Dave Concannon

From an interesting question on Quora -

“Why is Vodka so expensive?”

Because it is sold in expensive bottles.  The “juice” in a bottle typically costs less than $.10 to make.  The vast majority of vodkas in the US get their liquid from a few contract producers like ADM

Interpolate this into your average tech startup – The ‘value add’ for the majority of startups isn’t in using Ruby on Rails, or Cloud Storage, or a no-SQL database. It’s not in using the latest Agile techniques, or the best continuous deployment system (though all of these things help).  It’s how you make your users feel – Design, User Experience, and that disgusting practice that techies love to hate -  Marketing. Technology is a commodity*.

* There is still room for the disruptive technology innovations of your Google, but how many of those come along?

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.

Facebook announced their impending internet domination today at the F8 conference. One interesting thing is the ability to add a facebook “like” button to any page on the internet:

This simple bit of social proofing immediately adds credibility to a page in the eyes of a user – Hey! My friends like this, it must be worth a read.  That said, they’ve done a lot more. Their graphing API aims to link every piece of information that a user creates online back to their profile. This could get interesting.

Facebook Like Button API

The API docs for facebook’s ‘like’ button are straightforward  – to use the iFrame version is just a copy and paste, whereas the javascript SDK is a bit more bothersome.

Predictions:

1. The ‘Like’ button being absolutely everywhere by the end of the week
2. Shoddy marketers creating static images of the like button icon at the top of their pages.
3. Someone figuring out how to game the figures or creating a fake version by legitimately using the user’s friend data to create a spoof ‘like’ button.

After some initial messing my biggest problem is that the button itself seems to take up a lot of space with the default settings. I’m sure the CSS-savvy can style it to their heart’s content.

I’ve been posting excerpts from any interesting links I’ve come across up at my posterous blog for the last month or so. This is mainly due to the fact that the previous system I was using has decided to no longer work after a wordpress upgrade (Wordpress strips all markup characters) and I’m too busy at the moment to dig through the unholy mess that is wordpress to fix it.

Posterous is a pretty nice system for quickly putting together a simple blog. You can create a post by sending an email, and if you link to a flickr page It’ll automatically pull out the image. Likewise with youtube videos and a dozen other services.

Here’s a rundown of some of the more interesting links from the last month:

• The 100 Lamest excuses for not innovating

A self-help checklist. If you’re making any of these excuses, then you’re at risk of being left behind. Don’t be left making buggy whips when your competitors are out making cars!

• PR for startups

This is an interesting perspective. While in college I would have had nothing but contempt for PR and Marketing, which I thought of as just adding noise to a perfect process. Somehow, I reasoned, if the product was good enough people would just start flocking to it. Not so unfortunately. This is a great guide to what value PR and marketing provide to a product.

• How a well-designed “Thank you” can keep your community active

A great article from Carsonified about using a cleverly designed “Thank you” process to add a more human touch to your business that makes them want to engage more. Carsonified have a very polished design process which stands out as original and eye-catching yet very human.

• Marc Andreessen at Startup School ‘08

A few years old, but definitely worth another watch if you’ve already seen it. Andreessen is busy changing the world with his VC fund at the moment, but as one of the few people to have created not one, but two billion-dollar companies from scratch he’s someone who you want to listen to.

• If your product is great, it doesn’t need to be good

Fantastic article by Paul Buchheit on product focus. The message is simple – Pick two or three key things that will create a competitive advantage and do them really really well. Trying to implement every idea under the sun leads to mediocrity initially, and failure in the long run.

Following on from my previous post about Salesforce Chatter pushing Social Media across the chasm, here’s a very insightful opinion piece on why ExactTarget’s acquisition of CoTweet will legitimize social media as a mainstream marketing technology. More and more enterprise software companies are accepting social software as a business tool – it’s no longer just an experimental playground for web developers.

Link: Objective Marketer on Integrated Social Media

Access to technology has become easier than ever. Technology concepts that once had a high barrier to entry to the uninitiated have converged into frameworks, APIs, and libraries which give even relatively unskilled programmers the ability to create web software easily. Cloud infrastructures can alleviate a large part of the cost and complexity of scaling and availability under high traffic demands.

