Twitter Weekly Updates for 2010-08-29

August 29th, 2010 § Comments Off § permalink

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Haggling and market research

August 27th, 2010 § 3 comments § permalink

Haggling
Haggling
Image via Wikipedia

I never liked haggling, so I was terrified when I first heard there are places you can visit, like Arab countries, where sellers get literally mad at you if you don’t participate in their ritual of arguing, going away, being disappointed, and after some time eventually settling on price of the already ultra cheap piece of pottery.

Running a business of my own, I slowly learned that the art of negotiation is a good skill to have, and one you never stop improving. It is a social game that demands whole person to contribute. Not just oral skills, body language, imagination, improvisation are equally important, as well as intelligence and empathy to be able to guess and predict opponents motives and lusts.
So eventually I also realized the true source of rage for those Arab merchants – by ignoring their custom, you refuse them opportunity to practice their skills.

But, i believe there is a even a higher cause, a systemic function to this ritual, that makes it universal across all human societies, and most visible in the ones based on trade. Haggling and negotiating is ultimately about setting the price, or value of an object or service. Since the value of goods and services is something we made up and is not their natural attribute, it can exist only trough infinite debate, that is constantly questioning and confirming it’s place and value for the society at large.
By refusing to haggle, you also refuse to participate in this culture-wide debate and refuse to make society better. Anybody on the other side should be insulted with such ignorance.

Now, this is true in cultures like traditional arab was/is. I am not trying to say that we should all start haggling in supermarkets. In western world, it is often illegal not to be able to quote a price and stick to it. Let’s take a brief look at what happened here.
The process of figuring out the optimal price was, just like everything else, converted into science. Today, the science of marketing and market research is responsible for going out on the field, analyzing audiences, identifying markets, and defining price points that are optimally aligned with targeted market segments willingness and ability to pay.

Because we have built theory that can calculate optimal price and because we have trained society to conform to the model, haggling is not necessary anymore. Even more, it became unwanted, a bad word. If as a seller you don’t know exactly how you price your service, it means you didn’t do your homework. Instead, you are wasting my time as consumer, because you were lazy or incompetent of reading my mind.

Granted, I am exaggerating. We also have supply-demand game mechanism built into the theory, and all of this is more true for store-sold goods for mass consumption than for services and luxury items, but still, i believe that culture-wide mind shift is apparent and profound.

And understanding the origins and history of contemporary phenomena always helps hacking them ;)

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Twitter Weekly Updates for 2010-08-22

August 22nd, 2010 § Comments Off § permalink

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Planning new Hires in a Startup using Capacity Matrix

August 18th, 2010 § Comments Off § permalink

Diagram of the typical financing cycle for a s...
Diagram of the typical financing cycle for a s...
Image via Wikipedia

Staffing is one of the most important aspects of company growth, and arguably most crucial factor in transformation of a startup into a stable company. The entrepreneur has to always know more than just who’s performing and who isn’t. The entrepreneur has to know who in the company is in the right place, who will be capable of managing teams as they grow, who has the capacity to see beyond the current state and will be pushing the company to the next level.

The evolution of a startup from staffing perspective is a repeating cycle of: (1) hiring people who see beyond the current state, (2) working hard and discovering the right way to incorporate their knowledge into your specific case, to streamline and optimize operations.

It’s really just these two focuses. And the CEO’s job is to always know where in the cycle the team is, what is the next milestone and what kind of talent will see over it.

In my company, Zemanta, I use a method to track our capacities, that shows me just that. It is implemented as a table (not spreadsheet), that maps persons (employees) into roles, according to their experiences.

I believe there is a rather fixed set of roles every company will eventually have to fill. It is probably even possible to formalize it to the point where you could predict the staff requirements based on desired yearly revenue.

Let’s take a look at an example evolution.

Startup company at inception

A typical tech startup might begin with a simple structure: business and tech co-founders. Their capacity matrix will be simple, but overwhelming:

in-house external
junior senior
sales founder 1 & 2
HR founder 1
accounting founder 1
finance founder 1
marketing founder 1
PR founder 1
leadership founder 1 (CEO)

founder 2 (CTO)

engineering founder 2
QA & support founder 1 & 2
design founder 2
business founder 1
IT founder 2
product founder 2
legal founder 1

It shows us two founders performing all business tasks with no external help. Note that capacity is not the same as performance. Performance will be based on many external factors, but dependent on time the particular employee has. In the presented case, both founders are severely over-stretched, and can perform reasonably well in just one or two roles, while the rest will be on back-burner.

