Challenges Productizing a High-End Service Offering

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Today I had lunch with a successful entrepreneur that bootstrapped and sold his first company five years ago and is in the middle of his second startup. His second company, much like his first, uses his domain expertise around a complex problem where he sells annual contracts with a combination of consulting, customized product, and data. Being so services intensive, the offering requires a minimum six-figure annual contract, thereby limiting the companies he can go after. Now, in order to grow the business, he wants to productize the offering, make it more self-service, and sell it at a lower price point.

Here are a few of his challenges:

  • The offering is so specialized he’s worried about making it usable as a turn-key product
  • He’s done all the selling to date, wants to hire a sales rep, but hasn’t had good experiences hiring sales people in the past due to a lack of results
  • The lower-end market is more competitive and commoditized, but still has opportunity for growth

His goal is to build an enduring, sustainable business with a strong corporate culture. Productizing a service is extremely difficult, but with his timeline and resources he’ll be successful.

What else? What other challenges have you encountered productizing a service?

How our Culture is Different

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Today I took six of our new hires out to lunch. I try to take new employees out to lunch within their first month of starting and I also do a monthly cross-functional lunch with team members I don’t work with on a regular basis. The goal with the lunch is for people to get to know each other in a more casual setting outside the office. At lunch I do two simple conversation starters: tell us about your background and how is our corporate culture different from your previous company.

Here are a few of today’s responses to the question of how our culture is different:

  • Training was more comprehensive and hands-on
  • The other sales team members genuinely want to help each other and aren’t looking to split commissions for their help
  • There’s not as much pressure and craziness to get new product features out the door
  • People genuinely love coming to work
  • Co-workers hang out with each other after work

This question about corporate culture is important because often times people don’t think about their corporate culture consciously, but rather they think of what they like and don’t like about their company. Talking about corporate culture, and using those two words, makes it more meaningful and easier to stress how critical it is to everything we do.

What else? How is your corporate culture different from other places you’ve worked?

Defining the Word Entrepreneur

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Last Friday I had the opportunity to spend time with a PhD student working on her thesis research. She’s collecting information from serial entrepreneurs to develop new academic theories around the traits most correlated with repeat entrepreneurs. Along with asking questions like how do I define startup success, trigger descisions that lead to success, and more, she asked how I define the word entrepreneur. Here’s what I said:

An entrepreneur is a person who takes considerable risk assembling resources and people to build something new.

After thinking through it, giving my definition, and talking more, I wanted to read the definition:
1. a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.
2. an employer of productive labor; contractor.

It’s interesting to note that the dictionary definition regards managing with initiative an entrepreneur. I would regard that as an ambitious executive executive and not an entrepreneur. For me, the key entrepreneurial tenet is risk taking and the uncertainty of doing something new.

What else? How do you define the word entrepreneur?

Firing ‘A’ Players in a Startup

Jason Evanish’s tweet tonight prompted this blog post:!/Evanish/statuses/72013770720935936

One of the hardest things to do in a startup or regular company is to fire an ‘A’ player. I’ve had to do it a couple times and it is extremely painful. Jack Welch says that if you have a high performer that doesn’t buy into the corporate culture you should do a public hanging.

The better you hire the less you fire. We’ve continued to improve our hiring process over the years and are in a good spot now. Do we still make mistakes? Yes, definitely. The good news is that we’re strict, and we’ve trained many of our team members in the process — the results speak for themselves.

When we started to ramp up our hiring 12 months ago team members, being really nice people, would say ‘yes’ to most candidates because the candidates were nice people — not because they fit our core values. As the candidates that reached me got turned down, each one provided a good training session to explain to my team members which core value(s) weren’t met and how that was revealed. The end result was much better screening of candidates.

Firing ‘A’ players is a necessary part of a startup, and should not be taken lightly. It is one of the hardest things to do as an entrepreneur and leader, but also a great learning experience for the team members on the bus.

What else? What other thoughts do you have about firing ‘A’ players in a startup?

SaaS Metrics Resources

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Yesterday I had lunch with the CEO of one of the most successful SaaS startups in Atlanta. They have well over 100 employees and are on a path to IPO in the next 36 months. Towards the end of the lunch we got to talking about Software-as-a-Service (SaaS) metrics and which ones we track in our firm. One of the great parts of SaaS is that the predictability of the business also provides for easy management of metrics and forecasts.

Here are some of the best SaaS metrics resources:

These SaaS metrics resources are a powerful way to understand the dynamics of the underlying business and should be studied by management teams of SaaS startups.

What else? What are some other resources for SaaS metrics that you like?

Offshore Labor for Administrative Tasks

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Many people have heard of Tim Ferriss’ The 4-Hour Workweek, or at least the concepts: most of the “work” people do is administrative, so outsource/offshore it to focus on what you do best. Well, much of that applies to entrepreneurs who are trying to squeeze more hours out of the week. An executive assistant is often too expensive for early stage entrepreneurs so they end up doing many administrative tasks by hand. Outsourced/offshore labor is great for freeing up time and doing tasks that seem simple but can be burdensome.

Here are some example administrative tasks for offshore labor:

  • Build lists of information you want (e.g. say a site has a directory of 1,000 companies listed on it and you want to call them all — put up a job on for $50 for someone to build a Google Spreadsheet by hand of those 1,000 companies including contact information, company size, city, state, etc)
  • Research the best flight and hotel options for a tradeshow
  • Perform online research projects

I like to remind people that 50 cents an hour is a middle class wage in many countries. Entrepreneurs, even ones bootstrapping with little resources, will do well to start learning how to maximize their time and offload administrative tasks to other people that have a comparative advantage.

What else? What are your experiences using offshore labor for administrative tasks?

The Power of APIs

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Applications Programming Interfaces, or APIs, enable applications to talk to other applications in an automated and structured fashion. They are powerful. Extremely powerful. Thinking through the advent of technological development we’re now entering a phase where robust, generally available APIs allow for significant new opportunities. It is much easier to mash up disparate data sources to provide new products that deliver results better, faster, and cheaper.

In the same way cloud computing has changed the equation for scaling web apps, APIs are changing the speed with which apps can be developed. There are off-the-shelf APIs for a number of things like sending emails, looking up WHOIS info, connecting to Google AdWords, connecting to Amazon Web Services (that’s right – use APIs to scale up or down your cloud computing tools), validating a postal address, processing a credit card, finding your friends on Facebook, and many more. What we’re seeing is a proliferation of specialized services that interact with existing apps or provide niche data and tools.

Traditionally, a developer would have to build something internally, most often coupled in a monolithic fashion, and then maintain it over time. Now, with APIs, specialists can do what they do best and other apps can focus on adding value as opposed to writing more code for something that is now readily available. APIs are extremely powerful and need to be understood by tech entrepreneurs.

What else? What are some other powerful aspects of APIs?