Monday, December 28, 2009

Understanding Motivation

What motivates people? Specifically, what motivates a person to donate, buy, or participate? According to Business Week, 40%+ of rebates are never submitted. Shoppers pass by dozens of products they CAN afford to buy one they can't. People gladly share videos of Susan Boyle on Facebook, while refusing to "re-tweet" a cute video of a friends child. A friend of mine offered me $5,000 if I could find him a job... and it demotivated me. So what is behind these strange behaviors? What does this mean for business?

Engineers may wonder, why care about motivation. Simple answer, if you can't motivate people to 'action'.. you'll never sell a thing!

So, how do we motivate?
One answer may lie in games. Games provide some of the purest forms of motivation I've ever seen. "Get to the next level", "Get better virtual gear", "See the next video", "Save the virtual world", or "Win". So, how can you make your customers feel like 'they won' when they have bought your product...without making it feel like a scam? Karmaback is trying to solve this.

Another answer may lie in Youtube. Why are the 'funny' and 'ridiculous' so much more popular than the average? I believe it is because of 'shock value'. If something has 'shock value' then it is noteworthy... noteworthy to your friends = notoriety with your friends. I.e. if you are the one who found the noteworthy video, and you share it with your friends, you get 'cred.'.. or levels in friend-world. How can you make your product "noteworthy" and help your customers get 'cred. in friend-world? Karmaback is trying to solve this.

Finally, my last idea comes from buying behaviour itself. When someone recommends something that I need, I'm 90% more likely to try that brand/product. E.g. when NEED matches a FRIEND/family recommendation... I get REALLY motivated. Karmaback tries to encourage this every day!

What ideas or thoughts do you have on motivation? Understanding this psychology is the key to marketing!

photo by: ERCheck

Tuesday, December 22, 2009

What is Business?... in engineering terms.

Business is simple. Business is a process or function (for programmers) or a flow (for others). At its core it is the process where we invest resources (inputs: money, time, and effort). We use those inputs to produce intermediate stuff (inventory, product, or results). We then exchange intermediate stuff for (output: money). An incredible book called "The Goal" by Eliyahu M. Goldratt is a must-read for engineer-types because it introduces the concept of Flow or Critical Path analysis. This type of analysis is essential for business, because there IS always a weakest link, and it is usually NOT engineering.

Where is the weakest link? Usually it is in the exchange step. Lets take a deeper look at all 3 steps, engineering-like.

1.) Invest Resources (money, time, effort)
This part involves raising money, finding employees, motivating them, deciding what to build or do, and applying time and effort in its design.

2.) Produce Intermediate Stuff (inventory, product, or results)
This step of business involves actually making product (production) or inventory. It might be just buying stuff (inventory) low to later be sold high. It might be producing results for your client (if you are a service business).

3.) Exchange Intermediate Stuff (for money)
This step involves finding customers, selling, delivery, and collecting money for your hard work. Hopefully this step makes you enough money to cover the costs of #1 and #2!

So, where is the weakest link? Usually #3. Lets face it... building stuff isn't that hard. Designing stuff is hard, but not impossible (just takes time & effort). The real trick is finding customers and selling!

Just remember this axiom: buy low, sell high.

In other words, you better be doing #1 and #2 right so that people will WANT to buy, and that you will make enough profit to cover #1 and #2!

Good luck.

Thursday, December 17, 2009

The GUTS for sales?

Do you have the guts to do sales? Most engineer-types would say "yes", but feel "HELL NO". They'd probably claim its not adding value, boring, or beneath their skills. They are dead wrong. An engineer with the guts to go into sales has the sky as his limit. However, here are the fears you have to somehow, overcome.

  1. Rejection: this is a major one for engineers, and why so many of them propose so few truly new ideas. In sales, rejection is continuous until you get the check.
  2. Slime: many people think sales is a slimy business... rife with kickbacks and bribes... they are "thank goodness" dead wrong. People who rely on this went out of style with "The Godfather" (great movie, but far from reality today).
  3. Cold Calling: calling people is not fun, especially for engineer types or managers who constantly get cold called and hate it. Honestly, I'm stuck here.... I HATE cold calling, and flatly refuse to do it... I'm always wondering if it is hurting me: but in the world of Email, why can't we arrange a time to talk in advance????
  4. Pitching: Many engineer-types think pitching a product and "selling" means lying or being deceitful... if so, you should STOP watching Godfather, and instead pick up a copy of the book: "SPIN Selling".. which actually is not about "spinning at all" but asking questions to help determine IF your product has value to the client... if it doesn't, MOVE ON!
  5. Closing: funny, many engineer-types (myself included) probably think this means "getting to yes". I'm starting to learn though: closing is getting to "yes or no", then moving on when appropriate. In high-tech, getting a "no" is as hard as getting a "yes"... in both cases, the hard part is asking for it!

Here are a few that you'll worry about once you get here:
  1. Feeling worthless: since you're not 'making anything', or 'desiging anything' ... and it feels like you're "closing" very little (unless you count the 'nos'... which you should)... you'll feel like a lot of work for very little result. Trick is to remember, every deal has a "life-time value", not just the current sale.
  2. Lack of forward progress: similarly, since you're probably not counting 'nos' as successes (you should), you'll feel like your never getting anywhere. By the way, most clients will not say "yes" or "no"... which is even more frustrating!

Here's the solution.. READ A BOOK OR 2 on SALES!

Its funny, so few sales-people are reading sales-books... and so many are writing them!

Pick up a book!!!!

Here are a few I really enjoyed:
SPIN Selling
Sales Bible
Its Not Luck

Monday, December 14, 2009

Seth Godin: Brilliant Blogger... Good Person?

Seth Godin. I find it fascinating that a celebrated author, who writes masterpieces of business books such as Meatball Sundae, would run such an awesome Blog. It is even more incredible that he would then write (and compile) a book and publish it FOR FREE... "What Matters Now" view it here or download it free here. Even more incredibly, his intentions are NOT completely self-serving, as so many authors are... the very first page is GENEROSITY: "When the economy tanks, it's natural to think of yourself first... Instead, we're rewarded for being generous." I have found this to be SO completely true... for me, it really is the path to my current successes, and is in fact the backbone of what my new company is all about: Karmaback!

In the digital world, as Seth puts it, there is no reason NOT to give. Giving means clicking a sponsored link, blogging a product or cause you love, or twittering or facebooking the links you care about. Karmaback helps give incentive to the peopel who spread your love. Getting some Karma back, for your troubles and your time, is the least we can do!

So go, be Generous. Read the free book. Register at and get some of that Karma back! Thanks Seth!

Thursday, December 10, 2009

Lead with your weakness: Your Glass Jaw!

Seth's Blog had a recent post about "Leading with your Glass Jaw". His idea was that only the bravest and most secure companies will interact publicly with customers... and the weakest ones will shape up quickly if they start to do it. I think he's probably right: every company has a weakness (or 2)...a glass jaw if you will. However, I think he missed the boat with his post & headline. I believe, in the age of skepticism and skimp, of reviews and 'word-of-mouth' power, we should all be leading with our glass truth in our products strengths AND weaknesses.

