The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It
Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant
The Know-It-All: One Man’s Humble Quest to Become the Smartest Person in the World
New Product: I am very excited by the Square credit card processor for the iPhone (and maybe other devices with an audio plug). This product will revolutionize the way that people can conduct commerce. Not just businesses, but even person to person. The device is a small square credit card reader that plugs into the audio jack on the iPhone. There is software for the iPhone that will process the credit card and transfer money directly to the recipient’s bank account. Now the founders of Square have done some things right. They priced the software at $1 and the device is free. This makes it almost irresistible for anyone who wants to accept credit cards. Think of craft fairs, your lawn mowing teen or a Craigslist seller. The cost per transaction is reasonable (2.9%) and Square will even donate a penny per transaction to a charity of your choice. More details and a video here.
Knowledge: Steve Schwartz wrote a post on the 3 types of knowledge. While the language is not always appropriate for elementary school, he does explain clearly how these 3 types contribute to our general sense of ourselves.
Advice: Micah writes about giving advice. This one is going to be hard for me to do (given the name of this blog) as I love to give advice almost as much as Micah does, but if he can find a better way, I can try.
Apple. It seems like they are the darling of the technology world. Just this week, they announced the iPad — the next thing that will revolutionize our world. Apple is a very divisive company. People either love them or hate them. The lovers are passionate and evangelical. The haters are passionate and focused.
Until recently, I was a hater. I have been on the PC platform since my first PC in 1984, with one 5.25 floppy drive, since I couldn’t afford the 5 MB (yes MB) hard drive. My resolve broke down when I saw the iPhone. Here finally was a phone that I could use as a single device for all my needs. The fact that it could sync with Outlook and keep all my music and run apps was (pardon the pun) beautiful music to me. So last June, when the iPhone 3GS was announced, I overcame my trepidation and bought the phone. I really love the phone. It is easy to use, rock solid, has the huge App Store and just works well. Yes, of course, there are things that I wish it could do, like multi-tasking and more detailed profile settings, but in general I am pleased with my iPhone purchase. I am still not on the Mac bandwagon. That is going to take a whole lot more magic.
The Apple store is another great story. I love the Apple store. Everyone in the store is enabled to make a your customer experience the best. Want to buy something? Any Apple employee can make a sale — no waiting on line; heck they will even email a receipt to you. The Genius bar is terrific for solving problems. You get the feeling that everything that they do is focused on you. I can’t think of another retail environment that makes me feel like that, with the possible exception of Disney (topic for another blog post).
But, while Apple can make you feel like the smartest consumer ever for choosing to work with their products and their people, it seems to me that in their own way, they also treat you like the stupidest consumer. How can that be? Well, they severely limit the types of applications that developers can offer. Somebody reasonably smart can write a solid profile manager for the App Store, but Apple won’t allow it because it violates what they think should be available. How about a way to automatically expand text typed into an input field — something like tyvm should be able to be automatically expanded to Thank you very much? Both of these features are standard on the competing Blackberry platform, but even if someone wanted to write these applications, Apple would not allow them.
It gets worse. Say you lost your iPhone charger. How much would you expect Apple to charge you to replace it? Remember that the 8 GB iPhone can be bought for $99. According to Apple website, they want $29.00 for the replacement. 30% of the purchase price for a power charger? That is crazy. Yes, I know that you can find a third party charger almost anywhere for $10 or $15, but what does Apple take us for? Here is an even worse case. The iPhone allows you to store movies for remote watching. No problem, unless you want to plug your iPhone into your home television so that you can watch on the big screen. Then you can buy the video cables from Apple for $49. Too rich for your blood? OK, find some third party cables and buy them for $10. I did. When I hooked them up, the picture showed up on my tv for about 2 seconds then went blank. I got a message that said that since I wasn’t using the approved Apple cables, they had disabled the video output. Remember that I did get a picture for a short bit, so it isn’t a technical issue. Ouch. Starting to make me feel like less of that smartest consumer ever.
