Saturday, November 27, 2010

Failure to Launch

Over the last six months I have been living one of my dreams - doing another software startup. During the 90's I founded and sold two companies, the last being Netoria that was sold to Novell in 1999.  So in April this year I founded Majura as a mobile security company in the rapidly exploding mobile device marketplace.  However, a few weeks ago I ceased all activity and put Majura to rest.  

Many people have been contacting me saying how hard it must be right now, but the truth is that I feel great and had a fantastic six months.  Failure is a part of life and something that every entrepreneur must face - but something that we often we don't like to discuss.  Without an open discussion and analysis of failure we won't learn and grow as individuals. Plus, there is the hope that others can learn from failures such as Majura.  

So what happened?

The fundamental reason for the failure of Majura was lack of what Steve Blank calls "customer development". We simply were not close enough to enough potential customers to validate that what we were proposing would work, and in particular:
  • The exact problem we were solving
  • Who would be the buyer
  • How much they would pay
  • Whether they would buy the solution from a startup
Yes, we did speak to potential customers, and we did get very positive feedback, but only THREE of them. We really should have had feedback from 10+ potential customers. The lack of close and continual customer feedback also prevented us from realizing early that we were likely biting off more than we could chew - i.e. our solution made sense, but would have taken far too long to implement and get right.

We also spoke to investors far to early, even before our prototype was functional. While everyone agreed the space we were in was exploding, the lack of actual customers and a running prototype/solution really made investors uncomfortable.  After all, they can invest in consumer businesses that has already launched a web site, and has real customers and possibly revenue.

So what would I do differently? 
  1. Get closer to many more potential customers - at least 10, and preferably more. Really understand their routine and the problems they face. 
  2. Find a problem that it easier and simpler to solve i.e. find an "impedance match" between the problem and the capabilities of the startup.  By starting out simply you can get in the market quickly and start iterating quickly into a bigger solution. As an example, the various mobile device device app stores offer a simple and quick route to market and a way to validate mobile technology and ideas.
  3. Rapidly iterate in the marketplace, according to Steve Blank's philosophy.
  4. Don't go to investors without marketplace validation.
Netoria's initial product was only 50 or so lines of code, but it's rapid uptake in the market allowed us to quickly improve and move the product into other areas - and upon acquisition we had over 1 million enterprise seats installed of four products. We solved a simple, but important problem that got us into the market and provided the needed customer input.

This has been a fairly short post, because the mistakes made are fairly clear and obvious. I may or may not do another startup, but this lesson will stay with me for the rest of my life, and for that I am very grateful.

Monday, October 18, 2010

Highlights of Warm Gun Design Conference

A few weeks ago I attended the first Warm Gun Design Conference hosted by Dave McClure's 500 Startups up at Mission Bay Conference Center in San Francisco.  There is so much bad design around these days that any opportunity to learn about what makes good design is most welcome, plus an opportunity to attend a full one day conference is a good way to recharge the batteries.

This post isn't an exhaustive recap of a really enjoyable day, but rather what I saw as the 3 key takeaways that we can all follow when designing something.
  1. Vision - Can everyone on the team describe the experience of using your design five years from now? If the team doesn't understand where you are headed, how can they work together on getting there?  Note that this ties into my post Do you have a Visual Vision.
  2. Feedback - In the last six weeks have you spent more than two hours watching someone use your or a competitor's design? In this day of massive upheaval in the technology industry I am still fascinated by the number of people who fail to take the time to understand what is happening around them.
  3. Culture - In the last six weeks have you rewarded a team member for creating a major design failure. After all, if we don't celebrate failure, and create a culture that it's OK to fail, how are we going to move forward.
There were numerous great lessons and soundbytes from the day, and I particularly enjoyed the sessions by Jared Spool and Luke Wroblewski.  Luke in particular gave a great session titled "Sign Up Forms Must DIE!", and he gave a great session on leveraging other services such as Facebook and Linkedin to complete a signup.

I also enjoyed the blunt, non-politically correct language - given the suffocation that most enterprises enforce, getting a group of highly motivated and creative people in a room was a refreshing change.

Overall a worthwhile day, and I'll be at the next one.

Monday, September 13, 2010

Platform Product Management

One of the most important Product Management roles is that of Platform Product Management - being responsible for the key foundation of the product(s). Often this role is not broken out separately but may be encompassed in your role as head of Product Management for one or more products. This role is critical as it exposes one of the primary challenges of product management - the trade off between foundational elements (architecture) versus customer facing features. Engineering wants to know how much resource to contribute to next generation architecture, versus sales people who are screaming to just add a certain feature so they can close $$$$ this quarter.
This challenge is prevalent in enterprise technology companies today, as many products were built on platforms that are 10+ years old, and fundamental limitations are now becoming obvious. A good example is the many products built on a 32 bit custom operating systems that are approaching scalability and performance limits and need to move to a new generation operating system/environment - but after 10+ years of features in the 32 bit OS, a wholesale move is almost impossible.  What to do?
Firstly, Product Management must ensure that the organization is aligned behind a common vision.  If the organization cannot with confidence and consistency state where it will be in 2-3 years, then you will suffer from incrementalism, and a schizophrenic product, plus at some point miss out on a strategic shift.  I am a huge believer in the visual product vision as outlined in the post Do you have a visual vision? If an organization, including sales, engineering, marketing, management, does not have a clear product vision 2-3 years out, then Product Management is failing.

