As the new year is almost upon us, my family and friends bring up the ubiquitous New Year’s Resolutions as a good topic for conversation. After listening to some resolutions, it got me to thinking that these are a good proxy for what motivates people. Really, think about it, what motivates you?
The popular How to Make Wealth article by Paul Graham is a timely one in that it talks about startups and entrepreneurship, as well as clarifying that wealth is more about assets, which is different from money. I bring this up because a good number of people say they are motivated by money, but I don’t believe that’s usually the case. We’ve all heard the studies and articles that say money, as a motivation for employees, is lower priority when compared to things like purpose and recognition.
My question for the new year is this: what motivates you and how are you incorporating that into 2010?
Continuing with the topic from yesterday on Tools for Product Communities, let’s look at some example products from the different categories:
Please let me know what other tools you like and recommend.
One of the challenges for a growing company is to put processes and procedures in place to systematize how the organization operates. The idea is to add some level of reproducibility of what goes on so as to be able to scale to a company size that is many times larger. An area that is especially ripe for putting in tools to generate better economies of scale is that of online product communities. Here are some tools to consider:
- Knowledge base / articles
- Frequently asked questions
- Message board / forum
- Idea exchange
I recommend starting with one or two of these types of tools at first and eventually incorporate all of them to engage the product community.
Continuing my posts from earlier in the year on using Google Spreadsheets to manage KPI Dashboards (here, here, and here), there are several areas we’ve been able to improve. Let’s look at them now:
- Use absolute cell references for the goals so that when you copy and paste a column to represent a new week, the goals are persisted (yes, this is junior-level knowledge for most Excel users, but was new to me)
- Put the goals in a separate sheet and then insert a new column each quarter reflecting the new goals, so that the previous goals are maintained and can be tracked over time, as well as maintaining existing KPI percentages
- Incorporate a hidden row that represents the percent complete of the current quarter so that KPIs can be based off that, if applicable (e.g. some KPIs, like number of trouble tickets per week, aren’t time sensitive whereas others like a specific recurring revenue target, are time sensitive)
We’ve found the Google Spreadsheet KPI Dashboards to be very effective for us and are going to continue using them next year.
This afternoon, I talked with a friend of mine about his web-based startup idea. He has five years of experience running a labor-intensive small business and he’s ready for a change. Naturally, building a web application and using his expertise to improve the industry with his domain experience makes the most sense. We got to talking about the idea, only to realize he had no idea how difficult it is to acquire customers.
I’m beginning to believe more and more startups are really sales and marketing plays. What I mean is that the winners will be the ones that execute the best with regards to customer acquisition. Yes, the product, support, and capitalization are critical, but if customers can’t be signed up and serviced profitably, there isn’t a business (assuming it isn’t a winner-take-all business).
My recommendation is to focus on sales and marketing, especially customer acquisition costs, when determining the viability of a business.
As commonly happens, I’m called in to help with IT challenges at my dad’s house over the holidays. I’m happy to help and am always curious about what new issues have arisen. Yesterday, the goal was to help him configure email on his new iPhone 3GS. He had just purchased it the day before due to the battery dying on his first generation iPhone, and it being unusually expensive to replace.
With a clean slate on his iPhone, I recommended he go with Gmail instead of Yahoo due to the superior web-based interface, no text ads in the emails, and the better integration with other Google services like Google Calendar. Of course, he’d been using Yahoo! Mail for seven years, so he was reluctant to switch. Here’s the trouble with Yahoo! Mail we had to go through to make forwarding work:
- Sign into Yahoo! Mail to forward email to the new Gmail account only to find you can’t forward mail unless you pay $20/year for the Yahoo! Mail Plus (we’re now annoyed at Yahoo! and they have a message that the $20/year will auto-renew and there’s no way to not have that take place without canceling the email forwarding)
- Go to the Yahoo! Mail Plus forwarding interface and find that it is the static, non-ajax interface with a cheesy apology that they haven’t gotten around to updating the interface
- Pay $20 and wait for a confirmation email to the Gmail address required by Yahoo! to forward mail
- Click refresh several times in Gmail, looking for the confirmation email, only to eventually think to look in the spam folder — there’s the Yahoo! email
- The Yahoo! email doesn’t have a clickable link and there’s a code that has to be copied and pasted into the Yahoo! interface (yes, we’re just trying to get mail forwarded)
- The process is now complete after paying $20 and jumping through a bunch of hoops
This trouble with Yahoo! Mail, actively making it difficult and cumbersome to forward email, shows they are on the defensive, protecting with they have, and not doing the right things to grow. Companies make lots of little choices that all add up to a strategy — Yahoo!’s strategy is to play defense.
Building on my previous post about the frictionless Apple App Store, another key benefit of the App Store is the top downloads section. The user interface is divided into paid and free apps, making it easy to browse popular applications and try them out (the free ones). Here are some benefits of this strategy:
- Empower users to consistently find new applications
- Enable the most popular apps to rise to the top
- Encourage the iPhone eco-system to help both users and vendors
I recommend thinking of how a similar approach could be beneficial to your startup.
One of the tactics I’m a fan of is putting together a one page outline as a basis for a conversation or partnership. The general idea is to just jot down ideas in a bulleted, outline format so that one or more parties are prepared for a discussion, and to use it as a basis for future discussions and accountability. Of course I use Google Docs, making it is easy for everyone to work from the same content and centralize changes.
Some benefits of the one page outline:
- Forces the people involved to think through ideas in advance of the conversation
- Easy to change and update — bullet points are more manageable when compared to paragraphs
- Requires everything to be less than a page making for a more focused conversation
One page outlines work for me and I recommend them.
When a new product shows signs of taking off, inevitably companies and entrepreneurs in other countries will take note and reach out to form a distribution partnership. Having a distributor can really help startups generate revenue without significant capital outlays. Let’s look at a few considerations for international partnerships:
- Geographic Exclusivity – this is a big one, and needs to be taken very seriously. Ideally, it would be tied to performance metrics.
- Revenue Split – Variables like who supports the customer, who delivers sales demos, and kickers to accelerate the revenue share should be considered.
- Training – web-based training programs like GoToMeeting make this an easy consideration. Annual face-to-face training should be evaluated as well.
- Branding – considerations like usage of the brand and content vs a true independent distributor should be analyzed.
Partnerships generally fall under the 80/20 rule whereby 80% of the partnerships produce 20% of the results and 20% of the partnerships produce 80% of the results. Regardless, partnerships, and international ones, are great growth opportunities for startups and should be fully evaluated.
I just started reading the book SuperFreakonomics today and at the beginning they talk about how the success of their first book, Freakonomics, has made finding material for their second book so much easier as readers bring ideas to them. The term cumulative advantage, in the economics profession, describes a situation where previous accomplishments result in seemingly unfair advantages for future situations. Immediately, this made me think of serial entrepreneurs with a win under their belt.
Some cumulative advantages for serial entrepreneurs include:
- Previously proven executives and employees to draw from (assuming non solicitation has expired)
- Relationships with partners and distributors
- Existing network of trusted vendors like legal and accounting
- Easier access to capital as investors are more apt to invest in entrepreneurs with a track record
I recommend working on relationships and expertise that result in building a personal cumulative advantage.