They have continued these policies with the iPad. What a wonderful media player. But no HDMI output. Too bad that you will need a (you guessed it) proprietary plug to get video output. Well, I am sure that it must have a USB output. All real devices have a USB output. Um, not so much with the iPad. The answer is that it will be available with an accessory kit. I have heard that Apple believes that they want to serve the non-technical crowd and don’t want to make things too complicated for that marketplace. Well, it seems to me that the PC marketplace hasn’t done too badly by giving people options. If only someone could develop a “gorgeous” device that was open to be customized to our needs.
I guess that my experience has shown that it is possible to be in the middle on the topic of Apple. I love the customer service and I love the device. I just wish that the company had the foresight to help me make this my device, at a reasonable cost. Then I could confidently move into the ranks of the lovers.
A number of the technology companies that I have been advising have been working towards building whatever they have to build to get a product into the marketplace. They have lists of features and are using some sort of project management system to track their progress. The feature lists are long and sometimes include esoteric features that the founders believe will immediately make them more newsworthy and consequently, more able to be funded.
My advice to my entrepreneur friends is simple. The biggest thing that makes a difference in getting funding is having paying customers. The faster that you can get a paying customer, the faster you can show to the world that you have a product or service that people want. The difference between pre-revenue and post-revenue is huge. Of course, post-revenue has a volume to it. One paying customer means something; 200 paying customers means something much more. But as the old Chinese proverb says, a journey of a thousand miles began with a single step. Take that step early.
Take the time up front to identify the minimum that you need to do to give your potential customers value and give them a glimpse of the future. Once you have decided what the initial feature set is, develop with all your heart and soul. Work fast and resist the temptation to add features. Keep a list, off to the side, of the neat features that you might want to consider in release 1.1 or 1.2. Go through the entire development cycle. Do not forget to quality check and validate your user interface. But release that code and sell that product. Most likely, your initial customers will not be shy about asking for additional features. Add them to your list and keep track of how many times each item is requested and by whom.
Only when you have gotten some paying customers to utilize your system can you determine which features are most critical to your success. That gives you the understanding to wisely choose the small set of features that will be in the next release. The unanticipated advantage of this is that you get another chance to tell your customers and prospects about a new release with new features that were suggested by them. You can’t get better PR than telling your customers that you are listening to them.
The best software firms out there do this… Look at Google with Google Reader or Google Docs. They push out new features almost every other week. Look at 37 Signals. Backpack today is much different from when it started out and the founders had no idea of the direction it should take, but their customers did.
You can’t get customers until you have a product out there. Release early and often.
Follow-Up: Last week I wrote about Technological Innovation, where I talked about Microsoft’s introduction of the search engine Bing. I was interested in seeing how the world reacted to Bing after the introduction. Microsoft has chosen to push shopping and decision making as the key aspects of Bing’s success. The screens are colorful and the sample searches that I completed were fine. The media has generally been pretty favorable to Bing’s introduction. But you can make your own determination with a visit to a site called Blind Search which will compare your search results through the use of Google, Bing and Yahoo.
Microsoft has also made good on its promise to advertise the heck out of Bing. There are banner ads, newspaper ads, television ads, keyword ads, blog post ads and even, dare I say it, Google AdWords. They have increased their influence on buyers with the Bing Cashback program which like a combination of the Google Checkout program and the Discovercard’s Cashback program.
Google is not taking their leading market position for granted. It is interesting to me is that Google has started to ramp up their advertising engine for the first time. Both adwords and blog ads have become much more prevalent. For a time, Google even changed their normally sparse home page to include a link to Explore Google Search to help people understand the wealth of options that Google provides for finding stuff.
In the early weeks of June, since the introduction of Bing, Microsoft’s share of the search market has grown a bit. Much of this can be attributed to searchers taking Bing out for a test ride. The real question wil be whether people continue to utilize Bing or if the honeymoon ends as people go back to their first loves.
Fun: Spend 2 minutes and watch this great stop action film, done as a senior project by a student at the Savannah College of Art and Design.
Chutzpah: Wow! I haven’t posted a chutzpah link before today, but I had to post this. For those of you who are unsure about the meaning of chutzpah, according to dictionary.com it is unmitigated effrontery or impudence; gall.
Technology: I consider myself pretty competent around a spreadsheet. I knew about half of these double-click wonders for Excel. On this page there are also links to a few other pages with Excel shortcut magic.
