This morning I attended a meeting of our local “lean startups” group here in San Diego. The lean startups movement, as put forth by Steve Blank and Eric Ries, is the study of customer development as a method for bootstapping the early stages of startup growth, and is one of those things that you wish you had heard about before you joined your first startup. There is a local group of lean startup executives here in San Diego, and periodically, thanks to the efforts of a few of our members, we sit down to breakfast together to talk about all things startup.
During the meeting, one of my colleagues was speaking about his company, and in the course of describing his technology made the comment “I don’t want to get too sales-y; I mean, who wants to be a sales guy?” (cue nods of sales-guy disdain from folks around the table)
A few other people interjected, talking about his technology, and asking about his early successes. When it finally came time for me to speak up, I immediately countered his earlier statement. Having spent nearly half of my career in startups, I have heard similar statements from nearly every founder. This is to be expected, given the nature of startups. Startups, in my experience, are founded by a person or group of people that are driven by a passion for the solution or the product that they have created. The question that needs to be answered, however, is do you have a solution that addresses a customer’s pain well enough for them to make a purchase?
Too often passionate people find themselves building or creating technology for the sake of the technology. While creating for the sake of creation is important, at a certain point it needs to change. Startups that survive share similar DNA in this regard. While almost all companies start singularly focused on technology, early successes drive the need to continue selling their product to more and more customers. I read a recent article by Carl Eibl at Enterprise Partners, where he discussed that nearly all startups that get funded share one major trait in common: they not only have customers, they know exactly why those customers made a purchase. This is the core premise of the lean startup methodology, which put simply, states that startups should sell their product, find out why early customers purchased, and then capitalize on that pain point to sell to more and more customers. I encourage everyone to read Steve’s book “Four Steps to the Epiphany” to learn more.
Back to my point about not wanting to be a Sales guy. Almost every engineer I have ever met has one image in their mind when they think “Sales Guy” and it’s this guy right here:
This is a really unfortunate situation, as this is not what I mean when I counter that
you do, in fact, want to be a sales guy.
Being a “sales guy” doesn’t mean some high-pressure, used-car, software-pushing salesperson who looks at clients and sees dollar signs. Being a sales guy means being able to speak to executives about the solution that your company has to offer. Being a sales guy means speaking to a different crowd, and as a result, using a different vocabulary. At the end of the day, the sales guys and the engineers are all striving towards the same goal: to solve problems through the use of technology.
The main problem, when you talk tech, is that you are generally speaking to the people who will be implementing your solution, the IT manager and that general area of the company. their concerns are “does it authenticate against our AD server” or “can it render our existing embedded files”. As an engineer, you can speak to this goup, and it is probably the group of people that you are most comfortable working with. The problem is, for the most part, your average IT person is not the one that signs the check. At most they tend to be the “technical buyer” to use the Miller-Heiman description. They can recommend a solution, but they can’t write a Purchase Order and send it over to you without approval.
If, instead of talking tech, you spoke about your solution in terms of the business problem that you solve, now you can speak with executives using their language. Executives don’t care about how efficient your SQL queries are compared to the competition. Executives care about solving business issues. You need to be able to frame your conversation in terms that they are familiar with. If you could, instead, meet with a manager or executive and say “You are spending an average of 10 minutes with each customer in your call center; with our new Phantasmotron 2000 software, you can cut this time down to six minutes. Imagine the savings across all of your call centers that you will realize right now by deploying our solution!”, Now you are speaking in executive language. Extra points if you say “decreasing your variable overhead costs by 40 percent will save you millions in the first year alone”!
Of course the manager is going to ask his IT manager if your solution will work with their existing data center structure, and now, by all means, feel free to geek out with the IT guys and sell them on the solution as well or maybe you sold them ahead of time or delegated the technical details to your Sales Engineer. Regardless, in this scenario, you have tackled the hard part first, selling the buyer on the business case for purchasing your solution.
It is important to note, that although you first spoke to an executive and then he brought his IT manager into the conversation, it is much, much harder to push things along in the other direction. I have seen salespeople drive themselves to the brink of madness by speaking with IT managers and then trying to get them to push the decision up the chain of command.
I am a big believer in investing in personal self improvement (for example…the total cost of my education, up until this point, exceeds the cost of every home I have ever owned), and while many startup founders have brought in salespeople early in the life of the company, I do not think that this is the best path. As founder or even an engineer, you need to understand why you are building the solutions that you are building. If the time comes to think about bringing in financing, VCs will want to see that you are one of the best salespeople in the company.
