Press releases are more valuable I thought

Marketing takes a day to learn. Unfortunately it takes a lifetime to master.
– Philip Kotler

At Genuitec, we issue press releases pretty regularly, but I never really gave much thought to “why” we do it. However, recently I received an email from one of our smaller business partners that read something like this:

I noticed that you rely heavily on press releases and I’m thinking of issuing one for our new product. Obviously, there will be some costs involved (for creating the PR and for the distribution). I’ll be happy to hear your insights on this. Do you think PRs are still worth the expense?

When I read this very straightforward question I realized that I had absolutely no idea how to answer it. So, I used one of my core strengths and simply delegated the responsibility to reply to Genuitec’s Marketing Manager, Jens Eckels. Truthfully, I expected a couple of sentences that basically said “Yes, press releases are important.”  However, what I got back was actually a very thoughtful response that made me realize that press releases are much more valuable than I thought. And, since I bet there’s a new nugget or two in there for you as well, here’s Jen’s take on press releases and why they still matter.

As a blanket statement press releases still have a great impact, but I will temper that with the caveat that you will likely need to have a goal in mind. A release for the sake of one may backfire on you. But, I can tell you from our experiences that press releases have had the following positive benefits:

1) It focuses our own thoughts. Many times, especially in technological circles, we tend to inherently know why something we’re doing is valuable, but we’re not always so great about talking it up in common ways that others will easily understand. The process of writing the press release helps greatly with this and forces us to focus our energies and simplify our messages.

2) It provides positive search engine optimization abilities. Google indexes press releases very well (they love text, after all), and the addition of a well-written press release with some thoughtful anchor text can provide valuable links back to our product from what search engines see as quality “external” sites.

3) They provide easy fodder for the press, if you are in contact with journalists. This is perhaps the most commonly-thought of way to use press releases, but is worth mentioning. If you have any contact with the press (or want to), these are great ways to send your pertinent information in an easily-consumed format. Journalists get press releases all day, so if your stands out, it makes a nice little “package” of information that can be referenced. If it goes further into an interview or some sort of verbal interaction, the fact that you’ve prepared the press release and gotten your thoughts together will make you that much more effective in that setting.

4) They are often republished by bloggers or other news sites. There are lots of technical sites and private blogs that want to be seen as authorities on the latest technologies. We have seen that many times a press release will be republished on these sites – often a verbatim republishing of our releases along with the anchor text we used. These provide more valuable SEO points, as well as broadly disseminate our information – all at no cost.

5) They’re relatively cheap. We currently use the PRWeb service, and have found it more than satisfactory. You can spend up to USD$200 or more for some broader SEO options (like anchor texting), or as little as $80 for simple distribution on the wires to get the word out. We do both, depending on the relative importance of the release and how much we want to get out of it.

6) They are great supports of other marketing initiatives. The press releases we put out are in no way “advertising in a vacuum.” Will putting out a press release by itself drive a ton of traffic and boost sales overnight? It’s very unlikely. But, if you are posting on social media sites, in forums and on popular technical sites, your message will be seen in many places. Then, if people are looking for information a press release is expected. It can add legitimacy to your message, as sometimes individuals are looking to see who or what is behind the announcements and would expect to see some “official” note on a product release. We have tried to not underestimate the value of “being seen where you’re expected to be seen.” In our case, this includes full press announcements.

7) They are easily republished on a huge list of FREE press release sites. I would shy away from using these exclusively and go with a professional service for the announcement. But, for SEO, exposure and syndication reasons, we often re-post our announcements to these sites as well.

The downsides of doing a press release are really the hard and soft costs involved. As you say, you will have some time investment in writing the press release, and then the distribution cost. Do you plan to write the release yourself or outsource? If you outsource, I would spend very little on getting a draft and then cleaning it up yourself. If you do it yourself end-to-end, your costs should be mostly soft.

In short, I believe press releases are still worth the expense of putting them out for all the reasons I listed. These days, they used more for exposure and SEO than they are for “press.” But as stated, they can help you consolidate your thoughts, keep yourself in the journalists’ view and easily come back to you in SEO value.

 

Perfection is not a valid goal

The essence of being human is that one does not seek perfection.
– George Orwell

About fifteen years ago, I thought of source code as some sort of “art form”. I actually had a belief that it could

be “perfect”, to a level, and that pursuit of this goal of perfection was somehow important. It was something

akin to believing that software developers were artists that used code as a medium for expression of that art.

