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Category Archives: startups

Back To Work: About New Year’s Resolutions

nyeThe entire KidoZen team is back at work this week and I never seen this level of excitement. Obviously, we ended the year with a very good momentum and have super ambitious and really exciting plans for 2014. Like most people, I spent part of my holiday break reflecting about 2013 and setting the goals and plans for 2014.

During that time, I was super happy to discover that I hit over 85% of my 2013 goals, had some pleasant successes in areas I didn’t  plan for and I still manage to do a decent  job on the resolutions I didn’t accomplish. While 85% might not seem particularly impressive, my satisfaction comes from knowing that my 2013 goals were super ambitious. At the end, I believe that’s the only way to set goals.

From New Year resolutions to our monthly/weekly plans at KidoZen, I like to evaluate goals based on the following rule:

  • Accomplishing Over 90% of the Goals: Probably our goals are not ambitious enough
  • Accomplishing Between 75% to 90% of the Goals: We are doing well, let’s keep pushing to get close to 90%
  • Accomplishing Under 75% of the Goals: We are doing something wrong, time to reassess.

As always, the key to accomplish goals is to stay really focused, iterate and adapt.

In terms of my New Years Resolution, I have some super ambitious goals both personally, for my family and I can’t not even tell you about some of the crazy goals we are trying to accomplish with KidoZen. It should be fun ;)

 
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Posted by on January 6, 2014 in entrepreneurship, leadership, startups

 

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Give Thanks to your Competitors: What I Learned from the Starbucks-Square Partnership

Yesterday, mobile payment processing startup Square dropped a bomb on its competitors by announcing a partnership with Starbucks  http://news.cnet.com/8301-1023_3-57488803-93/square-starbucks-aim-to-give-mobile-payments-a-jolt/. The initial phase of this partnership will enable Square to process credit and debit payments in 7000 Starbucks stores. Additionally Starbucks will be adding $25M to Square’s new monster funding round.

Pretty sweet deal for Square huh?

Well, while learning about the details of the partnership, I was surprised to learn that it was Starbucks who approached Square and not the other way around (http://pandodaily.com/2012/08/08/starbucks-approached-square-after-rejecting-every-other-mobile-payment-player/). Apparently, Starbucks had been approached by every other payment provider in the last few months and, not being completely satisfied with those technologies, they decided to evaluate Square which started the conversations towards the partnership.

For Square’s competitors, this has to feel like a punch in the stomach. Square literally benefitted from their efforts trying to land a strategic alliance with Starbucks. This is a classic example of how a failed attempt to establish a partnership can open the door to your competitors.

In the software world, establishing a successful partnership is always a combination of having a solid business model and a compelling technical solution that benefits both parties. Missing any of these two elements can have very different outcomes.

Approaching a potential partner with a great technology solution but a poor business model can completely shut the doors for all your competitors as your partner could assume that there are no viable business models in the space. However, if your partnership model is really compelling but the technology is not as good as your competitors the partnership attempt might backfire and create new opportunities for your competitors with a better technical value proposition.

As a startup CEO, when working on strategic alliances try to evaluate all possible outcomes of including the possibility that you might create new opportunities for your competitors. Similarly, stay aware of the partnerships and strategic alliances your competitors are trying to establish. Their failures could end up creating immediate opportunities for you.

 
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Posted by on August 9, 2012 in entrepreneurship, leadership, startups

 

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The Enterprise Minimum Viable Product: Focus on Viable Instead of Minimum

The minimum viable product (MVP) is one of the great concepts pioneered by the Lean Startup methodology. Conceptually, the MVP includes only the basic set of features that make a product production ready and nothing more. Obviously, the MVP concept has become one of the essential mechanisms to ship software efficiently and quickly incorporate feedback from real customers. However, while the MVP mechanism has proven to be an incredibly effective vehicle in the consumer market, there are some major challenges on develop solid MVPs in the enterprise world.

The whole MVP principle is based on shipping the essential feature set to make the product usable, get it in front of customer, study their behavior and incorporate their feedback into subsequent versions of the product. AS you might imagine, this process is not that simple in the enterprise software world in which the complexities of companies can complicate the dynamics between an enterprise software startup and its potential customers.

Having struggled with the characteristics of the right enterprise software MVPs for almost a couple of years now, I can point to a few challenges that most enterprise software startups will encountered when trying to get customers to adopt MVP-type products.