The abstraction doesn’t even stop at the basic technology; at one level above this, some of the fundamental use cases in web software can be delegated to high availability services e.g. Twitter or Facebook Connect for primary user login and profile management or Yahoo Pipes to translate and combine different data sources into a format you require without having to write a line of code. Reusing the essential use cases of software was an original vision in a startup I worked for nearly ten years go, and at the time it seemed a distant and indistinct goal. Today, loosely-coupled Service-Oriented Architectures allows business the freedom to focus on the core business problems.

Dot Com Lessons

The dot com bubble exploded around the concept of the “first mover advantage” whereby companies had to be the first brand in the consumer’s mind regardless of the cost to get there or the value of the underlying business proposition. Huge amounts of capital were burned trying to build the sort of basic infrastructure that is now available for free or at a fraction of the cost. The web 2.0 era has been both caused and inspired by a massive innovation in technology used on the web; at first revolutionary but now almost fundamental to how some users experience the web. The battles between innovative frameworks and libraries that do similar things eventually leads to a de facto standard. In some languages and problem domains, more and more developer time is spent simply connecting different technologies together (slide #93).

I’m not claiming that technology has hit a dead end – that is clearly not the case. Engineering innovation will always be a core requirement for certain types of business, the point is that the barriers to technology implementation that a business faced even five years ago made it a very difficult and costly problem. This is no longer the case.

This Decade’s Focus

So where is value added? I believe that this decade will fundamentally be based around a businesses attitude to design. When all product or software businesses can assemble the same basic set of underlying features that solve a customer’s problem for little to no cost, remarkable design and marketing is the differentiation. You cannot outsource creativity.

Design

Graphic work can be turned into a commodity on crowd-sourced forums such as 99designs, but as Eoghan McCabe points out design is something very different. Apple excel at distilling consumer trends into a product vision that they conjure remarkable designs around and whip up a frenzy of demand for. Mint took the basic problem of not knowing the best prices on essential banking and utility services and wrapped it into a clean interface that requires next to no user interaction to save money. In both these cases the value add is from a beautiful design that wraps pretty basic features in a creative way.

Flexible Business Models

Innovation will also come from business model design – using concepts from Lean Startups and Business Design Innovation to rapidly react to market forces and pivot. As technology can be built with less inertia, and more about your user’s interaction with your product can be measured and analyzed than ever before, changing direction is arguably less painful now then it has been at any point in history.

So, what do you think? Has technology been commoditized to the point at which it’s almost no longer a concern for a lot of businesses? Is design (of product and business model) the new king?  What is the must-have skillset for a programmer in an era where technology is no longer the be-all and end-all?

The types of sites I read have slowly migrated away from pure technical sites talking about monkeying around with with code towards sites discussing business, customer development, marketing, and general startup concepts. Here’s a list of my favorite authors, blogs, podcasts, and forums dealing with these topics. Who else should I be listening to? Let me know in the comments.

Update: All the best Lean Startup and Customer Development resources in one place: http://www.leanstartupfeed.com/

Customer Development and Lean Startups

Steve Blank

Steve Blank is a successful startup veteran and MBA lecturer in the Haas School of business at UC Berkeley. He took the lessons he learned in successfully marketing his startups to develop the concept of Customer Development in the must read book “The Four Steps to the Epiphany“. Seriously, if you’re working in a startup – you need to read this book.

http://steveblank.com/

Eric Ries

Eric Ries developed the Lean Startup methodology by combining concepts from the Toyota Production System (Lean Manufacturing), Agile Software Development, the OODA loop, and Steve Blank’s Customer Development model. The combination of these ideas results in a low-cost startup that is critically focused on rapidly producing a product which satisfies customer needs. There are some fantastic concepts in his writing which will inspire (Minimum Viable Product) and possibly scare the crap out of you (Continuous deployment for example).

http://www.startuplessonslearned.com/

Dave McClure

Dave McClure is a successful entrepreneur and angel investor. Dave mainly writes about using startup metrics to drive success. His “Startup Metrics for Pirates” presentation describes essential metrics any web application needs to measure to turn first-time users into obsessed fans. His refreshingly informal writing style pulls no punches, and his violent use of text color will make your eyes bleed. (The reason I have pictures next to each of these authors is mainly due to this loud advice. He’s right.).

http://500hats.typepad.com/

Individual Article of Merit:

This epic saga by Recess Mobile tries to map out the entire landscape of Customer Development and Lean Startups. I can only imagine how long it took them to write this one.

