Digging In | Startup Insights

Follow the Money

2012-02-26T06:51:00.002-08:00

Over the past few weeks I've advised a half dozen entrepreneurs at various stages of startupdom. I have a lot less time to chat or review things because I'm working full time, serving on the school board, and developing my own stuff nights and weekends.

So I cut to the chase. "What are you selling, who's buying it, what are they paying for it, and how often?", and change the verb tense depending on their stage. It really focuses the conversation on what the business is.

Ideas are great. I love to hear ideas and shoot the shit about them. But business is primarily about income and expense, and if you have none for the former then the latter is going to stop you in you tracks eventually.

Follow the money. Stop guessing about where it will come from. Figure it out.

So how?

Call potential customers.

Talk about the benefit of your offering, and ask them if they'd be interested, and if so, what they think it would cost. Let them know you're a startup and doing research. Some will be too busy to help you. Others won't want to put the phone down.

Listen to them all, ask probing questions, but mostly let them tell you what their issues are related to your proposed product.

Should I go to this conference? No, I don't think so. You need to sell something and get some early reference customers. Should I go to this other conference? Sure, it will help you sell something and get some early reference customers. Should I hire a PR firm? No, you need to get some early customers first. Should I raise $750k? No it's more than you can put to productive use and you need to show that you can scale sales with half of that.

See where this is headed?

Nothing happens until you make a sale. If you're already selling, you might test higher price points; are you leaving money on the table? Who's looked at you but passed? Talk with them and ask why (in the form of 5 or 6 questions, and be respectful of their time).

We make assumptions all day long--that's part of the risk. But you need to test those assumptions with constant research into prospects, existing customers, and lost prospects. Get into the habit of talking to a few customers or prospects a day.

That's where your answers are.

They aren't here on this blog, they aren't in Lean Startup, they aren't in your business plan, or Techcrunch, or some event, or some meetup, or a call with me.

Start with the customer, and everything else will fall in place.

Update

2012-02-21T06:02:00.000-08:00

I wish I had more time and inclination to blog, but I've been sick for a few days and not terribly productive. Today I'm turning it back on, but it's tough sometimes to soldier through. On top of that I have a school board meeting tonight starting at 6.

The world doesn't wait. Apps don't build themselves. I still make the list, focus on the detail, get the work done, iterate--in between naps.

How do you get through?

Crunch Time

2012-02-16T08:31:00.000-08:00

It's been a while since I've had dependencies on my own output. That's changed :)

It's crunch time, with fast iterations, better but imperfect output, and a lot of second guessing. Fun, but at some point you get too close to it and need to step back.

Stepping back will happen Friday night, at which point I think I'm going to have a nice home-cooked meal, take the dogs on a long walk, and do a bit of Noding over the weekend.

Good stuff.

Punt: Steve Blank

2012-02-15T08:37:00.000-08:00

There are only a few sites I refer founders to these days. The first one is usually Steve Blank's.

The primary problem I see with founders--dozens of them--is they don't know their model. Steve focuses you on some key questions that seem so obvious, yet so many people miss them because of an obsession with vision, or product, or raising capital.

You have to start with the customer. Who do you serve? Who pays you? What do you they pay for? How often will they pay you? And how, exactly, do you know this?

Steve has a new book. Go check it out.

Startup Lancaster is Thriving

2012-02-14T05:47:00.000-08:00

Yesterday evening I joined a group of 16 startup founders from the Lancaster area. Only two of them were there for the first time.

Since we started in May last year, we've seen some great progress. Clint has landed help from a local college for his algae production thing (too much to explain).

Damon and team have chosen not to pivot, but to start something entirely new--a very tough choice given the amount of time they've put into a veyr good idea.

Kyle, Kyle's not talking. He's there to help others.

New guy Mark is an attorney with a great drive and narrow focus on a niche that looks like it wil be a cash cow. Unlike a lot of non-techies who have an idea, he's got a spec and a business model.

Dave is moving along with customer testing.

Mike and John are nearing beta. If you remember they chose not to outsource and instead added a technical co-founder back in November--someone they met at an earlier Startup Lancaster event. And they're getting a deep level of care as a result.

And there were more. Everyone's making progress. Even me--I ripped and replaced all of Jawaya, and will have something new soon, including a new take on it. Ah! And Steve came for the first time with his geo-tracking thing that's heading to beta soon--built on Node, of course. As rock start Chris Matthieu of Nodester says, "hack the planet, dude".

It's a small group, but it's thriving. And I think in May it might be time for a little show and tell to some local investors and VCs, just to see what we could do here, instead of seeing them fly the coop out to Palo Alto or up to NYC or some other tech magnet.

If this is happening in Lancaster, imagine what you could do in, say, Reading? It's like Lancaster without the glitz ;)

Hiring: Narrowing Your Options Isn't Always Good

2012-02-13T05:32:00.000-08:00

Some days I have no idea what I'm going to post. And then someone like Steve sends me an email and there you go--instant blog post. Thanks, Steve.

This morning Steve (local tech guy with cool startup) sent me a job description for a CTO role. Looks like a great opportunity for the right person.

This post is my response, edited for context. It's not something up my alley, and I'm enjoying my current gig.

They plan to grow from six engineers to eighteen, and are looking for the right leader. But in the skills section, they say they need a Linux/Unix expert highly proficient in Python.

Well. That narrows the field substantially.

So in my nosey way I sent an email. They really aren't looking for a coder with Unix expertise. They need a leader.

They're really looking for a leader-manager with a bit of vision and the ability to grok a wide range of technologies--enough to see convergence, new paths and opportunities, etc, who can build a team that develops great tech/products in strategic support of the business objectives.

(Wow that sounded so corporate).

By including those two requirements, the exclude people absolutely qualified for the role they really want to fill.

If you are building the team to eighteen or so (which you should only do after hiring the CTO and have him/her define the teams needed to support your plans), you probably don't want someone up to their arms in Python or walking around Linux.

Show any just about technologist just about any code in almost any language and they'll know what's going on after a quick primer on syntax. You don't need them to lay any code to be amazing technology leaders.

So I'm always convinced I'm right, of course. But am I?

The Day the Music Died

2012-02-11T05:55:00.000-08:00

Uh oh. Github.com is down. And thousands of hackers catching up on their own fun weekend projects will now have to...well...clean the house while they wait.

evansims
+1 RT @brianherbert These DDoS attacks on @github are getting really annoying. Whoever the tard is behind it needs to stop already.
2/11/12 8:52 AM

The Dog Ate My Paper

2012-02-11T03:03:00.000-08:00

I think I just made a "dog ate my paper" case for something.

You know what? Don't do that. How you get somewhere isn't important anymore, because there are so many other things that have gotten there before you without any inappropriate dogs meals (try Evermore Pet Food for the real deal). Just get it done.

I'll say this about Node: as much as I love it, deploying can be a real pain. I have been in the habit of using the most recent stable release, but my hosting provider and a bunch of others settled in on v0.4.7. That's sooo Sept 20011.

I've been developing on my Mac, waiting until I was near launch to push it to the server, and using Github basically as a backup. But Heroku needs the older version.

So I revert, but then npm (node package manager, like Rails bundle) doesn't work, so I have to revert that too, which means finding the build that works, somewhere out there on the Github part of the interwebs.

All from the joy of command line heaven. I'm guessing when Jobs said "it should just work" the Unix guys just chuckled, with glee. Their idea of abstraction is highly abbreviated esoteric command patterns.

Which is why npm is so nice--npm install some_module. npm uninstall some_module. And then it runs out there and gets what it needs from the intergalactic tin-can network we've assembled.

Anyway. That's some dog. Still mucking about. The funny (if funny is really sad) thing is the app runs fine on the older version of node. Only npm has the issue. Well wait, no, contextify breaks, which node-waf depends on, which I have no idea why it's in there.

And here we are at the end of the post, and I still haven't pushed to the host successfully. A fine how do you do.

Sighs of Relief

2012-02-08T06:46:00.000-08:00

In a blog with active commenters, the best stuff is usually in the comments. Yesterday was one of those days, in talking about managing development teams toward goals. Adrian said,

"First and foremost, the people on the ground have to be rewarded by the work itself. Dates represent angst and fear. Release notes are small sighs of relief - and most importantly - progress."

I asked "really great points--especially about dates. But if there are business dependencies with dates--like specific events, launch timeline, etc, how do you handle that?"

His response was really worth pointing out. Enjoy the read, and feel free to jump in.

Opinions vs Action

2012-02-07T06:19:00.000-08:00

I tell ya, it's a lot easier working on my own stuff than someone else's. They expect results!

It's also a lot easier giving opinions about startups than building them. It's not nearly as rewarding though.

I'm relearning that communication matters. So do lists with dates, not just lists. I'm mindful that I'm not organized the same as the anal retentive, and have to work a bit harder on that to be effective.

But not too organized. Sometimes you actually have to do something, not just organize everything.

For train time today, I'm taking a step back and deciding what will create the right work balance for the work and management I have to do.

I've decided on daily progress updates to the CEO and product team, simply because it keeps me in the discipline of communicating where we are. They'll be brief--nobody wants to slog through a lot of prose every day.

Weekly I'll summarize where we've been and where we need to go, and make sure we're still aligned with our dates. I'm not a product manager, though I've played the role from time to time, so it's a bit of a stretch. But stretching is good.

If we keep it lightweight, focused, and fluid we should be able to make great progress with lots of productive, quick iterations.

It's easier to work as just one dev in a lot of respects--set your own pace, be your own PM, fix your own code. Working in a team takes good communication, which simply means effective communication--just enough at the right times. Stay out of the way as much as you can without dereliction of duty.

I'd love to hear your input on running teams--it's been a while for me but I'm enjoying it so far :)

Punt: Phil Sugar Guest Post on AVC

2012-02-06T09:18:00.001-08:00

Go read, enjoy: http://www.avc.com

Decisions

2012-02-05T06:09:00.000-08:00

I've had a few conversations over the past week with a number of founders about decisions they're struggling with. I have some simple, but also simplistic answers and questions that surface or almost force a decision (ambiguously referenced here as "it"):

It either works for you or it doesn't. If you can't tell, it's probably not working unless you haven't given it enough time.
Focus everything around your basic, fundamental, mission-driven goals: does it directly support reaching them?
Is it fundamental to your core revenue model? Can you draw a direct line from it to a transaction?
Does it directly support your customers or customer growth?
This next one I'm cribbing from our friend Phil Sugar: think of any expense in terms of cash. If you're not sure about an employee, think of whether it's worth handing a crisp $100 bill to them every 2 hours (or whatever their pay + taxes + bennies adds up to). Cash is real; line-items on P&L reports are more abstract.
Follow your heart. I got an email today from a guy in India with a 3-year-old online marketing company who wants to participate in an incubator there. Someone he respects (perhaps out of cultural obligation) says it's a step down, what should he do? That's an easy one.
Write a list of possible outcomes on one side of a slice of pizza (ok, paper. Craving pie right now). Next to each outcome, write down the worst that can happen. Next to that, write down what you would do next, given the worst has happened. I find that relieves the anxiety of not knowing, or not understanding the scope of an issue.
Is it a high-value application of your time, low-value application of your time, or unavoidable?
If it's unavoidable, is it really unavoidable? Can you hand it to someone else, outsource it, ignore it, end it, or remove it altogether?

The point of this isn't to give you specific answers or even the right questions to ask, it's to get you thinking about what matters to the business and to you.

When you go through the process of asking a lot of questions like this, your path becomes clear, not because the answer's right in front of you, but because it's usually already within you.

There's a lot of murkiness in building startups. But if you focus on your mission and the basic stuff that gets you there, you'll be fine.

Weekend Project: Lists

2012-02-04T08:21:00.001-08:00

I'm making my list, checking it twice.

I've neglected a few things this week, like certain coding, cleaning, organizing, bill paying. I started working at interim CTO at a consumer web startup (stealthishly), which means weekly travel to NY and less time to take care of the things at home.

Further, I'm wrapping up some of my own stuff over nights and weekends. Sleep hasn't been great because I have the dogs this week and they've been sick.

So, make the list. And then blast through it. Once that's done, I can focus on getting a few key tests done, moving the app to a Node host, and inviting a few folks in.

One thing I realized this week--my coding skills have really hit a nice, stable, fluid period. My guitar playing is like that sometimes; you know your vocabulary, know your tools, and fluently lay into a groove with ease. It's a nice place to be.

So I need to go make the list and get some stuff done for me. Then a hike in the park, and likely a Saturday late afternoon through the evening working on some neat stuff I'm really enjoying.

Now go forth, make your own list. What's at the top?

News Notification by Email Services

2012-02-03T03:01:00.000-08:00

I have a Yahoo email account that I've never quite been able to get rid of for some reason. I use it to sign up for whatever service when I'm not really ready to commit, because I don't want my primary email spammed and interrupted by promotional crap (which it is anyway).

This morning I got an email from my friends at LinkedIn. I don't know anyone there but I was user number 3001 or something, so it feels like we've been through a lot together over the past 7 or 8 years.

But I'm skeptical. The subject is "The 7 things you need to know in the news this week". So ok, I'll bite. I open it up, skeptically thinking they couldn't possibly know what I care about or what interets me.

And I'm wrong.

Six of seven catch my attention and they are now open in my browser, including yet another article on the amazing growth of Pinterest, P&G laying off people after spending a huge amount on advertising, and something on company culture.

Some of my industry friends have services like this. Kevin Marshall's KnowAboutIt is the most accurate, but about a quarter of the stories catch my attention. More than half are things I read anyway. There's always one gem in there.

William Mouyagar's Equentia Semantic Portal (William, ya gotta rename that!) has maybe one nugget that works for me. William's new thing is going to be really cool pretty soon--great start for Engag.io

Others I've tried simply don't offer any gems--it's mostly recaps of stuff I've already read or I don't care about.

This stuff is hard, I imagine. Most of these services seem to think relevance has something to do with association. The numbers don't bear out.

But LinkedIn nailed it today. I haven't opened any of its earlier entreaties, so I'm going to review a few of them to see if it holds up.

My feeling about news notification services is that they don't really do it for me. I don't feel like I'm learning something new, and definitely feel like there's more stuff out there I want to see.

So I go to Twitter and Facebook for general interest timewasting and connecting, and through that I come across stuff I like (presented through friend, so association too), and directly to news sites. News.google.com is my first stop.

I'm not sure what my point is here. I'm thinking a lot about notifications and what makes them work or not work. The next time I see one from LinkedIn, I'll probably open it.

Eat Your Own Dog Food

2012-02-01T04:12:00.000-08:00

The only way you can truly understand and stand behind your product is to use it. The cliche forever has been "eat your own dog food".

One of my new friends from the startup class does exactly that. Literally.

Enjoy :)

Punt: JLM's Post

2012-01-30T06:01:00.000-08:00

I don't have a lot of time this morning as I crank to finish some work before heading off to help another startup for a while. Which of course means I have to move my own work to nights and weekends, but that won't be much of a change :) Perhaps it will actually help to think about something else for a bit.

AVC Regular JLM has some very simple, practical advice for growing companies today in a guest post over there. It demystifies some of the fog (ooohhh...supremely mixed metaphors) around what to do next as you're learning how to sell product and grow the company.

It's another set of JLM Gems--enjoy.

Weekend Project: Contracts

2012-01-29T07:52:00.000-08:00

I didn't work yesterday (much), aside from reviewing some contracts I'll need to sign prior to a gig I'm taking this week to help a friend.

Contracts supplied by startups are typically onerous. Their lawyer may or may not be startup oriented, and will usually send some boilerplate of each category of contract, and leave it to the signatories to raise issues.

I read every line and decide whether I can live with it or not; I can't afford to be prevented from making a living because of some overly paranoid boilerplate. At the same time, it's the startup's job to ensure they aren't hiring a trojan horse.

Current and future investors depend on the startup's ability to compete, for instance, which is tougher when someone close to the company's secret sauce heads to a direct competitor.

So defining what constitutes a competitor is really important. Usually competition is defined very broadly--like high-level categories. An example: "...any company addressing the internet search market." Huh. Does that mean Google? Kayak.com? Foursquare? It's so broad that I wouldn't sign something like that.

You end up making reasonable suggestions to narrow the scope, hopefully without being too big a pain in the ass for the startup. The point is, it's not about you, it's about them, and they're right to be paranoid and protective of their work--to a degree.

At the same time, you sign a couple of these with a few different startups and end up with no place to work because of the overly broad non-compete statements. Contracts tend to be 99% over-protection and 1% about the actual business. Ugh!

Here are a few suggestions for startups hiring outside help:

Keep your contracts concise and short. The longer they are, the more time everyone has to spend on them, and that's time spent away from your highest purpose.
Be specific and narrow about your protections; the broader the claims and protections, the more likelihood you'll have a protracted period of refining.
The four contracts are typically NDA, Non-Compete, Inventions, and the Consulting Agreement. There should be no overlap between these, but for some reason every startup I work with sends these with all kinds of overlaps--sometimes contradictory overlaps. Or better--consolidate them.
Don't obsess about locking everyone down with every last possible restriction. You need to get to work, you need the help, and you don't want to scare people away. It's highly unlikely someone's going to screw you, or be able to screw you. Your success comes down to your and your team's own execution.

This is just off-the-cuff. Please chime in with your own rules of the road for contracts--I'd love to hear your thoughts on this.

Feeling Sheepish?

2012-01-26T13:26:00.000-08:00

I've been helping a few other startups think through some stuff this week, so it's really taken a lot of my time and headspace. I'll keep blogging, but perhaps less frequently. Things are about to really tighten up for me.

Today I met with someone who wants to start something around a pretty solid idea, and he brings a bunch of experience to the table. He's passionate, and driven by a personal mission to right what he sees as a major wrong in the world.

