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Startup gung-ho

This article was original published on swombat.com in November 2011.

Businesses, investors and consumers alike are gregarious. They want to go where everyone else is going. They want to buy success, from successful companies.

This leads to a perversion that affects the startup world as well as the rest of the business world: the need to appear more successful than you are, in order to get business, investment, customers.

This is not entirely artificial. Building a successful business is also about being able to project the right image to appeal to customer, and an appearance of success is part of that. Fake it till you make it, as they say. People don’t want to buy from or invest in a dying company, so you’ve got to look like you’re doing great, even if you’re an invoice away from technical bankruptcy.

But there’s a reverse side to that, which I believe is harmful to some startups: this projection of fake success extends to meetings with other startups and potential mentors at networking events, and because of that, founders who could really use a good dose of advice from a more experienced entrepreneur end up flying blind and making all the same mistakes again.

Startup networking events

When I turned up to my first startup networking event, I didn’t know what to expect, so naturally, I turned on the “we’re doing great” façade (which, I quickly observed, everyone else did too). Isn’t it amazing how, in a high-risk industry where most companies are expected to fizzle out in the next few months or years, everyone is doing great, growing fast, acquiring more users, etc? How often do you meet a new founder and hear “Yeah, well, I’ve been at this for 9 months and our revenues are still way too small, so I think I’ll be throwing in the towel and trying something else soon, because this isn’t working.”

Another aspect of this problem is that once you start putting up the appearance of success, it becomes very tempting to do so consistently, with everyone. Anyone could refer you to some business, after all, so you have to be on your toes all the time. Otherwise, you might miss out on some great opportunity that would have come your way if only people thought you were doing well. At least, that’s how it often feels.

To make matters worse, if you introduce yourself by presenting what’s wrong with your business, people will peg you as a negative type, and that’s not the kind of founder people think of as being headed for success. No, you have to be an outgoing, friendly, open extrovert with a strong dose of self-confidence and a very slight touch of arrogance.

I’m very lucky that I can genuinely say that at this point, the two businesses that I am involved in are doing very well. But this wasn’t always the case.

Missed opportunities

In the times when my companies were not successful, did I get any amazing opportunities by claiming to be successful to my startup peers? I don’t think so. Founders have a pretty finely tuned bullshit detector. I doubt anyone was all that fooled. What about investors? With them, faking success is even less useful. VCs will not invest without doing a fair amount of due diligence. Claims that you’re doing great when you’re going bust will never lead to investment, unless you’re a consummate con man.

What opportunities did I really miss, then?

How about opportunities for advice? Entrepreneurs are a helpful lot, but if you don’t present your problems clearly, your peers won’t be able to help you. Even non-entrepreneurs seem more likely to offer advice and connections if they think you’re struggling and they could make a difference. Perhaps the only set of people to whom you might want to project the “appearance of success” are clients, during a pitch. Even that is unclear, though. It really depends on your industry. In some industries, a fledgling startup is more likely to get a foot in the door than a mature, successful company, and expectations will be lower, and therefore easier to beat.

In summary

  1. Appearing more successful than you really are will destroy more opportunities than it will create.
  2. Instead, be honest with fellow entrepreneurs. Don’t be negative about it, but don’t claim to be doing great when you’re not.
  3. VCs will not invest based on an appearance of success, so bullshitting them won’t work either.
  4. Appearances of success may work with some types of customers in some industries, but think about it for a few minutes instead of simply defaulting to the startup gung-ho attitude.

Thoughts from 2018

This article was and still is bang on the money. And it has thankfully become less of an original thought due to a lot of focus, in the startup scene and elsewhere, on depression and how it impacts people in jobs with a high pressure to appear successful, like startup entrepreneurs. Tragically, that focus has generally come about due to people committing suicide.

In a more prosaic sense, the same is still true. People at startup events rarely talk about their problems, opting instead to project an image of success. And yet, there are all sorts of “fail-con” types of events that also try to portray the reality that many startups don’t succeed. It feels like we still have a fair bit of work to do as an industry to bring these two poles together.

Driving, and the art of running a business

Learning to drive and learning to run a business are surprisingly similar endeavours.

When you learn to drive, you don’t know what you need to pay attention to. There are, seemingly, a million things going on, and some of them might kill you if you fail to heed them. This can cause a sense of panic in the beginner. When you know how to drive, you rely your experience to know what to pay attention to and what you can simply ignore or deal with without thinking about it.

Learning to run a business is similar. There are a million things that you could do, and some of them will kill your business if you fail to heed them. This can cause a sense of panic in the beginner. When you know how to run a business, you rely on your experience to tell you what you need to pay attention to and what you can simply ignore, delegate or outsource.

When you learn to drive, there are a lot of new habits that you need to build into automatisms. Learning to use the clutch to change gears rapidly while accelerating onto the motorway, surrounded by speeding cars, seems very difficult at first. But the more you do those things, the more they become automatic and unconscious. When you know how to drive, you don’t even really think about changing gears, you just do it.