What is happening in the industry and the customer installed base is a critical element of the vision - obviously we are in a multi-dimensional transition - from in-house data centers to hybrid and then outsourced virtual data centers, from in-house services to XaaS, from Windows desktops to a heterogeneous device landscape, and from a hardened DMZ approach to security, to 3/4G connected devices talking to multiple application sources. Attending infrastructure events like VMWorld is critical to understand where enterprises are heading.

The next step is to analyze the current business and understand the strengths, weaknesses, opportunities and threats (SWOT).  While this is the start of a longer business plan for each product or the product line, you should be able to identity areas of opportunity for revenue. Even a fully mature product always has opportunities to penetrate new markets - often called a Product Line Extension (PLE). And of course if your vision calls for movement to a new platform/architecture then the vision and roadmaps are going to need to explain how this transition will occur.

A good example of a Product Line Extension is Citrix adding the Secure Gateway as a feature to XenApp (then called MetaFrame). Secure Gateway allowed XenApp to be used securely across the internet for remote/travelling workers, partners etc - the feature was so successful it transitioned in the Access Gateway SSL VPN, and has become a key capability to drive revenue across multiple Citrix products. Another example is Novell's Netware - a legacy product that has been declining for many years, but still generates hundreds of millions of dollars of revenue - so Novell is obviously still delivering value to specific segments - whether geographic, industry, size etc -success is likely measured in terms of reducing the decline.

A good way to understand what people are using in the current product is through a "dial-home" type of service, such as Microsoft has implemented in Windows.  Of course this needs to be an opt-in service, but if you explain to users it can we used to make better products, no confidential data is transferred, and many will participate.  Imagine being able to know exactly what features, configurations, performance, user counts etc about your product in the field.  Imagine how this can help you prioritize capabilities of a new platform.

Obviously the current quarterly and annual goals affect product trade-off decisions - there is nothing wrong with sacrificing long term for short term revenue if the company needs immediate revenue.  There is no use having the best next-generation architecture if you run out of money in the meantime. The takeaway here is to accurately label why you are doing every item in a release/sprint e.g.  use codes in the backlog/PRD/MRD:

S - Strategic - moves us towards vision
T - tactical - doesn't move us towards vision
R - Revenue - immediate revenue generating feature
E - Extension - moves the product into a new space/segment.
B - Bug fix

A single feature may have a combination of codes and the main point is to get united in a common understanding why something is being added to the solution. Your biggest challenge (as always) is going to be saying no to sales people who see revenue in a space that just isn't strategic or big enough for the company, and ends up a distraction.  This is where the vision comes in, and you must help sales understand that by focusing on the vision they will end up better off by having an easier to sell solution/product, albeit over a longer term.

One area that needs to be specifically called out is the transition to a new platform/architecture.  The time to start a transition is not when the main product goes into decline, but while still growing.  A new architecture/platform can be tested or validated in smaller/different market segments without jeopardizing mainstream revenue.  Citrix purchased their Online Division while traditional products were still increasing in revenue (as they still are), and it provided a services based delivery mechanism to address new market segments and is now one of the top ten SaaS businesses in the world - and at the same time they were able to move from a 32 bit to 64 bit platform, increasing scalability and performance.

If your long term vision does call for a complete cut over in architecture, for example from deployed software to service, one of the best paths forward is to acquire a smaller company that has implemented the new architecture, and give them the resources to succeed.  Your customers will be much more tolerant of an acquired service not having all of your capabilities in the initial release, and will look to an integration roadmap.  If you can successfully develop a new architectural offering internally, proper positioning is critical so customers don't expect all the capabilities of the main offering.  Intuit has done a great job here by positioning Quickbooks Online as a very clear sub-set of capabilities of the main Quickbooks offering.

The Platform/Feature trade off is like a teeter-totter (called a seesaw in the Commonwealth) - but without a vision, clear data on the product business, and an understanding of the current business objectives, you can't effectively make tradeoffs. Otherwise you're just blindly moving to one side to the other.

Saturday, July 10, 2010

Guest Blogger: Only Customer Opinions Matter

A friend of mine who works in a small startup created the following post based on some recent experiences.  There are a number of gems in here, including:
  • educational webinars are a great way to find leads, but be careful about including too much product content.
  • to really understand what your customers want, ASK THEM.
  • any marketing activity must be measured to gauge success.  If it's not working then change it.
  • nothing pisses off your professionals more than telling them HOW to do something.  Tell them the results you need and let them loose. There is a fine line between guidance and micro-management.  The upshot is that this startup is going to lose a very talented VP Marketing .

Our company’s CEO and Director of Sales have been urging me to add more product content to our most successful lead generation program, a a free educational webinar series with 10% or less product content. Because it’s educational, our contacts forward the invitation email to friends, acquaintances, and colleagues in our industry, ultimately delivering between 300 and 500 new, highly-qualified contacts into our CRM every month.

