Tag Archives: business

Build your products like you make your dinner: Mouth-watering, Easy to Consume, and Tasty

Nick from shearinglayers made a great comment on Monday’s post, so I thought I would expand upon his comparison of how we process food to how we interact with products.  Below is a simple, and by no means comprehensive,  framework that may can shed some light on why certain products are more easily digested than others.

Consumers choose products like they choose a meal. They ask themselves three main questions:

1) How does it look? (Mouth-watering = Clear and appealing value proposition)

-In both food and products, presentation counts. However delicious a food may be, most people will never try it looks unfamiliar and they can’t conceive it’s taste beforehand. Similarly, if your product’s value proposition cannot be communicated without a trial, many people will never give it a chance.

2) How easy is it to eat? (Easy to consume = Simple to use)

-Blue fin crabs may be delicious but you’ll never catch me picking them myself- it’s just too much of a hassle. Similarly, many products can create the desired effect, but require too much discipline to use.

3) How does it taste/how good is it for you? (Tasty = Valued)

-This is obvious for food and products. If people don’t like what they deliver, they won’t use them.

So how would certain certain foods/products stack up?  Let’s see.

FOODS

Lobster- 1: like a sea insect, 2: a pain in the ass, 3: delicious

Wedding cake– 1: beautiful, 2: easy, 3: never as good as it looks

Strawberries– 1: delicious, 2: couldn’t be simpler, 3: god’s candy

PRODUCTS

Twitter– 1: confusing, 2: easy as sms, 3: depends how you use it

Most GTD software– 1: sounds like a good idea, 2: need to change work flow, 3: at the end of the day, disciple, not GTD software, determines what gets done

Pandora– 1: “Internet radio,” I get that, 2: turn it on and don’t look back, 3: the only thing that makes sitting in front of a computer for 14 hours a day bearable

This analysis predicts that online radio is may be more “adoptable” than microblogging.   Thoughts?

Nick from shearingglayers.com made a great comment on Monday’s post. Below I expand upon his analogy of how we process food to how we interact with products.

Choosing a product is like choosing a meal. Three main questions come to mind:

  1. How does it look? (Clear and appealing value proposition)

-In both food and products, presentation counts. However delicious a food may be, most people will never try it looks unfamiliar and they can’t conceive it’s taste beforehand. Similarly, if your product’s value proposition cannot be communicated without a trial, many people will never give it a chance.

  1. How easy is it to eat? (Ease of integration/Simplicity of use)

-Foods like Blue Fin crabs may be delicious but you’ll never catch me picking them myself- it’s just too much of a hassle. Similarly, many products can create the desired effect, but require too much discipline to ever be used.

  1. How does it taste/how good is it for you? (Value delivered)

-This is obvious for food and products. If people don’t like what they deliver, they won’t use them.

How do certain foods/products stack up?

Foods

Lobster- 1: like a sea insect, 2: a pain in the ass, 3: delicious

Wedding cake- 1: beautiful, 2: easy, 3: never as good as it looks

Strawberries- 1: delicious, 2: couldn’t be simpler, 3: god’s candy

Products

Twitter- 1: confusing, 2: easy as sms, 3: depends how you use it

Most GTD software- 1: sounds like a good idea, 2: need to change work flow, 3: at the end of the day, disciple, not GTD software, determines what gets done

Pandora- 1: Radio on the internet, I get that, 2: turn it on and don’t look back, 3: the only thing that makes sitting in front of a computer for 14 hours a day bearable

Anyone else have any product analogies they’d like to add to the mix?

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Free Business Ideas: Karma Calculator (Unlocking value by measuring flows of assistance)

Tao Te Ching
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Tabulate and publish the “props” and “thanks” between people.

We keep track of the money we owe each other, but why not the favors and nice things we have done?  We all know which of our friends is always willing to lend a hand, let’s celebrate that person and give them the recognition they deserve.  Similar to how I receive weekly “Network updates” on Linked-in, it would be cool to get weekly reports on how “Brett thanks Bryce for editing his paper” and “Brian thanks Janos for the ride to TN” or “Michelle thanks Jordan, Aranda, and Kar Han” for coming to her show.”   Create a leaderboard so that everyone can see who is helping out, thus creating incentives for people to help each other more often.  Not only would this system give the most helpful people the recognition they deserve, it would eliminate the shadows in which the less helpful among us hide.

Clearly, people’s fear of being valued and unable to hide their unwillingness to pitch in is the largest obstacle to the adoption of such a system, so I would focus on the positives.  Unlike the Time Banking Idea I articulated on Monday, a Karma Calculator would not be tit for tat but rather a homage to those that help a brother out.   It’s kind of like micro Linked-in recs.