Learning to run a business is similar. There are a lot of new habits that you need to build into automatisms. Learning to detect that the person in front of you is a lead, pitch them in the correct way, follow up, and close the sale, seems very difficult at first. But the more you do it, the more it becomes automatic and unconscious. When you know how to run a business, you don’t really think about pitching and closing sales, you just do it.

To learn to drive, you have to actually sit in a car and drive yourself. No amount of reading or talking about it will enable you to drive. You could study driving for years, and even watch someone else driving for years (most of us watch our parents driving for our entire childhood), and still it won’t replace the actual experience of driving. While it is possible to build car simulator, even that is a poor substitute for actual driving.

Learning to run a business is similar. You have to actually run a real business yourself. No amount of reading or talking about it will enable you to run a business. You can do all the MBAs you want, and study entrepreneurs and entrepreneurship for years, and still it won’t replace the actual experience of running a business. While it is theoretically possible to build a simulation of a business, it’s a poor substitute for actually running a business.

The best approach for learning to drive is to get an experienced driving instructor who will sit in the car with you and figure out what you know and what you need to learn, construct a teaching plan personalised to you, teach you those things, demonstrate them when it helps, and help you practice them over and over again in a safe environment, watching out for things that might kill you. Because this approach works, it is used throughout the world.

The best approach for learning to run a business is similar. You get an experienced mentor or coach or close advisor who will be lightly involved in the business, who will figure out what you really need to know next and point you in that direction, who helps you work through tricky business issues, and who watches out for things that might kill your business and that you haven’t spotted. This is much less widely used in business than indriving, perhaps because good business coaches are much more rare than good driving instructors. But driving schools for business are getting more common every day.

There is a difference between learning to drive and learning to run a business. In business, there is no such thing as a safe environment. You’re on the motorway from day one. And most people drive their first business without an instructor by their side.

Thoughts from 2018:

Not much to add to this article! I still think this is a good and useful analogy for learning to run businesses, and the best ways I have observed to train entrepreneurs are indeed experiential and based on working on a real business.

People, Processes and Tools

This article was originally posted on swombat.com on October 24th, 2011.

Some years ago, one of my managers used to repeat this “Accenture truism” (or so he designated it): to fix or improve something, first you need the right people, then you need the right processes to help those people work together, then finally you need the right tools to support those processes. People, processes, and tools – in that order.

This is even more true for tech startups than for corporations. As geeks, whenever we face a problem, we often start by looking for a tool to fix it. “Our team isn’t communicating properly – let’s set up Campfire.” “But I don’t like Campfire, why don’t we use Yammer?” “Yammer and Campfire are so lame, let’s just use good old IRC.”

This is the wrong approach. Tools by themselves rarely resolve problems in your business. If your team isn’t communicating, you need to solve that problem step by step.

First you need to figure out if that’s because of a “people” problem. Maybe one member of your team just doesn’t want to talk to the others. If that’s the case, no tools or processes are going to fix that. For example, many sales organisations try to get their salespeople to communicate everything they know about every client – but salespeople don’t want to do that, because it makes them more easily replaceable. Setting up a CRM tool doesn’t solve that problem, until you fix the people, by giving them the right incentives to do what you want (or, if that’s impossible, either changing what you want or changing the people).

Then, you need to look at the “processes” part of the problem. For example, assuming your team wants to communicate with each other, maybe they can’t because they tend to sleep at random schedules in different parts of the world. That’s a process problem that can be fixed by, for example, declaring a certain time each day “team time”. For example, you can anoint the period between 2pm and 4pm in some timezone as “team time”, and require everyone to be available to chat at that time every weekday.

Finally, once you’ve got the right people and they have the right processes in place to support them, then you can start looking for tools to support those processes. Depending on what you actually want “team time” to look like, you might choose campfire, GTalk, IRC, or any number of other tools. But by now, you can select the tool based on whether or not it supports your processes, rather than whether or not it’s the sexy SaaS app of the month.

Thoughts from 2017

The principle still feels true to me. If anything, it feels even more true. The biggest addition would be a much deeper and nuanced understanding of what working on the “people” and “process” problems can mean, and how they feed into each other. At GrantTree we’ve even adopted and developed a whole interview aimed towards figuring out how well people will be able to adapt to our complex processes (open culture makes significant demands on people’s abilities), so we try not to find ourselves hiring people who are perfectly fine individuals but not well suited to our environment.

As the years have passed, tools, however, have become less and less interesting in and of themselves.

Steve Jobs Lives On

This was originally posted on swombat.com on October 6th 2011.

I’m sure there’ll be thousands (probably tens of thousands) of blog posts, comments, and other forms of expression and eulogies about Steve Jobs. The man had that much influence over us. Maybe some, maybe all of them will repeat what I’m going to say here, but that’s not why I’m writing this. Fundamentally, it’s because I feel compelled. I can’t not write it.

I was sitting in a meeting about UK legislation throughout the morning, and found out, at the end, that Steve had died. Even though it was obvious that he was going to die sometime, it was still incredibly sudden and shocking. It’s amazing how personally and emotionally touched I feel by this.

1.