The worst part of that belief was that I was striving for perfection “in my eyes”, not those of my users.

Perfection had to do with how the software was implemented, but not whether or not is really was useful. How

utterly naive.

As I mentioned before, business is a blood sport so we’ve discovered that our singular focus needs to be

delivering what our customers value. And they don’t value how software is written; they value what it does, or

more specifically what it does for them. So we focus on relieving pain; which is simply helping developers do

what they want to do, the way they want to do it, but more easily and effectively.

And the ability to do that requires that you listen to your customers and build what they want, since that is the

only thing that they will value. But that’s not the same, necessarily, as building what they need, or specifically

what you think they need.

We have to keep in mind that our customers, not us, are the subject matter experts for what we deliver and they,

not us, get to determine what is valuable and what is not and it is they, not us, that decide whether or not to pay

for the value they perceive.

So, we learned to do our best to get close to what we think our customers want, then we ship it, then we listen to

their feedback, and deliver relentlessly to close the gap between our product’s current abilities and their reality.

And sometimes their reality suddenly changes as does what they value. But when that happens you can’t be so in

love with what you’ve already done that you can’t dump it and start over if needed. Because the code itself isn’t

art and never has been. It’s just a temporary vehicle that leads to the perception of value in the minds of your

customers, and only for a little while.

Watch your market, listen to your customers, be wary of your competition and adapt quickly because the

Eclipse markets belong to only the very big or the extremely nimble.

Since this blog will also be on the long side, I’m going to begin it with the “executive summary” format I tried with my last blog.  So, for those of you that can’t be bothered with “lots of words”, here ya go:

1. Software that is “good enough” really is
   • Perfection is the enemy of “good enough”
   • “Perfect code” never ships
2. Ship often, as soon as you have compelling new value
   • Creates a culture of constant improvement
   • Greatly increases value to customers
   • Iterative refinement allows customers to provide feedback
3. Solve Customers’ current problems
   • Provide a better way, not a new way
4. Don’t fall in love with what you build
   • Customers don’t care what you value — only what they value
   • Be ready to dump what customers don’t value

Many years ago I thought of source code as some sort of art form. I actually had a belief that it could be “perfect”, to a level, and that pursuit of this goal of perfection was somehow important. It was something akin to believing that software developers were artists that used code as a medium for expression of that art. The worst part of that belief was that I was striving for perfection in my eyes, not those of my users. Perfection had to do with how the software was implemented, but not whether or not is ultimately useful. How utterly naive.

As I previously blogged, business is like a street fight. And to have any hope at beating your opponents you’ve got to focus on delivering what customers value. And they don’t value how software is written; they value what it does, or more specifically what it does for them. For example, since Genuitec is in the development tools space we focus on helping developers do what they want to do, the way they want to do it, but more easily and effectively. And the ability to do that requires listening to customers and then building what they want, since that is the only thing that they will ultimately value.

But that’s not the same, necessarily, as building what they need, or specifically what we think they need. We all must keep in mind that our customers, not us, are the subject matter experts for what we deliver. And it is they, not us, that get to determine what is valuable and what is not. And it is they, not us, that decide whether or not to pay for the value they perceive. So, what we must do is get close to what we think our customers want, ship it, listen to their feedback, and deliver relentlessly to close the gap between our product’s current abilities and their reality. And sometimes their reality suddenly changes, as does what they value. And when that happens we can’t be so in love with what we’ve already done that we can’t dump it and start over if needed.

Because the code itself isn’t art and never has been. It’s just a temporary vehicle that leads to the perception of value in the minds of our customers, at least for a little while.

Perfectionism is the enemy of creation, as extreme self-solitude is the enemy of well-being.
–John Updike

 

Technical decisions are business decisions

Making money is art and working is art and good business is the best art of all.
–Andy Warhol

I know this blog entry will be a long one because I have a lot to say. So, I’ll do both of my loyal readers a favor and distill this lesson into a four-point executive summary:

