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Archive for May, 2011

CIO’s: You’ve Got a Target On Your Back, Use It!

Posted by Bob Warfield on May 24, 2011

Bummer of a birthmarkThis week’s InfoBoom post is all about security and Sony’s recent epidemic of hacker attacks.  I can’t imagine any CIO watching the Sony/Hacker drama unfold wouldn’t be wondering whether it could happen to their organization. I was reminded of it again when I read this morning about “Another day, another attack on Sony.”

Clearly Sony had very much underestimated their risks, but isn’t it likely almost everyone has too? So far, Sony has estimated $171 million in costs relating to these attacks.  In this post, I look at whether a strategy similar to Netflix’s “Chaos Monkey” might help CIO’s feel a little more secure.

Check it out on InfoBoom.

Posted in business, cloud, data center, strategy | Leave a Comment »

Founders: The Bubble Clock is Ticking

Posted by Bob Warfield on May 23, 2011

Bullet piercing a bubbleThe incredible valuation of the LinkedIn IPO can only be interpreted as one signal:  the Bubble Clock has started ticking.  So long as it continues to run, we will live in a reality distortion where valuations are insanely high, capital is cheap, and smart businesses can leverage that to hyper growth.  When it stops, we’re back to “RIP: Good Times“.

What should responsible Founders do with their companies during this period before the sand in the hourglass runs out?

In The Art of Riding the Bubble, we considered the dynamic interplay between VC’s and Entrepreneurs when there is a Bubble.  For this essay, let’s focus on Founders who want to build their companies.

Just as we got a presentation from Sequoia discussing what to do in the wake of the crash, there should be a presentation about what to do when the starter shot for the Bubble is fired.  Bubbles have a very limited shelf life.  This one is no different, though one of the crucial signs we have a Bubble is that people will admit it exists and then work hard to convince you it’s different.  It’s not.  Bubbles only differ slightly in terms of whether they emphasize tulip bulbs, sock puppets selling pet food, or multi-billion dollar business card substitutes.  They differ slightly in terms of their timing, what starts them up, and what shuts them down.  All of that is minutiae to be analyzed after the rush has ended.

What we’re talking about here is a Valuation Bubble, where the sense of how to value a business has become highly skewed.  It doesn’t necessarily mean there isn’t a real business there, just that the business is fantastically more valuable than it will be before and after the Bubble.  It will seem as though the business has transcended the laws of physics.  You will hear that the business is based on fundamentally new forces and that the only way you can profit without being left behind is to jump into the fray.

Founders, forget all that psychology about the Bubble.  You only care about two things:

1. The Cost of Capital gets as close to zero as you are likely to see with this business.

2. The world is willing to go way beyond giving your business the benefit of a doubt if they become convinced it has the virtues driving the Bubble.

Your job, therefore, is clear:

First, you should accumulate as much capital as you possibly can–put more cash in the bank than you think you could ever use.  Put so much cash there that if you had to reinvent and restart the business three times over you could do so.  Easily.  Assume you are never going to see capital available so cheaply again.

Second, you need to leverage #2, where the world will believe in your business more than it ever could outside the business.  Leverage it by positioning your business so it has the virtues that drive the Bubble.  This Bubble is a Web 2.0 Bubble.  The last one was a Web 1.0 Bubble.  If you’re not a Web company, you’d better figure out how to become one.  Fast.  Otherwise, you’re sitting this Bubble out.

Third, having positioned your business and raised lots of cash, figure out how to convert that cash to scale as quickly and efficiently as possible.  Businesses that both have cheap capital and can spend it efficiently have a huge advantage over those that are clumsy with their capital.

The way you keep score is by either achieving a liquidity event for your business at a ridiculous valuation that benefits your shareholders, or by making your business so strong relative to the competition that it can keep growing and stay strong after the Bubble bursts.  The last Bubble killed a lot of companies, but out of those ashes we got companies like Google.  There are no other outcomes of consequence for you to seek.

Lastly, this is not a time for “business as usual”.  Business as usual will be easy.  It will be tempting to avoid risk, take the orders, and keep your head down.  If you take that course, you’re not leveraging the Bubble, you’re hiding from it.  You’re marginalizing your company’s shot at greatness.  There will not be another Bubble in time to help your company.  Don’t miss this opportunity.

Those are the high level nuts and bolts.  A word about some tactics:

The three elements work together.  The more your business is positioned with the virtues driving the Bubble, the more Capital you can get.  The more efficiently you can convert Capital to Scale, the more Capital you can get.  The more Capital you have, the easier it becomes to Scale and get unfair attention for the virtues of your Business.  We easily have time for a couple of cycles of this, meaning you need not raise all of your Bubble Capital in one shot.

