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Archive for September, 2013

Will Context Eat the Software Industry?

Posted by Bob Warfield on September 23, 2013

ManBehindCurtainI read with interest fellow Enterprise Irregular Michael Krigsman’s recent post, “Context Will Eat the Software Industry.”  Kudos for the excellent link baiting paraphrase of Marc Andreesen’s “Software is Eating the World.”  Andreesen is right, but I’m not so sure about Michael’s hypothesis.

He is centered in some thinking about Content Marketing and why some Content Marketing, specifically Enterprise Content Marketing, is not so hot:

The best content speaks directly to the reader, listener, or viewer. However, creating great content requires a nuanced understanding of the audience, which precisely explains why most enterprise content sucks. Content without empathy misses the target and quickly falls into the trap of jargon and sameness.

To see the effect of bland content marketing, try a test. Examine marketing materials for directly competing products from the major enterprise software vendors and try to discern significant differences in messaging and positioning. You’ll likely discover that the major vendors tend to look similar; remove the product name and see how the competitors all sound similar. I tried a variant of this test and the results demonstrated how bland enterprise marketing become as it regresses to the least common denominator.

From this he sees Content that is increasingly targeted to specific readers (e.g. targeted to Context) as the answer.  Let’s talk about that.

First, in the spirit of Full Disclosure, I want to point out that I make my living as a Content Marketer.  I don’t do it as a service for others, but it is nearly exclusively how my bootstrap company, CNCCookbook, sells its wares.  As a result, I have spent a lot of time thinking about it and trying to get better at it.  I’ve been extremely happy with the results so far.

Now, what about Context?

Context is critical to the extent that there must be content available that speaks to the reader well enough to move them to some action.  If you can do so, you’re Content Marketing.  That action may range from buying a product to promoting a brand (i.e. telling others about it) to (especially in an Enterprise setting) being predisposed to favor or at least not block a brand.  I list those in roughly the order of importance.  While it’s great to have lots of people who’ve heard of you and think positively of you, if they never bother to tell anyone else and nobody buys your products, you’re not going to make it very far.

At this stage, I should point out that Enterprise selling is special.  I have been there, done that, and gotten the T-shirt, frequent flyer miles, and hotel breakfasts that comes of selling multi-million dollar Enterprise Software.  For that world, the costs are such that you don’t just get somebody to whip out a credit card after reading a pithy article on your blog.  Instead, you may get them to exhibit enough enthusiasm that you can regard them as a sales lead.  This will start the corporate CRM gears in motion and somebody from sales will contact them.  One could argue and probably win the argument that the whole point of Sales is to provide a finely honed and real-time sense of Context.  It is the Sales Team that puts feet on the ground inside the customer’s organization.  They get to know the players, the politics, and all the details of the buying decision being made.  That is the essential key context for such a transaction.

Does that mean Context is unimportant for Enterprise Content Marketing?  No, of course not, but it is an important nuance to be aware of and I will come back to it shortly.

The next thing I want to discuss is how Context can be implemented, because that seems to be the gist of how Context might eat the Software Industry.

Here Michael has some choice Bill Gates quotes:

Content is where I expect much of the real money will be made on the Internet, just as it was in broadcasting.

and:

A major reason paying for content doesn’t work very well yet is that it’s not practical to charge small amounts. The cost and hassle of electronic transactions makes it impractical to charge less than a fairly high subscription rate.

As Michael points out, micropayments are available from Paypal and many others these days, so that isn’t the problem.  The problem is that, as with making Ballmer CEO for so long, Bill Gates was wrong.  Content isn’t where the real money was made.  In fact, the real money was made by software supplying Context.  You will know what that means more familiarly if you think about names like Google and Facebook.  If you think about Content being where the real money would be made, you’d be thinking of Yahoo, and we all know how that turned out.

Context via Self Selection

This brings up an important first principle of Context, which I will call the Principle of Self Selection:

Context is implicitly applied when people search for content or go to a place where their preferred content is particularly rich.