1. In business, competition is very intense
   • Lots of money is involved
   • Making a mistake can kill your product or company
2. Technical decisions have business implications
   • Delays or feature slips affect sales, market position and credibility
   • Everyone must be connected to the bottom line
3. Software expertise is not convertible into business acumen
4. It is very difficult to explain any of this to software developers
   Software is full of choices. Interesting architectures, abstractions, and implementation patterns that provide an
   assortment of ways to solve a given problem. And for those of us that enjoy solving various intellectual
   challenges it’s quite enjoyable. In fact, most of us look forward to improving our skills simply so we can better
   tackle the next interesting technical problem. Gaining additional development skill is somewhat akin to
   advancing levels in an online game we thoroughly enjoy playing. And it’s just about as safe.
   I quickly found out that business is very different. It’s not a game; it’s real world, it’s rough, and it’s deadly
   serious. It’s about marketshare and money and companies play to win by whatever means they have available.
   Less like boxing, more like a street fight.
   And in such an environment, you’d best be very careful not to make a mistake. But what makes that especially
   hard is that often the “right” technical decision will be the wrong business decision. And it’s the business
   decision that actually matters most. Of course to a group of software developers, of which I am one, it’s a tough
   pill to swallow to be told to pick an “inferior” technical decision by your “pointy-haired” boss. But there are
   extremely good reasons you should listen so perhaps this little example will help.
   You’re a developer responsible for implementing feature X. Your boss asks you how long it will take. You
   realize there are two basic alternatives, both of which will work and look identical to your customer when
   completed. One implementation approach is very direct, maybe even a little hacky, but will take one day to
   implement. The second approach is much more elegant but will take two days. So naturally you opt for the
   second solution since writing elegant solutions makes you feel good. You tell your boss it will be two days and
   you complete the work in two days, precisely as you estimated. No problem, right? Wrong!
   You just made a very bad and expensive business decision. Because minimally, you cost your company one day
   of your wages when you decided to increase the development time by 100% to deliver identical functionality to
   your customers. Or worse, because you decided to be elegant, your boss couldn’t bring a stretch goal into scope
   that would’ve given your product huge first-mover-advantage in the marketplace. Now the costs of your bad
   business decision really begin to add up as lost sales. Hey, but at least you “feel good” about being elegant,
   right? Isn’t that worth something? Let’s see. I’ll let you make the same choice again, but if you choose to go the
   2-day route this time you have to take money out of your wallet, right now, and pay me all your overheaded
   wages for that second day. Several hundred dollars, easily. Did that change your decision? Why is your
   money different than your company’s money? Those of you nodding are “business guys”. To those that still
   want to argue with me about code elegance, I thank you for illustrating my last two two b

Software is full of choices. Interesting architectures, abstractions, and implementation patterns that provide an assortment of ways to solve a given problem. And, for those of us that enjoy solving various intellectual challenges, software development is actually quite enjoyable. As developers, we look forward to improving our skills simply so we can better tackle the next interesting technical problem. I’ve often felt that gaining additional development expertise is somewhat akin to advancing levels in a collaborative on-line game that we thoroughly enjoy playing. And it’s just about as safe.

I quickly found out that business is very different. It’s not a game; it’s real world. It’s rough and deadly serious. It’s about market share, and money, and companies play to win by whatever means they have available. And the rules are very loose. It’s less like boxing and more like a street fight. And in such an environment, you’d best be very careful not to make a mistake. But what makes that especially hard is that often the “right” technical decision will be the wrong business decision. And it’s the business decision that actually matters most.

Of course to a  software developer, like me, it used to be a tough pill to swallow to be told to pick an “inferior” technical solution by your boss. But I finally learned that there are some extremely good reasons to do exactly that. Hopefully, this little example will help illustrate the salient points. Let’s pretend you’re a software developer responsible for implementing a new feature in a software product. Your boss asks you how long it will take, so you do a  bit of research to provide an informed response. What you realize is that there are two basic alternatives, both of which will work and look identical to your customer when completed. One implementation approach is very direct, maybe even a little hacky, but will take one day to implement. The second approach is much more extensible and elegant sbut will take two days to complete. Which do you choose? When I was young I would have opted for the second solution since many would perceive it as more technically “correct” and writing elegant code is actually a bit more enjoyable. So, is there really a problem here if I could estimate the work at two days and then complete it on schedule?

Yes, there is. Silently chosing the longer implementation time is actually a very bad and expensive business decision. Because minimally, I would have cost the company one day of wages when I decided to increase the development time by 100% to deliver identical functionality to our customers. Or worse, because I decided to be elegant my boss couldn’t bring a stretch goal into scope that would’ve given our product significant first-mover-advantage and a corresponding increase in sales. See how a seemingly simple technical decision is really a business decision in disguise?

