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Best Way to Succeed as a Solopreneur: Go For Fewer Customers

Posted by Bob Warfield on July 29, 2014

I’m reading with interest some posts that are hot on Techmeme at the moment from Jared Sinclair and Marco Arment about succeeding with iOS apps and as a Solopreneur.  Jared’s blog post is a cautionary tale for those who would like to bootstrap a small venture well enough to quit their day jobs.

Many weigh in with various comments and based on his latest post, it looks like Jared was inundated with a bunch of notes from people who thought he just didn’t market the app enough.

I’ve been a solopreneur with some part-time helpers trying to make the gig into a multi-person bootstrap for some years now.  I’ve managed to create a business that now throws off more cash than I’ve gotten at any Day Job I ever had short of being an exec at a public company.  It’s been an extremely happy experience and I thank my lucky stars and my awesome customers every day for making it possible.  I want to talk through what Jared has bravely reported about his venture and compare it to what’s different about my own CNCCookbook and talk about how I think those differences matter to a successful solopreneur.

First the Results of Both Companies

Jared starts out presenting his financial results from his iOS app, Unread:

FirstYearSalesUnread

Unread Cumulative Sales in the First Year…

It’s pretty easy to see why Jared is unhappy–most of the action happens shortly after he shipped the initial application.  Yes, there’s steady growth afterward, but the actual sales per week or month (remember, the graph is cumulative) had to be pretty disappointing if you want to live off that income.  The app only costs $4.99, so Unread has actually been extremely successful in terms of the number of customers it has attracted–looks like somewhere between 6,000 and 7,000.

I wanted a way to provide some similar insight into CNCCookbook’s apps, but I’m not as interested in Jared in giving away my exact finances (sorry folks, you’ll just have to do some back of envelope calculating to figure it out).  Here is the cumulative graph of software license years sold for CNCCookbook’s software:

CNCCookbookCumLicYearsSold

CNCCookbook Cumulative License Years Sold…

I’ve been at it for a few years now, and the growth has been steady, almost hockey-stick-like–this is a very happy business!  The big bump between 10/22/12 and 10/22/13 reflects the launch of our second product.  I’m hoping to get another bump like that in the next 6-12 months as I launch our 3rd product.

With all that said, I want to make some suggestions about what I think has made CNCCookbook successful.

Suggestion #1:  Lead With Subscription Pricing for Recurring Revenue

First, what is a “software license year sold?”  CNCCookbook sells both subscriptions and perpetual (you buy the software for life with one payment).  Recurring revenue is essential for Solopreneurs because it means they’re getting new revenue without much new work other than keeping the software vibrant and useful.  Getting new customers is hard work.  In a minute I’ll discuss how CNCCookbook goes about it, but suffice it to say I have created a business where my biggest problem is having enough software to sell my customers moreso than getting the new customers.  Part of that is due to the recurring revenue stream.  If you’re a fan of the SaaS/subscription model as I am, you’ll realize that once one of these revenue engines gets up sufficient momentum, they’re almost unstoppable.

So, my graph shows how many years of subscription were cumulatively sold for both products over time.  I plugged in a figure of “6” for any lifetime sale because that’s more or less how I think about my lifetime pricing.

Suggestion #2:  You’ll Want Perpetual Pricing Too, and the Subscription Helps Justify a High Price For It

 FWIW, I mostly wind up selling the lifetime version during sales, but that’s okay too because having a fairly expensive lifetime version does a couple of things.  One, it addresses the needs of customers who just don’t like getting tied to a stream of payments.  This is a very real audience, and if you don’t give them an out, you’re not going to reach them.  Why not choose a perpetual price where they’d have to keep resubscribing for so many years before you come out ahead that everyone can see it as a win-win situation?  Why leave the perpetual hole open for a competitor to come in and take over?  Once you have both pricing models, it gives your customers options.  Do they prefer to preserve cash flow?  My subscriptions do that, just like the lease vs buy decision on a car.

Suggestion #3:  Find the Sweet Spot on Price and Insist On It.  You Probably Want Fewer Customers Willing to Pay More.

My first product offering was $69 for one year.  It seemed like a lot to me at the time, but it wasn’t.  It was actually less than the product was worth–I raised that to $79 with no impact on the units whatsoever.  More importantly, it was and is too low for a business you want to have be your sole occupation.  This gets me to the point of my headline–figure out a business model that requires as few customers as you can easily sell to achieve your financial goals.  Jared’s Unread sells for $4.99–pretty typical for an iOS app.  But it took him almost a year of very hard work to produce it and it isn’t paying the bills.  It’s not really a matter of promotion–he has a ton of customers.  It’s a matter of the customers not paying him enough cash for each sale.

A solopreneur can only touch so many people.  You can only get the word out so far.  There is an upper limit on how many people you will have a chance to sell to when you launch, and on how fast you can grow that audience over time.  You need to be cognizant of that fact and find a product opportunity that can be priced accordingly.  Be brutally honest about how many customers you can close.  Forget models that require too many.

Advertising?  Fuhgeddabout it.  No hope in heck.  I’ve estimated that charging for your product is about 2000 times more effective than giving it away free and relying on advertising revenue.  Why make your job 2000 times harder?  It’s so attractive to sell Free until you realize the sheer magnitude of scale you must achieve.  Those are VC-only deals, folks.

Cheap Phone Apps.  Based on the information I’ve seen, Jared’s information, the problems with finding apps in the app store, and the platform owner’s huge tax of 30% on sales, I am strongly thinking phone apps are not a good target for bootstrapping or solopreneurs.  It’s too hard to market the apps, the platform owner has too much control over the walled garden, they get too big a share of your revenues (30% is huge if they’re not driving huge demand your way, and they’re not), and you aren’t able to charge nearly enough in most cases.

Phone apps have been a dilemma for me in my own business.  My audience would love one.  I have done the work to actually keep one code line running on PC, Mac, iOS, and Android, and there has even been a prototype run on iOS.  But the thought of the work involved finishing the app and questions of whether I’ll be cannibalizing my existing sales with sales that have a 30% tax to Apple or some other big guy has given me pause.  The project has been on indefinite hold while I look at other more promising ways to invest my time.

To get an idea of what you need to charge, look at some successful bootstrappers.  Take Basecamp–it’s $150 a month.  There are cheaper plans, but they limit the number of projects.  Eventually you will be likely to upgrade.  At $150 a month, you only need about 140 customers to be making $250K a year.  I see all these Solopreneurs talking about their $60K a year businesses and wonder why they aren’t aiming higher.

Or, if you have something with more mass market appeal, say like Smugmug, you an charge $40-300 a year.  It’s going to take a lot more customers than Basecamp, but if their average sale is say $60 a year, that’s about 4200 customers to do the $250K a year.  Given how many love photography, that again seems like manageable adoption to be able to succeed.  Either number is a lot fewer than Jared has already sold.

I mention that I thought my pricing was too low and I mean it.  $79 a year requires me to find 3200 customers to get to $250K per year.  It can be done, but I surely didn’t get there in 1 year or even 2 years.

If I had my druthers, I’d be looking for a niche that needs circa 1000 to 2000 customers to get to that $250K.  Hence, we are charging $125 to $250 a year or at least $99 a month.  Look around.  There are quite a few SaaS businesses at $99 a month.  I use a bunch of them to help me with CNCCookbook marketing–Wordpress hosting service Page.ly, SurveyMonkey, MailChimp, my shopping cart provider, etc., etc..

Things are priced where they are for a reason, and not simply because it’s what the market will bear.  It is not only what the market will bear, but it is also what can support a happy healthy growing business.

Suggestion #4:  Debug the Marketing and the Market Before You Ever Write A Product

Many solopreneurs are software developers.  I tell my non-developer friends about my business and they are envious, but can’t see how a marketer can get a product written without paying an engineer, at which point they’re no longer solo.  Engineers, OTOH, seem to think they can bump along and do a decent job of marketing.  As my marketer friends are fond of saying–everyone consumes marketing so everyone thinks they are an expert on it.

Here’s the thing: as a software developer, you know you can get the product built.  That’s pretty low risk.  It’s fun to dive in and start slinging code and pretty soon the demo starts showing some life.  But so what?  As I said, you know you can get the product out.  What you don’t know are two very important things:

1.  Are you solving a problem anyone cares about?

2.  Can you successful reach that audience to sell them your product?

Now here is the truly amazing thing:  you can answer both questions with very high confidence as a solopreneur in a relatively short time.  You can even do it fairly comfortably while holding down your Day Job–even better.

There’s a short list of tools and skills you’ll need to master that I’ll get to shortly, but in order to solve those two big marketing problems, you need one critical talent:

You’ve got to be able to tell a story people want to listen to, and you have to be able to do it in writing.

If you can’t tell a story people want to listen to, I think your future as a solopreneur is probably not going to go well because you’re going to be left either needing someone else to tell your story or just buying advertising.  I keep playing with advertising every six months or so.  I am very analytical and well versed in how to do it.  I have conversion hacked landing pages with great results and done tons of A/B ad testing to try to improve the results.  My conclusion each time I try the experiment is that it just isn’t very profitable.  It costs me so much to sell a customer using AdWords that it is hardly worth it.  I’ve talked to a slew of bootstrappers, and their mileage varies.  Many report something similar.  Many do not keep good enough analytics to even know, they just budget for it and spend the money, hoping it will work.  I guess if you want to depend on ads, this is also something you can know up front.  You can try ads that lead to a page and see what it costs you to get people to that page.  The trick is in what they do when they get there.  In my case, they sign up for a free trial.  That’s one conversion event.