Too many companies "lie by omission" about their products real value. They hope that people won't notice the blatant flaws, and that people won't mind the "idiosyncrasies".

In reality, companies should be up-front with their customers and in their marketing materials... ADMIT to your weaknesses. Expose the glass jaw. Why? If customers start to hit it... THEY look like the bad guys... after all you were very clear and up-front about your problems/issues.

In fact, done right, your other customers will stand up for you (if they like your "main" value proposition).

Want the best example in the world? Apple.

They admit that their CPUs and GPUs aren't as modern as PC. They admit that their software is tied to their hardware (closed platform). They admit to "blocking google voice"... and more!

And OH how the people defend them....

Be Apple, tell the truth... up front!

photo attributes:

Monday, December 7, 2009

Do Incentives Work on Social Networks??? MIT Students Prove: YES!

There is fascinating new evidence that incentives work for social networking VIRAL growth... even better than DARPA expected.

This article outlines the details of the MIT Students "incentive program" for social networking to help them find 5 red weather balloons spread across the nation. Their program rewarded $2000 for "first to find the balloon" but also "$1000 for a friend who referred them" and "$500 to the friend of the friend who referred that friend" and so on!!! BRILLIANT!

And this is part of what Karmaback does... we reward people for sharing good deals, specials, and cool products with their friends! Its the whole point of Karmaback! If you haven't checked out Karmaback yet, now is the time... you could be missing out BIG!

Read more about the MIT team here:

Thursday, December 3, 2009

Free Stuff vs. Prizes.

This post is more of a question than a deep thought. What % of people, do you think, are motivated by free stuff (like swag)? What % of people, do you think, are motivated by chances to win "bigger" prizes? Which is better, swag or prizes?

This and many other questions, I hope to answer with my new company: Karmaback.

One of the most exciting things that we do at Karmaback is measure EVERYTHING. The statistics of motivation have intrigued me for years... ever since we handed out massive K heatsinks (the Killer Bling) at Blizzcon in 2007. I recently wrote a magazine article about this experience... basically, giving away the big K heatsinks on chains as necklaces WORKED extremely well.

So, what do you think will work? Swag or 'bigger prizes'... and what % of people will be hooked?

Stay tuned to Karmaback and find out.

By the way, some great prizes can be had right now on Karmaback:

Good luck!

Monday, November 30, 2009

Dirty Hands: Understanding the Consumer Products Sales Process

Engineer-type brains sometimes like to get their hands dirty, but understanding the mess that is consumer product sales may be dirtier than many engineers are comfortable with. I'll try to explain some of the basics, then tell you the dirty truths about consumer product sales.

The Basics:
1.) The consumer buys your products from: a.) you, or b.) a channel
2.) There are dozens of kinds of channels... here is the top 4:: retail, e-tail (e-tailer), System Integrator, VAR
3.) These channels buy from either: a.) you, or b.) a distributor
4.) The distributor buys from either: a.) you, or b.) an aggregater (or aggregator), or c.) a rep firm.
5.) The aggregator buys from either: a.) you, or b.) a rep firm.

So, the most direct route...
The longest route...

And there is the rub... there are many e-tailers and most retailers who will no 'buy from you direct', especially if you are small.
Instead, you have to work with a distributor... funny, there are many (most) distributors who will not work with you directly.
So, you have to work with a rep firm or aggregator or both.

That can be a lot of hands in the pie! It is only just the beginning. In addition to the margin points that every step needs to take, each will want your marketing dollars to help make their channel/distribution succeed.

Messy yet?

Many channels require these marketing dollars (called Market Development Funds or MDF) or they will delist your product, regardless of how many you are selling.

So, how do you navigate this maze?

Very carefully, and hopefully with a lot of margin built in to your product.

Wednesday, November 25, 2009

Winning at Sales: Sales Dogs

Doing sales is easy, right? What the heck is doing sales anyways? So many engineering type brains wonder: why do we pay sales-people? What do they do all day? The answer is: not much... just everything.

Losing at sales is easy. Make a call, get rejected, give up, repeat. Very few sales-people do this... so their day gets FILLED with NOT GIVING UP! That's what you are paying the sales-person for: persistence.

Winning at sales is hard. I used to sell aerial photographs of peoples homes, now I've sold Killer NICs, Stock, and "the Karmaback viral marketing program"... each progressively harder. Here is a few of the things "I do all day"... and your sales-person should be doing too:
  1. Manage dozens/hundreds of contacts and leads: reaching out to them via email and phone to set up pitches, keep them updated, etc.
  2. Do 2 or 3 hour-long sales calls per day.
  3. Research existing leads before each call & email to be up to date on their business and products.
  4. Research new leads & beg friends for more leads.
  5. Build custom presentations & custom proposals & custom contracts for each lead & prospect.
  6. Learn/Practice everything about own company/products
  7. Beg for more assets, more demos, etc.
  8. ....I could go on and on....
In summary, Winning at Sales takes a Sales Dog! A hound that never gives up, never loses faith, always wags his tail, and works DAMN HARD!

Thursday, November 19, 2009

My new company is LIVE! Karmaback: Get Some!

Karmaback is now live!

Go, earn, spend.

What is Karmaback?

Simply put, it is a REWARDS program that gives you prizes, discounts, and more... just for sharing your thoughts, comments, preferences, etc.

That's it.

Right now, you can win some awesome Blu-Ray discs (The new Star Trek)... and our grand prize right now is a pair of AWESOME $299.99 headphones:
Psyko 5.1 Headphones (True 5.1 sound on your head with truly 5.1 speakers!!!)
Here is where you enter to win:

Monday, November 16, 2009

Hating the customer.

If you decide to get into 'business' at all, you will have customers. The customer may be fortune 500 companies or 13 year-old kids, but you are going to be selling to someone. And you will hate them. You won't admit it, but you will feel it. Why? Because they will not behave how you want them to! They won't say the right things (FLAMES), or buy enough, or care about you. They take too long, play mind games, and pay too little. So how do I cope?

A few tips that have helped me learn to hate my customers less.
1.) accept that you cannot control others.
2.) try to learn what they 'do do' consistently.
3.) have a dialogue. JUST TALK TO THEM... normally. Don't always be selling, sometimes you just need to learn more about them.
4.) remember you exist to help them... but you can't help the un-willing.
5.) GOLDEN RULE: do unto others, as you would have them do unto you. TREAT YOUR SUPPLIERS BETTER! Really. Just consider how you treat your own suppliers, and good karma will start to flow.

For more on Karma see: :)
coming soon!

Photo Attributes: derivative work: Mike.lifeguard | @en.wb Kittyplya03042006.JPG: Photographed by and copyright of (c) David Corby (User:Miskatonic, uploader) 2006

Wednesday, November 11, 2009

Say more with less.

We engineer-types tend to want to 'give all the evidence', to 'explain the results', and to 'build scientific consensus'. Sometimes we just need to say more with less.

This means 3 things for me:
1.) shorter blog posts - I'm going to shorten what I say.. probably still be long-ish every now and then... but I'll do better.

