OOMAAT: One Order of Magnitude At A Time

Order of Magnitude is 10x: tasks change at each step

2011-10-07T12:50:00.000-07:00

Ash Maurya ( @ashmaurya ) has posted a very interesing Post about the 10x Product Launch. http://www.ashmaurya.com/2011/10/the-10x-product-launch/

This captures some of the key issues around building a business. As you progress through the stages of different numbers of customers, you shift and need to use different tools and different focuses. When you are just starting out, you have zero (0) customers. At this point, your goal is to get one (1) customer. When you have one (1) customer, your goal is to get to ten (10). The task and process of getting the first customer is very different and more personal than getting the 10th. By the time you get to the 100th customer, you have enough data and enough history to be able to automate your processes successfully. It is always a bad idea to automate processes which you can not accomplish by hand for the first few cases.

For your first 50 customers, you should definately be working to talk to them in person. This does not mean you can't use surveys or email or ads to search for and find potential customers. But it does mean that you should get out of the building and talk face to face to them early on in the process. As you begin to see the patterns, you can then focus on the area where you are most likely to make traction.

Startup Weekend Around the World , What would it look like.

2011-06-23T16:45:00.000-07:00

As we are coming up on the Bellingham Startup Weekend on June 24-26, I was looking at some of the other cities engaging in Startup Weekend at the same time

Rio http://rio.startupweekend.org/
Boise http://idaho.startupweekend.org/

Las Vegas   http://lasvegas.startupweekend.org/
Skopje http://skopje.startupweekend.org/

Bellingham   http://bellingham.startupweekend.org/
Chandler http://chandler.startupweekend.org/

Guadalajara http://startupweekendgdl.org/
Copenhagen   http://mobilecopenhagen.startupweekend.org/

Bejing   http://startupweekendbeijing.com/en/page/home

It is heartening to see all of these different cities all engaging in the process.

Seeing all these cities doing it on the same day makes me wonder about the process of doing a multi-city team that would engage in the process where there was someone working on the project 24x3 , around the clock.

What tools would you need to enable this process. Would the current use of google docs + hosting + a chat channel work? What are the tools that you would use for a startup weekend sprint? ( http://startuptools.pbworks.com/w/page/17974963/FrontPage )

At lot of interesting work happens at the coffee table and at the food table as people get to know each other and work on corners of the project. What would be the remote version of that?

Would using skype be enough of a tool to connect people between cities?

How would remote teams end up finding each other and forming?

Would you need to pre-seed the conversation by having someone at each event already part of the proto-team that did local recruiting?

How would it be different than using oDesk to do part of the project?

I look forward to learning about a team that actually does this.

Should I walk the outside Funding Pathway?

2011-05-26T16:36:00.001-07:00

Earlier today, I saw a question that essentially boiled down to:

"I see this great opportunity, it takes more resources than I have, should I put it on the credit card, get a loan , ask an Angel or get a VC?"

I had many thoughts as I read this. Let me see if I can put them into any type of order:

First, being in the midwest is not a problem for accessing capital. There are several Angel networks and more growing all the time. Rain Source Capital is based in the midwest and supports several angel groups across the country

http://www.rainsourcecapital.com/AboutUs

You can use Angel Soft as a way to locate Angel Groups - http://www.angelsoft.net, so finding Angels is not hard at the initial stages.

However. Getting loans, getting Angel money and getting VC money are all very different animals for very different reasons. They look like they are the same (getting money), but they are not. VC money is other peoples money, in large chunks with specific expectations. Angel Money, if it is to be really useful comes with expertise, attention and introductions into the industries. There are appropriate times for each of these and there are many more times when you should not take outside funding.

The best place to get funding is from your customer. If you have figured out how to get to the right place with the customer base, then you will have flow and you can use outside money to grow faster. If you spend outside money on operations instead of growth enabling changes, then you will have wasted the opportunity. Most people have a hard time seeing the difference between operations and growth enabling changes.

You have the opportunity to build connections and relationships with Angels before you ask them for money. If you find the right Angels, you can have conversations that will transform how you approach your ideas even before you get to the point of asking for money. The angels would much rather have a deep sense of who you are and where you are going and where you have been, than to have a quick pitch and have to make a bunch of guesses.

