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Archive for March, 2011

Fred Wilson is Still Wrong About Streaming Music and Amazon’s Locker Will Rock

Posted by Bob Warfield on March 29, 2011

Fred and I have tangled before over the issue of owning your music versus streaming it.  Fred continues undaunted in his latest post, a reaction to Amazon’s Music Locker announcements:

I don’t get the idea of music locker services like the one Amazon just announced. If I’m going to stream music from the cloud, why should I continue to buy files and collect them? I’ve been a Rhapsody subscriber for something like 11 or 12 years and I love subscription streaming services. I’ve just stared using rd.io on my Android and on the web and I love it too.

Locker services seem like they are designed to continue the physical model of collecting music and buying music when there is a new and better way – just subscribe to music dial tone and listen to whatever you want wherever you want.

I’m bearish on locker services and bullish on subscription streaming services.

Naturally, I am equally as undaunted.  The answer for why we differ so much is a simple one: people interact with their music in different ways.  Fred seems to love variety.  In a comment to my original post, he says:

i may be wrong. it happens all the time!

but it’s how i see all of this playing out

i own close to a thousand vinyl records

i own at least that many CDs

i have a terrabyte server full of mp3s

all of that is available in our home to our whole family

and yet we listen to rhapsody and other streaming services close to 80% of the time

it’s just easier. we don’t have to wonder if we own it. we just decide what we want to listen to and then play it.

I like variety too, and I use streaming services sometimes when I want to go in search of it.  But I like curation better.  My curation.  The songs I know and love I want to be able to hear when I want to hear them.  Music is not background ambience for me.  I literally can’t have it on when I’m working, or pretty soon I’m more focused on the music than the work.  Moreover, I’m concerned about the future when I don’t own the bits.

Look, things change.  The music industry is arbitrary and capricious.  Fred himself has suffered the outrageous slings and arrows of their behavior to the point he eventually confessed to pirating some music to get access to it.

I don’t like the possibility that the streaming service I’ve paid for falls into a dispute with a music label and suddenly can’t stream some artist I love.  I don’t like the idea that some streaming service concentrates so much power they become a monopoly and decide to charge per listen or some such nonsense.  We only just got the Beatles on iTunes after years fer cryin’ out loud.  Let’s keep as much power as possible in the hands of the music lovers and not the record labels or distribution (e.g. streaming) channels.  I know the latter offer better ways for VC’s and Startups to make money, but that doesn’t mean I have to like it or support it.

If I am going to make the emotional commitment to the music, I want to be in control.  Amazon’s Locker Service is the ideal way to have my cake and eat it to.  I can get all the benefits of streaming and keep all the benefits of owning.  Fred may not value the benefits of owning, and that’s great for him.  He should stick to streaming. But his bearish predictions for the non-streaming world don’t reflect the whole universe of whole people interact with their music.

BTW, this is no different than insisting you be in control of your data when you sign up with a SaaS software company.  If they can’t deliver regular backups of your data whenever you want to see it, it’s time to start asking why.

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For the record, I agree with the sentiment that this isn’t innovative.  We’re past the Early Adopters.  Amazon’s service is the sound the Chasm makes when you’re already across it.  In light of that, I will see Fred’s Bearish call on lockers and raise with my own Bearish call on streamers.  Streaming music businesses that can’t also offer a locker service are going to be limited to either casual use as a second service and not the System of Musical Truth that is my music collection, or they’re going to be limited to the portion of the musical audience who, like Fred, don’t require a music collection.  In short, there will be a ceiling on their success if they can’t support both models, particularly in light of Amazon and Apple’s distribution strength.

 

 

 

Posted in business, cloud, strategy, user interface, venture, Web 2.0 | 4 Comments »

The Art of Riding the Bubble

Posted by Bob Warfield on March 24, 2011

People are increasingly asking whether there is a Bubble underway in the tech business.  The answer is that by the time you know there is a Bubble it’s probably too late to do anything about it.  But if all you’re doing is asking whether there is a Bubble, the Bubble is probably not here, yet.

Riding the Bubble is what VC’s do, so you should understand how it works a little bit too if you’re going to be involved with them.

A VC has a portfolio, and only a certain number of the deals in the portfolio are going to be successful.  The VC must maximize the value of the successful deals as much as possible.  In the pre-Dot Com VC world, there was a lot more tendency for VC’s to help companies achieve a product market fit so they could take off.  Multiple rounds of failure were pretty normal.  Not so much any more.  The multiple rounds of failure are there, but you’re expected to pay for them yourself and have considerable traction by the old standards before you see much capital.  It used to be you could raise money for a slide show and a team.  People who think that represented a bubble just haven’t been at it long enough to know that’s how things worked pre-dot com.  Then, essentially as a reaction to the first dot com crash and its fallout, the bar has steadily risen.

Immediately post dot com bust, you had to build the product and team, and you could get capital.  This, BTW, was euphemized as being perfectly normal since all the new technologies made building a product so cheap.  Funny, but it really isn’t that cheap for significant SaaS business software, only for B2C consumer Internet, but we digress.  Not long after bootstrapping product became the norm, the bar was raised again so you had to find a few customers who loved the product and team, and you could get capital.  Now you have prominent VC’s like Fred Wilson, who say they don’t think companies should spend a dime on marketing.  “Marketing is for companies who have sucky products.”  That’s just a blunt way of saying that today, you have to build the team, create the product, get some customers, and create enough viral momentum that it appears you don’t even need marketing.  Like I said, there’s not so much helping companies achieve product market fit going on any more.  VC’s want to use their capital to pour gasoline on what is already a raging bonfire.

This strategy can be extremely successful, as Sarah Lacy reports in her missive (via Techmeme) about whether Late-Stage investing is the new black.

But there are ramifications for the VC’s on how they must operate to succeed in this new game:

If you must continue to be Early Stage, Spray and Pray

Dave McClure does a good job explaining the Spray and Pray strategy for early stage.  If you’re going to get involved before you’ve seen enough traction that you know the company needs little marketing and has gone viral, you’ve got to invest in a lot of deals.  The reason is we don’t know how to predict which companies will go viral with much certainty.  Virality in a consumer Internet business is a matter of calling fashion trends, something nobody is very good at predicting until after it has already happened.

I say “If you must continue to be Early Stage” because a lot of VC’s that used to do Early Stage and Seed don’t any more.  They normally are reluctant to tell  you that, BTW.  Relationships get started in these early stages and they want the relationship so you’ll be back when you get to their stage.  Also, what’s called “Seed” or “Series A” is not very comparable to what used to be called “Seed” or “Series A”, it’s actually later.

If you’re going later stage, pony up the capital

Let’s face it, the VC’s that show up after the entrepreneurs have already built a raging success have a lot of selling to do (one reason they want the early meetings around early stage capital to keep the relationship intact).  They have not built a relationship with the entrepreneurs and they haven’t huddled in the foxhole with them during the early days helping create a product market fit.  To offset those shortcomings, they have to pony up a lot of capital at a significant valuation.  Welcome to some of the crazy numbers we see from Groupon, Facebook, and all the rest.