2.) stop selling when its sold - I have a real problem with this one... I tend to keep going purporting benefits, even when there are already enough benefits!

3.) use more pictures - pictures say more than words.

So, here you go, need I say more?

photo attributes: Sexy_Mouth.jpg: Nyki m derivative work: H005

Tuesday, November 10, 2009

A Code of Honor.

One of the best books on building teams is Rich Dad's Advisors: Building a Business Team That Wins. It talks about making not just a 'company mission statement' or a 'values list'...but a "code of honor". For those that read this blog, you know how important I believe company values and mission statements are. When I read this book, it took my feelings to the new heights (Picture at right is from my capsule at the top of the millenium wheel in London, 2009). I'm so lucky to be able to start a new business and bring some of the ideas from my last venture (Bigfoot Networks) into the new one (Karmaback), and also to heighten them with new ideas such as "A Company Code of Honor". So far, all the employees of Karmaback have agreed to the code of honor, and it is working well. Here is how Karmaback's code of honor works, and publicly, here is our code of honor. We live this code not just with each other, but also with our suppliers, partners, end users, and customers.

Karmaback's mission:

Karmaback is dedicated to developing new technology that combines rewards with social media and customer feedback to deliver new and unique buying experiences. We believe in being an ear-piece rather than just another mouth-piece.

Here are the rules of our Code of Honor:

We, the Employees of Karmaback, subscribe to a code of honor. A code of honor is a set of common beliefs and rules that we agree to hold ourselves and our peers to in all of our dealings (each other, our partners, and our customers).
We “call it” privately, when someone violates this code by telling them about their discretion ASAP.
We “reward it” publicly, when someone upholds the code in a novel or successful way.
We “accept it” internally, when we are called on it, or rewarded for it.

Karmaback Code of Honor:

We take complete ownership of our assignments.
We never abandon a team-mate or partner in need.
We always offer a chance for redemption.
We always celebrate wins as a team.
We are always direct and honest with everyone.
We never squash or punish ideas or opinions.
We are always passionate about our individual contribution.

What is your code of honor? What do you think of ours?
Have you ever worked in a place that not only 'said' these things, but believed and lived them?

To me, a great place to work is one where ownership is clear, direct, and everyone is passionate about their contribution.

Wednesday, November 4, 2009

Companies that measure, win: AKA Engineering Control Theory

Companies that do not wise up to the fact that measurement is MORE important than spending money are going to die. The ones with more cash (Apple, Microsoft) will die slowly. The ones with less cash on hand (start-ups, struggling businesses) will fail quicker. Marketing and advertising can be up to 40% of annual expenses, but very few companies measure their effectiveness. How can you 'correct' what you cannot measure? Why would you spend $10,000 on a banner ad, and then only measure how many 'clicks' it generated? Companies need to measure the effects of their activities in terms of the whole system, including sales. I believe so strongly in this, I started a company, Karmaback, to try to help businesses solve this problem.

Engineer-types call any measured system where the input is adjusted based on the output a 'control system'. Many people call this a feedback system. If only more engineer-types went into marketing! The major problem is that generating 'clicks' is easy, and generating sales is hard. There are SO MANY more variables than just the banner itself that goes into the sale. All of those variables need to be considered and adjusted based on the true measure of success: not clicks, sales. Finding the knobs that move sales, not just getting more 'clicks', is they key to success. In order to find those knobs, we must measure sales, and begin to create a hysteresis pattern leading to win.

Engineer-types understand the word hysteresis. The idea is simple: for any measured system, where the output is not 'easily' predicted by its input... under-correction and over-correction create a 'ringing' pattern called hysteresis. Anyone who drives a car understands this intuitively: it's the steering-wheel micro-adjustments you make while you drive. You see the car is going a tad too far right, you steer a tad to the left and vice versa. In business, we have many steering-wheels (knobs), and going the way you want is, hopefully, growing sales not clicks.

I leave you with 1 last thought. Any banner with a hot girl or an outrageous claim is going to get clicks. What knob, however, is going to get sales, and how are you going to measure it?

photo attributes:

Sunday, November 1, 2009

Why I started a new business.

I started a new company called Karmaback. It is still mostly 'stealth', although we are just about ready to launch. I will of course write more about the company in the future, but today I just wanted to explain why I started a new company. It starts with this: many people think I prefer to be a technologist over a businessman. If you read this blog, you probably know that is bunk. I switched over to business ever since I made my first $1 Million in revenue as CEO of my last company. So, why did such a hard-core engineer turn truly into a businessman? Why did I decide to start on this adventure AGAIN?

1. I love to teach. This sounds crazy, but leading a company for me means getting to teach my employees, my partners, my customers, the press, and you. It's a true passion.
2. I believe in company culture. I don't necessarily think I have the best culture of all time: but I know I have a good one for me. More than that, I enjoy the challenge of building a team to fit the culture and growing the culture for the better over time. A healthy company really is like a child growing up.
3. I genuinely want to help others succeed. This probably ties in to teaching, but I really enjoy seeing others win. I like my customers to win. I like my employees to win. Heck, I even like helping other peoples unrelated businesses to win.
4. I want to make a mark. I'm not fame-hungry, but I do want to make a difference in this world. I believe that having a successful company living and growing, creating jobs, and contributing to community... will make a mark in my small part.
5. I enjoy the tremendous challenge. Without doubt, I get bored easily. I'm not the best engineer in the world, but I can logic my way out of almost any box. Figuring out a pricing strategy now, that is true challenge! (click the link if you can help!)

Stay tuned for more on Karmaback.

Tuesday, October 27, 2009

Why buzzwords matter.

Engineers loathe buzzwords. Usually they are a precursor to a bad idea, misconceived, and violating several laws of nature or physics. Keeping up with the buzzwords and hype, however, is critical to the engineer-type mind who wants to succeed. Buzzword knowledge makes you look smarter (as long as you don't criticize others misunderstanding), and opens up new opportunities. For example, did you know that Amazon is co-investing MILLIONS of dollars in cloud computing companies: all you have to do is apply...

Here is a list of reasons to keep up with buzzwords:
1.) So you can understand what your boss is saying (or trying to say).
2.) So you can see new opportunities in the convergence of new (old) ideas.
3.) So you can learn about tidbits like the Amazon Investment Fund investing in Cloud Computing.
4.) Because it might help you win in business today.

How can you get a jump-start learning the buzzwords and seeing through the hype to how it can help you?
1.) Read Meatball Sundae by Seth Godin
2.) Read Seth Godin's blog.
3.) TechCrunch:
4.) Read
5.) Attend start-up conferences and events like those we have here in Austin as part of the Austin Technology Incubator.
6.) What is your favorite source??? (Please share below!!!)

Thursday, October 22, 2009

Marketing Basics from an Engineers Perspective.

Even my 6yo son knows the marketing formula.... do you? Here it is in C++.
customer_action = customer_need * demand(product(5cs), place(5cs), price(5cs), promotion(5cs));
If you don't understand marketing quite this well or this precise, read on.

