Pitching Hacks Has $20 Worth of Advice for Bootstrappers As Well

Written by Sean Murphy. Posted in Books, skmurphy

Although it’s aimed at startup entrepreneurs who are seeking investment, the Pitching Hacks e-book from the Venture Hacks team has $20* of advice for bootstrappers as well.

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:

  • profit
  • revenue
  • customers
  • 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.

William Feather on “Dead Business”

Written by Sean Murphy. Posted in 2 Open for Business Stage, Books, skmurphy

Another excerpt from William Feather‘s “Business of Life

Dead Business

A neighboring grocery store went bankrupt, and a bookkeeper who was called in by the lawyers to help inventory the bankrupt stock says he never before realized the difference between a dead business and a going concern.

Here were cheese and vegetables and meat, he found, which would have been salable the next day if the store had kept open. Here were accounts with nearby customers which might have been paid by the next payday, but now would have to be turned over to a collection agency. Here were canned goods which could have gone to make up the weekday meals of a hundred families, but now would have to be sacrificed as “bankrupt stock.” No one who has not helped to salvage a disordered store and turn odds and ends into cash at a quick sale can realize how much it shrinks in value.

Every business accumulates a friendliness on the part of the customers which becomes part of its stock in trade. The habit of stopping at a certain store to buy, or the familiarity which leads one to ask for an advertised brand of anything, forms an asset as important as building and fixtures. It is this fact which enables companies about to issue stock for public sale to place a large value on their good will and to issue stock for its full amount. The money which has been invested in years of careful advertising builds up a fund of good will solid enough so that bankers lend money on it–when they lend money on anything.

My copy of “Thoughts on the Business of Life” is copyright 1949 with individual articles copyrighted between 1927 and 1949, so I can only limit the date of this article to between 1927 and 1949. It’s certainly still applicable today, and as applicable to knowledge businesses as it is to retail firms.

Entrepreneurs who are facing the challenges of closing a deal with their first few customers can be surprised how hard it is to get on prospect’s calendars and get them to return calls. Problems that will be an order of magnitude easier to manage once the prospects become customers. Credit relationships with suppliers, partners, and customers can also take a long time to establish and are equally valuable.

As you consider how to get through the recession of 2009 (or what I hope will be called the recession of 2009, instead of the recession of 2009-2010) Feather’s observations from perhaps 80 years ago are well worth bearing in mind. Find a way to continue to operate, even if in a reduced fashion, as a set of ongoing customer and supplier relationships have considerable value and act as a force multiplier on your other assets.

I close with two related quotes on reciprocal obligations from Margaret Atwood’s essay “A Matter of Life and Debt

Debt–who owes what to whom, or to what, and how that debt gets paid–is a subject much larger than money. It has to do with our basic sense of fairness, a sense that is embedded in all of our exchanges with our fellow human beings.

We are social creatures who must interact for mutual benefit, and–the negative version–who harbor grudges when we feel we’ve been treated unfairly. Without a sense of fairness and also a level of trust, without a system of reciprocal altruism and tit-for-tat–one good turn deserves another, and so does one bad turn–no one would ever lend anything, as there would be no expectation of being paid back. And people would lie, cheat and steal with abandon, as there would be no punishments for such behavior.

Here are some earlier blog posts that include excerpts from William Feather’s “The Business of Life.”

Customer Development for a Consulting Practice in a Downturn

Written by Sean Murphy. Posted in Books, Consulting Business, Customer Development, skmurphy

What follows are some real questions I have answered either face to face or in e-mail over the last 90 days in response to the current downturn in Silicon Valley.

Q: I just completed my first two years of consulting–which were spectacular–after 20+ years of full time work. But long term clients have just dropped me, and after a rather frantic couple months of chasing every lead I could, and exhausting my list, I am facing the imminent need to shut down my operation and go back to getting a job somewhere. What can I do?

A: One book you might read is “Rainmaking” by Ford Harding (an excerpt from page 22, emphasis added)

For your own business you must gain a feel for two variables. The first is the typical gestation period from the time you first make contact with a prospect to the time you actually sign him as a client. Depending upon your business this can range from a couple of months to over a year. The second variable is the typical conversion rate from prospect from client. This may have several subsidiary rates. […]

Understanding them will help you complete the following sentence, which underlies one of the key principles of marketing:

I need x prospects today to have a reasonable assurance that I will have a new client in y months.

Professionals do not often think enough about the implications of this sentence. They become focused on the pursuit of two or three hot prospects, and once these projects are either won or lost, find that they have too few others in the early stages of development to generate the business they will need in the months to come. This is one of the major causes of “porpoising,” the radical and repeated swing from too much work to too little that  so many organizations face. To avoid porpoising you must market and not just sell. To minimize porpoising you will need to generate a continuing flow of new leads.