Exit Valuations are Enhanced By Bubbles

After you get done ponying up a zillion dollars in capital for a hot property at a ridiculous valuation, your next question is how to get back out again with a decent profit.  Momentum investing is such a timing game, and momentum, as opposed to Growth investing, is what today’s VC’s are doing.  The Old Style of VC, was much closer to a Warren Buffet growth investor.  Some of the Angels are still playing that game, and we’ll see whether they succeed.  But the name of the game for valuation is timing the Bubble properly.  You have to sell as near the top as possible, because this thing may collapse if we miss this wave.  A famous early example of missing the Bubble, ahead of its time, is the tale of PointCast.  In January, 1997, News Corp offered $450M for the company, which was tiny but had a lot of buzz.  By March, the offer was withdrawn and PointCast’s fortunes declined steadily from there.

I remember the application well because I was raising money at the time and every VC I visited had it running on a PC in the corner of their waiting room.  It was all the rage in the write ups too.  I remember not being able to figure out what the attraction was.  After all, here is an app that was essentially a screen saver that showed news and advertising when activated.  So, it would only present valuable content and monetizable ads when it was sure you weren’t using the computer any longer?  Something was wrong with that picture, but then, I’m not an arbiter of B2C Internet Fashion.

If You Miss a Window, Wait for the Next Bubble

The bubbles are like sets of waves arriving at the beach.  There’s hide tides and low tides and big sets and little sets.  But there is always another wave.  A lot of factors are involved.  High and low tide may be regarded as frothy or depressed stock markets.  The analogy to big sets versus little sets may be whether the competitive landscape is properly configured to cause a merger and acquisition frenzy.  The latter are not as exciting as high tide, because there aren’t as many dollars involved in private M&A.  It is, after all, fueled by some public company acquiring a private company.  Decorum must be observed with one’s shareholders and everything is easier if our public stock is riding high.

Now the ideal Mutha-of-all-Bubble-Windows happens when we not only have frothy public markets, but we also have strategic M&A going on like crazy.  Strategic M&A is not about entering new markets.  It’s about struggling to maintain advantage against a competitor that is scaring the heck out of you.  It’s about there not being enough time to do it organically or by building it internally.  It’s about not being able to hire all the talent you want and need.  It’s about running a once great franchise that’s getting tired alongside all the shiny new franchises springing up during a major paradigm change.  Dig it?

You Can Step on the Gas, but Hitting the Brakes Kills the Deal

When your job is to pour gas on a fire that’s already burning, you have to plan it carefully.  Maybe the fire needs to spread on its own until there is enough combustible material nearby before you add the gasoline.  Maybe you’re worried that the Big Bubble is going to come and go in the next 24 months and you had better pour gasoline on now so you’re big enough it matters.  People wonder how Color got so much capital, so fast.  The answer is not that the Bubble is here.  Color is too early to catch a wave that’s here.  It’s that the VC’s involved think the Bubble will have come and gone in 24 months or so and they want to make sure any deals they do now have enough gasoline to participate.

The corollary for deals that don’t have what it takes to be in this bubble cycle is not that you won’t receive capital, but that the VC’s may some day soon be thinking its time to use the gas very sparingly.  They’ll want into your deal so they can be ready for the next bubble, but they will be frugal.

Hitting the brakes will generally kill the deal.  You can’t pour the gas on, miss the window, and then go, “Hey guys, lets go back to our happy little bonfire, hunker down, and wait for the next wave.”  It’s too late.  You’ve hired like crazy, blown through capital like crazy, and every boy and his dog in the company has already test driven their new Ferraris and mentally become part of the landed gentry.  Hunkering down will be massive culture shock and will feel like failure.  Worse, the peeps you hire in the pouring-on-gas phase are not really entrepreneurs.  They aren’t doing it for the love of it, they’re chasing the new hotness, and they will move on if they doubt your short-term future.

Going Public is a Lot Further Out than it Used to Be and Each Year is Risk

For a whole lot of reasons, the US has systematically made it dramatically harder for companies to go public.  It has done so in a wide variety of ways, so many that it sometimes seems to be a result of the Law of Unintended Consequences that it is so hard to go public.  Sarbanes Oxley alone costs circa $6M to gear up for just before you go public and $3M or so each year thereafter.  Companies used to go public on maybe $40 or $50M in annual revenue.  SOX alone makes that difficult if the public market climate requires you to be profitable to go public.  So, maybe you have to be able to grow to $80 or even $100M.  If profitability is particularly elusive, you may have to wait for the right climate to go public as well.  Once you get public, life is not a bowl of cherries either.

If you have the sort of company that is Riding the Bubble, because it is more of a Fashion statement than an ROI statement, this is a problem.  Each extra year of growth needed to reach the public company initiation standard adds risk that your Bubble will burst before you can ride it to the finish line.  If President Obama wanted to fix the recession rapidly, he would figure out how to make it possible (forget easy) for a $50M revenue company to IPO.  I favor making regulations like SOX only applicable to companies with $1B or more in revenue.  Heck, let’s be generous and call it $500M or more.  Figure out how to get the analysts back in play too.  We were so afraid of skulduggery there that we’ve created a situation where there is almost no information available.

Entrepreneurs:  Conclusion?

Now that you’ve seen a little bit of the Art of Riding the Bubble, I hope you’re thinking hard about your strategy.  Make no mistake about it, Riding the Bubble can be very lucrative.  And, your VC’s very likely know a lot more about it than you do.  But if you really are an entrepreneur, there’s probably an element of all this talk that feels shallow and insincere.  This may not have been what you set out to do.  If you’re a builder not just focused on cashing in, it can be downright scary.  Bets are going to be made with what you’re building that can be very harmful if they prove wrong.  I can only offer two bits of advice:

First, the VC’s didn’t sign on to build something.  They have to make a return for their investors.  If you got good VC’s, they will be very good at this.  Regardless of whether they’re good or not, this is what they do and they will not let much get in the way of it.  You’re going to have to deal with it, support it, and learn how to succeed with it.  If you’re really good and the sort of entrepreneur who can grow with the company, you will figure out how to be a star at helping the VC’s do what they need to do.  That will give you the opportunity to build a lot more things down the line.

Second, have a realistic view of what you have built.  This is the hardest thing to get on the same page with your VC’s about.  Sometimes they’ll be wildly over enthusiastic, and maybe that’s what happened to Pointcast.  Sometimes you’ll be wildly over enthusiastic and they’re ready to cash out.  Never forget that companies are not sold, they are bought.  They’re not very liquid.  You can’t necessarily chose when you’re ready to cash out.  When opportunity knocks, give it careful consideration.  The next wave is a ways out, and every year is risk.

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Sure enough, mention Riding the Bubble as Momentum and Warren Buffet as Growth and along comes Warren saying the Social IPO’s will be overpriced.

Posted in strategy, venture | 12 Comments »

What are Customers Looking for From Social Businesses?

Posted by Bob Warfield on March 23, 2011

There’s a great conversation going on right now around what Customers are looking for from Social Businesses (e.g. what is Social CRM, really?) between Dennis Howlett, Paul Greenberg (via Dennis), Mitch Lieberman, and no doubt several others I haven’t yet tracked down.  It starts from a survey IBM did on what businesses think the value of being Social is versus what Customers think:

Social CRM PerceptionsLike any great discussion topic, there are layers of data and possible interpretations that become a Rorschach tableau on which to justify one’s personal predispositions; hence I won’t hesitate to share mine!