First, it seems amazing, unbelievable, that Steve Jobs could be dead so suddenly. His death at a young, young 56 is a brutal reminder that death takes us all.

Even if you’re a multi-billionaire, someone who’s changed the world twice over, loved by many, influential beyond measure, leading one of the world’s most powerful human organisations, living what was presumably a model life from a health perspective, even if you’re someone who literally has all the world at his disposal, still the great scythe will sweep and it will not miss. Taxes may not be certain. Death is.

2.

A second thought is of the empty “reserved” chair, visible in the front row at the Apple keynote just two days ago, was reserved for a man who was probably lying on his death bed at the time. The empty chair reminds us that Steve worked until the very end, resigning only when, presumably, his declining health made it impossible for him to work.

Like Freddy Mercury said (and did, working until June, dying in November): The Show Must Go On.

Steve died as the curtain fell. I’m not ashamed to say that it actually makes me cry a little, here in this coffee shop. Oh well, I’ve always been a sentimental.

3.

A third thought is about what a tragic, personal loss this is to, well, everyone who loves technology. You may have loved Steve Jobs or hated him, but what you can’t deny is that he was a force for the progress of technology.

Steve Jobs revolutionised the world of consumer computing with the Mac. He upended the music industry (and a few others), transformed consumer electronics, forced the mobile phone industry to leap kicking and screaming into the 21st century, and finally pushed forward a device which will possibly represent the future of computing. The shape of things to come – cue Battlestar Galactica music in the background.

Seen from the perspective of where technology was a mere 10 years ago, the iPhone and iPad are, quite simply, science fiction. No matter your emotional stance on Steve Jobs, it is impossible to deny that, on a technological level, he made a big dent in the world.

What a tragic, personal loss this is to all who love technology, and even to those who don’t. Here was a truly exceptional man, who made the world better in the way he could, and he is no longer with us. We have lost him – all of us. We’ll have to make do without him.

4.

A final thought occurs, a thought about life and death that I’ve been mulling over for some time.

I don’t have much experience of death, but here is my perspective. While we live, we influence the world around us, through our will (which led some philosophers to declare that will was the fundamental unit of reality). When we die, that will is extinguished.

How quickly it seems that the world erases all trace of most people. Some live on for some time, through great art or great acts, but eventually, it erases all, without fail, without exception. The broom follows the scythe and sweeps everything away. The well of the past is indeed bottomless and filled with the forgotten memories of those who came before us.

And so with Steve Jobs. One day he will be utterly forgotten, not even an atom of a memory will remain, even if humanity lives on. But for now, what Steve Jobs achieved in Apple, over a brief decade since he came back to it, was to create, in a medium other than art, an extension of himself. Apple is modelled after Steve’s vision, and it is fair to say that it is an extension of what he learned, through his life, and, more importantly, of what he willed. Apple is Steve’s will, externalised.

And Apple lives on. And Apple is, technically, immortal (as in, not subject to mortality – obviously it can go bankrupt). One day it will err and die, but its potential lifespan is considerable, given where it is now.

Certainly, Apple will change, but so would Steve, had he lived.

This is a poor form of immortality. As Woody Allen said, “I don’t want to achieve immortality through my works, I want to achieve immortality through not dying”. But whereas art, to a large extent, is static, a company is an entity – legally and in reality – capable of making decisions, of changing the world, capable, in short, of will.

It may not be a perfect proxy for Steve’s will, but it’s what we have left after this great man has passed away. That, and the science fiction he made real for us.

Thoughts from 2017

Most of the thoughts in this article still feel true, but as my articles about my ill-fated adventures with the new Macbook Pro have perhaps made clear, I suspect that the answer to the question of whether Steve Jobs’ will lives on in Apple is, sadly, no. But I might be wrong, who knows. Jobs made a few mistakes in his time too, though generally they didn’t lack vision. Time will tell.

Still, I wanted to preserve this article on danieltenner.com.

My life in Accenture before startups

This was originally posted on swombat.com in June 2011.

I regularly get asked about my time in Accenture, and my transition into entrepreneurship, both by people who are trying to decide whether to apply to go there after university, and by people who are currently working there. Here’s an attempt to answer some of those questions in one place.

Background and overview

First, some background. I joined Accenture in 2003 as a Junior Software Engineer, on the basis of my mad Java skills (certified by Sun) and the undeniable fact that I didn’t have three heads.

I’d like to say the interview process was gruelling and that I succeeded where many failed, but to be honest, I think at the time they were hiring anyone that could write two lines of Java to grow the newly created Solutions Workforce (engineering people, basically), so I don’t remember the interview process being particularly hard at that stage.

On my first or second day, I sat in an induction presentation where they told us that the Solutions Workforce was designed so that “it’s ok to stay at the same level for 10 years if you want to, it doesn’t have the ‘up or out’ pressure of the Consulting Workforce”. From that horrifying moment onwards, I knew I had to get the hell out of the Solutions Workforce into Consulting.

Transition to Consulting

There was no process allowing people to do so, so it took me about a year to bypass the un-process (which included having to go through a whole new round of much harder interviews) and transform from a Software Engineer (I got promoted in the meantime) into an Analyst (which earned me some £10k a year more than other Software Engineers).