We survey attendees at the end of every webinar, and it’s abundantly clear from their comments that they attend for the education. Both the CEO and Director of Sales have praised the program and recognize that it’s been an extremely successful tactic to get new leads into the system.

And yet…they want to change it. They think that adding product content to the webinar “won’t hurt”, that attendees will “appreciate it”, and (here’s the ironic part) it will “speed up the sales process.” I have resisted their suggestions simply because attendees have consistently stated in the post-webinar survey that they highly value the industry education and are thankful that we don’t subject them to product pitches. But, after a direct order from the CEO, I added 30% more product content to the most recent webinar for a total of 40% product content.

The webinar attendees’ reaction on the post-event surveys was immediate and virulent. Our satisfaction scores in every category dropped from an average of 4.5 to 3.5. And we got comments like this: “If I had known this was going to be a product pitch, I wouldn’t have attended, and I wouldn’t have forwarded the invitation. I’ll never attend one of your webinars again.”

Great. There’s a prospect that we’ve disappointed who will not take a sales rep’s calls, not respond to subsequent webinar invitations, and will never, ever refer us to potential customers. When I reported this reaction to the CEO, he snapped, “Well, I guess you were right again.” Then he said, “How do you know what our clients want better than people who have been at this company years longer than you?”

What a confounding and—dare I say—stupid statement! I knew what our target audiences’ reaction would be to the webinar change because they told me. My opinion doesn’t matter. In addition to our post-webinar surveys, the marketing department regularly surveys our contact database to better understand their business problems and how they apply technology to solve those problems. We share survey results with the management team and everyone in the sales and software development organization. They read the results and then go back to what they were doing—based on THEIR opinion of what our clients want.

Why do CEOs, CIOs, sales reps, marketing managers, software developers, documentation writers, etc., think that they know more about their customers’ and prospects’ business needs and challenges than the clients and prospects do? Why do they guess, or worse, assume that they know? Why does it not occur to them that clients would tell them, in explicit detail, if only they would ask?

Prospects do tell salespeople what they want as part of the sales process. The best salespeople listen well and, if asked, could accurately describe what their clients want. Unfortunately, many salespeople are so focused on closing the sale and moving on that they filter what prospects and clients tell them and transform those needs so they align with the product or service the reps is selling.

If you continue to believe that your opinion is more important than the opinion of your clients and prospects, prepare to be proved wrong in disastrous ways—by expensive marketing campaigns that fail, product releases that flop, plummeting client satisfaction, lowered renewal rates and unmet sales goals. 


Tuesday, June 29, 2010

Business Fables - The Spaghetti chefs

Once upon a time there were three chefs in a kitchen, all making spaghetti.

The first chef, Jane, was a meticulous planner, and spent nearly two hours reading the recipe book and gathering the right ingredients.  She meticulously took measurements throughout the cooking process and made corrections due to a multitude of factors - altitude, temperature, time etc.  She knew exactly when the pasta would be done, and at the appointed time took it out and served it for the customer.

The second Chef, Wayne, did some preparation based on his experience in cooking spaghetti, and  near then end of the estimated time he took some spaghetti out and threw it against the wall to see if it was done.  The first two pieces were not done, but the third stuck to the wall, telling him it was "al dente", and ready to serve to the customer.

The last chef, Charles, did no preparation at all, and wasn't sure exactly how long the spaghetti would take, so he had three separate pots boiling, all with different amounts and types of spaghetti, and regularly took some out of each and flung it against the wall.  The difficulty was that Charles couldn't actually tell what was sticking, due to all the overlapping spaghetti, and his focus being split between all the different pots.  In the end he ran  out of time and just served up what he had - three different types of spaghetti in one bowl, all at various stages of being cooked.

Can you guess which one worked out for the customer?  That's right - Wayne was able to serve the best spaghetti, in the shortest time, at the lowest cost.  Wayne knew that once he did the initial planning, there were so many different factors at play in the kitchen, the best thing to do what test the spaghetti every few minutes and serve it when it stuck to the wall.

Jane took far too long, the customer was getting annoyed because of the delay, and when the pasta was finally served, it wasn't perfect even though Jane thought she had planned for the perfect outcome. She wasn't able to serve many customers due to the time she took to prepare the spaghetti each time.

Charles came out the worst because the customer didn't really get what he wanted, none of the spaghetti was done, and Charles wasted lots of materials and took up too much kitchen space.

When introducing a new product, or even trying a new marketing campaign, many people use the term "Throwing it against the wall and seeing what sticks" as a negative i.e. sloppy and lacking in planning and preparation, but it's exactly what needs to be done to get the best outcome each time.

Be just like Wayne- do enough planning and have a feedback loop to ensure that you are on the right path.  For a new product introduction this is a prototype product used to engage development customers, leading to a minimum viable product and (hopefully) rapid customer adoption.  And if the spaghetti doesn't stick, then throw out the whole batch and start again.