Economics: The Freakonomics blog points us to Al Roth of the Harvard Business School. He talks about the opposite of repugnance. These are things that we as a society promote, even though there are no good financial or political reasons. They include: monogamous marriage between a man and a woman, home ownership and donating to charity.
Technology: Lots of talk about this new product that Google introduced (not released) at their IO Conference, called Google Wave. A good overview article can be found at Techcrunch, but if you have an hour and a half to spare, I heartily recommend you watch the keynote speech where the development team demonstrated the tool. Wave solves some of the problems that we have today with out communications products, by providing a single repository for waves that can contain multi-media and can be edited by a specified group. The good news is that Google is planning to release Wave as an open source product, so developers can use common interfaces to build new features, much like the Firefox browser. This also means that Google will probably not be using this as an advertising vehicle. Lots of whiz bang stuff has been included like real time search, context sensitive spell check, easy two way integration with blogs and real time translation.
Behavior: My most popular column to date is the one I entitled “The Young Entrepreneur“. Tomatonation wrote a version that was more life centered and less business life centered. But it belongs on the reading list for any 25 year old.
Big Picture: It is always interesting to me to see how founders think about their companies. Sergey Brin, co-founder of Google, writes this annual report. And while we are on the subject of Google, Jim Spanfeller, CEO of Forbes.com, wrote a scathing indictment of Google and their role in the demise of the publishing business. A much more fun read is the response by Danny Sullivan at SearchEngineLand in a point-counterpoint post.
Innovation: Scott Adams of Dilbert fame talks about information flow using a time based methodology. He envisions a world where our calendars will become much more intelligent, personal and useful. I like this vision of the future.
Ideas: If you have never seen Seth Godin speak, you now have the opportunity to view this talk on Tribes from the 2009 TED Conference. And for a little historical Seth, here is his riff on Purple Cows from 2003.
Entrepreneurship: Gina Trapani discusses all kinds of neat tools, applications and vendors that can help a new business get started.
Behind the Scenes: Robert Scoble takes us inside of Zappos.com and how they can create a corporate environment that keeps their employees excited and their customers enthralled by their service.
Behavior: An article on neuroscience probably would not have caught my eye, but bring Penn and Teller into the conversation and I am hooked. This article talks about how magicians utilize flaws in our perception to amaze us. I viewed the balls and cups clip 3 times and still I didn’t catch everything.
Business Economics: The US Postal Service is one of those organizations that we take for granted. 6 days a week, we will have a red, white and blue truck drive up and deliver our mail, most of it “junk mail” or what the USPS calls standard mail. What we don’t think about often is how fiscally responsible they are, what are their unfunded pension liabilities and how they make money in the age of the Internet. This article sheds some light on how the USPS operates and offers some suggestions to make the service more effective.
I remember when I was young, my mom used to write all of her friends letters on real paper and put them into the mail. She would get handwritten responses that she could keep and treasure. We could identify the letters from this friend by the foreign stamps and from that one by the color of ink she habitually used.
Many people have written about the lost art of writing letters. I don’t want to argue the merits of that topic right here, although a handwritten thank you card can work wonders. It is always interested me to read the letters between historical figures. You can get a better picture of the people behind the public persona by reading the conversation between two people. If you have those paper documents, you can keep an archive. This archive can then become the basis for understanding and illumination.
Today, what I want to discuss is how we can manage our communications today, especially email.
For a while there, it seemed that email was totally fungible. I don’t have my emails from 1999 or 2000 or even 2004. Yes, I know that they are probably out there somewhere on some archive in at old ISP (remember this for when you write something that you shouldn’t have), but certainly not in a place that can be accessed easily by my biographer in 50 years.
Google Mail has changed this for me in a big way. It can be the same with other on-line, cloud based email services. The search capabilities and large storage capacity of these services allow you to search for old correspondence in a way that is much more helpful than reading those old piles of handwritten letters. Don’t remember the site that had that neat financial tool? Just search your archived mail. How did we resolve that board question? Review all of the relevant documents from one screen. Google gives you over 7 gigabytes of storage (and counting) in each mailbox, so that you can keep all of your emails in one place.