This was, largely, a very good move. I learned a lot in Consulting. I had always been a good programmer, but now I was able to take on all sorts of non-programming roles and round off my non-technical skills: client management, people management, planning, recruiting, processes, performance reviews, and all sorts of other “softer” tasks that I really wanted to learn how to do well. I’ve always liked being a generalist, and I’ve always liked pressure, and Consulting suited both those tendencies very well.

At the same time, something really bothered me about my work. It felt pointless. One project I did (whose output was basically a PPT and Word document outlining the successes and failures of a client project), which took two and a half months, had, as its only apparent purpose, the promotion of the person who had led the project. Accenture was paid (quite well) so that I would sit there and produce a piece of paper that justified this person’s promotion.

To me, that didn’t seem like a good use of the precious few years we have on this Earth. In fact, the feeling that I was wasting my time was really killing me inside (I’m not exaggerating).

The height of absurdity was reached, I believe, when I was asked to prepare the proposal for the preparation of a plan to produce a proof of concept for a module of a tool the client was implementing. Long before that, though, I had started to look for other things to do. Wherever I looked in the corporate world, though, I found more of the same (usually more of something even less good). As far as the corporate world went, Accenture was not so bad.

About two years into my four-year corporate journey, I started looking for other jobs, but found nothing I liked. Another year passed before I started considering the idea of starting my own business. From that point on I was looking for a partner to start it with (I knew I didn’t have the knowledge or skills to do it all by myself yet). Soon, my best friend approached me with a product idea. It was all I’d been waiting for, so we got started. Nine months of hard work and no sleep later, I handed in my resignation, and finally ended my stint in the corporate world.

Hindsight

Do I regret my time in Accenture? No. Not at all.

I think I should probably have planned my time there better, and exited sooner, but all in all, it wasn’t a bad experience. I learned a lot, both in terms of skills and self-knowledge. Accenture has some truly exceptional people working there, and they tend to be fairly accessible, so if you’re the kind of person who naturally strives to get advice, who reaches out to your network for assistance, you will get plenty of coaching from people at all levels.

Most of the managers I worked with, directly or indirectly, were excellent (some less so), and I learned a lot from them both. One of the most crucial things I learned in Accenture was how to hold back my habit of being blunt and direct with everyone. I learned to be smoother and far more effective. That’s a valuable thing to learn. I also gained a lot of confidence in my abilities to pick up and absorb new things and become productive quickly – something that I knew I could do with technologies, but which I saw I could now do with almost all subject areas.

So, in hindsight, would I do it again? I’m not sure. I was far from ready to join the startup world before I joined Accenture – but then, I was just as far from ready when I left Accenture, and in the end I’ve done alright, I think. You’re never ready to take that leap. You might think you’re ready, but you’re not, really. It’s impossible to say what my life would have been like if I’d joined a startup instead of Accenture, or if I’d simply tried to launch my own business.

I was already toying with some entrepreneurial ideas with a friend in Geneva before leaving for Accenture. Perhaps life could have gone differently.

Conclusion

My advice to people who are hesitating between startups and a company like Accenture is: don’t worry too much about it.

Big, prestigious corporations have their share of benefits. Accenture is probably not a bad choice amongst the selection of corporate masters. If you’ve got the bug for entrepreneurship, chances are a few years in a large corporation won’t distract you from it (and they might even strengthen your resolve). If you feel like you can start a business right away, you can try that too.

But don’t stress about it. You’re not making the most important decision in your life. There’ll be many chances to adjust the shot if you decide corporate life is not for you. Many entrepreneurs get started later in life, after having held steady jobs for decades.

If it’s in your blood, it’s in your blood.

Thoughts from 2017

Not much to add to this article. It’s still a sensible look back at those years in Accenture, that seem rather more distant now (this year, I reached the “10 years since I quit my last regular job at Accenture” milestone).

What sort of entrepreneur are you anyway?

This article was originally published on swombat.com in May 2011.

From my father’s blog about wisdom:

The trouble with values is that they are all good.

Most people will swiftly agree with most of the high values of humankind: freedom, happiness, truth, respect, justice, equality, prudence, compassion, courage, modesty, patience, moderation, harmony, industry and so on; but ask them which is the most important and prevailing. You will suddenly find in the pattern the striking differences that tell fascists apart from communists and religious fanatics from tolerant free thinkers.

Bad people have no problem with good values. Irreconcilable opposites are made from the same handful of values representing goodness. It is the weight of each that differs.

The same is true for entrepreneurial values. Everyone but the most psychopathic entrepreneur will agree that a business should treat its employees well, shouldn’t waste money, should create value, should generate returns for its shareholders, shouldn’t kill people or make them ill, and so on.

And, more specifically in the tech startup world, a great many entrepreneurs will agree that startups should hire the best people they can, should iterate, should keep an eye on relevant metrics, should have automated test suites, should have automated deployments, should have backups of valuable user data, should be running on secure, well-administered servers, and so on. For B2B startups, everyone agrees that making sales, creating a good brand and building strong customer relationships are good things.