Q: Is there anything that a professional organization offers in aiding members to get more leads?

A: One of the principles of lead flow is that you have to give to get. Professional communities are not a lead generation service. One of the key points in the “Creating a Consultancy Out of What You Practice” article Theresa referred to in “Two Professional Groups for Consultants” was this one:

Consultants often refer one another to clients they can’t satisfy. “Some get more jobs than they can handle or they get a job that’s not quite right for their expertise,” says Mr. Maclay. They may recommend you to a client, and you should reciprocate when it makes sense, he explains.

As you are out there “frantic..chasing every lead” carry others folks cards and website addresses with you so that even thought it’s not a fit for you it may be a good fit for someone else. I refer business to other consultants frequently. You have to see yourself as part of a larger system or community that will prosper together (or not). See also my “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.

Q: I’ve read all the books and really don’t see the merits of all the standard tricks about having a sexy website, publishing a regular newsletter, teaching seminars, etc. I’m sure it’d all help, but it seems like foolish advise for someone starting out. If you don’t have a personal inside referral, or unless the market is so hot and they’re so desperate that they are Googling for you, all the rest is just noise that they’d rather do without.

A: A website, a regular newsletter, seminars are all good ideas for marketing your expertise.  They are not noise. Talk to folks who have been consulting  five or ten years not just two. If you don’t have a website you don’t exist. I apologize if this sounds too judgmental, it’s certainly challenging times, but establishing a consulting practice that can survive a full business cycle is not easy. It may take longer to succeed than you have runway, in which case finding a part time regular job may allow you to ease into it or a full time job may be more of a fit with your nature. Here are some rules of thumb we have tried to follow over the last five years at SKMurphy, Inc.

  1. Once you let one client get to be more than a third of your revenue, certainly if they are more than half, you may have inadvertently let them become your employer because you become afraid to tell them “No.”
  2. As a consultant your job security is your ability to get new work. You need to be continually marketing yourself to avoid “porpoising” or going deep on one or two clients and then going idle until you can find your next big client.
  3. It’s almost always easier to look for new clients when you have existing client work: it increases your confidence and improves your negotiating position.
  4. 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.

Update February 19, 2009: 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.” The page/quote cited in this blog post are from his first edition.

Ten Key Books for Busy High-Tech Execs @IEEE-SCV-TMC Nov-6-2008

Written by Theresa Shafer. Posted in Books, Events, skmurphy

Sean is speaking Thursday November 6 at the Santa Clara Valley Chapter of the IEEE Technological Management Council on “Ten Business Books in One Hour for the Busy High-Tech Executive.”

Spend an hour and leave with a summary of key business insights and some rules of thumb for successful innovation in Silicon Valley. You might even identify one or two books that you haven’t read that will be worth your time. Sean will cover ten books that form the basis for conventional wisdom in Silicon Valley. They provide the terms, the metaphors, the parables–in short the language–that successful businesses use to develop their plans and monitor their execution. Some of these books are old, but still provide succinct guidelines for adoption decisions organizations have to make when deploying or introducing new technology.

Authors like Clayton Christensen, Geoffrey Moore, Peter Drucker, and William Davidow provide a strategic framework for high technology business; they explain how the world works. Steve Blank’s “Four Steps to the Epiphany”, Doug Hall’s “Jumpstart Your Business Brain” and Michael Gerber’s “E-Myths Revisited” offer valuable perspectives on business; they explain how teams need to view the world. Finally, Peter Cialdini, Al Ries and Jack Trout offer useful insights and rules of thumb for how to influence and act as a change agent both within a company and externally.

Entrepreneurs, Luck, and Silicon Valley

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

Two articles from June of 2003, the month I decided to start SKMurphy, Inc. First up is “Life in the Bust Belt” by Po Bronson in Wired with the following observations that reflected much of the conventional wisdom in Silicon Valley at the time:

As a regional economy, Silicon Valley will steam ahead splendidly; as an icon, however, it’s over.

Perhaps most telling is a newfound and poignant reluctance when it comes to startups. Says one San Francisco entrepreneur who founded three companies, “I never want to start another company again. I saw an ugliness in human character that destroyed my faith in the common man.”

I doubt startups will ever become commonplace again. Most new products will be funded and developed through intrapreneur programs at well-established companies. Venture-funded startups will be reserved for only the rare great ideas. They’ll be highly watched anomalies, a spectator sport for the average Highway 101 commuter.