There are a lot of sales books and sales methodologies, and all have their perks; However, the best education that you can receive in from information that is available right in front of you: find out why customers purchased your product. Not just who (it’s an CIO) or where they are using it (accounting uses our software to manage payroll) but rather seek to understand WHY EXACTLY, did they spend money on your product. You want an answer that you can re-use a part of your sales process. Ideally, you will hear that they had a problem that they knew was costing them money (e.g. – the call center example above) and they tried other solutions, and none worked until they tried yours. Look for pain points, understand how your solution eases the pain, and now you are armed with a fantastic business case to present to the next client.
Who wants to be a sales guy? You do.
Distermediation is a term that may be familiar to veterans of the dot com boom; it’s a fancy way to say the same thing that infomercials have been telling us for years: “We cut out the middleman and pass the savings on to you” Which is great, because everyone loves a bargain. Back in the dot-com boom, all of these new fancy websites told us they were going to “cut out the middleman”; we were promised web based storefronts to appeal to every man, woman, and child, that would allow us to buy products directly from the manufacturer and bypass the costs that are tacked on by all of those pesky middlemen. Why did we want to cut out the middlemen? Because everyone knows that the more people that stand between the customer and the manufacturer, the more expensive that product will cost.
In the enterprise there are also middlemen but what these middlemen add is something far more destructive: Confusion
Remember playing telephone is grade school? It’s a simple game that illustrates a powerful point. The game starts with the first person telling something to the next person, who then tells it to the next, and so on until you reach the end of the line. Inevitably, you start with something simple, like “little jimmy smells”, and by the time it gets to the last person in line, it ends up as “purple monkey dishwasher”. How did that happen? There’s the rub; this drastic change happens gradually, so much so that nobody notices the change along the way, but it’s easy to notice when comparing the starting phrase to the ending one. This is the concept of Cumulative Error, which tells us that even small errors compound one another to produce drastic differences between input and output.
This same issues of Cumulative Error is present in many businesses today. With each layer of management between the user of a technology and the provider of that technology, a little more confusion is added to the mix.
I’ve worked with a number of corporate clients, and in almost every case, we have not had to dig far to find the results of these Cumulative Errors in their organizations. I often advise managers to look for employees “building bridges” around these errors. In the past, more entrepreneurial employees would get around their corporate limitations by emailing spreadsheets, building Access databases or installing Media Wiki on a makeshift server under an employee’s desk. Today, these same bridges are being built using E2.0 tools. Employees build bridges over their IT department, legal department, and other layers that previously existed between the firm and their customers. By using E2.0 tools, individual departments can easily and quickly deploy their own CRM, Collaboration, and messaging solutions. These bridges, regardless of their materials, serve as signposts to tell us where and how we as an organization need to change.
E2.0 Changes Everything.
There. I said it. Hate me if you want to, but it’s true. Never before have consumers risen to such an all-powerful status, nor have employees had the ability to get their work done without involving 20 layers of management. Let me show you what I mean.
Lets talk about the IT department. In my workings with large corporate clients, many seem to have a relationship with IT that is tenuous at best. To be fair, the IT department has a lot on their plate. Obviously, the connection of every desktop PC to the LAN and internet, plus in many cases, an IP phone system, and 3+ years worth of legacy hardware (or 20 years, in the case of the AS/400 wonderland that was Circuit City). In the 90s and early millenium, all you heard about in every B-school case study was how we needed to maximize the efficiency of the enterprise by consolidating activities. We suddenly saw the IT department saddled with the responsibility for fixing everything from a dead laptop to an installation of MS-Office. The pileup of responsibility led to a department that does many things and has little or no bandwidth to help out with that marketing department skunkworks project in Social Media.
So, as always, employees do what they need to do to get things done, which these days means using cloud services to build bridges around an efficient yet inflexible enterprise.
Which brings us to our point. Buying cloud apps or using social media at work need to stop being looked at as “workarounds” and we all need to realize that we are standing at the forefront of a new order of things. The cloud has driven costs down for serious business applications to a level that no longer requires the CFO and CIO to argue; now you have a choice: you can buy a million dollar, custom made CRM or you can buy salesforce for your team at $65 per person, per month. In the past, in order to make a significant expenditure, firms had to build a cross functional team to argue incessantly debate the features needed for the new software or hardware; spec-ing and building a custom solution took years.
Those days are over.
Now is the time for each team or line of business or insert-silo-here to choose their own solutions. Does marketing have their own special needs and desires for CRM? Great, let them be responsible for buying and updating the Saas app that they will use for their CRM system. The relative low cost of these cloud apps makes it harder to argue for platform standardization in the name of efficiency.
IT needs to become one thing: a provider of connectivity. Make sure that I can turn on my computer, open a browser, get online, make a phone call, and use my blackberry. Why do I continue to argue for the reduction of the IT department to a provider of dumb pipes? Because SaaS is only going to become more prevalent going forward, and web connectivity will be more important than ever. On top of that, more and more workplaces are allowing, if not downright encouraging, their employees to work remotely some or all of the time; it behooves these firms to ensure that all of the applications used by their employees are accessible from either side of the firewall. And if everything is accessible from both sides of the firewall, why have a firewall in the first place?