Based on the reality of when the Bubble will likely end, Founders should draw their plans accordingly.  One way to do that is to plan an 18 month cycle that runs to 2012 with a follow-up 18 month cycle after that if the Bubble holds.  A cycle consists of fund-raising followed by execution leading to results that are good enough to raise more capital.  Stack your long-lead items for the first cycle up front along with the fund-raising.  If you’re planning a major technology initiative, for example, get the team going on that ASAP to maximize the benefit as early in the cycle as possible.  If you’re planning to upgrade your Executive Team, do it sooner than later.  Bubbles will accrete talent to the likely winners, and they will be hard to pry loose until there is an outcome.  Get your scarce talent aboard ASAP.

How long will the Bubble last?

I figure we have until somewhere in the 2012 to 2014 range.  There’s no way the Bubble pops before we know who our next President will be.  The incumbent wants a frothy economy anywhere he can get it while he is trying to get re-elected.  Therefore, consider 2012 the inside limit.  It’s possible some disaster can nip this in the bud sooner, but we live with risk in Bubbles–get over it.  The strength of the LinkedIn IPO is telling us there is a lot of fuel on the sidelines for this Bubble.  2014 is a function of economic cycles.  Some say the VC cycle is 14 years.  2014 is 14 years post the dot-com cycle.  Can the Bubble last longer than 2014?  Perhaps, but it’s very unlikely.

The Bubble Clock is ticking, are you sprinting for the finish yet?

Posted in business, strategy, venture | 5 Comments »

The Bubble Has Begun With the Most Expensive Stock In America

Posted by Bob Warfield on May 19, 2011

Burning MoneyIt’s official, the current Bubble has begun with LinkedIn’s IPO.  It was declared the most expensive stock in America even before doubling which means its now clearly way past Bubble territory.  Exciting stuff!

LinkedIn’s PE is 62 times Apple’s, 50 times Google’s, but less than 4 times Salesforce.com’s.  Wow, AAPL and GOOG look like Value Stocks!

Stay tuned for more Bubblemania.  After all, Facebook and other high flyers are still sitting on the sidelines.  I wonder if anyone has ever calculated the amount of money on the sidelines at the beginning of a Bubble that is available as Bubble Fuel?  With the kinds of market caps these companies will get, you would think it will use up the fuel quickly.  Of course there will be some tendency to self-fuel as speculators jump in and out of these stocks pocketing profits and reinvesting in new securities that are earlier on the Greater Fool timeline.

How will we know when the Bubble is bursting?  Well, they always burst and the bigger they are the harder they burst, but you’d like to know just slightly in advance, no?

I remember the original dot cum bubble bursting.  I’d call the day it burst the day Webvan IPO’d and the stock went nowhere.  I had been given some IPO stock by my broker and it was flat to down.  It had all the right things in place for a Bubble IPO, Goldman backed it, yada, yada.  Just no profits and no real business.  At least LinkedIn has some profit this time.

Posted in bootstrapping | 4 Comments »

Small Businesses Need a Minimum Viable Marketing Strategy

Posted by Bob Warfield on May 18, 2011

I’ve taken to thinking that marketers should view marketing on the web as a product.  As I said in my post on the Pitfalls of Free Content and Inbound Marketing:

Marketing is a Product that has a UX and Competes Like Any Other Product

It’s easy to forget because we don’t charge for it that Marketing is a product too.  In particular, online marketing is increasingly indistinguishable from an online software product.  It has a User Experience that we want the consumer to be delighted with.  It has Business Logic and is the System of Record for critical Enterprise Value if you want to get all Enterprise Software about it.  Think about Marketing as a Product and you’ll find some breakthrough insights.

And don’t assume you don’t charge for marketing either.  You’re charging your customers the highest price they pay for anything you sell–you’re asking them to give you their trust.

If we’re going to think about Marketing as a Product, then the concept of Minimum Viable Product makes a lot of sense for Marketers to think about as well.  MVP is all about the idea of not building in every possible feature and refinement.  It’s about building as little as possible to make a product that you can get in front of customers sooner, so you can learn from their feedback.  Doesn’t that sound exactly like what marketers should be doing to avoid making mistakes that were tragically knowable?

I was reminded of all this while reading through a brief post and subsequent comments from Hubspot, called “How Valuable is Social Media, Really?”  In the post, some charts are presented that show Social Media produces very few inbound visitors but its conversion rate to leads may be higher.  Readers are implicitly invited to speculate that the obvious conclusion–Social Media is not valuable–might be wrong and follow on posts will reveal why.  I opined as how I saw it as an inventory problem:

We’ve got 4 to 8x the volume from the non-social and only a 50% better conversion.

It ain’t enough.

Reminds me of Bing. I get much better conversion from Bing searchers–makes me think it may be a better engine. But so many fewer show up than Google that it doesn’t matter.