The money quote is the one Dennis plucked from Mitch’s piece:

Customers do not want a relationship with your business, they want the benefits a relationship can offer to them.

Ouch! Those darned selfish customers, we just want to be their friends!

OTOH, there is an evil part of me that speculates that an awful lot of our “friends” are not much less mercenary most of the time, particularly if they’re just business acquaintances, so why are we surprised?

The other reaction to the chart is that in terms of measuring whether customers want a relationship, they didn’t ask all the right questions and may not have interpreted the ones they did ask very well.  After all, “Feel connected” and “Be part of a community” are pretty much content free touchy feely BS.  What sort of person do you have to be to seek that sort of companionship in the bosom of a corporate entity?

OTOH, if I consider a more realistic view of Social Interaction, all the areas that scored big on learning seem perfectly Social.  And, when I look at “Purchase”, it makes me wonder what that really means.  Here is a chart from IBM that shows why Consumers go Social:

Why Consumers Visit Social Sites

Presumably, this is the chart we’re meant to compare and contrast with.  Let’s consider some of these categories and ask whether they have a place, even indirectly, in the business Social world.  Consider it a way to think differently about your Business Social efforts in order to increase engagement.

Connect with friends and family

The desire to “Feel Connected” and “Be Part of a Community” is evidently much less important in Business Social.  The corollary seems obvious: if you want to increase this motivation for connecting, get some friends and family in there.   Family is hard, but there are countless Social sites where people go to meet and interact with others who have similar interests.  When I was with Callidus, one of the most popular components of our User Conference was a session we called “Birds of a Feather”.   This was essentially a beer bash organized by industry vertical where customers could go compare notes.  The session had two parts.  First, we had our domain experts present, one at each table.  Their instructions were to listen and only chime in when nobody could answer a question.  They were told to act strictly as a resource and not to try to guide what was going on.  Second, we had a closed session where all the Callidus people left.  Customers were welcome to talk about us, our competitors, or whatever else they needed to in our absence.

I can think of no reason why this “Birds of a Feather” type interaction couldn’t be done in an online Social context nor why it wouldn’t be extremely popular.  Some vendor or other probably already does it and I am just not aware, so please chime in if you’ve heard of it.  In a broader sense, think about whether your Social CRM efforts are purely hub and spoke, meaning they force too much interaction with your company and not enough peer to peer to do very well in this context.  Get out of people’s ways and facilitate their getting to know one another.  Empower the gregarious networkers whether or not they are customers.  They will keep the party rolling.

Access News and Entertainment

This ranks pretty high on both scales.  If you haven’t already figured it out: content is king.  Give away as much valuable content as possible.  Call it Best Practices or whatever it takes, but be the best educator in your space and do it for free.  Free means not even pestering incessently for contact information.  BTW, at my last company, we had a Best Practice Community filled with content that went over extremely well.  Some of our highest landing page conversion rates came from the signups for the community.  People didn’t see a signup to join a community as egregious in the way a signup for a White Paper seems to be.

Sharing

Several of the entries amount to “Sharing” of one kind or another.  Too often businesses see Social as just another direction to point the megaphone.  Are you giving your customers voices too?  Are they empowered to share?  Are they encouraged to share?  Are your customers actually trying to share and then getting shouted down or smothered by the people in your company that run the Social program?

This is one of the hardest things for businesses: giving up control to the customer, even just a little bit, doesn’t feel right.  But go talk to your best Salespeople.  Aren’t they good listeners?  After all, Social isn’t some High Priesthood that takes years of learning and arcane knowledge to master.  It’s just people.  Go ask people who are good with people how they’d solve a problem and then try that in the your online Social context.

Bottom Line

These are just a few thoughts about turning some of the Social Debate and information on its head to try to get new insights.

If your Social isn’t, well, Social enough, try thinking about it from your Customer’s standpoint.  Forget about what you want from them, give them what they want from you.  Establish reciprocity, and the rest will follow as best it can.  Forcing the issue won’t necessarily help and it may very well hurt.

Postscript:  The Pepsi Refresh Failure

In his post, Dennis refers to the Pepsi Refresh failure :

The Refresh Project accomplished everything a social media program is expected to: Over 80 million votes were registered; almost 3.5 million “likes” on the Pepsi Facebook page; almost 60,000 Twitter followers. The only thing it failed to do was sell Pepsi.

It achieved all the false goals and failed to achieve the only legitimate one.

While Ad Contrarian views this as Social Media’s massive failure, and an indictment on Social in general, I look at it differently.  I don’t think Pepsi’s problem is merely about what they measure or how they engage.  It’s a lot deeper.

How much do you and your friends talk about Coke or Pepsi?  I think the longest conversations I’ve ever heard happened because some restaurant had the wrong brand and someone made a snide remark afterward.  Is it any surprise that while such brands can bribe people in various ways to visit, that these people don’t really want to engage?  These Pepsi guys could’ve saved their $20M.  Rather than asking why Social didn’t increase sales, they could as easily have not spent the $20M on any marketing at all and wondered why it didn’t affect their sales.  Heck, if Coke would save the money they spend to advertise at the beginning of every movie I see I would thank them, “Like” them on Facebook, or whatever.

At some point I will do a post on what sorts of brands benefit from Social or not, but for starters, just observe whether parties who should be interested spend much time talking about it.

Similarly, Dennis in his post touches on some cultural issues companies may have that will ultimately prevent them from being very Social.  Some Company cultures are flat-out anti-social when you expose Customers to them.  But, these two points are peripheral to my main theme, which is to try to think out of the box or at least in your Customer’s corner of the box where Social is concerned.  You have a lifetime of monkey-see monkey-do formal marketing to overcome, but it’s worth it.

Posted in business, Marketing, Web 2.0 | Leave a Comment »

The Worst Business Advice You Ever Received

Posted by Bob Warfield on March 21, 2011

I’m looking forward to the great comment thread that will no doubt ensure from this theme.  John Jantsch of Duct Tape Marketing, one of my favorite marketing bloggers, has issued a challenge to relate the worst business advice you’ve ever received.

Here was my 2 cents:

My two most successful startups began despite receiving advice that they could never work.

Ben Rosen told me not to bother trying to compete with Lotus 1-2-3 at my first startup. The end result was Borland’s Quattro Pro spreadsheet. Rosen was a Board member at Borland and we both had a good laugh about that one.

The second was when one of the world’s foremost experts on Genetic Algorithms showed up to a VC presentation I was making about a technology involving Genetic Algorithms. This Stanford PhD professor advised the VC’s that the concept couldn’t be made to work. 10 months later we had sold the company (Integrity QA Software) to Pure Atria and the product is still available today from IBM–Rational Test Factory.  To this day I wished I’d had him autograph his book on Genetic Algorithms with his advice.  Alas, I didn’t bring my copy to the meeting.