I like that.

But he felt sheepish about asking investors for a salary. He doesn't think highly of himself as a business leader, because he's not one yet. When I asked how much he needed, he again was sheepish about paying himself, and was considering having someone else run it.

Wrong.

You are the keeper of the flame. Most of us have little or no experience when we first start. We make it up as we go. We learn. We screw up. We fix it and move on. We grow into the role. We're imperfect. But we make it happen.

Some of you will roll your eyes when I say this (again), but I'll say it again: there's a lot of darkness in building a startup; your job is to bring light to the darkness. You'll figure it out.

What the company needs at the startup stage more than an experienced leader is passion for a mission and the commitment and tenacity to get there.

That's what investors care about. They know they'll never get a return on their investment if you aren't driven by a mission and passionate about getting there. They know you'll figure it out.

I almost signed up for it--that's how much passion for the cause he has.

So no, don't feel sheepish. You're giving investors a chance to benefit from your passion, your sense of justice, your hard work during the day and endless thinking about it nights and weekends. That's a privilege, and nothing to be sheepish about.

Now get out of here and go be your badass self like you know you are.

Today's Punt: Steve Blank on Sopa

2012-01-24T08:54:00.000-08:00

Some really great points about Hollywood's misstepts.

"(Imagine if the $110 million/year spent on lobbying went to disruptive innovation.)"

http://steveblank.com/

Try. Break. Refine. Try Again.

2012-01-23T09:06:00.000-08:00

First, you're going to get back to your list/calls/code in about two minutes.

Today I'm once again learning something new. Learn, implement, refine, move forward. I'm breaking my coding into 30 minute blocks--more or less the Pomodoro approach. A call comes in, I take it, pace while I'm talking to get a bit of exercise. The knee's a lot better--radically--so it's time to get back to exercise.

Hit a stopping point--weird behaviors in my routing. By habit I hit the web to look for the answer.

Wrong. It's almost never the right approach--it should be a last resort.

Test. Doesn't work. Try something else. Doesn't work. Try again. Keep track of what you're trying, keep refining it, track everything. That's better...ok...picked up the trail, and ...ok, nailed it.

Break's over. What's next?

Star Wars, Crowd-Sourced over the SOPA-Free Interwebs

2012-01-22T07:29:00.000-08:00

I came across this on the Facebook or the interwebs somewhere. It's Star Wars--the entire movie (first one)--remade by, well, the crowd.

At first it seemed gimmicky. But I couldn't turn it off. At 12 minutes in, I realized I had to take it seriously and watch it on my 42" TV.

And pull my studio speakers and mixer into the living room to get the full effect.

It's truly an amazing work. Each participant contributed 15 seconds. The producer edited each 15-second segment together, perfectly.

Some of the scenes are hilarious; if a scene is 2 minutes long, that's 4 different approaches tied together. I'm still shaking my head at some of them, including one scene with the Dude and Donny at the bowling alley talking about the death star.

Some are artistic, some are silly, some are cartoons. One is done in the style of Casablanca, another, the Simpsons. There's a lot of stop-gap animation.

And of course, the most fun are the ones with kids, or kids and their parents, typically with a kid as Darth Vader, with the original James Earl Jones voiceover.

My favorite kid scene is where a captured Leia first meets Vader, with Vader played by the dad, and leia played by a 3 or 4-year-old, held by dad as they deliver the lines perfectly.

After yesterday's brawl over SOPA over at AVC, this was a refreshing piece that never would could have been made had SOPA passed.

Even as it is, it's possible it could get pulled given George Lucas's notoriously tight hold over the Star Wars franchise, but I'm guessing he'll be won over right about the time he sees Indiana Jones flying the Millenium Falcon.

Watch it--HDMI out of your computer to your TV. Pump up the volume.

SOPA & The Third Stage of Grief

2012-01-21T06:07:00.000-08:00

Fred posted on the SOPA defeat; this post is an edited version of my comment there.

I've been thinking about the transformation of the creative industry since I walked from my record deal in 1994 to start a computer company.

Things have changed dramatically since then. I remember bitterly saying to them "you're not getting another record out of me", then sat out the rest of my contract, which had 3 years remaining on it.

So here's where I am with the SOPA b.s. and the plaintive music and film industries: The content industry needs to ditch its scarcity mentality and move to an abundance mentality; if it doesn't it will continue to die it's slow, grueling death.

And I bet because they've pissed us off so much, someone will figure out a way to accelerate that.

Part of the problem is that the music and film giants are, well, a big part of the problem: the old school, top-down control model with many middlemen, concentration of capital and resources at the top, trying to hold onto every.last.dime.

For years they squeezed the life out of most of their creators, taking the bulk of the profits, and now they're unhappy they've been disrupted?

This isn't about piracy--that's a red herring. It's about the direct model. They've been cut out of the relationship between the artist and the fan, and you know what? Good riddance.

10 points on an album I took 6 months to write and 4 weeks to record? For what? If I'm lucky they might throw a release party, but the reality is unless I win special favor with the execs, or my rep does, nothing's happening because the company did something.

It's up to me anyway. So why work for them anymore? We don't need them anymore.

Most people don't steal; most people who used to grab stuff off LimeWire moved to iTunes because 1) it just worked and 2) the price was right.

Creators can create without them now. They can sell direct. 10,000 great fans can easily float a songwriter at $5/album. Make the album at home. The tools are amazing now.

A friend in NY is working on his first film. Skipping most distribution, going direct and through iTunes, Video on Demand, Netflix. Screw retail distribution. We don't need atoms to move these bits.

They're in the 3 stage of grief: bargaining. Good luck with that.

Unwanted Downtime

2012-01-19T05:48:00.000-08:00

Yesterday I was really cranking.

The day started slowly; I was distracted by the SOPA stuff and couldn't seem to get into a groove.

And then things started popping for a few hours--finished authentication and sessions and started testing to see where things stood.

There was a bug. One of the modules has a number of dependencies, and something had destabilized it. So I started chasing it down.

(For you hackers out there, the evil module is JSDOM, which has dependencies on HTMLParser and Contextify)
.
I made a mistake, as I occasionally do: I see something over at Stack about upgrading, so I upgraded to the latest stable version of Node and NPM.

And that's when it started.

4 hours later, I got everything working again--except for JSDOM. I'm no closer than I was do fixing the issue, and wasted 4 hours I'll never get back.

I try to avoid unnecessary downtime. Configuration issues take a lot of time and energy and can suck the life out of you.

What causes your downtime? How do you avoid it? I keep touching that hot stove...

SOPA Overreaches

2012-01-18T03:18:00.000-08:00

There are two bills in Congress purporting to be about internet privacy: PIPA and SOPA--one for the House, one for the Senate. I'm not sure which because my traditional starting points are protesting and not available.

The legislation gives the government the ability, rather arbitrarily, shut down or block sites that

Sources of Capital: Part 1

2012-01-17T06:05:00.000-08:00

Shooting for brevity today. This is Part 1 because it's a long topic, only because people tend not to believe that they really shouldn't be trying to raise capital.

Few startups I coach or come across are ready for institutional capital. Getting seed capital from active tech angels or seed funds ain't easy either.

I'm telling you this because I want to save you some time and wandering alone in the desert. Most of us don't need to raise capital.

Yet.

Here's the criteria for me referring a startup to an investor, or vice versa. The startup has:

more than one person
revenue greater than the combined salaries
not necessarily profitable, but the path to profitability is obvious
a quantifiable, sizable market
a way of addressing that market from the bottom up. Never say "the market size is $10 billion, and we plan on capturing 1%". What investors care about is how you're going to capture 1% (business model) and when (trajectory).
product that makes sense, looks good, works well
customer profile that aligns with the business model and projections.
clear path to scaling.
existing investment from either trusted sources, personal debt, or personal stash. Skin in the game matters.
passion
ethics. It's surprisingly easy to learn about someone's ethical stance (if they have one at all)

I rarely do any matchmaking--it's just not worth the risk on both sides of the equation. As I said, most startups don't have a robust enough combination of the listed stuff (I'm likely leaving stuff out) to warrant raising money.

So if that's the profile, and you don't match it, what do you do to raise capital?

bad stock photo illustrating someone else's point

Raise from customers. Don't have a product? Sell it anyway as a service job where you retain the rights to the code. Read this article on Bootstrapping by Greg Gianforte, then stop reading anything on the black hole of the interwebs and get to work.
Play credit-card roulette. Amass a good number of credit cards and an American Express. Move balances around to avoid interest. Make the minimum payments.

This is a risky move, but a lot of founders have worked it well. And accrued a lot of air miles, which is useful for your hopeful but largely unnecessary travel.

now that's commitment...

Ask mom. Dad. The rest of your family. If you can convince your family to invest something that won't ruin your relationship if you blow it, it will help convince others to join in.

Don't do it if you don't have a clear path forward, though. R&D is for nights and weekends.

Day job. Nothing like someone subsidizing your R&D by having you do something of value to them and paying your for it. You still have nights and weekends, which by my simplistic math leaves you with at least another 50 hours/week, if you're slacking :)
State-backed investment vehicles like Ben Franklin Technology Partners. Well, scratch that. I think it takes way too long for too little money with a huge amount of ongoing documentation. I love the people at BFTP, but the program itself is a bureaucratic mess.
Sell stuff. You really need all that crap you've collected?
Raise from prospects/customers. Yes, I said it again, because that's really where you should spend your time. Sell something. "Nothing happens until someone sells something".

If you're a consumer web startup and plan to make money on lead-gen or advertising, well, God help ya. That is a long, tough path and you typically need some good backing to get to sustainability. You might be able to pull it off with lead-gen if your target sectors generate high payoffs like financial services, mortgages, etc. But the most you'll likely get per user is $30/year, but it's much more likely to be between $5-$10/user/year.

So get off the web and go sell something. This isn't a mystery, folks--the answer ain't out there waiting for you to find it. Get on the phone. Go visit prospects.

Do what you have to do to pull in some sales, learn more about it, refine it, rinse and repeat. You'll get there :)

Building the Business

2012-01-16T07:57:00.000-08:00

Today's post is from my comment to Fred's post on management stages. Reblogged for your viewing pleasure (or displeasure):

-If you begin committed to a framework of principles/values to inform your visioning, hiring, decision-making, and execution, you'll end up with a company that mostly reflects those values.

--Building the business is still an iterative period; you need to test to find what works and what doesn't, especially in marketing and sales, and even more so if you're in a constantly evolving competitive market.

--Focus is tough. Be careful not to chase too many 'opportunities', spreading yourself thin. By now you should have an idea of what sectors overperform for you; focus on those until it's clear you have a new sector opportunity.

--"Partnerships" != Business Development. Don't chase logos and press releases with established companies just for the credibility. If there isn't a clear path to revenue, it's not business development, it's a distraction.

--Hiring is always tough. Avoid "I know a guy" approaches to hiring. Define the roles very clearly, and screen for initiative and ethics along with capabilities. There's nothing worse than a skillful person with marginal ethics and no interest in taking initiative.

--Don't spend a lot of time reading blogs. Or TC. Or whatever. Or rather--know when to stop. In one of my ventures I read way more than talking to customers, obsessed with figuring it out or finding the magic bullet, some pearl of wisdom that someone blogged about that answered everything I needed. Wrong. Talk to prospects, customers, lost customers, lost prospects. At every stage. Make it the core discipline of your company and you'll always have a handle on what to do next.

There's plenty of darkness around the startup, even as you're growing and nailing revenue. Your job is to bring light to that darkness (like WoW) and the clearest way is through direct contact with customers and everything you learn from them.

Learn About SOPA

2012-01-15T08:07:00.000-08:00

Intellectual property rights should be protected--I agree with that. The methods, however, are critical. SOPA dramatically overreaches--to the point that it's a threat to free speech and the future of the Intergalactic-Wide Web (predicting expansion to other galaxies).

Learn about SOPA, and take a stand. If you oppose it (I hope you do), make some noise with your representatives.

Weekend Project

2012-01-14T06:55:00.000-08:00

I wish I had a goodie here but I don't.

This weekend--like most--I'll be working on Jawaya, taking an occasional break to go to market or on a (gasp!) walk, and testing a side project around community.

I've rebuilt Jawaya from the ground up, switching from Rails to Node. It's going very well, very fast. I've run into a few minor issues because Express isn't well documented (damn you TJ!), but the Node community has been a great help.

I could cut down a lot of work if I chose to use the original UI. For now, though, I figured a completely clean pass would be best, and I can always hook the prior one up.

The plugin is the same, but I'm adding an iFrame and a bookmark as options for those wary of browser extensions.

I'm going to be very conservative and say it will be ready in two weeks, but I'm already wrapping up the server APIs and have just some cleanup and testing to do.

So that's my weekend. Blue skies, though, so definitely heading to market (by car), Mandros (greek food market/deli), and perhaps out for a very limited stroll. The knee is recovering very well, but it's too early to really push it. Hoping to get some sort of workout in--but nothing involving the legs :)

Have a great day

The Disqussion

2012-01-13T07:42:00.000-08:00

Yesterday Fred blogged about Disqus's report on its user base, with the title "Pseudonyms Drive Community". Part of the definition of "quality" were number of replies and number of likes.

Now, Likes are variable but don't reflect that; intent differs from person to person. I like a lot of things, but I like some things much more than others. Disqus gives us no way to differentiate that.

An example is that I tend to like @awaldstein 's first comments; I appreciate them, I learn from them, and I want to point that out to others.

In later comments down the thread, I might like a joke he makes. I appreciate them less, I don't really learn from them, and when I Like them it's just to pat him on the back.

So how can such a variable signal be given such weight in their analysis?

And quantity as an indicator of quality, well, that really bugs me. Some of the best comments require no response. They're great on their own.

Some very long threads have tons of replies that are completely meaningless to the original point; some original points are weak on content but strong on provocation.

I dropped in late to the party--4 hours after the original post, and posted this.

Number of times a comment is replied to? Really? That's a signal of quality?

Seems to me it's a signal of engagement.
Or in some cases, enragement.
Not simply what the sage meant. (drop me a beat...)

The totality of the statement is a bit over the top. Some, not all good comments are from pseudonyms, just like within that group some, not all comments are useful, reliable, or experience-based.

Quantity is not a signal for quality. As much as I like Disqus, this 'research' doesn't reflect the quality of the service.

My comment was voted up pretty quickly, became the top comment and stayed there (yay me!).

Should velocity be a signal? Maybe. But velocity doesn't speak to the quality of the content (though by default everything I say is amazing high-quality content, of course;) )

Likes and number of replies don't do the job; they're inadequate signals. A better approach would be to have yet another button (or slider, or stars) that lets you vote on quality.

On StackOverflow, the best answers are voted up. Wait! Are they really the best? With programming there are tons of opinions on the best methodology, but fundamentally the suggested approach has to work, and if 50 people vote for something, it's likely the approach works.

But I think that's weak as well, though it's stronger than what D presented. I can find good solutions through that, though sometimes the better responses have far fewer votes than the most popular ones.

As @messsel pointed out later in @fredwilson 's post, sentiment, quality, etc are tough nuts to crack.

Which is why, I think, people reacted so badly to the claims in @danielha's original post: people care about quality, and we see Disqus as a thought leader (with about a million blogs using Disqus it's clearly a force), and they've based quality on weak signals.

Disqus is one of my favorite companies. We complain because we like what they are doing, but want them to be ideal. And my guess is that many of us differ on what an ideal Disqus should be. As it should be, of course.

I'd like to challenge Disqus to a live video chat among people who care about this. What a great discussion it could be. In fact, it would have been great to have a live video chat sometime yesterday when the topic was hot...when's that feature coming, Daniel?

You Are Not Alone

2012-01-12T08:40:00.000-08:00

I had the privilege of a great talk with the famous Tisch the other day, and he asked me what I was passionate about (wrt the next startup).

For me it's strengthening communities, both online and offline, through both online and offline interactions.

A lot of smart people have written about this. Some have built great businesses around it, like Meetup and Skillshare. I'm a user of those tools, along with Eventbrite, which is great for handling an event but not great at supporting the community that develops out of the event.

My thesis is somewhat obvious:

communities strengthen with the number and quality of connections between their members.

And that's what I've become very passionate about, both in my online and offline life. With the offline life, it's about my hometown--friends, family, colleagues in the startup world, and especially the broader school community of 74,000 people, 11,000 students, and 1600 employees.

Stronger communities make everyone's lives better.

I talk with a lot of founders--a ton, really. While I've thought about charging for services--and I have--the ones who really need the help can't afford to pay me, which makes it hard for me to spend the time.

So part of my mission these days is to connect founders with founders, and help them develop relationships so they don't have to go it alone. I want to help to create communities of founders (though that's not my core mission).

Building a startup can be a very isolating experience, especially as it scales. Sharing the challenges helps us think through them, but it also opens the opportunity for others to help, and to recognize their own challenges.

So we learn.

Startups have a ton of resources I never had in the 90's, and tons of great advice. James Altucher, Eric Ries, Brad Feld, Steve Blank, Fred Wilson, etc, etc.

But it's only advice. And it's generally not interactive advice. There's something about sitting down with other founders and talking about issues that addresses more of where we are emotionally--our frustations, misgivings, bewilderment, passion--that written advice simply doesn't address.

One of the best things that comes out of those sessions is positive feedback, support, connection, and affirmation.

That's a great idea.

I feel for you--I went through that last year.

It gets better, you just have to hang in there.

I know a few people who might be able to help.

It's simple, but it makes a difference. Just a little genuine encouragement can lift us up.

Sometimes we leave energized. Sometimes it's exhausting. And sometimes we leave with more questions than we came in with.

You can start your own thing where you are. Use Skillshare, or Meetup (fee), or whatever, and choose a night, then promote it to the local tech community (exclude non-founders).