I am passionate about learning. I am even more passionate about teaching: I love it. I love learning through teaching. Recently, I decided to start sharing some of my business knowledge with friends and family. My son is helping me (as you can see here!). The topic of this day was "Marketing Basics" and to highlight, this is the view from an engineer-type mind (my own). So you will see, it is simple, straightforward, organized, and logical. Engineers, pay attention, all the marketing basics are IN THIS BLOG POST! After this, you will probably be a better marketer than your VP Marketing (who forgot all this because it wasn't organized or learned as rigorous as science is by engineers). My 5 YO son grasped most of this... you can too.

Marketing Basics:
The goal of marketing is simple.
To build demand, awareness, and action.

Marketing (as a class) has 4 member functions: (The 4 Ps of marketing)

1.) Product - to help define a product/service that satisfies a need, solves a problem, or is otherwise desirable. It's features and benefits SHOULD be defined by marketing.

2.) Price - to set a price which maximizes profits based on demand. (see economic theory). NOTE: this price should be based on PERCEIVED VALUE, not on cost.

3.) Place - to find the best places to put the product/service where it is convenient and readily available to the target customer.

4.) Promotion - to advertise and educate customers about the product/service, price, and PLACE. NOTE: must create 'action' here, and SHOULD be measurable.

Marketing's tools/variables.
Marketing has 5 member variables that must be considered... the 5 Cs of Marketing.

1. Customer - who are they, and what do they want? This is vital information (inputs) to the functions of marketing (the 4 Ps above).

2. Company - who are you, and what do you want? Often this is your competitive advantage and the goal of your business.

3. Competition - who are they, and how are you different/better?

4. Collaboration - who can help you and why?

5. Context - what's going on in society and how can that help/hurt you?

That is it. Really.

Can Marketing be made more complex? Sure... is that good? You decide.

For me, I'll keep my marketing simple. I'll deliver the 4 Ps using the 5 Cs, and get it out there and get it going... to acheive the goal: build demand and create action.

For me, action is sales. A topic for another day!

Sunday, October 18, 2009

Giving Birth to Business: The Thrill.

Giving birth to a new business can be a thrill. The word is thrill, not green, as Bruce Willis would say in the blockbuster film The Fifth Element. Green is money: if that is your thrill, go be an investment banker or some other lucrative job. The thrill of success, of building winning teams, and of launching successful companies is what motivates the best of us...

In fact, 'thrill' may be one reason that VCs struggle to put 'process' into small companies. Process can go against thrill if not managed well. For me, I absolutely love giving birth to a new business. I've discovered a process that I think makes for a good recipe for forming an idea into a business. It starts first and foremost with motivation: why are you starting the business? For me it is not just thrill (that is the reward), it is people, passion, and love of the challenge.

Here is my recipe for sharpening an idea and turning it into a business:
1.) Understand your reasons for starting the business!!!
* For me, this is the best part. I absolutely love the challenge of running a new business. I truly enjoy seeing my employees, partners, and bosses succeed. Finally, I am almost always passionate about the need or problem I am solving.
* The real thrill for me though: is doing all this MY WAY: the way that doesn't compromise on values, and is unique. In fact, the best part about starting and running a company for me is hiring, managing, and firing according to the winning values that I believe in (more on that in a future post).

2.) Hone the idea into a Minimum Viable Product (MVP).
* For me, I've written about the MVP idea already... but this is so important. If your MVP idea can't solve (by its self) a part of the need or problem: start over. If it solves "too much" and "will take a long time" to get going... or requires a "chicken for your egg" start over.

3.) Build a winning Business Plan.
* A winning business plan to me is one that: a.) clearly identifies the problem or need. b.) has a solid business model, c.) identifies and sizes the target market, and c.) shows how profitability can be achieved quickly. I'll assume that the product/service idea is good... the other parts are almost always the key.

4.) Build a team and a product.
* Based on the business plan, build a small team.. give shares freely for work early, and get the MVP product built ASAP!

5.) Sell it.
* start selling now. I am learning about this myself... it is hard. Be voratios about learning: there are Good sales books out there (i'm on a sales book reading kick right now myself, and i'll post my results soon).

6.) Raise money if needed.
* after you have successfully made a sale, determine if you can keep going and get to profitability, or if you need to raise money now.

7.) Sell it more.
* keep selling. Selling stock. Selling product. Selling vision. Selling culture. Successful selling is THE thing that makes small businesses work.

(photo credits)
Bruce Willis in
The Fifth Element.

Sony Pictures Entertainment Company. All rights reserved.)

Thursday, October 15, 2009

Persistence of an Entrepreneur

Being an entrepreneur is REALLY REALLY HARD. You have to persist. You have to put your whole self into it. I often meet with engineer-types and others who are looking to start a new venture. It's almost always an exciting idea, but it is almost always lacking a few key elements. Nevertheless, I never scoff or worry about what is lacking (although I do try to highlight the missing pieces). The reason I don't worry, because I know that if that budding entrepreneur works HARD ENOUGH and persists, they will succeed. The business might not, but they will.

Here are a list of the common things I see advising new young companies:
1. Lack of Business model. (or naive business model)
2. Scalability problems. (marketing, sales, etc.)
3. Weak go-to-market plan.
4. Thinking they can do it all themselves. (no team plan)
5. Thinking fund-raising is easy.
6. Thinking of "raising money" before the product.
7. Too MUCH too soon. (too hard)
8. Chicken and Egg problems.

Feel free to ask questions about the above, if you don't know what I mean.

Oh, and come see me tonight 10/15/09:

photo attributes:

Monday, October 12, 2009

Culture of Pride.

While I was working at Intel, I learned what a truly successful culture looked like. Somehow Intel had cultivated a culture of pride: pride of ones work, ones product, ones company, and ones peers. When I founded Bigfoot Networks with my 2 good friends from Business school (props to Mike Cubbage and Bob Grim), I wanted to somehow ensure that a culture of pride, one where people actually WANT to work was developed.

For four years, I was CEO of Bigfoot Networks, and within the first few months of our founding, I had convinced the team that a formalized culture with certain common values was a good thing. My first draft of our mission and values statement (corny to those who haven't really lived one), was accepted by all without modification (they didn't know what they were in for!)!

Our mission:
We fight lag win Innovation.
Our common Values:
Flexibility & Redemption

These had specific definition so there was no confusion what we meant (see below). In practice these 4 things combined to create a culture of pride, just like at Intel. Many employees have said to me that the culture WAS the reason they joined Bigfoot, and it WAS the thing they liked the most about working there. We took our culture VERY seriously, and everyone made an effort to know it and to live it (most importantly perhaps, myself, as CEO). Ownership was 'lived' in every meeting, where owners were delegated ownership (not tasks). Passion pervaded our work, and those who didn't have it were asked politely to move on (hopefully to something they WERE passionate about). Flexibility was being a startup, but screwing up meant redemption. And all of this in as direct a manner as I know how to live.