The User is Not the Buyer

One of the reasons that make the MVP concept works so well in the consumer market is because the user of the software is typically the ultimate buyer. Because of this reason, user feedback will directly make the MVP more appealing to potential buyers. This story is quite different in the enterprise world on which the people trying the MVP are rarely the ones making the ultimate purchase decision. In that sense, enterprise software startups need to be able to carefully evaluate the feedback received from an MVP, filtering the noise from the features that will make the product more relevant to potential customers.

Time Commitment

Getting enterprises to commit time and resources to evaluate an MVP-type product can be a really challenging endeavor. Differently from the consumer market, potential buyers in the enterprise are constantly bombarded with different assignments that will distract their attention from your valuable product.

Overfeature Culture

For decades, enterprise software has evolved in the middle of a culture that value the number of features over the simplicity and usefulness of a product. By presenting an MVP version of your product to enterprises, you might run onto a wall of prejudices that tend to associate the number of features in a product with its robustness and enterprise readiness.

Burning Bridges

Given the complexities of enterprise software sales cycles, startups need to be very careful when/how to position an MVP product to customers. If not explained correctly, the MVP might cause enterprise to be disappointed and not consider adopting your software just because they misjudged the purpose of the product at that stage.

In my opinion, there are some fundamental differences between the viability of the MVP approach in the enterprise and consumer markets. Despite the validity of the approach, I think enterprise MVPs can’t be too minimum and must be very viable ;)

 

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Enterprise Software Lessons: Avoid the Early Adopters Sirens Songs

In enterprise software, customer acquisition is the main factor that differentiates winners from losers. Understanding the process of winning customers, the required time, typical sales cycle, parties involved, etc are essential to successfully implement the correct growth strategies in an enterprise software startup. In the early days, enterprise software startups need to do everything at their disposal to win customers and increase adoption of their products.

While the first customers of any enterprise software startup are always the most exciting ones, their behavior can be really misguiding in terms of predicting long term customer acquisition strategies. I like to refer to this problem as the “early adopter’s siren songs”.

In Greek mythology, were dangerous and devious creatures, who lured nearby sailors using enchanting and irresistible songs that deviates them from their normal course. Using this analogy, in an enterprise software startup, you can think of early adopter customers as a bit of a siren song that can deviate the product from its normal trajectory.

Early customers are a great thing to have as an enterprise software startup. These companies are willing to take a chance on your new product and invest in your success. However, early adopters are not a direct representation of your target customer population and, consequently, of your ultimate business models. From a customer profile standpoint, early adopters tend to be more forward thinking, risk taking and innovation hunger than most companies. In that sense, your early adopter customers can send the wrong signals in terms of the customer acquisition models and metrics of your enterprise software product.

As an enterprise software startup CEO, you have to fight very hard to get early adopter customer but you have to drive even harder to get passed the early adoption technology inflection point. Until you get passed that “inflection point” you won’t be able to get a clear picture of the customer acquisition models that work for your enterprise software product. Early adopters are a great sign of the initial traction of a specific enterprise software product as well as the viability of a specific idea but can rarely be considered an indicator of long terms business and execution models. Establishing customer acquisition strategies and projection based on early adopter customer are not only unreal but highly misguided representation of the real adoption and long term business models in an enterprise software startup.

From an enterprise software startup perspective, the transition from early adopters to mainstream customers is one of the hardest thing to accomplish. However, until you get to that point, any metrics , long term projections or business models won’t be based on real facts but on dangerous songs of sirens.

 

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What Entrepreneurs Can Learn From Dwayne Wade

I had a thoughtful post about enterprise software prepared for today and then something happened last night: The Miami Heat won its second NBA title! So I decided to write a cheesy post :) Don’t worry, we are not going to talk about basketball :)

I was barely paying to the post-game interviews because everybody was talking about the same: effort, team work, sacrifices…..However, there was something in Dwayne Wade’s interview that made me stop what I was doing to listen. Wade was being interviewed by ESPN when he was asked to compared this title with his first NBA championship in 2006.

“I’m speechless,” Wade said. “Winning the championship in 2006 was amazing. But I didn’t go through nothing yet. Now six years after that, I’ve been through a lot in my personal life, and I’ve been through a lot in my professional life, and this means so much more.”

Wade also mentioned that in 206 he was happy to win a title for his veteran teammates and recognized he didn’t realize how hard was going to be to win a second one.