The opposite of the MVP is what Charles did - not really knowing what would come out and unable to focus on creating a single spaghetti that the customer wanted - if you split your focus between different approaches it's impossible to discover which one (if any is working).

So be like a great chef - do the required planning, but start cooking quickly and get feedback to ensure that your dish is ready for the customer.

Sunday, June 6, 2010

Core Communication Skills for Entrepreneurs

Last week I received the following email, and thought that the answer to the question would make a great blog post:

I am doing a project for school and wanted to know if you could send what you consider to be the most critical core communication skills for Entrepreneurs?

Self-awareness is a critical skill of successful entrepreneurs - the ability to know what you are good at and not-so-good-at.  This will let you know what skills need to come into the team, what type of people you'll need as advisors and board members, where you need an education program, etc. I really benefited from an executive coach while at Citrix - having someone independent to point out your strengths and weaknesses is humbling, but effective if you really want to be successful. 

Being able to effectively communicate both internally and externally is obviously important and this another another area where coaching is beneficial. Citrix had a policy where all speakers at the company events had to work with a presentation coach (in my day, Michelle Murphy from InnoPro), both on the actual presentation deck and the delivery. I'm still amazed at the number of extremely boring and confusing presentations that I sit through at almost every conference, especially where working with a coach like Michelle would have made such a huge difference (for a relatively small investment in time and money).

There is enough information around on how to give effective presentations.  Just remember that the key is to understand your audience - what is their goal, likes/dislikes, background etc. You need to be able to repackage the story for difference audiences - I use the book "The Art of the Start" as a guideline for communicating to different groups.  When communicating externally, especially in the early days, listening is key - this is an area where I have had to improve my skills - letting people know that you are really listening to what they are saying, and valuing the feedback.

As an example, last week I presented a pitch for my new company to an early stage VC firm.  I reached out to people who knew the person for feedback on what worked best for him - then used Linkedin to understand his background.  I then met with another VC friend prior to the meeting, and went through the presentation and deck (resulting in some major changes).  Lastly, after the meeting (which went extremely well), I immediately modified the deck to reflect feedback and content that would have answered some questions.  In a military context this is would be "gathering intelligence" before an operation - never go into a situation blind, and use all the tools at your disposal.

Being able to communicate with passion and conviction is obviously key - I know one CEO whose lack of confidence is infecting the whole organization with doubt.  Entrepreneurs are generally comfortable with a lack of clarity of the future and are happy to work things out as they happen, but many groups need more certainly. So it's OK to have doubts, but keep them to yourself or identify them in a clinical way in the presentation "risks" slide.

Similarly, being an entrepreneur must be capable of of "bold action" i.e. the ability to take risks and push their ideas firmly.  Understand that everyone in the world is a human being, even billionaires and big company CEOs.  The first billionaire I ever met was Ray Noorda in a supermarket in Utah where he was pushing his shopping trolley and buying the weekly groceries.  When you see that CEO who could help you, push aside those fears, go up and introduce yourself, and ask for the help you need.  Or just make a contact. Nobody succeeded by being shy and unknown.

Lastly, being able to build and lead a team is going to be the difference between success and failure. Leadership is not management and management is not leadership.  Leadership can be summed up simply as the ability to get people to do something willingly that they don't want to do. A more comprehensive definition comes from Ann Marie E. McSwain Assistant Professor at Lincoln University:

"leadership is about capacity: the capacity of leaders to listen and observe, to use their expertise as a starting point to encourage dialogue between all levels of decision-making, to establish processes and transparency in decision-making, to articulate their own value and visions clearly but not impose them. Leadership is about setting and not just reacting to agendas, identifying problems, and initiating change that makes for substantial improvement rather than managing change."

However, I would somewhat argue that the mission of Entrepreneurs is to impose their own value and vision - A manager fits into the world that has been established, while an entrepreneur attempts to change the world to fit them.  I often quote the words of George S Patton, someone well known for passion, bold action, and leadership:

"Lead me, follow me, or get out of my way." 

Tuesday, May 4, 2010

What is an Entrepreneur?

Last week (prior to Interop in Las Vegas) I was attending a four day sporting training course and became good friends with one of the attendees from San Diego.  David was a very quiet guy in his early 30's, attending business school to earn an MBA and was contemplating a career change by moving into a technology startup.  He made the comment "I could never be an entrepreneur, as I don't have any good ideas".


There is a huge misunderstanding that an entrepreneur is the one who has a clever idea and that idea is what makes them a billionaire.


The defining characteristic of an entrepreneur is the ability to make an idea happen.  In a world with billions of people there are actually very few unique ideas - look at the simultaneous discovery of the electric light, one of the everyday conveniences that most affects our lives. We all are taught that it was invented in 1879 by Thomas Alva Edison, but he was neither the first nor the only person trying to invent an incandescent light bulb.

Also, consider the Wright brothers - they were one of thousands of people trying to achieve manned flight.  The difference with the wright brothers and Edison is that they were able to make it happen and both built successful companies around their early achievements.

After selling Netoria to Novell, many Novell employees delighted in telling us that they had exactly the same ideas, years earlier.  Our response was "of course you did" - what we were doing was common sense and straightforward - we never claimed ownership of the ideas, but rather, we took the risk to make it happen.