Every year, I asked employees to talk about Culture and review what worked and what didn't. Only after 2 years and a team the size of 20 did a new facet to our culture get introduced: Teamwork. It was already implicit in what we did, but we weren't giving it any credit. In fact, we were celebrating owners and not teams. We added that to our mix and it was for the better: we no longer celebrated individuals as a group but instead celebrated wins as a team. (yes I wasn't very good at it, but I tried!)

Now I'm off on a new adventure, starting a new company. We are yet again trying our best to build a culture of Pride... but now in a new unique way. More to come in a future post.


Full definitions of the culture from Bigfoot:

I COMPLETELY OWN the work I am assigned.
Ownership includes planning, execution, and analysis.
Execution includes driving those around me for the things I need to be successful, even the CEO.
Everything that matters has an owner.
I am responsible for the work I do, and the work that others do for my project.
When complete, I am proud of what I've done

I never punish or squash ideas, feedback, or directness, even when its painful.
I listen to others, and I am listened to.
I am direct with feedback and ideas, I never hold back, even when its painful.
I don’t keep Secrets or practice Politics.
I use Constructive Collaboration to strive for a win-win-or-no-deal solution for all.
I don’t discriminate, pre-judge, or harass anyone for any reason: great ideas come from diversity.

I am passionate about what I do.
I know I add value, and what I do matters.
I continue to learn new things in and out of the office: and I share my knowledge when I can.
When I encounter problems or issues, I look at them as learning opportunities.
I know where the company, my team, and myself are going, and the plan to get there.

Flexibility and Redemption:
I enjoy being stretched, and doing things I’ve never done before: whatever it takes.
I make fast decisions, taking calculated risks for speed.
Flexibility is my weapon: I don’t let momentum make me do the wrong things right.
If I make a mistake, I announce it: I know Redemption is possible and flexibility means sometimes being wrong.
If others make a mistake, I give them the opportunity and tools for Redemption.

I celebrate wins as a team.
I recognize individuals only in light of the team.
I never leave a team-mate alone.
I strive to better not only myself but also my team.
The team grows when I teach and share my knowledge freely.

photo attribution

Tuesday, October 6, 2009

Tytus to speak at IEEE in Austin 10/15/2009 at 6:30pm (Free registration)

The IEEE CTS ComSoc-SP Society invites you to a talk on the "Networking and Computing Requirements for Video Games: Current Trends and Solutions".

The event is free to attend if you RSVP here:

NOTE: this will be a different presentation that was given at GDC Austin. This will be more "Business & Trend" focused... "Level Up" Networking is the theme. Should be fun!

Speaker Harlan "Tytus" Beverly will delve the dark mysteries of the online gaming market and networked game development in the unusual industry that is gaming. The online gaming market has grown from virtually $0 to over $70Billion/yr market in less than 15 years, and now dominates the gaming industry. Harlan will explore what has fueled this growth, and how specific games and networking technologies have 'leveled up' the industry at distinct moments. Harlan will also explain how networked game development's unique software development, deployment, and testing challenges have led to industry-wide practices that may have applicability in other industries.


Thursday, October 15, 2009 from 6:30 PM - 8:00 PM (CT)

AT&T Labs
9505 Arboretum Blvd
Austin, TX 78759

Harlan Titus Beverly is a passionate entrepreneur, engineer, and gamer (Tytus). While at Intel, he was responsible for architecture and development of corporate server networking products, including the world's first 10-Gigabit Ethernet adapter. He later joined Britestream Networks and developed a 100% CPU off-load network security solution with SSL and TCP/IP processing on one chip. In 2004 he conceived and founded Bigfoot Networks, makers of the Killer NIC, <>. The Killer NIC is now a world-wide success and ships in 20-40% of Dell's gaming desktops. Harlan has over 30 patents, has been published in dozens of books and articles, and runs a blog on "Business for Engineers" at

Following is the event registration link:

Thursday, October 1, 2009

The Partnership Atmosphere is RIPE!

A lot of folks are running wild these days, trying to get sales, trying to get stability, trying to get a job even. One of the most amazing things is, since everyone is a "seller", there aren't that many buyers! What better time in history to go for something 'different'. Go for a partnership instead.

Business Development (Biz Dev) is one of those rare skills that I tried very hard to develop at my last company. It's undoubtedly a hard thing to do, to measure, and to manage. However, the rewards of good business development can be partnerships leading to NEW revenue opportunities for you both!

Seth Godin writes a Blog that everyone interested in building a business should read. A recent post on Business Development has many 'thoughtful' tips on doing business development. Thoughtful tips are good, but in my opinion tactical realistic guides are better. So, without further ado, here is how I go about "doing business development".

1.) Learn the business. Don't try to be the 'master' strategist, just try to learn what the goals and challenges are for the company you are doing Biz Dev for.

2.) Find the targets. Biz Dev should be a 'hunter' activity, not a 'passive, they will come to us' activity. If someone wants to be your partner, then they don't need YOUR skills (maybe just to help negotiate)... your skills should be outbound. Exception: if one of your targets LANDS in your lap by luck, great, close it, put the feather in your cap and move on!

3.) Reach the targets. Great Biz Dev folks have 500+ LinkedIn connections (i'm working on it... so add me already: ) Anyways, getting to the target starting the conversation is vital, if you can't get connected you'll never get started. Surprisingly, YOU PROBABLY CAN IF YOU TRY!!!

4.) Don't sell. You are not selling. You are 'exploring' if working together will be beneficial!

5.) Close. If it IS beneficial, write it up... (I like "joint project proposal" form), and lets sign it. Putting this piece of paper in front of a partner, quickly reveals true 'issues', and is a roadmap for getting to close.

6.) Communicate. After the close, weekly or monthly status reports are vital. Ideally these would be phone or f2f accompanied by a report. You initiated the contact, so you do the report and push for awareness. As soon as they 'forget' about you, the project starts to die.

Now get cracking, and close some deals already! The atmosphere for 'joint' money-making ventures couldn't be more 'now'.

photo attributes:

Monday, September 28, 2009

Culture is not corny to Engineer-types.

Many people think that the "culture", "mission statement", "values", of a company is 'corny'. We are often embarrassed by it, feeling it a kind of fake thing. If this is you, you may be in the wrong company. A strong company culture is absolutely the #1 most important thing for a businessman and especially a CEO to consider and stick to. For engineer-type minds, it sets a standard of measurement for the intangible. All our lives, we've been graded in two ways: factual 'right' answers (Objective) and 'intangible'/feel answers (Subjective). All our lives, we engineer-types have failed (or not excelled) at the subjective. Culture should not be a corny thing to engineer-types, it should be thing #1. Most (if not all) of the engineers I've hired know this, and that's a MAJOR reason the decide to work for (really with) me.

There are companies known for great corporate culture: National Instruments, Intel, and Google to name a few. People, myself included, seek out these companies and prefer to work at them. I spent many years at Intel blissfully unaware of my under-payment, because I was happy. I thrived in the culture that put a standard of measure on the subjective: and my performance ratings prove it.