Someone else raises the issue that the cost of getting the different kinds of visitors affects the ROI and therefore may change the picture.  But as I say, we have an inventory problem (potentially).  If I can only get x conversions from Social Media and that number is sufficiently low, that’s the inventory available for marketing dollars in this kind of program and it doesn’t matter what the cost is unless it is to make the program even less attractive (e.g. if there are too few leads AND they’re very expensive, we really don’t like this kind of spend).  Last aside, they talk about conversion to leads, but that isn’t conversion to revenue.  I have also remarked and believe that optimizing the wrong metric is the root of all marketing evil, so we may have been led down a primrose path on that one (though the $ money bags on the chart are a tacky misdirection if so, LOL).  What we want to optimize, in other words, is not leads but actual sales.  Marketing and Sales departments fight like cats and dogs over that one all day every day at nearly every company.

What does all this have to do with a Minimum Viable Marketing Strategy?

It’s a perfect example of why you need one–to avoid the distraction of programs that can’t produce enough results to make a difference even if the results that are produced may be good and cheap.  Put another way, when you are small, one more good, cheap, but relatively insignificant marketing program is just like one more good, cheap, but relatively unimportant feature on a product.  You don’t need the distraction, shouldn’t spend the time and money, and it won’t move the needle.  Cross it off the list until you are much bigger.  You’re looking for big hits.  Test as many small ones as you can until you find the big ones and then double down.  These numbers, at least what we have so far, don’t make Social Media look like a big hit for the business as described.

Lest we leave the subject thinking I am not a Social Media believer, let me just say that my own business experience suggest much better numbers are possible for Social Media.  For example, my CNCCookbook business is my test bed for these kinds of experiments and gets numbers more like this:

Minimum Viable Marketing

We can see that Social is generating quite a lot (15%) of the traffic to the site.  However, its conversion to leads is just the opposite of Hubspot’s numbers, being lower than many other sources.  Being a heavy content marketer, I’m of the opinion (unproven), that getting so many visitors is worthwhile and I will eventually nurture them to conversion.   In addition, I suspect referring sites link to me partially because of my content and partially because I have a following on the social communities peculiar to this space.  For example, I know a lot of machinists through the social who may then go on to connect.  FWIW, while I have tried Facebook, Twitter, and LinkedIn, and maintain presences on Facebook and Twitter for CNCCookbook, these are very poor sources of leads and visitors.  The richest sources are niche communities totally focused on the market CNCCookbook is in.

Here is the more interesting thing to consider, though.  If you’re looking for the minimum viable marketing strategy for the CNCCookbook business, which programs should you focus on?  Which should you ignore?  FWIW, I have sorted the data series in order of most to fewest leads produced.

For example, the Paid category (largely Google AdWords) has a very high conversion, but doesn’t yield enough leads.  I spent months tuning it until I was only paying for clicks that actually yielded profitable business.  That mostly resulted in long tail keywords, which are cheaper to bid for than mainstream more generic keywords.  Unfortunately, they have an inventory problem–not enough long tail searches with profitable economics.  Will I keep running the AdWords campaign?  Yes, the work spent tuning is sunk cost.  But I won’t spend more time trying to improve AdWords other than to monitor that the ROI stays profitable and cut it back when it doesn’t.  In retrospect it wasn’t worth the amount of time I spent on it and shouldn’t have been part of the minimum viable marketing strategy for CNCCookbook.

For this business, the cutoff is after email.  It isn’t worth focusing on Bing (and I definitely wouldn’t buy ads there) or PPC.  My email is worthwhile, largely because it is low effort and consists mainly of periodically asking my customer base to refer their friends (hence the very high visit to lead ratio).

What I should do next is find some more things to test, and that’s what I’m doing.  Keep in mind, your mileage not only can but will vary–you have to test, test, test to know what works and what doesn’t.  Double down on what works, cut what doesn’t, and keep some powder dry to keep testing new things.  Cast your net wide and don’t get focused on going deep except in a very few areas that are well proven.

Conclusion

Small Businesses should look for a Minimum Viable Marketing strategy.  Don’t get distracted (as I did) trying to optimize programs that can’t possibly produce the results you need.  Run some tests and ask yourself how much improvement you would need to see in those tests before a program would be in your top 3 or 4.  PPC was never going to get there for me, so I never should’ve invested in improving those results.  It would’ve required hundreds of percent improvement, and I had proven viable programs already doing much better.  Focus on those and keep enough bandwidth to keep testing new possibilities.

Posted in Marketing, strategy | 3 Comments »

The Real Problem With Mobile WiFi: Terrible UX

Posted by Bob Warfield on May 14, 2011

No WiFiStacey Higginbotham with GigaOm wonders why WiFi doesn’t relieve some of the congestion on the mobile networks.

Apparently an AT&T executive says it’s like this:

The executive noted that AT&T didn’t see Wi-Fi helping the nation’s No. 2 carrier offset congestion because in most cases people don’t use Wi-Fi unless they are sitting still in a hot-spot. And apparently, there are plenty of people still wandering around watching YouTube videos.

