Polygraph Media Blog

What I don't get about Enterprises & Creative Disruption

I am a four-time entrepreneur who has also worked in a major corporation for several years and has consulted many others.  Yet my experiences working on both sides of the fence don't make it any easier for me to understand why big companies consistently fail to place at least small bets more adventurously when there are signs that their business model is peaking or has peaked.

Sure, Clayton Christensen outlined a lot of great reasons in his classic The Innovators Dilemma.  But my question is a little more fundamental.

When big companies have a cash flow and the wherewithal to actually make some seed investments in something new, why does it never, ever happen?  Why are things like serendipity, experimentation, and the like considered to be so awful?  Are the internal zealots shouted out by people focused on the core business?  Are executive leadership teams always more prone to act on survival than opportunity?  

New ventures are usually the things that can ultimately give the big business some assets when the old business model does indeed wither away.

Amazon is pretty good about it.  Google has been chastised for it, unfairly in my opinion.  I hear that eBay does a reasonable job.  Who else does a good job of it?  There aren't many cases.

Just something that I may never really understand.

Are You Real?

As we progress with our business in 2010, I find myself more and more drawn to doing business with people who are genuine, sincere, and as honest as they can be.  Maybe I'm having a negative visceral reaction to all the examples of people acting "on behalf of their business," which we're told should excuse.  You know, because history is replete with cases of lying, cheating, and stealing to get ahead.  Some of the best business barons of the last several centuries have checkered pasts - so it's somehow OK to do whatever it takes to get ahead today, right?

I think our "outcome-oriented" culture is becoming extremely negative for our American society.  How many people do you regard as successful because of the outcomes of their businesses, not because he/she is intrinsically a good person?  Certainly, money is a very important scorecard in business and I'm not minimizing that.  But I think it's also important to do it "the right way."  It's not just important to succeed, it's important to succeed with class and dignity.  It's important to your legacy, your reputation, and the way people will treat you when you are inevitably down.  Because no matter who you are, it *will* happen.

Somewhere along the way in America, we adopted an extremist "do whatever it takes" and "me first" attitude about business.  I don't totally agree with that -- the how/when/why means more to me than the outcome.  I think it's ultimately good business to be genuine and true to your word insofar as you can be -- society *craves* it in a world of cleverly manipulated bailouts, mortgage bailouts, and "anything it takes."  Society is based on rules where we aren't out to screw each other or create a problem for someone else all for the sake of personal gain -- at least it used to be.  But those choices are up to you & me -- and we have to begin to do the right thing every now and then despite what the "rules" or the "structure" allows.  Otherwise, America will be pillaged until there is nothing more to take.

Entrepreneur Networking & the Scarcity of Time, Part I

OK - this post has been a long time coming and is likely to offend folks.  But the Seattle Tech Startups e-mail list (to which I still subscribe/lurk) has a great discussion ongoing right now about the topic of how entrepreneurs should use their time/help each other.  At issue is Dave Schappel's blog post. where he proposes an interesting framework for thinking of his own time economically.  I met Dave briefly at a Medina, WA, Christmas Party as I was exiting Microsoft & investigating opportunities that ultimately led to Notice Technologies.  So for those of you who have never met Dave, he's a sharp, sharp guy and a leader in the Seattle community. 

As an early-stage startup guy who is immersed in the hunt, I can 100% empathize with Dave's perspective.  When a startup gets to a certain point, time becomes incredibly valuable and scarce.  Your "idea" comes to fruition on some level, and you all of a sudden find yourself a lot more demanding about the use of your time.  It's a natural evolution -- deployed products, customers, business development activities, hiring, etc. all take up your time and it all hits at the same time.  If you're there, you know what I'm talking about.  If you're not there, well then you are not quite there yet in the life of your startup.