Create a safe event where people can air their issues openly. What happens at Founders Night or Startup Night or Commiseration Night stays there. Like Fight Club.

In Pittsburgh? Call it Startup Pittsburgh. Whatever. Just get it done. Buffalo? Easy one. Startup Buffalo. See? Shamokin? Startup Shamokin works just fine.

You might only find two other founders in your area. Or two hundred. Regardless, get together every month and talk about your challenges. Limit it to two or three challenges per person.

Don't expect to get answers--that's not what this is about. Ultimately you have to discover and choose your own answers.

If you want to attend one of mine, follow me on SkillShare.

Html2Jade & Perfect 3-Column Layout

2012-01-11T16:13:00.000-08:00

While I know CSS, I'm not a designer and don't love to move pixels around the screen without guidance.

So I found a good HTML/CSS template combo from this guy, and decided to give it a try. So I started converting it by hand to Jade, and then thought, "gee, someone should write something like HTML2JADE."

Right. Googled it. There it is--thanks buddy. I love the interwebs.

HTML2JADE is a simple node module that converts your html to jade format. You can install it (on Mac) with npm install html2jade, and then use command line to convert:

html2jade yourfile.html.

If you don't have a lot of files to convert, then shoot on over to another hero's site and just paste your HTML in, click the button and bang--you've got jade :)

Gotta love the interwebs.

UPDATE: TJ also included a way to convert your CSS to Stylus in the Stylus executable. So if you're using a css template (assuming you have installed Stylus globally), just use

stylus -C --css ~yourpath/here.css

and the magic will happen.

Update

2012-01-11T07:26:00.000-08:00

So, that was a brutal day in NY. The meetings were great. But let me tell you, don't do what I did. I needed a wheelchair at the Amtrak station in Lancaster to get to the car, at which point I drove to the school board meeting, mini-stepped my way to the table, and sat for 3 hours. I see the doc in an hour.

But the hotel and on the train I was able to focus and get a bunch of APIs stubbed out and some of them built. For some reason I just really flow with Node, Express, Mongoose, and Jade.

Yesterday I added Stylus, which is the CSS renderer for Jade. TJ apparently doesn't like extra characters like colons and brackets, so he's removed them. The CSS is basically the same, just with fewer characters.

Over the next day or so I'll tighten up the user and session management, then turn to filling out the APIs; the core ones are done. The search stuff I'm not certain about; we've used Solr for Jawaya, and I'd love to leverage Solr or Lucene (which Solr sits on top of) but haven't researched it beyond knowing that there's no Mongo integration yet. I think.

The best thing about the new platform is that I'm not waiting on someone else to fix bugs. I never really liked Rails, and didn't want to invest the time to become proficient. With Node, I was productive after the first hour. Feels great.

Time to head to the doc. I'm really hoping it's not as bad as it seems, and that a few days of rest will be enough. :)

Have a great day, and remember to get outside and enjoy the sky for a few moments before hustling to the next thing or looking at your phone.

Immobility (or "Pop Goes the Knee")

2012-01-10T05:05:00.000-08:00

"but there are things that'll knock you down you don't even see coming
and send you crawling like a baby back home"--Bruce, "When You're Alone"

On Friday I did a relatively light workout--20 minutes on the treadmill at a fast walk and low-weight, high-rep lifting to strengthen the quads.

A half hour after I walked home, I joined a friend for a 2-mile hike. That night, I walked downtown for First Friday and met a friend for a beer, then walked home.

The next day my left knee was sore--just sore. I didn't feel up to the gym so I didn't do much aside from cleaning and coding.

Then Sunday it hit me. I could walk but it was painful--something was wrong. And when I got up Monday, well, I couldn't put much weight on my left leg at all. The pain was incredible.

But I had a startup class (soldout!) in NY to lead, and venture meetings Tuesday. In December I had scheduled meetings with the same people, but the train was sold out (unbelievable) and I missed them. There was no way I was going to flake out again.

So I got on the train (a bit late--missed a meeting with a great dev as a result). I walked very slowly to the hotel a block and a half up, afraid of getting bumped on the crowded sidewalks. The hotel clerk offered me a wheelchair, which I considered, but pass on and made it to the room.

Later that day I made it to coffee with Arnold at 5, and was limping along. I had bought a brace right after getting off the train so the knee was a bit more stable, and if I stepped forward just with the right leg, I could manage.

The class went great; only 6 people of 15 showed, but we had a really good conversation about their current challenges. They accommodated me--I plopped down on the couch and put my leg up to relieve the pressure.

And then I had to get back to the hotel. Well. Getting in a cab isn't easy with a leg you're afraid to straighten. But I got in--it took about a minute. The driver was aggressive, with a lot of hard braking. It sucked.

Falling asleep was hard because of the pain; I took some advil but that only goes so far.

Waking up was, of course, worse. My knee had stiffened over night. I'm sitting here in the hotel room with 3 meetings scheduled, and I'm going to ask the hotel to bring a wheelchair.

I'm not equipped to deal with this. See the doc on Wednesday back home, and I'll just have to manage until then. Cabs to the meetings, slow ministeps. Should get a cane. Be like House. Without the oxy.

I've done some research: it's likely a tear of the patellar tendon, which connects the thigh with the top of the bottom of your leg. The tear--I'm hoping it's not a tear, but all signs point to that--is at that connection.

don't hurt this

The recovery period is 6 months; 6 weeks in a cast/immobilizer, and the rest slow recovery with PT. I'm already trying to figure out an exercise routine to keep the progress going--my knees going to need less of me to recover well.

If I have to get surgery, it's open-knee not arthro for this, and a 6-month recovery period.

Needless to say, my NBA career is over. But I can still code. I can still pick up a phone. I can blog at an angle.

Moral of the story? No idea. But nobody can say I didn't show up. (or have the sense to stay home. the investor in my first meeting sprained his ankle last night and cancelled, responsibly.)

Don't Be a Feature Pig

2012-01-09T07:44:00.000-08:00

I had conversations with 3 separate founders over the past 4 days, all of whom are brilliant and accomplished, and all of whom have more vision than capacity to serve it. I'm very familiar with this, because I am absolutely the same way: I want it all, I want it fast, I want it now, so let's get it done.

And that's not a great approach.

You're smart. Brilliant. Your mind races through the possibilities, almost constantly. Because these days the possibilities seem endless; I believe they are.

Everything is programmatically possible. And that's the problem.

As founders we bring a lot to the table--vision, energy, capabilities, desire to serve, desire to win, etc. Balancing that so you move forward is sometimes tough.

I'm a Feature Pig. Anyone who's worked with me knows I see the possibilities and want them all, if only to see how they work in real life; there's a big difference between a feature on paper and in practice.

But it's not the best approach, and can really interfere with a project.

The balancing act is this: you need enough features to round out the product--like Ries' Minimum Viable Product--but not so much that you 1)overwhelm the customer and 2) delay your project.

The brain interprets everything it sees and hears. Everything on a page is information--every line, every word, every space, color, images, shapes, etc.

And all of that goes into the user's understanding of the app and experience with it. The more features, the greater the learning curve. The more features, the more noise on the page, the more interpretation and the greater chances of problems along the way.

It's frustrating--I know this very well--it's frustrating to have a vision that will accelerate the product adoption and not be able to get that in, because your team is focused on the "core stuff". And sometimes you can redefine what's core.

But when you have ideas coming all the time, in real time, and you run them by everyone, all the time, in real time, it starts to wear on them.

Your team needs successes, concrete wins, and a sane working environment. If you're constantly innovating and expecting them to respond, you'll weaken their efforts and be perceived as, well, as Random Idea Guy. RIG. RIG the Features Pig. Nice.

So how do you handle that brain on fire?

Write it down. Run it by people when they aren't focused on production--like after work at dinner, or during lunch. If you have a technical hurdle to understand, you might pull someone in, but again, write it down. Then schedule it, realistically. Take time to socialize the idea with your team.

I write down everything these days using Evernote or on paper. Very simply--I mostly use bullet points. If I need to sketch something out, I use a simple image program and create quick mockups. If it makes sense to move forward with it, I wireframe it with light BDD specs.

Developing the discipline of knowing what features should go in, how they are represented visually, how it works, and when to let your team know is critical to your success.

Develop that balance and you'll be able to push your team faster, and you'll get your features (which you should definitely test with users before deploying fully).

Don't develop that balance and discipline, and you'll slow things down--it's self-defeating. Now go cut some features :)

AirBnb Vs. Hotel

2012-01-08T11:29:00.000-08:00

I'm a fan of AirBnb and have used it about a dozen times in at least 3 cities.

Today I'm booking a room in NY for tomorrow night. I'm heading up to lead a class, meet some startups, talk with investors, and experience NYC winter winds.

I booked my room on Hotwire.com this time.

As much as I like AirBnb, and as much as I like meeting new people, I feel the need for certainty in travel as a businessperson. While some AirBnb rooms/places have adequate wifi, most don't have an adequate workspace. My sole interest in NY is having great meetings, which to me means prepping for the meetings. And I always have coding to do. I can't tell you how annoying it is to code without an adequate desk and my own environment (sound, distraction control, etc).

The other factor is price. If NY hotels feel expensive, I'll try to do a day trip or AirBnb. But this week they're relatively cheap, with a number of options for 3-star hotels (lower chance of bedbugs) under $90.

So for me the choices are certainty and cost, and this time around, Hotwire wins out. Now, perhaps I should have shopped a bit, because the location of the hotel isn't great for my meetings, and Hotwire doesn't give specifics until you book.

But it's good enough :)

Weekend Project: Sun :)

2012-01-07T09:13:00.000-08:00

It's currently over 50 degrees in beautiful downtown Lancaster, not a cloud in the sky. In the sun it feels like the 60s, which at this time of year feels like the 70s. :)

I just got back from Central Market where I picked up a whole, local, free-range, left-wing chicken, and a pound and a half of local grass-fed, righteous sirloin and some veggies shipped in from Florida.

At 1 I'm attending my mother's retirement dinner; she headed the Nazareth Project for 17 years, taking over after my dad passed away. She's raised millions for the hospital and will be missed, certainly. But it's time.

Later I'll take a walk in the park and hit the Y again. Speaking of which, I walked to the Y yesterday, hit the weights plus cardio, then went on a hike with a friend. And I'm feeeeling it today :) So it's a good start to a new routine.

Anyway, get out there!

Craig Lauer: Content, Editing, UX expert

2012-01-06T13:38:00.000-08:00

I've known Craig most of my life. From 2003 through 2008, he helped Mission Research shape GiftWorks, edit marketing materials, etc.

He's not a designer but he helps shape the design through his use of language and advocacy for simplicity. The principle was that if you had to write help to explain it, it's probably poorly designed. Your users should be able to learn the software simply by using it. It should be obvious, simple, and fulfilling.

He did great work for us then, and continues to do great work (writing blog posts, marketing material, UX input, project management, editing, etc). He's helped me with Jawaya and some other stuff I was working on and I'll hire him again.

He's worked with the top design firms in NY, and a large number of clients ranging from startups to American Express, and has an impeccable reputation.

My point is this: if you need someone to make your software/product/messaging/writing etc better, hire Craig. Contact me for his info.

Health

2012-01-06T08:38:00.000-08:00

Ignoring your own life is never justified by your work; it's not noble, it's not at all smart, and it has obvious and avoidable results.

Last year I posted on End of Bullshit, which apparently had no effect on me.

My own bullshit--well that's a long post. Fat, unhealthy, lying to myself about committing to good habits. Yesterday I finally bought the running shoes. If I had cut out the bullshit, I would have gone on the run. I didn't. Or today. Snow, right? Bullshit. Something that fundamental--living well--isn't elusive. You have to actually push it away.

A friend of mine was the CEO of the Vermont Bread Company and had left the year before. We were talking at the end of a conference of socially responsible businesses in Maine 5 years ago; I think I had mentioned my stress, over-working, weight, etc.

She said, exasperated, "we have to stop killing ourselves". The obvious wisdom stuck with me; I collected it among a number of other phrases that I keep but don't often heed.

Every few months I recommit to my health, only to quickly forget about it and stay in the same patterns; there was no integrity to those commitments. I don't know why. At the time I had just met my wife, and I was really happy about making health part of the commitment. And almost 5 years later, I'm in the same shape and my marriage is over, with health and the components around it contributing factors(there's never just one thing of course); and I'll say choices around health, to take ownership of it. So I'm very sad, humbled, and a bit angry with myself, but life moves on and it's time to pay attention.

On Monday the Fitbit arrived, and it's been helpful already. It tracks part of your daily activity--walking--and allows you to add activities on the site, which adds and totals the calories burned. And it helps you track your meals and calories. It's pretty simple.

What's notable though is that it's made me much more conscious of how I spend my day--what I eat, how and whether I move, etc. And it's helped motivate me to exercise more consistently.

Fitbit lets you set goals, and maps out a path for you including daily calorie limit and target number of steps to walk/calories to burn. I set mine for 80 lbs over 10 months, which is surprisingly easy to hit if you simply stay consistent and mindful of what you eat and how often you move.

Most of my life over the past three years has been a life of the mind--designing, coding, reading, writing, thinking. No movement involved. And that hasn't really worked out that well. I've been out of balance. You can ask "why don't you just do it, why do you need help" and I can't answer that. Some people just do it.

But the simple act of tracking the things that contribute to the state of my health and wellness has motivated me to do better.

It's working. My state of mind is generally better. I've lost a bit of weight in the past week (5 lbs, but the early weight is always the easiest). I feel better.

And I can see a better path forward. I don't know how to stop feeling very sad, but in the meantime, this is one thing I'm committing to with integrity. I'm considering making my path public, because a little shame and support can help with motivation too. Two friends --Michael Whalen and Brad Feld--have been doing this and it really helped them.

The sun is shining, so I'm going to wrap up a bit of coding and head to the park for a hike with a friend. But first I'm heading over to the Y. If I make that a daily habit--just getting there--it will be a great, welcome change.

Startup Lancaster This Coming Monday

2012-01-05T07:54:00.000-08:00

The daily post is going to be tough to continue; my head's been elsewhere--btw code, school board, and life I'm finding it tough to keep up. But I think I'll keep the punts going.

Today's is over to Startup Lancaster, which we started last May. It meets again this Monday evening at Isaac's near the square in downtown Lancaster.

I'll be in NY leading a class for startup founders, so I'll miss it this time, but it's a great group of startup leaders working on their visions.

If you're a founder of a tech products startup then please swing by on Monday to meet other founders, talk about challenges, and get feedback.

Have a great day.

Today's Punt: Elliot Ng

2012-01-03T09:19:00.001-08:00

Elliot was the co-founder of a fellow DFJ company back in the day. I can't quite remember which one it was, and I'm too lazy/tired/busy to look it up. Something about doing things on the interwebs. [UPDATE-NetCentives. couldn't help it]

He has a thought-provoking and well-researched post today. Worth the read.

See you tomorrow.

Grimmy on CNN.com

2012-01-02T05:27:00.000-08:00

The Grimster has another guest post, this time at CNN. It's got a pretty good set of advice for startups.

This is my favorite, and kicked my ass this morning:

EVERYTHING NOT MAKE LONG TERM WIN IS FAIL PAINT. WORLD OF WARCRAFT. FACEBOOK. HANG OUT WITH LOSERS. EAT ANOTHER BIG MAC.

EACH TRIP THROUGH DRIVETHROUGH OF FAIL TURN YOUR TIME AND MONEY INTO MORE NOTHING.

YOU WANT HAVE SOMETHING? FIND MCDONALDS OF YOUR SOUL.

BURN IT TO THE GROUND.

Emphasis is mine.

That's something I've been thinking about a lot recently as my life has, well, changed a lot in the past few months. And after a lot of introspection, weeping and gnashing of teeth, I've come out the other end with some sobering conclusions, which I'll get into someday.

Today, though, is sunny and beautiful, and I'm coding up a storm, making calls, hitting the gym, and writing. I can see the sun now because I torched that McD's of my soul.

It's easy to give into the lame, especially when things aren't going well.

Don't. Keep focused. Don't look at the tree--you'll ride right into it. Focus on where you want to go--it's the only way you'll get there.

I suspect there's a lot of personal fast-food arson about to happen among startup founders this morning. Thanks Grim.

Predictions for 2012

2012-01-01T08:57:00.000-08:00

Hey, everybody's doing it, why not me? What follows is absolutely armchair conjecture.