That’s not the problem.  I often turn off WiFi on my iPhone and iPad even when I am sitting perfectly still when I’m out and about.  There might be a great WiFi nearby, but I never know it.  Why?

Because WiFi has terrible UX.  Let me count the ways:

-  It takes too long to try a connection and get it going.

-  Often, all the available connections are secured.  Don’t even get me started about WEP and similar security.  I won’t use it at all unless I’m pitching on Sand Hill which has the world’s worst cell connections and often no other way to get out to the net.  Life’s too short for the UX to set up a new secure WiFi connection you’ve never seen before.  FWIW, iOS makes this somewhat less painful than Windows.  Microsoft, you really should fix that.

-  Often, connections that are apparently unsecured require interaction.  You have to login, even when you didn’t think you would.  Or, you have to agree to some idiot lawyer’s terms and conditions.

-  You have no idea how secure the connection is.  Sure, mobile wireless isn’t especially secure either, but I’ll bet there is more FUD around WiFi unsecurity.  Its reputation is for being unsecure.

-  The connection drops more times than AT&T if you’re at a public HotSpot.  I was a Starbucks just the other day and it would alternate between being 100% great and 0% dropped connection.   Every time it dropped, I had to accept the terms and conditions again.  Guess how many times I let that happen before I turned it off?

-  Mobile browsers stink at dealing with WiFi.  My iOS devices act like they fell in a black hole if I turn on WiFi or there is a hiccup in the middle of refreshing a page.  If the status changes at all, best thing to do is a complete page refresh.  That’s not always a happy thing.

-  Pet peeve:  You’re at some luxury hotel, resort, or other expensive location.  These bozos want to charge you an arm and a leg for a little Internet connection.  Are they frickin’ kidding me?   That is so 20 years out of date and I think less of whatever business tries this stunt every time I see it.  Connectivity is cheap, so quit jacking me around about it if you want my business.  It’s your table stakes to get me to stay.

My bottom line after trying and trying WiFi?  Unless my 3G connection is terrible or AppStore makes me go to WiFi, I just leave WiFi turned off.  It’s too much trouble.  The User Experience is terrible.

The term “WiFi” was first used commercially 20 years ago.  Isn’t it about time it worked a little better?

A little cooperation between the WiFi devices and the mobile OS makers would go a long way:

-  Get the hot spot and browsers/OS’s working together to send everything back and forth https.  Even if the web site doesn’t support it, the WiFi router can take it back to http once it hits the wire, but leave it secure over the airwaves.

-  Figure out how to make a single box deliver both a secure and open hot spot so all the paranoid peeps can feel safe and I can connect to their hot spot.

-  Introduce a standard set of “hold harmless” terms and conditions that you can accept once on the device and then handshake everywhere you find a hot spot to let it know it doesn’t need to ask again.  If they want more restrictive T’s and C’s, screw ‘em, I’m not using that hot spot.

-  Browsers have to get smarter and smoother about dealing with interruptions and reconnections so they don’t lose their place or go away interminably.

-  Rebuild all the protocols to time out fast–5 seconds maximum.  Look, if its taken a blinkin’ computer 30 seconds to figure out whether the connection is alive you need to assume, “It’s dead Jim.”  30 seconds is 20 years or more out of date with modern levels of performance.  If it takes me that long just to connect, how happy do you think I will be with the BS I get once connected?

-  Mobile browsers should start remembering whether I was happy or not with a connection and make sure the OS knows.  Give me a button to rate the connection.  Choose the connections I like and ignore the connections I hate.  Let me rate my 3G while I’m at it.  Or, let the browser monitor the connection so there is an automatic rating–but make sure I can override it easily.

Businesses, think about your customer’s online connectivity as an integral part of your atmosphere and style.  It’s a connected world, some parts more than others.  If you’re serving lattes, quiche, or expensive wine, you come off like a 50’s diner when your Internet connection stinks.

Posted in mobile, user interface | 3 Comments »

Amazon: The Hidden Empire

Posted by Bob Warfield on May 13, 2011

An amazing read about Amazon and the strategy of creating a huge success on the web:

Amazon: The Hidden Empire by faberNovel

Why can’t the other Big Seattle Tech Company be remotely this smart?

Posted in amazon, business, cloud, service, strategy | Leave a Comment »

Pitfalls of Free Content and Inbound Marketing

Posted by Bob Warfield on May 13, 2011

Free SignLet me start this article by saying it’s not intended to be a negative article against free content or inbound marketing.  Rather, I want to talk about some of the strategic considerations when you use these tactics.   I believe wholeheartedly that, properly employed, there are no better tactics for building your customer base and getting the word out.  Let’s also define “inbound marketing”, at least for purposes of this post, as follows:

Inbound Marketing is giving away valuable content for free in order to attract an audience and earn the right to sell them something.