At the very least in public, very few entrepreneur will disagree with those values. But, as with the more generic human values, there is a world of difference in how each entrepreneur orders those values. Are backups more important than automated tests? Is saving money more important than implementing good metrics measurements? Is it ok to treat your employees harshly in the name of shareholder returns?

If you’re going to work in someone else’s business, it is wise to try and determine how they have ordered their values before doing so – this is why interviewing with people who work there already can be so important for the job seeker.

And, similarly, for yourself! What sort of entrepreneur are you (or will you be when you start your own business)?

To be aware of your values and to examine their worth with your own mind is yet another subtle source of freedom. Keep Nietzsche’s hammer at hand to gently tap on each value and to judge the sound. Depending on the place where they are hung, some of those bells may give an empty ding of hypocrisy. We tend to forget that values are man-made axioms agreed as beneficial. There is nothing God-given about them. You do have a right to examine them freely – in your head – to chose your own choices. This is not theory: your own chime, your arrangement of personal values chants who you are.

Thoughts from 2017

As time has passed, I’ve been able to see first-hand how important knowing yourself is, if you’re trying to build a successful company. Reading this article again, I see that it lacks a method by which you can know yourself – Nietzche’s hammer is a bit too abstract for most people. Ultimately, to know yourself takes the same thing as to know someone else: you have to witness the person’s actions, particularly when they need to make difficult decisions.

So my advice today would be that knowing your values is important and yet at the same time the only way to really get to know yourself is to go out in the world, do things, make decisions. Then, be sure to reflect on your choices regularly, and gain the self-knowledge available to you.

What will kill Facebook?

This article was originally posted on swombat.com in December 2010.

This question pops up regularly on Hacker News. What will kill Facebook? Before that, it was “What will kill Google?” There was no Hacker News before that, but if there had been, it would have been “What will kill Microsoft?”

Often, the question is asked with a combination of rage and envy. The questioner doesn’t like Facebook, they want it dead, and they wouldn’t mind if they were the one who came up with something that killed it. Aren’t entrepreneurs charming?

However, the question is fundamentally flawed. It’s the wrong question. It leads nowhere. The only company that can kill Facebook is Facebook. Here’s why.

Undead Facebook

First of all, let’s assume that right this minute there is a startup which is just like Facebook 5 years ago. Let’s call it Smashbook. Let’s further assume that Smashbook is going to do to Facebook what Facebook did to MySpace. We don’t know how it might do that, and we don’t care. We just care that this is the Facebook Killer.

What then?

Take a look at the top 100 sites. What do you find at position 51? MySpace. Wait a minute, didn’t MySpace get “killed” by Facebook? They sure did, and Smashbook will have exactly the same effect on Facebook. It will drop from position 2 to position 10. Maybe. After a few years.

In other words, even if a Facebook killer was out today and ripped Facebook a new one, it would still take many years for this to be noticed by Facebook, and it would take decades before it finally did kill Facebook.

Ok, but how to kill it?

Is it even possible for Smashbook to exist? The evidence of Facebook killing MySpace would point to ‘yes’, but this is not so clear. When Facebook came on the scene, MySpace already had many issues. Due to MySpace’s design and its demographic, large groups of people were simply not interested in joining MySpace, and so MySpace already carried the baggage that would eventually cause it to get trampled by Facebook.

Facebook, on the other hand, doesn’t have any such flaws. You might say that privacy is Facebook’s flaw – Diaspora and others are certainly betting on that – but, unlike design and demographics, privacy is not something that most people care about. The odd geek will get angry and leave Facebook, but for most, privacy is of no interest.

In this, Facebook is similar to Google: it has utterly dominated its market and has such a lead over its potential competitors that no one can catch it. Facebook is as unkillable as Google.

So how unkillable is Google?

To see whether Google can be killed, let’s look at the previous “unsinkable” title-holder: Microsoft.

Microsoft is far from dead (and probably will never die), but it has made a very good attempt on its own life in the last decade. With Windows Vista, Microsoft did what it could do commit suicide on its flagship product. Six years of delays, bugs, driver support issues, usability issues, and so on – Vista had them all. And yet even that didn’t work. Microsoft’s revenues barely took a hit. Like any company of this size, it will take decades for it to kill itself, and it will have countless chances to avoid death along the way (and probably will successfully take one of them).

No company is really “killing” Microsoft. What may be killing Microsoft is its own failure to adapt and evolve with the times. What will eventually kill Microsoft’s current cash cow is the slow but inescapable disappearance of the Windows/Office monopoly, to be replaced by “the cloud”, whatever form it eventually takes.

Google, similarly, will be killed not by a competitor rising out of nowhere, but by falling into irrelevance. This will take many, many years, and Google will have many chances to jump onto whatever the next wave of relevance is.

So, back to the beginning.

What will kill Facebook?

As I said at the beginning, this question is flawed. Facebook, like Google and Microsoft before it, has risen on a giant wave, that of social networks. As an entrepreneur, thinking about “killing Facebook” is unproductive. You won’t kill Facebook. No one will.