Most important in this stage is that the founders have senior capacity in leadership. Everything else will be in flux, but without this they will never be able to attract and direct additional team members.

If the company has this kind of capacity matrix, it will inevitably be a technology and product company with good public recognition but poor business performance. Main challenge and milestone in this stage will be attracting early clients or investors, that will enable growing the team to really start working on the services/products.

And the competence matrix tells us that the only way to do this transition successfully will be to find some help for the founders to do things right…

Seed stage – proving the product

Where it will go from there really depends on specifics of the business. For instance, one of the first actions might be outsourcing:

in-house external
junior senior
sales founder 1
HR founder 1
accounting founder 1 accountans
finance founder 1
marketing founder 1
PR founder 1
leadership founder 1 (CEO)

founder 2 (CTO)

engineering developer founder 2 rentacoder.com
QA & Support founder 1 & 2
design founder 2 consultant
business founder 1
IT founder 2
product founder 2
legal founder 1 law firm

Company in this stage can afford some to spend some money on making the core team more efficient, but the flexibility of working with outside help is much appreciated, since you are still proving that the work has long-term sense. Depending on the type of product you might invest in limited number of developers.

Company’s main focus is still on product and partly marketing and business development. Key milestone to reach will be implementing key metrics that will demonstrate commercial value of the service/product and inventing the specifics of the revenue model.

The competence matrix suggests that the only way to reach next stage will be acquiring knowledge/experience/people in business side – at the end of seed stage, the company is severely over-resourced on product and technology side.

Growth – stability and focus on sales

Next might be professionalizing the development part, by hiring full time staff and possibly even engineering lead, and finding seasoned sales person to kickstart the pipeline:

in-house external
junior senior
sales founder 1 VP sales
HR COO
accounting COO accountants
finance founder 1
marketing founder 1

VP sales

consultant
PR founder 1
leadership founder 1 (CEO)

founder 2 (CTO)

engineering dev team VP engineering

founder 2

QA & Support dev team
design founder 2 consultant
business founder 1
IT founder 2
product founder 2
legal founder 1 law firm

Now, a year in, we have a decently operational company, that is starting to generate revenue, the founders can focus on monitoring the changes in the competitive landscape and the CEO’s job for the next few months (years) will be making sure the roles are performed optimally.

Company becomes sales-oriented and is all about implementing the revenue model, where VP Sales is the key person that will have to overlook, improve, do all the hard work and earn his own staff.

The Sustainable Company

The ultimate state every company should strive for, the state where company works as a stand-alone system is something like:

in-house external
junior senior
sales staff VP Sales
HR staff HR
accounting staff CFO
finance staff CFO
marketing staff CMO marketing agency
PR staff CMO PR agency
leadership CEO

CTO

engineering dev team VP Engineering
QA & Support staff CPO
design staff CMO & CPO
business staff VP Business Dev
IT staff CIO
product staff CPO
legal staff Lead Council law firm

At this time, every role has a senior manager, reporting to seasoned CEO. Everyone has well defined job descriptions and knows their role in the mechanism.

Most companies never get to this stage – they either stop growing at earlier stages, fail or get acquired. My thesis is that those that fail do so because they fail to find the people that could take them to the next level when timing is right.

Conclusion

We’ve followed a path of a fictional company on the path from idea to professional organization, which was really a process of converting inspiration into experiences. As the company’s focus moves from proving the idea, building the product, implementing the revenue model to stabilizing all aspects of operation, the right staffing will be the key driver of those transitions.

Quite possibly I’ve missed some other important roles. But I hope I managed to convey the main points:

  • CEO’s job is figuring out the details of the path between initial state (first table) and final goal (last table)
  • the areas you need top performance should have dedicated personnel, ideally seasoned
  • this same method can also be used to evaluate staffing in any sub-department
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Twitter Weekly Updates for 2010-08-15

August 15th, 2010 § Comments Off § permalink

  • Zemanta Gadget on Blogger.com: One month in and accelerating http://dlvr.it/3ZWBR #
  • i had to start firefox just to drag and drop something online, because that is broken in chrome. #fail #
  • bagel thursday is better than sliced bread #
  • Point of View: David Berkowitz http://dlvr.it/3jScM #
  • thinking about what i'll be eating it two weeks … :D #
  • I really really detest #capitalone spam snail mail. Twice per week for months and they won't stop?!?! Whoever gave them my address anyway?!? #

