It’s been a while since I’ve written any book reviews, though I’ve still been reading at a normal pace. My time has been taken up on a few interesting personal projects. Anyway, I thought I’d do a quick rundown of what I’ve read and whether it’s worth a look. In the unlikely event that anyone wants a longer review, just let me know.

General Business Topics

• How to Build a Business and Sell it for Millions by Jack Garson.  A manual on the process of selling a successful business. It starts from the premise that you need to be aware up front that selling the business is an option so that when the time comes it’s set up to be convenient. Recommended. (A signed copy of this was kindly given to me by Giang Biscan).
• Escape from Cubicle Nation by Pamela Slim. Do you want to be an entrepreneur, and if so how do you go about it? It’s a good book, but I don’t think I’m the target audience.
• The Little Big Things – 163 Ways to Pursue Excellence by Tom Peters.  This is sort of a stream-of-consciousness collection of thoughts on corporate excellence. I didn’t like this much, it felt unstructured and sort of thrown together and it bored the pants off me. YMMV
• Founders at Work by Jessica Livingston. Fantastic read. Livingston interviews successful startup founders about the chaotic days of company building. Real in-the-dirt war stories from the dot com days, really enjoyable and inspiring.

Creativity

• Made to Stick by Chip Heath and Dan Heath. This is one of the most enjoyable books I’ve read in a while. This is very relevant for anyone selling a technology product, as it digs into how to bridge the gap between all the information you know about your product (The ‘curse of knowledge’) and what your customers need is. Highly recommended.
• A Technique for Producing Ideas by James Webb Young. This is a manual on how to train your mind to be more creative. I’m not sure why I read this one, as I already have more ideas than time to do anything with them. It’s short, pretty common sense (to me maybe), but enjoyable.
• It’s Not How Good You Are, It’s How Good You Want To Be by Paul Arden. A guide to making the best of yourself by an award winning creative. Contrarian advice with a useful message.
• All Marketers are Liars by Seth Godin. A book on framing your story for the audience you’re trying to reach, and telling authentic stories that resonate. Maybe I’ve read too many of Seth’s books at this stage, but this just felt like ‘more of the same’. A good read if you haven’t read some of his other stuff.

Design

• Cadence & Slang by Nick Disabato. A fantastic book spawned from a kickstarter project. This covers the gamut of product design, usability, and technology in one really nice looking book. Concepts that mildly annoyed me were the occasionally proscriptive tone ‘A product should…‘, and some minor philosophical ideas which go against the Lean Startup philosophy which I’m fond of. Very comprehensive, beautifully designed book covering a huge breadth of topics really well.
• Designing for the Social Web by Joshua Porter. How to create technology that is intrinsically social by figuring out the interactions of the users and their needs at the outset, and keep users coming back. Really digs into the specifics of social oriented technology design very well. Ten demerits for a totally out-of-place chapter on “Authentic Conversations”. Puh-leaase.

As a break from the usual business books, I also read “The Fountainhead” by Ayn Rand to see what all the fuss is about. The Fountainhead has more straw men than an archery contest, but the underlying message is an interesting take on ignoring the status quo and creating something of value for the sake of creation alone. Great arguments against design-by-committee, and contrarian attitudes in general. The book doesn’t quite explain the difference between a creative loner genius who the world doesn’t have the intelligence to recognize and the loner nutcase who’s just deluding himself, but maybe they’re different sides of the same coin seen from different perspectives.

Most interesting point that I took from the Fountainhead is that people will happily sink into whatever tripe that society throws at them. Rand describes the sort of moronic time-wasting that people spend their time on in the 1930s, and it’s no different to today judging by the amount of X-factor and “the apprentice” tweets offending my eyes every week. Bitter rant aside – go read some books. I’m going back to writing code.

Having created and subsequently sold the ad network LinkExchange for some $275 million dollars before the dot com crash, you might think that Tony Hsieh would have been happy. A stable job at Oracle bored him, and after a abortive attempt at a web design business he created a simple ad network. Being in control of his own destiny kept him amused until the company grew into a place that no longer attracted the sort of people he wanted to work with. Soon, he was just as bored with LinkExchange as he was at his job in Oracle. “Delivering Happiness” is the condensed version of what he learned in starting Zappos – a company he swore wouldn’t attract people who were just there for the paycheck.