The world is full of experts who will tell you the many reasons something can’t be done. That’s what experts do.  But if you’re an entrepreneur at heart, you’ll learn to follow your heart. Sometimes it easier to succeed at something that can’t be done just because nobody else is trying.

If you’ve got a good story about the worst business advice you’ve ever received, go ahead and post on John’s thread.  It’ll be great to see all the anecdotes.

Posted in business | Leave a Comment »

This Product Roadmap Kerfluffle is Getting a Bit Silly

Posted by Bob Warfield on March 18, 2011

In case you’ve missed it, there’s a big Kerfluffle on right now over whether SaaS companies should share a product roadmap with customers or not.  The charge against is led by Kashflow CEPO Duane Jackson, who says sharing your roadmap is flawed because:

– Reduces agility

– Creates expectations that make it harder to delight customers

– Introduces competitive risks

– Sets companies up for a fail if they have to change their roadmaps

Coming at it from the other corner is Dennis Howlett, who thinks it is “bonkers” not to share the roadmap and insists customers have a right to know and prudent customers will insist on knowing.  In a third corner is Ben Kepes, who seems to have decided that while the arguments to share make sense, the success of KashFlow and others (37Signals to name one high profile example), and because he says as a small business owner, he knows it just isn’t that important because the decision cycles are so much shorter.

I’m coming down on the side of Dennis and sharing the roadmap

I’m on the side of sharing for multiple reasons.

First, the arguments against sound an awful lot like companies are afraid their customers will have too much control.  Sorry, but that’s no way to partner with your customers, and I believe above all else that it is critical for you partner with your customers.  That is the road to delighting them.  Why live in fear of your customers when you could partner with them?

This all sounds so much like arguments I’ve heard from Product Managers against Social Product Innovation Sourcing (aka Ideastorms).  It sounds like the arguments I’ve heard against Social CRM.  “We’re afraid of what our customers might say or the standards they might hold us to under the public spotlight.”

Hey guys, get used to it.  The whole world now operates in that spotlight courtesy of the Internet and all the many ways it gives your customers to get the word out.  You can’t just choose not to participate, especially if your competition is wholeheartedly embracing it.

Second, having worked with customers of all shapes and sizes, from small to gigantic Fortune 500, I’ve never had a problem of having a customer back me into a corner I couldn’t get out of. You’ve read all the advice about authenticity, honesty, and candor with Social Media?  Guess what, the Social Media guys didn’t invent that stuff, it’s simply the right way to deal with your customers.  If I don’t have a roadmap that’s baked well enough I can talk about it, shame on me.  That means I’m waiting for some sort of Monkey-on-a-keyboard A/B testing to figure it out for me and that’s not going to happen.  That’s a vision-less product organization and it is doomed to be inferior for a lot of more fundamental reasons than lack of a roadmap.

If I can’t have a well-reasoned conversation with a customer wherein I explain the business reasons why I have to change my roadmap and they don’t get it and can’t abide it, shame on both of us.  Shame on me for being unable to sell it, and for not having delighted the customer enough elsewhere to get the benefit of a doubt.  Shame on the customer for being so high maintenance and not understand that their best course is for me to be successful and that means satisfying more than just them.  I will tell you in all honesty that’s never happened to me, despite having to break the news of roadmap changes more than once.

One of the best product managers I’ve worked with (Hi JP!) used to have a saying about this.  There are no stupid features and no “No’s”.  There is only prioritization, and that is fluid.

Third, let’s talk about the competition.  Are they truly that clueless that they don’t have their own roadmap that’s pretty similar to your own?  Particularly when it comes to things customers are asking you to sign in blood for?  Don’t you think their customers are asking them for the same things?  Of course they are.  Those areas are not secrets and you’re kidding yourself if you think they are.  On things that are truly visionary and innovative, precisely the kinds of things you don’t want the competitors to know about because they’re not thinking of them, who says you have to share the whole roadmap?  There’s your opportunity to delight customers and confound the competition right there.

Things your audience is begging for are not plums waiting for you to pick and hold up for the adulation of the crowds.  They’re cases you got blind sided and should’ve paid closer attention to.  Fixing them is the elimination of a negative, not the creation of a positive.  If you think otherwise, you are the man to be in charge of innovation at Microsoft, because that’s always been their problem.

Best Practices for Sharing Product Roadmap

Okay, so let’s get past the argument and talk about how best to share product roadmaps, because there are some important ingredients to maximizing the benefits of the practice.

1.  Everyone does not get to share the roadmap and it isn’t public. As SVP Engineering/CTO, I have insisted that deep roadmap dives be presented by the CTO and/or Product Managers and not by Sales.  Roadmap entries need a firewall separation from the negotiation and sales process.  Getting to see the roadmap is a tightly vetted process.  Only real serious customers who are also good customers get to see it.  We will not drop it on leaflets out of airplanes to every lukewarm lead that comes along.  The salesperson that wants a Roadmap Briefing for their customer has to make an impassioned plea for why that makes sense.

2.  The roadmap is high level. It talks about areas of focus at the 20,000 foot level, and it calls out just a very few key features for each area of focus.  Features you’re absolutely certain you must have as part of the area of focus, and are therefore unlikely to change unless the whole focus changes.  It is not a detailed Market Requirement Document replete with UI mockups, giant bulleted feature lists, and all that stuff.  It’s just enough so that if the customer says they need “X”, you can tell them when you will be focusing on that area, ask to understand the exact problem they’re trying to solve, and render an opinion on when you might (or frankly might not) attempt to solve the problem.  The goal of such discussions is to assist the customer with the phasing of their own roadmaps, and to help them to understand whether the strategic direction they’re moving in matches your own direction.  In other words, is this marriage going to get better, or are we really destined to go our separate ways?

3.  We do not change the roadmap as part of a negotiation. We accept input that will be factored in, but we’re not going to talk about the outcome until post-sale.  This is a strong ingredient in selling what we have, or at least what we’re firm we intent to build.

4.  The roadmap is fluid.  Get the disclaimer out there right up front.  We’re not here to negotiate contractual obligations.  We’re hear to share our best thinking, and that can change based on new information.  We will promise not to act arbitrarily and capriciously, and to communicate well.  But we will also promise to be good businessmen intent on maximizing overall customer satisfaction as best we can.

5.  We do not talk much about how the features will work. Instead, we talk about the problems we intend to solve.  Benefits, not feature roadmaps.  These are not joint UI and Architecture design sessions.

6.  We’re very honest about not doing something, and very diplomatic about how we say “No”.  Product roadmap sessions are not the time to say “Yes” no matter what.  They’re the time to get some cards on the table and understand the problem the customer is really trying to solve.  If it’s a problem you think many of your customers have to solve, there is a strong business reason to tackle it, and you should say so.  If you don’t you need to get that out front too.  There are really a couple of different key “No’s” to be able to deliver:

–  This doesn’t make good business sense for very many of our customers, so therefore we aren’t going to go there.  If we hear more requests for it, we might revisit.

The subtext, particularly for smaller companies, is that the customer should want you to be successful by working on areas with the broadest demand.  Discuss this candidly and you will have implicitly helped that customer to understand their problem better too.  I have more than once seen a customer walk out of the discussion and wonder whether they might deep six the idea themselves if nobody else was doing it.  Customers know when they’re being unreasonable.  Those customers that know it and don’t care may not be the customers you want to divert your whole roadmap to satisfy anyway.