The next thing is to convert them from the free trial to a paying customer.  That’s a second conversion event.  I do very well on the latter–about 20% of free trials become paying customers, which is very decent.  Where I fail is getting enough ad click throughs converted to the free trial relative to what the ad costs.  You can do the math:

1.  The ad costs $1.50 per click through, for example.

2.  The page converts 27% to click through to the trial signup.  Conversions for me are better if they don’t sign up on the landing page–that’s being too pushy for my audience.

3.  Once on the trial page, 25% successfully register for the trial.

4.  As mentioned, 20% of the trials convert to paying.

So if I get $79 for the sale, I can afford to pay $79 * 20% * 25% * 27% = about $1 to break even.  $1.50 is very unprofitable.  Even if I can buy ads for 50 cents, which I very seldom can, it still seems like I am giving Google the Lion’s Share of my hard work.   OTOH, if I am Basecamp, all that changes because I am looking at an annual value of $150 * 12 = $1800.  I can afford to pay quite a lot for advertising in that case.

Working through those numbers is how you debug advertising as a marketing possibility.  There’s still one other big advertising drawback even if you can afford it: it doesn’t create a sustainable marketing asset.  Once the ad has run, you quit getting value from it and you must spend more money on ads.  That’s one reason why I much prefer inbound or content marketing.  If you create great Evergreen content, and own the searches for those subjects, you own a marketing asset that keeps on giving without your having to do much.  You can spend time adding even more Evergreen content.  That model scales well for the solopreneur and small resource-limited bootstrap.

With that model, you’re relying on giving away great free information to attract people via referrals and search engine traffic.  This is the one you can really debug well without even starting a product.  This is the one where you need to be able to tell a story.  The reason is that you can start a blog aimed at your audience with an email mailing list for that blog and find out what works.  Do they care about a problem you want to solve with a product?  Write articles about the problem and see if anyone comes to the party.  Can you reach this market?  Go forth, read the relevant blogs, visit the relevant social sites, and find out what they’re talking about.  Find out what they’re interested in.  Start talking about that on your blog.  If they show up, start building your readership.  Collect their emails and start a weekly blog digest newsletter. Track your progress.

Now do some more back of envelope.  How many do you need in your fold?  I’ve typically been able to sell 4 or 5% of the folks on my email newsletter a new product.  So if I must sell 1000 to reach my financial goal, I had better have 20,000 folks reading my email newsletter.  I recommend you spend 6 months to a year building up your online content (blog) and building your newsletter before you even start writing your product.  Get a sense of how long at your current growth rates it will take you to have enough that you can meet your financial goals and plan it so that by the time you finish the product, the audience are already there, eating popcorn in their seats, and waiting to see what you can offer them.

This is what I mean by debugging the Market and Marketing before you start a product.  Nothing could be more frustrating than to turn in a ton of cubic hours building a sweet product only to have it fall far short of your financial goals for it.  You need to discover whether you can tell stories well (or write ad copy or whatever) enough to attract an audience without a product.  If you can do that and give them a sweet product,  you’re much more likely to succeed.

What about those skills and tools I mentioned?  Yeah, there’s time to figure all that out too during that 6 months to a year when you start creating content.  You have to figure out how to run a blog, (I have 4 or 5 kicking around here somewhere).  Just go get WordPress, don’t even mess with anything else.  Figure out how to use plugins.  Don’t write custom code, that’s a distraction.  You need to figure out how to collect the emails.  That’s a WordPress plugin plus an email service.  I use AppSumo’s List Builder (not here, on the CNCCookbook blog) and MailChimp.  Then there’s all the techniques of creating landing pages that convert and SEO and all that jazz.  It’s not that hard.  Seriously.  I have a clipping blog I call Firehose Press.  Every single great marketing how-to article I have ever read is there.  Read it and digest it and you will know nearly everything I know about marketing.  Go back over the articles in this Smoothspan blog.  There’s plenty of posts that chronicle various epiphany’s I’ve had about marketing along the way.

Conclusion

I didn’t write this article to knock Jared’s efforts–he’s done well by getting so many customers.  He obviously built a sweet app.  If I were to suggest differences, it would be in two areas.  Jared had wanted to succeed with his launch and with blog and social media mention.  In my mind, that’s too passive.  You have to create an engine that you can control with a throttle you can push when you need to.  My throttle is to write more and better content.  I suspect that the lack of controller marketing that could be invested in is what made Jared’s sales graph so flat, while a price that was too low is what made it so hard to live on the revenue from the product.

I didn’t write it to beat my chest about what I’m doing.  It doesn’t matter, it isn’t that big a thing, and I don’t believe it will help CNCCookbook in any way despite what some marketing folk say about such things.

I wrote it because I love being a solopreneur and bootstrapper.  I think it is the greatest thing since sliced bread.  I’d really like to see as many people as possible get a shot at it, so I’m trying to pass along what I’ve learned along the way.

As always, there are many strategies that work.  I certainly don’t have the One True Path.  But if I’ve helped clarify things even a little bit, then I will have accomplished what I wanted and I thank you for your patience reading through the post.

Posted in bootstrapping, business, Marketing, strategy | 5 Comments »

Microsoft: World’s Worst Customer Service? (Walmart, Amazon, GE, BestBuy, MacMall, and Paypal Not Far Behind)

Posted by Bob Warfield on July 28, 2014

microsoft-surface-pro-3I recently tried and failed for the fifth time to buy a Microsoft Surface Pro 3.  It’s been a real comedy of errors, but the latest attempt has been by far the most spectacular failure.

Let me start out by saying I really like the Microsoft Surface Pro 3.  I am a perfect candidate for it as I would like to replace the combination of my Macbook Air and iPad with just one device for travel and for demos of my software away from the office.  The business I’m in is software for the CNC Manufacturing world, and while my own software runs on both Mac and PC, most from that world is PC-only.  Hence a device about the size of an iPad that can run desktop Windows software would be a real boon.  The Surface reviews I’ve read have been largely positive, and I played with one at a Microsoft store for long enough to feel like I would be very productive on it.  The keyboard was great and I had little trouble dealing with the Win 8 differences everyone is complaining so much about.  So I resolved to get one.

In fairness, all of my problems have stemmed from one little wrinkle in how I wanted to buy the device.  I’m looking at about $1500 all in, and I wanted an interest free for 12 months deal–the same kind of deal I used to purchase my Macbook Air.  My business is steadily growing and I like the idea of charging most of the cost to the larger version of the business that will exist down the road.  These offers all involve signing up for a credit card, with my Apple Macbook Air it was really no big deal.  I recently had paid off the Macbook Air and so time to get another device.

Here’s what happened.

Fail #1:  Best Buy

Despite haunting the Microsoft Store since the Surface launched in hopes of their offering a deal, no joy.  So I started Googling and wound up at Best Buy.  Looked great, so I attempted to make the purchase.  The online credit card app simply froze up the browser and would neither confirm nor deny I would be able to do the transaction.  Geez, how can a company the size of Best Buy have IT producing forms like this that flat don’t work?  Seems like they’re wasting a lot of opportunity if it happens to very many.

Fail #2:  Walmart

A little more Googling and I discover that Walmart has the same deal.  Great.  Except, oh oh, same problem–the credit card app just fails.  Takes all the info, hit the button to go for it, and nothing happens.  I’m now starting to wonder if the problem isn’t some common third party?  It doesn’t really matter, both these two retail behemoths have lost a $1500 transaction for a stupid reason–their web site didn’t work.

Fail #3:  Amazon

At this point I am thinking it can’t be that hard, SOMEBODY must do this.  So I tried Amazon.  Aha!  They’re offering the no interest deal I want!

I filled out all the information to apply, the application worked (I guess Amazon knows a lot more about software than Best Buy or Walmart), but it turned out to be bait and switch.  Buried in the fine print is a notice that GE Capital would only finance $500 of my $1500 purchase.  Now I have a GE Credit card that will get shredded and never used.  That has to be sub-optimal for both GE and Amazon–they went to all the trouble and cost but are getting no revenue from me.  Not to mention a $500 limit is insulting.  Amazon knows I spend a fortune with them on all sorts of things including Amazon Web Services and have never missed a payment.  Come on guys, do your computers talk at all?  Why offer this stupid $500 credit card on a $1500 purchase?

Fail #4:  PayPal + BillMeLater + MacMall

I went back to the PayPal site to process some orders for my business, and noticed BillMeLater being advertised.  Wow!  I had seen the ads come up every time I had paid for something with PayPal, but I generally just pay cash and had more or less ignored them.  They have a product search that will plug you into a BillMeLater transaction with some merchant that has what you want.  I promptly searched for “Microsoft Surface Pro 3″ and got vectored onto MacMall.  Hmmm, that’s kind of odd to buy a PC from a company that sounds like a Mac company, but why not?  I was getting pretty tired of the chase by now.  I started down the path and promptly noticed I was only going to get 6 months interest free, but again, I was beaten down and ready to do a transaction, so I went ahead.  Filled out all the forms, yada, yada, and BOOM!  I was back to Fail #1 and Fail#2:  PayPal reported that they couldn’t complete the transaction for unspecified reasons (like those other credit card apps just freezing up) and I should try again later.  WTF?!??

Fail #5:  Microsoft + PayPal

Is this becoming Epic Fail, or what?  It’s almost comical by this point.  But, the best is the final episode (so far) and involves Microsoft and Paypal.  I was still focused on the idea of using BillMeLater and it was a new day.  So I had the idea of just seeing who would sell me a Surface Pro 3 and let me pay with PayPal.  I tried Microsoft first, and sure enough.  Excellent!

So I hopped on, performed the transaction, got to the part where you pay PayPal, and for the first time ever (I have made hundreds of PayPal purchases) I saw almost nothing of PayPal and never got the opportunity to use BillMeLater.  Bloody Hell!