Even Bill Gates at Microsoft happily admits that he bought DOS (their first massive success) for $50,000 from Tim Patterson at Seattle Computer products.  IBM wanted Microsoft to provide an operating system for their new PC - Microsoft didn't have one, but Bill Gates MADE IT HAPPEN.

That's it in a nutshell.

An entrepreneur has the ability to make an idea happen.

They are able to bring the right people together and build an organization to make an idea come to fruition.

What is it that allows an entrepreneur to execute on an idea?  I see a few core values, but they can all be summed up in one world - Courage.

Courage to believe in yourself and your ideas
Courage to take a risk
Courage to potentially fail
    I have met numerous people who profess that they would love to do a startup, but (pick your excuse):
    • I have a big mortgage to service
    • My wife/husband won't let me
    • My debt is too high
    • I'm just waiting until ....
    • My kids are too young/old
    An entrepreneur pushes all of this aside and makes it happen.  This is not to say that they are not scared - believe me, I've had many scary times, and once got down to having no money in the bank, and one potato in the house to eat (not a joke).  My wife supported the family in the early days of Netoria, and she was working seven days a week at one stage.  We've moved our kids across the world many times, and both of them say that they haven't been harmed or felt bad by moving - in fact they are grateful for the life that they have led.

    Successful Entrepreneurs minimize risk by following a set process that they know will yield rapid results - they will either succeed or fail quickly.  The most important aspect here is not to commit resources to building something until you have customers willing to buy the product, and get a Minimum Viable Product (MVP) out early and iterate.

    In the case of Netoria, I was able to write the MVP product and release online while still working as a contractor - basically working two jobs, one during the day, and another at night and on the weekends.  We had enough paying customers to know that we were onto something, but going full time meant a 90% salary reduction.  We did it anyway, and used the mantra "if we fail, we'll get jobs".

    Back to David and the training course - it took me until day two to get out of him that he was a Marine Corps pilot, and had recently returned from a tour in Iraq.  This is a guy to whom courage is no stranger, but he admitted that he was scared by the idea of leaving the Marines after 10+ years, and striking out on his own.

    Actually, the Marines have taught him exactly the skills he needed to be successful in a small business, notably:
    • Leadership
    • Organization
    • Strategy
    • Communication
    • Focus
    Startups generally don't fail because they have the wrong idea, rather the founders are unable to create and grow a productive organization e.g. I've seen a startups flail because the founders lacked an ability to effectively communicate, especially around goals and priorities.  Another was unable to focus, and felt it necessary to chase every opportunity that came their way, leading to the company being unable to achieve enough momentum in any market. I could give example after example where the idea was sound, but the execution lacking.

    The real secret is that many startups fail because they deserve to - the better entrepreneurs learn from these failures and seek to address the skills they need to win next time. David has learnt core skills in the Marines that will allow him to build a functional organization and identify what skills he needs to bring in to compliment his own.

    Of course not all entrepreneurs are ex-military, but it helps explain why some countries are hot beds of entrepreneurial activity ( e.g. Israel).  Many people learn the needed skills from sporting leadership, organized activities like the Boy/Girl Scouts, Church leadership, or even just by surrounding yourself by the right advisors.

    I have another friend who saw an opportunity in his industry and is making a tactical sling for military and law enforcement (Tacstrap).  He didn't like anything else on the market, saw the opportunity, learned how to sew, and started selling the straps.  At a recent show he sold out within two days - clearly this is a market need and he has great validation.  He now outsources production and is expanding his product line based on feedback from customers.  This is how an entrepreneur functions - identify a gap in the market and make something happen.

    Very inspiring.

    So what market gaps do you see?

    Thursday, March 25, 2010

    Unambiguous Customer Communication Post-Acquisition

    This has to be the best post-acquisition customer communication I have ever seen - very blunt, direct and unambiguous.  History will show whether they delivered, but Oracle is off to a good start (and I love the stab at IBM at the end):

    Saturday, March 20, 2010

    Your business card is CRAP!

    I've always noticed that 95%+ of all business cards I get are terrible - they don't stand out or tell me anything useful about the company or the individual.  The best source of information is from a website, so all a business cards needs is:

    • Name
    • Title
    • Company & Web site
    • email
    • Cell phone (if necessary)

    I use Moo mini cards with text on one side, and a color photo on the other side - I have various versions of the image, from pics of myself to company logos, but I always get positive feedback - people remember me from the business cards.

    Here is someone with an even more impressive business card - not sure if I'd go to this extent, but it's an interesting view.

    Tuesday, March 16, 2010

    Startup Advice - so you have a great idea?

    The following question was recently posted on an entrepreneur forum:

    At the moment I have an idea in mind that I believe could be really big. I have discussed it with a few close friends because I wish to take first-mover advantage. The problem is that I lack the programming ability to make it a reality on my own. My programming friends are quite busy with work and they don't believe that they have the level of programming ability I require.

    I have developed a workable operational and growth strategy with a revenue stream that will not commence until after 1-2 years. What should I do to seek trustworthy web programming expertise that I require?