Overview

The early parts of the book are more of a personal memoir, and it’s clear from the onset that Hsieh has the entrepreneurial bug from the get go. He had various schemes to make money throughout his childhood, and several more for avoiding work. He’s got an relaxed writing style that feels more like an informal chat with a friend than anything else.

Zappos

Zappos seemed to happen by fortunate coincidence – Tony had set up an incubator fund after his sale of LinkExchange, and invested in Zappos. After some months, Zappos were running out of cash and with the dot com explosion destroying capital markets it didn’t look like they were going to raise any more money soon. Tony made the decision to invest, and then invest again, and then sold assets to keep the company going – the passion and experience of the founders was contagious and soon he stepped in as CEO.

Culture

If anything, the book is about Zappo’s famed culture. The culture of a company stems from the CEO – If the CEO wants great customer service and happy employees above all else you get Zappos. If the CEO wants profits above all else, customers get treated like cattle a la Ryanair. ‘Drinking the Koolaid’ is so important in Zappos that they regularly turn away highly technical candidates that could help their business simply due to misfit. Arrogant or egocentric employees don’t fit in with their team culture – they’re trying to create more of a family than just a business.  The driving force is to deliver amazing customer service – Zappos offers free shipping both ways, 365-day return policies, and regularly upgrades customer’s shipping to overnight shipping just to deliver that “wow” factor.

Summary

The book spends a lot of time explaining Zappo’s core cultural tenets, and explains their infamous rule to award any employee $2,000 if they want to leave. There’s also an interesting reworking of Maslow’s hierarchy of needs in terms of career happiness. Is the information applicable to other companies? I think so. A lot of reasoning is given to the question of why they picked the specific cultural ‘rules’; each of them has good grounding in motivational psychology. This book is worth a read, if even to get an insight to what can be done when a company doesn’t have squeezing every drop of profit out of it’s customers as it’s main motivation.

You can read more about the book at the website here.

FCA nonsense: I received an advanced copy of this book, the review above is my honest opinion. I would have bought a copy anyway.

Giang Biscan very kindly sent me a signed copy of Fascinate by Sally Hogshead, and in return I’ve done a guest post review of the book on her blog over at http://www.asable.com.

Giang’s site is worth checking out – In addition to producing the podcasts of Andrew Warner’s interviews on Mixergy.com, Giang also interviews entrepreneurs herself. Not only that, she also organizes startup conferences and meetups in the LA area. She’s got a great perspective on entrepreneurship which I find inspiring. Give it a look!

You can read my review of ‘Fascinate’ by Sally Hogshead on Giang’s blog here.

Nassim Nicholas Taleb’s (@nntaleb) 2007 bestseller details how popular statistical and economic theories expose us to large amounts of risk while never even acknowledging that they exist. Taleb argues that a combination of evolutionary human nature, academic theory that should not be applied in ‘the real world’, and post-event storytelling deludes us into believing that we have predictive ability over ‘black swan’ events.

Mediocristan

The author asserts that certain qualities of the world we live in exist in a domain that can be mostly measured by the standard bell curve of Gaussian statistics, a domain he calls Mediocristan. A quality such as the height or weight of people exists in Mediocristan, and is represented well on the bell-curve (You’re not likely to see someone 15ft tall, or 2 inches tall for example). In Mediocristan, you can observe things for a while and then make generalizations about how the system works, and the more data you receive the more accurate your predictions will become.

Extremistan

Extremistan is another matter entirely. In Extremistan, things are dominated by one or two very large outliers – take the example of the number of books sold by an author; One JK Rowling or Dan Brown completely overshadows the sales of just about every other author producing literature. Bill Gates’ fortune can barely be compared to the earnings of most entrepreneurs. Where problems arise is that conventional experts attempt to apply Mediocristan’s models to an area where it is not only completely unsuitable, but actively dangerous as it leads to a false sense of security. In Mediocristan, the systems are so complex, intertwined, and dependent on pure chance that predictions are impossible.