One corollary of the Principle of Self Selection is that when a Content Marketing team is micro-managed too much to, “Stay on message,” they wind up not creating content that can self-select a broad enough range of Contexts.  I suppose we should not be surprised as the essence of Enterprise Software and the biggest weakness of both the Software and the Companies is that it is overly focused on Centralized Command and Control.  This is perhaps the foremost reason why Social continuously hits brick walls in the Enterprise–something so egalitarian is toxic to hardcore Command and Control.  It encourages too much fraternization with the enlisted and noncoms.  Command and Control is also tragically short on the empathy that Michael points to as being so important.  The higher ups rarely think of themselves as being in the Customer’s Shoes.  The ones that do have typically been the ones I have enjoyed working with the most, but they’re not always the most successful.  I’m not sure anyone ever accused Larry Ellison of having too much empathy.

It has been my observation that most organizations with awesome Sales teams have lousy Marketing.  One wins out over the other, and scratch golfing sales guys are bread to be genetically superior to marketers in the face to face arena.  The marketers simply lose at politics, and it is even worse for the quant jocks that are essential to great Content Marketing.  This is a problem, because when you’re Content Marketing, you cannot simply parrot the party line–you must create real value.  This means your Content Team needs to have some motivated stars who are empowered to do something great.

There is also a subtle mindset difference with Content Marketing.  Let’s call it the Principle of Jiu jitsu:

When Content Marketing, you must give away something of great value to build trust.  In doing so, you cannot overtly sell anything.

It is called the Principle of Jiu jitsu because like the ancient martial art, it gives where the opponent is strong and pushes hard where the opponent is weak.  The opponent is strong at resisting sales pitches.  We are trained to consider whether the spam will be worth it if we give over our email to get a white paper, for example.  In Content Marketing, we give them such fabulous content without the Sales Pitch or demand for email that they give us their email gladly to make sure they don’t miss any future free content.  This is tough for a lot of Sales people to grasp.  They’re used to the idea of using their Jedi mind tricks to machine the prospect into submission, “Sign here, these ARE the droids you’re looking for.”  In fairness, most of them are smart about giving their personal charisma for free to get to deliver the sales pitch, and that is sort of close to what’s being done by Content Marketing, but yet different.  BTW, it’s even tough for most Marketing people to grasp.  They will tell you to do things like remove all the navigation from your landing pages so that once the prospect winds up there, they have no choice but to fill out the lead form.  Sadly, this increases short term lead gen at the cost of long term trust.  Think carefully about your business and your sales cycle.  Is it really as short as you thought, or did it go through multiple iterations, coming on and off the forecast over the course of even a couple of years as the prospect came up to speed?

To capitalize on self-selection we serve up a smorgasbord of content, make sure it is SEO-optimized for search engines, use analytics to identify what’s working, and then double down further with more similar content.  Quite apart from killing software, that approach is only enabled by a bunch of analytics software, not to mention the software at Google that delivers them to your doorstep.  Seeing your content through the SEO lens as well as the reader’s lens is a subtle art that has to be learned over time.

Context via Machination

Of course self-selection is not the only way to establish Context.  There is what I will call, “Context by Machination”, where software establishes Context in real time based on what it is sensing.  Two examples would be Responsive Web Design and Marketing Automation.

Responsive Web Design is simply designing a web site so that it changes based on the device being used to access it.  This is done so mobile viewers have a better experience.  It’s blunt Context, but Context nonetheless.

Marketing Automation is a bit more subtle.  It means a lot of things, but in this case, let’s stick to Marketing Automation as observing what actions a prospect takes and serving up content based on those actions.  Ultimately, the content served up can even be the first call from telesales wanting to see if the budding relationship should be expanded to a full blown sales cycle.  A lot can be gained from this notion of Context.

To give an idea, let me tell a personal anecdote from my college days.  I’m a car nut and would haunt the local exotic car dealerships.  There’s no way I could’ve afforded such a machine as a college student, but I was not deterred.  Inevitably, a salesman would approach and try to determine if I was a serious prospect or or a tire kicking joyrider (that’s me!).  I would be taciturn, and would steadfastly refuse to ask any performance-related question.  Never ever ask how fast the car would go, for example.  Instead I wanted to know such things as, “How reliable are these cars?  What does it cost to repair one?  What’s the insurance premium likely to be?  Can they be driven in the rain?”  The salesman always took these sorts of sober questions as coming from someone who was trying to imagine what it would be like to live with one of these fiery beasts on a daily basis–a real buyer in other words who was over the romance of it.