So as such, the things you used to do (i.e. meeting folks speculatively for coffee, "helping" a fellow entrepreneur, attending a networking event, etc.) have to be scrutinized a lot more.  Our business hit the next level about 90 days ago, and trust me -- I've made far more tough choices about my time than I did just 3 months ago.  And the book that I'm finishing inch by inch right now would've never happened had I started the book just a few weeks later.  There used to be time for other things, but my available time for extracurricular activities is shrinking rapidly right now.  I can see it being reduced to UT MBA alumni events, blogging, and maybe advising a startup 5 hours a month.  That's it.

But back to Dave's blog post, here's my interpretation of his point:

    The entrepreneurs you *want* giving you advice/help paradoxically don't have a lot of time for you.  Young entrepreneurs, first-time entrepreneurs, and those who are just starting out *generally* don't understand this dynamic.

Same goes for most service providers and other folks who demand entrepreneurs' time like it's freely available & overflowing, but that's a separate conversation.

But anyway... as venture capital has tumbled and investments have gotten a lot more risk-averse, successful entrepreneurs have become a lot more valuable as mentors and advisors to other startups.  Two of our three advisors at Notice Technologies are successful entrepreneurs whose experiences and ideas are incredibly helpful.  But as we got to the point where we needed help from advisors, we wanted to respect their time by formalizing the relationship.  It has worked very, very well IMO for everyone involved so far.

I liked Dave's points about being available at events (as long as they're events worth attending) and offering time in a way that aligns everyone's interests.  As a serious entrepreneur (at least that's what I'd like to consider myself), that really resonates with me.  But ask me or another entrepreneur for a 10am meeting, and you'd better be comfortable with annihilating his/her morning. ;-)  This is why I like to set up meetings at 7am or 8am -- it's about economizing time & respecting everyone involved more than it is about imposing early mornings on someone else.

In Part 2 of this blog post, I'll share thoughts on how this affects (in a very tangible way) how I use my time & network in Austin.

Why People Mistrust "Social Media Experts"

I think I've figured out why social media folks have a bad "brand" in the business marketplace and amongst people who are not in that industry.  It really comes down to one word...

Execution (or lack thereof)

It's a loaded word -- "execution" can mean different things for different people:

• following through on promises - there is just a high correlation of "social media expertise" to lack of follow-up.  I don't know what it is, but it's a real phenomenon.  I have encouraged my old friends at Microsoft to create a "social media certification" through Microsoft Learning like they do for developers.  The industry needs some third-party objectivity to help the rest of us figure out who can actually do things with social media.
• bringing business results, achieving milestones, ROI, etc. - social media is not quite yet mature enough today to create an obvious & measurable ROI in a wide range of cases -- although you are starting to see some examples.  Progress in social media is measured today in a few things:  tactics to encourage sharing/virality, measuring success, starting and maintaining conversations, etc. This situation will improve dramatically, but right now success is still often times experimentation and setting the table for future opportunity.
• having expertise and the hustle necessary to get the job done - folks you meet in the social media business may know the buzzwords and the things that are necessary for success, but can they actually get you there?  I had a conversation with a real social media expert the other day who lamented to me "A lot of people call themselves experts because they know how to set up a Twitter account.  So what."  Therein lies the problem.  Other folks have the expertise, but they may not really have the time to help.  A lot of social media work can be labor-intensive -- maintenance and monitoring of social media is a time-consuming process.

I don't think it helps that the very tools that social media experts purport to use are the very tools that can be used for blatant self-promotion.  So we all too often see "social media experts" as shameless self-promoters who lack substance and the ability to execute, all while claiming to be expert on a subject area where expertise is actually pretty darn hard to find and sometimes too subtle to notice.

It's really a shame -- I know of good people in social media who really struggle with all the noise out there in the marketplace.  When you do find someone who knows what he/she is doing, that person is like gold because social media can help solve real business problems.  Unfortunately, finding good people is the hardest part of the problem for many corporations just because it's so hard to navigate all the nonsense.