I immediately went to PayPal and cancelled the transaction.  There’s a button right there and they accepted and confirmed the cancellation.  Then I went back to the Microsoft Store.  Not so easy to cancel there, I had to call  the dreaded 800 number and wait.  But eventually I got a Service Agent and after answering many strange questions, she assured me that the transaction was cancelled, and that she couldn’t really help me in any way to purchase a Surface with 12 month no interest financing or even to use BillMeLater to make the purchase.  Gee thanks, Microsoft.

So I’m thinking this is pretty silly.  Microsoft must want to be moving these stupid devices and should be making it easier, right?  Maybe I would just go lob a suggestion in to them and maybe someone would get back in touch with me with the right stuff.  I searched in vain both the Microsoft site and the Microsoft Store site for some place I could make the suggestion.  Apparently they are not at all interest in hearing from customers.  I guess I should’ve expected that after getting this far.

Fail #6:  Microsoft + PayPal, Again

This morning I logged into my computer to find 3 email message from Microsoft–a return authorization, a notice that the cancellation had failed, and another notice telling me I should just refuse deliver on the shipment.  Oh boy.  You would think Microsoft could manage to process a cancellation that happened within minutes of an order to avoid needlessly shipping physical goods to a customer who doesn’t want them.  No joy.  So then I bopped over to PayPal to confirm that my cancellation of the prior day was still in place.  The report had been updated to say they were going ahead and paying Microsoft.  WTF?!??  Really?  After both organizations had confirmed the cancellation the prior day?  Are you kidding me?

Now I’m angry.  Both these behemoths had clear instructions from me and had accepted and confirmed.  So, I called PayPal Customer Service.  A nice lady eventually picked up (yeah, lots of voice menus for THEIR convenience) and she confirmed from her screen that I had indeed cancelled payment.  Why then, does my report show this as a transaction that will be paid and why is the cancellation no longer showing?  Well, it looks like the transaction went through before the cancellation could take effect was the response.  OK, why does my balance still not reflect a deduction for the payment then if it’s too late to cancel 24 hours after the cancellation went in and was accepted?  “I’m sorry sir, but it is too late to cancel.  You’ll have to wait 48 hours to see if the seller has refunded your money and if they haven’t, you could file a dispute at that point.”

 

Conclusion

I was really pretty excited about getting a Surface Pro 3 when I started this trek.  I’m shocked at just how many organizations screwed up their Customer Experience along the way and at just how low the bar is set for that Customer Experience to be acceptable to them.  It can’t possibly be a good thing for sales of the Surface for there to be this much friction in the process.  I am hopeful that some one of the organizations involved will read this and contact me with a solution I’d like, but at the same time, I don’t think I’ll hold my breath.

Macbook Air and iPad?  You’ve got a solid year ahead of you still.  Maybe I’ll just wait until the Surface Pro 4.

Posted in amazon, apple, business, customer service, gadgets, Marketing, microsoft surface, mobile, strategy | Leave a Comment »

Authentication as a Service: Slow Progress, But Are We There Yet?

Posted by Bob Warfield on July 11, 2014

BankVaultSmallAuthentication as a Service solves a problem every Cloud Developer, mobile or desktop, has to solve.  As one player in the space, AuthRocket, puts it:

Do you really want to write code for users, forgotten passwords, permissions, and admin panels again?

To that I would add, “Do you really want to have to be a world class expert on that stuff to make sure you don’t leave some gaping security hole out of ignorance?”  I think the answer is a resounding, “NO!” to both questions.  Why do it in this world of Agile Development, Lean Startups, and Minimum Viable Products?  It’s one of those things everyone does (and should do) pretty much the same way from a user’s perspective, so there is no opportunity for differentiation.  You have to do it right because the downside of security problems is huge.  You have to do it right up front to protect your customer’s data and your investment (so nobody gets to use your products for free).  There’s basically very little upside to rolling your own (it’ll only slow you down) and tremendous downside.  Hence, you’d like to buy a service.

I keep going around this block for my own company’s (CNCCookbook) products, and I surely would like to get off that merry g0-round.  I wanted to buy this some time ago, and have written about it for quite a while.  For example, in an article I wrote 4 years ago on PaaS Strategy (Platform as a Service), I suggested login would be an ideal service for a pass to offer with these world:

Stuff like your login and authentication subsystem.  You’re not really going to try to build a better login and authentication system, are you?

I sound just like AuthRocket there, don’t I?  I’m sure that’s not the earliest mention I’ve made, because I’ve been looking for this stuff for a long time now.  As I say, I had to roll my own because I couldn’t find a good solution.  I would still like to replace the solution that CNCCookbook uses with a nice Third-Party service.  I only have few very generic requirements:

-  It has to offer what I need.  Basically that’s Email + Password login with all the account and forgotten password management interactions handled for me.  It would be very nice if they do Federated Login using the other popular web services like Amazon, Facebook, Twitter, Google, or whatever.  It would also be very nice if it could do 2 factor login.  The latter two are optional.

-  It has to work well.  I judge this by who has adopted it and how it is reviewed.

-  It has to be here for the long haul.  I’ll judge this by size of customer base and quality of backers.  AuthRocket, for example, is still at the invitation-only Beta stage.  That’s too early for me.  I have mature products and don’t want to have to change out this service too often.

-  It has to be easy for me to access the API’s.  I prefer a nice RESTful API, but I will take a platform-specific API for my chosen development platform: Adobe Flex.  And no, I don’t want to debate that platform, it has worked fabulously well for me, the products are mature, and I am not looking to switch.

-  It has to be easy to tie it back to securing my data in the Amazon Web Services Cloud.

-  Optional Bonus:  It helps me solve the problem of disconnected data access.  My apps are Adobe AIR apps.  You download and can run without a web connection for a period of time.  This is important to my audience, but means I’ve got to use data models that keep local copies and sync with the Cloud when they get connected.

While my apps are not yet available on iOS or Android, all of those things are almost exactly the same problems any Mobile App developer faces.  Therefore, this ought to be a hotbed of activity, and I guess it is, but so far, I still can never seem to find the right solution for me, and I don’t think I’m asking for anything all that crazy.  But, I have yet to find a solution.  Let me tell you a little bit about my 2 most recent near misses.

Amazon Cognito

I was very excited to read about Amazon’s new Cognito service.  At CNCCookbook we’re big Amazon believers, and use all sorts of their services.  Unfortunately, at least until Cognito, they didn’t really have a good service for solving CNCCookbook’s authentication problems.  They had IAM, which is a very complicated, very heavy-weight, very Big Corporate IT kind of solution.  It looked kind of like maybe you could do it if you had to, but you’d still wind up writing all the darned password management stuff and it looked like it was going to be a real ordeal.  Mostly, I think of IAM, as the tool used to define roles for how broad classes of users can access the various other Amazon offerings.  I wanted another service of some kind to be the sort of simpler, friendlier, front end to IAM.  Enter Cognito, and it sure sounded good:

Amazon Cognito lets you securely store, manage, and sync user identities and app data in the AWS Cloud, and manage and sync this data across multiple devices and OS platforms. You can do this with just a few lines of code, and your app can work the same, regardless of whether a user’s devices are online or offline.

You can use Amazon Cognito directly from your mobile app without building or maintaining any backend infrastructure. Amazon Cognito handles secure app data storage and sync, enabling you to focus on your app experiences, instead of the heavy lifting of creating and managing a user data sync solution.

A guy like me loves the part about, “You can do this with just a few lines of code” followed by “without building or maintaining any backend infrastructure.”  Now that’s what I’m talking about, I gotta get me some of this!

It’s nearly all there:

-  Amazon is an outfit that can be trusted for the long haul.

-  REST API’s are no problem, that’s how Amazon prefers to operate.

-  Tie back to other Amazon Web Services?  Puh-lease, who do you think you’re talking to, of course one Amazon Service talks to the others!

-  Sync?  Yeah, baby, that’s what Cognito is all about.  More potential time savings for yours truly.

Oops, just one little shortcoming:  it only does Federated Login via Amazon, Facebook, or Google.  That’s cool and all, but wheres my Email + Password login so I can seamlessly move customers over to it?  Maybe I missed it, maybe it’s coming, or maybe Amazon just doesn’t think it’s important.  Can I live with forcing my users to make sure they have either an Amazon, Facebook, or Google account?  Yeah, I guess maybe, but we sell a B2B app and it sure seems kind of unprofessional somehow.

Amazon, can you please fill this hole ASAP?

Firebase

I hear fabulous things about Firebase, I really do.  People seem to love it.  It’s chock full of great functionality, and on the surface of it, Firebase should fit my needs.  Yet, when I dig in deep, I find that the login piece is kind of a red-headed stepchild.  Yeah, they advertise Email + Password Login, and they even tell you how to do it.  But there’s no RESTful API available for it.  They list all the right operations:

-  Login, and returns a token
-  Create a new user account
-  Changing passwords
-  Password reset emails
-  Deleting accounts
etc.
However, it appears that those things are handled by a client library which is in a very dev platform specific format.  If you use one of their chosen platforms, it’s ok.  If not, you can only use their rest API’s for the Cloud Database–no login functionality.  That’s going nowhere for me.  It would’ve been so much nicer had they packaged what’s in the client library in their Cloud and provided RESTful API’s for the functions I’ve listed.  As I told them when I made the suggestion, that makes their offering accessible to virtually every language and platform with the least effort for them instead of just the few they support.
Conclusion:  Crowd Sourcing?
Hey, I’m open to suggestions and the Wisdom of the Crowd.  Maybe someone out there knows of a service that meets my requirements.  They seem pretty generic and I’m frankly surprised I still can’t find such a thing after all these years of building almost anything you can imagine as a service.  We’re not very far away from it.  Either Amazon or Firebase could add the functionality pretty easily.  I’m hoping maybe I’ll get lucky in the next 6 months or so.  If anyone knows the right people in those organizations (or their competition), pass this post along to them.