I sense that you have a new direction. This suggests that you are about to pivot. As such, you are still in the discovery phase of things. And you are still trying to validate the idea. And this suggests you can be focusing on testing and experimenting to know if this idea really has legs. If it does, you should be able to get orders booked. If you have orders booked and you have a product that people want, you will not need a lot of outside capital at this stage.

Build the relationships now with the funding agencies (banks, angels, advisors) , but save the request for outside money until you have a backlog of orders.

Twitter Pitch and the Clarity it brings

2011-03-23T19:32:00.001-07:00

As I am doing the planning and preparation work for a Pitch Clinic, I am reminded of an April Fool Post by Brad Feld @bfeld had on April 1st last year - ( shifting-to-twitter-for-deal-evaluation )

One of the biggest issues in the startup process is developing clarity. Being able to get to the point in a very effective way. Often my ideas are crystal clear to me, but they are all dreamy in some parts and all too detailed in other parts, in a way that makes it very hard to communicate. When you spend the time to go through and think out enough of the process so that you can get a clean and crisp communication of your idea, you have often done some of the core work that needed to be done to move the business idea forward.

While people suggest creating an elevator pitch, there is a certain poetic quality to writing a business idea in 140 characters. If you remember to put a URL in the post, it probably should be 120 characters.

If you can create this level of clarity, where the twitter post captures the essence of your business idea, you have gone a long way to being able to communicate your project. With that comes a significant momentum that will move you forward.

What's in a name? A business by any other name...

2009-05-09T20:01:00.001-07:00

Data or Presentation of the Data, that is the question. Whether it is nobler to be true to the data or to make it pretty and by beautification destroy the use of the data...

I understand the value of a clear and effective presentation of data. The work of Edward Tufte is a fabulous study in making effective presentation of data. The map of Napoleons march to Moscow is still an iconic diagram for me.

However, on a regular basis, I am confronted with the situation where people use spreadsheets as though they were pieces of paper. So they merge columns or they eliminate columns to make things print out nicely or worst of all, they alternate the meaning of data in a column from row to row. The spreadsheet is a simple form of a database. When you try to make it pretty, you break the database part of it. You remove the ability to sort and reorganize and plot the data. So this tension between the effective use of the data or the effective presentation of the data is a fundamental issue. For spreadsheets, it is worth the effort to have one set of sheets which represent the data and different sheets which represent the reports or views of the data.

When we are choosing the name of a project or a company, we look around for something that captures the business. This often boils down to the domain name. When we talk about the company we want to have the name of the company and the name of the website be the same. We want to be able to say the name or write the name of the company and the domain name is obvious to the casual observer. But even with this idea to guide us, there are other issues that arise.

The Google Test
After you select a name, the first thing that most folks do is to google the name to see how many hits you get. If you google for "google", you get 2,590,000,000 hits. I wonder how many hits they would have gotten before they started the company. Searching for googol, we 1,990,000 hits. The advantage of picking a name that has a low number of google hits becomes particularly appearant when you try to look up documentation about Ruby on Rails and you end up in the midst of train web pages.

Name Relevance
While selecting a name like Google does not initial imply search, it does imply large numbers of items and gets you into the right zone. To select a name like Johns Machining vs a name like ProtoMold leads your efforts in two different directions. In looking at business plans, and reviewing the business names, there are alot of names used which do not help the company. I have seen:

Names which you can not write after hearing it
Names you can't spell even if you heard it
Names which have nothing to do with the business at hand
Names that leave you with an impression of a different business
Names that are too long to keep straight.

Each of these get you into trouble, but lets take the last one. There are many times when information is passing by and it has to be sliced and diced to fit into the screen space that is available. While Twitter has a 140 character limit, it is not the only place where space is at a premium or where titles are important. I have my gmail account set up to collect RSS feeds from different places that I care about. Some of these folks put up articles with titles like:

Things to do this week
Top posts of the week
Good words
Crime watch

And the sad thing is that these are the same from week to week, so they actually end up conveying no information and actually cause me not to follow the link.

As an alternative, some of the feeds that I watch put together pithy lists with punctuation:

Angel Conference + Beer and Blog + Cre8 Camp + OSU Expo

This lets you know what you are looking at.