If you still don’t “get it”. I’ll let you make the same theoretical choice again, but if you choose to go the 2-day route this time you have to return a full day’s wages to your employer. Did that change your decision, or are you perfectly happy working at half-pay? I can’t imagine many developers would be.

Those of you that understand this lesson now know a bit about how tradeoffs are made in business and why transparency to your management is important, even for what seem like purely technical decisions. And to those that still want to argue with me about the ultimate importance of code elegance and extensibility, I thank you for illustrating bullet points #3 and #4 above.

Perpetual devotion to what a man calls his business, is only to be sustained by perpetual neglect of many other things.
–Robert Louis Stevenson

 

Building credibility takes time

Credibility of brand creates confidence in consumption
– Todd E. Williams

Summary for the impatient: building software is relatively straightforward and predictable; building a brand isn’t. Why should you care? Because you actually need a credible brand to sell software to enterprises.

With a highly skilled team, software can be built pretty quickly, in a matter of weeks (or a few months) for many products. On the other hand, building a new brand that people will trust and recommend typically takes years because trust requires credibility. Unfortunately, credibility must be earned by delivering on your commitments over time because simply saying you’re going to do great things really means nothing if you’ve never reliably demonstrated the ability to do so.

You can’t simply assert credibility so new companies start with a “credibility gap” that acts as a throttling factor to product adoption. Simply put, enterprises won’t standardize on a product that isn’t being backed by a credible software brand. As a result, sales expectations must be dampened to correspond with the realistic growth of credibility over time. How much time? Well, from personal experience I’d say at least a year and that it’s easier to underestimate the amount of time rather than overestimate it.

But there’s good news here too. Although a credible brand is difficult and time-consuming to build, it’s also highly valuable once you have one.  For example, have you ever heard the old adage “No one ever gets fired for buying IBM?” It was coined at least 30 ago and primarily referred to IBM’s mainframe business. Is that viewpoint still valid? I’ll let you decide that one yourself. But even now, that credibility “halo effect” lives on across IBM’s product brands at many levels.

If you can’t find a quotation that legitimizes your position, create one.
– Todd E. Williams

 

Don’t take business advice from poets

Build a better mousetrap and the world will beat a path to your door
– Ralph Waldo Emerson

Until I co-founded Genuitec, I was naive enough to actually believe that quote by Emerson. After all, his “build a better mousetrap…” adage is so often repeated that it must be true, right? He’s simply saying that “if you provide something better than existing solutions then your efforts will be rewarded.” If only it was really that simple.

I think the fundamental flaw in this advice is that it’s missing a qualifier, like “sometimes” or “occasionally” or ”in an ideal world” or ”after you successfully brand, market and build demand.” Because nothing comes as easily as this quote makes it sound. To prove this point I searched for sales data for all the various types of mousetraps to see if any of the so-called “better ones” that had been invented over the past hundred years came close to outselling the original “spring-loaded bar trap.” But you know what I found when I searched Google? Literally dozens of seemingly much better mousetrap designs that I had never seen before.  It seems that “building a better mousetrap” doesn’t even ensure success in the market for actual mousetraps, much less in any others. Why do you think that’s the case?

Personally, I think it’s because Emerson was an idealist and Aiken was a realist when he said:

“Don’t worry about people stealing an idea. If it’s truly original, you will have to ram it down their throats.”
– Howard Aiken (computer industry pioneer)

No one will ever claim that Aiken was as eloquent as Emerson. But if you interpret “ram it down their throats” to imply the need to build a brand and relentlessly market and sell your product, then in my experience Aiken knew a lot more about the real world than Emerson did. Building a better mousetrap is certainly helpful, but you’d be wise not to underestimate the amount of time you’ll need to spend ramming it down some throats if you want to be successful.

 

How to treat OPM addiction

Happiness is positive cash flow
– Fred Adler

Back around the turn of the century, I worked for a dot-com that smoked through round after round of “other people’s money” (OPM); hundreds of millions of dollars in total. I remember visiting our posh corporate headquarters on the top floor of a highrise in the pricy Buckhead district of Atlanta. The decor looked like the offspring of a Starbucks + IKEA mating. It was replete with lightly colored wood furniture, ubiquitous brushed aluminum accents, and custom chain mail curtains  that were used to offset the requisite pool table and a copious number of TVs tuned to CNBC. I was only there to conduct a couple of days of training, as I normally worked out of our drab  corporate cubefarm in Dallas.