So it is with what the Marketing Automation people call, “Lead scoring.”  So you read a white paper.  That’s good.  But did you look at the system requirements, for example?  Did you try the pricing calculator out with an interesting number of seats?  Did you look at the salesy content, or just the free value content?

Based on the lead scoring, the system can decide which emails to send to you.

This can be especially potent if you have a completely closed loop software company.  What I mean by that, is a software company where every single contact happens via the Internet:

–  They read your content on the Internet to get interested.

–  The software runs in the Cloud.

–  Customer Service is handled over the Internet.

In a world like that, the lines between Marketing, Product, and Service should rightfully become blurred.  You are always Marketing because SaaS renewals are so darned lucrative.  If they’re in the Product, why have them bail all the way out and go to a separate web site to get Customer Service?  Wouldn’t it be better if the Service people can directly see what’s happening in the Product as it unfolds with a problem?

It creates an extremely powerful combination to combine all three and view them essentially as one User Experience (UX) that has to be optimized for the entire cradle to grave lifecycle.  That’s Context via Machination at its finest.  I haven’t seen any companies that really optimize that end to end experience.  You get the Marketing Automation companies like Marketo and Eloqua at one end, and there are starting to be Product companies at the other like Totango.  It’s an interesting opportunity.  I haven’t even seen many companies that operate in that realm of Contextual Integration, but probably the biggest and best would be Amazon.  Funny how we’re still trying to get to what the CRM world originally called the “360 Degree view of the Customer.”

So, quite apart from Context Eating the Software Industry, that Man behind the Context Curtain’s name is “Software.”  If you don’t have keen Software chops in your Marketing, Product, and Customer Service worlds, you are missing several tricks.

Postscript

Heidi Cohen makes the problems with Enterprise Content Marketing even more obvious with her 3 Surefire Ways to Kill Content Marketing:

1.  Contains Too Much Marketing Hype and Buzzwords

2.  Lacks Truly Independent, Unbiased Information

3.  Is Too General To Be Effective

Yup.  You see all three constantly in Enterprise White Papers, blogs, and other content marketing.

Posted in business, Marketing | Leave a Comment »

You Have to Have an Overseas Dev Team to Scale? Baloney!

Posted by Bob Warfield on September 7, 2013

Baloney1ba·lo·ney 2 also bo·lo·ney (b -l n ) Slang. n. Nonsense. interj. Used to express disagreement or exasperation.

Recently, I was doing something on LinkedIn, and it asked me to endorse various people’s skills like it often does.  One face in particular popped out at me:  Anders Hejlsberg.  I’ve known Anders for many years, so I immediately had to check what it was about.  In this case they wanted me to endorse that Anders knows something about Software Engineering.  Unfortunately, it was a simple Endorse/Don’t Endorse interaction, because I would like to have said that Anders knows about as much about Software Engineering as the Pope knows about Catholicism.  You see, Anders is a Technical Fellow at Microsoft.  But beyond that, he is one of the most brilliant Software Engineers I’ve ever known.  I met him when I was VP of Engineering at Borland and he was the guy that built Delphi, or Turbo Pascal as it was known when I first came to Borland.  He went on to do C# and a whole lot more for Microsoft after leaving Borland in 1996.  Not only is he a brilliant Software Engineer, he is also one heck of a nice guy.

By now you’re wondering, “What does Anders Hejlsberg have to do with Overseas Development Teams anyway?”

Let’s start with why I even bring up the overseas subject.  To put it simply, I needed to pen a rebuttal to Jason Lempkin’s Wall Street Journal article which says essentially that all SaaS companies are probably going to have to have an overseas dev team because its just too hard to hire talented Software Engineers.  In fairness to Jason, he did say “probably”, but he said it so softly it’s clear he doesn’t mean it.  I disagree violently with the conclusion, to put it mildly.

