52 Bicycles

Mike Volpe (brother of my occasional squash partner) has a post on Small Business Marketing 2.0 discussing a 3-30-3 Rule for Whitepapers:

• 3 seconds to grab your readers attention, leading to
• 30 seconds to be engaged, such that they allocate
• 3 minutes to read the paper.

Neat. I think the 3 minutes is about right - white papers are approximately at the level of executive summaries, such that a <1000 word count is appropriate (two typewritten pages seem about right). The 3 second bit for the initial click is about right as well, but should be taken in the context that someone who is going to read a thought leadership piece is looking for thought leadership pieces to read, so one need not sell on the importance of the problem, but rather make a promise of interesting insight (which is in turn usually either diagnostic, prognostic, or prescriptive).

The length rule we’ve followed relative to our white papers, I think we could do better on the 3/30 part.

FOSSCamp looks pretty interesting for my fellow Boston-based (or as I am, Cambridge-based) entrepreneurial friends. I will try to be there, and if scheduling works out I’m going to try and organize a discussion about business models for companies that make and/or use open source software. 

Cambridge, Central Square, Hilton@MIT. Saturday starting at 10am, Sunday too.

Yes posting has been light of late - at least here. The business is going gangbusters, and I spent a week in Orlando in August at the annual conference of the International Legal Technology Association. Fascinating time to be around people who put technology to work for the most pure knowledge workers in the world. I liveblogged some sessions, and others I am posting summaries of my thoughts at www.element55.com/ilta2007.

In addition to some great content, I have to give props to Doug Leins of Boult Cummings, who gave a presentation that reminded me more of Barcamp than of the Ritz Carlton - all in a good way. His talk, on RWAD with RoR, was a 10-minute demonstration in which he built the application. (He later confided that he took the introductory video from rubyonrails.org as his inspiration, to which I say kudos for modeling on the best!).

Lesson for a great presentation: Show, don’t tell. Which itself is a pithy subject for a post another day.

Marc Andreesen has some great insight on The only thing that matters:

Hopefully a great team gets you at least an OK product, and ideally a great product.

However, I can name you a bunch of examples of great teams that totally screwed up their products. Great products are really, really hard to build.

Hopefully a great team also gets you a great market — but I can also name you lots of examples of great teams that executed brilliantly against terrible markets and failed. Markets that don’t exist don’t care how smart you are.

In my experience, the most frequent case of great team paired with bad product and/or terrible market is the second- or third-time entrepreneur whose first company was a huge success. People get cocky, and slip up. There is one high-profile, highly successful software entrepreneur right now who is burning through something like $80 million in venture funding in his latest startup and has practically nothing to show for it except for some great press clippings and a couple of beta customers — because there is virtually no market for what he is building.

Conversely, I can name you any number of weak teams whose startups were highly successful due to explosively large markets for what they were doing.

Finally, to quote Tim Shephard: “A great team is a team that will always beat a mediocre team, given the same market and product.”

His broader point is that market/product fit trumps some notion of “great team”.

Of course, teams do matter (pace my title), but I tend to think that the best teams are ones that are molded to the market, just as the product needs to be. To that end, I don’t look for deep experience in my people, but rather extraordinary talent. A good subject for another post.

Bar Camp Mancester is happening in Manchester, NH (an hour’s drive north of Boston) a week from Saturday, July 28. Am sure it will be a great time, though with my workload, unlikely I will be able to make it. Congrats to Ian and the crew for making this event happen again. Here’s their description:

BarCampManchester is an un-conference BarCamp event held twice annually in Manchester, NH. The goal of BarCampManchester is to bring technology professionals from the Greater Manchester area and New Hamphire together to learn and network.
Unlike many conferences you may have been to, a BarCamp is free and all content is provided by the attendees. It provides a great opportunity to learn about cutting edge tools and technology from your peers.

Am a fan of Eric Sink’s blog. He’s written a book, and you can get a free electronic copy by registering to be notified of the Business of Software Conference. I’m in Boston, so can’t attend, but I registered to get the book, and I’m reading it now. Mostly essays, but good insights from a different point of view. Enjoying so far, recommend to all.

Too much work, but I hope that everyone who has an interest in learning something new and working on a project for a day is either there or will stop by Devhouse Boston (actually in Cambridge, a stone’s throw from where I live!)

Congrats to Shimon, Mike, and the good people at Central [Sq.] Intelligence for making this happen. Events like this help build community, and I am grateful to them all. (and to Jeff, if he was involved too, and hey, why not throw out link love?)