The Nature of Humans

While I can’t even touch on all of the great ideas in this book, the sociological implications of his theories are very interesting. While it might be obvious to some that we lie to ourselves in some way or another throughout our lives, the author categorizes the mechanisms we use in interesting ways:

• Narrative Fallacy – Explaining an extreme event after it’s happened in a way that makes it appear obvious. “Of course the Irish housing bubble was going to crash, here are all the reasons…“. This rationalization after the fact hides the obvious truth that at the time, nobody believed that anything extreme was happening.
• Luddic Fallacy – Academic theories of economics, game theory, and general psychology are often based on the premise of the “rational actor” or “market forces” – that somehow people or systems will come to a balanced path based on perfect information. The author argues that these theoretical models are entirely useless in the uncertainty of the real world.
• Confirmation Bias – It is human nature to try to find evidence that confirms our stories, to take past instances that corroborate our theories and treat them as evidence. The problem is, it’s pretty easy to find evidence that will confirm just about any theory. The author suggests that ‘negative empiricism’ – looking for conflicting evidence that disproves a theory is more useful. I found this particularly useful in the context of Customer Development and Lean Startups – Don’t just go out looking to prove your assumptions, look for the instances where your assumption fails and rethink it.

I’m sure I’ve been guilty of these logical traps in the past, and it’s interesting to try and catch yourself in the act.

Benefiting from Black Swans

Taleb gives an insight into his investment style which he believes will give positive exposure to Black Swans – Keeping a high percentage of ones wealth in safe investments such as Treasury Bonds, and a small (10 – 15%) percentage in risky investments such as venture capital and equity investments in startups. A portion of startups will fail, a portion will break even, but there may be that one eBay or Google in the mix that results in a huge multiplicative return on your money. A very interesting theory and one I’m already practicing. I love when someone far smarter than I tells me I’m doing something right almost as often as when they tell me I’m wrong.

Writing Style

Taleb’s argument style is highly confrontational – he has no problems calling Nobel prize winners or captains of industry morons. This makes for a really enjoyable read! He believes what he’s writing is true, and holds little respect for people clinging unwaveringly to their sacred cows. His assertion that in certain fields (economics, politics, psychology) there are no experts, only opinions rang very true for me.  His ideas resonate with my own beliefs that for all the learning and theory and rationalization, a lot of the time success is going to come via keeping yourself open to the chance encounters of pure dumb luck. This was probably one of my favorite books I’ve read this year, and I think I’m going to give it another read in a few months.

After seeing Randy’s excellent conversation with Eric Ries (@ericries) at the Startup Lessons Learned Conference, I felt compelled to pick up Randy Komisar and John Mullins’ “Getting to Plan B“. Randy delivered a very succinct and informal series of advice based around why the initial assumptions about a business model will oftentimes not be the path that leads a company to success. Fitting in very nicely with the Lean Startup philosophy he went on to describe his methods to enable a company to test and measure these assumptions and pivot to a new model if necessary. ‘Getting to Plan B‘ is the basis for his chat with Eric, and the expanded thesis on these ideas.

Analogs, Antilogs, and Leaps of Faith

The authors set the stage by describing a few companies that found success after discarding their initial model (yes, the ubiquitous PayPal example is used…). The authors describe taking inspiration from analog companies or models that you want to learn from, avoiding antilog companies that you want to avoid mimicking, and clearly stating the leaps of faith that you need in your business model – e.g. Sony’s leap of faith for the Walkman was that people wouldn’t think that walking around a crowded street with headphones in was antisocial.

Dashboarding

The guideline for success they define is the dashboard – A series of measurements that test the leaps of faith the model is based on. Whether it’s the amount of revenue coming in, the number of users signing up for your software, or some other metric specific to your business it’s imperative to understand when success is happening – or more importantly, when it’s not happening. Poor dashboard results may indicate a need for the plan B.