–  This makes sense, but it can’t be done immediately.  We’ll slot it into the roadmap, but it will be out there a ways.

Do not talk about your roadmap for more than 4 quarters out.  Anything beyond that is baloney anyway.  So the worst case answer is, “Yes, that makes sense, but it won’t be this year.  We’ll keep you in the loop and work with you as our roadmap unfolds.”

More than one very smart person has said negotiations don’t start until you say “No”.  Be honest with your “No’s” and your customers will respect your candor more so than the sucking up, even if they are handome and powerful men.  You may scare the odd sales person along the way, but they’ll recover when the customer decides to trust because they’ve had a real conversation with you and buys as a result.

Follow those 6 Best Practices, and you and your customers will be very happy that you’ve chosen to share your roadmaps.  Pray your competition decides not to share theirs.  Guess which meetings will make the customer feel like they have a better partner?

 

Posted in business, Marketing | Leave a Comment »

Black Hat Social Marketing (aka Maybe Scoble Was a Little Bit Right About Authenticity)

Posted by Bob Warfield on March 15, 2011

I have to admit: when Scoble blew up over the idea that the Facebook comments adopted by Techcrunch might reduce authenticity, I was convinced he was wrong.  The premise is a simple one: the Facebook commenting system forces you to leave comments under your real name.  The theory is that a lot of people will be afraid to say what they really think for fear of angering Techcrunch, which can make or break startups with their bully pulpit posts.

But then I happened to notice a weird thing in Eric Schonfeld’s Techcrunch article lambasting Adobe’s Wallaby for being weak.  It was the usual sort of Apple Fan Boy post you see so often on Techcrunch and a few other places.  He hated Wallaby, a Flash to HTML 5 translator, because it has limitations on which Flash features it can translate and there are bugs that can crash the browser.  Never mind that said limitations might be limitations of HTML 5’s current maturity not to mention the crashing of the browsers when fed HTML directly conflicts with Steve Jobs assertion that it was Flash doing the crashing.  I didn’t really expect much, but being a Flex developer and a great fan of the platform, I was out reading the articles on Wallaby and this was the only negative one I saw in my Google Reader.

So how did Scoble get to be a little bit right?  Well, of course you have to read the comments on Techcrunch.  They’re the real value on Techcrunch as I see it.  The posts are sort of like the Hockey Game and the comments are the Fights.  You’re there for the Fights, not the Hockey Game, silly!

One of the posters, Steven Sacks (hey, we get to know his real name), points out:

Ever since TechCrunch switched to Facebook comments, all their anti-Flash posts have a slew of comments supporting Flash. Prior to this, all the anti-Flash post comments were predominantly anti-Flash. Good to see all those anonymous posters don’t have the guts to post under their real names AND can’t write negative comments under numerous names.

Sure enough, there were a ton of comments, all but one were pro-Flash and very negative on Techcrunch as I write this.

That’s fascinating.  OTOH, I look at Scoble’s argument, and it seems obvious that if you can’t be anonymous and you want to say something negative, you might hesitate.  But here were folks not afraid to use their real names when trashing the mighty Techcrunch, and they were nearly all pro-Flash.  Where had all the Apple Fan Boyz in the commenting audience gone?

So far, I only have two working hypotheses:

First, maybe the Apple guys just didn’t get there yet.  Only problem with that is that the Techcrunch post went out several days ago, so they had time to mobilize.  That hypothesis is looking sketchy.

Second, maybe Techcrunch was being gamed.  What if a whole bunch of those anonymous Fan Boyz were actually just a very small number of people who disappeared once the veil of anonymity was no longer available?  Wouldn’t it be fascinating to know who they were?  Employees of an Adobe competitor even?

It’s fascinating to consider the impact on perception if you can scare up a virtual cyber mob any time you want to say anything you want and nobody is the wiser.  Maybe we’re seeing some evidence that just as there is Black Hat SEO, there can be Black Hat Social Too.

I actually don’t think Facebook is the cure for bad comments, but the dynamics we see here are fascinating.

Related Articles

4Chan founder says anonymity is authenticity.  I’ve decided the authenticity is a function of what’s being discussed.  Yes, there are topics where anonymity begets authenticity.  But as we’ve seen above, there can also be topics where anonymity begets manipulation.

Scoble does a good job explaining how anonymity hurts.

Posted in apple, Marketing, strategy, Web 2.0 | Leave a Comment »

Efficient Marketing Means Doing Something Different

Posted by Bob Warfield on March 9, 2011

Startups have to solve three problems to succeed:

1.  They need a great product.

2.  They need a business model that results in profitable growing revenue.

3.  They need an efficient marketing model that results in a profitable growing customer base.

As Om Malik’s great post on business models and Twitter points out, too many companies are exclusively product-centric.  They’re focused on #1.  But just adding #2 isn’t enough either.  You also have to get the word out, and as a startup, you can’t afford the luxury of advertising as your medium.  You need Efficient Marketing.

By “Efficient Marketing”, I mean marketing that doesn’t cost much in relation to the value it delivers.  It’s marketing that is profitable from day one.  You know, the kind of marketing startups and bootstrapped companies have to do, but also the kind of marketing larger companies want to do.

Efficient marketing only happens when you do something different.  Something the rest of the crowd isn’t doing so much of.  Marketing is about standing out and getting noticed, and that’s hard to do if your marketing plan is the equivalent of standing in the middle of Times Square at midnight on New Year’s Eve and trying to make yourself be heard.

What are some examples of Efficient Marketing, and what are the ramifications of thinking about “Doing Something Different?”

First, on doing something different.  It’s ironic that most of us go through life studying what successful folks did and trying to emulate that success by doing the same thing.  The irony is that most of the time, when the successful folks did it, they were doing something different.  By the time we get around to copying them, it’s no longer unique, but we still wonder why copying their formula verbatim doesn’t work.  In this case, the old saw about insanity being the expectation of a different result when we do the same thing tells us that Marketing takes a little bit of craziness.  We expect the same result when we do the same thing, but we should be doing something different to get that successful result!

Assuming that last bit hasn’t gotten you completely confused, let’s delve into Marketing Differently.

As my loyal readers know, I am a huge proponent of Content Marketing.  Content Marketing is still relatively rare, though it is rapidly gaining in popularity.  It is a sub-genre of what Hubspot calls “Inbound Marketing.”  If you make the decision to lead with Content Marketing, you’re already doing something different from the masses.  But, consider how much further you might take it.  Instead of leading with a conventional corporate web site that’s all about you, how about leading with your content that’s all about delivering the value of the content free to people who might one day become your customers?  That’s pretty different, and you can go much further down that path than the Carbon Fiber Gear folks.

If you’re going to focus on Content Marketing, you’ll want to make sure your content has the opportunity to be different.  Are you in a space where there isn’t a lot of quality content available?  Some markets are better about that than others.  The first one to bring premier content to a market lacking in good content will be a big winner that’s hard to unseat because they have the benefit of inertia (they’re in everyone’s blog readers and already receiving the newsletters) and network effects (everyone is already referring others to this wonderful source).  So in the spirit of the 3 problems a startup must solve, check into whether your proposed business has the opportunity to excel with content.