 

 

Posted in bootstrapping, business, cloud, mobile, platforms, saas, service, software development | Leave a Comment »

Let’s Try Another Verse of Your SaaS Company Does Not Need a Sales Force

Posted by Bob Warfield on May 23, 2014

MorpheusNoSalesForceIt’s time for another installment of what some of the Enterprise Irregulars have called the Jason and Bob show.  Jason and I have disagreed on a fair number of issues over time, though we have also agreed on a lot.  Jason’s had a great run and is now in the rarefied atmosphere of VC’s.  All of his material is thought provoking and well worth a read.

Today, we’re going to talk about Outside Sales or indeed the question of whether SaaS companies must have a sales force at all, inside, outside, or otherwise.

Jason’s post today is “Inbound or Outbound Sales? The Answer is Yes.”  In it, he argues that

There’s a meme, a CommonThink, among certain segments that Outbound Sales is Bad, or at least, a Little Unseemly.  And maybe a lot bit Old School.

That we’re in a new world of sales, a new consultative world, where leads come in, prospects can try and learn before they even talk to a human, and then, a sales rep thoughtfully answers questions, models business process change, and helps them decide how and why, and if, to buy.

And that’s true.  We are in that world.  Inside sales is terrific.  Warm leads are great.  Live trials of easy-to-use-and-deploy web services really have changed the game.

And yet …

The reality is, by revenue, this isn’t the way the majority of the world buys.

My role here today is to cast a dissenting vote, and to explain why.  In fact, this one’s been argued between us before so I’ll just refer you gentle readers to my original response to get the ball rolling:

Does your SaaS company have to have a sales force?

In that article I make the case that, no, your SaaS company doesn’t automatically need Outside Sales. It’s a function of who you need to sell to and that’s a function of what your solution costs. The more money involved in an individual sale, the more likely you need Outside Sales.  This isn’t really news or something I made up, by the way.  I learned it at the knee of one Geoffrey Moore, he of the Chasms and Gorillas and such.  I find it makes a lot of sense to think about how you need to sell based on the size of the transaction involved.  In hindsight, it’s obvious that a very expensive purchase carries a lot of risk and that a large organization will need to involve many people and ultimately a highly placed decision maker to get it done.

Jason does tip his hat to this notion with some remarks about selling to SVP’s, but I believe it’s something that startups need to think really carefully about very early on.  Horses for courses. What’s the right way to sell for my specific product and opportunity?  You need to make a conscious choice during the very early stages of the startup about what your strategy will be in this respect, because it’s going to have a profound impact on what sort of company you’re building, what kinds of skills you will need, and even the capital needs of your venture.

Jason mentions the “meme” that Outbound Sales is Bad.  Surely that’s damning with faint praise, but there are sound reasons why that meme is out there.  He says, “by revenue, this isn’t the way the majority of the world buys,” referring to purchasing without the need for Outside Sales.  Au contrare, Jason.  I don’t believe it and I have never seen any data to support it.  In fact, you don’t have to look far to see that the biggest revenue is associated with offerings that don’t require either inside or outside sales. Think Apple, Walmart, et al. Their selling is totally self-service and marketing-driven. Not software? How about Google or Facebook? Oh, not business enough? What about Github, Amazon Web Services, or many other ventures that are hugely successful.  While we’re at it, let’s look to where the majority of the profit, not the revenue goes and the differences are even more stark in favor of finding models that don’t require Sales.

What if that’s the real opportunity–start something that works and doesn’t require Outside Sales.  Or if you prefer, consider the potential for disruption that going into a market with a product that can work without Outside Sales offers. That’s exactly what PC’s did to the Minicomputer vendors. The Rolex-clad, scratch golfing, Armani suited crowd with good haircuts laughed at the little computer stores and the pathetic IBM PC.  Ken Olson himself laughed at them all the way to the point where DEC disappeared and was never heard from again and in a very short span of time.  Hitting an Outside Sales-driven industry with a solution that requires no sales creates the Mother of all channel conflicts for the poor sales-driven company.  It is just as toxic to companies with Sales Forces as Subscription models are to Perpetual License models.

The other reason the meme is strong is capital requirements.  Outside Sales-driven opportunities are going to require more capital to finance their longer sales cycle.  It’s unavoidable when you have to wind your way through the organizational complexity that’s there to stop a company from foolishly spending its money without proper checks and balances on your expensive solution.  SaaS itself is already capital inefficient because it pulls expenses forward and pushes profit out over time relative to getting it all up front in the Perpetual License model.  We live with it to get to the pot of gold at the end of the rainbow, but what if we could at least mitigate it by selling a product cheap and easy enough that it didn’t need Outside Sales or even Inside Sales?

That’s how the companies I’ve mentioned got to be so big so quickly.  That’s why this so-called meme is a real business strategy that’s disruptive and must be considered by any startup.

Figuring out how to leverage strategies like this in new markets where you can be supremely disruptive to the incumbents is what successful startups are all about.  Don’t be a slave to tradition.  You’re not here to build another SAP.  You’re here to build the next generation by disrupting SAP and Oracle.  SaaS is probably not enough to do that, though some argue otherwise.   I think many of those are confusing disruption with room at the bottom (great link from Jason, BTW).  The thing is, everyone’s doing SaaS now, so what’s different about your story?

 

Posted in bootstrapping, business, enterprise software, Marketing, strategy | Leave a Comment »

Random Thoughts on Customer Engagement, CRM, and Social CRM

Posted by Bob Warfield on May 13, 2014

Can Enterprises learn to talk WITH Customers rather than AT them?

Can Enterprises learn to talk WITH Customers rather than AT them?

I read with interest Paul Greenberg’s, “Random Thoughts on CRM.”  They don’t call Paul the “Godfather of CRM” for nothing, and this post got some old neural circuits firing again just like it was yesterday.

The gist of the article was about how a much larger market, called “Customer Engagement”, will eventually subsume CRM and make CRM just a feature of the larger Customer Engagement matrix.  The process of assimilation is already underway and presumably resistance is futile.  Paul characterizes Customer Engagement as involving all that is CRM plus the following:

 

  • Customer journey management
  • Customer experience management
  • Customer analytics including sentiment and text analysis
  • Social listening
  • Gamification engines and platforms
  • Customer engagement platforms (broad definition here)
  • Feedback management systems including ranking, rating engines)
  • Reputation management engines
  • Customer interaction engines (e.g. Epiphany, Exact Target)
  • Self-service knowledge engines
  • Community platforms
  • Social networks
  • Personalization engines
  • Communications platforms that foster customer communications (parts of unified communications fit the bill here though UC is a lot more than this)
  • Enterprise video chat/conferencing
  • Customer Effort Scoring (score on what you do. Thanks to Esteban Kolsky for this one). How much effort does a customer make
  • Loyalty and Advocacy systems

I wholeheartedly agree, and it was as I was reading that list that I suddenly had my epiphany:

Customer Engagement is nothing more than Social CRM writ large.

Or if you prefer to be a little less dramatic, Customer Engagement is the Second Coming of Social CRM.

Whether you believe Social CRM failed, was an idea before its time, or is simply percolating along and growing steadily, I can’t think of a better way to describe Social CRM than to say that it’s all about Customer Engagement.  The difference between Social CRM and Conventional CRM is almost entirely a matter of perspective:  are you talking WITH your Customers or talking AT your Customers?  CRM talks AT them.  It values them solely as leads to be qualified and sold to or as an expense area in the case of Customer Service to be minimized.  Paul’s list of Customer Engagement activities is nothing more than a list of what sorts of conversations can be had WITH Customers and what tools may be available to facilitate those conversations.

That problem of talking AT your Customers (and yes, “Customer” must be capitalized in this era when those who can’t learn to talk WITH them will start to increasingly lose) is a cultural problem born of seeing Customers as accounting line items and metrics rather than as PEOPLE who can choose to do business with us or not. Social CRM skeptics back in the day (seems so long ago since I was part of that world) danced around the cultural issues–they were sure Social in the Enterprise couldn’t work just because Enterprises were all about Command and Control and not what it takes to be Social.  Not all Enterprises are, BTW.  Companies like Southwest Airlines come to mind as counter-examples.  But by and large, Enterprises are very much about Command and Control.  I believe that a close relative of the Innovator’s Dilemma is what I will dub the “Politician’s Dilemma.”  It’s what happens when an organization grows large enough that the primary skill needed for advancement is not creativity or the ability to make good decisions, it’s the ability to be a good politician.  It’s been the undoing of at least as many large organizations as the Innovator’s Dilemma, and it is also closely related to those pesky cultural problems that prevent Enterprises from seeing Customers as Customers rather than $customers (and I wish I had an even smaller font for “customers” and a bigger one for “$”).

Here’s where I wonder about Paul’s view that Customer Engagement is, in fact, going to eat CRM.  I wonder because I can’t see much evidence these cultural biases that prevent Enterprises from being good at CRM have even remotely diminished.  Perhaps over time the Internet will exact a toll on their callous disregard for real Customer Service.  Certainly the frictionless exchange of information about what a Company’s products are REALLY like and what it is REALLY like to deal with that company help.  But, our fixation in the 80’s, 90’s, and 2000’s with reducing regulation and empowering ever larger monopolies (and hence the 1%) has been a powerful counterbalance to any renewed sense of egalitarianism the Internet brings.  Simply put, it’s business as usual for these companies.

Paul brings up the 4 largest companies in the CRM space:  Salesforce, SAP, Oracle, and Microsoft.  It’s funny, but with the possible exception of Salesforce, you couldn’t ask for a stronger list of the Who’s Who of having abused their customers and maximized their Bully Pulpit Status.  Perhaps by being (or seeming to be) the exception, this is precisely what has driven Salesforce’s growth.  I certainly know people that work there and talk about it in much more glowing terms than the other 3.  Let’s leave Salesforce aside and ask about the other 3:

What are the chances that SAP, Oracle, and Microsoft can actually learn how to talk WITH Customers and not AT $customers well enough to participate in Customer Engagement at a more empathetic level than, say, researchers watching mice in mazes?