Startup Marketing

Sean Ellis

Sean is a seasoned startup marketer having led several companies through to IPO. He writes about Customer Development, PR, and startup marketing.  As a quick taster, check out his Venture Hacks interviews on bringing a product to market – Part One on what to do before Product/Market Fit & Part Two on what to do after Product/Market fit.

http://startup-marketing.com/

Brant Cooper

Brant is another very experienced startup marketer who is developing a series of tools and models based around the Customer Development methodology. He recently conducted a survey into the current Customer Development landscape which can be found here: Customer Development Survey. Most recently he put together a simple model which ties Customer Development, the standard sales funnel, and Dave McClure’s AARRR metrics into one cohesive whole [Available Here]. Highly recommended.

Together with Patrick Vlaskovits (@vlaskovits), he wrote the excellent “Entrepreneur’s Guide to Customer Development“, which I reviewed and would recommend highly.

http://market-by-numbers.com/

Venture Capital and Entrepreneurship

Fred Wilson

Fred is a VC at Union Square Ventures based in New York, which funds companies such as FourSquare, Boxee, and Etsy. His blog covers a wide variety of topics in the area of entrepreneurship and business strategy, and also a little bit of venture capital concepts. He provides a very interesting critical eye on technology industry news.

http://www.avc.com/

Mark Suster

Mark is a successful British entrepreneur who has “gone over to the dark side” to become a VC. He covers the gamut of entrepreneurial topics from raising startup capital, marketing, right down to the definition of  “Entrepreneurial DNA“. His fantastic interview on Mixergy was quite probably the most inspiring thing I listened to last year.

http://www.bothsidesofthetable.com/

Nivi & Naval (Venture Hacks)

Nivi and Naval have founded successful companies, and invested heavily in startups like twitter. They  cover a full range of startup essentials from securing funding from angel investors, how to choose company advisors, the psychology of a board of directors, and a fantastic selection of case studies on all of the above and more.

http://venturehacks.com/

Business Model Hacking

Alexander Osterwalder

Alexander’s blog centers around the Business Model Canvas methodology which involves analyzing business models, pulling them apart into their constituent parts and then reassembling them in interesting ways. Lego for business if you will. He uses an interesting tool sheet to aid this, which I think meshes perfectly into the lean startup concept of ‘pivoting’.

http://www.businessmodelalchemist.com/

Podcasts, Interviews, and Videos

Andrew Warner – Mixergy

Andrew Warner co-founded an internet business with his brother which went on to generate over thirty million dollars a year in sales. With Mixergy, Andrew has conducted some of the most inspiring and amazing interviews with entrepreneurs you’re likely to find. He conducts frank and probing interviews that dig deep into the mindset of his interviewees – people who have either taken their business to dizzying heights, or failed spectacularly trying.  As well as my personal favourite interview with Mark Suster listed above, you should check out this interview with Ben Huh of “Failblog”, or this amusing interview with Neil Patel of KISSMetrics. This is quite simply an amazing resource.

http://www.mixergy.com

Jason Calacanis – This Week in STartups

Jason co-founded weblogs Inc which grew to be a huge network of niche content sites, and was eventually acquired by AOL for a giant bag of money. TWiST interviews a wide range of guests in the technology sphere, and intermittent shows where listeners can ask Jason for advice. Very entertaining and informative.

http://thisweekinstartups.com/

Bob Walsh -  Startup success podcast

Bob specializes in news and advice aimed at MicroISVs at his blog 47 Hats. As opposed to the more general entrepreneurship podcasts listed above, the Startup Success Podcast digs into the more specialized issues faced by independant software vendors.

http://startuppodcast.wordpress.com/

Forums

Lean Startups Circle

A Google group centered around advice for entrepreneurs running lean startups.

http://groups.google.com/group/lean-startup-circle

Business of Software Forum

Joel Spolsky’s forum covering a range of issues faced by developers trying to market software.

http://discuss.joelonsoftware.com/?biz

Hacker News

Everything under the sun relating to technology and entrepreneurship. User driven article voting, hosted by Paul Graham’s startup incubator Y Combinator.

http://news.ycombinator.com/

The Tuesday Push is a crowd-sourced approach to PR with a little word-of-mouth marketing thrown in. It gives Irish businesses a push on the web and occasionally a little advice.

