, constraints, workflow or overall situation.

Acknowledge that both tool B and tool C are good solutions unless they are not at all appropriate. Mention other solutions that are also viable.

Point to objective third party write-ups of how to make the decision. Help the poster walk around the issues; don’t just advocate for your offering. Software, whether installed or SaaS, is the promise of an ongoing relationship with a customer, not a one time transaction. You are not selling a wedding dress–something that will normally only be purchased and used once in a lifetime–you are selling a tool that your customer will rely on going forward.  You want to act like a trusted advisor not a used car salesperson.

If you are selling a tool or service that is normally only used once (e.g. how do I migrate my data from X to Y and I am not going back) then focus on the results and how to measure them. Explain your process steps and quality control measures.

Be frank about the weaknesses or shortcomings of your offering that are relevant to the situation described in the question or uncovered in response to your request for more context. Acknowledging shortcomings increases credibility; if a user were writing in they would talk about relevant shortcomings of the solution they were recommending.

Offer one or two reasons why named customers have told you they chose your solution. Tie these back to the objective questions you asked in the beginning.

It’s critical to understand the problem the customer is trying to solve so that you highlight relevant capabilities that your product or alternatives offer for the particular use case. While the sales team at the Jaguar dealership cannot figure out how those poor guys selling Fiats make any money because no one ever walks into their dealership who wants a Fiat, consumer Reports still covers both in their buyer’s guide. Public comments in a forum should be more like a buyer’s guide than a sales pitch.

Summary: your fundamental goal is to be viewed as a valuable contributor to the community.

  • Building credibility is the result of a series of posts that allow you to be viewed as a member in good standing.
  • Good posts normally include one or more of the following
    • Objective questions aimed at a better understanding of situation and context for decision.
    • Objective statements either about your offerings shortcomings or assessments from third parties.
    • Real stories from customers that are relevant to the situation.

Verify Your Market Insights Against A Variety of Information Sources

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

While we stress the value of serious conversations with prospects and customers there are other sources of market insights on emerging opportunities for your current product or next offering. I have placed them on a spectrum that runs from a macroscopic view based on objective measurements and numbers to a microscopic view that is more subjective and based on stories.

Shelly Gordon of G2 Communications at Sunnyvale BB Tue-June-19

Written by Sean Murphy. Posted in Events

Compare notes with entrepreneurs who eat problems for breakfast.Shelly Gordon, from G2 Communications Inc., has come to a couple of Bootstrapper Breakfasts® in the last year and offered very practical suggestions on how to tell the story of your startup and where to look for coverage.  We have asked her to share her insights on the “How to turn my problem solving idea into a remarkable story” at our next Bootstrapper Breakfast Tuesday June 19 at 7:30am at Coco’s in Sunnyvale.

Our format with a speaker is only slightly different than our regular roundtable discussions. After the regular round of introductions and suggestions for issues to be discussed the speaker makes about six minutes of prepared remarks, takes questions from other attendees, and then joins our regular roundtable conversation.

Great PR is about developing great stories of influence that journalists, bloggers, etc. want to write about and your market wants to read/view/listen to. Bring your questions on:

  • How to approach journalists & bloggers
  • Crafting your story

Come prepared to tell us a story about your fledgling idea; product; solution to a problem; or new service. Rather than simply describe your new business venture; tell us a story.

If you haven’t been to a breakfast before:  we start promptly at 7:30am with introductions; the formal event ends at 9am but you are welcome to stay after and talk to other attendees afterwards. Come prepared to introduce yourself and offer at least a one sentence summary of where you are in your entrepreneurial journey. There is one conversation around the table that is moderated by a volunteer: the breakfast is a chance to compare notes on operational, development, and business issues with peers. Vast majority of attendees are focused on technology startups but all are welcome.

Exits vs. Enduring Companies

Written by Sean Murphy. Posted in Silicon Valley, skmurphy

VCs and angels may talk about changing the world, but their business model rests on a more prosaic calculation: Buy low, sell high. They invest in companies they think will become more valuable, so they can sell their stake for a sizable profit. From the time that VCs invest in a company, they have five years—10 at the most—to sell their entire position, hopefully for many times more than their original investment. After that, it doesn’t matter to them whether the company survives a year or a century.

To put it another way, the VC model is based on creating wealth for investors, not on building successful businesses. You buy into a company early on and sell out a few years later; if you pick well, you can make lots of money. But your profits don’t accrue to the company itself, which could implode after your exit for all you care. Silicon Valley is full of venture capitalists who have become dynastically wealthy off the backs of companies that no longer exist.

Felix Salmon “For High Tech Companies, Going Public Sucks

Marc Andreessen’s selection as “The Man Who Makes the Future” in a recent Wired cover and interview highlighted five key idea and related project or companies he started as a result:

  1. 1992: Everyone Will Have the Web  (Mosaic at NCSA)
  2. 1995: The Browser Will Be the Operating System (Netscape)
  3. 1999: Web Businesses Will Live in the Cloud (LoudCloud)
  4. 2004: Everything Will Be Social (Ning)
  5. 2009: Software Will Eat the World (Andreessen Horowitz)

It’s interesting that there is no mention of Jim Clark recruiting him to start Netscape, he does have an interesting aside as to how ephemeral even significant products can be:

Andreessen: One of the first times Zuckerberg and I got together, in 2005 or 2006, he stopped me in the middle of conversation and asked: “What did Netscape do?” And I said, “What do you mean, what did Netscape do?” And he was like, “Dude, I was in junior high. I wasn’t paying attention.”