On my first day at headquarters, I shared the elevator ride up to the penthouse with an older gentleman in an expensive suit. After a quick glance to confirm that I was likely insignificant to his purpose, he appropriately ignored my presence. However, when he got off the elevator I overheard him mutter, “These offices are nicer than mine!” I could believe that, because they were the nicest ones I’d ever seen. Later that day, I learned that my elevator companion ran a venture capital firm that was thinking about investing in the company. He opted to decline, however, apparently wanting no part in financing our amazing number of self-important people in posh windowed offices. Go figure.

With credit markets frozen and venture capital investments all but dead, many startups are are being forced to rethink not only their decor, but their business models as well. Without a steady stream of outside liquidity, dot-com-style models, like the one above, that rely on spending ever increasing amounts of OPM to “get big fast”, but without profit, are doomed to failure. Even prior to the current financial malaise, OPM models typically succeeded only when a buyer could be found to purchase the startup for its market share, without regard to the unprofitable nature of the underlying business.  Typically, this buyer (or “greater fool”) was either a large corporation or, if an IPO could somehow be arranged, the public. Those exit strategies are now as dead as the dot-com business models that once depended upon them.

Unfortunately, OPM seems to be as addictive as its homophone, opium. And, when your supply runs out the consequences can be just as brutal. To help kick the OPM habit, here’s a four step plan to get your software startup on the road to recovery.

Step 1 – Embrace Frugality
I’m sure you’re familiar with the term “fiscal responsibility” and honestly believe you’re doing a good job spending your OPM wisely. After all, if you weren’t good at this you wouldn’t have that big corner office overlooking Atalnta, right? Seriously though, there is a world of difference between “fiscally responsible” and “frugal”. To make that transition, you have to treat the money like it’s your investment, not someone else’s. Here’s a little story to help explain the difference. When I was a kid I would occasionally ask my father for $20 to go to the movies. He’d typically give it to me, and I’d spend it as I had indicated I would. That’s being “fiscally responsible”. But sometimes, for inexplicable reasons, my father would tell me to spend my own money instead. That change in his response immediately changed my behavior. Surprisingly, I was wondering how I could spend less than $20, or if I even needed to go to the movies at all. Spending my money versus someone else’s money made a big difference. Suddenly, I was frugal.

Step 2 – Target an Existing Market
The advantage of existing markets is that they contain customers with money looking for solutions to their problems. To win customers in an existing market, you’ll have to convince them that you can improve on something they already do, or want to do. Conversely, creating a new market involves convincing people to do something completely different or try something new. This “new market message” is typically a paradigm shifting proposition and as a result, it’s a much harder sell than a “current market message” of incremental  improvement.  Startups typically don’t have the time horizons or the money to engage in the marketing and educational programs required to encourage a paradigm shift. It’s so much faster and cheaper to poach customers from your competitors in established markets.

Step 3 – Ship Something and Sell It
It is now time to actually make money, just like all the successful companies do. Fortunately, it’s actually rather simple, at least conceptually, to get started — just ship something, market it, and ask for money. You’ll either start increasing your revenue or you’ll fail fast, both of which are positive outcomes. Need more convincing? Then I’m going to refer you over to the OnStartups blog to read “Wimps Wait. Revolutionaries Release Early.” Once Dharmesh has convinced you, come back for Step 4.

Step 4 – Keep Shipping and Selling
Once you’ve shipped, listen to the feedback, improve your product, and ship again. Quickly. It’s extremelly difficult to compete with a software company that excels at quickly and reliably shipping high-quality software.

At Genuitec, we’ve coined the term “relentless delivery” to describe this entire process. We apply it to all of our product lines and treat step 4 as an infinite loop. And even though I’ve written this blog in the context of getting off of OPM, this process actually works best if you never get addicted in the first place.

Instead of taking other people’s money, begin by investing your own, like we did when we started Genuitec. You’ll find that step 1 becomes very easy at that point. After that, simply focus on execution of steps 2, 3, and 4, 4, 4, 4… to batter opponents both large and small. No one is too big to go after if you do it incrementally.  In fact, we’ve found that relentless delivery is a better weapon against the large and sluggish. That’s why we’re bashing IBM right now with impressive results, simply by executing what I’ve outlined here.