This may not be exactly what firms like Hubspot who are experts on the topic use, but it is how I think about it and it will work well for this discussion.

This post was motivated by some thinking that’s been going on in the back of my mind about inbound marketing that all bubbled to the surface when I read John Jantsch’s “When Free Becomes Free For All — 5 Reasons Free is Hurting Us All“.   Along with Seth Godin, John Jantsch is one of my top two favorite marketing bloggers. But, with this latest post, I think John has missed some key points and gone off the track.  Rather than debate his 5 points up front, I want to drop back and paint a more strategic backdrop for understanding the value of free and I also want to call attention to the alternatives.  To paraphrase Winston Churchill’s famous quote about democracy:

“It has been said that free is the worst form of marketing except all the others that have been tried.”

Let’s start from that premise when considering John’s proposition that too much free is damaging by asking, “What are the alternatives?”

Just enough free to get the job done and charge for the rest?

Pay walls?

Intangible costs and friction like registration landing pages you go through over and over again to get one white paper, webinar, or slide show at a time?

I’ll bet John will have a hard time defending those alternatives, I know I would.  As an aside, ironically, I had gotten a new Hubspot email (one of two this morning, easy there boys) offering me a white paper that looked valuable.  I clicked to the landing page and was immediately presented with an old style fill in the form to get the content.  Now I know you want to capture the individual’s contact information, get them on your house list, yada, yada.  But I’m on Hubspot’s list–they’re emailing me for cryin’ out loud and I haven’t opted out. They can tell I’ve clicked through with silent instrumentation.  This is an artificial and annoying barrier that cause me to think them slightly less enlightened and to click off the page and go on about my business.  They either did it that way through sloth or because they are trying to “qualify” me by making me do the work of reentering my information.  Either way, it cheapens the Inbound experience.  If you’re going to be Inbound, be inbound.  Once you get someone’s information, treat them as you would want to be treated.  End of rant, these guys should know better.

Distracting as it may be, the anecdote relates to John’s complaints about free.  Let’s talk about the 5 things he worries about (paraphrased):

It doesn’t hold the content consumer accountable.  

If it’s free, they can sign up and then no-show.  This is a variation on the VP of Sales contention that you have to charge a lot or the customer won’t respect you.  My problem with this perspective is it reflects artificial scarcity and a presumption about the stage that the prospect has reached that isn’t justifiable.  When you’re engaging in Marketing, you’re not yet at the stage where you’re entitled to demand a price.  You’re not ready to close a sale.  You’re earning the customer’s trust and any artificial scarcity or cost interferes with that trust, just as my experience with Hubspot made me trust them a little less.

With respect to artificial scarcity, the history of any market is a march to commoditization unless the participants find a way to create defensible unfair advantage that limits competition and creates artificial scarcity.  Other than via legal entanglement, content is not amenable to unfair advantage through limited availability because it can be reproduced and communicated too easily. Your only opportunity for unfair advantage is to make your content better than the other guy’s.  Leaving aside all that, think about monopolies, patents, record labels and other cases of successful artificial scarcity.  Do you want your marketing to reek of that?  As I said, you’re earning trust, not selling patent-pending titanium toilet seats to the Air Force.

It would be awesome to see my two marketing blogger idols, John and Seth Godin, debate this proposition.  My impression from Godin’s writing and tactics for self-promotion is that he totally gets this business of creating unfair advantage through better content and then making it even more unfair by aggressively giving it away until it goes viral.

Let’s turn this one around from a unpleasant problem to a prescription for success:

Make sure you are accountable for your content and it is so good that it is irresistible.  And then give it away.

That formula will knock the cover off the ball of Inbound Marketing every time if you can deliver.

Eroded Value

John’s description of this point is worth repeating:

When content is consistently given away it loses its value–not only for the producer, but also in the eyes of the content consumer. How good can something that’s free really be?

This lumps thoroughly researched, well-presented, useful content in with shoddily veiled pitch fests.

My problem with this argument is two-fold.  First, it goes down the traditional Mad Men marketing and sales path of assuming consumers are sheep.  I know it can be easy to fall into that trap, but John knows better.  Consumers are better judges of your content than that.  The ones that matter know a “shoddily veiled pitch fest” from useful content.  Go back and read the endless admonitions to content creators for Inbound Marketing about delivering value.  If you’re not delivering enough value that it’s obvious to consumers, you may have accidentally produced a pitch fest.  Blame yourself, not the consumer.  Value is in the eye of the beholder, not the author.

Finding great content is hard.  If it wasn’t there wouldn’t be so much controversy over search, there wouldn’t be so many bookmarking services, and there wouldn’t be a long tail.  The great content would be obvious, plentiful, and easy to come by.  Instead, there are relatively few Duct Tape Marketing or Seth Godin blogs, so we read them incessantly and don’t take them for granted.