As I have mentioned in the past, App Stores are another way to market differently or market different, as Apple might say.  But not all app stores are equal.  While they are relatively new, and a lot of companies have benefited by being early to the App Store craze, some are getting very crowded.  You’re no longer doing something different if you’re counting on a listing in the Apple app store to get your product noticed.

What to do?

Check this great article on how one game developer is finding the Android store to be more profitable than Apple (thanks Techmeme for bringing me this one!).  According to the article, “Spacetime, which is supported largely by in-app purchases, says its Android users generate 30 to 50 percent more revenue than its iOS users do.”  30 to 50 percent is huge, but why does it happen?  I love the money quote from Gary Gattis, Spacetime’s CEO:

“Android’s a smaller pond for apps right now,” he says. “The support on the Google side has been much more tangible — they’re really trying to nurture the gaming community.”

Bingo–right now, being on Android is doing something different.  As a result, Gattis says Spacetime has stopped advertising on Apple entirely and thrown their whole marketing budget behind Android.  That too is something very likely different.  Most companies love the idea of balanced scorecards–a little bit here, a little bit there, spread the risk.   Unfortunately, where marketing and a lot of other business is concerned, unless you’re already big and protecting your position, spreading the risk isn’t your job.  Take exceptional risk by doing things different and doing them big.  Double down on what works and try another experiment when it doesn’t work.

We’ve got Content Marketing, choosing the less popular App Stores (and potentially platforms), what about some of the common patterns?  For example, stealth launches.  I’m not a big fan.  First, you should be building content day one to attract the audience who will eventually buy your products.  Second, it’s been done to death.  There’s even a service now to automate it for you. With respect to Scoble and LaunchRock, how much is your startup going to accomplish if it does the same thing the last 1000 startups have done and uses a service to homogenize the experience on top of it?

Let’s try some more, rapid fire bullet style:

–  In an age where business views customers as “people with our money in their pockets”, what happens if you take a different and refreshing view of your customers.  By now you must have heard the Zappo’s story of exceptional Customer Service.  Others are catching on, but there’s still plenty of opportunity to be different in how you treat customers.

–  Advertising:  If you must advertise, you’d better do it where others aren’t.  That means finding the long tail keywords if you plan to use AdWords.  Keywords that others haven’t discovered so your ads run where they’ll be noticed and can be placed very cheaply.  How about advertising in specific online forums where your tribe may be found?  This can work if your tribe is focused and there isn’t already a ton of advertising there.  Running a bunch of ads on Facebook probably won’t quality.

–  E-mail campaigns:  Not a big fan of email to get noticed.  In this age of Spam, it’s too easy to do yourself more harm than good.  As a tool to nurture your audience after they’ve asked to be on the list and could opt out at any time, it works.  But look for ways to make your mailings different in some way.

–  Social Media:  Yeah sure, but the opportunity to be different is fast dwindling as everyone gets focused on the new new thing and it suddenly becomes the tired old thing.  As with email, figure out how to be different with Social Media, and realize that folks on the receiving end are even tougher about Social Spam than Email Spam.  What can you offer that is genuinely fresh and isn’t just gaming the Social Web?

–  Snail Mail:  Marketing moves in cycles as the herd seeks to do something different to improve response rates and cut costs.  Snail Mail direct marketing has been around forever, so it has probably seen more of these cycles than any other venue.  If you can strike at a time when the Snail Mail Direct tide has ebbed, you can stand out.  You’re going to have to do something different with the piece you mail and you’re going to have to test it to see whether there has really been an ebb and you can stand out.

–  Viral Marketing:  Everybody loves the idea.  It’s so compelling.  And so hard to realize when it’s your turn to try.  It may be too late to catch this train, unless you can come up with something that is different.  Many people are starting to complain they’ve hit the wall with viral signups.  Many platforms no longer make it easy to go viral on their coattails.  Find a way to be different if you want to succeed here.

The next time you’re sitting in a meeting, hashing through marketing programs, ask, “What’s different?”  If the answer is, “Well this worked for XYZ, they got really big on it,” ask yourself whether it’s too late to jump on that bandwagon because what XYZ did is no longer different.

Ask, “What are we doing to be different?”

Posted in bootstrapping, business, Marketing, strategy, venture | 6 Comments »

Does the Internet Mean There Can Only Be One?

Posted by Bob Warfield on March 8, 2011

I read with interest today Hubspot’s coverage of their new monster VC round.  They’ve raised a $32M Series D monster round from Sequoia, Google, and Salesforce–certainly an all-start cast.

There’s a lot of interesting data in these announcements, such as Hubspot’s view of what market shares look like for the Marketing Automation category:

If true, and we should wait to hear what the other vendors have to say before concluding it is, it suggests Hubspot is blowing away their competition at Eloqua and Marketo, and not by just a little.  That’s pretty big news too.

But there was one part of these announcements that really caught my eye.  Brian Halligan says:

In industries formed prior to the internet, oligopolies naturally formed where there is a market leader holding 20% market share, a 2nd place competitor having 18% or so, a 3rd having 15%, etc.  In industries that have formed in the last 10 or so years, the opposite seems to be happening where the winner takes all (or at least 80% of the market cap in that given industry).  A few examples include Amazon, VMWare, Zappos, Salesforce.com, Google, and even Groupon.

Dharmesh Shah follows with:

For the following leading companies, see if you can name the #2 player and #3 in their category.  You have 30 seconds, I’ll wait:

  • Amazon
  • NetFlix
  • VMWare
  • eBay

Difficult, isn’t it?  Chances are you struggled a bit with coming up with the #2 and failed completely to come up with #3.  The point here is, as these tech categories evolved, the #1 player became so dominant that we often don’t even know who #2 and #3 are.

I don’t know about you, but I’m skeptical about this new “rule”.  There’ve been so many “rules” that the Internet has supposedly changed in some form or fashion.  I think it’s worht delving into this one.  First, is it really true that there can be only “one”, or is there something about this list or this environment that makes it a temporary abberation?

First, we could as well have asked whether there can be “only one” SaaS company in each category.  Certainly that market is closer to what HubSpot is than these companies they’re holding up as examples.

While there are not tons of companies, there is often more than one public SaaS company in a category.  I’m going to call that a strike against the “only one” hypothesis.  But, I will point out, that it is very difficult to fund a new SaaS company today and they take a lot of capital.  It may very well be that a factor at work here that has nothing to do with the Internet is the funding environment.  VC’s today are focused on companies that can be bootstrapped before they bring their millions to bear.  HubSpot got their first capital before we had fully entered that era.  It would be hard to found a company today on a slide show and team, which is where most of the SaaS world started.  So that’s a factor that has changed, but that could change back.  Personally, I think that when VC’s get tired of funding 12 different add-ons to each popular service, each with no perceivable barrier to entry, and each at the mercy of services like Twitter, they may start to look for opportunities with more substance than the usual Consumer Internet Plays that need no marketing.  From that perspective, the more firms like HubSpot that succeed, the better.  But, for the time being, we’re immersed in Dot Com Bubble 2.0 as huge valuations roil around us in markets where “there can only be one.”