The right question to ask, instead, is:

What will be the next giant wave?

If you can figure that out, and execute the right business to catch that wave, and beat every other business who sees it too, and end up king of the hill at the top of the next wave, then you will have beaten Facebook in the only way which is meaningfully possible. Chances are, when you get there, you won’t care much about how to kill Facebook, or any other mega-company.

Thoughts from 2017

The points of this article are still true. The latest darling to kill is Apple, and many are predicting its demise. I joined in that, with a caveat1. The caveat is partly informed from the views in this article. You can’t “kill” giants like Facebook, Apple, Microsoft, etc – you can only wait for them to fail to catch every single important wave of change. Eventually all things die, but category dominators like these companies take a ridiculously long time to die.


  1. “Like Microsoft, I think Apple will continue to make mind-boggling amounts of money for those 5, 10, 15 years. It just won’t be from my wallet, I guess.”

Principes of Pitching

This was originally posted on swombat.com in April 2011.

Learning how to pitch an idea effectively is an enormously useful skill that they never really teach you at university or at school. It’s the kind of thing you learn from personal experience. There are many articles providing formulae for pitching or presenting your startup, but few about the principles behind those formulae.

Back when I was still at university, I spent a whole Easter holiday building a prototype for a chemical spot auction site. In this I made many mistakes (among others, I started by building an elaborate user management system rather than focusing on the key dynamics of the auction process), but the real killer came when we pitched it.

I was working with a guy who was just as inexperienced on the business side as I was on the programming side. His father happened to be a top-level executive at a big chemical company, and so through this huge foot in the door we got an entire hour booked to pitch this product to a panel of senior people at this blue-chip company. I remember sitting on my bed and naively thinking of how we would spend the billions of dollars a year we were undoubtedly going to make from this surefire deal.

Golden opportunity

Was this meeting a golden opportunity, or just a formality to please the boss? I don’t know. But what I do know is how much we screwed up on whatever this was.

On the technical side, everything fell apart. This was the day the ILOVEYOU virus hit, and all the corporate networks were down. Our site was unreachable. I had not thought to have it running locally on the laptop so that I could demo it without internet access (über-rookie mistake). When the server finally became reachable again, the meeting was over, with only one sympathetic soul staying behind to have a look at it. I felt mortified. My entire purpose had been to build this prototype for the demo, and that had completely and utterly failed. Two months of work for nothing.

The real killer, though, was our pitch. To my partner’s credit, I must say that he handled the whole thing himself, and certainly did it better than I would have – but it was still a disaster, and unlike me, he had no technical difficulties to blame. As I watched the pitch unfold and observed the audience, I felt my heart sink further.

We had an hour booked. Here’s how my partner structured the pitch: for the first third of the presentation, about 10 minutes, he talked about how startups were changing the world (which was interesting timing, considering we were two months into the dot-bust); the second third focused on how B2B was a growth area and predicted to make many billions of dollars over the next few years; finally, the last third talked about the customer, and repeated things they knew about themselves, and finally maybe one or two slides were about the product we were pitching and what problem it would solve for them.

So, in short, out of about 30 minutes of presentation time, only 2 minutes answered questions that the audience actually cared about.

I can’t remember exactly what sort of questions there were, but if I recall correctly, the “panel” took the excuse that the prototype wasn’t working to leave before the hour was out. At the time, it seemed that they left because the prototype didn’t work, but, in hindsight, I’m pretty sure they left because they hoped to still be able to do something productive with the little bit of time left in that wasted hour slot.

Hindsight 20/20

Fast forward 11 years later, and I still remember this story, I can still bring back to mind the feeling of sitting through that disastrous meeting, and the insights I got from it. I’ve now pitched hundreds of times, various different ideas. I’ve watched our Woobius interns fumble together a pitch with no preparation (they did better than I did back in 2000). I’ve pitched at competitions, during sales meetings, sales calls, networking meetups, and so on. I even spent two weeks cold-calling 20 people a day to pitch them my “voice on the web” startup (I hate cold-calling).

But the most important lesson about pitching, I learned in this very first pitch:

1. You have to tell people what they want to hear.

With this, I don’t mean that you have to make up stuff. What I mean is, out of the vast infinity of facts at your disposal, you need to ruthlessly zoom into the small handful of key points that the people in front of you care about. Back in 2000, our audience didn’t care for startups, B2B, or well-known factoids about their company. In the context of this meeting, they cared about two, maybe three things:

  1. Are these guys pitching something I should care about?
  2. Are they credible?
  3. (probably) Can I get out of here sooner without pissing off the boss?

The whole pitch should have been focused on answering these questions quickly, smoothly, effectively. This could probably have been done in 5 to 15 minutes, with most of the hour left for answering questions and building up our credibility further.