In case you don’t follow the NBA. Dwayne Wade won his first NBA title in 2006 as part of the Miami Heat team that included super star Shaquille O’Neal, current Miami Heat captain’s Udonis Haslem and veterans like Gary Payton and Antoine Walker. After that year, the Miami Heat went through a rebuilding period of having some of their worst seasons in history but finally the team was able to sign all-stars Lebron James and Chris Bosh and started a path that took them to two consecutive NBA finals and the title last night.

Listening to this interview, I couldn’t avoid relating it to what, a lot of times, we experience as young entrepreneurs. When triumphs comes to us too easy, when we win customers without even trying, when our talent is recognized everywhere, when all we experience in our companies is growth, when we sell our first company or product; we take the risk of not appreciating the effort that takes to be at the top and, more importantly, we can lose perspective about the values and motivations that drove us there in the first place.

Those values are quickly tested in difficult times, when you win only 15 games in an NBA season, when you lose a big client, when you have to part ways with some of your key employees, when you go through a personal crisis that can start affecting your work performance…. At that point, is when you have to rely on values and convictions as much as on talent to get back on top.

When you experience those dark days, your new triumphs and recognitions will come to you in a different path. You start realizing that, as Reid Hoffman promotes in his latest book, entrepreneurship (and I am not referring to start companies) is a philosophy of life and not a job. You start realizing that you climb mountains because you love to climb and not because you want to get to the top. You realize that you play basketball because you love the game and not to win championships. Those championships will come, just in a different way.

 
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Posted by on June 22, 2012 in entrepreneurship, startups

 

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Does Enterprise Software Needs Sales People?

The sales staff is one of the traditional elements of enterprise software companies that has been heavily questioned by the new generation of companies in the space. A lot has been written about the new software acquisitions models in the enterprise and how companies today don’t need to rely on traditional sales mechanisms. Companies like Atlassian claim they have acquired tens thousands of customers without a single sales executive and passionately promote that model as the cornerstone of the new generation of enterprise software.

These days, enterprise software sales staffs are associated with the old boys, the Oracles, IBMs and SAPs of the world. Sales guys are not cool, they think about money and not about changing the world and they are expensive. These days, enterprise software can spread viraly, purchased with a credit card on subscription basics. Factoring all this, do we really need sales people in an enterprise software startup?

The answer is: ABSOLUTELY YES!

I have thought about this problem for a long time and tried different models. At this point, I couldn’t be blunter about my opinion on the subject. To achieve scale, an enterprise software startup MUST have a sales staff. What we do need is a different type of sales guys and new and innovative sales models.

Let me try to explain.

While you can certainly establish an enterprise customer based without a sales staff, it’s almost impossible to achieve a decent scale following that model. Selling to large enterprises can be a lengthy and complex process that needs the patience and dedication of a sales executive. When selling to large enterprises, you need to deal with procurement departments that have been trained to get any possible discounts in your software, IT departments that tend to be adverse to changes and new technologies and rigorous compliance and policies that most of us find ridiculous. Having a solid sales staff can and will help to win those large accounts that, otherwise, will require the full attention of the management team.

Having said all that, I do believe that effective enterprise software sales are fundamentally different from the traditional models. Market phenomenon such as globalization and economies of scale, technology movements like software as a service, software distribution models such as app stores, cultural movements such as the “consumerization of the enterprise” are just some of the factors that we can leverage in the new generation of enterprise software sales. As an enterprise software company, there are a few tips that might help you improve the dynamics of your sales organization in this new world.

Leverage Fremium Models

As I mentioned in a previous article, fermium models do work in the enterprise. A fermium model will help you increase your customer population while allowing your sales team to focus their attention on those customers with the potential to convert to a paying model.

Selling to the Buyer

One of the main problems in enterprise software is that the people testing the product are not the ultimate buyers. Involving the decision makers early on in the evalution process will do wonders to expedite your sales.

Make it Simple

I know it sounds cheesy but, as an enterprise software company, you need to obsess to make your software as easy to acquire as possible. A simple and transparent sales model will streamline the software acquisition processes for your customers.

Disclose Pricing

Complimentary to the previous point, part of making a sales process as simple as possible is to provide your customers with all the information they need in order to evaluate the product. Pricing is one of those aspects that a lot of companies tend to only disclose after they have gotten in contact with the potential buyer. That’s completely ridiculous, disclosing your pricing model will make it easy for your customers to evaluate your software and will avoid unnecessary negotiations.