Decisions for Heroes provides an interface for rescue teams to manage their teams, and measure all the details of a rescue operation – from the time it took to get to the victim, the injuries encountered, to the wind speed at the time of rescue.  This allows for detailed logging, measurement, and metrics which can be analysed to determine the effectiveness of their teams in precarious situations and lets them determine if they need more members with particular skills or training in a specific area. As it logs all the data it builds up a detailed picture of how the team operates, and can print immediate incident reports, making it very easy for teams to keep a paper trail.

I had heard of Decisions for Heroes before FOWA Dublin and thought it was quite a nice idea – but when Robin Blandford blew away the competition at the small business pitch session, then I really took notice. Robin’s years of experience as volunteer cliff rescuer has obviously opened his eyes to the potential for a team management application.

So, in terms of a business model – how does this stack up? Decisions for Heroes has a nice niche market for whom the product is definitely a “must have”. My only question (knowing little about rescue services) would be how large the potential English-speaking market is? I would think that there is certainly enough money to be made before the need to localise the application into another language presented itself, and in the meantime the product can quite easily be adjusted to suit similar niches or customised for very specific types of rescue or medical teams. The software-as-a-service model promises to deliver a recurring revenue stream which should have little churn providing there are no serious competitors in the market. This is as far away from “me-too! (dot-zero)” as you can get.

In terms of  marketing D4H hits the nail on the head with great used of AIDA and clearly answers the customer’s potential questions of:

• What is the product and what can it do for me? – Nicely explained with a video, a tour, and clear feature set descriptions. Additionally all application features are positioned as benefits to the customer, not just a list of things that the technology does.
• Why should I care? (‘Why are you credible?’) – The main page has several credibility indicators, namely the logos of several internationally recognised rescue services who have used the service and given testimonials.
• What do I do next? – The “Get Started” and “Take a Tour” buttons are repeated throughout the page, with notes directing attention to them. All in all a very compelling page designed to convert the user.

As might be expected from a company making software to analyse data, the analytics behind the scenes on the main page are impressive. Bytesurgery are not only measuring how often people visit the page, but how often they’re playing the intro video, when exactly they’re pausing or stopping the video, and if they’re watching it through to the end. I’m sure there are a dozen other events that they’re tracking so that they can tweak their main page to optimise conversion.

My only criticism that I can think of (and it’s a stretch) would be the quality and position of the video on the front page, at full-screen it’s very grainy and hard to see the product features and I’d also expect it to centre on the screen. Minor criticisms aside, I think this product has a huge amount of potential.

 

    With even the most limited of budgets a company can get themselves a presence on the internet, allowing their message and brand to permeate into the eyeballs of potential customers globally.  This is a huge opportunity to reach out to the world and champion your products or services  to people who may otherwise never have heard of you.  Planting a solitary flag into the moist soil of an undiscovered country could have been a fitting analogy ten or twelve years ago, but today the internet is like taking a seat in a massive sports stadium and expecting your voice to be heard above the clamouring masses. 

    If I take this analogy to the next step, let’s imagine that for a few minutes you are given the undivided attention of everyone else in the stadium – a sixty second chance to let everyone else know why what you do is better then anyone who does something similar.

    I can’t (and won’t) claim to be a copywriting expert, but I want to compare and contrast two websites. I’ve stumbled across these companies over the last week or so and there’s a sharp difference in how they present themselves. While they may be in different markets or targetting different business segments, they were both given the sixty second chance to attract my attention. One succeeded nicely, and one failed so miserably that I felt compelled to write this article.  Without naming names, here is a snippet of text from the main page of both.  Compare the robotic drone of this buzzword spaghetti:

 

 We enable you to leverage your existing customer, content and service assets to massively increase online adoption and monetisation, by leveraging the widespread adoption of widgets and Web 2.0.