The challenge with this is that besides search, the tools available to help you mine the information in your Gmail archive are limited. Sure, there are labels and filters. Labels are great in the abstract, but as you get significant amount of mail, it becomes difficult to tag each email before archiving. Filters can help with the labeling, but you have to know the circumstances for which you need a filter before you need a filter. I’m sure that there are a lot of you organized types who put both to good use. But me, I’m not so much on the organized side of things. So, what can one do?
We tend to think that the young among us are most technologically centered. They can quickly adjust to different tools and utilize social networking to the max to achieve their goals. However, it is interesting to note that several of the young entrepreneurs that I am mentoring have mentioned in recent meetings about the difficulties that they have responding in a timely fashion to the deluge of emails that they receive every day.
The reason that this came up was in relation to an article I read on Gigaom about Why Email Clients Need to Change?. My email box does not look like Alistair’s, but I have the same types of problems with an email deluge. His ideas on adding features to our email clients that help us make better use of both our incoming mail and our archived mail make a lot of sense to me.
How do you manage your email? Do you keep everything or are you a deleter? Would the tools mentioned in Alistair’s article be helpful to you? Do you have any others that you want to add?
Peaks and valleys. Reminds one of a bucolic Colorado vista, perhaps Pike’s Peak and the San Luis Valley. But our lives are driven by patterns that look like peaks and valleys. For example, this is a graph of the stock market for the last 25 years.
S&P 500 1984-2009
Notice the number of times that the chart has significant ups and downs. This is a way that we as humans tend to operate in our domains. We push the level of an activity until it goes beyond a breaking point (or some external event, like 9/11, causes a breaking point) and then instead of slowly returning to an equilibrium level, the system quickly regresses back to a point well beyond a median and we start the cycle all over again. While it is painful to go through these cycles, our historical precedents do tell us that we will come out of the valley and start to rise again within a reasonable time. Over time, these boom-bust-boom cycles have been getting shorter but steeper.
A current example of the boom-bust-boom cycles have to do with credit. The credit markets have acted like a pendulum, swinging from high availability, low rates to low availability, high rates. Some of these changes were due to changed economic policy by our government and the Federal Reserve. A large part of our current credit problem is related to the reticence of banks to take on additional risk, so they have tightened down the requirements for getting credit, to consumers as well as to businesses. I wrote about the changes that Chase has made in their lending to small businesses here. Will this get sorted out? Yes. How soon? Much bigger question.
But not all peaks and valleys correspond to economic events. It has always been instructive to me to watch the technology curves.
My technology journey started with the mainframe. Everything you could want was on the mainframe. It had to be since you interacted with the mainframe via punched cards (yes, I am that old). All by one manufacturer, all guaranteed to work the same way, the only way. Kind of like Ford’s Model T, in any color as long as you wanted black. But soon, we got PC’s and things got colorful fast. Lots of different programs, different interfaces, different data storage, little interaction. Businesses had a hard time utilizing these PC’s; actually IT (or Data Processing as it was called in those days) had the problems. Everybody did things differently. So, they decided to purchase integrated ERP solutions that allowed the entire company to work together cooperatively on planning and executing, counting and selling, paying bills and receiving cash. These also included the support software to ensure it would all work together, the databases, the communications manager, the security systems and the scheduler. Back to the mainframe mentality – easier to manage, but limited in flexibility.
But of course, people wanted their own solutions. So, along came Unix and other open systems. Now it was possible to pick the best of breed solutions for each system need. Flexibility to pick and choose, difficult to integrate and make sure that Program A fed Program B the right data in the right format. It was costly for the software companies to support – they had to have every possible combination of systems to test with and provide their tech support staff with. I likened it to going to a race track and having to make the right choice to win for 10 races. Difficult for anyone and not efficient for the IT staff.
Yesterday’s announcement that Oracle is going to buy Sun is bringing this whole technology cycle full circle. Now one company can sell you the database, CRM Software, ERP Solution, security and hardware to be able to guarantee that all things will work together. IBM and HP are also looking to provide a full course solution. What could happen to companies like Dell, Cisco and Fujitsu? Where does Microsoft play in this arena?
All I can say is that given our history with peaks and valleys, you can expect that this phase of single company providing a full suite will have a reasonable lifespan and another model will come into play. It will be fun to watch this change over time.