Android 4.0 will roll out more slowly than expected, and only the wealthy and technorati will be able to enjoy it. The Nexus is $299 with a contract, only on Verizon.
Sprint will continue its unlimited data plan for 4G users and its network won't break a sweat--this year.
Verizon will continue to have issues with data until sometime mid-year.
School districts will buy Makerbots.
More schools will drop Microsoft Office in favor of free Google Docs, OpenOffice, or StarOffice.
Adoption of Node.js will accelerate greatly, resulting in high-paying in-demand jobs for Nodesters.
Node will be ported to Android, Arduino, and other devices and enable a new generation of apps based on the possibility of servers on phones, mesh networks, and SETI-like distribution of computing to mobile. Those possibilities will be explored but won't become significant for a few years.
iPhone 5 will change everything again. I really hate to leave iPhone, but I'm looking forward to checking out the Android universe. The iPhone 5 will likely suck me back over to the dark side (walled gardens are dark to me).
The angel funding boom will subside as investors start to experience what happens when seed-stage funding runs out and founding teams scramble for bridges to nowhere.
This will create opportunities for early-stage venture funds, which will have had a lot of their homework done for them in the seed rounds and inevitable thinning of the herds.
There will continue to be more venture capital placed than makes sense because of the perverse incentives created by the 2/20 model.
Liquidation preferences will swing back toward investors a bit, from 1x non-participating to 1x participating, as last year's crop of seeds compete for the next round.
We'll start to find out how well 500 Startups picks startups. My guess is it will outperform the general seed stage market, but its success rate will trail Y-Combinator and Tech Stars simply because of the number of startups it funds . This year, anyway. (Performance means follow-on round of funding without cramming down founders :)
I'll finally ship Jawaya, rename it, and get some decent traction, and I will close a seed round by May.
I'll also ship one of my side projects in Q1.
I might even finish the damn book.
I'll blog less, and comment less at other blogs.
Fake Grimlock will be Fred Wilson's first guest poster for MBA Mondays, which starts tomorrow. Cat's out of the bag, Grimmy.
Microsoft will move Steve Ballmer to Chairman and make a products VP the new CEO--likely someone from the Enterprise side.
Microsoft will deeply subsidize Windows Phone carrier deals to boost share.
The US will see its first sub-$50 tablet.
Facebook will continue to grow, but more and more people will use it less and join other social networks like Path that enable private social networking.
Chime-in will not become a major player in the social space; it will likely be acquired by an AOL, Microsoft, or Google and not Facebook or Twitter.
Google might acquire Clear. Here's hoping.
The term "Hyperweb" will not catch on, largely because it's an unnecessary fabrication of a couple of venture capitalists looking to position themselves as visionary leaders. Internet-enabled devices will become more ubiquitous, but won't require a new category.
The overall economy will continue its upward trajectory, but without manufacturing jobs the middle class will continue to struggle with its debt overhang.
Unemployment will be under 7.5% by the election next year, which Obama will win.
The Republican nominee will be Mitt Romney, who has likely already cut deals to get there.
Christie will not be his running mate; it's likely he'll choose a social conservative to keep the dollars flowing from the right, possibly the governor of South Carolina.
Education funding in PA will be cut again, resulting in larger class sizes, fewer electives, and reduced after-school support for urban students.
The state will do nothing about the pension crisis, leading to massive layoffs of teachers within 3 years.
Arnold Waldstein will launch a startup that mixes community and wine.

What are your predictions?

Weekend Project: Mongoose

2011-12-31T08:42:00.000-08:00

I've been playing around with Node, Mongo, and Express--all parts of a full-stack Javascript (JS) framework. I'm truly enjoying it, though I do have to say sometimes the guys building this stuff are just way over the top in terms of abstractions and complexity. Keep it simple, guys :)

JS is known as the language for web pages. But that wasn't always the case; ChiliSoft and Microsoft used Javascript in ASP, and Netscape had a crappy implementation in Livewire.

But now it's back and much better. The reason I'm interested is that I know Javascript pretty well--I'd say I'm proficient. It gives me the ability to code the web application from the server to the database to the browser or mobile device in a single language.

And that "full-stack", single-language programming means I don't have to learn new syntax, and switch from one to another, which is tough for old guys like me.

Mongoose is an ORM for Mongodb. If you're not a programmer, here's the basics: Node.js is a 3-year-old web server written in the C language, and it's super fast. But the sweet thing is that it allows anyone to build applications using the very commonly known Javascript.

Mongo is a database that can be coded to in any language, but it works with data structured like Javascript Object Notation (JSON), making it very easy to work with as a JS developer, though it's not the only or primary reason.

Express is a Javascript framework for building web applications that run on Node; it's a lightweight Model-View-Control (MVC) framework. You don't have to use this to build apps in Node, but it's very useful once you get the hang of it.

So Mongoose, this weekend's project.

Mongoose makes working with Mongo in Javascript much easier. Mostly. Mongo is already pretty easy to work with, but if you're coming from traditional SQL databases, you think more in terms of schema than in structured documents.

Mongoose adds the M in MVC; it gives you the ability to create and use data Models based on Schema you define, and then use those models in your Express/Node apps.

For the uninitiated, a schema defines, effectively, your column names in a database table. Mongo doesn't have tables, though, it has collections of documents, and those documents within the collections can have varying numbers of columns/fields, which can make it very flexible but also maddening if you are expecting certain fields in a document that aren't there and others are, which can happen in multi-developer environments. And single-developer environments, too, by choice or omission.

So it gives your data some structure--a model is basically an object based on your "table" design that you can use with consistency in your app.

There is one gap I've come across that's driving me nuts, though: you can't check to see if a value already exists in a record in the database.

Let's say you are signing up for a new service on the web. You give it your name and email, and it checks to see if that email address is already in use. If it's not, it adds you to the database and moves you along. If the email's already there, it tells you and prevents a second registration with the same email address, and sends you to a login page.

The part where it checks to see if the email address is already in use doesn't seem obvious to me. And after some research, I can say I believe it's the case that you can't check for a value and get a true/false answer back from Mongo.

Instead, you can "upsert"; meaning when it checks for the email address, it updates the record if it exists, and if it doesn't exist, it inserts the record. But I want the option of not inserting it. I might not be ready just yet to add that, so now I have a maintenance problem.

I'm new to Mongoose and Mongo, so maybe someone out there can give me a pointer. I'm going to add the maintenance overhead so I can keep moving forward with my app, but I'd love to find that I'm wrong and just need to look with my good eyes, as Mom says.

And for anyone who's made it this far in the post, there really must be something better to do today :) but if there's not, go check out Node, Express, Mongo, and Mongoose.

Perfect Punt: Altucher

2011-12-30T05:12:00.001-08:00

Punting a lot lately because, well, folks I got me some work to finish :)

I really didn't like this guy the first time I read his stuff. Then I read more. And more. And I'm likely going to buy one of his books.

Some really good stuff in here, and I enjoy his voice. Makes me rethink my book--even whether I should finish it :)

Enjoy

http://www.jamesaltucher.com/2011/05/the-nine-ways-to-guarantee-success/

Unintended Effects

2011-12-29T09:14:00.000-08:00

Brief one today.

Be careful about how you structure your company. Be careful about deal terms if you take investment. Be careful about sales commissions, incentive pay, and pricing gimmicks.

One thing is clear about human behavior: people respond to what they perceive is in their best interest. They'll go to great lengths to avoid taxes, to collect income for less work, call more if commissions are tied to volume, close more faster if there's a large bonus for clearing the pipeline, buy sooner if you drop the price or throw in lots of extras.

They'll also operate around the constraints to effectively get what they think they deserve. Entitlement doesn't always make people lazy--sometimes it's a motivator. Sometimes toward good behavior, but sometimes toward bad. There's middle behavior though--the gray area, or white; it's without any morality applied to it, it just is.

Consider the downstream consequences. What behaviors can you anticipate? What behavior, constructs, constraints, freedoms do you imagine? What behaviors and outcomes do you want or not want?

The unintended consequences of how you structure the financial aspects of your company that touch people can really lead to extraordinary, crazy, great, terrible, difficult, enabling, amazing, and baffling results.

Think ahead. Now think further ahead. That's it--what do you want the result to be? Design with that in mind.

Today's Punt: Steve Blank interview

2011-12-28T07:41:00.000-08:00

Today's punt is over to Steve Blank, the Customer Development evangelist, professor, guru, and all around great American. He gets it.

"Get out of the building". Talk to customers. Talk to prospects. Talk to lost prospects. Learn your market firsthand.

Yesterday he posted this interview--worth the listen.

Have a great day!

Tuesday's list

2011-12-27T06:37:00.000-08:00

Three Tuesdays out of every month I have School Board meetings--sometimes twice during the same day. I tend to schedule calls and meetings during those days and code very little.

The last Tuesday (and if I'm lucky there are five Tuesdays so I get time off two weeks in a row) is free. I hardly know what to do with myself.

So I make the list.

Today the list is mostly bugs, testing, and aesthetics. But in advance of the New Year, I've added 'YMCA', 'Market', and 'cleaning'. I'm not a habitually neat person, but I've been spending 30-60 minutes a day recently just cleaning or straightening stuff out. It makes a huge difference in quality of life.

Market is Central Market--the country's oldest operating market. THere are only a few organic stands there; I get my local grass-fed, free-range, liberal thinking meat and eggs there, and in the winter the organics come from greenhouses and trucks from warmer climes.

The YMCA is the tough one. If I can simply get there, I'll work out. But I often listen to that lazy bum in my head that complains it's too cold, or I'm too tired, or whatever. No more of that--it's on the list.

If it's on the list, it gets done. That's the rule, and it works.

Make your list.

End of Year Sales

2011-12-26T08:58:00.000-08:00

I had a nice time with the family over the weekend. By last night at 7:30, I was saturated with family time and headed home.

It's good to be back at work :)

Don't discount this week as lost. While many people take the week between Christmas and New Year's off, many others don't, and some of them have surplus budget they still can spend.

Others are developing their budgets for the coming year. I'm guessing you want to be a part of that.

So make your calls, send your emails, pull those triggers and see what you can do to pull in new leads and some end-of-year revenue. Depending on your target market, you likely won't regret it.

Merry Christmas

2011-12-25T06:38:00.000-08:00

Today I'll spend late morning at my brother's and the evening at Mom's. We have a fairly traditional Christmas, with gifts in the morning, and a roast with friends in the evening.

And every year, Mom makes Yorkshire pudding, which will help you put on an additional 5 lbs of winter insulation if you're not careful.

Sisters will be calling in; 1 from the Philippines, the other from New Mexico. This year family and friends have been, as usual, wonderful, and it's a pleasure to spend the day with them.

Have a great day.

Today's Punt

2011-12-24T12:32:00.000-08:00

Here's a decent post over on TechCrunch about being a founder...and here's a better one. Worth reading all of it.

Recommend a Phone?

2011-12-23T07:51:00.000-08:00

I drop things.

A few weeks after I got the original iPhone, I dropped it and the screen cracked. I was fortunate that they replaced it, but I dropped it another 100 times.

You'd think I'd get a case. But the cases make the iPhone feel terrible.

I skipped the second version because of my contract with the lousy AT&T, and then got the iPhone 3Gs.

Two days later I dropped it and the screen shattered.

You'd think I'd learn. But the cases hadn't improved enough and I took my chances.

100 drops later, bits of glass were flaking off the phone, so I decided to replace the screen. I ordered the cheap repair kit off Amazon instead of taking it to Apple or some other shop that charges $99 for a repair.

Well, that didn't work so well. The phone works, and I can see a thin line of text at the top of the barely functioning digitizer.

I need a new phone. Or old one.

My ATT contract is up in about a month. I really hate cell phones; you might have heard me gripe about audio quality before. Consumer Reports just came out with an extensive review of phones, which was helpful.

As an entrepreneur I want to checkout Android 4. I'm not sure I want to commit to 2 years of Android, but the new Nexus looks amazing.

Unfortunately it's $300--out of my price range these days.

If you were to get an Android phone, what would it be? What has worked for you? Should I simply repair the 3Gs and suck it up? And is there a great phone that survives dozens of drops from unsteady hands?

Bottom Up

2011-12-22T06:48:00.000-08:00

In a board meeting the other day, one of the board members gave an hour presentation about the company's prospects.

I have four problems with the presentation:

the member has no operating experience of any kind (MBA--all hat and no cowboy)
it's an hour of my life I won't get back
it's the CEO's role; it's good when board members contribute but this was over the top and very little of it was relevant
the projections were based on top-down analysis.

A top-down analysis is tempting. You identify a market size. You then stake a claim on part of that market, oh, let's say 1%.

Really. I was waiting for the punch line, but none came. From there you rationalize that with some simple division based on a hypothetical average selling price to get your target. "If we only add 1000 customers at $1,000 each, we'll have a million more of revenue".

Priceless.

So what's wrong with 1%?

1% tells you nothing about customers. Nothing about product. And nothing about how to get there. Worse, it almost says you're willing to only take 1% of your target.

That's where Bottom Up comes in.

Bottom up means to break your target down to its component parts: number of leads, number of closed customers, average sale, etc, over a short period of time, and the marketing and sales activities you need to achieve those assumptions.

The sales and marketing work should be expressed as resources--the spend on each marketing activity (online ads, adwords, SEO, whatever) and sales effort (number of calls per rep, number of reps, number of emails, responses to inquiries, etc. You can automate but early on you'll have difficulty converting without customer contact).

You should validate those assumptions through direct contact with your market: call them. Methodically call and have conversations. Take lots of notes.

Then develop a set of questions to ask to the broader market. Test your assumptions. Don't vary the questions, unless it seems you're way off on the initial set.

Interview enough prospects to be able to reasonably quantify the results. A statistically significant sample is 31, but that's with a homogenous group, and I'm going to guess that there's wide variation within the first 31 people you talk with because you haven't learned how to narrow your market.

So shoot for 300 completed interviews. It's a lot of work but it's the most valuable work early on.

Out of those, you'll find some very willing to keep in touch with you and try your stuff, partly because what you're doing is much more exciting than their daily work, and partly because you're just so awesome and amazing that they're happy to help you along to greatness.

Let's say you spend 10 minutes per prospect. That's 3,000 minutes, or 50 hours. Not bad, really. But it won't really work that way--it will likely take two to three times that long because you won't connect on every call, and some will last much longer (sometimes because you're simply enjoying it, and others because they are enjoying it. I once had an hour call with a woman who was simply depressed about her work and life...).

Add in a week of interviews, and another week of following up with those clearly interested. Don't waste their time; ask a specific question to each of them. Be appreciative and gracious.

The good news? You'll have a great set of data on which you can base your bottom-up assumptions. You'll have a much better sense of your market and mission. Your gut will truly be informed intuition.

Your questions should be about the problem you think you're solving. Price should be in there--how willing would you be to pay $100/month for something that solves the problem? $75/month? $1000/year? $10 one-time?

Pricing questions can be tough, so I tend to start high and work down from there. I find pricing to be one of the toughest things to set. You have to price against competitors, budgets, value perception, biases, etc. I highly recommend spending some time researching pricing methodologies until you get comfortable--this isn't easy stuff, and blowing your pricing could leave money on the table or scare prospects away.

So now that you have your research on which you can base your assumptions, you can start building your model. You might want to close 100 customers per month in your top-down 1% faulty logic, but the data suggests your close rate will be 10%, which means you need 1000 qualified leads and the team and tactics to close them.

Do you need a sales force?

Early on, it's just you--everyone should know how to close a sale. Is it an automated process? Good luck with that. Early on, you're going to have to have some contact with early prospects so they are comfortable parting with their money.

I've left out a lot of stuff. Steve Blank has a through set of posts (and a book) on customer development. You should buy the book or read through his posts--it's the most relevant, actionable stuff out there.

It's easy to create assumptions out of thin air. Don't.

Do the work. Know your market and prospects from the bottom up. 1% of bullshit is still bullshit. Bottom up analysis is the real deal, and you can only nail it by talking with a lot of prospects.

UPDATE: Brett Topche notes in the comments that top-down is still useful as a reality check on market size. He's right: you need both top-down and bottom-up approaches to nail your projections.

No Post today...

2011-12-21T09:40:00.001-08:00

I can't even punt--need to stay focused. See you tomorrow.

Identity & Profile

2011-12-20T07:24:00.000-08:00

I'm going to have a lot to say about online identity in the coming year, but for today I'll point you to the discussion at AVC today. Fred's post is ok, but the comments are where the action is.

Some really great insights. (and he punts!)

Taking Things as Granted

2011-12-19T09:01:00.000-08:00

I woke up at 4:30 am after waking up at 1:30, 2:30, and 3 am--for the 5:35 train to NYC for a few meetings. Let's just say I was pretty tired when I went into the cold bathroom to shave and shower.

Hopped in the car, drove to the station (which is walking distance but I'm simply not ready for 22 degrees yet!) and parked.

Up the stairs, hit the ticket machine, and hey--it's sold out. Really. In fact all morning trains to NY were sold out.

I had the chance to prepay online, but I simply didn't want to fill out the form, and had never been blocked from a train before.

Back in the 90's we were able to catch a flight easily--just walk straight to the gate after the relatively light security, buy a ticket and hop on board. Seats were generally available, and flights on the West Coast were relatively affordable.

I take certain things as granted. Bridges won't collapse. Trains run on time and seats are always available. Cheap long-term airport parking is available. Open wifi is always available.

Alas, how wrong one can be :)

Weekend Project: Testing

2011-12-17T07:39:00.000-08:00

It's been tough to wrap up the beta because of a bit of distraction recently, not the least of which has been living in limbo and then moving.

Yesterday I unpacked the studio/office and reconstructed my desk, which is the perfect studio/mixing desk with rack space for outboard gear and a raise tier for speakers, extra monitors, etc. I love me a big desk :)

When I'm coding I usually use one monitor for code, another for documentation, another for testing. And sometimes one for mixing a recording just to keep the brain fresh.

With the office mostly set up, I'm ready to dig in and wrap the latest. I'll be in NY for investor meetings on Monday, so I'm looking forward to getting a few things cleaned up in the code and get a bit of feedback, then use train time to review the pitch.

I don't use automated test suites--I'm hoping to start sometime and learn some testing methodologies. If you have any testing tips--especially for JS in the browser and browser extensions--please let me know. I'd also love some tips on liquid CSS :)

It is Saturday though, so I'm also looking forward to a romp in the park with the dogs :) Have a great day!

Organizing Life

2011-12-16T07:19:00.000-08:00

Today I'm working just a bit. On Wednesday I moved into a new apartment; well, actually it's an old apartment, and I've lived there before. It's a great place downtown--high ceilings, hardwood floors, affordable. And it's just like home, because, well, it was home for 7 years.

It's pretty beaten up though after years of renters with varying levels of care about the woodwork, paint, etc.

So I'm doing some painting (well, a friend is, subsidized by free rent til February). But I've got boxes and furniture all over the place, and quite a bit of unpacking to do.