I’m not optimistic, and I don’t think Paul is either.  He offers the following critique of the four companies:

  1. Salesforce.com – They are getting so big and so process driven that a lot of the creativity that characterized the company is starting to seep out.
  2. SAP – The continuous politics at this company are forcing it to step on its own feet every time they make progress – and we start again.
  3. Oracle – They are totally locked and loaded into their customer experience messaging and it’s the wrong message to send to the marketplace.  This prevents them from thinking in terms of ecosystems – which is a 21st century requirement for a large company’s success.
  4. Microsoft – They are moving quickly but still don’t have the messaging down at all. They send mixed messaging signals to the market and they are hard to read. They need to clarify this right away, since they have successfully accomplished a radical transformation of their customer-facing applications for the better. Now the world needs to hear it.

Ask yourself whether the essential cultural virtues needed to thrive in a world of Customer Engagement are likely to be strong or weak in the light of those criticisms?  Even for Salesforce, eliminating personal initiative and emphasizing management by excessive process is a sure recipe for stopping any real conversations with Customers.  It’s hard to change for all the same reasons that once the Peter Principle has taken hold, you can step back from it.  People are hired by bosses who hire the sort of people they want to hire.  Bosses who think of Customers as $customers don’t hire people who think “Customer.”  They hire more $customer people.  Sure, you can add a few Customer lovers here or there, but they drown in the sea of $customer people.  It’s a vicious cycle that can’t be undone.  Command and Control never goes softly into that Good Night, least of all because it is very Commandingly In Control.

What does it all mean?

Optimistically, it means that these four will eventually give way to a New Guard of some kind.  I’d like to think that’s true everywhere and in every industry that finally understands the Customer is King.  Taking that view is a powerful Engine of Growth for new ventures.  It is disruptive in much the same way SaaS has been to Enterprise Software because where SaaS was a business model change that could not be achieved, Customer Engagment is a Cultural Model change that is too hard to achieve.  It’s relatively easy to hire a new CEO or merge to make a new entity.  So far, we are tragically short of good Existence Proofs that this New Wave is underway.  There are precious few Southwest Airlines and an endless stream of Ego-Du-Jour companies that power to the forefront or that cling tenaciously to the monopolies they already own.

Fundamentally changing the culture of a company?  That’s darned near impossible.  I’m not sure I’ve ever seen a successful example of it outside the fawning press releases and interviews telling us how transformative some new CEO has been, all of which turn out to be false hopes.  More’s the pity.

Postscript

Paul Greenberg’s response, via Facebook:

Bob, I read the post. I’m more optimistic than you on this, though I really liked your post. Also, these are random, and to be fair to the Big 4, I also noted what I liked big picture about each of them too. I just don’t have a black and white view of this at all. its a nascent, roiling market at the moment and lots to come of it hasn’t happened yet – and is indeterminate. Also, I agree with you totally that this is what you called Social CRM writ large though my take is a little different. You’ll see more on this in a series of major pieces that will be coming leading to the next book. Social CRM was the progenitor for customer engagement – it didn’t fail, like social business morphing in its short life to digital transformation, social CRM now CRM morphed to something much larger and more encompassing that the parent was/is. CRM becomes the operational components of the engagement market. You are a helluva writer, by the way. Seriously good.

Paul is not just a brilliant CRM analyst, but a gentleman and renaissance man of the sort that is seldom seen these days.  I know him via my past life in Social CRM and the Enterprise Irregulars.  Thanks Paul!

Posted in business, customer service, Marketing, strategy | 1 Comment »

The eBay Turnaround that Never Had to Be: Now Here’s the Rest of the Story

Posted by Bob Warfield on February 13, 2014

Read an interesting account of John Donahoe’s turnaround at eBay in Business Insider.  It’s a fascinating discussion that revolves around relatively few premises for how the turnaround was accomplished.  Here are the money quotes:

He de-emphasized eBay’s auction business and started describing the company as a “technology partner” to retailers small and large. eBay added clients Home Depot, Macy’s, Toys ‘‘R’’ Us and Target, helping them cope with a world dominated by Amazon.

So, making eBay a first class technology partner to large bricks and mortar retailers.  Great idea, more on that in a moment, but first, a couple more quotes from the article:

For example, eBay never bothered to develop sophisticated search technology. This made it dependent on Google ads, which took a bite out of profits. And it made it hard for users to find products they wanted to buy, dragging down sales.

Likewise, eBay under Whitman never developed a product recommendation algorithm to match Amazon’s — despite the fact that Amazon credits 30% of its sales to the tool.

Better search, and the ability to do merchandising and product recommendation like Amazon’s.  What if I told you eBay was offered a finished technology solution to each of these problems way back in 2001 and they completely blew it off as uninteresting for their business?

Trust me, I know, because my startup, which was called PriceRadar.com, was the group offering the technology.  We met numerous times with Jeff Jordan at eBay, and even had offices across the parking lot from eBay headquarters right there in Campbell.  We had built a sophisticated textual data mining technology, and had decided this technology could be hooked up to eBay’s data to produce a unique selling proposition.  We would visit with our customers, who were major bricks and mortars retailers like Sharper Image and West Marine, to name two companies that had worked with us.  Walking into a meeting we came to show them something special, something unexpected.  After sending our web crawler to visit their online catalogs, we could generate a report telling them exactly which of their products they could sell on eBay for just as much as they were selling in their catalogs, how many they could sell without depressing prices, exactly how to optimize their listings including which keywords, what time of day to list and close the auction, which eBay “extras” were worth paying for, and so on and so forth.  The software would even let them allocate quantities of product which we would then list on eBay for them to drop ship when the auctions closed.

The bricks and mortars retailers loved it–it was easy to sign them up.  For them, it was an extremely cheap way to add new customers to their house list.  You know, that list that causes them to dump endless catalogs at your doorstep if you order anything from them?  Our fees combined with eBay’s fees were a pittance compared to their existing marketing costs to add a new name to the house list.  So that’s quote #1, making eBay a first class technology partner to bricks and mortar retaillers.

That’s not all we could do.  The site was called “PriceRadar.com” because it had an extremely powerful search engine that was adept at finding listings that were hopelessly lost if you tried to find them with eBay.  We also tracked affinity patterns–if you bought “X” you were also likely to buy “Y” and “Z”.  Plus, we generated endless analytics that the eBay people had no way to track on their own.  They were always surprised and interested when we visited with this information.  It included things like a fine grained breakdown category by category (and I’m talking our categories, not theirs, a taxonomy of thousands of micro-categories) accounting of exactly where their business was coming from.  So much for quote #2 as well–better search and product recommendation.

So what happened?  Why did eBay pass on this opportunity way back in 2001?

Call it an idea ahead of its time.  We offered them the technology in 2001, but it wouldn’t be until 2005 that they’d start to massively lose market value.  By 2008, Meg Whitman was ready to move on and leave Donahoe as her successor.  All tragically avoidable if the article was right about the cure.  But, that’s just it–you would’ve had to see very far ahead to realize it.  4 more years is forever in High Tech.  It was probably starting to get scary even 2 years after our offer, but still, that’s a long time in the Dog Years these companies live in, and they would’ve handily rationalized early problems as being a temporary effect of the 2001 Dot Com crash that would go away.  Then there was the issue of eBay’s culture at the time.  Business Insider describes it well:

Partly, the issue was obvious: eBay had gotten fat and happy. For 10 years it had been a huge success, riding a wave of Internet adoption. During the mid-2000s, eBay was notorious for meetings that always ended in applause — even when the news was bad.

But eBay also had a problem attracting and retaining innovative, entrepreneurial people into its executive ranks.

The fat and happy part and the lack of innovation were terribly obvious every time we met with them or interfaced with their humongous software back end.  They just didn’t quite seem to understand what we were telling them about better search and what I pitched at the time as “Merchandising like Amazon’s.”  Things were so good it just didn’t seem like it was worth the effort to make things better.  They’d narrowly survived making their technology scale–we used to see the news trucks parked every day at eBay so they could run a story about how the site had gone down.  When you’re getting Boundless Growth and Unbridled Demand just for showing up at work, why rock the boat with any new ideas?

Then there’s that ole bugaboo called, “Innovator’s Dilemma.”  You have to be prepared to cannibalize your own business lest somebody else (like Amazon) decides to do it for you.  The most substantive objection eBay had about our technology was that they were afraid it would alienate the mom and pop businesses that were responsible for the Lion’s Share of eBay’s listings.  The message was something along these lines:

We’re afraid that if you make it super easy for Sharper Image to suddenly have a big eBay presence the mom and pops will take that as eBay competing against them and they won’t like it, they’ll pull out.

I tried hard to explain that they had no place else to go–they were hopelessly dependent on eBay.  There were no other easy partners who could create an e-commerce presence for what had been small bricks and mortar independent retailers.  At PriceRadar, we had interviewed dozens of the most successful resellers on eBay in various categories and learned that many of them had closed their bricks and mortar storefronts because eBay was so lucrative they’d rather sell online out of their home offices than pay the overhead of owning an actual physical shop.  Many of them had unique merchandise that the big retailers didn’t have anyway.  The eBayers would listen politely, smile, and then move on.

If you’re curious, here’s what the old PriceRadar site looked like in 2000:

PriceRadar

We had even signed Gary Burghoff as a spokesman!