How little you know about the age you live in if you think that honey is sweeter than cash in hand.
–Ovid

 

Conjecture: Apple’s creating an “iPhoneBook”

“The best way to predict the future is to invent it.”
– Alan Kay

Why in the world would I want a netbook computer? They’re just small, underpowered laptops by any measure, and I already have a laptop. Even if I needed a new machine, I wouldn’t buy a netbook because the poor performance would drive me nuts. In fact, I’m always demanding more from my laptop, not less. But netbooks seem to be all the rage lately. What am I missing? Am I supposed to buy one in addition to my laptop so I can have yet one more place to sync my email and deal with replication issues?  I still have real work I need to do with productivity applications and development environments, so maybe I’m just not the target demographic for netbooks.  Perhaps they’re for the “youth market” that has no money but an addiction to Facebook? I can accept that.

But maybe the reason I don’t want a netbook is that I already have one! It’s called an ‘iPhone’.  Perhaps you’ve heard of them? Seriously though, with its ubiquitous Internet connectivity, real web browser, and applications for just about everything, the iPhone really is a tiny netbook. In fact, for most trips I don’t even take my laptop anymore; my iPhone is typically quite sufficient. “Usually” is the operative word though. Because the iPhone still has three primary limitations that prohibit extended use as a netbook:

• Battery life – The battery life when using the iPhone as a phone or media player is excellent. I often go several days between recharges. However, if you want jump online over a WiFi connection for a few hours, you’ll quickly find the battery meter plummeting toward empty.
• Screen size – The iPhone’s screen is truly amazing. It’s clear, bright, and easily readable. But if you want to watch a movie or read a book on your flight, a larger screen would be extremely welcome.
• Keyboard – It took me awhile, but I eventually got pretty good with “thumb-typing” on my iPhone. However, if I have to write a lengthy email, edit a contract, or do other “real work” for a few hours, a keyboard is a requirement.

But Apple could easily address those issues by introducing a new device that I’m going to call an “iPhoneBook”. The hardware form factor for the iPhoneBook would be similar to the Macbook Air, but scaled down to accommodate a ten inch touchscreen. Within the screen would be large flat battery and a slot into which you can fully insert your iPhone. The touchscreen could be disconnected from the keyboard for use in a tablet configuration (“iPhoneTablet”), similar in that aspect to Always Innovating’s Touch Book. On the software side, the iPhoneBook doesn’t need very much at all. In fact, it would only require what’s needed to remap and scale the iPhone display to its touchscreen and interface with the keyboard, if attached.

The combination of an iPhone plus an iPhoneBook would make a powerful netbook computer. Here are just a few reasons why:

• Longevity – Just plug the iPhone into the iPhoneBook and you’ll have over ten hours of battery life since all the battery needs to power is the iPhone and the larger touchscreen. There are no power-robbing hard drives or peripherals on an iPhoneBook.
• Tablet Mode – Remove the high-resolution ten-inch touchscreen from the keyboard and you have the perfect form factor for watching a movie in lanscape mode or reading a book in portrait mode. If you thought you needed a Kindle 2, now you don’t. Also, the iPhoneTablet could be used for any paperwork tradtionally done in a “clipboard format”, such as hospital record keeping.
• Netbook Mode – With the keyboard attached to the large touchscreen the iPhoneBook really is a netbook. All three of the limitations I listed above would be addressed and the Internet could be easily accessed for extended periods without eyestrain or thumb-typing errors.
• Flexibility – There would be three configurations to choose from, based on the anticpated workload: iPhone, iPhoneTablet, or iPhoneBook.
• Security – All information remains on the iPhone or the Internet. The iPhoneBook has no storage so it cannot contain any proprietary or sensitive information.  There’s nothing that can be compromised if an iPhoneBook is stolen.

The Business Model: Why Apple would create the iPhoneBook?