Silicon Valley 3.0 needs people who are good at working a single problem for several years. The kind of people who don’t find themselves saying, after only six months, “Enterprise server software has gotten old.” People who don’t mind that it takes two years to be promoted from Web engineer to bottom-rung manager

As my uncle John used to say “It’s generally accepted, so generally accepted it may not be true at all.” So far at least Mr. Bronson has proven to be too darkly pessimistic. Two month earlier, in April of 2003, Roger McNamee wrote “The New Normal” for Wired (that later became the book, “The New Normal“)

In the New Normal, the trick is to get real about the new set of challenges we face and what it takes to win in an environment where there are no shortcuts. “You have two choices,” says McNamee. “You can say, ‘I’m out. I’m never going to do this again.’ Or, if you’re a lifer, you say, ‘Okay, what lessons have I learned? Because I have to do it again, whatever the circumstances in the marketplace. I’m just going to be a lot smarter this time.’ If you’re willing to do some homework, and if you’re willing to be a little different from everyone else, there are countless opportunities worth pursuing. That’s what the New Normal is all about.”

Which brings me to the second article “How To Make Your Own Luck” by Daniel Pink in Fast Company.

It’s really a summary of Richard Wiseman‘s “The Luck Factor: Changing Your Luck, Changing Your Life: The Four Essential Principles.”

  1. Maximize Chance Opportunities: Lucky people are skilled at creating, noticing, and acting upon chance opportunities. They do this in various ways, which include building and maintaining a strong network, adopting a relaxed attitude to life, and being open to new experiences.
  2. Listen to Your Lucky Hunches Lucky people make effective decisions by listening to their intuition and gut feelings. They also take steps to actively boost their intuitive abilities — for example, by meditating and clearing their mind of other thoughts.
  3. Expect Good Fortune Lucky people are certain that the future will be bright. Over time, that expectation becomes a self-fulfilling prophecy because it helps lucky people persist in the face of failure and positively shapes their interactions with other people.
  4. Turn Bad Luck Into Good Lucky people employ various psychological techniques to cope with, and even thrive upon, the ill fortune that comes their way. For example, they spontaneously imagine how things could have been worse, they don’t dwell on the ill fortune, and they take control of the situation.

How To Ask An Expert For Help

Written by Sean Murphy. Posted in Books, checklist, skmurphy

Entrepreneurs often have to ask an expert for help. Here is some great advice by Andrea R. Nierenberg in the “Ask the Expert” column of this month’s New York Enterprise report.

Q: Like most small business owners, I find there aren’t enough hours in the day to accomplish all I want to do. Plus there is another, growing demand on my time — people who call me and e-mail me asking for my advice, help, etc. I feel that as a growing business, I need to get back to anyone who communicates with me, and I am aware that these contacts may provide some opportunities for my company. But the sheer volume is beginning to bog me down. Do I owe a response to everyone who contacts me? If so, how do I handle it all?

A: I have been a business owner for over 13 years, and a week does not go by without someone calling or e-mailing me to “pick my brain” (a phrase that, by the way, I detest). While I always believe in the courtesy of responding to everyone, I am also a stickler for time management. Here is how I handle my inquiries:

When someone calls, I immediately say, “I have five minutes: how can I help you?” As the caller starts to tell his story, I stop him or her and say, “Would you mind writing down your specific questions and let me know what you have done so far to seek a solution? Then, please e-mail them to me, in bulleted form, so that we can arrange a follow-up meeting or phone call. This way, I’ll be prepared and we can get right to the matter.” Here is the funny thing: About 5% of the people actually follow up. I have found that while many people say they want your advice, time and suggestions, they will never act on what you say — so I find out in advance by asking them to meet me halfway. The ones that are serious about soliciting my advice or opinion will follow through.

With an E-mail inquiry, I will basically give the same sort of reply. Like many people, I carry a BlackBerry and I will glance at my e-mails all day long. But for the sake of time management, I often wait to answer them all at once, when I have a mini-block of time.

To keep things under control, it’s also crucial to batch these kinds of calls by category and importance. Don’t stop and start on each inquiry that comes in without finishing your prior work. You will only get more bogged down.

A caveat here: If during the first few minutes of the phone call, or if in reading the initial e-mail, I know I cannot help this individual or provide useful advice, I immediately say so; if possible, I may refer him or her to someone else. The last thing I want to do is waste time figuring out “some way” to help someone when I know that ultimately I won’t be able to.