Packing is a good time to weed out the crap in life, but at some point you start running out of time and you just throw what's left into boxes and deal with it later. That was about 30% of the stuff this time.

So unpacking is a chance to do some weeding, and re-order life a bit. So I'm organizing and unpacking all day, resetting, reducing the clutter and stuff, and setting up what I hope will be a great work-life environment.

See you Saturday.

Arnold Waldstein

2011-12-15T06:16:00.000-08:00

Arnold has no idea I'm posting this. We're not close friends, I don't know him that well, we have no business interests together, and he has never threatened me with a bottle opener. Not yet, anyway.

I met Arnold through AVC.com, which is truly a blog community, where people have gotten to know each other and connected outside of the blog comments. It's weird and wonderful to be a part of.

I started commenting there on the first day back in 2004 or so, and it's been a great part of my intellectual life. I read lots of other blogs but only comment at a few.

So this guy shows up to AVC a few years ago and he's really smart and insightful. He's posting meaningful stuff, and other commenters pick up on it, and conversations ensue.

So I got to know Arnold a bit through what he was saying and the conversations he chose to participate and develop.

And then he starts blogging. He's a really good writer; he was a way of describing things in a non-linear way. It's like three-dimensional writing.

We connected in email, spoke on the phone, and met for a drink in Manhattan. Great conversation. Since then we've met a few times and email occasionally, usually about community.

Why am I telling you this?

First, I want you to consider hiring him to help you get your marketing, branding, positioning--your story--together. He gets it, and it's likely you don't. I haven't worked with him but I know he gets it from our ongoing discussions about community.

He's also a very experienced guy (not really that old, frankly). An older guy who can think circles around you and is completely current. I hate age bias (and experienced it out in the Valley this year), and a lot of people simply can't see that with age comes wisdom, experience, and insight.

Second, I want to point out the power of community. Real community. This blog has hints of community; our wonderful commenters are mostly imported from AVC, though the readers come from around the world. Real blog communities interact with each other, independent of the blogger.

Arnold gets community, which is something I've been studying for years but have intensified my interest over the past 6 months. People talk about building communities as part of their startup plans, like it's something that just happens. Sometimes it does, but it really takes a lot of work. I can't say I've completely figured it out yet.

So set aside some cash and a bit of equity and drop him a line. Or consider making him part of your leadership team. Go read his blog. Read his comments at his Disqus profile. You'll learn some important things, and maybe get soem great wine tips along the way.

Accounting, Part 1

2011-12-14T06:39:00.000-08:00

So you've started a business. Great!

The fun part is accounting. Well, ok, it's not really fun. But it can be painful or not painful depending on the habits you develop and some choices you make early on.

DO IT YOURSELF OR OUTSOURCE?
It depends. You'll hear me say this occasionally if we ever work together: there are high-value applications of your time and low-value applications of your time.

If building product is the best application of your time, you should focus on that. If selling product is, do that as much as you can. If rallying team members is, then that's your gig.

DO IT YOURSELF
Here's my loose rule, after 20 years of building businesses (including my band): start by doing your own accounting. Set up your own chart of accounts, do your own data entry, write your own checks (or print), send out invoices, collect receivables--do the work.

You'll know your business a lot better, you'll understand your cash flow, you'll understand your expense requirements, you'll deeply know the impact of hiring someone and the costs above salary/wages. You'll know your stuff.

That knowledge will serve you well as you scale the business, raise capital, plan the future, and develop the slush fund. (oops...).

FRAUD
Speaking of slush funds: when you hire an office manager or bookkeeper and assign accounting to them, do a background check and learn a bit about preventing and detecting fraud. For some reason, Lancaster County has had a string of crazy fraud cases, just bad, bad, bad stuff.

One method of committing fraud is through the chart of accounts. Someone with access to the Chart of Accounts can create fake (or real) vendors, and write small checks to them that add up over time.

If you have a lot of vendors, it becomes tougher to detect. I have a friend who was ripped off to the tune of $250,000. Small business. $250k. Amazing. He's 65. Trusted someone for years, didn't manage/control the chart of accounts, and didn't notice where the leaks were.

THE CHART OF ACCOUNTS
It's been a while for me, so I'll keep this brief: set up a reasonable list of categories for organizing your income and expenses. Do this with reports, charts, and graphs in mind. What do you need to know? What do you want to be able to see at a glance?

For example, let's say you spent $5k on marketing in October. Is it enough to have a single line item--Marketing? What does that tell you when you run your report? Not much.

Break it down to its component parts: Google Adwords, Email Marketing, That stupid direct mail thing that never worked, Blog Ads.

And then break those down too if it matters. Which ad? Well, that might be too granular and is better for your marketing reports, rather than bogging your accounting down with that level of granularity.

SOFTWARE
Don't get fancy. Buy Quickbooks and expect to use it for a long time, unless you grow past, oh, 100 people. Really. You don't need NetSuite or some other overloaded SaaS designed for larger companies with supply chains, and it will suck the lifeblood out of you. And your cash. Lots of it--to consultants.

I haven't tried QuickBooks Online for a while, but I'd simply get the desktop software. Your accountant knows how to use it and can import your file easily.

Today is Moving Day number 2--moving into a place downtown--so gotta wrap this up. I'll write more over the coming weeks.

Get it Done

2011-12-13T06:51:00.000-08:00

I don't have a lot of time today so I'll keep this brief: get it done.

make your list
check it twice
get it done
something that rhymes with twice
make your calls
fix those bugs
stop reading blogs
shut down the twitters
simplify
and focus.

Go be yer awesome self all day. See you tomorrow.

Working Remotely

2011-12-12T07:45:00.000-08:00

I hate it.

It's an amazing resource, this internet thing, with Skype and Hangouts and email and online apps and GitHub and Stack.

But I hate collaborating online, when compared to working in an office with people. Phil Sugar just commented on this in response to my comment on AVC:

"One way or another you have to be able to assemble a small team and crank the vision, otherwise its a hobby. I'm old school, but I also like an office, where you come in and work together."

So much more is communicated in person than over a video chat. Or chat. Or phone.

I've been working for 3 years out my my home on a few different projects. I'm done with that. My goal is to raise a small round, get a team together, and crank in the same room together and release a great, focused first product.

The last year has been a hellhole of hodge-podge passes at the product. It's not the quality of the people helping me, it's our lack of focused, contiguous time together.

I finished up the next beta over the weekend, for the most part. There are some tweaks to the UI I'm working on this week, and given no rush and Christmas coming up, I'm going to do a slow release out to a few trusted people.

And then what? Well, any further work needs server work. Which means I either hire rails developers, learn rails, or move new stuff to Node, which is my inclination.

I'm tired of the remote thing. The goal is to raise enough to bring on a few team members and get us all in the same room. It's so basic. I'd rather start from scratch with a team in the same place than continue to work the way I've been.

It works for some people, but it clearly doesn't work for me.

The Future of The Internet

2011-12-11T07:35:00.000-08:00

Fred's post today features a speaker from Forrester speaking at Le Web on the future of the web. It's not visionary, it's predictive of existing trends.

The future of the internet will be defined by a number of things:

new and extended capabilities (better geo, lightweight, disconnected interfaces, storage, processing power),
cheap mobile devices running full stack web services along with apps (serving as both servers and clients),
cheap and almost unlimited power through a combination of new types of batteries, motion-generated power, and solar
improved packet handling/transport/routing/ across the internet
wicked fast & deep wireless
differences in political impacts on deployment and management of the capabilities across different countries with different value systems

Today you can run a web server/application server on your iPhone through a port of Node.js by @TooTallNate. The question is why?

One reason would be to distribute applications and data across gaps in internet access. Think of villages in Bangladesh, which have access to wireless devices but not PCs, and not necessarily to the Internet.

Another would be to provide limited proximally relevant apps, to a concentrated group of users. Think Occupy Wall Street and their need to communicate within the group without outside access.

Lightweight, Disconnected Interfaces

Some friends gave me an iPad this past week in thanks for being such a great dresser. ;) It's really amazing, considering where we were 5 years ago.

But it's a bit heavy and the glass screen is fragile. I drop things all the time, and have had to replace my iPhone twice.

I'm looking forward to the day (it exists now) when lightweight, disconnected screens will be ubiquitous and cheap. Projected information might be the best approach.

Why bundle all the functionality in a tablet or phone? Why not have a set of devices that are optimally designed to be mix-and-match, plug-and-play devices?

For instance, a simple, bendable, not fragile screen that fits on my wrist. Or that slides out of my bag. Or disconnects from my notebook screen.

Why must the cellphone capability be integrated with my device? I'd really like a great phone with great audio, and a great device that does all the other stuff.

Today I can get that through VOIP, ignoring the cellphone altogether with its spotty reception and poor audio quality.

With great power and deep improvements to the component parts, we'll have an amazing set of options that some company will simplify down to a few components that are simple, lightweight, and powerful.

The only blocking issues will be political. We're seeing it now within the US, which more and more is trying to control the internet and the freedom to communicate. We see it in Syria, saw it in Egypt, and will continue to see states interfere.

But aside from that, the sky's the limit (until, of course, China controls all of the resources needed to deliver these components).

Breaks

2011-12-10T06:52:00.000-08:00

I used to work every day. Ok, I still work every day.

I'm sitting in my family's summer house on a lake in Northern PA. It's snowing a bit, there's about 5 inches on the ground from Wednesday night, my best friends Millie and Lupine are with me, and I'm eating bacon and eggs.

Life is good this morning.

But I'm wrapping up the big project, which still needs a lot of work, not to mention the stuff we had to leave out just to make progress.

So I'm working.

If you can't take a break on a Saturday, at least change up your routine. Go to market for an hour. Exercise for 2 hours instead of 1. Take a long hike. Visit friends.

But don't work all day.

Now, if you're smart, you're focused all week, and pace yourself so you have your Saturdays free. Maybe even your Sundays.

Is that you? Should it be? Are you fresh?

If you're not fresh, take a break. When you get back to work you'll be sharper. Listen to some music--that helps me a bit. Playing guitar or piano for an hour helps even more.

Breaks are good.

People

2011-12-09T07:58:00.000-08:00

On Wednesday, the leadership team from Mission Research (makers of GiftWorks fundraising software, which I started with Dave Weaver) took me out to lunch (ABG, which has dramatically improved over the years). It was great to hear how things were going.

But what really struck me was how sincere each of them was. I can spot bullshit, especially when it's about a company I started and led, and there wasn't an ounce of it.

There's a new level of trust among people there. There's a viable vision, but the impressive thing is the execution. As Steve said, it's all about the results and holding everyone accountable to the results--and to each other.

I never quite got that part right, and I know my successor didn't. It's hard stuff. But this team had been through the ringer, and when reinventing the company they focused on what truly mattered: good people focused on and delivering measurable, positive results.

The results? A highly profitable company. A meritocracy. Trust among employees. Happy customers. A positive environment to work in every day. Less stress.

I'm in awe of the results, and grateful for the efforts, patience, and tenacity of this great group of people.

appMobi

2011-12-08T06:24:00.000-08:00

Yesterday I met with two different startups. One was Mission Research, which gave me a really sweet Christmas present and thank you note, which I'll likely frame. It was great to see the amazing progress and health of the company since last year.

The other was appMobi, which now has a few dozen employees and is based in you guessed it, downtown Lancaster. It's raised many millions from local investors, which puts me to shame :).

You remember my complaints about money flowing like molasses? Well, Sam must be pretty sweet at turning molasses into water, because it seems like it's flowing pretty well for him.

And for good reason: appMobi aims to be the leading platform provider for HTML5, which is the future of the web and mobile web. And I believe it can do it.

Check it out; if you're a developer, give it a shot and let me know what you think. I'm so pleased they are here, growing well, raising capital, and trying to be the leader in a web platform. I love, love platform plays, and if they can nail the developer evangelism, training, documentation, etc, they have a great chance of achieving that.

Once they do, appMobi will be a key part of the startup ecosystem here in Lancaster. Perhaps the center of it.

Good Enough?

2011-12-07T06:41:00.000-08:00

The Penn Manor School District was featured in the local paper today for its decision to switch from Apple to Lenovo, saving it a few hundred thousand dollars. The notebooks use the Ubuntu Linux operating system, Google Docs, etc.

And they're likely to choose an Android tablet over the iPad.

Today, Fred blogged about the new line of Samsung phones, which are pretty sweet (though I still think too pricey). And I thought, well, my iPhone 3Gs is good enough for what I need.

We've gotten to a point in the tech world where you can get decent design, great performance, and good enough for a pretty cheap price. I'm considering a free Android phone to replace my broken iPhone. But I'm also thinking about simply fixing it.

The fact is that hardware and software have finally reached a point where the incremental increases in performance and usability no longer have a dramatic impact. The speed increases are no longer perceptible to humans in most cases.

We've reached the performance plateau, where it no longer makes a lot of sense to buy the latest and greatest, because last year's model--or the year before that, or the year before that--is good enough.

Which is an interesting and dangerous place for the industry to be in. So what's next?

You Never Know Who Knows Whom

2011-12-06T08:04:00.000-08:00

Last night I attended the Central PA Tech Meetup hosted at Mapquest in Lancaster. Yes, Mapquest has a pretty good-sized team and sweet new office space here in the center of all culture and technology.

We saw a few demos; one from the Millersville Software Productization project (I was on its board until last Spring), another from a company selling application performance analytics, and I forget the last one.

The application performance analytics guys had a free client-side product that identifies client-side latency down to a pretty granular level. They then sell a server companion piece, which provides the full picture. Not a bad freemium model, kind of.

"So what's your business model?", I asked.

The biz dev guy, slouched back in his chair like any good techie, said it's free, it's just part of the wonderful world they live in and want to make it free to everybody.

"No, the server piece, what's the pricing".

And here's where it got completely boring.

"We don't disclose our pricing. It's Enterprise pricing". Enterprise pricing means of course there's no way I'd be interested. Got it.

Ah. Ok. So really, what's your pricing?

"We have big clients like BonTon. We don't talk about our pricing." You gotta be f**king kidding me.

I'm thinking through the contacts I have that might be able to help this Central PA company, and a few of them have large-scale, high-traffic sites, and a bunch of them are pretty big companies, and a few are investors in fast-growing startups, and I'm literally shaking my head thinking "there's no way I'm recommending these guys".

Looking around the room, there were at least 4 other people I knew there who had great networks as well.

So you don't disclose your pricing. Well, ok. That's fine--your choice. But you lost me and a good part of the room.

First of all, it was a bit rude. Second, you never know who's in the audience and who they know who might be good customers. We're here to help each other and often do.

Here's a better way: thank me for the question, explain politely that for a number of reasons you don't talk about pricing publicly, but you'd be happy to talk to me after the event and give me your card.

That's it--just a little, tiny bit of respect yo'd give to any potential customer while deflecting the question, and then you haven't lost me and the room.

Oh--the third one was Mapquest--they showed off their new mobile app. Nice guys--made me really want to try the app.

And given the free time I have from not offering to help the other company, I'm pretty sure I'll be able to get to it.

But who the hell am I, anyway.

UPDATE: The company is Dynatrace, which is not a Central PA company, nor is it a startup. It's owned by Compuware, a public company.

Burn Rate

2011-12-05T09:16:00.000-08:00

Fred posted on Burn Rate today. It's a good read--definitely go read it after this post.

But Fred's example is based on a funded company, where the amount of investment is known and up front.

For most startups, that stage is a goal we aspire to, but isn't the norm at the beginning. Instead, we raise cash here and there, hoping to get enough to run things smoothly, and maybe combine it with revenue.

With both ChiliSoft and Mission Research, I remember telling the guys "I can pay you this week, but I'm not sure about two weeks from now".

It was a tough spot to be in, but the team was loyal and knew I could usually make something happen. And I usually did.

Managing cash flow is an important practice to get to know early. It's pretty simple: you have your known ongoing expenses, known revenue (or not), and known investment (or not). You have to manage your cash--the combination of investment and revenue--to cover the expenses on an ongoing basis.

That's why hiring someone early on is such a big commitment. You're asking them to change their lives on your behalf, so you damn well better be able to make payroll.

I blew that in a big way once; I thought I had a certain amount of cash, and knew I had to contract the company to make the cash last, but then I got an email from my right-hand man informing me he had made a mistake--by $200,000. Oops is right. We laid 10 people off the following Tuesday.

Which raises another point: you're the leader, the CEO--you need to verify the numbers. I failed to do that, though my practice prior to that year was to know everything about finances. It was a mistake I still regret today.

So keep a close eye on your cash, your burn, and your revenue. Don't apply your optimism to revenue projections and investment when making your hires, and only hire ahead of revenue if you have at least 12 months of cash for each position (your risk tolerance may be greater or less, but that's not a bad runway; I prefer 18 months but have based hires on as little as 3 months, which is nuts).

Weekend Project: Rails on OSX Lion

2011-12-03T08:06:00.000-08:00

I've been running Rails on Ubuntu on Oracle's Virtual Box, and boy are my arms tired. It's slow. Very, very slow. It seems to be a progressive thing; initially it's moderately slow--slow boot, slow responses--but it crawls to a halt soon enough that coding is no longer really possible.

If you have any insights, please let me know.

What's nice about virtual box is that if everyone on the team is running it, you have a consistent environment and the config issues drop to about zero.

Instead I'm going to install Rails natively on Mac OSX Lion, which has its own issues as a Rails host, apparently. I've found installation guides here and here, but neither has been a direct path to Rails heaven. I'm not a Rails expert, plus I'm new to Mac. Oh snap...

So now I'm faced with a choice: potentially waste hours in config time, or simply work on another weekend project, like Node :)

Daily Post?

2011-12-02T06:33:00.000-08:00

I've been posting daily for the past two months. I don't plan the posts or write them in advance.