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How to save Barnes and Noble and improve American way of life

August 12th, 2010 § Comments Off § permalink

Eslite Bookstore in Taichung Chung-yo Departme...
Eslite Bookstore in Taichung Chung-yo Departme...
Image via Wikipedia

Was reading this article on how formerly greatest bookstore is doing to improve and accommodate for the future. I’m thrilled to hear they are doing something, because I really enjoy visiting bookstores, and theirs are one of the best. But…
The main question they are focusing on is “how to get more visitors?” – very contemporary :) and their answer is: by putting stuff other than books on the shelves – games, toys,… All good and well if it works, but I’d rather see two other tactics being employed to make bookstore more appealing.

  1. give me good coffee and I’ll spend hours browsing around these urban oasis. Bookstores are the quietest, most pleasant environments in a big city, where you can be with yourself. Now if they also spoiled me just a bit… :) Learn from Bar And Books.
  2. stop thinking of yourself as a store, bookshop of the future is actually a storefront. Don’t bother with the counters, just let me buy digital editions by using a camera on my smartphone. I would buy many many books if I didn’t have to carry them around and get bad conciseness while waiting in line to pay. Think iTunes, micropayments, cheaper editions, audiobooks bundles…

Basically, what I’m saying is: Leverage the best attributes that amazon can’t copy and build on them. Otherwise We’ll start browsing trough your stores and buy online.

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Twitter Weekly Updates for 2010-08-08

August 8th, 2010 § Comments Off § permalink

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2 simple tweaks that would make email useful again

August 4th, 2010 § 3 comments § permalink

Major telegraph lines in 1891
Major telegraph lines in 1891
Image via Wikipedia

It’s been ages since I last blogged here, mainly because I write too many emails these days. I actually wrote IMAP client to analyse this phenomenon, and it turned out I process something like 1000 emails per week. By process I mean read/write incoming/outgoing. I’m sure most of people doing business online these days are even worse-off.

So being a startup product guy, I was thinking what’s wrong with it and how to make it useful again.

I realized that there is only one thing missing in the whole email protocol. One simple concept, that has been around since human beings started communicating – ability to flag the messages with level importance. Sure the ‘urgent’ flag exists, but I believe it is not used because of a design mistake.

Think old-fashioned mail: there we have a three-part structure of the service:

  1. Sender can choose to send the package as ‘normal’ or as ‘priority’, depending on how important it is for him that it is delivered timely. Yes this was due to logistical limitations of the medium, but it also protected receivers from getting overwhelmed.
  2. At the same time, the receiver doesn’t have to pick the mail up immediately.
  3. And for truly urgent things we have telegrams

These ensure that all possible situations are covered – ability to send, control of own time, emergency situations.

Now, in digital world we can flag messages as ‘urgent’, and the only people really using this are PR spammers. So what went wrong? At the same time we completely dropped the (2), with an explanation that the receiver can choose to read at will. I believe this should be handled appropriately based on the social relationships.

So here are the two things email protocol lacks:

  • Social flagging: If my wife sends me email, I want to know about it immediately, and I’m ok if I read everything else only every hour or so. Right now, because of the way email works, I can only choose to see everything all the time. It’s great that the web can be real-time, but if it is all-time it starts to cause serious productivity problems.
  • Different urgent: Sometimes my wife will send me message she knows is not urgent and she wouldn’t want to bother me with it while at work. Because of the way email works she can only choose to send it now or wait and remember to send it later. The founding fathers of e-mail screwed up severely – in a real-time medium the internet today is we need the NOT-urgent flag. Most email programs don’t make it easy to do delayed sending, and it wouldn’t really solve this issue anyway, because I might be interested in reading non-urgent email during my lunch break.

We need email client that understands standard emails and ships them once per hour and priority that is delivered immediately. We need it on both ends – the senders and the readers. And I should be able to state mail from whom I want to see as soon as it arrives, and which should be delivered every hour.

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Twitter Weekly Updates for 2010-08-01

August 1st, 2010 § Comments Off § permalink

  • OH @zornada kavarno neboticnik smo dobili nazaj! Minimal, dobra glasba, brez wifija – a lahk kdo zrihta? #

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