Regardless of who calls, always take those few minutes to listen carefully and be courteous. Be firm, stick to your time limit, and remind them that you can talk to them at a later date, when you have blocked out the time. Let people know that your time is valuable and help them get to the point. I’ve made some great connections and contacts through lending a helping hand, and I firmly believe that what goes around does come around. You just have to set up your rules so that your helping hand remains just that and you can get on with the business of running your business.

I don’t know that you should be quite so brusque with prospects, but let’s turn this around for a minute and assume you were going to ask an expert for help. I think there is some good advice here if you are planning to ask someone with expertise for help.

  • If it’s in writing (for example in a forum):
    • Outline very briefly who you are
    • your situation or problem
    • what you have done to investigate and/or solve the problem
    • what specific alternatives you are trying to choose from or have ruled out
    • Any other directly relevant information
  • On the phone: E-mail ahead the information above adding
    • who suggested that you contact the person
    • how helping you might also help the other person
    • end your call in five minutes or less unless the other person is clearly interested in talking
  • Approaching a speaker after a talk
    • Introduce yourself, exchange business cards, and ask if they mind you e-mailing a question about “X” in less than thirty seconds. Especially if there are folks behind you the speaker may be anxious to chat with them briefly as well.
    • When you follow up mention where you met them and that they said is was OK to follow up (unless they didn’t say it was OK, in which case don’t).

I am amazed at the number of folks who ask questions on forums without doing any basic homework. It’s much more motivating to read they have tried six things and are now asking for help because none of them gave a satisfactory answer. I am disappointed at events by the number of folks who strike up long conversation with the speaker and there are half a dozen or a dozen people in line. You can always get back in line or wait until the line clears to see if the presenter wants to have a longer conversation.

Chapter 6 “Knowing Who Knows, Plugging Into the Knowledge Network” in How to be a Star at Work by Robert Kelley also details an excellent model for connecting with experts stressing the need to

  • Build your network before you need it, if possible.
  • Be very mindful of people’s time and don’t waste it.
  • Give careful thought to how you phrase your request or question.
  • Summarize your attempts to solve the problem or find the information you as asking for help with.
  • Verbally thank and follow up in writing, publicly credit.

Update Jan-21-2011: William Pietri suggested Eric Raymond’s “How To Ask Questions The Smart Way” that has a lot of good advice for how to ask an expert a question in forums and e-mail groups.

Related Blog Posts

Entrepreneurial Innovation Comes More From Borrowing & Combining Than Invention

Written by Sean Murphy. Posted in Books, Quotes, skmurphy

I came across a good quote on innovation and invention in a  2004 article in Fortune Magazine by Harold Evans called “What Drives America’s Greatest Innovators“ (emphasis added)

[The] defining characteristic of the innovator: a determination to bring a brainwave into the bustle of the marketplace. […]

More innovations come from borrowing and combining than simple invention. “I invented nothing new,” Henry Ford said, “I simply assembled into a car discoveries of other men behind whom were centuries of work.” It sounds easy, but it emphasizes another quality more significant than originality: imagination as manifest in the ability to see relationships.

Harold Evans is the author of “They Made America” which was also made into a four hour PBS special.

Understand, Believe, and Act

Written by Theresa Shafer. Posted in Books, Consulting Business, Favorites, Startups

The sales process may seem like a simple exchange – you convince a prospect to accept your product or service in exchange for their money. However, there are a number of overlapping processes running to get you to that point.

A few thoughts about one of them: the process that prospects go through to decide if they are going to buy from you. Jerry Weissman has framed this as Understand, Believe, and Act.

First a prospect must understand what you have to offer. This is straightforward when your product is a better, faster, cheaper version. But this is much more difficult when it is an innovative technology. Demos and sales pitches become critical. We joke that “If you are looking for smarter prospects who will understand your offer, then maybe your demo sucks!” Sadly, this is often the case (we have even had to apply it to our pitches from time to time).

Presenting an innovative technology in a way that’s understandable to a prospect is never easy. The language, the problems, and why it is better must be grounded in the prospects world. If you give a prospect a feature list, some will be able to “get it”, but not many. To reach most prospects, you must start from a problem that they know they have, and offer a solution they can understand.

Secondly, prospects must believe that your innovative technology will actually deliver them the benefits you promise. New technology always brings risk. They may risk losing their job–or at least putting a “dent in their career”–if you don’t deliver! The first people who will trust you are folks with whom you already have a prior shared success. They know you can deliver. Usually these people are the source for your early sales. When your first clients say “I used it and it worked” to their friends they give you credibility. Eventually you must get to strangers referring other strangers to buy. Testimonials on your website are critical for prospects believing your claims. Testimonials, like your demo, must be in the language customers use and from people who are credible.