Since then, when pitching anything, I always first try to figure out what the “audience” cares about, what they want to hear. For example, your pitch to a customer and your pitch to a VC must be vastly different. The VC cares about whether you’re building a startup worth investing in. The customer cares about whether you can solve their problems. Your friends care that you’re doing what you like and not heading for disaster. Your parents care that you’re not wasting your life chasing unicorns and rainbows. This brings us to the second most important lesson of pitching:

2. You have to know who your audience is and understand them before you can pitch them effectively.

Any pitch where you don’t know who you’re talking to is a shot in the dark. It might hit something, but who knows what that might be? So, before answering that oft-asked question, “So what do you do?”, make sure you first try and figure out what the other person does.

Finally, there’s a third critical aspect of pitching that we failed at, back in 2000, that I’ve become more aware of as the amount of sales work I do has increased.

A long time ago, Aristotle wrote about rhetoric that it was “the faculty of observing in any given case the available means of persuasion”. Pitches are a minor application of rhetoric. They do not exist in a vacuum. You don’t pitch just for the pleasure of it. To be described as “good” in any way, a pitch must have a purpose, something you’re trying to achieve, and a “good pitch” is one which achieves its purpose.

Let’s say that, against all odds, the chemical company’s executives had liked us and liked our product. What then? They would naturally have asked, “So what are you looking for?” And the reality is that, naive as we were, we hadn’t even thought of that before going into the meeting.

So this is the third most important lesson of pitching:

3. In order to deliver a successful pitch, you have to know what you want to get out of it.

There are many things you can honestly want out of pitching: customers, funding, esteem, friendship, rapport, advice, insight, introductions, and so on. Depending on what you want, your pitch will need to change. You don’t pitch for business in the same way that you pitch for advice or to build a relationship. Thinking about what you want ahead of pitching is not just helpful, it is essential in order to get anything out of it.

In conclusion

Ultimately, there is one great teacher of the art of pitching: practice. This is why entrepreneurs get very good at pitching: they do it all the time. But hopefully, these three principles can help make your practice more deliberate:

  1. Tell people what they want to hear.
  2. Know who you’re pitching so you know what they want to hear.
  3. Know what you want out of your pitch.

Thoughts from 2017

This article has aged perfectly. The principles within it are evergreen – I would argue they were as true a hundred or a thousand years ago as they were today, and so they’re likely to have some lasting power. I now have even more experience of pitching, and of being pitched (as a seed investor) and all of it supports those straightforward points which so many pitches fail at.

Fit your product to the right market

This was originally posted on swombat.com in March 2011.

On my first startup, I made the mistake of not talking to customers at all until launch day. As a result, the product sucked – it was not fit for any market. And because it was unfocused, it was impossible to define any sort of effective marketing strategy, either. This is the kind of expensive mistake you don’t make twice, and I extracted it as a one of my “N tips” posts later (see tip number 4).

So imagine how surprised I was when I managed to make a variation on this mistake again with the next startup – albeit in a different flavour. We launched within 2 months, had active users from the right industry right away, saw the product spread… and yet when it came to charging people, the process of getting those happy users to pay was harder than pulling teeth from a cat! Moreover, when trying to sell to other potential customers, who had been unwilling to use the product for free but seemed more inclined to pay for it, there was always a feeling that the product was exciting and had potential, but it didn’t quite do what they needed in order to justify paying for it.

In startup lingo, that’s known as a product/market fit issue.

Fit the right market

It turns out that getting a prototype out there is not enough. You have to get the prototype into the hands of the right market. If you’re planning to sell a paid SaaS product, this means finding early users, from day one if possible, who will pay. Otherwise, you’re getting product-market fit – with the wrong market.

In that context, it was good to see, recently, the following story about SyncPad, who did launch to paying customers right away – which enabled them to discover that their paying market was not who they thought initially:

After Davide launched his app he hit the streets and began talking with his actual customers. What he discovered surprised him. Instead of taking the art world by storm, Davide discovered that his true customers for SyncPad were in the business market. He found that companies were using SyncPad to help manage meetings (both remote and locally), real time visual communication, and for presentations.

SyncPad made some wrong assumptions about who their customers would be, but by charging early, they found those assumptions out very quickly, and were able to pivot their product into the right market.

The price selector

Price is a very strong selector when it comes to users. The people who pay are often not the same as the people who want a free product. This is especially obvious in the B2B market, where “how much the customer wants to pay” allows you to select between enterprises, small businesses, freelancers, etc.

If you build a product with the feedback from free users, you’ll build a product that’s great for free users. If you want to build a product which users will pay for, you need to be charging them as early as possible so your product feedback comes from paying users.

Charging early

One approach for charging early is to ask users to pay from day one, even while your product is in early beta. Even though they’re helping you out a lot by being some of your first users, you need to validate that they are the right kind of user, and the only reliable way to do that is to ask them to pay you.

Of course, you can’t charge them the full price. They’ll laugh you out the door and you’ll lose a potentially very valuable relationship. So, what do you do?

You give them a steep discount. “We’re still early in the development, so you will get a 90% discount for the first three months, and we’ll review the price upwards as more features are developed.” This can also lead very nicely into a discussion of what feature they would most like to see in order to accept the price increase in three months. This can turn into your product road map, if you manage it well.