Second, some of these companies mentioned have profound network effects.  That’s an ideal reason for there only to be one.  eBay is the best example.  I did an auction e-commerce business called PriceRadar that was aimed at delivering some cool optimal merchandising and selling tools for online auctions.  When we started there were circa 8 auction houses and more being announced all the time.  There were going to be not only huge horizontal auctions like eBay, but every major Internet service would have one (like Yahoo!), and there would be vertical auctions for industry (DoveBid).  Within 2 years very little was left except for eBay.  That’s how strong the network effects are for that business.  Netflix has network effects.  How many subscriptions to movies will a household tolerate?  Amazon may have network effects.  They are the online superstore merchandise-wise, they control some key franchises like books, they sell readers that read their books and create further network lock-in, and Clouds may have network effects due to latency.

The upshot of network effects is that there is a very short window for competitors to respond.  If they don’t, the compound interest associated with the network effect and the lock in makes it impossible to catch up.  That should be a sobering thought if you’re competing in a market with network effects, but it isn’t clear to me that Hubspot is.  Do companies plug and unplug their marketing automation software?  To some extent they do.  I was given that perspective by no less an authority than a key executive at one of the three Marketing Automation companies I’ve mentioned so far in this post.  Color me skeptical about network effects for these guys.

What else leads to just one?

Platforms, which are related to network effects.  Sometimes they become so pervasive you must deal with them.  Google owns search.  Facebook is another.  The network effects aren’t as striking as eBay’s when you deal with a platform, but it is a function of needing to be compatible with the status quo and it being too hard to reinvent all the wheels you get with the platform.  Oracle and SAP have platforms in this sense.

What about VMWare?

That one is pretty easy–there are VM managers that are just as popular as VMWare, but they’re Open Source.  You could argue MySQL was just as popular as the big DB vendors, but never hit their revenues because they were Open Source.  This is a scary thing about building a business around Open Source–you may succeed without getting much for it.  It’s very tricky to find exactly the right balance that ignites passion while delivering profits.

How about properties like Groupon?

Man, hard to believe they won’t see a #2 and #3 that make good money.  Living Social is already on that road.  Moreover, there’s been a spate of articles lately that are finally recognizing that coupons aren’t really even all that unique and they may not be the best thing for you and your customers in terms of fostering a long-term relationship.  It’s like the world started switching from newspapers to online media and forgot to bring their coupons along.  So, wow, Groupon is great, I have coupons again!  And then pretty soon we’ve got coupons coming from 18 different mailing lists, we’ve got flash shopping sites, we’ve got small businesses getting hit with tons of visitors who buy below cost and then never come back, and we realize we weren’t missing all that much.

I’m not buying “there can only be one”.  There may only be one if the others don’t get moving soon enough, and the Internet may shorten that window, but that’s all it does.

What do you think?

Related Articles

David Raab, longtime marketing automation expert, raises a little heck with the idea that the game is over, there can be only one, and it is Hubspot.  He also pointed to the little inconsistency in Hubspots graph of lead sources which shows email and not inbound to be the lion’s share.  That caught my eye too.  Read David’s article to see what Dharmesh had to say on that one (good explanation).

Posted in business, cloud, Marketing, strategy, venture | 2 Comments »

Google’s New Algorithm Puts Content in the Driver’s Seat

Posted by Bob Warfield on March 7, 2011

I saw the difference Google’s new algorithm was making to reduce spam the very first time I tried one of the searches I do very commonly.  Almost all of the old favorites I was used to ignoring because I knew that a quickly through would buy me nothing were gone.  A host of new sites that showed quality results had taken their place.

Bravo Google!

I can’t say that every query is enormously improved, but the difference is very noticeable.  I use Google for research, usually pretty deep research of various topics.  When I go looking for information, I want high quality deep content, not somebody’s ad-laden content farm that tells me in 63 languages the obvious things I already know.  This is cool, but it sends an important signal to marketers:

Content is Back in the Driver’s Seat!

This is not something I have had any doubts about, even before the algorithm change, and I’ve written about it in several posts:

–  Who is Your Chief Content Officer?

– Content Marketers: Are you a Teacher, a Curator, or a Pundit?

– Content Trumps SEO and Links

I have this belief that content trumps SEO and Links not out of any religious fervor, but because I have seen it firsthand.  I have a hobby business that I use to test Boostrapping strategies, tools, and techniques on.  It’s website is called CNCCookbook, and it caters to machinists both home shop and professional.  Despite the fact that the graphic design would make any decent designer shudder, the navigation is a mess, and most of all there is no SEO done to it whatsoever, it regularly produces fantastic amounts of traffic.

Consider this Compete report on the traffic received by CNCCookbook, the market leader in CAD/CAM and a $100M+ business (Mastercam), and one of the most popular and rising star competitors (Gibbscam):

CNCCookbook Traffic

If you’re running a startup, especially a bootstrapped startup, your #1 problem is how to get noticed.  What would it be worth to you to have the same traffic to your site as your $100M a year competitor?  For most companies, achieving that goal could only be a dream, but here’s CNCCookbook managing to accomplish it with a hobby site against much larger players.  How?  With content.  The other guys have standard corporate websites if you check out the links.  FWIW, I sat down and figured out one time how much I had invested in the CNCCookbook content that accounts for the lion’s share of inbound traffic.  The answer was about 1 Bob-year of effort (YMMV).

CNCCookbook is not my only experience with this strategy.  We made my last company, Helpstream, get noticed with content in a remarkably short time.  I am still asked by executives of competitors how we got so much PR so fast.  They don’t believe me when I tell them it was the content.

As a result of all this, I have been telling startups that there are two “first things” they must do to get started.  The First-First thing is all the obvious moves around building a product that every startup knows.  But the Second-First thing is to get started building your content Day One.  Don’t go into Stealth mode and hide out all coy.  That stuff is getting old and lame.  It was cute the first 100 startups that did it, but it doesn’t cut any ice any more.  There’s no street cred in it.  Saying nothing does nothing in a world where it is so easy for so many to say something.

Instead, start creating content.  Figure out how to make your site the go-to destination site for people who are likely to be your customers.  Do not start out marketing anything to them.  Give them valuable content.  Free.  Give them plenty of it.  Do not hide your content behind registrations or other standard marketing nonsense.  Get it out there.  Make visiting your site to check your opinion on anything in your space an automatic impulse for anyone who has the slightest chance of being your customer.

Why?  Because you need to be noticed.  And because these Google algorithm changes are the first shots in a war that isn’t going to end.  Search needs to improve its results and it will do that by identifying content that consumers find valuable.

Does that mean you don’t need SEO or Inbound Links?  What does it mean about Social?

Good points.  I had a good SEO consultant take a look at CNCCookbook because I wanted to quantify what could be done.  His initial reaction on analyzing pages was that it would be a piece of cake to improve the site–I had done none of the standard things SEO espouses.  Then he started analyzing search results to create a baseline against which to measure the improvements.  Eventually he came to me and said, “Bob, I’m not sure how much we’re going to be able to improve these results–you’re getting some really good rankings already, better than a lot of my other clients after SEO.”