Only after they understand and believe will customers ever act. But they act on their own cycle, whether it’s a certain point in the product development process, a certain time of year, or a phase of the moon. It’s their timing! Your challenge is to make sure they remember your offering when they are looking for it. For this reason you need a method of reminding those people that you have a solution. We call this percolating. This is the function that applications like Salesforce provide: you can set up a sales campaign to remind you to contact everyone who is percolating every 6 weeks or so (or whenever they wanted to hear back from you next). Another method we have seen work well are newsletters. If you can help your prospect and send them something useful every 6 weeks, people will join the mailing list and remember you when they have a problem you can help them solve. Be there when they are ready to act.

Jerry Weissman On Persuasion: Getting From Point A to Point B In Your Presentation

Written by Sean Murphy. Posted in Books, Consulting Business, skmurphy, Startups

I wrote earlier in “Kierkegaard On the Art of Helping Others To Understand” about the need to understand where what Jerry Weissman calls “Point A” is for a prospect. Here is an excerpt from his book “Presenting to Win: The Art of Telling Your Story” (pages 6-7, emphasis in original) on persuasion.

Persuasion: Getting From Point A to Point B

All presentation situations have one element in common.

Whether it’s a formal presentation, speech, sales pitch, seminar, jury summation, or a pep talk, every communication has as its goal to take the audience from where they are at the start of your presentation, which is Point A, and move them to your objective, which is Point B. This dynamic shift is persuasion.


In psychological terms, Point A is the inert place where your audience starts: uninformed, knowing little about you and your business; dubious, skeptical about your business and ready to question your claims; or in the worst-case scenario, resistant, mentally committed to a position contrary to what you’re asking them to do.

What you are asking them to do is Point B. The precise nature of Point B depends upon the particular persuasive situation you face. To reach Point B, you need to move the uninformed audience to understand, the dubious audience to believe, and the resistant audience to act in a particular way. In fact, understand, believe, and act are not three separate goals, but three stages in reaching a single, cumulative, ultimate goal. After all, the audience will not act as you want them to act if they don’t first understand your story and believe the message it conveys.

Nuts, Bolts and Jolts by Richard Moran

Written by Sean Murphy. Posted in Books, Quotes, skmurphy

Between 1993 and 1998 Richard A. Moran authored four books of business advice–similar in tone and size to H. Jackson Brown’s 1991 “Life’s Little Instruction Book“–that were collections between three and four hundred bullet points of pithy advice:

  1. Never Confuse A Memo with Reality (1993)
  2. Beware Those Who Ask For Feedback (1994)
  3. Cancel the Meeting, Keep the Doughnuts (1995)
  4. Fear No Yellow Stickies (1998)

Moran has put all four books in a blender and created a synthesis with “Nuts, Bolts,and Jolts: Fundamental Business Lessons You Must Know,” retaining most of the bullets from all four books but organizing them into chapters with a couple of pages of expository perspective to frame and counterpoint their epigrammatic style.

What follows is my selection of his seven best observations for entrepreneurs.

“Easy projects, easy sales, or hot new business opportunities
are like children’s soccer; everyone clusters around the ball.”

As a startup you are better served to be far from the crowd at least initially so that you can learn in (and own a niche) of your own.

“Learn the difference between running a meeting and leading a group.”

Lead (and sell) with your ears. Focus on objectives and results, not methods and facilitation. Even when it’s your initiative, if you are the leader you are better served to have someone else present it (after appropriate shared rehearsal) so that you can better gauge reactions and be more alert to feedback.

“Ask for input only if you plan to do something with it or about it.”

This is especially true in customer service and product marketing roles (and any management role). Don’t raise expectations that you will take action on the information you ask for if you have no plans (or ability or resources) to follow through.

“Being good is important. Being trusted is essential.”

Trust is essential to any early relationship that a startup forms. It can be especially tempting with prospects (and even customers) to violate their expectations and unilaterally amend an agreement (e.g. when features are going to be ready or a particular bug will be fixed) to give them something “better.” The challenge, as Gerald Weinberg observed in “Secrets of Consulting” is that “People don’t tell you when they stop trusting you.”

“When told you don’t understand the big picture, ask to see that big picture.”

I think the opposite is even more true: don’t tell someone that they don’t understand the Big Picture, offer them a rich enough context for your advice or direction so that they gain a better appreciation for your perspective. Bob Lewis offers a similar prescription in his 3/11/2002 Tip (registration required) on “Context: make sure you provide lots of information about it. Whether an employee is writing a program, designing a network, or deciding whether a course of action is worthwhile, it’s the context that determines the answer. So don’t let employees just ‘do their job.’ Their job, after all, ought to be doing what makes the most sense, which means that they need to understand how it fits into the bigger picture.”