What do you guys think?  Would you be more or less likely to help someone that you know has gone out of their way to help others?  Do you think that helpful people would be overwhelmed with requests?

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Online Community Building: Make affiliations more valuable by making people earn them

LOUISVILLE, KY - MAY 26:  Boy Scouts salute th...
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What happens if you make people do something to earn their affiliation to an online community?  Clearly there is a trade off of quantity for quality but I wonder if you make up in engagement what you lose in volume. Does anyone have good examples of  where this has been done?

Most online (and offline) groups and affiliations only distinguish people by how much they give, and make no effort at accounting for what people actually do. Unfortunately, all the flag waving and fund raising in the world is useless without the people that actually implement the good works.

Take Causes.org* for example. While Causes.org is provides better accountability than most online affiliations because it measures what users donate and how many other people they recruit, they have no means of recognizing people that actually implement the good works.

It always annoys me when I go to a benefit at, say, the New York Philharmonic, and there is a gigantic list of people that have donated money, but no mention of the people that have donated their time, connections, or reputation to make things happen. Similarly, it has always annoyed me that you can just plaster your Facebook or linked-in profile with hundreds of badges of organizations and associations that you have never once lifted a finger for. Sure spreading the word has value, but I think that associations and badges would become more meaningful if one actually had to do something to acquire them.

Look at the Boy Scouts. Do we give away “fire starter” badges to kids just because they want to fill the empty space on their belt? What about black belts in karate? There is a big difference between a dojo where people earn their stripes and one where people pay for them.

Especially now that most work is digitally distributable, there is no reason that one couldn’t harness the social web to actually get actual work done. I might not have $10 at the moment, but I’d be happy to donate 10 minutes of data entry for a FB badge of a cause I believe in.

I am interested in the community building effect of making people earn their affiliation. Does anyone have good examples of  where this has been done?

*Causes.org is a non-profit Facebook application that enables users to identify and support the “cause” (charity) of their choice. Causes users can do three main things: 1) “join” a cause (place a specific charity’s badge on their profile), 2) “donate” to a cause (directly send money to the specified charity through the app), or 3) “raise” for a cause (recruit their friend’s to join and donate). Causes’ 15mm active monthly users make it the 4th most popular Facebook application and thus an incredible hit.

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Free Business Ideas: Time-based Barter Economy Targeted at Entrepreneurs (Timebanking Revamp)

Clock in Kings Cross railway station
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The other day I stumbled across a social experiment called “time banking,” at timebanks.org. Basically, Time Banking is a community improvement movement that revolves around the principle that every person’s time is worth the same (Yes,  quasi-socialist).  Each community creates a “Time Bank” where community members can make “deposits” by lending their time to others and “withdraws”  by calling upon other community members for help.  It facilitates a barter economy with currency denominated in hourly increments of service to your fellow man.

“For every hour you spend doing something for someone in your community, you earn one Time Dollar. Then you have a Time Dollar to spend on having someone do something for you.”

An example.  A lawyer helps a little old lady clean her yard  for an hour.  He ears a credit.  Then he can turn around and get an hour of guitar lessons from another guy around the corner.  The guitar player could then ask for cooking lessons, perhaps but not necessarily from the little old  lady.

During boom times, when everyone has more business than they can handle (ie. plenty of money but no time), this idea seems silly.  But in the midst of steep recession, when everyone has no money but plenty of free time, the concept might be once again applicable.  A year ago, it might have seemed crazy for a lawyer to swap services hour for hour with a plumber whose market rate is 1/5 his own.   But if the lawyer has nothing else to be doing and no way of generating business at his billable rate, is it so crazy for him to save the $50 needed to fix his sink by spending an hour helping his plumber resolve a legal dispute?

I think the concept of bartering services is particularly applicable to startups, a group that is always short on cash.  In fact, a good bootstrapping entrepreneur will  always barter services, whenever it is pragmatic, to preserve cash.   This happens all the time, albeit informally.

Time Banking started almost 30 years ago and has spread to “22 countries in six continents” according to the official website.  A  quick google search for “time bank your zip code” will almost certainly produce a small community website.  Unfortunately, the success of Time Banking appears to have been limited by the onerous setup costs.  If your community doesn’t  have an existing infrastructure, you are urged to set one up by buying a “Time Banking Start-up Kit for just $49! With the kit, you get a six month membership, access to the coordinator forum, and a 4.5 minute DVD from the founder of time banking!!!”

WTF?!? 

$49 to join a social network and get a DVD of some old dude talking about something he did three decades ago?

It sounds like a con scheme but no, this is actually a rather sizable nonprofit organization operating on a pre-internet infrastructure.