That was the Consumer Search front end circa early 2000.  There was another client used by the Retailers to list their products on eBay via our service.  We did a number of unique things at PriceRadar, many were things people said couldn’t be done.  Like downloading all of eBay’s auction data and processing it on SQL Server–the Unix guys all said we’d have to have Unix and Oracle to make it scale, but we didn’t.  We made it through the scaling hurdles that had plagued eBay in a relatively short time, handling their data volumes in our architecture.  Today, it would’ve been called a “Big Data” application, but back then nobody had heard that term.  The search algorithms were very sophisticated and involved a mix of computer algorithms and live human “taxonomy experts” that fine tuned the results by creating special search rules on the micro-categories.  In the end, it was a bust.  When we started, there were lots of auction houses out there, and it seemed like a super sophisticated search engine monetized by retailers who wanted to list was a great plan.  Unfortunately for us, network effects meant that eBay controlled that entire space in a relatively short time.  Once they were the only game in town, they were also the only buyer in town.

Too bad for all concerned eBay didn’t realize we had the solution for a lot of problems that would nearly kill the company.  PriceRadar was a great lesson in market timing and exit strategies in the face of network effects and derivative businesses.  It’s also the failure I regret most as the product and technology were dynamite.

Posted in business, strategy | 2 Comments »

The Problem With Replacing CEO’s, Boards, and Governance at Big Co’s

Posted by Bob Warfield on February 1, 2014

At some point, Silicon Valley VC’s, whom I am not always entirely complimentary of, decided it was easier to teach a Founder to be a decent CEO than it was to teach a Big Co Exec to fill in what they’d lose if a Founder left.  That doesn’t mean they don’t replace CEO/Founders, but it used to be an almost guaranteed matter-of-course.  The VC’s have it right.  We saw that unfold at Microsoft almost to the day Bill Gates handed the reigns to Steve Ballmer.  I believed then and believe now that Microsoft needed a Fighter Pilot and instead got a Moist N’ Easy Snack Cake Salesman.  Sorry Steve, you’re a good man, but you were not the right man for Microsoft.

Now the Microsoft Board is apparently on a path to making Satya Nadella, the President of their Cloud Business, Microsoft’s new CEO.  I read with interest in a WSJ article that he is asking Bill Gates to give him advice on Technology and Strategy.  That was my first red flag for this candidate.  Advice on Technology and Strategy?  Isn’t that exactly what’s been so badly lacking at Microsoft since Ballmer took the reigns?  Did he and Bill Gates just not talk?  Or is it possible that the company actually needs to find someone that knows enough about Tehnology and Strategy to chart their own course and actually dare to get Microsoft to do something different from what hasn’t been working all these years?

I read in The Telegraph the following from one of Nadella’s former computer science professors this ringing endorsement:

Former teacher and MIT director Vinod V Thomas told the Times of India he “cannot vividly recall” Mr Nadella as he “didn’t figure in either ends of the spectrum”, but added that records showed he was “a first-class student who achieved distinction.”

Any attempt to find out what Nadella has been doing for most of his career meets with a brick wall.  We know he did something for Sun Microsystems and that he has been at Microsoft for 22 years.  As the Telegraph article concludes:

Despite his enormous success in the tech industry, Mr Nadella is not the biggest user of Twitter. He has not tweeted since July 2010, and the messages he has posted are enthusiastic, but not particularly enlightening.

That seems to be basically this guys M.O.–he’s quiet, heads down, and steady.

Is this really what Microsoft needs?  Quiet, heads down, and steady?  I mean love her or hate her, at least Marissa Mayer has shaken up Yahoo to an extent.  At least Meg Whitman had done something everyone had heard about before she took over HP.

“But wait,” you say.  Hasn’t Nadella run one of Microsoft’s most important and successful divisions, the Cloud division?  Isn’t that a foward looking part of the empire?  Not really.  It didn’t take any great imagination or strategic prowess to deliver Microsoft to its present Cloud market position.  Microsoft was very late to the Cloud, played it very safe, and has yet to accomplish much there.

Herein lies the problem:  Boards want to hire the safe choice.  They don’t want to hire someone who will shake anything up until it is far too late.  They want consensus.  They want everyone to play nice.  They want to have nice informative Board meetings where they can get their two cents in and everyone in the room will nod sagely and take the advice.

There’s really only a couple of guys I’ve come up with who can make a difference for Microsoft.  Either Bill Gates can come back as CEO, or Jeff Bezos could add Microsoft to Amazon and go from there.  Neither one is apt to happen, so be ready to watch Microsoft flounder further.

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Evil VC Seeks Minions for World Domination

Posted by Bob Warfield on January 30, 2014

EvilSeeksMinionsIf we substitute “Venture Capitalist” for “Evil Genius”, the placard on the right describes the Silicon Valley Startup Culture perfectly.  Yes, you young hopefuls, your friendly neighborhood (that’d be the Sand Hill neighborhood) VC really does expect you to sacrifice your lives in a play for world domination.  They don’t care about building a nice little $100M a year software business–that’s peanuts, doesn’t move the needle on the fund.  Son, it’s just not enough tonnage.  Must be prepared to work 24-7 for fascist psychopath for close to no pay.  Yep, that’s about the size of it.  They won’t even try to hide the fact–they write about how you should accept as little pay as possible.  In 2008 Peter Thiel went on record saying the best predictor of startup success is low CEO pay.  Really?  That’s the best predictor VC’s have come up with?  Thiel is not the only VC to suggest it, not even close, and they’re largely successful at getting what they want–75% of founders pay themselves less than $75,000 a year.

What about that business of “Messy death inevitable?”

I suppose it’s a function of how you define “Messy”, but the “death inevitable” part rings true.  VC’s these days want startups capable of reaching $1B in revenue.  The reason, as one explained to me over drinks, is that they make their exit when the startup IPO’s.  But in order to IPO at a reasonable valuation, they have to be able to paint a picture for those buying public shares that the company has years of growth left.  That’s how the Greater Fool theory works–you can never let people discover they’re the last ones and the valuation has peaked.  So what happens to $1B Unicorns?  First, by quantifying things at $1B, we learn that the Utility Curve for VC’s is drastically different than for most Founders.  Offer Most People $10M after 10 months of effort when they’ve never made even $1M, and an awful lot of them will say, “Yes.”  The VC’s will resoundingly say, “No,” and they’ll tell you that anyone who says “Yes” never should’ve raised VC in the first place.  BTW, I have been through that scenario personally and I can tell you it was a harrowing experience.

Getting back to that $1B Unicorn, the odds are not at all good.  Only about 0.07% of Consumer and Enterprise VC-Backed companies become those Unicorns.  That means, Dear Impressionable Young Founder, that your odds are one in 1428.  The odds of winning on a single number at roulette are nearly 40x better, and you don’t have to bet years of your life on the roulette number.  One in 1428 odds of achieving World Domination.

That Messy End will come about because of the inevitable terms in your legal documents with your financiers and because of how the system operates.  Consider if you had worked hard to achieve a modicum of success and sold a company for millions but none of the founders or employees got anything at all out of it except a job with the buyer while the VC’s saw a positive (but inadequate in their eyes) return.  Wouldn’t that be a messy end?  The key term in your documents that leads to tears is the “Liquidation Preference.”  Supposedly the market standard is 1X but I’ve seen numbers as high as 3X in some cases.  Now let’s suppose you’ve got a company that is sold for $50M.  That’s a lot of money: many would regard that as a successful company.  But, it’s only successful to the investors to the extent it generates a return on their investment.  Suppose they’ve put in $40M and have a 1X liquidation preference.  That means they get back their $40M right off the top.  Now there’s $10M left to split between the investors, founders, and other employees.  You’re probably diluted pretty good at this time, so let’s say non-Investors are getting $4M.  Suddenly your $50M sale is getting you more like $1M than the $5M you and your co-Founder expected.  It gets worse–with a 2X or 3X liquidation preference, you get nothing.

Make no mistake–the VC’s feel perfectly justified in all of this and see it as emminently fair.  Fred’s example from that link sure sounds fair, but as some of his commenters point out, it attaches no value to the sweat equity of the Founders and employees.  They may have worked years of their lives at sub-standard pay ($75,000 a year?) and not be entitled to a dime in a scenario where VC’s are getting all of their money back.

“NO Weirdos?”

Yes, the VC’s prefer to invest in the Old Boys Club.  Minorities and women will have a tough time breaking in, not that they are Weirdos in any sense, but the homogeneity of the VC Startup Club and especially of the VC’s themselves is strong.  You need to have gone to the right school and have the right background.

The VC’s BTW, are (mostly) not really Evil.  But they have certainly done everything in their power to create a set of rules that overwhelmingly favors their own success, even at the expense of Founders.  Looked at in the cold light of reason, it’s hard to argue it isn’t pretty much as the plackard about Evil Geniuses suggests, at least metaphorically.  Why then do Founders seek Venture Capital?

After talking to lots of Founders seeking advice (I’m on my 7th Startup, have founder 4 of the 7, and have had 3 happy liquidity events), I have concluded the primary motivator for Founders seeking VC is that they want to reduce their risk.  It’s ironic.  VC’s these days don’t accept Founders until they’ve forced the Founder to remove as much risk as possible.  You have to create a Product, find an Audience, and demonstrate Traction before they’ll put a dime in.  Or, you have to give away a surprising amount of your company for surprisingly little capital if you go the Incubator or Angel route.  Yet, these Founders are largely worried about two things they believe can reduce their risk.  First, they want knowledge.  They want people who have succeeded to tell them how to succeed.  Second, they want connections.  The Incubator promises to put them in touch with the VC’s when the time comes.  The VC’s promise more VC’s, talented executives, and many other contacts.  Founders want to be part of the Network.