Every morning I read a bit of tech news, check out a few startup blogs, and then write something.

It's not easy. And sometimes it's time-consuming.

I'm likely to continue the daily post, but in some cases I'll simply pass on a few things I find interesting--the "punt"--as I did earlier this week.

And maybe it will be easier if I have a few themed days, like Fred Wilson does with MBA Mondays and Feature Fridays.

The question I have is this: what do you want me to post about?

Blocking Issues

2011-12-01T07:42:00.000-08:00

We built Jawaya on Rails. At the time it kind of made sense; Rails is hot, there's a large library of gems to pull from, and Ruby is a relatively easy and forgiving language to learn.

I'm able to pick up just about anything, though I wouldn't call myself a stellar developer by any means. With this I focused on the front-end, and had some local help build out the back end.

But my help has been part-time, so when I hit a blocking issue, I have to work on something else until that issue gets resolved. More often than not, I set the project aside and work on something else until stuff is resolved.

Currently I have a problem where the performance is so bad for some reason that it simply isn't worth my time to code against it.

Now, I could try to become a Rails expert, but there's something about the shorthand that turns me off for some reason. Digging into someone else's code isn't fun either, especially the next time they get into it and see the mess you've made :)

This is the problem of not having a co-founder. It's also the problem of not choosing a platform I'm personally comfortable with. Over the past few months I've learned Node, which allows me to code in JavaScript up and down the stack. When I have an issue, I'm not blocking on anyone else and can solve things pretty quickly.

I don't know what the lesson is here. I don't think Rails was a mistake, per se, and perhaps I should have taken the time to just learn it very well. Or perhaps I should have found a technical co-founder. Or perhaps I shoulda, woulda, coulda.

Wrapping up the final beta has taken way too long, and partly it's because of me, lack of resources, and lack of availability of my lead guy, who's a great guy and highly competent, just not highly available.

But if I choose to continue with this, I might do what a lot of people recommend against: rip and replace, and move the entire thing over to Node. Now that we know what the app is, it might make a lot of sense.

Or it could be incredibly stupid. :)

So how do you deal with blocking issues?

Great Post: Startups Are Still Hard

2011-11-30T05:59:00.000-08:00

I really didn't plan on punting two days in a row, but when you come across a post like this, you simply have to pass it along:

The past 2 months have been pretty difficult for me. We were close to raising $1M twice but couldn’t quite cross the finish line. We decided to put off fundraising until after our product launches. The product has taken longer than expected and feel helpless, watching my cofounders kick-ass, and wishing I had learned to code (we are launching the private beta sometime this week!).

My relationship is on the rocks. She’s in Boston and I’m in SF, and we’ve been doing long distance for as long as we’ve been dating in person. I didn’t mail her anything for her birthday and she’s pissed. We both want her to move here but she won’t move here without a ring. I can’t blame her. Her entire life is there and moving for someone is risky.

The problem is I can’t afford a ring, and I wonder if I’m mature enough to take care of someone else. I can barely take care of myself, eating 1.5 meals a day. I’ve taken up the same time sleep schedule as the engineers, waking up at noon… on a good day.

Read the whole post here:
http://jeffreylu.tumblr.com/post/13483930630/building-a-startup-is-still-hard#disqus_thread

The MInt.com Model

2011-11-29T07:08:00.000-08:00

I'm headed to the airport so today's post is a punt to Aaron Patzer, founder and CEO of Mint.com, which was acquired for $170 million by Intuit. And I believe they cleared out the Quicken management immediately thereafter and put Aaron in charge.

This is a very clear description of Mint's business model. It's worth watching for a number of reasons, but particularly if you're thinking of models.

Don't Be Zynga

2011-11-28T07:24:00.000-08:00

Zynga's getting a lot of attention from the media these days as it prepares for its IPO (good for them).

I don't know its founder/CEO Marc Pincus, and only know one employee. So my observations are simply as an outside observer relying on the questionable accuracy of tech news media.

Read that article--it's a bit disconcerting. Measuring everything you can that's meaningful makes a lot of sense. Pushing teams to aspire to great things can create a great achievement-based culture. Analyzing everything can give you great insights. But it seems it's over the top at Zynga. And taking options from employees...that's simply wrong.

While they likely would never offer, I wouldn't want to work there. It sounds like a pressure cooker, like they've taken metrics and management too far, without considering the human cost of constantly driving people, shifting expectations, and what seems like the worst of it--changing compensation expectations.

It's not a nurturing workplace, it seems.

So what does a great work environment look like? How should you treat your employees? At what point does pushing your employees start to crush their spirit and inspire them to look elsewhere for work? How do you want your employees to feel about the company every day?

You can control elements of your culture--not all of it, but you set the framework within which it grows. What kind of company do you want to be?

Gut: Informed Intuition

2011-11-27T08:21:00.000-08:00

Every day as a business leader, regardless of the size of your business, you make gut decisions. I remember once in a management meeting at Chili!Soft I pushed the idea of licensing the software through ISPs. Somebody said something like “Yeah, but that’s just your gut."

Right.

When I’m in the game, I read constantly. I read trade magazines, business magazines, tons of blogs and websites, books, and just about any other material. I participate in trade show; I don’t just attend, I’m the guy talking to every company exhibiting, grilling them on what they do and how they do it, and then I’m the guy that grabs the microphone and peppers the panel with tough questions. I’m obsessed with knowing as much as I can.

So when someone says “Yeah, but that’s just your gut,” I say “gut is informed intuition”. You gather as much information as you can. If you’re smart, you’re organized about it and store the information so it’s easy to retrieve and reference and easy to share with your team.

Then you analyze what you’ve learned, and decide on a number of paths to take based on what you’ve learned.

And that’s where gut comes in. Your gut—your informed intuition—tells you to launch a new product. Or that you need to change the way you greet people on the phone. Or that you need to raise your prices and reposition. Or that you need to simply rinse and repeat, expanding on what works.

You can’t predict the future, but you can know as much as possible about your customers, how they perceive you and your products or services, what potential customers think of you and your services, what marketing efforts work and what don’t, what the overall economy is for your sector, and what your own capacity is for moving forward.

So now you’ve come to your conclusions. What remains are decisions: go left, go right. Hunker down and ride out the storm, or go out guns a blazin’ (yeah, that was me once. Didn’t work).

The decisions come down to your gut. You can and should feel pretty confident about the risk of making a specific choice if your gut is highly informed. When you’ve made your decision, list the assumptions on which you’ve based it so you can test and validate it.

You’ll learn a tremendous amount, and be able to apply that knowledge toward improving your products, services, future decisions, and your decision-making process.

So know your business. Know your competitors. Know what the leaders do well and what they don’t do well. Know what your competitors customers think about them, and then ask your customers think about that. I’m amazed that more companies don’t ask their competitor’s customers about their perspectives.

Your gut is always stronger and more accurate when you've done your homework. The only caveat is this: know when to stop. You don't have to read every last post on TechCrunch or Business Insider (or whatever your trade rag is). There's a point at which you're pretty well saturated and anything more is a waste of your time.

The Human Need for Connection

2011-11-26T07:35:00.000-08:00

This is the first in what I hope is a series of posts on connection. I'm more interested in what you have to say than diving in deep in the post, so I'll keep it relatively brief.

We need each other. It's built into us. I don't really understand why; I've been very much a loner at different times in my life, an independent completely comfortable eating dinner alone, traveling alone, and living alone.

Or is that really the case?

I've been researching online & offline communities, the power of connections between the members, what leads someone to join an online community in the first place, and the dynamics within them.

It's fascinating.

I've been participating in online communities since the late 80's, when my Dad had Prodigy. Since then, I've always been the first among my friends to try new online communities, including the relatively stodgy LinkedIn, Facebook, Twitter, blogs, Geocities, Yahoo Groups, Excite Communities, etc.

At Mission Research, I launched a disastrous attempt to create a community called Sustainable Nonprofit. It wasn't sustainable ;). And that's when I realized it couldn't be forced. You can't simply build it, declare it's there, and try to get people to post by posting leading questions and forced responses.

That effort died a painful death, along with many others by other companies that also didn't get it.

People want to connect around their existing beliefs or interests, partly to learn new things, partly to validate their own thoughts and existence, partly to meet new people.

That last reason is intriguing: people don't simply show up to meet new people in any old place--there has to be a reason.

The number one reason? My friend invited me, and I don't want to let my friend down, so I check it out. If it interests me, maybe I'll stay.

The second reason? It meets a specific interest. Arnold loves learning about new wines and sharing about them. It's a core part of how he's organized his life; it's important to him and fulfilling.

That's where I stumble a bit. What is it about us humans that need to share? That we need to be fulfilled, and can be through sharing?

What is it about our need for affirmation that we highly value blogs where people respond to our comments, even if the original content is sometimes tepid, occasionally excellent?

And are we a self-selecting group? Why do some people not have the need to comment, but read the posts and sometimes the comments? What is it that prevents them from taking that step?

I'm certain other people and companies have figured this out. I'm almost certain there's some game theory behind it as well, which turns me off because it feels crass, but I understand why it's an important component for nurturing and growing communities: we want to achieve, we want to be recognized, we want to be affirmed by people we respect (perhaps more than ourselves).

This very human need for connection has been analyzed to death (google "attachment disorder"), and I've been reading a lot of articles and papers about it.

I have nothing new to add, except for this: it's taken me 44 years to realize that going it alone isn't very fulfilling.

Thrashing

2011-11-25T07:29:00.000-08:00

Black Friday has never held any significance to me.

I hate holiday shopping out in the chain stores (I hate shopping in chain stores altogether, except maybe Barnes & Noble when my local store doesn't have something and I'm buying for someone else; otherwise I use Amazon).

It feels like thrashing. I know it must make money for the retailers or they wouldn't do it. They throw up a few loss leaders, and maybe add some discounting off inflated MSRPs, and people buy the TV at a loss for the store, which makes it up with overpriced cables and other accessories.

It feels like thrashing. Reminds me of Ghostbusters (hint: everything reminds me of Ghostbusters).

"Get her, that was your whole plan, huh?"

Things get slow. Customers don't buy when you want them to. Or expect them to. Or they simply don't buy.

So you feel like you're fumbling around in the dark, and you are. You don't know how to get from here to there, and can't understand why, why aren't people simply signing up and trying it, or trying it and buying it?

You think the product's great, so clearly it's something else. So you start messing with price, as though that's the issue, and with a 1-day only discount, or end-of-month special, they'll buy.

And maybe some do. But what does that tell you?

Nothing. Well, maybe a little. You got someone to part with their money. But they were going to buy anyway. You might have accelerated their decision cycle, but there's a cost to any discounting beyond the money left on the table.

I'm not going to get into pricing here; it's a tough subject for me (and most founders, I think), and really requires more time and thought than I have right now.

What I want to point out is this: don't panic, don't grouse, don't feel alone in the wilderness, and don't discount because nothing else worked.

It's thrashing.

You need to develop a pricing strategy. You need to discover your value to potential customers. You need to test your pricing strategy. You need to dig into the data, which means you need to do the work to create the data. You need to survey your lost prospects, and find out exactly what the problem was.

Were you really interested in our stuff?
What did you buy?
Why did you buy it?
How much did you pay?
What did they have that we didn't have?
What problem are you trying to address?
Our pricing is X, was that high, low, or just right?
What do you think about the quality of our product?
If we had added Y, would you have been more inclined to purchase?

You have to do the research. Think of yourself as just that--a research company. When you talk with prospects, when you talk with lost prospects, when you talk with customers, you learn.

And then you can refine your offering. Maybe you're missing a feature. Maybe the pricing is too low. Maybe if it were triple the price, people would take you seriously.

Maybe you've just been guessing all along.

I'm not a pricing expert, but this is about more than just pricing. Steve Blank has a lot of great material on customer development, which you should check out.

But I'll say this: I have never felt more confident about setting product, pricing, marketing, sales, and customer service direction (strategy, tactics, tone, etc) than right after I talked with a few dozen prospects, customers, and lost prospects.

And out of those, the lost prospects can be the most valuable, because 1) they have nothing at stake and 2) you weren't good enough for them and only they can tell you why.

Your customers? Great for validation. Great for future features. But the lost prospects--those are the ones who rejected you, who had higher standards, who felt more strongly about your competition, or worse, chose not to spend money at all than to spend it on your perfect shit that simply doesn't serve them.

Stop thrashing.

Stop guessing.

Do the work.

JetBlue Customer Service

2011-11-24T08:45:00.000-08:00

We hear about a few nightmare customer experiences on JetBlue on occasion; passengers stranded on the tarmac for hours, etc.

But JetBlue has always been a great experience for me. Tuesday was no different.

I left my third Kindle on the plane, just like the first one. Number two broke somehow (that version was particularly fragile) and Amazon replaced it immediately.

I left number three in the seat pocket at 6c.

The plane was still there, but my connecting flight was about to push off when I realized I had lost it.

I told the flight attendant, who immediately called the attendant up front, and he called me up front to talk with the gate guy who had taken our tickets.

He was awesome.

Said he had to get the plane going, but to give him permission to look at my records and get my info to send me info if they find it. He wrote down his direct number for me to check, and made it clear not the call the 800 number, that he was serious about getting it done.

I believed it.

The flight attendant looked me in the eye and said "he's a good guy--I know he's going to get that for you."

Now, I've lost a lot of things over the years while traveling, including two (yes two) guitars, a CPAP, and a Kindle, among others. I lose things. So I'm expecting nothing, and already thinking about ordering the replacement some day when I can spare the $79.

When I check my email after we land, I have an email from JetBlue Lost & Found. They had in fact found it, and it was back at JFK waiting for me, or they could Fedex it.

It's a great relief, because the Kindle has become a necessary tool for me. I read much more, much faster, and with more comprehension, likely because of my ADD.

Reading the newspaper is a real chore, because my eyes see everything and I have trouble focusing on the article I'm trying to read. So the limits of the Kindle do wonders for me.

Anyway, I'm grateful for that effort--thank you.

How you treat customers every day shows your true character as a company.

That extra effort--particularly when it isn't expected--speaks volumes and turns customers into true believers in you and your work.

BURNOUT

2011-11-23T10:42:00.000-08:00

Founders typically don't talk about their burnout, usually out of fear of the judgments of others (employes, investors, potential investors, etc). And maybe that's the way it should be; the wrong perception can kill a business.

Jerry Colonna talks about it in this article from earlier this week.

I'll take a bit of a risk here, though, in the hopes that founders reading this might learn from it: I'm suffering some minor burnout, but it's mostly physical this time. Mentally, I'm in decent shape, feeling more focused, and looking forward to coding without distraction for a few weeks.

PHYSICAL BURNOUT

Physically, though, I haven't adopted good habits. I don't exercise consistently (or much), I ingest more than I need, and my taste for beer has broadened to high calorie varieties. I'm overweight, and I feel it every day.

So over the next 2 months, I'm focusing on my health with a weight-loss target of 40 lbs, which sounds like a lot, but it's really not that aggressive if you consider the context: I don't move very much, and ingest too much. The very simple formula works: eat less, exercise more.

I'll eat smaller portions, drink more water, and cut down or cut out alcohol. I'll largely cut out the bad carbs, eat more fruit and veggies, and eat more slowly.

I've noticed that I'm a habitual eater; if you put a bowl of popcorn in front of me, I'll eat the whole bowl, and if it's just a cup, I'll eat that whole cup and be just as satisfied. I think it's called "unconscious eating" or something like that, but I do the same with packs of gum, crackers, whatever. Kind of OCD.

The key is to break the habit by identifying it, then making some minor changes that interrupt the automation.

Next, starting this afternoon, I'll swim at least an hour daily, walk at least 3 miles, and do some basic gravity exercises like sit-ups and pushups. The more muscle you have, the more energy you consume, so exercise along with some basic weight training should support the overall effort.

This is a commitment I have had trouble keeping once I'm out of my ideal space. So when I return home (whatever that ends up being), I'll need to continue the program.

TRUE BURNOUT

I've learned that full burnout is a state of mind. A number of times in my career I've been seriously burned out, but it wasn't until the winter of 2009 that I realized what caused it.

Basically when you're no longer inspired, when you're frustrated by the arbitrary obstacles others put in front of you and you can't seem to get around, that's when you really get burned out.

How do I know? Because after my burnout at Mission Research six years into it, and I left the company, I became reinvigorated within months when I learned of an amazing set of inventions and discoveries in the energy sector. My brain was on fire again, I was smiling again, and thrilled to be back.

No therapy, no sudden windfall--just the power of inspiring, meaningful work with lots of potential. It's when you lose hope, when you lose that belief in the potential and your ability to fully reach that potential that you get burned out.

The same thing happens in relationships, in teaching, in political movements, and anything else that requires some suspension of disbelief.

This is why selling the dream is so important. You have to first sell yourself on the idea and your ability to make it happen, even though you know it's incredibly difficult. To deal with disappointment, long hours, and people issues day after day, you must have deep belief in your ability to get there.

Burnout kicks in when you lose that belief. And if you don't believe, others notice, and they won't believe. It's possible they never did, but they'd never tell you.

I get energized by my own ideas, discovery, and vision, but I get more energized by other people's commitments, initiative, and belief in our goals and paths of getting there. When we are not aligned, then it's incredibly important to address that.

When you don't, the result will be someone's burnout, loss of belief, loss of energy.

COVENANTS

As I write this, I realize how simple some of these things are. Maybe we just need to make an agreement, a covenant that we stick too: we will exercise daily, we will eat only what we need, we will commit to our mutual goals and paths of getting there, we will work toward our beliefs, and when we see a change in that, we will be honest and truthful with each other.

It really isn't that hard, yet here I am, playing catch-up, addressing a neglected body, and pulling the spirit along the way, making new covenants that I believe will redefine my quality of life.