Check it out for yourselves.  Is there anyone out there that would be interested in writing a Facebook application to bring this concept into the 20th century*?  Seems like you could add a lot of value to startups that have complementary skills.

*Yes, they have a page, but I see no reason why the whole infrastructure shouldn’t  be put up on the web.

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Network before you need to

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In addition to a place where people go shortly after losing their jobs, Starbucks is networking central these days. The 11am Tuesday latte, previously dominated by soccer mommies and retired folk, has become prime networking territory for would-be entrepreneurs and employees.  Almost every conversation I inadvertently eavesdrop upon is an elevator pitch or an informational interview.

As I’ve argued earlier, putting yourself out there where you can bump into new opportunities is definitely a recipe for success.  It didn’t take people long to realize that the best way to find a new job is to get out there and meet new people.  It’s been inspiring to see people respond to adversity by meeting strangers for coffee, mining their alumni databases for contacts, or attending professional networking events such as the NY-Tech Meetup or Meet at the Apartment (both are very cool events which I attend whenever I can).   Jobs availability may be at an all time low but my unscientific survey tells me that labour market efficiency is on the rise.

Unfortunately, I have a sneaking suspicion that most people will stop networking as soon as they procure employment. Focused intently on their new jobs, staying connected will take a back seat to immediate tasks.

This is a mistake.  In fact, at today’s Meet at the Apartment event, Allison Hemming, co-founder of The Hired Guns, brought up the point that people should always be networking, whether they are employed or not. Being well networked can not only help you do better in your current position, but it can help you find a new job faster if you happen to get laid off.

Savvy companies increase their marketing spend during hard economic times to gain share.  Marketing during recessions is not only cheap (less competition) but more effective because everyone else is cutting their budgets (less noise).  Similarly, savvy individuals continually connect to relevant people whether or not they have an immediate need to ensure that their voices will be heard above the crowd when it counts. Successful people make meeting new and relevant people part of their routine.

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Agility

20060421-30D-IMG_4511
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Agility and the ability to quickly adapt to changing circumstances or failed plans is one the many common behavioral characteristics I identified over the past year and a half I spent interviewing entrepreneurs and venture capitalists.

For example, when financing for ad-supported social networks abruptly collapsed in 2008, so did David F.’s plan for growing his online youth sports community. Without external funding for extensive outreach, customer acquisition was prohibitively slow. Rather than diverting his limited resources in a (likely futile) attempt to boost marketing, David completely reconsidered his business model. While recruiting at a local event, David learned from a Little League official how outdated and difficult the company’s software was to use. After further inquiry, David recognized that recreational sporting institutions could use his current social networking system to manage their backend customer registration. With a minor product tweak and a major shift in strategy, David emerged from the brink of failure, more profitable than ever.

Balancing initiatives is particularly difficult for start-ups, for which every big decision is interrelated. If seemingly insurmountable challenges arise, entrepreneurs must be willing to make drastic changes to their original plan.

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The Serial Entrepreneur/Venture Capitalist Paradox

Some VCs and serial entrepreneurs look at me like I’m crazy when I tell them that I am looking for patterns in the startup process.  This always strikes me as strange because the same people that tell you that every problem is esoteric, every situation unique, will, in the same breath, tell you that the reason they are good at their job is because they’ve seen or started 000s of businesses.

The obvious question is: if every startup is unique, why would the seeing first 1,000 businesses help you create the 1001st?  Clearly there are patterns of things that work and things that don’t.  Startups may require both art and science, but many of entrepreneurs and VCs would have one believe that they pull rabbits from hats for a living.

To paraphrase a professor I once talked to: “Perhaps some parties are loathe to reduce to science their self proclaimed ‘black art’ of getting early stage organizations off the ground because to do so would take the mystery out of it and, of course, the money too. As the saying goes, ‘Where there’s mystery, there’s margin.’ “

I spent the past two years interviewing CEOs and VCs with the goal of articulating the lens that experienced VCs and entrepreneurs use to evaluate early stage opportunities and the general principals they apply to the creation of early stage processes.  I’ve found a host of reassuring similarities that I look foward to sharing with everyone here.

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“What Should I Work On Today?” A very entrepreneurial problem…

This piece is an excerpt from my Fulbright research with Prof. Thanos Papadimitriou of SDA Bocconi.  You can find out more about our research on our blog “chefsnotbakers.”

What if your company lacked a consistent process to decide which opportunities to follow and which fires to fight? What if you had no tangible feedback on customer satisfaction, design productivity, or market share? Even worse, what if you had no customers, products, or market share? No, it’s not a nightmare; it’s a typical early stage company.

“What should I work on today?” is a question that entrepreneurs ask themselves every day.