In the same way, when I look at gmail, my screen has 30 characters for the user names and 70 characters for the subject and then a little bit of the message. If you are effective with you email, you try to make the subject be short, to the point, and clear. If you split the difference and have a subject of 35 charaters, then you should have the first 35 charaters of your message be meaningful. This pattern can help communicate what is in an email message.

In the same way, when companies are submitting business proposals to angel groups using the Angelsoft.net tool, they are put into folders where there is a directory showing the list of the companies. It shows the name of the company and then a limited number of characters. On my screen, 30 characters are shared between the name of the company and the beginning of the first description paragraph. Often when people are writing their first paragraph, they start out with the name of their company and it ends up looking something like:

MyCompanyName - MyCompanyName is a .....

From this I conclude that it is best if you have :

a name which is short
a name which is pronouncable
a name which is a clear reflection of what the company does

and that the paragraph that follows starts with the 3 words that are the core description of your business.

So instead of getting:

        MyLongCompanyName - MyLongComp

You end up getting

        ProtoMold - Fast Plastic proto

This idea of having short and effective names and clear focused carries on into the Angel pitches. When you get a Pitch Desk for an angel pitch, they suggest you start with the Problem, then tell the Solution and then go into the business structure.

We end up seeing business pitches, where the title of the page is "Problem", "Solution".... After dozens of pitches, these all run together. Don't spend that valuable large font title on "Problem", Tell me what the actual problem is... In Big Letters.

And when you pick a business name, make sure that it sticks with me in the same way.

.

What is the Lemonade Stand of the Internet?

2009-04-11T19:44:00.001-07:00

Everyone has done a lemonade stand or gotten a drink from one. It is the definative small business example and it is a cultural icon for the entrepreneur. So much so, that it is used in schools to teach business issues. But thinking in terms of current business reality, it makes me wonder:

What is the online equivilent for the lemonade stand?

If I look thru my list of Online Revenue Models I see that some are easier to implement. Some things which can generate revenue quickly as a small one person shop. These are different from those things that take some other large component to make it work quickly:

Short term opportunity or easier to do:

4. Ads - http://wordsearch.armoredpenguin.com
5. Sell a product directly - http://Amazon.com http://Frogstore.com
6. Sell a product Indirectly - Amazon bookstore http://Puzzazz.com
7. Subscription - http://Netflix.com
15. Donations - Ala NPR / Public Radio - http://WikiPedia.org

As opposed to Longer term harder to do things:

1. Get paid to do it - Consultants, webdesigners -
2. Increase Sales of an existing product - http://www.Pepsi.com
3. Reduce costs for an existing process - http://www.UPS.com
8. Enable an Exchange - http://Ebay.com
9. Float - http://paypal.com (old model)
10. Sell Aggregate User Data - http://Janrain.com
11. Product Placement - http://Vidoop.com
12. Pay for Job Post - http://Craigslist.com (Selective sales)
13. Pay for Support - Open source - http://project.net
14. Sell Online Real-estate or virtual Items - http://SecondLife.com

The great things about the lemondade stand is that the goals are clear, the process is clear and it ends up being all about execution.

Looking even closer at the list, it seems that ads and donations are the quickets and easiest.

Easiest:

4. Ads -> Set up a Blog and turn on ads
15. Donations - Ala NPR / Public Radio -> Put up a donate button

A little more work:

5. Sell a product directly -> Requires fullfillment
6. Sell a product Indirectly -> Sign up with Vendor to resell product
7. Subscription -> set up a subscription, membership

While both Ads and Donations require you to create content that is valuable to the reader and then to attract an audience, it seems that ads generate more revenue for the level of work.

This Suggests that suggests that the Lemonade stand of the Internet is to create a Blog and put up ads on it.

The steps to this would be:

Set up a bank account to keep all the revenue in, keeping money separate from the personal money.
Sign up for Blog software - Let's use Google Blogspot - http://www.blogspot.com
Sign up with Ad provider - this is a part of blogspot by clicking on monitize. Ads will be inserted into the blog.
Write content that is valuable to an audience.
Spread the word that you are writing and build an audience.

Does this seem like the simplest revenue and business model on the internet? Would this be the canidate for the "Online Lemonade Stand"?

What would your choice be?