Press on.

Skillshare Class Tonight: Canceled

2011-11-21T13:24:00.001-08:00

My apologies to anyone who signed up--I've had to cancel the class and there's no cancel mechanism at the site.

I'll offer it again in January. Again, sorry for the inconvenience.

Quick Post: Go Do.

2011-11-21T08:15:00.001-08:00

It's Monday and I'm still packing. The movers get here in an hour or so, and the list of things I need to do is longer than time can accommodate.

Take a minute, make your list, prioritize simply

must do today
get it done this week
sometime

On your must-do-today list, add this: make 10 calls to potential or existing

customers
prospects
reporters
investors
partners
employees

Getting Things Done is a great book and system for organizing your days. But it takes execution to get things done, which takes a bit of discipline. And discipline comes down to this: doing something.

Go do.

Things

2011-11-20T09:32:00.000-08:00

I'm packing my office/studio today. Most of the work is done, but I have a lot of little things that I'd like to organize.

I have the original Diamond Rio mp3 player. Do I keep it? I'm pretty sure I have some old recordings of mine still on it, so yes. Plus it was released 7 years before the iPod, and was a pretty great early product.

The Handspring PDA with cellular module is an interesting one too. Museum?

I still have my Dell dual XEON processor workstation from 2001; it can record 32 channels of digital music simultaneously, though applying audio effects makes it skip if there are toon many applied.

So a few years ago I got a basic HP media computer, and it doesn't skip at all. Definitely a keeper, and I'll donate the Dell.

So how much is enough? If you've been in love with recording all your life, you feel the need to have as many tools available as possible. Especially if you remember the pain of paying your hard-earned cash to a studio to get a record done.

So I'm hanging on to a lot of things, but throwing out others. And I'm throwing out almost any paper, unless it's lyrics, letters, or tax related.

It's not fun moving, but I've enjoyed meeting some old lyrics again, and taking a tour through tech history as I sift through what had to have been thousands of dollars of crap that I had to get because, well, I've always lived at the edge of innovation.

Less so now--I don't feel the need to get the latest of everything, though I want a 3D printer and still will try the new new thing.

De-clutter. Simplify. Pack it, store it, and then pack a bag with just enough: an AD/DA converter to record, an acoustic guitar, 1 decent mic, my airbook, a thin, light monitor, and clothes.

For the next few weeks--maybe months--I'm going to be on the road, living more simply, and finishing what I started with Jawaya.

When I come back, I expect I'll wish i had thrown more out, and will do so as I move into the next place.

Weekend Project: Plugins

2011-11-19T06:22:00.000-08:00

I've been developing the Jawaya plugin for almost a year. Deisng, implement, test, redesign, test, redesign, trash it, rebuild, rip and replace...all kinds of figuring out what feels right.

Plugins are a pain to develop and I'd avoid it if possible. Here's why:

Everybody uses browsers. Not everyone extends their browsers with plugins. Some simply don't feel comfortable with giving permissions to another party, een though the browser makers have all of the same permissions already.
Each browser has a different plug-in interface. So you either have to code to 3 or 4 different interfaces--which is painful--or use a common API layer like WebMynd.
Debugging is very painful. Especially if you are hitting server APIs and have multiple callbacks.

But at this point, I'd have to say I'm a plugin expert (on Chrome anyway); I say that knowing that I'm not a superstar programmer, but I've been to war with plugins, and it's what I know best at this point.

The arguments in favor of plugins:

you can control the browsing experience
you can have access to all open tabs
you can have access to all browsing history
you can access the DOM of any page your peeps visit
you can create peer-to-peer apps through the browser, which I haven't done but am really thinking about it now
you can extend server apps that you don't have direct access to, like Disqus
etc etc.

Be good, though. You can do a lot of good things through extensions, but given the depth of functionality you can also do some harm. Be an ethical plugin developer.

So that's what I'm doing today. Tomorrow I do some final packing of the house, Monday we move out of the house, and then it's back to work.

Showing Up

2011-11-18T08:20:00.000-08:00

It's a beautiful day in Lancaster County. I'm on the train, rolling by Amish farms under a cloudless sky.

It's home.

what's wrong with this picture?

But I'm ambitious, and while I've got a ton of work to do to close up the house before Monday, I also have a few great meetings in NY. One with a venture capitalist friend; I'm running some recent ideas past him because I'm not confident with the model (I love the idea).

I love meetings like these; it will be relatively brief, and I'll get a lot of great feedback and likely some new ideas (not that I have a dearth of ideas; it's execution that matters). And I'm not raising capital (well, I might be raising capital) yet, so there's not awkward expectation there.

How does this advance the business? Well, ideas are helpful. Models that work are particularly helpful, and if I'm going to raise capital for this (I am), I really need to believe in the business model. It's always easier for me if the model involves selling something specific--a specific product that serves people really well.

It also strengthens the relationship. Other interactions are fine, but don't think that a phone call or email even comes close to a meeting. So much more is communicated in person.

The second meeting is with a friend who manages a a few well-known singers/songwriters, and I just love talking with her. It's such an honor to be invited into her world to help her think through some new ideas. That's just a great relationship and I have no expectations.

Early this morning I decided not to get on the train--too much to do, not enough time, and very little room for error on Monday if I'm going to teach my SkillShare class in New York at 6.

So I missed a nonprofit tech event in the city, and all the relationships and connections i so looked forward to, and canceled my other two meetings.

But I came to my sense about 20 minutes before the 10:32 to NY, and my meetings hadn't responded yet, so I retracted, brush my teeth and jumped on the train.

What did Woody Allen say? 90% of life is just showing up.

Show up :)

[UPDATE] Great meetings--completely worth the effort.

A Deal's... well.

2011-11-17T16:42:00.000-08:00

Negotiation sucks. The buyers went half way, the realtor kicked in, and we sucked in up because it's time to move on.

This isn't win-win. But it's done, and now I'm packing up and prepping to take a few months on the road, with lots of coding and some Skype consulting :)

Collecting Logos vs Productive Partnerships

2011-11-17T06:13:00.000-08:00

[No update on yesterday's post]

The early days of ChiliSoft were the early days of they dynamic web, and the very, very early days of corporate adoption of web technologies.

We had little credibility, which made it difficult to sell our first product, ChiliReports, which was the first web component to write data from a database to an excel spreadsheet in real time, pre-formatted to your liking.

Geoffrey Moore was right in "Crossing the Chasm"; the mainstream buyers need to see other mainstream buyers endorsing and buying your product before they will, which raises the question: how do you get your first "mainstream" buyers?

At the time, it was impressive to people if you had a partnership with a major tech company. The major tech companies had either no, few, or incomplete internet technology stories, so we were able to garner early press and get some attention from the majors at the time like IBM, Microsoft, and DEC.

I did a lot of logo collecting, trying to establish "partnerships" with as many major companies as possible. A "partnership" was basically a joint press release that lauded each other's contributions to whatever, with no real specifics, and a light agreement to publish each other's logos on each other's sites.

And that helped with the credibility issue a bit. Winning Best of PC EXPO in the developer tools category helped a lot more, and garnered a ton of positive press.

The press was always looking for reference customers, and we had some early adopter fans who would sing our praises; those early adopters worked for mainstream companies, so it was a huge boost when Bill from AT&T said we had promising stuff.

But the logo collection wasn't what I'd call productive partnerships. A productive partnership is one where you work together toward common or mutually beneficial goals and achieve those goals.

Your goal might be increasing your customer base by 10%. Theirs might be to provide an answer to customer questions, like, at the time, "How do I get data over the web in something other than a static HTML page?" Microsoft pointed customers to us at the time because they had no viable solution, and it kept their cutting edge customers happy for a time.

My point is this: you can spend your time collecting logos so people think you're a going concern; endorsements from major companies can help make you look better and bigger than you really are, and that provides some comfort to potential buyers.

But I'd focus on the productive partnership, where you know specifically what the deliverable is, the goals are, and the expected outcome is. A distribution partnership with a revenue share makes sense to me. Exchanging logos and press releases really doesn't.

I'd limit the number of productive partnerships to 2 or 3, unless it's clear that you'll get either linear or exponential growth as a result. And I'd be very, very careful about which companies to partner with; large companies can be a bitch to work with. ATT took 3 years to close.

IBM paid $3 million for the port of ChiliSoft ASP to RS6000 and S/390, but it took years and a huge amount of effort that should have been focused on building our core markets. (IBM was not a player at all in the late 90's and tried to buy its way around its cultural swamp) .

Neither of those deals was worth it.

It's much more important to focus on getting early customers who can serve as reference accounts for the press and other customers.

If you aren't profitable yet, no partnership is likely to get you there, and it will drain your time, energy, and focus that would be much better directed toward serving your customers.

A Deal's a Deal

2011-11-16T08:49:00.000-08:00

I'm surrounded by boxes and packing material. And I just got off the phone with the movers; I cancelled.

The realtor called at 8:30 this morning--the day of our move--to say there had been a snag. Really? Huh. I thought you said the last time we spoke the deal was done and there was no further risk.

We planned on that basis. Packed, hired movers, made minor improvements, booked tickets, cancelled accounts, etc. Lots of moving parts, all converging on today.

Our house is in what's arguably the nicest part of town, surrounded by grand homes, including one across the street that someone put $3 million into. Our is pretty nice too, though we've put in quite a bit less than that.

This area has seen very little impact of the housing recession, so some houses are getting full-price offers. A friend just had a bidding war on his.

The deal was this: we listed at $XXXk. They agreed to that price, with a twist called "seller's assist", which is where they pay the full price, but we contribute 10k at closing, which in reality brings it to XXXk -10k. This is to lower their down payment, effectively, and still met our target, so we agreed.

Plus we agreed to replace the subpanels which was $2500. But the "sellers assist" has become the issue. The bank needs the appraisal to be $XXXk to agree to financing at XXXk. Right? The appraisal, for some odd reason given the comps (our neighbor sold a week before for substantially higher per sf), came in at $XXXk - $10k yesterday. Which is what we effectively the final price they had agreed to.

The realtor calls me and explains it's a problem, basically looking for a 10k concession to make up for the appraisal difference. And me, well, a deal's a deal. You don't change the deal on the day the movers are showing up. I said I'd call her back.

My wife agreed--a deal's a deal. I cancelled the movers.

Then I called the realtor back and said "a deal's a deal. If they want the house, they'll buy the house, but at this point, we've cancelled the movers and we're taking the house off the market. We'll re-list in the Spring, without a realtor this time."

We'd already made a few concessions, and they wanted more, and of course the realtors both want the transaction; at the end of the day, it's just a transaction that either works or doesn't.

But we, being human, are tired of the stress of the move to storage with no place to land (planned just on traveling for a few months) are willing to walk. I gave her until 3pm.

Sometimes it's better to just get the deal done, and give in, especially when there's no ongoing relationship, as in this case. I think we love the house so much that it simply isn't worth it for us to capitulate.

I've been in a number of deals where the other side has asked for concessions well after the agreement. "We agreed on a stock price". "Well, we felt it's just too much". "Yes, but you agreed, just two days ago, and now you want to change the terms again. Sorry, no deal."

The worst is when you're counting on investment, and the investors know that, and you're feeling overextended and vulnerable, so you do what you have to do and agree to terms you likely wouldn't have in other circumstances.

Then later, those terms come back to bite you, and so you wonder why you're killing yourself for it. And that ultimately hurts the investors, who have effectively demotivated you through stupid terms, which in turn compromises their investment.

It's better to just walk.

Don't negotiate from weakness in the first place. Be cash-flow positive. Don't overextend. Hold firm on reasonable terms. And if they've agreed to a deal in a term sheet (or contract), and then ask for concessions, tell them a deal's a deal, give them a deadline, and be prepared to walk. There's no sense giving in, and it simply sets a bad precedent for your long-term relationship with them.

Finally, if you're dealing with someone who constantly makes representations and then changes them, you might be dealing with someone with an integrity problem. That's as good a reason as any to pass; you really need to be able to trust your partners.

The Lifestyle Company

2011-11-15T06:57:00.000-08:00

A business friend of mine came to visit yesterday and course we talked about business. He was wearing shorts, which is the linqua franca in his office. Even his customers know about his fashionable look.

Years ago he and his partners had raised venture capital from a few small funds in this region. Things didn't go the way they expected, and ultimately--after a lot of struggle with th e investors--they bought the investors out.

Today the company's pulling in several million a year, and is growing strongly. Half of it is net profit. The bonuses are not small. They pay 100% of health coverage. And they could probably sell it for $20 million just on a linear sale basis (EBITDA * P/E of acquiring company), nothing strategic considered.

Today, it's relatively cheap and easy to raise angel rounds. But most companies will not need a VC round. Once the VC is in, the expected path is a liquidity event within 3 to 5 years (they say 7 to 10 years but that's not what they really want). Your goals have to aligned with theirs: substantial sale or IPO.

As he pointed out, they want the hockey stick, so that's what you sell them.

But do you really want that?

They aren't technically rich yet (very well off), but they have fewer hassles than running a large company, have significant personal income, and will basically have a nice nest egg in a year or two when they sell--if they sell. And they have side projects.

Go back to your angel investors. Raise your next round from them. Take it step by step. You might want to take formal venture capital, but you really might not.

The time to take it for most companies is when your cash on hand isn't enough to safely hire new people to support and accelerate growth. But you really need to know--and I mean know, not guess--that the growth is expandable.

So build your business, nail your core value, keep it lean, test expansion, and only raise venture capital if you know you want to go down that path, knowing that most exits are not 10x your venture round, but more like 2 to 3x, and you can get there without the pressure of institutional rounds.

And you get to wear shorts to your business meetings and, it turns out, still win the business. Who knew?

When Things Slow Down

2011-11-14T05:49:00.000-08:00

Over the past few weeks my focus has been highly fragmented by weekly trips to New York, staying at AirBnb places, planning a big move after the sale of the house, and planning my next steps.

It's a lot.

In the meantime, it's taken a while to work out some bugs, partly because I didn't test thoroughly enough. Bugs on my side appeared to be server bugs, and Ryan has had little time to jump in and fix them. They turned out to be my bugs, manifesting as errors that pointed to his stuff. Crap.

So things have slowed down.

In between, though, I've taken the chance to design some things I've been thinking about that are complementary extensions of Jawaya. And I think I've gotten to a level of belief in the broad ideas that I might, just might decide to raise angel capital.

I'm up and down on raising funds; if I don't feel there's a clear path to success, I'm less likely to take money from investors because I need to be confident I can deliver.

At the same time, there's tremendous value in the R&D, and the likelihood of positive, business-building changes given X discovery or Y feedback from customers.

So I'm very close to making the decision to raise an angel round based on the extended vision.

I'm pretty much there, but I have to call the movers, do most of the packing today, arrange for someone to house my guitars, and maybe get to some bug fixes this evening... ;) we'll give it a week.

Hammer Out a Quick Slideshow

2011-11-13T11:27:00.000-08:00

I just hammered out a quick slideshow to explain a possible new business model around the "interest graph".

I'll just say this: there's no such thing as hammering out a quick slideshow, for me anyway. It took a couple of hours, and I'm still tweaking it. Needs work.

Fred Wilson puts together pretty good graphic slides--it makes a lot of sense if you're speaking and use the slides as launch points.

But this requires more detail--it's explaining a complex idea.

The thing that takes time is taking a clear crisp idea and NOT over-explaining it. I over-explain, but also miss key parts.

So then I iterate, and then I start to care about the visuals, which end up sucking anyway.

So note to self: this isn't easy to just hammer our because you have to figure out exactly what needs to be expressed given the audience.

So who's the audience?

Hell I dunno. Just a couple of people I'm talking to about this. An investor, a developer, a marketing guy. Three different audience types.

The one thing every one of them cares about: who pays you, what are they paying for, and how do you get more of them to pay for it.

Model is everything.

Anyway, it takes a lot longer. And now I've got to run some errands to prep for packing the house--fun fun all around :)

Weekend: Mongoose

2011-11-12T10:15:00.000-08:00

It's a beautiful day in sunny downtown Lancaster. I just got back from a meeting about some school issues, after which I picked up my car from the station and headed to market (left my keys in NY).

Today it's a tough call: head out for a long hike with the dogs, start packing the house (we sold it), or dig into some code.

This weekend I'm digging more into Node.js, and especially Mongoose, an ORM for Mongodb. I've been using it, but as usual there's so much more to learn. And with stuff like this, I learn more by doing more.

So today I plan a few hours on building out the models for a side project, but looking at the sky and temp, I think I'll wait until later this afternoon.

Enjoy your day :)

Witness: The Power of an Empowered You

2011-11-11T09:30:00.000-08:00

Last night I was at an amazing fundraiser for a cause I've supported since 2000. Witness.org was founded by Peter Gabriel and the Lawyers Committee for Human Rights. Gillian Caldwell was its Executive Director at the time, and I helped her as a volunteer (along with many others) as she turned it into a standalone org.

Mission Research was created out of that experience.

Witness was started by Gabriel after the live broadcast of the police beating of Rodney King back in, well, along time ago. 93?

The footage was shocking and the uproar that followed was scarring, but also transformative (short on time so skipping ahead).

Witness gives human rights activists around the world training and technology to effectively document and expose human rights abuses, from Burma to China to the United States, Israel, and Honduras.

The world of video has completely changed since 1993; it is now ubiquitous, and has served activists well. One of the leaders of the Egypt Spring revolution spoke; it was a moving story about how the power of video, social media, and, of course, actual journalism, which was very sparse in the beginning as the major media ignored it.

uStream has taken this to a new level, enabling anyone to become the broadcaster in real time to anyone over the internet.

The more we democratize these powerful tools, the more transparency governments and corporations will be subject to, and the more powerful regular people will be.