Rightfully so. The success or failure of rapidly growing but resource constrained businesses depends directly upon their founders’ ability to juggle a variety of diverse tasks. Paradoxically, because startups generally operate on the thinnest of margins, success or failure hinges on entrepreneurs’ ability to focus all of their effort on exactly the right issue, at the exactly right time. Only by catching fires early and extinguishing them as quickly as possible, can entrepreneurs carve out time to create real value.

Unfortunately for entrepreneurs, it is human nature to focus on the facets of the business with which we are most comfortable, even to our detriment. History is littered with failed startups that couldn’t see the forest for the trees. Salesmen bleed their company of resources by chasing inappropriate customers. Financiers produce spreadsheets that bear no resemblance to reality. Technical founders write code while the bank runs dry. Products are created with no customers, business plans go unrealized, and popular but profitless online services linger as the remnants of past founders’ myopia. To paraphrase novelist Henry M. Tomlinson, founders see things not as they are, but as they are themselves.

Insidious internal biases afflict techies, MBAs, first timers, and veterans alike. Take the failed startup Monitor110. Lead by brilliant technicians and Wall Street veterans, the startup’s ambitious plan to index of entire the dynamic web’s financial information made it one of the most anticipated new firms of its time. In mid-2005, despite willing customers and a working beta product, the firm opted not to release V1.0, choosing instead to explore newer and more powerful search technologies. The decision to pass up early market feedback proved fatal. As time passed, both internal and external expectations for the product soared. In response, the firm retreated inside of itself. Although the team was working harder than ever, fear of disappointing an eager market began to push the firm farther away from its customers. Without regular feedback, the firm’s product-market fit began to erode. By the time Monitor110 finally released v1.0 almost two years and three rounds of funding later, the gap between product and market had grown insurmountable. They had built a product no one wanted and there was no money left to build something new. Despite having all of the prerequisites for success—a rock star team, an innovative product, a massive market, and plenty funding—Monitor110 failed. Success is not only sourcing and building the critical pieces, but aligning them together in a sustainable way.

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Wall Street Meltdown: The best thing that could happen to bankers

Wall Street Crisis
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Roger Ehrenberg, ex-banker turned startup investor, wrote a good post a while back discussing the possibility that the collapse of wall street will fan the entrepreneurial flames of ex-wall streeters.  I’ve been talking about this since the beginning of the financial crisis and I have an answer: YES.  I believe that the financial crisis will lead to positive changes in the lives of many Americans.

As an ex-banker (well, sort of, equity research) turned sailor turned startup grunt turned rock band bassist turned student of startups, I believe that unleashing a herd of hardworking and (relatively) intelligent people will lead to more than a few entrepreneurial success stories.  If nothing else, a forced break from the fire-hose of “absolutely critical” business and career will help people to understand that there is more to life than climbing the corporate ladder.  Shouldn’t it worry you that spending a sunny weekday on sheep’s meadow nearly drives you crazy?  Thoughts on what I call “the river” and “PDA dependency” to come on later posts.

When The Street began to fall apart, I dreamed up a new project: collecting a set of stories about Ex-Wall Streeters who, freed from jobs that they hated, go on to pursue their passions and, most likely, much happier lives. What do you think? I’m not saying that every banker is self-loathing (most of the truly successful ones aren’t), but a lot are.   Sadly, people stay in jobs that they hate because their “opportunity cost” is too high to leave. They’d rather pay the price of lifelong self-resentment than pursue fulfillment in, gasp, a potentially less lucrative field.

Why do people who manage risk for their living make such “irrational” decisions you may ask? Their myopia is the result of spending 7 days a week, 51 weeks a year (save a week long “recharge” in an otherwise unused cottage in the Hamptons) in a culture that has but one yardstick, the dollar. The simplicity of a system where every decision can be measured with one simple metric- how much $$$ am I making? – is both distorting and intoxicating.

To bring it home, I  believe that Roger’s third factor, risk, will have the most affect on the ex-Wall Streeters. Wall Street was never risky to its participants. It’s probably one of the safest career choices (on an expected value basis) available. No longer be able to tell exhilarating stories about the exorbitant sums they made with Other People’s Money, these people will have to completely re-conceive their personal notion of risk and how it interfaces with their self-image. Drawing spreadsheets for a modest living is a bit harder to sell as exciting and risk taking, even to oneself. Accountants, where you at?

I think, and sincerely hope, that the implosion of “gravy train” will liberate talented ex-Wall Streeters from their myopic fear and enable them to follow their dreams. Value expansion, if only in the personal sense, seems inevitable.

If anyone wants to tell their story or has a  friend that wants rap about their new plans, I’d love to talk to you.   Thanks and good luck.

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