“Technology eventually evens out. Compete on service and talented people.”

A technology advantage can allow you to seize a niche, but for staying power you need excellent service and a commitment to hiring folks with the appropriate talents and helping them to continue to develop them.

“Great ideas and solutions to problems often occur right before you fall asleep at night. Get up and write them down or they will be lost in the morning.”

This is excellent advice. I carry 3×5 cards during the day and keep a pen and pad of paper on my nightstand. More than once it’s happened that I have been wrestling with challenging project or problem and either awakened in the middle of the night or a few minutes before the morning alarm went off with a solution clear in my mind. It’s amazing how fast an insight or solution can dissipate if you don’t get at least a fragment of it written down.

Moran has some great advice for startup CEO’s on how to prepare for and run effective board meetings in an April 16, 2007 article “Elephants in the Boardroom” on SandHill.com.

Seth Godin’s Book “The Dip” Save Your Money

Written by Sean Murphy. Posted in Books, skmurphy

There are some good insights in Seth Godin’s The Dip, his slim new volume devoted to excellence, perseverance, and organized abandonment. Godin doesn’t say “organized abandonment” which is a concept developed by Peter Drucker, but “quitting.” Godin offer’s three checks to perform before you quit and backs into the need for a plan with his third:

Three Questions to Ask Before Quitting (pages 66-71)

  1. Am I Panicking? Decide in advance when you are going to quit.
  2. Who Am I Trying to Influence? A person or a market? Markets value persistence far more than an individual.
  3. What Sort of Measurable Progress am I Making?

The key point is to decide what failure looks like before you start (and unexpected success, which for an entrepreneur signals that a product deserves more investment, potentially even third party investment in addition to re-directed internal resources) so that you know when to quit.

Even at $7.77 on Amazon it’s a good blog post stretched out for 75 pages. Spend $13.57 on The Daily Drucker and get 365 one page nuggets of wisdom from Peter Drucker. The entry for March 14 on Universal Entrepreneurial Disciplines might well substitute for most of Godin’s book.

Every institution–and not only business– must build into its day-to-day management four entrepreneurial activities that run in parallel. One is organized abandonment of products, services, processes, markets, distribution channels, and so on that are no longer an optimal allocation of resources. Then, any institution must organize for systematic, continuing improvement. Then it has to organize for systematic and continuous exploitation, especially of its successes. And finally, it has to organize systematic innovation, that is, create the different tomorrow that makes obsolete and, to a large extent, replaces even the most successful products of today in an organization. I emphasize that these disciplines are not just desirable; they are conditions for survival today.

ACTION POINT: Abandon what is about to be obsolete, develop a system to exploit your successes. And develop a systematic approach to innovation.

Drucker wrote about this at greater length in his book Management Challenges for the 21st Century, the chapter on “Change Agents” was run as an article in Inc Magazine and is available free on-line. This excerpt elaborates on his core concept of organized abandonment. This model is especially important for entrepreneurs.

For being a change leader requires the willingness and ability to change what is already being done just as much as the ability to do new and different things. It requires policies and practices that make the present create the future.

Abandon yesterday. The first step for a change leader is to free up resources that are committed to maintaining things that no longer contribute to performance and no longer produce results. Maintaining yesterday is always difficult and extremely time-consuming. Maintaining yesterday always commits the institution’s scarcest and most valuable resources–and above all, its ablest people–to non-results. Yet doing anything differently–let alone innovating–always creates unexpected difficulties. It demands leadership by people of high and proven ability. And if those people are committed to maintaining yesterday, they are simply not available to create tomorrow.

The first change policy, therefore, has to be organized abandonment. The change leader puts every product, every service, every process, every market, every distribution channel, every customer, and every end use on trial for its life. And the change leader does so on a regular schedule. The question it has to ask–and ask seriously–is “If we did not do this already, would we, knowing what we now know, go into it?” If the answer is no, the reaction must not be “Let’s make another study.” The reaction must be “What do we do now?”

In three cases the right action is always outright abandonment:

1. When you think that the product, service, market, or process “still has a few good years of life.” It is the dying products, services, markets, or processes that always demand the greatest care and effort. And we almost always overestimate how much “life” actually is left. Usually, they are not dying; they are dead.

2. When the only argument for keeping a product, service, market, or process is that “it’s fully written off.” To treat assets as being fully written off has its place in tax accounting, but for management the question should never be “What has it cost?” The question should be “What will it produce?”

3. When for the sake of maintaining the old and declining product, service, or process, the new and growing product, service, or process is being stunted or neglected.