Experienced Founders are less about the connections or knowledge, they’ve realized they can get connections and knowledge more easily in Silicon Valley than almost anywhere in the world.  Scratch the push for connections and knowledge up to inexperience on the part of young Founders.  Experienced Founders just want the VC’s check.  They want to get where they’re going faster and with the certainty that plenty of money in the bank promises to bring.  VC’s hate to be courted simply for a check.  It eliminates their view of how they differentiate their firm and belittles the possibility they will make a contribution from the Board.  Yet, even many VC’s share the view of many experienced Founders that aside from Cash, VC’s often add negative value.  No less a personality in the VC world than Vinod Khosla says 70 to 80% of VC’s add negative value.  If you look at the impact forcing a company to take unlimited risk in the quest to becoming a $1B Unicorn has, I would suggest that many companies that could have been successful by any non-VC standards and happily profitable got pushed too far and left behind a smoking crater when they fell short of joining the Unicorn Club.

One of my favorite bloggers is Seth Godin.  He writes about this odd conundrum perfectly in his short post, “How much does it cost you to avoid the feeling of risk?”  He’s talking about the risk of putting yourself out there, and it’s no different for Founders.  The VC’s are asking you to do most of the work of creating a successful company before they put any money in.  They’re asking you to do it on your dime.  Unless you have it thoroughly in your heart and soul that  you won’t be happy until you’ve created a Facebook or Google-sized success, forget the VC.  Finish the remainder of the work to create a profitable company instead of raising VC.  That’s the real essence of reducing your risk.

Turning your happy little company into a VC Startup is the first step on the ladder of radically increasing your risk because you’re committing yourself to swinging for the fence.  No bunts, no singles, doubles, or triples.  Swing for the fence, and if you miss, you’re a failure.  Make no mistake about it:

VC’s increase your  risk.

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

How Moore’s Law Put Apple in the Driver’s Seat and Cost Steve Ballmer His Job

Posted by Bob Warfield on January 24, 2014

With the Mac’s 30th anniversary, lots of folks are writing all sorts of articles about it, so I thought it only fitting to bring up my own thoughts on what happened and how Apple got control away from Microsoft.  It’s not a theory I have seen anywhere else, but it’s the one that makes the most sense to me.

Recently, I spent the afternoon upgrading my PC.  I added 2 higher capacity SSD disks, a new graphics card, and a new power supply.  I had planned to add a CPU with more cores, but I couldn’t find it and frankly, I didn’t look all that hard because I knew it wasn’t going to matter very much.

Upgrading my PC is something I used to do like clockwork every 2 years.  I looked forward to it and always enjoyed the results–my computer would be at least 2X faster.  While it didn’t always feel 2X faster, the previous machine (when I still had access to it or one just like it) always felt a lot more than 2X slower.  Life was good in the upgrade heyday for the likes of Microsoft and Intel.  Steve Jobs was this idiosyncratic guy who made cool machines that you couldn’t upgrade easily.  Everyone knew Microsoft had stolen a lot of Apple’s ideas but it was okay, because heck, Apple stole a lot of ideas from places like Xerox PARC.  There were Mac users, but they were a tiny minority, so tiny that Jobs was actually fired from his own company at one point.

Fast forward to my recent upgrade experience.  I hadn’t done an upgrade in 5 years, didn’t feel like I had missed much, and didn’t spend nearly as much money on the upgrade as I had in those times past.  Before that prior upgrade it was probably at least another 3 or 4 years to get to an upgrade.  That one 2 upgrades back was largely motivated by a defective hard disk too, so I’m not even sure it counts.

Times have sure changed for Intel, Microsoft, and Apple too.  Apple is now the World’s Most Amazing company.  Microsoft is in the dumper, Steve Ballmer has lost his job, and Intel just announced they’re laying off another 5000 people.

What happened?

People will say, “That Steve Jobs was just so brilliant, he invented all these new products around music, telephones, and tablets, that nobody wants PC’s any more.”  In other words, Apple out-innovated and out-Industrial Designed Microsoft.  They even changed the game so it isn’t about PC’s any more–it’s all about Mobile now.  We’re firmly in the Post-PC Era goes the buzz.  VC’s are in a rush to invest in Mobile.  It’s Mobile First, Mobile is Eating the World, mobile, mobile, mobile, yada, yada, yada.

But I don’t know anyone who has quit using their PC’s.  Quit upgrading?  Absolutely!  Putting a lot of time on their mobile devices?  Yup.  But quit using PC’s?  No.  Absolutely not.   There are many many apps people use almost exclusively on PC’s.  These are the apps that create content, they don’t just consume it.  One could argue they are the ones that add the most value, though they are not the ones that necessarily get the majority of our time.  Some people are totally online with Office-style apps, but they still much prefer them on their PC’s–no decent keyboard on their tablet or phone.  Bigger screens are better for spreadsheets–you can never see enough cells on the darned things.  And most are still using Microsoft Office apps installed on their PC’s.  CADCAM, which is my day job, is totally focused on desktops and maybe laptops.  Graphic Design?  Photoshop on a PC (well a Mac, and probably a laptop, but they sure don’t want to give up the big gorgeous monitor on the desk much).  Accounting and Bookkeeping?  That’s my wife’s daily work–Quick Books.  Enterprise Software?  Yeah sure, they got mobile apps, but mostly they’re desktop.  Did people unplug all the desktop clients?  No, not even close.  They simply killed the 2 year upgrade cycle.

People will say Microsoft was just too slow, copied without ever innovating, and missed all the key trends.  There is no doubt that all those things were true as well.  But think about it.  Apple has always been great at Industrial Design and Innovation.  Microsoft has always been slow and missed key trends.  Remember the old adage that it takes Microsoft 3 releases before they have a decent product.  That’s been true their entire history.  Something had to be different for these two companies and their relationship to the market.  Something had to fundamentally change.

What’s wrong with Microsoft and Intel has little to do with people quitting their use of PC’s and switching over to Mobile.  It’s not a case of choose one, it is a case of, “I want all of the above.”  There are essentially three things that have happened to Microsoft and Apple on the desktop:

#1 – People stopped upgrading every two years because there was no longer a good reason to do so.

#2 – People who wanted a gadget fix got a whole raft of cool phones and tablets to play with instead of upgrading their PC’s, and Microsoft botched their entry into the mobile market.

#3 –  People who wouldn’t consider spending so much money on a computer that couldn’t be upgraded when it would be clearly obsolete in 2 years suddenly discovered their computer wasn’t obsolete even after 5 years.  So they decided to invest in something new:  Industrial Design.  I can afford to pay for fruit on my machine, just like I used to pay for polo players on my shirts back in the Yuppie Age (I like cheap T-shirts now).  It’s the age old siren’s call:  I can be somebody cool because of a label.

#1 was an unmitigated disaster for Microsoft, and the carnage continues today.  #2 was a botched opportunity for Microsoft they may very well be too late to salvage and it created a huge entre for Apple.  #3 cemented Apple’s advantage by letting them sell high dollar PC’s largely on the basis of Industrial Design.

That’s the desktop PC market.  The server market has been equally painful for Microsoft, but we’ll keep that one simple since Apple doesn’t really play there.  Suffice to say that Open Source, the Cloud, and Moore’s Law did their job there too.  The short story is that there is still a certain amount of #1 in the server market, because machines don’t get enough faster with each Moore’s Law Cycle.  They do get more cores, but that largely favors Cloud operations, which have the easiest time making use of endless more cores.  Unfortunately, the Cloud is hugely driven by economics and doesn’t want to pay MSFT for OS software licenses if they can install Open Source Unix.  Plus, they negotiate huge volume discounts.  They are toe to toe and nose to nose with Microsoft.  So to those first 3 problems, we can add #4 for Microsoft’s server market:

#4 –  Open Source and the Cloud has made it hard to impossible for Microsoft to succeed well in the server world.

Why did people quit upgrading?

Simple put, Moore’s Law let them down.  In fairness to Gordon Moore, all he really said was that the number of transistors would double every 2 years, and that law continues in force.  But, people used to think that meant computers would be twice as fast every 2 years and that has come to a bitter end for most kinds of software.

If you want to understand exactly when #1 began and how long it’s been going on, you need look no further than the Multicore Crisis, which I started writing about almost since the inception of this blog.  Here is a graph from way back when of CPU clock speeds, which govern how fast they run:

Notice we peaked in 2006.  What a run we had going all the way back to the 1970’s–30 years doubling performance every 2 years.  That’s the period when dinosaurs, um, I mean Microsoft, ruled the world.

Oh but surely that must have changed since that graph was created?  Why, that was 7 or 8 years ago–an eternity for the fast-paced computer industry.  In fact, we are still stuck in Multicore Crisis Tar Pit.  A quick look at Intel’s web site suggests we can buy a 3.9 GHz clock speed but nothing faster.  By now, we’ve had 4 Moore Cycles since 2006, and cpu’s should be 16X faster by the old math.  They’re not even close.  So Moore’s Law continues to churn out more transistors on a CPU, but we’re unable to make them go faster.  Instead, the chips grow more powerful by virtue of other metrics:

-  We can fit more memory on a chip, but it runs no faster.  However, it has gotten cheap enough we can make solid state disks.

-  We can add more cores to our CPU’s, but unless our software can make use of more cores, nobody cares.  It’s mostly Cloud and backend software that can use the cores.  Most of the software you or I might run can’t, so we don’t care about more cores.

-  We can make graphics cards faster.  Many algorithms process every pixel, and this is ideal for the very specialized multi-core processors that are GPU’s (Graphics Processing Units).  When you have a 4K display, having the ability to process thousands more pixels simultaneously is very helpful.  But, there are issues here too.  Graphics swallows up a lot of processing power while delivering only subtle improvements to the eye.  Yes, we love big monitors, retina displays, and HD TV.  But we sure tolerate a lot on our mobile devices and by the way, did games really get 2X visually better every 2 years?  No, not really.  They’re better, but it’s subtle.  And we play more games where that kind of thing doesn’t matter.  Farmville isn’t exactly photo realistic.