The thing is, most software companies go about developing software all wrong.  They get pushed in all sorts of directions when people who don’t know much of anything about Software Engineering (i.e. non-technical CEO’s, VC’s, and the like) insist things be done a certain way because someone else they’re familiar with did it that way and succeeded.  There may be limited correlation, but there is absolutely no causality.  It’s not like we technical types have a monopoly on that stuff, I’m sure there’s plenty of Technical CEO’s telling their sales and marketing people similarly poorly informed things.  But the thing is, it happens a LOT more often to the technical types.  Plus, we techies often don’t have the backbone and interpersonal skills to stand up very well when a CEO or Board Member gets up a good head of steam about some issue.  Sometimes having technical leads who can’t stand up and disagree is intentional.  I would say that in over half the VP of Engineering jobs I’ve ever interviewed for they were looking for someone who would demurely take stone tablets from some other source–product management, sales, the CEO, or some “visionary”–and just get it done on time and one budget.  And by the way, do it quietly and without disturbing the other functions.  Needless to say, I was “over qualified” for those positions.

A lot of companies do a lot of things wrong, but Software Development is different.  It takes longer to build software.  It’s harder to change direction at the last minute.  And by the way, did you notice?  They’re called “Software” companies.  They’re not called “Sales” companies, “Marketing” companies, or “CEO’s best notion of the moment” companies.  It’s important that you actually be competent at building software in order to have a real “Software” company.

I was recently reading over a list of startup advice (you know how those numbered lists grab the eyeballs) a VC had put forward on Facebook as being excellent.  I got as far as #8:

8) Should you have a technical co-founder if you are not technical? No. If  you don’t already have a technical cofounder you can always outsource  technology and not give up equity.

I quit reading in disgust so I could go on to see just exactly what sort of software this guy builds.  Mostly, he seems to have parlayed a pretty basic web site into a sale to TheStreet.com.  From there, he’s mostly in the business of telling everyone else how to succeed.  There are so many of these Dale Carnegie types out there these days.  He does not appear to be a Software Engineer, though perhaps he has played one on a TV show somewhere.  This stuff makes me nuts.  Companies that think software is easy to build.  A venture ecosystem that needs to invest in lightweight products because the founders have to pay to get it built on their nickel.  CEO’s that couldn’t care less about building something that can actually change the world, they just want to throw something out there as cheaply as possible so they can spend more on this month’s lead generation.  Bubble riding, in other words.

Whatever happened to the days when people actually had to build something of note?  Something that might change the world, even a little bit, and not yet another eyeball aggregator?

Let’s put that rant aside and get back to the question of whether you will have to have an overseas dev team to scale.  I will put my stake in the ground thus:

You have a choice for your software company:  you can either choose to be excellent at building outstanding software or you can choose to build adequate software cheaply.  The latter path will ultimately be even more expensive than the former, but you’ll be left holding junk instead of a real product.

I’ll warn you I’m being very polite when I talk about software being “adequate.”  Software is hard.  It is the most complex stuff we humans build, at least until we start building organisms from scratch by tinkering with DNA.  Many things that people say are harder are basically software, things like CPU chips.  There’s this little problem in the software world–we don’t know how to get lots of Software Engineers to be able to work effectively together.  There are entire disciplines such as Agile Programming that try to deal with this problem.  We’ve known about the problem almost from the beginning of software.  It was well articulated in the relatively ancient Brooks classic, “The Mythical Man Month.”  It turns out, we’re only good at getting 7 to 10 developers working smoothly together.  Any more than that and you’d better be able to break the software down into modules that are very independent.

If that’s the fundamental limit, how do you build great software?  Here’s a hint:  you can’t do it by hiring more people onto the team.   Instead, you must focus on building great software with fewer better Software Engineers.  You must focus on breaking down the software into modules that work and play well together, something that is also very hard to do and can’t be offshored.  That’s hard core architecture that takes brilliant Software Engineers communicating well with all the groups.  I have never seen a product module that couldn’t be built with about 10 engineers provided they’re the right 10 engineers, they’re well managed, and they’re operating in a culture that supports their needs.

Anders, back in the day, built the Pascal software he is famous for almost by himself.  He had a little help, but surely not a giant team half of which was located overseas.  I have done the same with every product built over my career.