For every product, service, market, or process, the change leader must also ask, “If we were to go into this now, knowing what we now know, would we go into it in the same way we are doing it now?” And that question needs to be asked about the successful products, services, markets, and processes as regularly–and as seriously–as about the unsuccessful products, services, markets, and processes. It applies with particular force to distributors and distribution channels, which, in a time of rapid change, tend to change faster than anything else.

From a career planning perspective (and a management perspective), the two book set by Marcus BuckinghamFirst, Break All The Rules” and “Now, Discover Your Strengths” focus on discovering and building on your unique strengths to achieve personal excellence.

Crossing the Chasm – Look for a Niche in a Lot of Pain

Written by Theresa Shafer. Posted in Books, Rules of Thumb

Ev Rogers’ seminal book, “Diffusion of Innovation” describes how people adopt innovations, e.g. new technology. He assumed a normal distribution of risk aversion. Geoffrey Moore’s insight was the chasm:  the early majority is not influenced by early adopters, they want the comforts of an established market.

Human nature is risk averse: most of us don’t like change. We would rather struggle with the beast we know than risk our jobs on a new technology that may not deliver it’s promises. But if the current situation is painful enough, we will adopt something new and risk changing the way we have always done it.

So how do you cross the chasm between the risk tolerant early adopters and risk averse early majority when introducing new technologies?

Look niche markets of early majority prospects who are in a lot of pain. If people are in enough pain they will change their behavior and risk adopting something new.

Bowling AlleyAfter entering niche markets, we can move technology up and out by using the ones in the most pain as reference case studies to the others. Also notice you start with the smallest niche market. This will allow you to make your early mistakes on a smaller market. It also buys you time and expertise to develop a whole product. Early majority prospects will not invest very much time or effort (very little compared to early adopters) to get your solution to work in their environment.

One you are across the chasm into your first niche, you want to continue to evaluate adjacent niches (those that would have some members who would be influenced by your current customers) that still have a lot of pain. Moore refers to this as the Bowling Alley, we show a representation slightly different from his where we sort going from smallest to largest in the most pain to less pain.

Questions That Sell By Paul Cherry

Written by Theresa Shafer. Posted in Books, Tools for Startups

I had promised to check out and report back on “Questions That Sell: The Powerful Process For Discovering What Your Customers Really Want” by Paul Cherry, which was recommended by Jennifer Vessels at Next Step’s workshop “How to Sell the Real Value of Your Solution” on Thursday, November 7, 2006.
This is a good book, with useful advice on how to have better conversations with your prospects. Three of better ideas for me were:

  1. Ask “Expansion Questions”
  2. Understand Your Prospect’s Perception of Risks and Rewards
  3. Understand Your Prospect’s Internal Customers, External Customers, and Competitors.

I will go into a little bit of detail on “Expansion Questions.” They are conversation openers that ask a prospect to share their perspective with you. They begin with phrases like “Describe for me…”, “Walk me through…”, “Can you please explain…” that don’t admit of simple yes, no, name, or number answers. The following three questions

  • What are the criteria for making this purchasing decision?
  • What is the time frame or deadline for the decision?
  • Who owns the decision and who is involved in making it?

can just as easily be captured by “Can you please walk me through the decision making process?” which is a nice way to uncover issues that more pointed questions might not elicit. At 180 pages the book is a quick read with a number of thought provoking suggestions for improving your ability to have a conversation with prospects and customers. There are a number of useful short articles on Cherry’s Performance Based Results site that will give you a flavor for the practical approach the book outlines.

June 2006 SDForum Interview

Written by Sean Murphy. Posted in Books, Customer Development, Quotes, skmurphy

I was interviewed in June 2006 by Barbara Cass, Volunteer Director for the SDForum, the final text appeared in the July/August 2006 newsletter (see page 15 of the PDF version). I have updated it here to add links for many of the referenced works and the quotes. KV Rao and I did a one year term as co-chairs of the Marketing Special Interest Group (SIG), our term ended in December 2006. Filomena U and Ed Buckingham took over, and are now the ones answering the sdforum_marketingsig-owner@yahoogroups.com alias.

Volunteer Spotlight
Interview with Sean Murphy, Co-Chair of the Marketing SIG

Q: Sean, you are a long-time member of SDForum. What helped you to decide to volunteer as chair of the Marketing SIG?

I had attended a number of the programs over the years and found them useful not only for the information that the speaker offered but also for what I would learn from other attendees. SIG meetings are a good way to keep a finger on the pulse of Silicon Valley. William Gibson observed that “the future is already here, it’s just unevenly distributed,” The SDForum SIGs are one place that’s certainly true. And I wanted to show my support for what the SDForum offers.

