Review: Dharmesh Shah's building a great Software Business

Improving one often degrades another

• Sales Velocity
• Acquisition Cost
• Lifetime Value

Invest in the Experience (not product)

• Don't make customers happy; make happy customers. It's not subsequent thing serviced by support team; it's a whole end-to-end process.
• Monitor customer happiness from Sale, Support, etc.
• Customer Happiness Index: use metrics (call them once you know they are unhappy)

Put virtual customer in meetings, what would Moly (customer) say?

Make not just great products, but superstars of your product. (Customer focus).

What do we have to do, to turn non-users into users. A better or simpler product? Is iPod a higher performance product? Or easier to use with easier access to music? Tap into a blue-oceans of users who are waiting at the sidelines.

Extreme trasnsparency with employees.

Brand is what people say about you after you've left the room.

Don't screw your customers.

The path of truth and justice to gain profits. Don't be evil.

Dream big. Execute small. Sell your company for a good price, then you can fuel your next dream.

Review: Geoffrey Moore's Making a Business in Software

Geoffrey Moore wrote one of my favorite book, Crossing the Chasm (can't believe I didn't do notes on the book).

Innovation

• Differentiation (Core)
• Neutralization (Context): The market moved, but you didn't (getting back into the competitive set)
• Optimization (Context): get the cost down

Core vs Context: Core is processes that amplify differentiation, Context is everything else which support the business (the necessary evil)

Innovation Waste

• Differentiation that didn't go far enough (people like to play safe, but Steve like to go far)
• Neutralization projects that go beyond good enough
• Unaligned Innovation

There is never a game-over. Sun is the dot in dot com? IBM controls the PC market? Kodak moment?

Markets

• Niche (Bowling Alley) -> Early Adopters -> Mainstream Market (Tornado)
• Growth -> Mature -> Decline

Buyers (Performance, Relationship, Value)

• Early: Performance (75%)
• Growth: Performance (50%), Relationship, Value (25%)
• Mature: Value (60%), Relationship (25%)
• Decline: Value (75%)

Models

• Product Leadership (Performance): Disruptive (Google), Solution (Autodesk), Product (Apple), Platform (Microsoft)
• Customer Intimacy (Relationship): Line Extention (HP), Design (IDEO), Marketing (IBM), Experiencial (Facebook)
• Operation Excellence  (Value): Value Engineering (TSMC), Integration (SAP), Process (Dell), Business model (Salesforce)

Winning in Solution Innovation (B2B)

• Target Customer: Pragmatist (follow majority's choice) manager in target niche
• Compelling reason to buy: Fix a problem (top 3 problems) business process
• Whole Product: End-to-end solution
• Partners and Allies: Solution complementers
• Distribution: Direct sales
• Pricing: Value-based
• Competition: Horizontal offerings
• Positioning: Niche market focus
• Next Target Customer: Adjacent niche market

Definite Separation

• Pick a core (laser-focus)
• Go really far (beyond reason)
• Optimize Context
• Small Competitiveness: Agility

Review: How to delve into Sales

Notes:

• Sales Organization: get people excited about your product, so that they'll share their needs with you
• Interview: don't lead, let people talk (so that they don't prime their answers to your needs)
• You want to hire someone who are interested in your start-up equity, at the same time most Sales people care about instant reward (show me the money!).
• Compensation: don't user percentage, but maximum absolute figure (negotiated quarterly or so)
• Weekly Pipeline Meetings, though Sale people don't like to be managed tightly.
• Team Selling: post-moterm after every sale. What happened in the meeting?
• Called before office hours and after office hours (to bypass the secretary); Friday afternoon is best for setting up meeting next week.
• Call as high as appropriate
• LinkedIn connected histroy: to find out about your competitor's movement.
• Ask for favour in return for reduction in fee. Leave room for people to have small victory. Margin?
• Forecasting: 10% if you understand client's needs; 50% if you given a presentation, and the client have something to buy from you; 75% if customer ask for negotiation; 90% you are told that you got the contract.
• Don't hire too quickly, don't hire too senior; trying selling by yourself to get a feel, get sales service consulting company.

Review: Seth Godin. Are you afraid to truly make an impact

Notes:


Wisdom of Selling a "Traditional" Software Product

• Who can i reach
• Will they talk about it with their peers?
• Can I earn and maintain permission to continue talking to them
• Will they pay for it after they learn of its values

Wisdom of Selling a "Connection" Software

• Does the connections create demonstrable values
• Is there an easy and obvious for someone who benefits to recruit someones else to join
• Is it open enough to be easy to use but closed enough to avoid becoming a zero-cost commodity

Stuff

• People like to do what others are doing.
• People are waiting to be led.
• Marketing = Tribal Leadership, create a Tribe of followers
• Connecting People: Connect users to one another
• Creating & Inventing something Interesting
• FREE is a marketing tool (marginal ZERO cost production) to get connections, leads to perception of a better services and end up paying for it
• Customer paying to be connected?