This brings me to my second point–be aware of the state of the free content ecosystem in your space.   John Jantsch’s Duct Tape Marketing content plays in the most crowded on-line space that there is for great free content–marketing.  The bar in that space is absolutely sky high–so high there is almost no oxygen up there.  Social Media, Email Marketing, Inbound Marketing, Affiliate Programs, on and on.  There is lots of great marketing content available free.  Whenever a content market gets that big and there is so much great content available, value is eroded.  You can’t take it back by deciding not to give it away.  There’s too many struggling for competitive advantage by giving their great (or even pretty good) content away.  Markets are eating their own dogfood, drinking their own champagne, and practicing what they preach.  It’s tough love, but you better get over it.

I’ve come to believe this is a key strategic point for entrepreneurs to consider.   Not every space is as crowded as the Marketing space.  In fact, very very few are.  Most spaces are still very much starved for great free content.  For entrepreneurs, when you’re evaluating a space, do a careful evaluation on your chances of becoming an early Thought Leader there through your content.  You want to be a big fish in a small pond where the bar is set extremely low for your content.

Lowered Expectations

John says:

This creates an atmosphere where content producers can simply slap something together with little value because, “What are they going to do, ask for a refund?”

I’ve nothing new to say here other than that you are accountable for your content and you have to make it so good that it is irresistible.   If you don’t and you’re in a crowded content ecosystem like marketing, you’ll never be noticed.  May as well go buy banner ads on AOL or Yahoo.   If you don’t and you’re one of the first fish in a small content pond, you’ll be noticed but vulnerable to a fast follower.  You will also miss igniting the level of passion for your content that you may otherwise have had, which will slow people passing on and talking about your content and prolong the window for the fast follower to take you out.

Blocked Revenue

“When the expectation is that all of your content, speaking and presenting will be made available at no fee, your business’ greatest potential asset is cut off.”

First, if your only business is content, you need to think carefully about your strategy.  In the ideal case, you have something else you’re making the money on besides the content.  Inbound Marketing is a wonderful no-brainer if you do have something else to sell.

Second, even if you don’t have anything but content to sell, who says it’s all or nothing?  Will they pay to see you deliver your content directly?  Will they pay for you to apply the mind that produced that great free content to their problem?  Will they tolerate ads in the content?  Will they pay to have your content in a different format, perhaps one that’s easier to consume or more compact?  Thinking of books that are compendiums of content that already exists where curation and packaging is the value.

Seth Godin is a master of this.  He gives away books he’s actively selling.  He encourages buyers to give their book to someone else when they’re done reading it.  It works for Godin, why not others?

Community Buster

Having spent a fair bit of time in the Social Web both personally and professionally, this is one I totally do not understand:

When people are invited into a community where everything is free, there’s actually less chance of building a strong community. Community builds when there is value.

That has not been my experience in the least, and I’d like to see such a community to understand what it’s real underlying problems are, because they’re not due to “free”.  Let me give two strong examples:  Stack Overflow and Quora.   Everyone reading this must have heard of one or the other.  They’re completely free, they are strong communities by any measure I have ever seen, and they deliver huge value.

Free has some really odd dynamics where behavior and community are concerned.  People will polarize around and defend free in ways that you just don’t see for things people pay for.  Try to make your living attacking virtually anything Open Source and you will see.  Free begets fanaticism because it creates obligation.  If you give somebody something for free, they feel an obligation to reciprocate in some way.  If they pay you, however little, they have discharged that obligation.  This is problematic for companies that want to be the cheapest offering in their space.  To me, they attract the worst of all worlds.  They don’t get the fanatical support of free, and they’ve attracted a legion of penny pinchers who feel no obligation and who are ironically much higher maintenance than the sort who buy premium products.

People generally have good intentions.  Give them a lot of valuable free content.  Set them up in a free community where they can get free help and give free assistance and I have seen magic happen multiple times.  If you find yourself in a space where no such resource exists, stake it out quickly–it will turn into a gold mine and you won’t be sorry.

Conclusion:  Marketing is a Product that has a UX and Competes Like Any Other Product

It’s easy to forget because we don’t charge for it that Marketing is a product too.  In particular, online marketing is increasingly indistinguishable from an online software product.  It has a User Experience that we want the consumer to be delighted with.  It has Business Logic and is the System of Record for critical Enterprise Value if you want to get all Enterprise Software about it.  Think about Marketing as a Product and you’ll find some breakthrough insights.

And don’t assume you don’t charge for marketing either.  You’re charging your customers the highest price they pay for anything you sell–you’re asking them to give you their trust.