How to make money on the Internet or What is you Revenue Model or Monetizing your web app business models.

2009-04-11T18:26:00.001-07:00

What are the different meta models for generating revenue from a web page or an online business? I have been collecting a list. I have been planning to write about it in detail, but I just saw a post that makes it clear that I should just get the list out and then work on the additions later.

I was sent a link for this article:

http://www.boxuk.com/blog/monetizing-your-web-app-business-models

Which is interesting, but more complex than I was working on. In double checking the list and comparing it to the list I was working on, I did not find any new models. They seperate out on other axises , and go into more details. For example, I consider "Licensing Content" to be "Selling Something directly". However, I am still looking for more large scale models to add to the list.

Here is the list of all the meta catagories that I have been able to identify:

1. Get paid to do it - Consultants, webdesigners -
2. Increase Sales of an existing product - http://www.Pepsi.com
3. Reduce costs for an existing process - http://www.UPS.com
4. Ads - http://wordsearch.armoredpenguin.com
4a - Pay Per Impression
4b - Pay per click
4c - Pay per Action
5. Sell a product directly - http://Amazon.com http://Frogstore.com
6. Sell a product Indirectly - Amazon bookstore http://Puzzazz.com
7. Subscription - http://Netflix.com
8. Enable an Exchange - http://Ebay.com
9. Float - http://paypal.com (old model)
10. Sell Aggregate User Data - http://Janrain.com
11. Product Placement - http://Vidoop.com
12. Pay for Job Post - http://Craigslist.com (Selective sales)
13. Pay for Support - Open source - http://project.net
14. Sell Online Real-estate or virtual Items - http://SecondLife.com
15. Donations - Ala NPR / Public Radio - http://WikiPedia.org

When looking at various sites that are generating revenue, I think that each has a specific primary model for revenue, and several have secondary models. Some event get to three different pathways that generate revenue:

Company examples to understand the business model:

1) Mozilla.org -> donations + advertising (google search)
2) Mysql.org -> Sell Support
3) Pepsi.com -> Increase existing Sales
4) Ebay.com -> Enable exchange
5) PayPal.com -> Float + Sell credit cards
6) GarageGames.com -> Sell Directly: software
7) Amazon.com -> Sell Directly: Fullfillment
8) Pandora.com -> Ads + Selling indirectly
9) Blip.fm -> ?
10) Npost.com -> Ads + Selling job postings
11) TechFlash.com -> Advertising
12) Sampa.com -> Sell product
13) Milliondollarhomepage.com -> Sell directly (pixels) or Advertising
14) Zillow.com -> Advertising + Referals
15) Redfin.com -> Selling houses
16) facebook.com -> Ads
17) Linkedin.com -> Subscription
18) UPS.com -> Reduce Costs
19) Wikipedia.org -> Donations
20) AboutUs.com -> Ads
21) Footwise.com -> Selling directly
22) Frogstore.com -> Selling directly
23) Toonlet.com -> Ads (google search box)
24) Tinyurl.com -> Ads
25) Nowchannel.com -> Selling indirectly

What websites do you go to and how are they generating revenue? What makes them sustainable in the long run?
.

[SeattleTech] Heading to Portland

2009-03-02T11:30:00.001-08:00

Today, I saw a note on the Seattle Tech Startups email list about someone heading down to Portland, looking to make contacts. Here is what I sent him, it is an initial set of ideas off the top of my head, but Buzz suggested that I get it posted on a website. I am sure there are many more things worth putting on this list. Perhaps you have a suggestion?

I sent :
(remember this is from a Seattle to Portland point of view)

There are a lot of interesting things happening in Portland.

One of the things that Portland has which Seattle does not seem to have is funded incubators. I suggest that you take a moment to talk to Steve Morris at the Oregon Technology Business Center http://www.otbc.org
And to talk to Carol Mason at the PSU accelerator http://www.psba.pdx.edu/

The Equivilent of the NWEN is the OEN. Linda Weston at http://www.oen.org is a good person to touch base with.

One of the projects that I find very interesting is the Calagator project. It is an open source effort to build an calendar agregator http://www.calagator.org

the Calagator folks can help you find many of the technical Gathering places. Things like the Perl Users group, or the MYSQL users group or the Android programer gathering or .... The list is huge.