 

To this simple, friendly, understandable text that I have copied verbatim:

 

$COMPANYNAME gathers all your valuable digital stuff — photos, documents, email, music, videos — from all your PCs and laptops.  It backs up everything, securely stores it, and organises it all so you can find or share your files from anywhere.

 

   If I try to translate the first quote I’m perhaps going to conclude that the company has something to do with widgets and want to leverage…  something. Maybe they make levers?  There are some guidelines that suggest that for maximum effect you should aim your web copy at an audience of 12 year olds, but while I have no intention of conforming to this,  clarity is always important.

     Marketing buzzwords exclude your audience, add very little in the way of value, and impress nobody but yourself.  Clearly these two example companies compete in different markets  (Business-to-business vs business-to-consumer),  but the difference in both clarity and the general impression of basic competence from the front pages of their website is remarkable.

 

(The astute reader will note that company B is putplace.com. I’m not affiliated to them in any way. They seem to have a nice product.)

In previous posts I’ve reviewed books on the mechanics of getting a business running smoothly and books on the general rules of positioning a product. This review covers a seminal classic for technology companies, a book which combines these two concepts into something suitably focused for the required audience – defining the landscape for technology marketing and the management flexibility required to turn a great high-tech idea into money in the bank.

Geoffrey Moore’s bestseller “Crossing the Chasm” defined ideas that are now ubiquitous in startups such the categorization of technology customers into five main groupings and “the elevator pitch”. I got a particular sense of deju vu from one of the early chapters which described the usual ascent of a startup; initial customer interest prompting raised morale and a few swanky meals out for the staff, followed by the realisation that these aren’t being followed by sustained sales, and finally leading to a further round of financing – with the caveat that that a few minor tweaks in the staff will be required. My own experience of this process left me jobless when three of the original seven staff of our dot com rollercoaster were made redundant. The ironic part of this trip down memory lane is that the management of this particular startup swore by Geoffrey Moore’s principles, yet they didn’t hear the train coming even with their ears pressed to the tracks. C’est la vie.

Past war wounds aside, Moore’s doesn’t write the most readable of books. The information delivered is essential, yet the manner in which it is presented is a quite drawn out and verbose. This is my second attempt at the book, and the first time I’ve managed to make it through to the other side. The humourous style of the initial chapers is pushed aside, and the introduction of large amounts of labels slows the pace. With that said, this isn’t a Mills and Boone romance novel – it is an essential treatise on technology marketing, and it is worth the effort.

The book builds on the Everett Rogers diffusion of innovations, describing the five main technology customers arranged into a neat bell curve. These are:

• Innovators/ Enthusiasts- Visionaries who “dig” technology, and are adventurous in seeking out new ideas.
• Early Adopters / Visionaries- Customers willing to accept a few bugs in order to shape a promising concept.
• Early Majority / Pragmatists - The bulk of a technology market, and where the chasm lies. These customers want a stable product that has an independant level of support; a very different proposition from the early adopters.
• Late Majority / Conservatives – This demographic will accept a product when everyone else has it, talk about your catch-22 situation.
• Laggards / Skeptics - Bringing up the rear are the laggards. These customers are the technology equivalent of Charlton Heston – you’ll replace their old technology when you “prise it from their cold, dead hands”.

The key focus is how to take a technology company from the early adopter stage to the early majority, and through to the late majority and it’s associated riches, glory, and infamy. This is where the “chasm” of the books title comes into play – the needs of these market segments are very different and the skills required to develop the markets are completely at odds with each other. The author argues that to make the transition between these markets the company must move from focusing on products to a market-centric view.

The main flaw with the book is the overly verbose presentation. If the ideas were presented in a sharp point format and then expanded upon, or summarised at the end of each chapter it would make for a more readable and easily referenced manual, rather then the slightly more academic feel that the current format has. While trying to review the main items in Moore’s work in my usual postmortem I scratched out the main points from memory, but was unable to find succinct definitions or supporting points that would provide a reliable reference once my memory fades. Regardless, this book defines the battlefield for any technology entrepreneur and merits its status as a bestseller.