Felix Salmon offered a less enthusiastic endorsement than Wired:

“In many ways, Andreessen’s entire fortune has been built on the greater-fool theory: if you build something trendy enough, there’s probably going to be a huge lumbering company out there somewhere willing to overpay for it. Hence the buzziness of the Wired interview — clouds! social! SAAS!”
Felix Salmon in “The Problem with Marc Andreessen

Salmon’s assessment echoes Chris O’Brien 2009 profile, “The Curious Case of Marc Andreessen” written just prior to the launch of Andreessen Horowitz, which triggered a Curious Case of Marc Andreessen Part 2. Some excerpts

And then there’s Marc Andreessen, the businessman, who seems to me to be — how can I put this charitably? — a bit of a dud.  […]

I don’t want to imply he’s a failure, because he’s not. But when I look at Andreessen’s business track record, I’m less interested in his checking account than the financial statements of his companies. As far as I can tell, Andreessen has never started or operated a profitable business, with one exception: Netscape turned an annual profit, back in 1996 when it posted a $19 million profit. Of course, that was when the company still charged you $49 to buy a copy of Netscape Navigator. Once Microsoft started giving its Explorer browser away for free, that was all she wrote. Andreessen and Netscape couldn’t figure out another business model, and vanished a couple of years later in a complex deal with Sun Microsystems and AOL that was announced November 1998.


Andreessen’s reputation has only risen as he has emerged as a leading angel investor for the Web 2.0 industry, advising or investing in companies like Facebook and Twitter. These companies reflect the philosophy of service and technology over revenues and profits.


Of course, at some point, these priorities have to change. A company has to actually make money. Innovation can’t be sustained by creating a venture-backed Ponzi scheme where one money-losing start-up is sold to another, which is then sold to another.

Losing money indefinitely isn’t just a financial failure. It represents a failure to truly understand how a service or product is creating value for a customer, how to communicate that value, and how to persuade the customer to pay above and beyond for that value.

That, all too often, is where the valley still falls short: Failing to innovate around the business to the same degree it innovates around the technology.

Three years after O’Brien’s article his assessment seems prescient.

Getting Started and Managing Rejection

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage

Q: An incubator rejected me because they didn’t feel I was working on an important problem. While I can respect their decision I feel that I need to prove them wrong by making my idea work.

A: It’s your startup: your interests, experiences, and skills have to be a part of the equation.

If you find your idea energizing I would not worry about the incubator admissions staff rejecting it: whatever your idea you will find most people you talk to rejecting it until you get all of the kinks worked out. The incubator may well be right, but that does not mean you should not still pursue your idea if you find it energizing.

If you persist in customer discovery you will find ways to improve your initial product idea (and more than likely refine your target customer and how you talk about their problem and your solution) and it will become more compelling.  I think you have to follow your own interests not work on someone else’s plan. This does not mean that you should ignore a customer when they tell you that something else is a bigger problem for them and would you mind helping them with that instead. But investors–I think in this case the incubator is acting more as an investor than a customer–tend to follow fashions than what’s genuinely needed.

I would try and find at least one other person who is energized by it as a team of two has a much higher chance of success and if you can’t convince at least one other person in three to six months then perhaps you should reconsider.

When you consider who might make a good business partner or co-founder select first for shared values.  Don’t worry as much about the idea, in fact you can spend time helping them with their great idea and vice versa and over time you may find a way to blend them. You can do this with two or three people at once on different ideas just to get a better sense of what it would be like to work with each of them.

Don’t let someone’s rejection “put a chip” on your shoulder. They have doubtless forgotten about you and it’s not a path to value creation for the most part. I see a number of entrepreneurs pursuing an idea to prove someone wrong in an argument that they had months–or worse years–ago.  This can  also lock you into an unwillingness to improve your idea, because changing it means that the incubator was right.

At the same time you may be tempted to set too high bar for yourself by the incubator’s rejection: don’t feel that you need to find a compelling idea before you get started. Just start with an idea that energizes you. Start where you are with what you have available to you. Saras Sarasvathy’s model of effectual entrepreneurship is the best one I have seen so far for the mindset that’s required in very early ventures and new markets.

Relationships are as much of an asset as knowledge. Pick a group of people you have an affinity for and talk with them about problems they face with tasks that they are trying to accomplish or their job or firm as a whole.

Look for problems that group has where collecting and documenting the work-arounds and partial solutions has value. This normally means that the group as a whole knows that they have a problem and are looking for a better solution. For example,  I am working with a team that is helping caregivers address what doctors refer to as the polypharmacy problem (and you or I would call “grandma has a big bag of pills to take every week”). There are many ideas and solutions already available that have various degrees of impact and effectiveness: documenting what helps and when has value in and of itself.

Look for groups that have not adopted a particular solution and probe for what’s missing or what’s wrong with the value proposition. It’s also useful to look across industries, what has been adopted in X but not in Y.

For B2B markets always do a workflow analysis. Understand what their business, processes, job content, and task look like before and after the introduction of your solution. Calculate the impact using their description and their estimates for quantities and frequencies and then probe for the implications:

  • “It sounds like this is costing you $100K every quarter.”
  • “It sounds like it’s taking two of your people full time to fix this problem who could be working on something else if this error went away”
  • “It sounds like you are losing 30 minutes a day on this”

Allow them to tweak their numbers. Asking them how much they would spend without doing a workflow analysis is essentially asking them to figure out the full impact in their head, it deprives you of the opportunity to explore the implications and determine the real value drivers.

You have to play your own game using your own unique skills and focus on creating value. Don’t be afraid to team up or even work for another startup or another large firm as a way to learn more rapidly.

See also

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