Fred Wilson says marketing is for crappy products.  I don’t agree with that at all, unless you substitute as Seth Godin did “advertising” in place of marketing.  However, one could argue that SEO is a bandaid for crappy content.  That doesn’t mean you shouldn’t SEO your content, but get some great content first, especially if you have little or no marketing budget.

On the question of links, they are hugely valuable but there are scary penalties for cheating.  Just ask JC Penny.  Any kind of cheating or gaming isn’t worth the potential downside, particularly now that we’re seeing competitors report each other to Google.  Yet, links still drive the mighty Page Rank and they matter.  A lot.  So how do we get links?  How about by creating content that’s worth linking to?  How about by creating content that gives away value for free instead of spamming “calls to action?”   Now you’re catching on.

As for Social, it works the same as links.  There are penalties for cheating, and cheating is way less effective anyway in a social context.  If you want to be talked about, give ’em something to talk about.  Get deeper than the usual marketing messages.  Quit selling so hard you can’t close and deliver some value.  Become a trusted advisor to your community.  Then selling is easy.

Last words:  Get ready for the pendulum to tilt more and more to quality content.  Content is the New Marketing.  Changes in Google’s Algorithms will only accelerate that trend!

Related Articles

Chris Dixon writes that SEO is dead and Danny Sullivan responds, thanks Techmeme!

Dixon’s issue is he doesn’t see any big startups succeeding with SEO.  The comment thread is very telling as people like Dharmesh Shah, Dave McClure, and Fred Wilson wade in to say he is wrong.

His article would pass for me if he means SEO = gaming the search engines versus writing great comment.

On the question of, “How else besides search can startups get noticed?”, I would consider that there are two alternatives we’ve seen more and more of in recent years:

–  Viral Growth.  My favorite example is EchoSign, just because it isn’t a gimmick.  It’s a service for businesses aimed at signing contracts electronically.  One you sign an average of 6 EchoSign contracts, you like the service well enough you’re ready to look at using it for your own business.

–  App Stores.  Where we rely on the virtuous conflation of a popular platform and getting to the app store relatively early.  Needless to say, arriving the new kid in today’s world is tough.  There are a lot of apps competing for your attention.

I still believe quality content used to deliver search traffic is the best way for Startups to get noticed.  Add to that PR, which is very much related as it happens these days online and via blogs, and you have a winning formula.

The 1972 Chouinard Catalog

I’m certainly nowhere near the first person to suggest that content marketing matters, but as I was writing this post, I came across this wonderful note from 37Signals (a company that has made its bones marketing via content) about the 1972 Chouinard climbing catalog.  Check it out.  The catalog is a masterpiece of content.  I remember similar catalogs from my youth. For example, the Leica catalog always had the most wonderful content about the value of different lenses.  You could learn a lot reading that catalog even if you could never afford an expensive Leica camera.

Posted in Marketing, venture | 3 Comments »

Those Special Customers Developers Love (Well They Should Love Them!)

Posted by Bob Warfield on March 3, 2011

Do you have any special customers that your developers hate?

These are the customers that can mysteriously break your products over and over again, even though perhaps thousands of others report no problems.

How does this work?

First, understand the psychology of bugs.  Developers don’t consciously create bugs, they come about as errors of omission, misunderstanding, distraction, and incomplete thinking.  Sometimes they’re a result of interactions between complex connected systems that the Developer does not understand or did not foresee.  Most Developers are pretty conscientious about not wanting customers to see bugs, and about getting them fixed quickly.  At my last startup, the Developers were part of the Customer Service crew, which gave them an even keener sense of the customer’s perspective.  Believe me, they wanted their bugs to stop hurting these customers!  BTW, I use that language of “bugs hurting customers” on purpose, because that’s what it feels like to Developers when they get to experience the customer’s pain firsthand.  I highly recommend it!

Yet, we still have bugs.

Second, consider how it all looks to the customer.  The first thing you have to do before you can put Developers on the phone is to get them to quit taking bugs personally and assuming the customer is wrong.  The customer reports a problem, and the immediate assumption is it is the customer’s fault somehow.  At least that’s how it can feel to your customers.  In reality, the Developer doesn’t literally think of finding fault, but they know the customer is doing something different, something they didn’t think of, and they have to get to the bottom of that as soon as possible.  In the worst case, it feels like a witch hunt to your customers when it shouldn’t.  If customers understood why the questions were being asked and why were they asked in that certain special Developer bone headed way, they would understand more.

Getting back to those special customers, they are the ones that do things differently than the vast majority, for whatever reason.  For example, if I talk to a customer that works in IT, I always take a mental deep breath.  These are the sorts of folks that will customize their browser’s security levels, erect additional firewalls, and do almost anything else to really customize their machines to work the way they want them to.  The vast unwashed are going to run their machines pretty much as they come out of the box.  So, the IT guys see some bugs that the vast unwashed don’t, simply because their configurations are different.

If I’m in a crowd with my wife, trying to find seats, I always follow her.  She’s left-handed and she will make different decisions than the vast unwashed, who are largely right-handed.  We will magically wind up getting to a shorter line or finding the better seats that are still available.  If you know a left-handed person, try following them.  It isn’t just a matter of picking left instead of right.  They perceive all of the cues around them just a little bit differently when making their decisions.

Look for people with different hardware.  They’re travelling the less traveled road.  They will find things your mainstream may not.

I have known dyslexic people who did the most amazing things with software.  I have seen problems uncovered through random behavior.  To a certain extent, I have also seen concentrations of bugs as indicating not just that an area of a product is buggy, but that it has poor User Experience.  Why?  Because areas that have poor User Experience cause people to do all sorts of crazy things as they try to guess at how to work the feature.  Hence it flushes out the bugs.  Always consider UX as a possible source of bugs!  And while you’re tracking these bug concentrations, recognize that unnatural locuses of bugginess are either indicators of Bad UX, Bad Architecture, Bad Developer, or something really really hard that you’d better invest more systematic testing in.  Let’s call these “Areas of Special Interest.”

I unwittingly became one of those “Special Customers” for KISSInsights during the last week (cool service I will have more to say about in a later post).  I had a problem with my account they kept trying to fix and couldn’t.  I escalated all the way to the CEO.  Not only did the problem not get fixed, but problems like making me a premium customer for a month for free were apparently being broken.  Both sides were becoming increasingly frustrated.  Then we discovered the real issue–I had two accounts.  They were fixing the older one and I was viewing the newer one.  DOH!

So what’s the moral?

1. Embrace your special customers.  Reward them.  They are like gold because they’re finding bugs that others haven’t found.

2. Seek out people who experience the world differently when using software.  I don’t know if you can go to the extent of trying to make sure your testers include South Paws and Dyslexics, but OTOH, maybe it’s a good idea.

3. Keep an eye on bug concentrations as a potential early indicator of Bad UX, Bad Architecture, or an Area of Special Interest.

4. Make sure everyone involved recognizes that positives that come of an effective quality process.  Never focus on blame.  Reward progress in discovery, correction, and avoidance.

Posted in customer service, software development, user interface | Leave a Comment »

 
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