Marketing matters.

Discovered a cool new podcast called innovatecast. On my iPod now. They recently interviewed Michael Arrington, founder of TechCrunch. Arrington again annoyed me with his misread of Seth Godin’s work, and repeated the common canard that promotion is irrelevant if you have something that is “truly remarkable”.

For the record, Mr. Godin would heartily disagree, as he has written several books on marketing and promotion. He would argue the reverse - that without being remarkable (as he puts it, a Purple Cow) marketing efforts cannot work.

Being remarkable is necessary but it is not sufficient. You must market and promote. Exactly how you do this is a discussion for another time, and I would recommend anyone to the works of Mr. Godin and Mr. Levinson (who is old-school, but old-school really works!) for best practices.

So save something for promotion, and make sure that you have the resources to bring your fantastic product or service to market after you have made it fantastic (or while you are making it fantastic).  

In Dealing with Darwin, Geoff Moore discusses two major business models for technology ventures:

Complex Systems, in which a disruptive technology requires significant change to the way people do business, and as such is a more complicated sale, with larger sale sizes and higher cost-per-sale.

Volume operations, in which a disruptive business model provides a major change in value through exploiting a technology. This disruption is usually about moving the technology in question down the value chain, making it available to a large population, hence the focus on volume.

A large part of his book is dedicated to innovation strategies for each model, and how they are different and largely do not intersect. But early in the book he shows this chart plotting the value of each model against size/type of customer that I find fascinating. In fact, spotting this chart in my flip-through led me to purchase the book

For volume operations, the sweet spot is in targeting the consumer. And this is consistent with a lot of the “web 2.0″ we have been hearing about. Really “web 2.0″ is making hay from the cost economies realized from the proliferation of web technologies in 1997-2000 for various value propositions. And as business model innovations tend toward volume operations, consumer-facing ventures are logically the focus point.

For complex systems, the sweet spot is the enterprise. Certainly we at Element55 have found this to be the case - only firms of a certain size have the infrastructure in place - both in terms of systems and personnel - to realize the full value of our integrated offering.

But note in here that small business is in the sweet spot of neither. And I have been thinking about this dip in terms of my friend Dharmesh Shah’s venture, Hubspot, among others who say they are targeting small businesses. These businesses can be the most difficult to deal with:

1. On the one hand they are usually hard up for cash, and like consumers, parsimonious with it, as compared with larger enterprises (which might or might not be profitable, but have budget for technology).
2. On the other hand, they have a higher demand for features that will drive their business profits. This is natural - businesses, even (especially?) small businesses, have more clearly-defined needs than consumers.
3. And on the physically-impossible third hand, they fragment into thousands of segments that have a limited amount of overlap among each other, making it more difficult to have a business model that serves a large number of them while keeping complexity down. Put another way, very tough to scale in this sector.

And again, I have seen this with small businesses, such that the winners come in two categories:

1. Large businesses that offer common, simple services of value to a large swath: banking, payroll, supply delivery etc.
2. Small businesses that offer products that are peculiar to a segment, and even then only get a small subset. Especially in technology, I see small businesses providing product to small businesses.

I need to step back and think about these distinctions, how good a rule they are for thinking about the market, and how it might apply to my business. Such a bifurcated market might imply an opportunity for someone who can figure out how to get a sweet spot in the middle.

I had the pleasure of meeting the future founders of Xobni at a Webinno event last year. Smart kids with a neat idea around data mining Outlook. I pointed them toward Dmitri Streblenko’s Redemption, which is a great utility (and near as I can tell the industry standard for getting around the OMG, though there are alternatives).

They were about to get their Y-Combinator funding at the time, and since then, they moved west and raised institutional money. Their space looks sweet too. (But did they have to pose all those pics?)

I like this business because I think data-focused businesses are more resilient than the lighter-weight “digital media” trend that so many people are glomming onto. It also creates value for user one, but by analyzing communications data, value can increase on a higher exponent as they look at the data of additional people, and the cost can go down as well (because an inbound from one person is the outbound for another, and could be analyzed as a single record). Both of these are even more true when working within a network, such that customer reference marketing (or, more likely, same-firm expansion) leads to the highest value for the customer, in addition to the reduction in COCA such a strategy usually implies.

 And wow, it’s nice to see someone in the software business instead of the media business. There’s definitely value in the latter, but the former is where I get excited, and I wish all the best for Adam and Matt.