Find a Champion in IT

In any enterprise software sales process, there is a huge difference between sales that require the involvement of the IT department and the ones that don’t. Rightfully so, IT groups tend to be extremely conservative when adopting new technologies and can be very demanding from the software compliance and policy standpoint. However, IT groups can also be your biggest champion if the value proposition is clear enough. If your sales process requires IT involvement, my advice would be to get then involved at the very beginning of the process and find a few champions within the IT organizations that can help you navigate the complexities of the process.

 

 

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Startup Moneyball: Talent, Passion, Experience, Perspective, Work Ethic

Hiring a great team is one of the most difficult aspects of a technology startup. However, attracting the right people is not nearly as difficult as building an environment on which their talents can blossom and contribute to the company. Despite the hundreds of books written about team building, I still think there is no magic formula for assembling a great team. Having said that, I think the quickest path to build a spectacular team is to simply hire great people.

When thinking about the mechanics of building a great team, I can’t avoid tracing the parallel to the moneyball science. In its 2004 book Moneyball: The Art of Winning an Unfair Game, bestselling author Michael Lewis tell us the story of how the Oakland Athletics(OA) General Manager Billy Bean and a group of baseball enthusiasts applied an accounting method for assembling a baseball team. As a result, with a very small budget and using underrated players, the OA were able to win as many games as the top franchises and even make the playoffs.

While the moneyball science is based on factoring baseball elements such as home runs, stolen bases, hits, etc in a the software startup world we can apply a similar formula to build a great team. In my experience, a great team in a small software startup is a combination of factors such as talent, experience, passion, perspective and work ethic.

Even though is not an exact formula, you can use the following equation to relate to a great team.

Startup Team= %Talent + %Experience + % Perspective + %Passion + %Work Ethic

As a startup CEO, your job is not only to find the right combination of the aforementioned factors but to provide an environment on which they can nurture and applied to the productivity of the overall team. Let’s think about each factor individually.

Talent

In order to be successful, it is key for a startup to attract the right groups of talent. Whether you are referring to great programmers, analysts or business development people, having a uniquely talented staff will allow you to efficiently execute in your specific products or strategies.

How to nurture talent? : Skill is the natural complement of talent and the best way to nurture it. As a startup founder, make sure you are providing an environment and culture and that allows your team to acquire new skills to improve their talents. A classic example is facilitating your best programmers (talent) to learn and apply a new programming language (skill).

Experience

Regardless of how talented you are, there are things that manifest itself throug experience. Having experienced folks in staff helps the team to avoid common mistakes and to focus on the things that really matter.

How to nurture experience? : The best way to nurture experience is to surround your team with the right group of advisors that will help guide them through specific decisions. In that dynamic, the less experienced team members will quickly be exposed to a new pool of wisdom based on the experiences of the other folks.

Perspective

Talent and experience are not everything. When facing specific circumstances, there are people that have the ability of thinking outside the box and trace parallels to examples of different industries, different times in history or complete different subjects. I like to refer to that skill as perspective and, arguably, is the hardest talent to find and nurture in startup

How to nurture perspective? : Knowledge is the natural ingredient to broaden people’s perspective. Some people acquire knowledge by reading books, others prefer to constantly talk or interact with more experienced people, other prefers to travel, etc. Regardless of the method you use, providing the right channels to acquire more knowledge will broaden the different perspectives from which your team can assess a particular situation.

Passion

Passion fuels all the other aspects of a startup. Being passionate about a problem, a product or a specific goal will make people go to the extra mile to accomplish a specific objective. Differently from talent, experience and perspective; passion is highly contagious and it quickly changes people’s attitude towards a specific circumstances.

How to nurture passion? : Passion nurtures itself. As a startup founder, make sure you are giving your most passionate people the right space to leverage their talents and to influence the rest of the team. Also make sure you are getting rid of all obstacles that can affect your team’s passions.

Work Ethic

You can’t build a successful software business working 8 hrs a day, it just doesn’t happen. Having a strong work ethic, making the right sacrifices and being a team player are essential ingredients to succeed as a software startup.

How to nurture work ethic? : Lead by example! Make sure your most hardworking people have the opportunity to mentor and influence the rest of the team. From time to time, I find it useful to run a few sprints and fight a few fires that test and train the work ethics of the team.

 
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Posted by on June 19, 2012 in entrepreneurship, startups

 

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