Q: What has been your experience in organizing these meetings thus far?

I am fortunate to have KV Rao as a co-chair. He is bright, articulate, and deeply thoughtful. He was early at WebEx in marketing and business development and has an appreciation for both startup and established company marketing issues. He has pulled together our two best programs so far: the “DotCom to DotBust to Web 2.0” talk by Dave Thompson that was our January kickoff and our May panel on “Making The Leap From An Application To A Platform Business.”

I have enjoyed pulling together an eclectic mix of topics: “Guerrilla Marketing for Startups“, “Internal Marketing–Fostering Technology Adoption“, “Building Strategy and Driving Consensus through Shared Mapping“, and “You Named it What?” We have attracted a diverse and thoughtful audience. Bill Grosso, who runs the Emerging Technologies SIG has been an invaluable advisor to me to get this year’s programs off to a running start.

Q: What have you learned from the first six months of putting on programs?

I think we have run informative programs on a broad range of topics, often because the audience has contributed as much as the speaker or speakers have. It’s very important to get a good title and to explain early in the description the speaker’s key experiences that will equip them address the topic as an expert. We are the Marketing SIG for the Software Development Forum so we tend to get a very technical audience: the key to successful programs is adequately preparing the speakers.

Q: What is the focus of your own business and have you seen value to your business since meeting with this group each month?

Our firm, SKMurphy, Inc. offers business development consulting to early stage software startups with a focus on early customers and early revenue. I think the value for me is the insights I get from the people I have met, either because I invited them to speak, or they were attracted to the topic for that night’s program. The SIG has given me a good reason to reach out to some individuals and have conversations that I otherwise might have missed out on. I would encourage folks to get involved, but I believe that it’s more about creating a community that we would all like to live in, and listening to and learning from strangers.

Q: Have you seen changes in the ways companies market or should be marketing their products in today’s world?

My firm’s focus is on strategy and business development for software startups. We work with early stage startups who sell to businesses. I personally have an interest in new technologies for collaboration–things like wikis, blogs, IM that are “new” in the sense that they are only a little over a decade old–and knowledge management methodologies like the “community of practice” model. So I look at the marketing issues from perspective that’s distinct from the consumer-oriented “get big fast” model that seems to be coming back into vogue: 2006 feels a lot like 1996 to me, with all of the various “pitch events” that are going on every month now. And I tend to work with teams that are bootstrapping both because it’s a mindset I find easier to relate to–I prefer pitching to prospects rather than VC’s–and because they tend to be more innovative than the VC-backed folks, who are normally channeled into a handful of predictable trajectories.

So, what I tend to see are startup teams who have a firm grasp on technology and product development issues but are less clear on one or more of the key concepts for successful new product introduction. Bill Davidow’s “whole product” paradigm from his “Marketing High Technology” book is fundamental to understanding the different between selling an invention and marketing an innovation. Geoffrey Moore’sCrossing the Chasm” framework, best expressed in his “Inside the Tornado” book is the solid explanation of the evolution of technology markets. Clayton Christensen’s “sustaining vs. disruptive innovation” model in his “Innovator’s Dilemma” book is the best “anatomy lesson for a karate student,” explaining to startups how and where to attack an established firm. Steve Blank’s “Four Steps to the Epiphany” is filled with detailed checklists for how a startup team must distinguish between product development and customer development as they explore a new market.

Postscript: I think answering this question started me down the path to the December 2006 Marketing SIG Program: Twelve Business Books in One Hour for the Busy CEO. I wish I could claim “anatomy lecture for the karate student” as mine but it’s based on a line from Chapter 18 of Red Dragon by Thomas Harris: “The others listened like karate students at an anatomy lecture.”

Q: What are some of your aspirations for the Marketing SIG in the near future?

We want to continue to fulfill our promise to provide practical tips and techniques for anticipating, identifying, and satisfying customers needs for emerging technologies profitably. We have several exciting programs in the hopper for the second half of 2006 but are always looking for good speakers on interesting topics. Contact us at sdforum_marketingsig-owner@yahoogroups.com with suggestions or to volunteer.

You Need to Be a Little Crazy

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

Theresa heard a radio interview with Barry Moltz in 2003 and suggested that I get his book. In December 2003 I purchased a copy of You Need to Be a Little Crazy and when it arrived from Amazon I put it on my to-be-read pile where it languished until early this morning when I read it in one setting, making notes in the margin and jotting down page numbers for quotes I was going to harvest for later re-use on a 3×5 card as I read.

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