Business Models Examined

The next few chapters in the book have a lot in common with Ram Charan’s ‘What the CEO wants you to know‘. The authors define the essential building blocks of a business model, and offer case studies of how companies have used these elements to drive success. Specifically:

• Revenue Model - Who is going to buy from you and what will they buy? What pain points are you resolving for the customer or what delights are you providing? How frequently will they buy from you? What price are they prepared to pay and how much effort will it take to win them?
• Gross Margin Model - At it’s simplest, how much more will the customer pay you than what the service or goods cost to provide?
• Operating Model - What costs will you incur, and how can you tweak the cost base and margin to give you a competitive advantage?
• Working Capital Model - How can you tweak your revenue and cost base to insure that you always have enough cash on hand to invest in company growth? Can you get better terms from suppliers, or get customers to pay up front?
• Investment Model - How much money do you need to start? Can you grow organically by bootstrapping or do you need a large capital investment up front? If you need to switch to a plan B (or C,D,E) will there be enough money to fund the change in direction?

Summary

Some of the theory in ‘Getting to Plan B‘ can be a little dry, but the case studies really brings it to life. It’s unfortunate that Randy’s session from the Startup Lessons Learned conference is not available in video (as far as I can find) as it offered a great run through of the concepts. Overall, I’d recommended it as a good fundamental breakdown of business models elements,  tips on tweaking, and excellent case studies. This book and Alexander Osterwalder’s ‘Business Model Generation‘ complement each other well.

The Four Steps to the Epiphany was a real eye opener for me. I’d worked in a succession of companies that had worked hard to produce vast amounts of code before realizing that there was no market for what they’d made. If there had been more validation on what their users actually wanted and more thought put into what market they were really aiming for they would have saved a hell of a lot of time, money, and heartbreak. At the core of the Four Steps was the message that “Engineers build the product right, but what you need to do is build the right product”.

So then what? Steve Blank’s Four steps explained the landscape of what needs to be done, but questions remain – where do I start and what do I do first?

A ‘Cheat-Sheet’ for Customer Development

I first heard of Brant Cooper (@brantcooper) and Patrick Vlaskovits’ (@vlaskovits) project on the Lean Startup Circle google group where they were looking for volunteers to “custdev” their Customer development book.  They gave me a few sample chapters that they were working on to get a feel for the direction they were headed in, and I was honestly blown away. Where the Four Steps builds up the general concepts of customer development, this book is the step-by-step instruction manual.

What’s in it?

The ebook gives you a brief recap on Customer Development – What it is and why you should care. Then it takes you through a practical series of steps to try to refine exactly what your market and business model will be, and how to get the ball rolling. There are:

• Exercises to help you decide what part of a market you should aim for
• Practical suggestions on where to find the sort of prospective customers that might buy your product
• Email and phone call scripts so you can get in touch with them
• Guides to setting your hypotheses, and concrete ways to test that you’re heading in the right direction to validate them

There’s a huge amount of very practical, actionable information in this book, it’s essential reading for anyone starting a business.  This book will prevent you from wasting time and money on things that nobody wants to buy.

Behind the Cloud is the tale of how Marc Benioff’s Salesforce introduced the Software-as-a-service model after the dot com crash. Part story and part playbook, he recounts the basic ideas and strategies that enabled him to create and legitimize and entirely new market for software applications.

Starting from his initial ideas behind a multi-tenant Software-as-a-Service Customer Relationship Management software, he talks through how he vetted the idea with friends, got customer feedback, and began promoting the company.

Chapters

The book is divided into specific sections, with specific sub-topics of interest in each.

1. Startup: Taking an idea from initial inspiration through to take-off
2. Marketing: Creating a clear voice and personality for the company and positioning against competitors
3. Events: Benioff used a series of spectacular events and renegade tactics to hijack his competitor’s events
4. Sales: A breakdown of various sales channels and tactics, and how to keep existing customers buying more product.
5. Technology: How to create things that your customers really love
6. Corporate Philanthropy: Maybe not for everyone, but Salesforce has a charitable mission at it’s core where it donates a percentage of profits and employee time to philanthropic organizations.
7. Global Markets: How to scale a great business idea beyond your locality
8. Finance: Raising capital and making sure everyone gets a return without compromising integrity
9. Leadership: A management playbook for a successful company – How to create processes to manage and monitor a scaled, post product/market fit company.

Overall it was enjoyable, it reads like Salesforce happened to be in the right place at the right time with the right people, but it’s interesting to see a company that started from an idea, found their product-market fit, and then scaled successfully without losing the founder at the helm.