More than just ratings and rankings though, a company culture sets forth a 'norm', a code of conduct, a code of honor, that permeates who you are as a company. In many companies that have "weak" corporate culture, this is not a good thing. Yes, they have "the mission statement and values" list like everyone else, but the measurement system is broken. Instead of 'calling it' when someone breaks the code or doesn't live up to the corporate culture: it goes ignored if results are good. In fact, in most companies throughout the USA, results matter most of all (enter Enron). I believe, as do most Engineer-type minds, that the ends do not always justify the means: and that doing something 'right' and winning is better than doing it 'wrong' and winning bigger.

Culture should be used to select who you hire, who you fire, and how you measure success. In fact, when a company gets bogged down in 'the hard stuff' and can't find its way, looking to culture there is always a way out. Culture can also seriously impact how others view you.

The Rich Dad's Advisor: Building a Business Team that Wins is a practical guide to how to build, and more importantly how to enforce, a company culture.

For myself, I believe I have found the perfect company culture for both success and for my personal belief structure (an excellent match)... more on that on another post. In the mean-time here is Intel's excellent corporate culture statements, which I can say generally speaking, was heavily enforced and rewarded in a very positive manner. (no I'm not re-joining Intel at this time, though I would work there again in a heartbeat for the right position).

Customer Orientation

We strive to listen and respond to our customers, suppliers, and stakeholders; clearly communicate mutual intentions and expectations; deliver innovative and competitive products and services; make it easy to work with us; and be a vendor of choice.


We strive to conduct business with uncompromising integrity and professionalism; ensure a safe, clean, and injury-free workplace; make and meet commitments; properly plan, fund, and staff projects; and pay attention to detail.


We strive to achieve the highest standards of excellence; do the right things right; continuously learn, develop, and improve; and take pride in our work.

Risk Taking

We strive to foster innovation and creative thinking, embrace change and challenge the status quo, listen to all ideas and viewpoints, learn from our successes and mistakes, and encourage and reward informed risk taking.

Great Place to Work

We strive to be open and direct, promote a challenging work environment that develops our diverse workforce, work as a team with respect and trust for each other, win and have fun, recognize and reward accomplishments, manage performance fairly and firmly, and be an asset to our communities worldwide.

Results Orientation

We strive to set challenging and competitive goals, focus on output, assume responsibility, constructively confront and solve problems, and execute flawlessly.

photo credits:

Thursday, September 24, 2009

More than Karma. Networking and Helping Others.

In the business world, it is well known that networking (knowing lots of people) can be beneficial. Engineer-types often take this to mean: get lots of LinkedIn or Facebook friends, and exploit them. Its not surprising, most engineer-types get blasted by people trying to sell them stuff. This in turn, makes engineer-types use Social Networking for all the WRONG reasons, and thus, miss out on the best benefits of the medium. I can tell you this, if you Network right, the rewards are more than Karma.

More than Karma? What does that mean? Here are the rewards of having a rich and deep social network:
1.) It feels good to help others.
2.) Helping others can be fun.
3.) Helping others sometimes leads to new opportunities.
4.) Staying in touch means knowing when new things are happening, new jobs, new businesses, more.
5.) You don't have to go to lunch alone (see prior Tytus Blog post).

Here is some do's and don't s to consider.
Networking Done Right:
1.) Don't solicit over a social network. (this is what phone, email, lunch, coffee, etc. is for).
1.) But DO make it known to those you know, what you and your company does. Do this, simply because they know you... and follow you, and you keep folks up to date with what you are doing.

2.) Don't invite/connect with people you don't know, unless you have an introduction, and a non-sales reason to do so.
2.) Do invite/connect with people you meet at a conference, trade-show, lunch, office visit, whatever.
2.) Do go to conferences, trade-shows, lunches, office visits, etc.
2.) Do ask your friends for introductions to connect with folks. (but not for sales-purpose, only because you want to know them for a Non-Sales reason).

3.) Do ask folks for help (as long as it is not sales). Do it 1:1 and let it be genuine, simple, straightforward.
3.) Take them to lunch. Pay!

4.) Do offer to help folks FOR NO PAY as often as possible. Just be willing to help...!!!
4.) in my mind, helping others is the greatest service.
4.) and THIS leads to the best rewards of social networking.
4.) Obviously there is a limit to how much you can do.. but do what you can!

5.) Don't do stupid things in public.
5.) like flaming, bashing, or slander.
5.) Do do personal things in public.
5.) unless it is TOO personal (you know who you are), or STUPID (see above).

If you are in my social network, and you are reading this, and I have not helped you yet today. Shoot me an email or a message, or, Lets do lunch.

I'd love to help.

photo attribution:

Monday, September 21, 2009

Dealing with "no"... handling setbacks.

A friend of mine recently espoused his joy at no longer fearing talking with Fortune 500 CEOs. This friend, of course is an Engineer-type. It struck me that many engineers do IN FACT fear talking with non-engineer types. It may be the single biggest thing holding back good engineer-types from being awesome at business. Given that somehow, I have learned to deal with "No.", I thought I'd share my own feelings on dealing with no, and handling setbacks.

1.) It is damn hard.
2.) It takes a lot of "no", followed by a few "yes"... time and time again, before you understand what it REALLY takes to handle "no".
3.) It takes the BELIEF that today's no, MUST BE... for tomorrows yes to happen.
4.) It takes optimism, faith, and an inner comfort with ones-self that the "NO" is not at 'you'.
5.) It MUST energize you, rather than demoralize you.

Recently, I've started a new business. I'm expecting 100+ no's before I get a single yes, no matter what I'm asking. It's normal. It must be so. I hope to learn from the no's to get better and refine my ideas... I will press on those who say no with "why"... I will try to uncover the 'bottleneck' of my goal.

Sometimes a 'no' seems like a setback. If this is the case, you've put too much stake into this particular 'possibility' than you should. Real setbacks are based only on litigation or your imagination. What I mean is a setback cannot be based on any one event, unless you give up (out of imagination), or are LITERALLY forced to give up (Legislation, as in Jail or Death). Persistence is really the key to any and all possible "yes".

Let rejection energize you, for today's no really is tomorrow's yes.

New look/feel of Tytus-Blog.

After analyzing Google Analytics, and feedback from people who read my Blog, I've discovered that an apparent bias I have towards "Engineers" as better than normal folk comes through a bit too loudly. In fact, it's not "entirely" untrue, as it relates to how many normal folk view problems. Reality is though, that I truly do value diversity. Diversity of thought, diversity of opinion, and especially diversity of viewpoint.

With that in mind, I've renamed the blog "Tytus' Business for Engineer-type Brains.", with the hope that it help not just engineers, and people who think like engineers, but also all the diversity of other personality types out there who would simply like to know "how engineer-type brains" think.

With the new theme, and the new "black" (easier to read) look, I hope that EVERY ONE OF YOU will subscribe to this feed over RSS or via Blogspot follow, or similar.


Sunday, September 20, 2009

Presenting at Austin GDC 2009, and why Engineers should be Experts.

Last week I had the honor of presenting at Austin Game Developers Conference (GDC) 2009. Out of hundreds of idea submissions many months ago, I was chose to present to game developers on the topic: Lag, The Barrier to Innovation. My presentation was recorded and the slides can be seen/downloaded here. I'll post the audio as soon as its available. Not only was it great fun to present to AGDC 2009, it was extremely fruitful. Engineers take note: you should become known as 'the guy who knows x' (or some might say, 'the expert in x')... it can only help you. In fact, the axiom I tend to follow is: helping others helps yourself.