In addition, something that I see in Portland that I don't see in Seattle is the Legion of Tech folks http://www.legionoftech.org
They run the Portland BarCamp and the Portland Ignite.
Getting time to visit with Todd Kenefsky or with Dawn Foster would be useful.

Todd ran a Startupalooza last year http://www.startupalooza.org
It was very good. I hope they do it again this year. The website has not been updated for this year.

You might want to track down some of the folks who are part of Starve Ups - http://www.starveups.org

They are a collection of folks who are working to help entrepreneurs, in a more focused way.

In addtion the folks at the POSSE - http://www.possepdx.org/
They are a bunch of Open Source Entrepreneurs.

Brian Jameson at Open Sourcery might be an interesting person to visit with.
http://www.opensourcery.com

The local Software Association of Oregon is a good gathering place for people doing different kinds of businesses. You might talk to Harvey Matthews or Bryce Yonkers at http://www.sao.org

I hope this gives you a starting place for what you are looking for.
If you follow Dawn Foster on http://www.shizzow.com , You will find that Beer and Blog - http://www.beerandblog.org tends to happen at the Green Dragon and you will see that the Linux Users Group tends to meet at the Lucky Lab

If there is any specific introduction that I can help with, please drop me a note.

IPFUT - What it takes for an entrepreneur

2009-02-05T08:02:00.000-08:00

A brand spanking new entrepeneur comes to the Business Facilitation meeting, looking for feedback and for investment from the potential investors in the room. As the investors look on the process, what things are they looking for? Certainly they are looking for information about the business and the potential plan. They are also looking for ways to evaluate the presenter. In early angel investing, the investment is as much (or more) in the founders as it is in the idea.

What traits of the founders are the investors looking for evidence of? As I have thought about this, I have come up with the following , in order. If these are not evident, the chances of angel investors engaging are greatly reduced:

I - Integrity
P - Passion
F - Focus
U - Urgency
T - Team

Without each of these, getting to the next part of the conversation will be hard. When presentations do not clearly represent a crisp picture of the business and a crips picture of the entrepreneur, it makes the next step difficult.

I have found that my mentoring conversations with entrepreneurs end up devolving into some kind of conversation about one of these topics.

These are the things that are important before the idea is going to get moving.

Are there other things that are common places that need attention for entrepreneurs?

Business Stage: KittyHawke

2008-12-14T14:50:00.001-08:00

After the Popcorn Business Stage, startups start to get a bit of wind under their wings. They are still not focused, taking whatever opportunities for revenue that they can find. But they are starting to get clusters of customers. Enough customers to have a notion of revenue flow. This is one of the most exciting times in a very early startup. You have a group starting to pay attention to you.

It is also a very dangerous time for a startup. It is easy to be pulled one way or another into projects that generate revenue, but which do not have a long term market for the company. This is the point for clarity. Who exactly are the people who are the best market for your company? Often the early adopters who help you get you to the KittyHawke stage of a little flow are not the ones who will ultimately support the company.

Clarity about the company's market and the direction are often very hard to get at this point in the business. So this is a time of experimentation to try to find pathways to the next flight. If you are successful, you will end up taking several short flights that lead you into the next Business stage.

The Theory of OOMAAT - One Order of Magnitude at a time

2008-12-14T14:18:00.001-08:00

        Every day, entrepreneurs dream that they can create the next
        big company. They have a dream of putting the right project
        together which will grow to be the next Google, Facebook or
        Myspace. And every day, many potential entrepreneurs work
        hard on their project, but make less progress than they need
        to succeed.

        Let's go run a marathon tomorrow! For most of us, running a
        marathon would take preparation and planning. Not doing
        that preparation only leads to pain and trouble. Potentially
        serious trouble.

        In the same way, starting a new company can be like running a
        marathon. A successful company is a complicated coordination
        of many different components. The creation of a winning team
        is something that takes some skill and experience. Most
        investors want to fund teams with a full compliment of
        experience. Most business don't get big without external
        funding. So for you to engage external funding, you need to
        have experience. How do you get experience getting funded, if
        you have not been funded before?