Will Things Stay This Way Forever?

Microsoft got shot out of the saddle by a very subtle paradigm shift–Moore’s Law let them down.  Most would say it hasn’t been a bad thing for Microsoft to become less powerful.  But it is a huge dynamic that Microsoft is caught up in.  Do they realize it?  Will the new CEO destined to replace Steve Ballmer realize this is what’s happened?  Or will they just think they had a slip of execution here, another there, but oh by the way aren’t our profits grand and we’ll just work a little harder and make fewer mistakes and it’ll all come back.  So far, they act like it is the latter.

And what of Apple?  They’re not the only ones who can do Industrial Design, but they sure act like that’s all that matters in the world.  And Apple has made it important enough that everyone wants to do it.  Don’t get me wrong, I love Industrial Design.  One of the reasons I like Pinterest is it is filled with great designs you can pin on your board.  Is Apple really the only company that can do competent Industrial Design?  Do they have a monopoly on it to the extent that justifies their current profit margins?  Color me skeptical.  Think that new Mac Pro is more than industrial design?  Is it really that much high performance?  The Wall Street Journal doesn’t think so.  How about this hacker that made a Mac Pro clone out of a trash can:

GermanProHack2

GermanProHack

Is it as slick as the real thing?  Aw heck no.  Absolutely not.  But it was made by a hobbyist and professionals can do a lot better.  Companies like BMW are getting involved in this whole design thing too:

BMWAngleView

How Can Apple and Microsoft Win?

Apple has the easier job by far–they need to exploit network effects to create barriers to exit for the new mobile ecosystems they’ve built.  They’re not doing too badly, although I do talk to a lot of former iPhone users who tried an Android and believe it is just as good.  For network effect, iTunes is fabulous, but the video ecosystem is currently up for grabs.  Netflix and Amazon seem closer to duking that out than Apple.  Cook should consider buying Netflix–he may be too late to build his own.  Tie it to the right hardware and it rocks.He should consider buying Facebook too, but it may not be for sale.  Network effects are awesome if you can get them, but they’re not necessarily that easy to get.

Meanwhile, Apple will continue to play on cool.  I’ve been saying to friends for years that Apple is not a computer company, it is a Couturier ala Armani.  It is a coachbuilder ala Pininfarina.  It is an arbiter of fashion and style, but if the world became filled with equally as fashionable artifacts, it isn’t clear Apple could succeed as well as it does today.  Those artifacts are out there.  Artists need less help than ever before to sell their art.  Fashion is a cult of personality, packaging, and perception.  We lost the personality in Steve Jobs.  That’s going to be tough and Apple needs to think carefully about it.  They seem more intent on homogenizing the executive ranks as if harmony is the key thing.  It isn’t.  Fashion has nothing to do with harmony and everything to do with temperamental artistes.

Another problem Apple has is an over-reliance on China.  They’ve already had some PR problems with it and they are moving some production back to North America.  But it may not be enough.

Most people don’t realize it, but $1 of Chinese GDP produces 5X as much carbon footprint as $1 of US GDP produced here in America.  In a world that is increasingly sensitive to Global Warming, it could be a real downside if people realized that the #1 thing they could personally do to minimize it is to quit buying Chinese made products.  Apple can fix human rights violations to some extent, but fixing the carbon footprint problem will take a lot longer.  Apple is not alone on this–the Computer and Consumer Electronics sectors are among the worst about offshoring to China.  But, if the awareness was there, public opinion could start to swing, and it could create opportunities for alternatives.  And fashion is nothing but public opinion.  Ask the artists that have fallen because the world became aware of some prejudice or some viral quote that didn’t look good for them.  That’s the problem with Fashion–it changes constantly and there’s always a cool new kid on the block.

Microsoft has a much tougher job.  The thing they grew up capitalizing on–upgrade cycles–no longer exists.  They have to learn new skills or figure out a way to bring back the upgrade cycles.  And, they need to get it done before the much weaker first generation networks effects of their empire finish expiring.  So far they are not doing well at all.  Learning to succeed at mobile with smart phones and tablets, for example.  They have precious little market share, a long list of missed opportunities, and little indication that will change soon.  Learning to succeed with Industrial Design.  Have you seen the flaps around Windows 8?  Vista?  Those were mostly about Design issues.  Microsoft doesn’t worship Design with a capital “D” as Apple does.  It worships Product Management, which is a different thing entirely, though most PM’s fancy themselves Design Experts.  Microsoft is just too darned Geeky to be Design-Centric.  It’s not going to happen and it doesn’t matter if they get some amazing Design Maven in as the new CEO.  That person will simply fail at changing so many layers of so many people to be able to see things the Design Way.

Operate it autonomously from the top the way Steve Jobs did Apple?  The only guy on the planet who could do that is Bill Gates and he doesn’t seem interested.  But, Gates and Ballmer will make sure any new guy has to be much more a politician and much less a dictator, so running it autonomously from the top will fail.  Actually, Bill is not the only one who good do it–Jeff Bezos could also do a fine job and his own company, Amazon, is rapidly building exactly the kinds of network effects Microsoft needs.  The only way that happens is if Microsoft allows Amazon to buy it at fire sale prices.  Call that an end game result if the Board can’t get the Right Guy into the CEO’s seat.

The best acquisition Microsoft could make right now is Adobe.  It still has some residual Old School Network effects given that designers are stuck on Photoshop and their other tools.  Plus Adobe is building a modern Cloud-based Creative Suite business very quickly.  But this is a stopgap measure at best.

Can the upgrade cycle be re-ignited?

There is a risky play that caters to Microsoft’s strengths, and that would restore the upgrade cycle.  Doing so requires them to overcome the Multicore Crisis.  Software would have to once again run twice as fast with each new Moore Cycle.  Pulling that off requires them to create an Operating System and Software Development Tools that make can harness the full power of as many cores as you can give it while allowing today’s programmers to be wildly successful building software for the new architecture.  It’s ambitious, outrageous even, but it plays to Microsoft’s strengths and its roots.  It started out selling the Basic Programming Language and added an Operating System to core.  Regaining the respect of developers by doing something that audacious and cool will add a lot more to Microsoft than gaining a couple more points of Bing market share.  Personally, I assign a higher likelihood to Microsoft being able to crack the Multicore Crisis than I do to them being able to topple Google’s Search Monopoly.

Let’s suspend disbelief and imagine for a minute what it would be like.

Microsoft ships a new version of Windows and a new set of development tools.  Perhaps an entirely new language.  They call that ensemble “MulticoreX”.  They’ve used their influence to make sure all the usual suspects are standing there on the stage with them when they launch.  What they demonstrate on that stage is blinding performance.  Remember performance?  “Well performance is back and it’s here to stay,” they say.  Here’s the same app on the same kind of machine.  The one on the left uses the latest public version of Windows.  The one on the right uses the new MulticoreX OS and Tools.  It runs 8X faster on the latest chips.  Plus, it will get 2X faster every year due to Moore’s Law (slight marketing exaggeration, every other year).  BTW, we will be selling tablets and phones based on the same technology.  Here is an MS Surface running an amazing video game.  Here is the same thing on iPad.  Here’s that app on our MulticoreX reference platform that cost $1500 and is a non-MulticoreX version of the same software on a $10,000 Mac Pro.  See?  MulticoreX is running circles around the Mac Pro.  Imagine that!  Oh, and here is a Porsche Design computer running MulticoreX and here’s the Leatherman PC for hard working handy men to put in their garages, and here is the Raph Lauren designed tablet–look it has design touches just like the Bugattis and Ferraris Mr Lauren likes to collect!

ShelbyGT500KR

Performance is back and it’s here to stay!

Can it be done?

As I said, it is a very risky play.  It won’t be easy, but I believe it is possible.  Microsoft already has exactly the kind of people on staff already that could try to do it.  We were doing something similar with success at my grad school, Rice University, back in the day.  It will likely take something this audacious to regain their crown if they’re ever going to.  They need a Skunkworks Lockheed SR-71 style project to pull it off.  If they can make it easy for any developer to write software that uses 8 cores to full effect without hardly trying, it’ll be fine if they have no idea how to do 16 cores and need to figure that out as the story unfolds.  It also creates those wonderful lock-in opportunities.  There’ll be no end of patents, and this sort of thing is genuinely hard to do, so would-be copiers may take a long time to catch up, if ever.

This is not a play that can be executed by a Board that doesn’t understand technology very well or that is more concerned about politics and glad handing than winning.  Same for the CEO.  It needs a hard nosed player with vision who won’t accept failure and doesn’t care whose feathers are ruffled along the way.  They can get some measure of political air cover by making it a skunkworks.  Perhaps it should even be moved out of Seattle to some controversial place.  It needs a chief architect who directly has their fingers in the pie and is a seriously Uber Geek.  I’d nominate Anders Hejlsberg for the position if it was my magic wand to wave.

It’s these human factors that will most likely prevent it from happening moreso than the technical difficulty (which cannot be underestimated).

Posted in apple, business, multicore, platforms, software development, strategy | 2 Comments »

Everything You Need to Know About Email Marketing in One Tiny Little Post

Posted by Bob Warfield on December 13, 2013

seths.headTake the time to go read Seth Godin’s post about the 8 things you really need to know about email.  It’s short, totally to the point, and exactly the way my bootstrap business CNCCookbook tries to pursue email.  It has worked great for us and I get tons of love letters back as a result.

If you have all of Seth’s bases covered, you will too.  As I mentioned recently, we use Mailchimp (sounds like he does too) to automate as much of the email process as possible.  Interestingly, I have not heard a word from them about my post on their becoming less user friendly over time.  That’s got to be a first.  OTOH, as Seth points out, they’re just a tool and not really the important part of the equation.

 

Posted in bootstrapping, business, Marketing | Leave a Comment »

 
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