2010 Resolutions

Well, today is the last day of what has been an interesting decade.  The world is certainly a much different place than it was ten years ago.  I brought in the 2000s at the Poodledog Lounge in Austin and I'll enjoy a nice, relaxing evening tonight with friends.  Since, I've worked in another early-stage startup, gotten an MBA, done a tour of duty in Redmond, and am now embarking on a startup of my own.

It has been a bumpy ride at times, but it has been a blast.  I've certainly learned through this process that I have to be fulfilled in my work.  Money has certainly not overcome boredom in the workplace, and enjoying the job has overcome the difficulties involved in making less money (or at times none at all).

I only heard one thing that really disturbed me all year -- just a few weeks ago a friend told me that he thinks my blog has become overwhelmingly negative.  So my resolution for 2010 is to stay honest but to make a sincere effort to point out good things I see when I see them.  All too often, us entrepreneurs just go from solving one problem to the next -- and it seems like you're just surrounded by trouble.  While I am not nearly as negative as the tone of some of my posts may suggest, I *am* admittedly a bit of a perfectionist.  So while I may stop to smell the roses a bit in 2010, I won't stop demanding the most from folks around me.

Have a great, prosperous, and most importantly rewarding 2010 everyone!

Just Own It™

You know how Nike has made millions with their slogan "Just Do It".

Well, I feel like I should perhaps trademark the phrase "Just Own It" because of how much I tell that to my early-stage startup team.  Maybe George Friedman of Stratfor just beat it into my head one time too many in startup #1, and it's now the only value-add I have left in my mid-30s.

Ownership is a simple, yet often misunderstood concept in the startup.  Owning something means taking responsibility for every aspect of a job.  It's about being a true expert, knowing everything there is to know about one's responsibilities.  It's a PhD in part of the business, but less the politics and with more accountability and action.  It's being able to anticipate problems and doing something about them proactively.  It's about looking for improvements obsessively.  It's about working with other people on the team and making things happen.

It isn't a nice to have either, it's a have to have.  People have to take ownership, because if they don't fault lines appear in your early-stage startup.  Now all of this isn't to say that people should have strictly regimented roles -- generalists are needed in most early startups.  But you need generalists who are great at their specific specialty and who take ownership of it such that other people don't need to do so.

It's pretty easy for a startup CEO (or investor for that matter) to detect.  You know a startup employee takes ownership when you can't possibly ask him/her a question about his/her area without it being considered and without action already taking place.  When you can (and yes I'm idealizing just a tad here), you know that someone isn't quite fully engaged.

That's all, have a great day and Just Own It™

Wordplay re: Incubators, Catalysts, Accelerators, Mentorship Programs, et al

Quick rant today on something that's been bugging me for awhile -- snobbery around terms used by different people who support entrepreneurs.  Some things I've heard lately:

"We are not an incubator <chuckle>, we're an accelerator!"
"Incubators stand the test of time."
"Our mentor program is different."

For the sake of simplicity, I ignore labels/names.  It isn't productive to get into a sophomoric debate over whether or not you "incubate", "accelerate", "catalyze", or "mentor."  And if folks are focusing on this, they're not differentiating themselves in an area that actually matters to you, the entrepreneur.

The only thing that really matters is if one of these people and/or groups can really help you.  What differentiated service or expertise can they provide that is better than anyone else you can choose?  Then it's a matter of the payment structure -- do you pay them in advance, do they fund you, or do you share some of the risk?  I think this actually changes the nature of the deal and the urgency of the people involved.

The more I sniff around, the more a lot of these groups feel the same to me.  The core value proposition group to group is the same.  If you want or need to work with one, you'll have to do some homework.  Get to know the people.  Check out their qualifications and their reputation.  Ask around.  And most importantly, make sure you are comfortable with them on either a personal or professional level, preferably both.

Finally, remember that no incubator, accelerator, catalyst, or mentor is going to do the job for you.  You have to earn your success.  The right one will make it a little easier, but you aren't going to have an easier time if you go with a "catalyst" over an "accelerator".  They're a lot more alike than they think, but subtle differences will make one the right fit for you.