        As many technologists, marketing and finance people are being
        given an opportunity to leave big companies and find something
        else to do, some are thinking that they will do a startup.
        Because they come from a big company context, they jump right
        back into that context not realizing that at a small company,
        you don't have teams of other people to rely on. You get to do
        everything.

        Rather than jumping into the next $1B opportunity of our
        dreams with one big bite, let's explore the question of how we
        can take small pieces of the process and build the skills
        incrementally.

        I am calling this idea OOMAAT: One Order of
        Magnitude At A Time. Instead of trying to create a huge
        company when you have $100 in your pocket, look at an effort
        that will allow you to grow that $100 to $1000 in, say, 30
        days. What would you need to do in order to accomplish this?

        By thinking out how to start smaller companies that are
        bite-sized efforts, you gain several advantages. First, you
        reduce the risk of failure. By starting many small companies
        with smaller amounts of effort, you waste less time and
        resources on your failed companies and the experience you gain
        will be very helpful to you on the next business. If you
        structure your efforts in the same area, the clients that you
        gather for one business will be interested in the next
        business. Thirdly, the efforts to start the smaller businesses
        will give you more ability to connect with others who are
        starting businesses and help you see the potential partners
        you will need for your next business.

        So... How much money can you put on the table today that you
        can afford to loose in order to start a business? Cut it in a
        third as a way to keep your powder dry. Now, Given that amount of
        money, what could you do in a fixed amount of time to increase
        it:

                   Amount                 Time             Target
              $100                      1 month                 $1K
              $1K                       3 months               $10K
              $10K                      6 months              $100K
              $50K                      1 year                  $500K
              $100K                     1.5 years               $1M
              $500K                     3 years                 $5M
              $1M                        2 years                 $10M
              $5M                      5 years                 $50M

        In this Blog, I will explore a collection of ideas
        to create OOMAAT-style startups. We will look at:
   characteristics of investors,
   skills that make a difference to the success of entrepreneurs, and
   experiments in trying to build businesses in the OOMAAT Model.

        Come join the experiments and let me know how things fare for you.

Business Stage: Popcorn

2008-12-07T22:05:00.001-08:00

In the business life cycle, there is a beginning stage of the company, where there is no flow. There is revenue.... From time to time. but there is no flow. I want to call this stage of the company the "Popcorn" stage. It is like you are waiting for popcorn to pop. You are not sure how hot the fire is. But you have seen one kernel pop. But here you are waiting for the next one to pop.

This is a stage of searching, trying to find a way to catch some momentum. Often this is the stage where people will try anything that produces revenue. And that can be a way to kill a company. On one hand, you want to search around to find things that people are willing to pay for. On the other hand, you want to have a business focus that does not get distracted by contracts and projects which pull away from the core of the business. Some where between those two is the answer.

.

Business Life Cycle as an adoption Curve

2008-12-07T21:44:00.001-08:00

When I have conversations about a business decision, I try to put the questions in context. The right answer for a business that is in the middle of rapid growth has dramatically different numbers and expectations than a company that is in full maintenance mode. There is a GREAT book called Diffusion of Innovation by Everett Rogers. It is the basis of the work that supports the idea of "Crossing the Chasm". http://en.wikipedia.org/wiki/Diffusion_of_innovations http://en.wikipedia.org/wiki/Crossing_the_Chasm Let's assume we have a product which we can sell to a fixed number of people. Let's also assume that we will only sell them one in their lifetime. Over time, we should be able to plot the revenue for the company. With this One-Trick-pony of a company, we would expect that as people adopt the product, we will get revenue. As the product is purchased, the Diffusion of Innovation suggests that there will be a Normal Curve for how the product is adopted. However, since we are selling only one to everyone, there is a point where the population is exhasted and you no longer have any revenue. This outlines the Business LifeCycle for a single product company with no replacement. When people talk about the S-Curve in adoption, they forget that there is the opposite curve as that technology is abandoned. The business process, expectations and activies need to be appropriate to the stage of the company. Over the next several blog post, I will explore many of the details of this curve. We are going to explore some of the expectations and divots that make this curve different than the Normal Curve and when this should cause you to take one action or another.

Exploring the Google Blog structure

2008-11-05T08:37:00.000-08:00

This is a test set up to see if I can connect a blog and a google site together. I am laying the foundation for a new blog.