So What? Who Cares? Why You?

Kleiner Perkins 7 Rules for software startups

Don Dodge has a useful post on Kleiner Perkins 7 rules for software start-ups - hop on over and have a a read.  I think all 7 are spot on, but my favorites would be:

1.  Create value on the first use -- ie. solve a real burning problem that returns instant value for the customer.
2.  The idea of minimal footprint ie. "software as a service" is a natural for the scalability and seamless delivery of software based products.
3.  Viral adoption ie. no direct sales force.  What everyone wants - the ability to reach your market without the high cost -- not always possible in my view, but still worth thinking about your path to market options.

some useful signposts to think about if you're working on a software based product.

While you're there, have a look at some of the archived posts -- some rich material to noodle on.

Enjoy your journey!

Wendy
So what? who cares? why you?
www.wendykennedy.com

When "Good Enough" is Great

II thought I'd play on the title from one of my favorite authors for this post. I'm up to my eyeballs right now helping one of my clients mold their products to fit a new category positioning.  We've been spending the past couple of months heads down on this and the result is pretty exciting -- everyone is jazzed about the new category definition and the visioning about how it can springboard the company to own a greater share of the category.  It is without a doubt one of the most exciting exercises I've been involved in for a long time.

But with change comes new challenges....in the world of brilliant engineers with DNA that says build everything to its fullest capability, I'm now introducing the notion of when "good is great" -- in other words, when do you just need enough of a certain feature or value bundle to make the cut. 

I find this fun -- it's an education of sorts that goes something like this "if i only want a breadbox that holds bagels, how long and how much will it cost? We have an exciting product roadmap, but for many of these non-core (but necessary) additions, it's more the question of can you build it to be great quality but not the cadillac of the industry.  It's a mindset flip for the brilliant R&D folks who've been trained their whole lives to build it best in class.  The reason we have world class ideas is because inventors, scientists, and engineers have this in their DNA.  But the challenge on the business side is to provide context to when and under what conditions the R&D investment is justified. 

This is the next stage in the evolution of this company.  Can it categorize it's investments -- core IP vs. non-core -- and can it build value that's just good enough in some cases vs. the current notion of "we'll build it because we can".  And more importantly, can it step back and say "NO" to some investments because of the cost, time, etc.

We're about to engage in a discussion and education that disaggregates top quality from full featured.  And that the customer impacts the definition of these things and not our own development capabilities.  In essence, we're about to bring the R&D team closer to the front lines of the market realities. 

I'll keep you posted as we navigate this over the next week.  We're under a time crunch to make this happen so we can have some "Go/NoGo"  decisions.  This I believe hinges on the buy-in to scope the R&D projects to build "good enough vs. great".

Stay tuned....

Wendy
So what? who cares? why you?
www.wendykennedy.com

Company Building vs. Feature Building

I always like David Hornik's posts on VentureBlog.  I was listening to his podcast on Deal or No Deal again this weekend. 

I think there's some useful stuff in here for all early stage entrepreneurs - I urge you to download the podcast and have a listen (or two!). He makes some great points about how to create 'high value things' in your company vs. building the value that an acquirer cares about.

It's so true that the tough part is in the execution - the daily operational grind of how to acquire and then maximize the customer base, minimize support costs, expand the distribution, source the right suppliers, etc. etc.  It's the commitment to sweat the details that sets apart of true company builders in my experience -- when a team is relentless, good stuff happens. Of course you have to be focused on the right details, but that's Hornik's point about the high value company building levers vs. feature building.

He uses the analogy of the game show "Deal or No Deal", you know that one with the brief cases where you pick a case hopefully full of money, but I know some folks who would argue that it's more like "Family Feud" :-)

Enjoy your day wherever you are.

Wendy
author/advisor/lady with the flipcharts
So what? who cares? why you?
www.wendykennedy.com

The Power of an Envelope!

I love envelopes.  They're just like napkins...those small inviting pieces of paper that inspire the most creative and insightful conversations.  You can draw pictures, summarize key decisions, collect your thoughts -- and yes, even manage your business from them.

I call this post "the power of an envelope" because I believe it's a great way for executives (not just CEOs by the way) to always be mindful and on top of the key drivers of their business. Write the 4-5 key metrics for your business down on the back of an envelope and put them in your pocket. 

Trust me, put them in your pocket -- not on your computer spreadsheet, or in your notebook, or on a post-it note.  Carry them with you, in your jacket pocket and keep them updated on a weekly, monthly, quarterly basis. It's not only a great reminder for you, but it will set a tone in your executive team meetings about "what's important around here"....pull out that envelope and your team will quickly begin to recognize that the discussion is moving to how the daily operating decisions are impacting the business drivers.

The envelope is also telling for your investors.  It signals discipline and commitment to managing to the metrics.  Something all investors want to know your preoccupied with.

So my 2006 tip is to buy some #10 envelopes -- it could be one of the best investments you make this year!!