Inside the Tornado is a follow up to Geoffrey Moore’s best seller “Crossing the Chasm“. Where Crossing the Chasm described the general layout of market adoption and looked at a few case studies of companies that had successfully gained mainstream acceptance, Inside the Tornado lays out a very specific set of concepts to help a company get there and further describes what generally happens once a market becomes validated.  The advice seems mainly focused at Enterprise level software, but it’s also at least partly applicable to the consumer web.

Innovative Markets

The problem with breakthrough technological innovations that create a new market is that the market doesn’t really exist if you’re the only one in there. Without competitors you’re just a weird little company doing something a little crazy. Then you have the problem of what happens when competitors enter the space and validate that the market actually exists – The market begins to enter a hypergrowth stage and the focus of your business becomes a land grab for market share.

Bowling Alley

Moore describes the initial strategy for creating a market such as this as the “bowling alley”. A company needs to focus on attracting and dominating several specific niches in order to get their technology adopted as the market standard. Once enough of these ‘bowling pins’ are collected, the goal is to fuse these niches together so that suddenly your disjointed little product is a ‘whole product’ solution that can satisfy really big clients.

The Tornado

Once the market has been validated and success stories start to trickle out of the early adopters, you garner the attention of the pragmatist buyer. The thing about pragmatists is that they only want a new solution if everyone else is going to buy it, which leads to a sort of stampede of pragmatist buyers trying to get their hands on this great new technology. This is where the land grab kicks in and companies can spend a significant amount of money trying to get the lion’s share of the market. Once this land grab finishes, the market will stabilize leaving:

• The Gorilla – Market leader. They get to set the bar and the market ‘reference price’.
• The Chimps – Companies that at one point could have been the Gorilla, but lost out.
• The Monkeys – A selection of companies catering to the edge cases that aren’t covered by the market leaders. This can be a specific smaller set of features that the gorilla can’t get a good return on investment on, a lower price point that services a smaller sub-market, or a niche that the gorilla can’t profit from.

These market definitions can change if a new disruptive technology makes it possible to resegment the market, and former gorillas can suddenly become antiquated if they don’t keep an eye on things.

Main street

Main street occurs when the tornado’s land grab dies down. Suddenly the sales funnel is a little emptier and the companies are finding more resistance on price points because simply put, the technology has become a commodity. At this stage, operational excellence drives the ability of a company to profit – process and cost cutting ensure the success.

Summary

Very interesting theories on highly competitive markets, and some interesting inside stories from the pre-dot com days. I enjoyed it.

Tribal Leadership is a guide to using natural groups within an organization to create more effective leadership. This concept in this book is slightly different to that of Seth Godin’s “Tribes”, but is an effective complement with a similar core message – an effective organization needs happy people all working towards a focused goal. Seth  mentioned Tribal Leadership in Tribes, and I happened to stumble upon it in a discount book store.

The authors gauge organizations into five tribal stages, starting from misanthropic groups of “Stage One” tribes, through to the sort of altruistic “Stage Five” tribes which the authors describe as “pure leadership, vision, and inspiration”. Interestingly, this isn’t some sort of self-help checklist you’re supposed to follow to reach enlightenment but a way to recognize the motivations and concerns of the tribes at various levels of a company.

The book emphasizes that for an organization’s workers to be truly motivated, the organization has to be driven by a noble cause. “Core Values” is not just some Dilbert-esque item to be checked off for a company to be complete – There has to be an actual reason for the people you work with to want to continue doing what they do. As the organization grows and creates tribal leaders at the stage four and five levels, they create what the authors describe as “triads”.

Triads

The concept of the ‘Triad’ will be familiar to anyone who’s read Keith Ferrazzi’s ‘Never Eat Alone’. The Triad is an influential person creating a relationship between two people they know, and then politely moving on. The distinction is that this creation holds no immediate benefit for the person making the introduction and indicates that tribes within the company are moving beyond the individualistic culture of “I’m great” of stage three type tribes towards the “we’re great” atmosphere of stage four and five.