Posted in bootstrapping, business, Marketing, strategy | 2 Comments »

The 7 Kinds of Software Developer Wushu

Posted by Bob Warfield on May 5, 2011

James Governor got me thinking along these lines by asking how to segment developers.  He asked whether the web “killed” the professional developer, or at the very least radically reshaped the segments.  I don’t know about all that, in fact I’m pretty skeptical.  But what I do know is that the way James talked about developers didn’t really resonate with me at all.  I’ve been managing developers for 27 years now, including a couple of stints that have involved selling tools to developers (via Borland and my Integrity QA startup, then at Rational/Pure Atria), and I just don’t think of them as “hobbyists”, “enterprise timeservers”, or any of the other possibilities suggested.  Likewise, while I found Coté’s alternative niches vaguely entertaining, they didn’t fit either in terms of providing me a unified field theory of how to think about developers.  Part of the problem is in not defining what the segmentation is for.  When I hear “segmentation”, I think about mapping out a plan to go sell something to an audience.

Putting all that aside, what really was more interesting to me was thinking about how to dimensionalize the skills of developers.  There are a number of very development-centric skills that I have seen that describe what developers are capable of in terms of development.  We could add a bunch of the usual more HR-centric qualities (works and plays well with others, yada, yada), but let’s keep to being development centric.

What then are the 7 Kinds of Developer Wushu?

1. Hackers

I’ll start with the purest expression of development Wushu.  The Hacker grinds out code.  Uber Hackers practically exude it from their pores.  I had the pleasure of working with Rob Barnaby, the creator of the original Wordstar word processor for one gig.  Rob was the consummate hacker.  He could directly type code in as fast as a touch typist could transcribe and in fact, it often seemed like the keyboard was preventing his expression of code from proceeding as fast as his mind could create.  Watching Rob in action convinced me once and for all that an editor had to be fully operable without taking one’s hands from the home keys to facilitate this kind of bond between man and machine at the highest possible bandwidths.

Hacking is distinct from the other forms of Developer Wushu, as we will see.  As an aside, “hacking” used to have a very bad connotation, and maybe it still does in some quarters.  At one time it meant someone who haphazardly coded, beating their way through the process through sheer trial and error brute force.  It was the antithesis of the elegance so many developers worship.  When I use the term “Hacker”, I mean it in a good way!

FWIW, I rate myself a “5” on the 1 to 10 scale of hacking.  I grind out code pretty well, but if I’m productive, it is more because some of the other Wushus have allowed me to write less code.

2. Language Polyglots

Did you read “Godel, Escher, and Bach?”  Did you really understand what it all meant?  Did you glide through that book effortlessly, constantly in agreement, and finding it a sheer joy?  Or was it one of those books you see that smart people all claim to have read and understood, but that was sheer drudgery for you?  If you’re in the former category, you may be a Language Polyglot.  For you, the ability to execute a language, to be a Turing Machine, is the highest accomplishment of the computer.  It’s what makes it our only Universal Machine, at least until somebody figures out nanotech replicators, which will have to be computers in large part anyway.  My first product, Quattro Pro, contained no less than 18 specialized interpreters that implemented various domain specific languages to accomplish different deeds.  These little interpreters made Quattro Pro easier to write, faster, and more flexible than the competition.  In the end of the day, all things computer wind up being lanuages.  Adobe proved that by making printers into languages in the form of Postscript.

The Language Polyglot makes every problem into a language of some sort.  These folks worship Lisp (first language I learned to program in, yes, I’m a Language Polyglot).  More recently, they create tools like Ruby on Rails.  Ruby, the language, by itself is interesting.  Rails, a framework on its own, is another framework.  But somehow the marriage of the two is magic.  It takes a Language Polyglot to figure out that sort of thing.  Good ones are responsible for all things Meta, which is to say imbuing a software program with the ability to change and take on some of the universal character that makes the computer a unique machine among machines.

I will somewhat egotistically give myself a “10” as a Language Polyglot.  It’s what I do best.

3. Algorithm Mentats

Ah, the Mentats of Dune.  What a compelling image.

Does your software need to be fast?  Does it need to scale?  If so, you’d better have some Algorithm Mentats.  These people uniquely understand how to combine algorithms and data structures to make a software program fly.  There are lots of sub-specialties.  Database algorithms, parallel and distributed computing, graphics, and others to name a few.

A good Algorithm Mentat is not just good at creating algorithms, these folks are often the most familiar with the literature in their areas of specialization.  Computer Science, as a discipline, is largely about Algorithms and Languages, with some Architecture in the sense I will describe shortly thrown in.

I will charitably rate myself an “8” as an Algorithm Mentat.  I don’t love it enough to do better, not like I do Languages and UX.

4. UX Wizards

If some poor user actually has to understand and hopefully love your software, your success depends on the quality of your User Experience (UX).  This area is poorly understood, frequently abused, and much talked about.  Everyone is a consumer of UX and everyone therefore considers themselves expert at UX.  Most of them are wrong.  Some view UX as a Design problem.  It’s not really, although Design helps a lot.  Some view it as understanding Workflows, and there are elements of that.  I think about it as a mixed discipline that involves Design, Workflows, Communication, and a deep understanding of what the User is trying to accomplish.