It wasn't easy to be selected to speak. It took me 4 years of trying. I began submitting ideas to speak at Austin GDC in 2004 (for GDC 2005). At first I just submitted 1 presentation topic. What I learned though is that submitting more than one presentation topic (even if they were related), would allow the selection committee to pick the best, rather than decide 'if' I should present. Once that was known, my task was to get others (selection committee and generally others in the industry) to believe I was a.) an authority on a subject, and b.) a good speaker. So, starting in 2005, I began speaking at smaller conferences, whenever I could. Especially so if they were in my home town of Austin. I also took an active role in my field, developing white papers and commentary on the subject (in my case Lag). I eventually developed friendships with many in the industry and people knew me as an 'exuberant' speaker. While I'd still love to speak at GDC in San Francisco, I'm happy to have gotten to speak at Austin GDC in 2009. Thanks again to the Selection Committee for choosing me to present, it was a blast and an honor.

Here is why you should become a speaker as well:

1.) Its good to give back. If you have gained knowledge through study, research, development, and pain... giving back and helping others to NOT have as much pain, feels good, and is generally good for the community.

2.) Build your network! Without exception, whenever I speak, a line of very interested (and interesting) people form to have a quick chat and exchange business cards. If nothing else, you've got a few new LinkedIn contacts! Sometimes, as with all networking, great things will come in the future from these connections.

3.) Build your cachet. It does not hurt your personal reputation to be the guy who has spoken at XYZ conference. In fact it helps it. Even if your company has NOTHING to benefit from you speaking, do it anyways for your own career future.

There are more reasons of course, including pride, the fun to wear a 'speaker' badge, specific company goals, the cool speaker gifts (this year at GDC Austin 2009, we were given a nice glass with GDC Austin 2009 Speaker on it, and a REALLY cool ice-tray with space invaders on it!).... the list goes on.

A few general thoughts from the show: it was much smaller than last year (THANK GOODNESS)... being smaller it felt less corporate, and more about the developers. It was JUST the right size. The presentations were all EXCELLENT (at least all that I saw)... even Tuesday's Casual Games Summit was well done... awesome even. The Chotsky was weak. (nobody gave out anything cool I could see, got a T-Shirt and a pack of cards... but it's not really the point of the show). I missed the free beer... not sure they did that or not, but they should do that every day. SODA POP SHOULD Be CHEAPER. That's about it. My 2 key learnings were: Over 13,000 Servers to run WoW!!!! and a Viral Coefficient is a way to measure how viral something is:

Viral Coefficient
Vk = V1 x V2 x V3
(building successful apps)
V1 = % of users doing invite over a period.
V2 = Potency (how many invites per user)
V3 = % of people who try based on the invites.

V2 = most important acoording to Facebook...
I have a different view.


Sunday, September 13, 2009

Social Confusion, engineering explanation of social networks.

Recently, I attended a start-up meetup conference here in Austin Texas. It was a really useful conference, focused on learning and practical knowledge. As always Brett Hurt did a great job with the keynote. The one thing that became clear, almost as a theme for the day, is that most people don't really understand social networking. Engineers in particular will quickly get lost in the quagmire, mainly because of lack of definition and lack of metrics. After hearing all the debate, I think I can explain at least part of the social confusion on new social media... in terms engineers might be able to make sense of.

First definitions:
Social Networks: Websites where users can communicate with other users. Includes Facebook, MySpace, Blogs, Forums, Twitter, LinkedIn, and almost any modern website with feedback tools.

Social Networking: the act of using Social Networks to some purpose, either personal or as a business.

Share of Voice: a metric (no standard units) that tries to measure how many people are talking about your company or product... especially on blogs and social networks.

Web 2.0: a useless term referring to "making a website capable of letting users talk to each other"... yes forums have been doing this since BBS, hence its silliness as a moniker.

Now what is all the hub-bub about? Three things simultaneously, that I will separate:

1. Social Networks (e.g. people who own the websites, and the vulture companies that surround them), are "possibly" making money because LOTS of people are using Social Networks today.

2. It may be profitable for Companies to "use" Social Networking to accomplish some goal(s). E.g. companies and individuals at companies should consider USING Social Networking, but only for some MEASURABLE GOAL... too many companies are using Social Networking with no goal other than to 'advertise'. Hint: Google is probably better for ya'.

3. Companies need to beware and pay attention to Social Networks, because that is where much of the Share of Voice can be seen, and customers are talking about you there.

With this common language, you can see, its not really that BIG of a thing, unless you consider the fact that SO many people are using them.

So, get off your duff and listen up. Companies need to wise up and pay attention to social networks message for you and STOP trying to use them so much...its not working.

In other words, rather than focusing on only 1-aspect of social networks (how to 'use' them for increased sales/revenue directly, item #2 above), consider the other 2 aspects of social networks (1 and 3 above).. and pay attention to the conversation (example: a good community manager) and get a presence on these social networks for that purpose (1. participate). Trust me, people WANT to talk about you/your company, you just have to be there and be listening.

photo attribution:

Tuesday, September 8, 2009

Engineers fear Lawyers... A Company's First Steps are Easy

Fear: HOW DO I START A COMPANY? MANY Engineers freeze up with fear right here. They don't realize just how easy it is to start a business these days. In Texas, everything can even be done online, and the legal part is really really simple. (NOTE: i'm not a lawyer, so do not consider this legal advice... side-note: see, even I'm afraid of lawyers).

Although this link has more detailed information and all the needed links, I'm going to try to make the process super simple in my own words.

1. Pick S-Corp or C-Corp. The only difference I can tell is that S-Corp does not double-tax dividends, but only allows investment by individuals. Most people should choose C-Corp if they plan to be invested in , and S-Corp if they are not. Don't fret... you CAN change it later by reincorporating.

2. File appropriate form online (in Texas, that is here): (costs $300, so make sure your business name is unique, a simple search is available same site!)
a. Choose some amount of stock that is big enough, but not too big. I chose 10,000,000 shares to start at par of $0.001.
b. Must have at least 1 director (can be same person throughout the document).

3. Get EIN from IRS (this is needed to file taxes, which is the ONLY requirement to continue as a company):

4. File for state tax if appropriate. Texas is here:

5. Enjoy being a company.

Its that easy. Now that you are a company, you might want to issue some shares to yourself. If you do, make sure you file an IRS 83-b form within 30 days.

As for giving yourself stock, I recommend it! And I recommend you get this stock in exchange for services rendered (such as business plan preparation, time spent in meetings/formation, etc.). A good founder split is NOT EVEN SPLIT! If there are 2 people, it should be at least 51%/49%. In fact, I HIGHLY recommend that one founder (the one who is leading the effort) get 51%. Reasons: this avoids any future problems related to who is in control/direction of company, this prevents any number of founders from ganging up on the others, and this makes good sense if you want to raise money because that founder will have enough power (hopefully) to stay on the Board of Directors and protect the other founders interest.