Summary

I’d recommend this book as a separate viewpoint from Seth Godin’s work on the power of tribes. The motivation is more of an internal analysis of an organization than a rabble-rousing call to escape corporate life. The book has several interesting case studies of people and organizations at various developmental stages, and insightful commentary on how to influence tribal direction. Particularly amusing is an interview with Gary Cole, the actor who plays boss-from-hell Bill Lumbergh in the movie “Office Space”. If you were going to pick between this and “Tribes”, I’d say I enjoyed ‘Tribes” more – but got a lot out of both.

I’ve been eagerly awaiting the arrival of “Rework” since I preordered it back in January. I’m a big fan of 37signal’s work, their blog, and loved David Heinemeier Hansson’s talk at FOWA Dublin in ‘09. I’m not a huge fan of “Rework”.

Testimonials

Before getting to the actual content of the book, the reader will be confronted by some of the most overly-enthusiastic praise from recognized industry figures that I can ever recall seeing in a publication. This almost stopped me from buying the book in the first place. Mark Cuban is someone I’d gladly sacrifice a major appendage to work for, but check out this effusive gibberish:

If given a choice between investing in someone who has read Rework or has an MBA, I’m investing in Rework every time… a must-read.

Or this mental breakdown from Tom Peters:

The clarity, even genius, of this book actually brought me to near tears on several occasions. Just bloody brilliant, that’s what.

Content

37signals typically write in a blunt, straight-shooting style, and they pull no punches in “Rework”. Don’t get me wrong – there are a few gems, but also several essays which really don’t make any logical sense. One or two of the essays remind me of “The Sphinx” from the movie “Mystery Men” – amusing upon first read, but logically empty. In particular, the introduction sets up some weak straw-man arguments about what ‘conventional critics’ say is not possible that comes across sounding like teenage rebellion.

“Getting Real” was a breath of fresh air in an industry that seemed to have learned little from the Dot Com crash. It was absolutely original and controversial when released, and inspired people around the world. At least part of the reason for the success of “Getting Real” was it’s contrarian stance on what was then normal industry practice – their advice to do less, avoid feature bloat, have passion for what you do, and their simple functional design theories were revolutionary.

The problems with success

It may be that they’ve actually been too successful at promoting their philosophy because for the most part “rework” doesn’t feel like it’s saying anything very unconventional. Here’s an (admittedly out of context) quote from the book that I found ironic:

When you’re a success, the pressure to maintain predictability and consistency builds. You get more conservative. It’s harder to take risks. That’s when things start to fossilize and change becomes difficult.

If you’ve been following resources like Andrew Warner’s interviews with entrepreneurs, or the surge of interest in concepts like the Lean Startups philosophy, a lot of the advice in this book just feels like common sense. Maybe I’m just not in the target demographic? It is to 37signals’ credit that they have inspired so many with their work and there is a lot of good advice for those who are not familiar with what they’ve already done, but some of “Rework” just doesn’t hold up to the light. It’s Seth Godin’s easy conversational writing style but missing some essential nugget of truth.

To make sure I’m not just whinging in this post I’ll clarify that there are the occasional diamonds in the rough. I particularly enjoyed:

• Meetings are toxic – Good advice on how to run a meeting if it’s really necessary
• Let your customer outgrow you - Don’t pander to every change request
• Scratch your own itch – Solve one of your own problems and you’ll find a market
• The myth of the overnight sensation – The only path to success is hard work
• Marketing is not a department - Everyone is responsible for the public face of your company

Buy it?

My critical process for reading any article, blog post, or book is to ignore who the author is and concentrate on the actual content. In this instance I wasn’t overly impressed.  Let’s be honest though – this book is going to be a resounding success whether I praise it or slate it. 37signals have a very large audience among whom they’ve reached a certain level of rockstar infamy. If I can riff on this tenuous rockstar analogy – “Getting Real” is to the Red Hot Chili Peppers’ “Blood Sugar Sex Magik” as “Rework” is to whatever that last album was called.

With all the points above in mind, there is still enough good advice in this book that I would recommend getting a copy if you haven’t already read “Getting Real”, and don’t subscribe to their blog.  There are four of the better essays from the book on Tim Ferriss’s blog if you want a sampler to make up your mind.