All the Best for 2006!

Wendy Kennedy
author/advisor/lady with the flipcharts!
www.wendykennedy.com 

Growth = Marketing

If you really want to turbo charge your growth, then start thinking about marketing as a discipline and not that function that produces ads, promotions, trade shows. There's a great article by Sergio Zyman in October's CMO Magazine that makes a great point about this.

If you can set a tone from the top-down that marketing is everywhere in the company, then you have a chance to get growth firing on all cylinders.  Think about this for a moment...

Look inside every department of a company and you'll find marketing at work -- from the customer service reps talking on the phone, to the training department, through to the finance department collecting receivables -- if you change the way you think about marketing, you'll get everyone inspired to put their shoulder to the marketing wheel.

This is when marketing really comes to life and delivers value!  You are not getting the multiplier effect of marketing when you think about it as a functional departmetn that produces tradeshows and brochures.  Change your thinking and that of your team and ignite your growth!

Enjoy your Day!

Wendy

author/advisor/lady with the flipcharts
www.wendykennedy.com

Once Bitten, Twice Shy...

Came across David Hornik's post on "Built to Be Bought" this morning over on VentureBlog.

Scary thoughts about heading back in to the dot.com bust...I'm seeing a bit of this too in my travels here in Canada and I agree with David Hornik -- I have an uneasy feeling.

Hop on over and have a read.

Wendy

Wendy Kennedy
author/advisor/lady with the flipcharts
www.wendykennedy.com

Map Out Your Sales Process

Today's topic is more of a "friendly reminder".

We all know the importance of mapping out the sales process, but when was the last time we actually did this?  Mapped it out fully I mean with these 4 things:

1. Gates,
2. Timelines,
3. Sales Tools, AND
4. Call to Action

for each stage in the process.

This is a task not just for the sales team, but for all customer facing groups.  Sit down together and map this out and discuss each of the elements above for each stage.  No sacred cows or pointing fingers - Map it out on a whiteboard and give everyone a marker.

You'll be amazed at what happens.  People will analyze all aspects - the timing, the effectiveness of demos, sales presentations, tele-sales, ... in the spirit of finding the best way to get sales to snowball.

Try it -- I think you'll be pleased with the outcome.

Wendy Kennedy
author/advisor/lady with the flipcharts!
www.wendykennedy.com

Good Revenue vs. Bad Revenue

When you’re starting out (and any other time for that matter), the first thing you need is revenue – no arguing with that.  But there’s good revenue and then bad revenue – and the key to success is in knowing the difference.
 

Good revenue is the type that moves you further along your business path – where you can get the snowball rolling.  Bad revenue is the type that has you changing your product and diverting your resources in order to customize a product for customer. 

At an advisory board meeting yesterday, we spent a lot of time discussing how to adapt the offering to suit an “out of segment” customer.  A bad habit to get into – yes, we all need revenue, but at what cost.

Try and stay committed to your focus – get your team asking “is this good revenue or bad”.

Enjoy your day!

Wendy

author/advisor/lady with the flipcharts!

www.wendykennedy.com

Less Passion / More Math

I was listening to a VC talk the other day about what he looks for in a pitch.

I like this "Less Passion, More Math" idea.

Entrepreneurs often bring loads of passion no doubt, but we often end up short on the math. 

And he's right -- rather than "estimating" things like market size, growth, and share, we need more due diligence ourselves by building bottom up models with more data points. Even if the data doesn't exist, there's enough related variables in the marketplace to draw from -- afterall, what's important to investors are the assumptions and the metrics. 

How much math are you doing on:

• the market - total available, and annual growth - build this up based upon some key market data points vs.  an industry report/study.
• your segment - size, revenue potential, revenue by product and customer, adjacent segments and size.
• your customer - the number of customers you'll win, revenue per customer each year, # of installs, and # of locations,
• channels - how many sales reps will you have?, how many channel partners at what comp plan?, how many calls will they make? % of success? etc.  Build up your year by year forecast from this.
• competition - growth against the market, analyze their business using the points above.

Math like this puts meat on the strawman - now we are able to see the size of the beast, and what it will take to service this opportunity - size of company, functional areas, # of products, etc.

Take a hard look at your own passion to math equation. It's not only for investor meetings - it's a sobering way to assess your business. 

Predicting Your Future

Several years ago in management school I was introduced to Larry Greiner's work on how organizations grow.  This model of his below is a classic and one I think all startups should use as a guide to navigate their growth hurdles.  It's one of my top 5 favourite growth models.

Often we think no one else has our challenges and we are unique - but if you look closely at the "crisis" at each stage below you'll no doubt see that often our growing pains are predictable and therefore manageable.

Go here if you want a more complete description of each stage and the management style required for each.

Remember, success stems from people not products.

Enjoy your day,

Wendy
author/advisor/lady with the flipcharts!www.wendykennedy.com