    Where can I go from here? 

    I was extremely impressed with the response from Brad Down, printed below:

    The reality is if you have no money, no friends that can help and no business partner, all you have is your idea.

    The first thing you need to do is pretend like you already have the product and go out and sell it. Develop a sales presentation some collateral even a basic display website. Then ring up some potential customers say you have a product in development and get some meetings.

    Remember it's all in the sizzle not in the sausage. If you can't even get a meeting based on your idea alone then you know you are in serious trouble already. Take my advice, forget development, focus on your first sale. If you get a potential customer then you at least you have something to work towards.
    If you can't make a sale then you are wasting your money and human capital with dev.

    I spent over $100K of investor money on our first startup before we made our first sales call. Fatal...we could have saved the $100K if we had have done some research and actually asked some people if they wanted what we were selling. No matter how good your idea, commercial realities exist, so many external factors and perceptions can affect your business model.

    So much can be done without a cent spent on dev.

    Brad's comment is a very concise statement of the SDBS methodology:
    1. Sell 
    2. Design 
    3. Build 
    4. Sell 

    As Brad says, if you can't get a single customer to commit to your product before development starts, then you are likely wasting your time. Enough said.

    Thursday, March 11, 2010

    Startup Advice - running short of funds for initial product release

    Last week I received an email from an entrepreneur here in the SF Bay area with a really good question:

    I needed some advice on our product - our current funding will allow us to complete the initial release, but with limited content and with a few features missing - and since its a product where content drives the experience and value - it is critical. We need some more funding to get the product out in all its glory and don't want to be rushed and want to deliver good presentation quality.

    Should we trust that it will all work out fine and go ahead and try to find outside money before launch through publishers/investors?

    The whole team believes in this product and if we were to do a smaller release first, the energy would be lost. The truth is the team really believes in this - and we wouldn't be able to execute if we tried to just deliver something un-innovative.

    What is your opinion on this?

    This is a great question, and here was my response:

    Obviously I have very little understanding of exactly what your team is building, so my response is going to be somewhat generic.

    Each time you accept outside capital you will dilute the shareholding and need to focus on fundraising instead of working on the initial release. This can also result in a loss of energy and focus and is why it's best to get more money that you need each time to keep a "buffer" in the bank.  Experienced investors will know that software development is an art as well as a science, and there are always unforeseen risks.

    Of course you could initially try to raise more from existing investors - this should be much easier, and if they believe in the team, should be willing to increase their investment.

    Great to hear that your team all really believes in the product, but how have you validated this with potential customers?  Your risk profile has to be based on how much potential customer validation you have - this is the best measure of potential success.  Remember that with advertising supported businesses, your paying customer is the advertising agency that sends you a check (e.g. Google).  They are the ones who get the value from the customer traffic driven.

    Is there is any way you can do a limited release of some functionality to a small number of users? I've participated in many traditional product and web services betas and they can be extremely tightly restricted to a smaller audience until you have the right product - this can also build up demand for the final product.

    Sometimes it's good to step back and re-validate that you absolutely need all the features in release one - the key is to get the minimal viable product (MVP) in the market as quickly as possible, and then build momentum. A good example here is the Apple iPhone - the first version couldn't even do 3G, but it didn't stop their success.

    Friday, March 5, 2010

    Effective Trade Shows

    Recently I attended two seperate trade show - the Consumer Electronics Show (CES) in Las Vegas and the RSA Conference in San Francisco.  While wandering around the shows I made some observations that would make a great blog post.

    Like any marketing activity, you need to know the objective in going to a trade show and how you are going to measure success.  In the pre-Internet era Tradeshows were an incredibly important part of the eco-system for many industries - this was where you found new products, resellers, distributors, and of course, customers. But in the Internet age information is instantly available anywhere in the world.  There may not be any need to physically be at a show, when you can watch a simultaneous podcast and get the same information, or meet needed contacts through other methods such as Linkedin.

    Of course this depends on your organizational goals - you may have strategic reasons for being at a show, such as getting noticed, speaking with customers, partners, press and analysts etc.  Sit down and rationalize how best to meet your objectives, and don't just go for the traditional booth because "we've always done it that way". Measure success to help decide the ROI and value of each event and activity.

    Many groups measure success by numbers of raw leads and will scan anyone walking by to meet their goals.  Unless you have a group of people who go out and re-validate each lead, it's better to gather just leads from people who have shown some interest.  If marketing people love to tell you how many trade show leads they gathered, make sure the leads are real, and not just "raw" - I've seen people scan the line at the food court to make up a more impressive lead count.  On the other side of the coin, I've gone up to a booth and talked for sometime, and they let me wander away without bothering to scan my details - not sure how they intend to follow up.

    The most concerning aspect at almost any trade show there is a large number of booths staffed with employees who don't want to talk to potential customers.  They'll be checking their email, having a private conversation, meeting old friends, sitting down and looking bored, or doing anything else except talking to booth visitors.  Many of them likely partied too hard the night before, and viewed the show as a free trip to the trade show city. Then you have the numerous booths that are sitting empty with nobody in sight - who knows where these people are?