Access to the mechanisms of democracy and therefore justice for regular people have eroded, but the rise of these powerful, ubiquitous tools provides a powerful platform of resistance and justice.

Witness continues to be on the forefront and is a cause worth celebrating and supporting.

AirBnB Stories

2011-11-10T07:49:00.000-08:00

I booked my AirBnb room late this time. A woman has an unused 1BR apt in Battery Park, normally listing for $250/night, but she offered it for $100. With rates starting at $150 for a lousy hotel on the edge of midtown, it would be a bargain.

I really don't like Battery Park. It's apparently designed to keep New York out, plain and simple--it's a gated community. The views are incredible, but it's from this incredibly sterile place, inhabited by, I'll assume, people who choose not to live in New York. Instead they live in Battery Park, which is basically a block away.

I get to the place and the doorman tells me to head up to that floor. He seems to know my host. She greets me, we chat a bit and I learn she's from the Ukraine. She shows me the room, and explains she'll be back very late and will sleep in the living room, that something had happened, and it's a long story.

And then she leaves.

I look out the window--it's the 33rd floor--and watch the ferries crossing the Hudson, the sun setting in the West, its reflection off the other tall buildings. The apartment itself is small, but clean, like model-apartment showroom clean.

Every time I rent I do a quick camera scan; I'm not paranoid, I'm realistic (though I can't imagine why anyone would want me on camera for anything ;)

I have a meeting at 5:30, so I head over past Zucotti Park to get my dose of Occupy, into the station, and out for the night at the AVC/DonorsChoose event.

When I get back late that night, everything is as I left it. So I check email and the news, and head to bed.

When I wake up, it's dark. I can't see anything, in fact. And I can't move. I can smell something, like the smell of a hospital intensive care unit. I'm tired, and aching a bit, and fall back to sleep.

I wake again and it's light, but I still can't see. I try to move but it hurts, and my arms are restrained. I hear some voices outside the door, and then some shuffling sounds, then another door closing. It's quiet.

For about thirty minutes I struggle to free my arms, bending my wrists so my fingers can somehow grab the restraints. And suddenly, I break through whatever's holding my right arm back. I reach for my eyes and remove the blindfold, and I'm blinded again by the light from the window.

And I'm still aching. There are towels around me, and blood. I pull the covers off. My shirt is on the floor, and my right side is bandaged, blood seeping through the bandages.

Everything else seems ok.

I find the AirBnB business model to be compelling. But every time I rent through AirBnb, I lose a kidney ;) . I think it's a rich ground for stories-great ones, terrible ones, complex schemes, etc. In this one, who really owns the apartment? Marina just sleeps there occasionally. Who owns the apartments around it? Who pays the doorman, the maintenance men, and what other things do they do? A real writer could easily produce a season of shows with believable stories (some true, some not). This one was, well, not. And I gotta get out of here in 15 minutes, so see ya in the comments.

Getting Your First Paying Customers

2011-11-09T08:54:00.000-08:00

The other night one of our founders talked about his revenue goal: a million a year. It could be less, it could be a lot more, but it's a good milestone to focus on.

Getting there is the trick. Let's assume that the monthly target is about $80,000 and that's constant--it's the target monthly revenue.

BREAKING IT DOWN
There are 20 to 22 work days in each month. For my math sanity, let's use 20, and break that monthly number down to a daily number: $80,000/20 = $4000.

So you need $4000/day for 250 days to hit a million/year.

So how do we get there?

It's a subscription model, so you don't have to sell $4,000 every day, but it's kind of like that: you need to get to enough monthly customers so it averages out to that. You'll build to that level, but you'll have to methodically bring on more and more customers over time.

Let's say the average monthly charge is $25 (arbitrarily), so we need to get to 3200 customers. Math check: 3200 customers * 12 months * $25/month =$960,000/year (about a million, just shy because of choosing more convenient numbers).

3200 customers is substantial. So how do we get there?

GETTING TO 1%
Start with 32, or 1%: how do we get 32 customers paying $25/month? This is where the daily grind of work comes in: you have to do the small daily tasks.

Let's assume a generous close rate; when I left Mission Research we were at 30%, which is pretty amazing, and highly dependent on referrals. When you're just starting, you don't have the benefit of great word of mouth and referrals, so "generous" is a lot less.

So 5%.

That's still generous given nobody knows who you are. So your stuff really has to work well, and your startup voice has to be very likable, and if you're smart you'll have a free version that people grow to love.

So 32 is 5% of 640 leads. How are you going to get leads? Again, more work. Don't assume that just because you built it, people will show up and pay for it, or that your online marketing or networks will generate huge word of mouth.

METHODS
Here are some ways, and don't grimace when you see the offline methods--they still work:

Google Adwords (expensive)
SEO (early on it's unlikely to really help, but you have to do some of it)
Referrals (no customers, no referrals, but try to turn every new customer into a source of referrals or into an evangelist for your cause)
Articles: PR is a cheap and effective way of developing interest--it's really key and can be very powerful if you're ready for it.
Blog posts at relevant sites--can you be a guest blogger?
Comments at blogs: the more you contribute useful, authentic comments at relevant blogs and media sites, the more traffic you'll drive.
Email marketing: still works, but you have to develop highly relevant lists and really track everything ( try Listrak.com )
Cold calling: ouch. It still works, but you have to diligently make the calls and follow up. This is still an important way of communicating with customers.
Direct mail: I've never had success with this. We tried all kinds of tracking, packaging, offers, etc. And I can say we never had a great success that justified all the work
Speaking: this seems like a great way to get customers, but it's really not. It really depends on your product, target market, and speaking ability. It can support PR efforts though.
etc, etc (I didn't mention trade shows because it's such a mixed bag).

So getting those early customers isn't easy--it takes work to find out what the best methods are. Trying all of the methods above feels like a scattershot approach. But when you're looking for growth, it makes sense to test some or all of them on a small scale and see if you can develop a functioning model.

For me, it's important to get those early customers and keep talking with them, getting their insights and feedback. Getting their regular use of the product is more important than extracting money from them; you'll end up with a better product and loyal early customers who sing your praises and help to sell your product to their own networks.

FREE

So make the paid version free for the first 100 customers. Don't have a free version initially. Make sure you have a simple email form on every page of the site to capture interest, and then send a personal email to each prospect asking for a time to call them to get their input and learn their needs. Early calls are so key...

Offer the product for free for a year if they take your call and join the "Pioneers" group (or a better name")

Once you have enough early customers, you can start to get a feel for what they would pay, and use that as a basis for early pricing.

When you do set your pricing, you'll have your free version, and some basic level. I would wait to add deeper levels of pricing--keep it simple so the choice is free or not free, and make the value distinction clear.

The more choices you offer, the longer it takes for a customer to commit. Make it a no-brainer (but don't leave money on the table--pricing's a bitch). And early paying customers will help you determine what the next level should be.

So let's assume that you were lucky enough to get a few articles about you or the product that generated some interest, then emailed your networks about your great new product, spammed your friends, and called a few hundred possible targets looking for leads.

Now you have 100 customers who got the first year free--great stuff (leap of faith).

Can you turn them into salespeople? We still don't have our 32 paying customers, so you either need to convert the 100, or get them to refer paying customers.

But the referral rate will not be significant enough to get a 32 new customers.

So I would say keep building up the free user base, let's say to 1,000. You'll close 50 of those, given you almost double your first 1%, or at least get enough referrals that close.

That's not enough to pay the bills but it's a good start and enough to base your future marketing decisions on--you'll have learned a ton and created a base of active users to learn from.

And I'd be careful to make the first basic level limited enough in features and/or capacity to convert the free 1-year accounts to the next-level account when you release that. Just because those first thousand got it for free doesn't mean they won't become paying customers--you'll convert some.

If they've built a dependency on you, then you'll convert them. If not, you'll see churn, likely in the 10-20% range.

You're smart, they love you, but let's assume you convert half over the next 18 months. That puts you at 500 paying customers, or $25 * 500 = $12,500/month. Not bad--if you can last that long to get there.

Out of your long-term free accounts--not the ones who got Basic for free--you'll convert about 5% to a paying account, or 50.

So which model is better?

WHICH FREEMIUM?

It depends on your stage. Early on, customers aren't going to have a ton of confidence in you, your reliability, etc. You have to work hard to please them, hope for their patience and support, and while you'll learn a ton, it's painful and things won't simply take off unless your'e really lucky.

I'd say it's better to give a paid version for free for 12 months. If you serve them well, you'll convert most of them. I wouldn't give a free option until after you've gotten to sustainable revenue.

So does that mean you'll have no revenue for 12 months?

Possibly. But let's say you don't have the running room. How can you develop revenue in this model?

Paid support, annual up front
Paid service (tougher; it's hard to serve both the product and services for the product without investment, unless the service contracts are long enough and big enough)
"Pro" (or whatever)--the upsell.
Capacity--depends on your app, but more storage, more bandwidth, etc

I've touched on a lot here and left out a ton of details. But it should give you an idea of the work ahead in getting critical traction with customers.

I'd rather have 1,000 happy customers who got great value for free than 100 paying customers. Why? Because I know I can convert some of those happy free customers into happy paying customers.

And I know that 1,000 happy free customers can amplify our startup voice and recruit the next 100 paying customers, likely faster than just going for 100 paying customers directly.

And at 12 months, if I have 1,000 active free customers who just ran out of freedom, I'll have at least 800 customers converted, plus 100 from referrals. That's just under 1/3 of the 3200 I need to hit a million a year.

Please feel free to point out the flaws (including leaps of faith) in this--there's a lot of missing stuff and a ton of work involved, but this has been my experience establishing a base of customers.

Disqus/Blogger Issue

2011-11-09T05:21:00.000-08:00

For some reason this blog loses its Disqus comment widget but I can never tell at the time what triggers it. The widget is replaced by the existing Blogger comment system, and when I get Disqus going again, well, your comments in the Blogger system are effectively lost.

I hope to figure it out. Disqus is back on...and no, that's not today's post :) will be up by 11 or so (if I make it to the train on time)

Pain & Price

2011-11-08T05:24:00.000-08:00

Last night 13 area tech founders met to talk about our businesses. This time we focused on two things you need to address in your startup: what pain are you easing, and the business model you think will fit with that.

The first part--easing pain--was the topic of a SkillShare event I attended last week, and it's a good one. But it's not a question the founders of Twitter could answer in its early, or Facebook.

Fortunately our crew solve some specific pains. Dave Weaver's startup Loggr makes application analytics in realtime very simple yet comprehensive. What's the pain? It's time-consuming to build your own application analytics.

Loggr's model is freemium: free to developers up to 100 events per day, with 7 days of storage. After that plans start at $15/month.

Clint LeRoy has a tough problem because his solution eases a number of pains, and focusing on the one that will float the business is tough. He's working on a compelling algae output thing that I won't fully describe here, and one of the pains it can solve is to cheaply generate oil.

The customers would be any energy company. The project is still in development, but it looks more and more promising every month.

Mike and John showed up with their new lead developer Dan, and all of them were able to articulate the pain their trying to solve: artists have a tough time monetizing their excess capacity.

Meaning they have free time they'd rather be paid for; these guys are working on something compelling (that I can't get into here), and taking a small piece of each transaction. I'd call them market makers, certainly. They have plenty of seed funding, so this will be exciting to watch.

Ben Donahower talked about his app, which came out of a hack event in Philly. It's a simple way of getting notified if your train is going to be delayed so you don't waste time ro get stuck. He's done A/B testing on pricing in a Steve Blank-approach to customer development, and it looks promising: people will pay something for it.

The last (we're ignoring mine) startup, led by Francis, is working on a way to build better teams. The pain they are addressing is the cost (time, money, and culture) of hiring the wrong person for the job. It's definitely compelling. The model I'm not so sure about, but it's pre-beta so it's highly likely they'll nail it by full release.

So I came away with this feeling: we have 4 viable technology startups, right here, right now in the Lancaster area. Plus mine, so that's 5 (yeah, yeah, it's viable, just gimme a bit more time to over-analyze everything).

Plus several more that weren't there.

It's very possible to have healthy tech startup ecosystem in Lancaster, PA. And I bet within 18 months we'll be there. We've been holding these meetings for 6 months, and it seems a though it's having a positive impact, helping founders think through things and learning from each other.

What we need next is a better flow of capital, and talent to build the teams, aided, of course, by Francis's app. We'll get there.

Press on :)

Startup Lancaster

2011-11-07T06:08:00.000-08:00

In May a number of us in the Lancaster tech community organized a monthly meeting of tech founders to see what else is out there; a list of disconnected people does not an ecosystem make.

Tonight we're holding the 5th of these. The pattern that's evolved is that we "network" (I really don't like that word--better one?), then go around the table and check in with our progress since the last meeting, then the challenges we're facing.

The discussion of current challenges is the most interesting, with founders helping founders with questions that make us think (or squirm), and with some specific advice coming from the more experienced.

Tonight we're going to do it a bit differently and split into groups of two for 10 minutes, then talk as a group about what we've learned/discussed, and then do it again.

It's a great way to get to know someone, and a chance to really open up about challenges. If you're a founder, you know there are plenty that weigh on your mind at any given time.

This is currently, and unintentionally, an all-male group, unfortunately. If you know of any female founders of tech companies (or wannabe founders), please send them the link below.

http://startuplancaster5.eventbrite.com/

So if you're a tech founder or want to be, please join us sometime. Sign up at the link above--there are only a few spaces left for tonight.

Discovery

2011-11-05T12:47:00.000-07:00

I'm fortunate to have a number of great friends--some of whom I'm very close with. This past week I had the chance to spend some good time with close friends in New York, catch up on what they're up to (typically amazing stuff), etc.

I also had the chance to meet a new friend, introduced to me by another friend moving back to NY from LA. We had a wild discussion about what seemed like abstract math in 3 dimensions over time; super-calculus stuff.

He's an artist. Sees things differently from me. Most of us, probably. I understand what he's talking about, and see the potential for a new applied science, perhaps.

As I was leaving, we were talking about how to fund the R&D & productization, how to frame it. So I dropped my favorite line, "Discovery. It's about discovery." (West Wing, Season 3).

He wrote it down.

So this stuff is really kicking my ass, making me think through computational models (I'm not a computer scientist but I get it, if not the terminology) and the way we currently compute because of our 40-year platform dependency.

So in between coding I'm studying, especially visualizations. There's a stack of stuff on this, and I'm not smart enough to understand a lot of it, but it helps to stretch the brain now and then.

There are math geniuses whose brains simply sing the calculations behind complex, flowing visualizations--songs most of us couldn't bear to listen to or absorb.

If you know any beautiful minds I should be paying attention to in the multi-dimensional computing & math space, please post links here.

What's Your Name?

2011-11-04T07:06:00.000-07:00

I'm just finishing breakfast at an organic restaurant on 6th between 13th and 14th. I know it's organic because it's part of the name.

But when any restaurant claims to be 100% organic, I ask for its "source book"--a list of the farms and suppliers it works with. Frankly it's just for fun--I like to see what's going on in the local food ecosystem.

The food is pretty good, and it's priced like any restaurant in the area; the more affordable options are the delis and grocery stores, but today I really wanted to sit and code a bit. So I sat down in this organic restaurant.

I asked for the source book. They sent someone over who explained that most of the stuff comes from two distributors who only buy from the tri-state area. So good! Local organic. He couldn't define what local means--30, 50, 100 miles?
(In California I think it's 250 miles. Pretty generous).

So I want to share this place with you. And sitting here, with no menu in front of me, and the name of the place in a scrawling cursive font on the glass window facing out, I can't tell you what it is. Even with 4square I can't tell because the geo isn't spot on with it.

I don't know the name of the place.

One of the many things I learned from my very short-lived political career is that it takes people from 5 to 7 impressions to remember a brand. If someone's sitting in your place for 45 minutes, you have a great opportunity to go well beyond that without killing their experience.

I'll look for the name on the way out, but imagine the work and effort it takes to be an authentic organic restaurant in NY at 6th and 14th, and then look at the missed branding opportunity.

So, a simple tip: show your name early and often. It doesn't have to be plastered all over your product, site, or restaurant, but just enough so people can, well, blog about it.

I'll do the extra work with the help of Google maps--the coffee makes it worth it: GustOrganics. The service, however, wasn't great, but I'll stop again.

Hiring True Believers vs. Outsourcing, Part II

2011-11-03T06:34:00.000-07:00

Last night I went to a Node.js meetup in at Pivotal Labs in New York. About 10 people showed up, which was perfect.

We talked in depth about the reasons for choosing Node as a tool or not, the attraction of full-stack JS, why Rails is a fine choice in NY (available developers, as opposed to say, Central PA), etc.

Really, really smart guys, talking about threading, concurrency issues, forking computation-intensive routines, the lack of enough contributors to the libraries, etc. Fun to listen to.

What struck me was that none of these guys were consultants. They all worked at startups of one stage or another.

In glass-walled room nearby, another SkillShare event was underway, with twice the people crammed in to learn about product management skills.

At some point a few Pivotal devs started playing ping pong. That was at around 8 pm, when we decided to end the meeting.

At which point some of us stood around and talked about the merits/and not of the Occupy movement until about 9, while others talked more about Node. I should have joined the Node group.

So here we are, leaving at 9 pm, the other SkillShare session still going, hungry for a bite to eat, and stepping out into NY life, and on the way down talking about semantic analysis, search, etc. Then goodbye.

There's nothing like the level of care, commitment, and intellectual curiosity that you get from having your own inspired developers who love to solve problems, learn new things, and develop cutting-edge mastery of their craft. And everyone around it picks up on that vibe, and it helps keep the energy pumping through a startup.

You simply don't get that environment through outsourcing.