There are those that say the position of CIO is doomed, I disagree. The last thing I would advocate for is some sort of work free-for-all of SaaS software; someone still needs to stand at the top and govern these cloud apps: those who say different have never had to terminate a disgruntled employee at a company that uses dozens of unconnected cloud applications.
There are many organizations for whom this is not going to be an easy change. It was Machiavelli who famously said:
It must be considered that there is nothing more difficult to carry out nor more doubtful of success nor more dangerous to handle than to initiate a new order of things; for the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order; this lukewarmness arising partly from the incredulity of mankind who does not truly believe in anything new until they actually have experience of it.
There are still many out there that have not experienced the advantages that they will gain through this disintermediation. There are many that are not convinced of the power of Social Media, of cloud apps, of SaaS. This change is, I argue, inevitable. In subsequent posts I will talk more about some of our success stories and some steps you can take with your firm that can show, at low or no cost, the advantage of corporate disintermediation.
I remember years ago listening to a publisher friend of my parents lamenting the invention of the modern word processor. He went on to elaborate what he saw as the major issue: the barrier to entry was now far too low to prevent bad writers from creating and sending manuscripts to every publishing house they could find. Add this to the list of things that our children will not understand; the concept of having to correct typing errors by applying liquid paper to the page will sound to them about one level more advanced than chiseling our cuneiform into clay tablets. The word processor allowed far more people to write rapidly, and reproduce endless copies of those documents at a low cost.
We’re facing a similar issue now in media; the rise of social media tools has lowered the barrier to entry for broadcasting your voice to the masses, and this is not necessarily a good thing. First, let me say that I am not against social media, nor do I deny the power of giving a voice to the people. The elections in Iran proved the value of social media in empowering people who previously did not have a voice, I am not disputing this.
What I am saying however, is that social media has allowed people to define their status without earning their status. This issue goes far beyond groups of facebook users suddenly calling themselves social media experts, to a complete collapse of our traditional methods of searching for and identifying experts or authorities.
In the past (“the past” being 2 or more years ago) when a person held a position of authority, there was a clear understanding about how they got there. A professor of Entrepreneurship with a Ph.D. followed a known path of study, published articles in peer reviewed journals, and defended their thesis before a panel of people that had followed that same path before. Without getting stuck in the mentality of doing something because that’s the way it has always been done, the reasoning behind going through all of these steps is more than just tradition, it is a method for establishing personal authority in a particular topic or course of study.
I have started my own company; I learned a lot about the mechanical and the personal effects of being an entrepreneur; does that mean, based on my experience, that I now teach a class on entrepreneurship? Should I start a consulting firm, and use my experience starting one company to advise others on how they should run their own firms? Yeah, probably not. I remember visiting the office of my grad school entrepreneurship professor. In addition to the degrees on the wall, he also had shelves of books that he had written (I remember he was working on his 26th when I visited his office) as well as displays showing all of the products produced by him and his partners (He invented the Crest SpinBrush, among other things). Suffice it to say, he had the credibility to back up the advice that he gave to us.
What is happening today in the social media space is a breakdown of these traditional avenues of expertise recognition; we have not yet established the social media equivalent of the peer-reviewed journal or the Ph.D. , as a result, some people are gaming the system, using social media tools to create a following or maybe execute one “big win” and then parlaying that into an implied expertise in whatever field it is that they are in.
In no way am I implying that social media is a bad thing or that the net impact of this increased communication is negative. As with many technological advancements, it is possible to for first movers to exploit the advantages given to them. What I am saying is that this breakdown of authority warrants increased scrutiny before we accept the work of these “experts”. There are plenty of people in positions of authority blogging, twittering or otherwise using social media, and there are even more narcissists speaking from a position of self appointed authority. The crazy guy in the street corner now has the ability to publish his writing for the world to see; that doesn’t make him any less nonsensical.
It’s that time of the year again, time to vote on the proposed panels for the 2010 South By Southwest Conference. This year I have proposed a panel to briefly discussion the concept of Commercial Open Source, a model being followed not just from within the software industry (although software is our focus) but from many innovators in a diverse array of fields.
It is really hard to believe that 19 months have gone by so fast, yet at the same time, I know that it is time to be done. I am back on campus for the last week of class, and all things going well, my MBA will be conferred this coming Friday.
My classmates and I are participating on our capstone courses, receiving debriefings on a lot of the projects that we have been exposed to over the past few years. It’s been hard work, and this has been a long time coming. At the same time, I am sad to see it come to an end, and I will miss the classes and classmates that have come to occupy all of my formerly free time.