    At the RSA show this week there was one company I wanted to talk with, and spent 15 minutes "hovering" at their booth, but could find nobody to help.  Out of about 15 employees, many were playing the video games installed for the customers, others were having their own private conversation, checking Blackberrys, or using the demo machines to do email.  This was in a booth that cost the company well over $100K, and this was repeated numerous times at both conferences - so as well as not giving me information, these companies have created a negative impression. In all honesty, out of about 15 people manning the booth, nobody was helping a customer, and I wasn't the only one trying to get attention. I shouldn't need to mention this, but the employee enjoying the burger at his pod - eating at your booth is a definite no-no.

    If you're going to have a booth, make it effective, and have someone in charge who can plan, train, manage and follow up.  Have a booth meeting before the event, and hand out written booth schedules, background material and collateral.  Explain the objectives and make sure everyone understands.  Show everyone how to ask customers if they can help and how to direct them to the right part of the booth.  And make sure everyone understands that email, Blackberry, cell phone calls, eating, nose-picking, butt-scratching etc are not allowed in the booth - do them on your break. And don't sit down - standing up is much more welcoming to customers.  Yes, manning a booth is tiring and difficult, but you need to suck it up and do a great job.

    I prefer a "clean" uncluttered layout with a small number of demo pods, contact desk, a small theater, and 5-10 minute presentations for a seated audience to get a t-shirt or another giveaway.  You're swapping the attendees time to listen to your pitch for a give-away, instead of just launching it into the crowd.  The audience is showing that they are interested enough to sit and listen to you for a few minutes. Take a look at the PGP booth from RSA - notice the 20 or so chairs to the left where they have their theatre - this was a nicely laid out, and very well managed booth.  I was impressed with how the booth staff worked the passing crowd to get them to sit down prior to a presentation, and ended up filling every seat. Notice also that they're not bombarding you with ridiculous amounts of text and product information while walking past - just enough to draw you in for a further discussion.

    For a startup, I would forget trying to get in your own booth, but being in a larger company's partner pavilion can be very inexpensive and extremely rewarding.  For a few thousand dollars you get a pedestal, signage, listing in the show guide, and even a monitor.  Everyone that walks in the partner's pavilion is a prospect for you, and you also get exposure to the partner's employees, executives, press and analysts. Make sure you bring 2-3 people to have the booth manned at all times, and let people have regular breaks.  Don't forget that this is a great time to meet other partners, especially during lunch and after the conference - find out what they are doing that is leading to success.

    Lastly, I'm a big fan of Oscar Wilde's quote that "the only thing worse than being talked about, is not being talked about".  Marketing is all about getting attention, and trade shows are full of sound, noise, and attendees become overloaded.  If you're going to make the effort to attend, try to be different. At Netoria we dressed our booth staff in outrageous Mambo loud shirts, and got huge amounts of attention at every event. Note that getting attention doesn't mean "booth babes" in skimpy clothing - you're going to turn off many of the audience (even if you personally like that type of thing).

    Don't waste time and money giving t-shirts or some piece of junk to everyone who walks by - if you want a cheap giveaway then provide something useful like a pen.  Netoria didn't giveway a t-shirt to everyone, but took 5-10 $70 leatherman tools engraved with "Netoria - tools for NDS", plus a few of the loud shirts, and handed them out to hot prospects.  Even now, 10 years later, I get people who tell me that they still have that leatherman tool or Mambo shirt (note the photo is not from Netoria, but we did wear these exact shirts to one show).

    At every tradeshow you have a chance to make a great initial impression with a new customer, partner, investor, press, analyst etc - like every marketing activity, make sure you know the goals and how you will measure success, and then put your best into creating the right impression.

    Saturday, February 6, 2010

    How to Measure Success

    In Australia over the Christmas break I was asked by the CEO of a startup company how to tell if he had the right product strategy. Some companies believe (falsely) that you can analyze success into a product by doing greater and greater amounts of market research and analysis.

    The true answer is extremely straightforward - you gain multiple paying customers.

    We live in a capitalist economic system, and money is our store of value.  Therefore if a customer buys your product, they are clearly demonstrating that you are delivering them value at least equal to the purchase price. Selling the same product multiple times without customization proves you have built something repeatable.

    All other ways of measuring product success, whether it be market share, market recognition, analyst awards etc, are irrelevant if you fail to sell the product. One large software company in particular sets goals around market share, but it does this because as a certain % of market share translates to a certain % of market revenue.

    Therefore, any company that wishes to minimize product risk, needs to get to market rapidly, with a minimal viable product (MVP), and gain paying customers during the development process.  Finding 2-3 customer willing to commit to buy your product and engage during development dramatically reduces product risk.  If you can't get multiple customers to commit to buying your product before you start developing, this may be a signal that you are building the wrong thing.

    As an example, while at Citrix we developed the Citrix Secure Gateway (CSG), that later morphed into the Access Gateway and quickly became number #1 in the SSL VPN market, and over $100M revenue. CSG was built by a small Citrix skunkworks team in only seven months, and very early in the process Lehman Brothers engaged as our development partner.  They actively helped during the development process by reviewing our specs, meeting with the team, detailing their requirements, and committing to using the product.