A simple MOU can make the above reality. If you actually issue the stock (e.g. with a directors approval or other legal mumbo-jumbo), then you will need a lawyer IMHO.

Frankly, beyond this point of a company, having a decent (fairly priced) legal counsel for the company is a good idea. (Yes, my fear of lawyers kicks in now). But you DONT have to have one to form the company, and you SHOULD wait to get a lawyer until you raise money, or start negotiating contracts/earning revenue/making sales.

Best of luck, and sometimes, fear is not a bad thing... but lawyers don't cost that much. I have found good legal advice as low as $200-$300/hour... don't pay more email me/message me first, I'll give you a few referrals.

--photo credits

Thursday, September 3, 2009

Self-Motivation: Short-term goals that lead to long-term success.

Engineers daily face the challenge of self motivation. Especially when working on a 'big' project. Engineers who master this self-motivation will do well in business because they understand short-term goals vs. long-term goals.

Imagine the Engineers day: "work on THIS bug" which helps me complete "this small task"...which leads to "this small feature" which leads to "this part of the product" which leads to "this product". For that day, it was just that bug. Thats it. It will be months, years before that bug 'doesn't' show up in that finished product.

In Business, this skill is absolutely necessary. Becoming overly fixated on "the long-term success" can lead one to do the wrong things at the wrong time. Like a good programmer, the businessman MUST fixate on the 'current task' while keeping in mind "the long-term goal"! For this, one needs a plan. ANY PLAN. It doesn't have to be 'the best plan' it just has to make sense and be flexible. Like a good engineer, if 'fixing this bug' is taking too much time/effort and no end in sight, perhaps ignoring it and working around it is a better approach. The same goes for business. If 'the current' task/step is bogging you down, and forward progress seems blocked, we must be flexible enough to work on something else (a workaround) or a future step.

In essense, we must "Begin with the end in mind" as Covey would say. But we must also "Put first things first"! If you can't imagine the long-term success... you are sunk. But you are equally sunk if you can't put together a logical (if difficult) series of steps that get you there.

Covey's 7 Habits of Highly Effective People info:

Photo Attribution:

Monday, August 31, 2009

Knowing a Small Business Idea from a Big Business Idea

I have many Engineer friends, many of whom have a business or product idea which they come to me for advice on how or even if they should begin. I always counter with this first key question: Is it intended to be a Small Business or a Big Business. The answer is invariable, BIG, and sadly, the idea is usually SMALL. So why the disconnect? The reason is that a business needs to have certain criteria in order for it to 'grow big'. If it fails one or all of these, your business will either 'be small, like mom&pop store' or 'bust, because its not sustainable'. In fact MANY, MANY Small businesses fail because of competition. This recent article from Bank of America (someone who knows failed businesses), highlights the 7 most overrated businesses and is a good short read.

My criteria for a big business idea vs. a small one are simple.
1. It must be Scalable - This is the most important! If your business is "regional, only works in Colorado for example", or requires excessive infrastructure (like a building in every region), or requires an excessive workforce (like door-to-door salesmen, or many thousands of workers per factory), than you have a SCALABILITY problem. This kind of problem CAN be overcome, but very rarely by Entrepreneurs... we get too bored with it! The classic example of "not scalable" is that of the 'Gaming Cafe', where people pay by the hour to place games. This is just not a scalable business. You need buildings, infrastructure, people (to manage it), and so on. The only way to make this not a mom&pop is to make it a franchise... [see link above about 7 overrated businesses].

2. It must create Barriers to Entry for Competition - this can be patent protection (not just patents, but ones that protect), a unique advantage (like having done it before), a unique/strong brand, or a significant 'lead' or 'leap' in technology.

3. It must be more than 1 Product - having only 1 product leads to inefficiencies in marketing, sales, and lots of other funcitons. If you can't leverage your workforce for multiple products (even in the same family is ok), then you might be stuck with an idle, overpaid workforce.

4. It must not rely on 1 customer or partner - this one is just too risky. A business CAN be big with this but at great risk. And if a big business relies too heavily on 1 customer or partner, the risk will prevent growth.

I'm sure that there are other criteria, and I didn't really define a Big Business Idea is... but that is intentional. I never judge folks who ask me for this advice. Most "Small Business Ideas" can turn big with enough effort and thought. Lets face it, usually it comes down to raising money! Either from investors or bankers, having the right business idea/business plan is key to getting that first dollar.

One final comment: some people SHOULD consider the Small Business route. Mom & pop style shops and the lifestyle that they can bring can be very rewarding! There is nothing wrong at all with that, its just a problem when people expect 'big business' and are faced with small.

Thursday, August 27, 2009

Innovation strikes not in a vacuum.

I live on a ranch in East Texas. It's about 50miles to the nearest city (Austin, TX). Schlepping my butt to town just for a lunch or coffee meeting would seem a huge waste. In reality, it is those lunches and coffees (and sometimes beers) I have with friends that help to congeal my best ideas into much, much better ones.

The reason is simple. Innovation rarely strikes in a vacuum. It can't really. Who would buy it, care about it, or even THINK it is innovative if it only stays in your head or in your personal lab. (yes I have a lab at my home :) )

Anyways, what I've found is that taking the time to TELL someone about your ideas, reveals its complexity, its holes, and hopefully its value. Many Engineers, myself included, worry about people stealing our ideas. It's down-right silly. To get from your brief description of an idea to a business is a LONG road, one that few people are willing to take. So share, learn, and innovate.

By the way, in a future post, I'll explain how to patent protect your best ideas for less than $200 (total). Then you REALLY don't have to worry about talking to people about it, right?

Wednesday, August 26, 2009

Minimum Viable Product (MVP)... easy to say, hard to do... especially for Engineers.

The whole concept of Minimum Viable Product is so simple, yet so hard for Engineers to follow. Not just engineers, of course, but anyone with a passionate interest in "making something", and a smaller interest in "making money". This Blog: does a fine job of defining it (great video here). However to summarize, its the basic concept of minimizing the time from 'idea' to 'market testing' of any product. Some even think this can be extreme (like pre-orders for foil-ware)... As an engineer, "foil-ware"/"Slide-ware" is the hypocritical Satan worshiped by people who don't know how to build things!

So what is the happy medium? And why is it so hard for we Engineers to "let go" of features/certain aspects of our products in the short term?

The simple answer is, passion. So finding the right mix of "passion" to go along with "business reality" is key to early success and real indicators of future success. Consider, if 0% of 5000 "qualified" customers are willing to sign up for a 'free trial' of a 'basic version of your product', what is to make you think they will be willing to pay $50/month for those 'extra' features in the future?

So, the happy medium is this: build the minimum product that contains the "key" differentiators of your solution... and nothing more. I mean nothing more. Not part 2. Not the part you "think" is needed to make it a 'complete' solution... just they KEY part. Even if the KEY part doesn't itself seem like an MVP. If they key part can't be made into an MVP, maybe you should consider a 'different' idea to build a business on, eh?

More about MVP:

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