• MacBook Sales Unaffected – The iPhoneBook isn’t a direct competitor with Apple’s existing laptops. It has no storage or operating system and is basically just a high-end addition to the iPhone. If you need a MacBook now, you’ll still need one once the iPhoneBook is available.
• Not a Commodity – If Apple tried to compete by building a “real” netbook they’d be fighting a losing battle in a commodity market that is hugely sensitive to price. Low price has never been Apple’s strong suit. Apple thrives at providing unique, innovative solutions for customers that value form and function more than low cost.
• Creates a New Market – The iPhoneBook is targeted at business users of the iPhone who sometimes find that they need a bit “more” from it. These users will pay for productivity.
• Force an iPhone Upgrade – Oh, didn’t I mention it earlier? The iPhone slot in the iPhoneBook’s touchscreen is too narrow for your current iPhone. Form factor and all.  I’m sure you understand. Besides, if the iPhoneBook is going to look like a Macbook Air then the iPhone will need to be restyled to match anyway. Surely you want them to match, right?
• All for under $1000 – Let’s see, that’s a new third-generation iPhone for $299 plus an iPhoneBook for $699. Yes, that that seems just about perfect; high enough to make customers wince but not so hight that they wouldn’t pay it.
• Even more – Come on, those guys at Apple have already thought of all this and more.  I can’t wait to see what they’ll add on top of this list.

Well, there’s my idea for the iPhoneBook. But is there really a market for it? I’d certainly buy one, but would you?

“We don’t know how to make a $500 computer that’s not a piece of junk; our DNA will not let us do that. We’ve seen great success by focusing on certain segments of the market and not trying to be everything to everybody, and you can expect us to stick with that winning strategy.”
– Steve Jobs, 2008

 

The is no perfect product, only perfect products

A little while ago, a friend of mine sent me a link to a Malcolm Gladwell video called “What we can learn from spaghetti sauce.” Since I’m not in the food business, I was initially reluctant to invest twenty minutes to watch it. But eventually I did, and now I’m going to explain why you should watch it too.

At the start, it’s obvious from the audience’s reaction that Gladwell was expected to talk about the book he was launching at the time, “Blink.” But surprisingly, Gladwell instead takes the time to relate several educational anecdotes from the career of noted experimental psychologist Howard Moskowitz.

In the 1970′s and 1980′s, Moskowitz did a lot of consulting with food companies to help them increase sales. One of his initial breakthroughs came while working on Diet Pepsi. Pepsi had independently determined that the sweetness level for Diet Pepsi had to be somewhere between 8% and 12%. Moskowitz’s job was to determine where the exact “sweet spot” was so the perfect Diet Pepsi could be launched.  So he did what a lot of scientists would likely do. He had the labs create each sweetness level (8%, 8.1%, 8.2%…11.9%, 12%) and then tested them in focus groups to determine the overall favorite. It seemed simple enough, but when the data was analyzed Moskowitz discovered that there wasn’t a favorite.  Because instead of plotting a bell curve, as expected, the data was much more scattered. There apparently was no “perfect Diet Pepsi.”

However, even without a predictable trend to the data, Moskowitz noticed there were still three or four very obvious preference clusters. So while there still wasn’t a perfect Diet Pepsi, there were definitely a small number of perfect Diet Pepsis. At the time, this idea was actually a huge breakthrough in food science; it was a complete rethink in an industry that tried to make each single item appeal to the majority of consumers. Unfortunately for Moskowitz, it proved very difficult to convince anyone of the magnitude of this result.

But one day in the 1980′s Campbell’s called on Moskowitz to save Prego spaghetti sauce. At the time, Prego was competing against the dominant jarred sauce, Ragu, and losing badly. But rather than research how Prego spaghetti sauce could be improved, Moskowitz decided to look for the perfect Prego spaghetti sauces instead. So, he enlisted the help of the Campbell’s kitchens to create forty-five varieties of sauce, each different in one or more key characteristics. Then, using that truckload of sauces, he ran thousands of people through focus groups to record their preferences. In the end, he found that all Americans’ sauce preferences fall into one of three categories: plain, spicy, or extra chunky.

When Moskowitz took his findings to Campbell’s, they were stunned. There was simply no such thing as extra chunky spaghetti sauce in the 1980′s. It didn’t exist. So how could this preference be real? After all, Campbell’s had conducted focus groups for years and when people were asked what characteristics they looked for in a spaghetti sauce no one had ever said “chunkiness”.  Yet, here was Moskowitz confidently telling them that one third of America secretly craved extra chunky sauce and that Campbell’s was completely missing that market. Later that year, Campbell’s introduced a new line of extra chunky Prego and immediately took over the spaghetti sauce market. And, in the subsequent ten years, “extra chunky” generated over $600 million in sales revenue.