Of course, perhaps no one will want your product even at a 90% discount – but if that’s the case, you should revise your assumption that they’ll be willing to pay for it at full price, ever, and perhaps pivot into a different product, one that people are actually willing to pay for.

Thoughts from 2017

This article is still very relevant. I frequently bump into new founders for whom this is a useful idea, and who haven’t heard it from somewhere else. In particular, the idea that price is a selector seems sadly rare, given how many founders would benefit from it.

Are patents any good for entrepreneurs?

This article was originally published on swombat.com in February 2011.

Yesterday, I attended an IP Review Event organised by the Intellectual Property Office in the UK. The focus was a review of “Intellectual Property” and how it impacted entrepreneurs. About 30 startup founders were represented in the audience.

Intellectual Hot Pot

Intellectual Property, of course, covers a great many different types of things.

Some (like Trademarks) are hard to argue against. If you start a company called “Daniel Tenner’s Widgets”, and register that name as a trademark, it is reasonable that your neighbour shouldn’t be allowed to start another company by the same name and compete with you.

Others (like copyrights and patents) are more nuanced. Entrepreneurs know, from everyday experience, that ideas aren’t worth a whole lot. Execution is everything. Some “ideas”, such as innovative mechanical inventions which require a lot of experimentation to get right, are clearly worthy of protection, but most ideas that earn patents are far too generic. And no one, not even the big boys, is immune to being sued by the owner of a spurious patent.

The first thing to do with this, then, is to split out the debate into its reasonable parts. Patents are not copyrights are not trademarks are not trade secrets are not design rights. Let’s take just one strand out of this hot pot and examine that: patents.

Patents and startups

A number of feelings were echoed by pretty much everyone at the event yesterday:

  • patents are effectively useless at protecting young companies; they are too expensive to acquire and too expensive to enforce;
  • on the other hand, patents can much more readily be used by larger competitors to squash smaller innovators; larger companies can afford the costs of enforcement and can register a lot of patents;
  • therefore, patents, as they exist, are a risk which startups must simply live with, and hope that it won’t turn into a full-fledged catastrophe, as that can easily kill their company if it comes at the wrong time.

All this is true whether you are in the US or the UK.

The feeling about patents was best captured by one attendant who stated, during the event “The more I learn about Intellectual Property issues, the less I want to do a startup”.

Another attendant, woefully optimistic, suggested that “we don’t want patents now (while we’re small), but we’ll want them in a couple of years (when we’re large)”. Actually, even large companies who have used patents to their advantage often don’t think they work as they are. Jeff Bezos, who applied the ridiculous One-Click patent against Barnes and Nobles, later (back in 2000) wrote a letter arguing for patent reform. Since then, things have only gotten worse, with countless ridiculous patents being awarded, and some companies even setting up shop as high-volume, highly structured patent trolls to exploit this gaping hole in the legal framework.

It’s pretty clear that companies large and small either dislike or just about get along with the patent system as it is, at least within the IT industry. It protects no one who needs protection, creates a constant threat for those who can’t afford the protection, and generally its main effect is to provide data for nice infographics about who is suing who in an industry (answer: everyone is suing everyone they can).

In short, patents are an overhead to innovation, one that smaller companies avoid paying by taking on an existential risk that could kill them, and an overhead that simply increases the cost of doing business for larger companies.

And what about everyone else?

The original purpose of patents and copyrights, according to the US constitution, was:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

The purpose was to promote progress, which would make things better for everyone. In order to achieve this, the founders of the United States of America were willing to make an exception to their otherwise staunchly anti-monopolistic views. This seems like a valid purpose for any law: to make things better for everyone.

So, excluding for a moment the people who file patents and get sued by patent holders, do patents, as they are now, make things better for everyone else?

I believe the answer is clearly “no”. Patents, being an overhead, drive up the prices of goods and services, and reduces the amount of innovation happening. Everyone loses out, most of all consumers who don’t get new products and services or who pay more for them. The only ones who win out of the current system are the patent lawyers.

Conclusion

My conclusion is simple.

The patent system, as it exists today, both in the US and the UK, is a nuisance, an overhead, a problem that everyone could do without. I would cautiously advance that the system that we have in place for patents is worse than no system at all. That said, there is a place for a patent system, but it needs to go back to the fundamental principle of making things better for society.

Patents (or other forms of intellectual property law) should not be predicated upon moral considerations of who owns an idea. From a moral standpoint, ideas, unlike physical things, are owned by everyone and no one, and to impose a false economy of scarcity on ideas is a significant burden for society. However, this burden is reasonable so long as sufficient benefits come with it.

So, a review of Intellectual Property Law, whether focusing on patents or other areas of interest, should primarily concern itself with this fundamental question:

Is the system designed in a way that benefits society sufficiently to outweigh the costs to society?

As far as patents are concerned, the answer is a resounding no.

Thoughts from 2017

Six years on I don’t find that my opinion on patents has shifted much. There has been a little bit less high profile patent trolling (at least as far as I’m aware), but plenty of large companies flinging their patent portfolios at each other on various spurious grounds. I think patents are still a nuisance to startups and older tech companies alike.

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