Don't confuse me for a social media zealot

I have had a few conversations with colleagues, ex-colleagues, and current clients that lead me to believe that they think I'm a social media zealot.  While a lot of what I do is tied in some way to social networks, I find it necessary to set the record straight tonight.  Here's what I believe:

• Social media is old technology, but mainstream adoption of it is a new phenomenon.  Nobody knows for sure if it is the next wave of computing or a fad.
• I *think* that Facebook has a few big advantages that make it the leading contender for social media dominance.
• But it is entirely feasible that the great advancement of the social networking age is not social networking, but rather the mainstream adoption of real-time data/information.
• Should things move in this direction, Twitter is undeniably in the lead here as they truly own (shaky as it is) the infrastructure for this along with a fairly large user base.  But it's too early to tell whether or not they'll actually win because switching costs are relatively low and Twitter is probably still a little too buggy to be considered "reliable infrastructure".
• I would not be shocked at all to see a major player (Microsoft, Google, Amazon, Yahoo!) launch and have some success with a Twitter-like product.
• The combination of blogging, micro-blogging, and social media have created a truly democratized platform that allows anyone to be a publisher.  This has been discussed ad nauseum by people in technology and observers.  However, changes to consumer behavior as a result of these things have made the dissemination of information far easier for "trusted" sources.  Very few things actually need to be printed anymore now that the infrastructure has caught up to consumer behavior.  Or is it the other way around?

Perhaps most importantly, all of this means that Internet Marketing has gotten a lot more complicated.  At one time, you just had to rank high on search engines.  Then the opportunity came about to buy space at the top of search engines.  Now to be totally effective, you have to do both of those *plus* make strategic decisions & execute on social media, Facebook, Twitter, employee blogging, and "real-time" customer service.

We don't have new social media opportunities today, but we do have new internet marketing opportunities.  Social media opens up bi-directional communication with previously anonymous customers.  It's an evolutionary, not revolutionary, change that requires you to think more holistically than ever before.

Quick Hits: Thoughts on Free/Freemium

There has been a lot of chatter recently in the blogosphere around free business models following the release of Chris Anderson's book and Malcolm Gladwell's subsequent review.  I thought I'd chime in with a few comments from the early stage entrepreneur perspective.  I don't have a lot of time today, so you're getting bullets and not the well written prose you are accustomed to getting from me ;-)

• "Free" is indeed the most frictionless way to get attention.
• This concept should not be equated with "the easiest way to build a business" -- the two are not necessarily the same.
• "Free" should also not be confused with "inexpensive to operate" -- Free at scale means that all of a sudden things can get very expensive.
• Despite all the obvious benefits of "Free", it's also a good way to never get your customers to pay you directly.  It's harder than people think to flip the switch from "Free" to "Paid", which is why you see so few examples in the marketplace of that actually succeeding.
• Companies without a way to directly monetize customers die unless they have a realistic way to generate revenue indirectly.  Google figured this out, Facebook is now figuring it out, and Twitter is well on the way as well.  Twitter may very well end up offering "Freemium" services, but they'll likely never freeze out a consumer who refuses to pay.
• This, obviously, is the key to Freemium -- making sure you deliver enough of a Free service that people who don't want to pay stick around while delivering a differentiated Freemium service that enough people actually want to justify the effort.  This is tricky.
• Companies that rely on a "Free" business model are to some extent relying upon either M&A or clever monetization tricks/schemes to succeed from a business perspective.  So if you're investing or working for a company that is relying upon this, you really should watch for indications that the management team is on to something and/or that they are listening.
• "Free" is ridiculously chic right now.  Most Web 2.0 type businesses are depending on some clever monetization scheme to succeed.  Very few will actually achieve profitability on this strategy because it's *damn hard* to create an indirect & defensible scheme for making money.  For one, it takes scale -- enough Users that indirect monetization actually works.  On the business operations side, the best candidates for success are those businesses that obsess over their cost structure *and* have an inexpensive way to scale.
• My final point -- but I'm pretty confident that all the indirect schemes will play out over the next few years.  We'll have a few winners and *a lot* of losers.  And when we do, people in our business will start asking the question "why not just charge people to use this?"... and "Paid" will be the new black.