You might have noticed that Moskowitz didn’t stop at spaghetti sauce.  And, as a result of his continued influence over the decades, we now have a better selection of most foods. So, if you’ve tried to buy mustard, jam, olive oil, pickles, or barbeque sauce and have stood in your grocery store completely stymied trying to figure out just which one will be your version of perfect, you have Howard Moskowitz to thank.

But why we should care about all this if we’re not in the food business? Because something tells me that Moskowitz’s insight applies to most products, not just eatable ones: “There is no perfect product, only perfect products.” Talking to our customers, taking surveys, and conducting focus groups are all helpful. But what if all that effort still fundamentally fails our industries, just like it did the food industry? What if our customers don’t know what they want,  but only know it when they see it? Could each of us be blind to a huge opportunity — our product’s equivalent of “extra chunky?” And if we are, how do we find it?

“It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”
– Steve Jobs (BusinessWeek, May 25, 1998)

 

Fail fast

I have not failed. I’ve just found ten thousand ways that won’t work.
– Thomas Alva Edison

News flash: not every idea we have will be a winner in the marketplace and we simply need to accept that. We all fail sometimes, for a variety of reasons, some within our control and some not. And everyone knows we’re supposed to learn from those failures, so I’m not going to dwell on that. It’s simply common sense. But within Edison’s guidance is a true gem that might not be as obvious: fail fast then try again.

I’m not saying you should try to fail, of course. Absolutely not — for any idea to have a chance of success you’ll need to fight for it with all the resources you can muster. However, while doing that, as soon as you can determine that failure is the likely outcome of your efforts, you should simply accept the loss and move on. That may sound easy, but it’s not.

We love our own ideas, if for no other reason than simply because they are ours. Left to our own devices, our natural tendency will be to “go down fighting”, to the last breath and the last dollar. And that kind of blind zeal will ensure that our first failure will also be our last. But if we can force ourselves to recognize failure and accept it early, we’ll win in the long run, through preservation of both time and money that we can then invest in making our next idea a blinding success.

And here’s some good news. Once we do finally succeed, the many failures along the way suddenly become nothing more than  amusing anecdotes we can use to regale cocktail party guests. That’s why Edison is remembered for successfully creating the incandescent light bulb filament, and clever quotes about failure, rather than his personal failures.

Thinking on it a bit further, we can see that it was truly fortunate that Edison was the “King of the Fast Fail.” Because if it had taken him just a week for each of his ten thousand failures while working on that first light bulb, you just might be reading my blog by candlelight.

I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. Twenty-six times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life and that is why I succeed.
– Michael Jordan

 

Three is a magic number

If you can run the company a bit more collaboratively, you get a better result, because you have more bandwidth and checking and balancing going on.
–Larry Page

If you saw the title and began singing the Schoolhouse Rock song by the same name, you’re not alone. It’s still going through my head, along with the preamble to the Constitution, as I write this. But, this lesson wasn’t covered in Schoolhouse Rock. I had to wait almost thirty more years to learn that three is a magic number when you form a company too.

I started reflecting on this topic recently when someone asked me why we founded Genuitec with three people. My answer, at the time, seemed obvious: “Because that’s how many of us there were at the time.” And while that’s certainly true, it has also worked out incredibly well. I think I now know why.

With a sole proprietorship, you have the power to make all the decisions, but lack a collaborative partner. Start with two founders, and you have a partnership that can split in irreconcilable disagreement. But with a group of three you have the freedom to both collaborate and disagree because, if forced, you can also vote. And the ability to vote is what makes three magical; it’s the smallest group that will yield an unambiguous majority.

I didn’t truly appreciate this lesson until our first vote, which I lost. In early 2003 we had a management meeting to discuss whether or not we should discontinue our consulting business and transform Genuitec into a product company. The consulting business paid all the bills at the time, but the product idea could be huge if we could pull it off. But such a move was risky, to say the least. And, there was no way we could do both; we simply had to choose. Consulting versus product; safe versus risky. In the end, we couldn’t come to an agreement, so the three of us voted and I lost. Once the decision was made, there was nothing to do but execute on it as a team.

It took over a year for us to be sure we’d made the right decision, but we certainly had. Today I shudder to think what would have happened if I hadn’t lost that first vote and we’d never created MyEclipse. That moment was an inflection point in Genuitec’s history, and it came close to creating a very different future for us.

So today, with gratitude, I am writing this brief tribute to the awesome “magic of three” that ensured we made the right decision then, and in each instance we’ve had to invoke its power since.