UX is about crafting a medium that communicates in both directions.  Until we had computers, communication was largely one way.  We had writers, composers and musicians, actors, and so forth.  Those folks have a lot in common with UX, but let us not lose sight of the fact that like any medium, UX is specialized.  We don’t expect Mario Puzzo to be a great movie director nor Steven Spielberg to compose a symphony.  They’re masters of a particular medium.  And, it’s a medium that morphs.  Batch had a particular UX, then we had dumb terminals.  PC’s ushered in an era, and then we had GUI.  Today we add Social and Mobile.  What a rich palette for the UX artist to draw from.  It’s all still here, amazingly enough.

I rate myself “9” on UX.  I hold the patent on spreadsheet notebook tabs (originated in Quattro Pro), and would be named on a patent for the right mouse button if we hadn’t felt it was entirely too obvious to patent back in the day.  We did that first and I remember the Microsoft Product Managers where lined up in the aisles taking notes like crazy when we first demoed Quattro Pro at Comdex.  Pretty soon Excel had these features too, LOL!

5. Architecture Builders

Architecture Builders are masters of arcs and circles.  They know what to put in the boxes and how to connect them for best results.  They think in layers, abstractions, and interfaces.  Refactoring is a joy to be embraced each and every time it is called for.  Patterns are their method of expression, as are the various odd notations associated with Object Modelling.  All large products need Architectural Builders, lest they be poorly architected and collapse under their own weight.  A good Architect can create a product that allows more people to work on it longer, which can be a decided competitive advantage.  Bad architecture results in constant rewriting with the difficulty of finishing increasing almost exponentially with each new release.  Architecture Builders are masters of managing complexity and hiding it where its mischief can be minimized.

I’ve done architectures for software that’s stayed fresh without need of rewrite for many generations, so I’ll call myself a “7” on this type of Wushu.

6. Process Plotters

What do you call that developer that has a million little scripting tools that make them awesomely productive?  They seldom have to create much as they’re forever transforming or improving using tools and processes.  These are Force Multipliers not to be underestimated.  Whether your Process Plotters are focused on the scripting and tools side or whether they’re focused on Agile Programming or whatever other methodology is the tool of choice.  They know when you have too much process and it is interfering with productivity.  They know when you have too little, and it interferes with quality and ultimately, productivity.  With the right tools, they are the consummate DevOps gurus.  They are consultants and managers who set forth the right campaign to accomplish your goals in a timely way.

While many of the processes and tools of development are useful in other disciplines, there has been little evidence the converse is true.  Assembly lines, Six Sigma Black Belts, and the like have not made much impression on the world of software.  It is for that reason that I call Process Plotting one of the 7 Wushus of Development.

I do okay with process and was practicing a variation of Agile Programming before the movement even had a name.  There are papers written about the productivity and processes used by my Quattro Pro team by a Bell Labs PhD named James Coplien.  They serve as some of the earliest working documents for the Agile movement.  Based on that, I put myself down as a “7” on process.

7. Black Boxers

This one is a curious trait, but I have seen it in action too many times not to be certain it exists as a powerful skill.   Black Boxers know how to deal with Black Boxes.  They’re the best debuggers, the best at going into code they didn’t write and understanding it.  There are different kinds of Black Boxers.  Some are ideal QA experts.  They formulate tests that are effective in mapping out the unknown territory associated with Black Box testing.  Some are very low-level.  One of my startups involved very sophisticated automated software testing tools.  We had frequent “blue screens of death” as our software had to do a lot of undocumented and unsupported unnatural acts to accomplish its job.  One of our team was an awesome Black Boxer.  He had a hardware debugger, which was a card with a button that could stop the machine and let him poke around inside what was left.  From that, he could usually figure out the source of our BSD and tell us how to fix it.

Incidentally, the very best Black Boxers hack security and break copy protection schemes.

While I have done Black Box reverse engineering, and managed to derive the Lotus 123 file format for Quattro without disassembling any of the software code in 123, I don’t rate myself very high on the Black Boxer scale.  Call it a “4”.

Conclusion

There are at least 7 Kinds of Developer Wushu.  If there are more you can think of, please comment.  It should make for a spirited discussion.  Any developer has strengths and weaknesses along all of these dimensions, though I’ve never met a developer that was a star in every category.  It takes all kinds to round out a team, so it may be helpful for teams to take inventory of the Developer Wushu expertise of their members.  It can shine a light on strengths and weaknesses and inform how you hire and grow the team moving forward.  It may also be helpful when interviewing new developers to think of questions and discussion topics that focus in each of these areas.  Get your developers who excel in a particular art to focus on questions about that art.  You’ll pretty quickly understand what your applicant is capable of and what will be challenging for them.

Posted in software development, strategy, user interface | 1 Comment »

 
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