    Compare this to a project at a different company, where after two years of defining requirements, development, testing, marketing, sales and SE training, the product didn't sell - it was essentially DOA.  There were a few main differences:
    • No customer(s) who had committed to buying the product on release.
    • No focus on delivering the minimum viable product (MVP).  Requirements blew out as "must haves" kept on being added.
    • No development customer partners.
    We've all worked with development teams who get motivated by solving cool or difficult problems, and view financial goals as non-motivating.  As a Product person, you need to explain carefully to these people that the financial goal is simply a measurement of the success in meeting customer needs.  To meet the financial goal we still need them to do their magic and deliver great products.

    Sunday, January 17, 2010

    A serious question on user interaction

    While at CES I noticed that Taser was exhibiting, mainly around their Protector Family Safety Platform. From a product strategy point of view, Taser is branching out from their traditional product line, and leveraging their brand into another area of personal safety - parental controls of mobile devices. In a future post we'll analyze this move, as parental control of mobile devices is going to be a huge market. But this entry isn't about strategy, rather let's focus on user interaction.

    While I was at the Taser booth I noticed some of their more traditional products.  Taser has created an incredible brand, and testament is that their name is now a generic term for these devices and even a verb i.e. "someone was Tasered".  Using a Taser is all about delivering non-lethal force to stop an attacker, and in this post I'm not going to pass any judgement on the use of these devices or the company - let's just focus on the user interaction.

    What caught my eye at the show was one of their law enforcement models that was generally shaped and used like a handgun - especially the handgun like safety catch and trigger. I am sure that  there are many reasons Taser used this shape and mode of user interaction for law enforcement products, and likely law enforcement officials felt that it would leverage the training their already conduct in handgun use.  Taser is a professional company and would have done a lot of research.

    Officers generally carry the devices in a belt holster similar to a handgun, so have a handgun on one side, and a Taser on the other side.  Is anyone starting to see a possible issue here?

    I have incredible respect for Law Enforcement and the job they do every day - many people tend to focus on the ngative, but every day these men and women put their lives on the line for us - every day they walk out the door of their home, and their spouse doesn't know if they will be back.

    No matter how much training someone receives, in the heat of a situation anything can happen.  I am ex-military, and I was always fascinated how adrenaline took over in the more realistic training situations and you forgot a lot of the training. Law Enforcement officials have a difficult decisions to make in an instant, often when their lives are being threatened or they are in the middle of a physical struggle.

    So here's the issue - a Law Enforcement officer now has two devices that operate in almost identical fashion:

    • Reach for my main-side - handgun = lethal force
    • Reach for my off-side - Taser = non-lethal force.  
    • Once either device is in your hand, operate safety and trigger identically
    The only thing the users selection of lethal and non-lethal force is the side of their body that they reach?  Does this make sense from a user interaction perspective?  

    Tragically there has been a situation in California where a Law Enforcement officer was captured on video shooting a suspect in the back with his handgun after a violent struggle - there is no doubt in my mind he thought he was going for his Taser, but in the heat of the moment ended up with a handgun, and the results were tragic for both people.  I spoke to another officer at a New Years Eve party, and he said in his department that there has been similar cases of officers pulling their handgun instead of Taser (but luckily no harm done).

    One of the aims of user interaction is to avoid mistakes by operators, especially serious mistakes. This is definitely an extreme and emotional case, but we need to ask does it make sense for the non-lethal devices to follow the same model of user interaction as the handgun (lethal force)?  With an electronic device (i.e. not mechanical like a handgun), why not do away with the trigger, or make it the opposite e.g push forward with your finger?  Or even use a completely non-handgun shaped device such as the consumer oriented Taser C2?

    Think of the impact of user interaction here - are we failing the Law Enforcement community AND our community by not providing a better model of user interaction between lethal and non-lethal force?  

    Feb 2010 Footnote 

    There have been a recent series of news articles on the incident discussed above, and the Taser/handgun interaction question is getting even more serious.  Here is the text from one of the articles:

    A few hours before he fatally shot an unarmed train rider on Jan. 1, 2009, former BART police Officer Johannes Mehserle decided he wanted a Taser. So he called up a fellow officer and borrowed one. He did not, however, adjust the holster that came with it - something that all BART officers were expected to do to make sure their Taser was in the position that best suited them. That would have demanded up to 15 minutes of work with an Allen wrench and a Phillips-head screwdriver.

    Other articles report that because he was using a borrowed Taser, it was positioned for a RIGHT HAND draw, so the officer lost the ability to discriminate via dominant/non-dominant hand. BART police are advised in training to use their non-dominant hand to deploy a Taser, but are permitted to use either hand.

    This tragedy could have been avoided with a redesign of the Taser to not operate like a handgun. Ditto each officer *must* have their own holster, permanently adjusted to their own size/position.  They can still share the actual units, but not holsters.
    We are putting too much pressure on our already stressed law enforcement officials.