Maybe we're ahead of the curve.  Maybe we just "don't get it".  And maybe we're not as cool as the "Free" crowd.  But I have a handle on what our services cost to operate.  I know how many customers get us to profitability.  Most importantly, I know roughly how I'm going to monetize them -- and it isn't based on hypotheticals or schemes.  Call me old school, but I prefer this approach to the hopes and dreams I've believed in before.  What can I say?  It feels like 1999 all over again, just without all the free cash flying around.

Why we can't all get along on Twitter and what to do about it

Maybe I'm slow, maybe I don't think about these things in an academic sense, I don't know... but it recently occurred to me why Twitter sometimes annoys me.

1) it's every man/woman/bot for him/her/itself,

2) everyone has a different use of Twitter, be it personal, business, or rapidly generating a following,

3) everyone has a different perspective on what the rules are or what they should be,

4) everyone has a loudspeaker.  As @cheeky_geeky so eloquently puts it, Twitter isn't as much a conversational platform as it is a tool for one-way communication.  The only difference is that in real-life, you can occasionally opt to ignore even folks you ordinarily like to hear.

Let's face it.  Statistically, it has to be pretty hard for someone to use Twitter and not be turned off by something they see or someone they follow.

It might be the guy who follows everyone.  It may be the woman who refuses to follow you back when you "do her the favor" of following her.  It may be the shameless self-promoter.  It may be the person who won't stop promoting their business venture that is getting no traction at all.  It may be someone who airs dirty laundry.  It may be a serial flip-flopper... the ass-kisser... the shameless groupie that comments on every semi-insightful point made by "the Twitterati".  It may be someone who annoys you with their political views, which are clearly so important and impactful that they need to be shared with thousands of followers.  I could go on.

The lack of a shared ethos re: Twitter usage is quickly becoming a problem for the Industry's latest darling.

Think about other communication media for a moment.  We've developed accepted practices around e-mail.  We know to be careful with SMS because the recipient is charged a fee for received messages.  Facebook and LinkedIn are largely governed by how their platforms operate... i.e. both people in a "friendship" or "connection" have to accept the other.

In Twitter, the only rule is that everyone can follow anyone... which means that we all approach Twitter with different intentions.  It also means that over time, you can gain less and less insight from data Twitter currently provides.  For instance, at one time early in Twitter's life, you would gauge a User's popularity and/or importance in a community based on the # of followers he/she had.  Now it may just be an indication that someone is a Twitter whore.  ;-)  OK - maybe that is harsh.  It could be an indication that someone is trying to build a following perhaps for business development purposes, and doesn't discriminate when taking on new followers.  My point is that the correlation between followers and a User's reputation is certainly not what it used to be, and it is continuing to trend negatively.

So what does all of this mean?  If Twitter is to continue to thrive, Users will need a way to filter noise and both consume and contribute to the broader community.  Twitter is a pretty good way to follow a few hundred people, but can someone reasonably follow significantly more people?  Not at present.  It doesn't have to be fully conversational in my mind, but it does have to be occasionally conversational.  If it isn't, it won't survive as a means for everyone to hold a loudspeaker and shout things into a deserted forest.

It also means that we all need more insight into the people we choose to follow.  We don't necessarily have enough data to make informed decisions today, so we'll continue to waste time evaluating what we see and what we read.  I'm not sure that is going to last too long.  Maybe I'm wrong.

If you and/or your brand does want to be listened to in Twitter, it's more important than ever to establish a good reputation.  Provide useful content in as human a manner as possible.  Be consistent.  Commit to sharing unique or curated content on a regular cadence that your users can expect.  Rise above and don't annoy.  Set the rules of engagement and you will win, but do so as a trusted, valuable member of the community.