They asked us to stand up and say what our most important take-away from this program has been, and it was very hard to narrow it down to one single thing that stands above all others. For me, my greatest take away has been understanding that the most important responsibility that I have as a manager is not having all of the answers, but rather, knowing how to ask the right questions. One of the litmus tests that I revisit frequently is to look at past situations and ask myself if I would act differently in that same situation; in many cases, the answer is yes. Of course, I don’t know whether the outcome would have been different, but at the very least, I know that my increased knowledge helped me have a deeper breadth of understanding of all of the factors in play.
In other news, my session at South By Southwest has made it into the panelpicker, and is up for vote this week. I will be talking about the emergence of “Commercial Open Source” as a business model. Although at first, I had aimed this session at firms in the software space, my research in this topic over the past few weeks has led me to the realization that it is not just software but many industries that can drive innovation from the bottom up.
I always figured it would happen someday…I was captured by a Google streetview car. One thing I can say, is that these vehicles are not discreet; I realized what it was immediately as soon as it pulled in front of me, and despite my best efforts to make funny faces and otherwise act like an idiot in view of the streetview camera, the only decent photo doesn’t even show my face.
In the 16th Century, Niccolo Machiavelli famously wrote his discourse on the challenges faced by innovators:
“It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order…”
This weekend I will be attending Transparency Camp in Washington DC, and as I prepare for my presentations, I can’t help but notice that a lot of the talk of “Government 2.0″ misses the point when speaking about the value of the tools being used. I’ve read hour long presentations on why twitter is awesome for government (it is awesome, I get it, but that is beside the point) and I’ve seen far-too-long powerpoints on how to broadcast using these new tools. STOP!
You’re missing the point!
The value of these new tools is that these new tools step out of the way, cut the static and let us get to the data; that is, the data is fast becoming disintermediated from the source. For years, data has been available in silos from many government organizations; data, in these silos, has very little value. The true value of data comes not from collecting it, but analyzing it to create intelligence. The true value of these new tools, like twitter, is that you do not need to use twitter.com to access twitter’s data; twitter, through their API, gives anyone access to anything said by any one of their members.
There is value in being the hub at the center of millions of conversations
If you watch all of the data go by, you can grab the bits that you care about to create the whole picture; mash twitter feeds together with the oscars or american idol and you start to get a good picture of who is paying attention and what they are thinking. The value of these tools is that now we can create that same type of intelligence around government applications. Government data has always been (for the most part) a matter of public record. The emergence of APIs connected to this data means that now we can mash up congressional voting records together with lobbyist donations. What will we see? How will this change things? It has been said that the barrier to entry for true participatory democracy is an inability for the populous to possess adequate knowledge necessary to make informed decisions. Watch closely; the sun is setting on that world.
People of the world, prepare to be educated!
The intelligence created out of these easy to access data sources is going to be the catalyst for the next great shift in governance. Many government agencies are going to resist, and the most frustrating factor that they are going to find is that the people are able to go on whether government agencies are involved or not. API’s and data access have created a reformer that is billions of people strong. Those in the ivory towers can resist, but clearly, they are outnumbered.
So what is the point? What is the value of these tools? The point is, these new tools, APIs for every data set, are going to put knowledge in the hands of the many. And at the end of the day, the many have the power of the vote, they decide your fate. If everyone in America watches your voting record flex in tandem with your lobbyist donations, well, I would wager a bet that you won’t last long in this new order of things.
I just received the results of the Pew online survey, and here is, unsurprisingly, where I stand:
Based on your answers to the questionnaire, you most closely resemble survey respondents within the Omnivores typology group. This does not mean that you necessarily fit every group characteristic.
Omnivores make up 8% of the American public.
Members of this group use their extensive suite of technology tools to do an enormous range of things online, on the go, and with their cell phones. Omnivores are highly engaged with video online and digital content. Between blogging, maintaining their Web pages, remixing digital content, or posting their creations to their websites, they are creative participants in cyberspace.
You might see them watching video on an iPod. They might talk about their video games or their participation in virtual worlds the way their parents talked about their favorite TV episode a generation ago. Much of this chatter will take place via instant messages, texting on a cell phone, or on personal blogs. Omnivores are particularly active in dealing with video content. Most have video or digital cameras, and most have tried watching TV on a non-television device, such as a laptop or a cell phone.
Omnivores embrace all this connectivity, feeling confident in how they manage information and their many devices. This puts information technology at the center of how they express themselves, do their jobs, and connect to their friends.
Who They Are
They are young, ethnically diverse, and mostly male (70%). The median age is 28; just more than half of them are under age 30, versus one in five in the general population. Over half are white (64%) and 11% are black (compared to 12% in the general population). English-speaking Hispanics make up 18% of this group. Perhaps unsurprisingly, many (42% versus the 13% average) of Omnivores are students.