Review:

Seth Gordin is a famous Sales & Marketing Guru, but he is not my favorite. He is a believer that Marketing/Business triumph, not technology/technical skill. On the surface, I do agree with him that pure technology or technical competency is not enough to prosper in the market in most cases, but neither pure Marketing/Business is sufficient to bring success to tech companies. There need to be a balance, combining Technical brilliance with Marketing brilliance. But it's true that sometimes coders over emphasize on the coding side that they end up with a great product which no one use. 

Nowadays, a coder (especially founders) didn't just code, we innovate and create something new (or disruptive); we are an inventor/designer/artist, who happens to be the implementer/manufacturer/coder as well. Why do we need to code? Because it's difficult for another coder to realize our creation. Can someone draw on behalf of Picasso? Do we admire his painting skill, or we admire his creativity?

What did I learn from Seth? Spreading of Ideas, Connecting People, Building a Tribe and Create something Interesting.

Review: Eric Ries's The science of lean startups

Notes:

• Stop wasting people's time: build something someone would actually use
• Identify value-creating vs wasteful activity
• Learn what we need to learn at the lowest cost: can a 9 months mistake be learned within a month?
• Fisher Price Model: Learn -> Ideas -> Build -> Code -> Meassure -> Data -> Learn (Loop)
• Agile Development with a Continuous Feedback Loop
• Why do we build products: delight customers, get them to signed up, make a lot of money, change the world.
• Continuous Deployment Principle: Make very kind of mistake only once, Quick Deployment, Cluster Immune System (to warn of potential mistakes)
• Minimum Viable Product: 1/8 of the original features, talk with early adopters

Review: $0-100million with no sales people (Atlassian)

Notes:

• 2 founders: someone to depend on
• Freemium: product must sell itself
• Use your own product
• Measures everything
• Test everything
• ABM: always be marketing
• Send T-shirts to customer
• Cool Benifit for workers: 1 week holiday before startwork, welcome kit of T-shirt and Chocolate
• Your 1st idea will fail
• Long term thinking
• Know when to switch gear: when not to bootstrap anymore?
• Build somewhere you want to work
• Give experience as reward: Treasure hunting game

Review: Fundable Startup (AngelList)

7th Founder Showcase - Naval Ravikant Keynote from Founder Institute on Vimeo.

Be Exceptional at one of the following (Importance is ranked by sequence, where Traction rules)

1. Traction (Perhaps 20% per month)
2. Team (Reputation, not self acknowledgement)
3. Product
4. Social Proof (Reputation, Reference by someone known, Herd Mentality)
5. Market ...

Markets & Approaches (Unfundable)

• Services, multiple products
• Small Markets
• Desktop Software / Dead Platforms (Silverlight, Flash, etc)
• Conquered Markets with Network Effects (beating eBay or Craiglist)
• High atom content (required brick and mortar)
• Not too large, not too small

Team (Unfundable)

• You don't get to call yourself visionary
• Outsourced development, business-heavy
• Sole founder
• Part-timers
• 12 years experience (too genetic, what have you done)

Exceptional Team (Fundable)

• Keywords: MIT, PHD, Columbia, CS, Cisco, Sun, Google, Microsoft
• No adjectives / opinions of yourself
• Show, not tell
• Quantitative and precise, not qualitative and vague
• Branded or measurable output
• Recruit only the best. And if you can't, you're not ready.

Product Guidelines

• No promises / vision
• Show, not tell
• Quantitative
• Something hard with specific knowledge
• Expect competition
• Build only the best

Real Hacks

• Advisory Round (Notable VC)
• Cast a Broad Net, move simultaneously
• Easier to pitch a new investor than to convert one
• Sell the option to invest more later?
• If you're having a hard-time, restart (go back to drawing board)
• Don't sell more than 20% at seed round

Summary

• Get to a funding hub
• Recruit an exceptional team
• Build something you are passionate and knowledgeable about
• Test it against customers
• Get social and customer validation
• Raise on at least once exceptional characteristic

Friday Thoughts

I like Friday night, where it’s always calm and quiet, where I have time to digest TEDs video before hitting the movie for another 2 hours pass midnight, and it made me realizeor think of something before I hit the bed. A little bit of time for self-reflection, I would say. To understand how we are going to come to terms with our own life.

I guess there are too many shits going on around us, we have corruptions which made us uneasy, people with their own agenda until they start to hurt others and good people have their hands tied. Are the politicians whom we voted still looking over our backs, and does the laws still uphold justice? Does Democracy and Capitalism still works well enough, or the rich and the immoral are running the world and the country now?

As an individual, it’s easy to escape the undesirable environment. If the company we work for sucks, we can always find another one, or start our own. If the country or government sucks, we can migrate to some other place as long as we have the cash. After a while, you realize there are always shitty people and shitty places; as if there is nowhere to run. No place is ever safe or good enough, and the knight in shining armor which we hope will come and clean the mess, just doesn’t appear anymore, or fall short of our expectation. Is it there is no one left to save us, except for ourselves? Like it or not, perhaps we need to be the hero to save the day.

I guess we do need a lot of hope and faith to live in our time. Sometime we need to forget, and sometime to look at the brighter side, and sometime to remember again. It’s like the movie where a group of people completed a big heist after facing numerous obstacles, and they get their dream and freedom in the end. Life is full of shitty challenges … you never know what you’re going to get.