When I took over the VP of Engineering job at Borland, it was the darling of the software world.  We had our share of problems, and one of them was profitability.  I was directed to make cuts.  It didn’t take me long.  I zapped all the consultants I could find and reduced the maximum team size to 10 developers or so.  Not one single product slipped schedule as a result of it.

So what’s the deal with this big overseas software push?

In exchange for making the acknowledged weakest link in software development (communication) much worse, we get to hire lots more people.  At one point, Oracle would trade 2 open reqs overseas for 1 open req here on our shores (Redwood Shores to be exact).  They discovered over time what a bad idea that was and ended the practice some time ago.

Companies the size Jason suggests must go overseas, $3 to 4M in ARR, are still way too small to need to go overseas.  They’re still finalizing fundamental architectural underpinnings.

I can already hear the refrain, “That’s nice, Bob.  But I can’t hire enough good Software Engineers, what else can I do but go overseas?”

If you can’t hire, and I don’t doubt there are companies that can’t, you need to look much closer to home to find the problem:

–  Perhaps your company doesn’t value developers and act like the “Software” in Software Company matters.

–  Perhaps the head of your engineering group is not an inspiring figure.  Will walk-on-water developers follow her or not?  Does she know lots of walk-on-water developers who she can bring on?  Why not?

–  Perhaps your product vision is just not interesting to walk on water developers.

I’ve seen all of these problems in varying degrees at various places I have visited.  I went to a video ad company one time that was proud of the density it could pack developers into.  They had long benches and developers were literally shoulder to shoulder.  There was a strong “no telecommuting” policy in place on top of that.  Sales and marketing had conventional cubes, by contrast.  I wonder if management in that company was aware that software development requires intense concentration and focus?  In the heyday of Borland, each developer had their own private office.  Close the door and you could get some serious work done.

By the way, amidst all the hand wringing about there not being enough visas (more evidence we can’t hire enough developers and we must go overseas!), there is more than one study out that says it’s all a sham.  We are graduating more STEM graduates than we can even put to work.  Most of them don’t stay in their field and wages have been stagnant since 2000.  Does that really sound like a market where you can’t hire developers?

I have interviewed at companies where the developers begged me to come on board and save them from Sales and Product Management.  They wanted to be released from dealing with one unrealistic deadline and shoot for the moon set of specs after the other, because they were failing at every single one.  They had no voice in setting any of it up.  I wonder if the VP of Sales turned CEO set his sales quotas up to be unachievable time after time?  If he was, Sales was no doubt failing there too.

Too many customer demands to keep up with?  Hogwash (time for a word other than “Baloney”).  Build an architecture that’s intended to keep up with customer demands.  Build one that is customizable at the outset.  Salesforce did.   I ran engineering for Callidus Software through their IPO.  That companies processes sales compensation for the biggest companies in the world.  If you don’t think sales constantly fiddles with comp plans and that every company does it differently, you don’t know that market.  Our differentiator was that we had the only product that could deal with those customer demands and still scale to the levels giant companies like Sprint and Allstate needed.

Let’s wrap this up.  We will probably agree to disagree, but I want to summarize.

Good software is not expensive to build nor is a good software team hard to hire for.  The reason is simple–you only need 10 really good people to do almost anything.  Once those 10 are working well, start thinking about how to modularize your software for the next 10 person team.  You can start to get real business-changing things done with a lot less than 10 too, that’s just the maximum.

If you have any doubts, try tearing apart the financials for Salesforce.com.  They have managed to build the world’s most successful SaaS company with relatively few developers.  Fewer than their peers according to the numbers: the percentage of expenses that go to R&D is small compared to many other SaaS companies.  The architecture of their product is rich and sophisticated.  That didn’t happen by accident, it happened because they understand what I’ve been trying to say here.  They hired for quality, not quantity.

Bad software, on the other hand, is very expensive.  It is expensive because you’re throwing a wall of bodies at a problem that cannot be solved by a wall of bodies.  They will build something that is ultimately unsatisfying and unmaintainable.  They will not produce good architecture or good user experience.  They will not produce sustainable competitive advantage in one of the few areas software companies can have such advantages.  They will fail and your customers will be unhappy.  Your competition will love it.

Posted in business, software development, strategy | 3 Comments »

 
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