Planning, Startups, Stories

7 Also-Rans as Business Obstacles

I didn't intend to start a series, but this is the third. The first was my biggest obstacle in starting a business, which was followed by my biggest boost. Truth is, I was listing obstacles trying to figure out what I'd answer as the biggest, and this is the list I developed before I came up with the real answer.

So this is a list of runners-up, perhaps called also-rans, that I remember as obstacles when I started the business that became (years later) Palo Alto Software.

1. Money now vs. money later. I was consulting, but I had products. I was often torn between the consulting engagement offering money quickly, on the one hand; and the product development efforts that took short-term money but offered long-term payoff. That inability to focus, trying to serve conflicting objectives, was hard to manage.
2. Ahead of my product's time. I started doing business plan software as templates for the financial projections, written in Lotus 1-2-3 and Microsoft Excel macro languages, in 1984. That idea didn't make money until 1995 when I was able to pull that content and add some more content into a standalone Windows application, Business Plan Pro. Ten years is a long time to wait. I was pretty stubborn.
3. Adequate is good enough. That's a quote from the late Adam Osborne, computer writer and entrepreneur, the man behind the Osborne Computer (sorry, ancient history, but for those of us who remember). I struggled a lot with how much to do before it was done. I believed in the "we sell no software before its time" idea, but that's hard.
4. Do-it-yourself. It took me a long time to understand the leverage of hiring other people to do things that I could do myself, but only -- the doing it myself -- if I had infinite time. There's a limit to doing it yourself.
5. Marketing yourself.  More on that later.  Not in this post.
6. Sustaining the second and third accounts. You get that one critical account and the temptation is to relax and let your marketing slide. That doesn't work. And it's tough too, because you also have to focus in on delivering great work so you never lose that most important account.
7. And the list goes on and on ...

Biggest Startup Business Obstacle, Counterpoint: Biggest Boost

I posted my biggest obstacle here Saturday: When I started my business in 1983, needing the money was my biggest obstacle. I had a good job, which I left on purpose; and mine was the only income. And we had heavy debts left over from business school, and four kids, 10 years to one year old.

There was also a biggest boost to starting a business: My wife said "go for it; you can do it." And she meant it. At several key points along the way, she made it clear that we would take the risk together. There was never the threat of "I told you so, why did you leave a good job, you idiot!" What she said was "if you fail, we'll fail together, and then we'll figure it out. We'll be okay."

If you're starting a business and living a relationship, then think about that one. Call it a "make or break" factor.

My Biggest Obstacle in Starting a Business

I've been asked to write about the biggest business obstacle I faced when I started a business. I've thought about it. It took some time. I developed some lists. But, after consideration, here's what it came down to:

My one biggest obstacle was needing the money.

My family depended on my income. We had several small children, I had the fancy MBA degree and the only income. We had business school debts, a mortgage to pay, and running expenses. All of that, against the background of quitting a good job to do my own thing instead, with all of the related risks, was pretty hard to overcome. I might cite confidence, but it could also have been a bad decision with a good outcome, due to plain good luck.

A lot of people who need the money keep the real job, and don't set out to do their own thing, or build a new thing.

Furthermore, as I look back on it, I don't want to be advising anybody else to do as I did. If you do, then at least make sure you plan really well. Reduce the uncertainty as much as possible.

I was driving with my youngest daughter over the weekend. She's 21, soon to be starting her fourth year of college, and thinking about her future. That might be the ideal time of life to start a business, if it weren't for the experience and know-how factor, because there are few ties and dependencies. Ironic: more age increases the chance of success, but also increases the weight of alternative options.

Real World Adaptability: Trunk Club Rolls On

What's not to love? It's a great business model, its founder is dedicated and -- more important -- quick to adapt, and she was a student in my 'Start Your Business' class a few years ago.

And things haven't gone exactly according to plan, but things keep going, and the founder keeps adjusting. That, to me, is real planning, as in "planning, not just a plan."

That's the Trunk Club, which is a couple years old now. It was started in Bend (Oregon) and has already opened presences in Dallas and Portland as well, plus a new virtual version that opens it up to any customer anywhere.

I posted about Joanna Van Vleck's intriguing business model late last year in Success Story: The Trunk Club on my Up and Running blog with Entrepreneur.com. What I wrote then was:

It’s a great example of how market, identity, and focus come together to build new businesses that combine new ideas with old-fashioned serving the customer.

That was about nine months ago. Since then, it gets better. And not because things have gone according to plan, but rather -- and much more realisticly -- because Joanna has been able to adapt to changing assumptions without slipping up. For example:

• Her co-founder dropped out as things started to take off. "Too much work," she said, or something like that. It was a friendly parting, but still... 
• Investment promises came and went. Joanna ended up with enough investment to keep going and grow: less than promised, and from some different sources than planned, but enough. 
  • She had one person end up writing checks for a different amount than agreed upon, and some other people appear in the nick of time. In all cases these were contacts, from her own networks, not through the more formal investment search contacts. 
  • One key advisor was originally the guy sitting next to her on a plane from Redmond (Oregon) to San Francisco.
• She's had to revise plans a couple of times because of the ups and downs of finding the right employees.
  • "I've been learning," she said. She thought she wanted people with sales experience, but it turned out she needed a special kind of sales experience, people comfortable with outbound selling rather than people used to waiting for customers to appear. 
  • She's also had to deal with letting people go, which is, in my opinion, one of the hardest parts of running a company. One person in her 40s was full of advice but "she started telling me how to run the business," which became awkward.
• Her latest burst of entrepreneurship is the idea of virtual accounts, meaning people who can't get to the existing locations in Bend, Portland, or Dallas. Virtual customers can work with Skype or similar Web facilities.

And in the meantime, although the investments have been less than planned, sales are better than planned, so Joanna is moving forward.

This is what bootstrapping and entrepreneurship is all about.

Passion and Persistance Can Be Overrated

I'm worried. I spoke yesterday at SpeakerLunch in Corvallis, an interested and interesting group of people, looking at starting and running businesses. New businesses, small businesses, and so on. They call it speed mentoring. Bring in a speaker once a month, over lunch, talk about it.

My problem this morning is the overuse of the three Ps of passion, persistence, and perseverance.

The question of the economy came up, towards the end of the session. I don't remember the exact wording, but it was about the wisdom of sticking with it during tough times, or starting a business during an extreme recession, or something like that.

Which reminded me that in the world of entrepreneurship a lot of old guys (like me) give people pep talks about passion, persistence, and perseverance. As if the key to business success were just sticking to it, no matter what. Good times or bad, the entrepreneur, we seem to think, is driven to success. My business above all.

What worries me about this is that it's too damn easy for the people on the podium to preach about sticking to it, and sometimes passion and those other Ps are misplaced.

I love the idea of starting business and entrepreneurship and all, but not at all costs. I am not advocating passion to the point of obsession; and particularly not getting so far down into the business, bad times or not, that you think of nothing else, and lose relationships.

Life is more important than business. Keep your balance. Keep your priorities straight.

These are tough times. Plan well. Be smart. Think it through. Don't bet the farm unnecessarily, and certainly not just because some old guy says you have to have passion and be persistent.

Google, Zen Master of the Market

In today's New York Times, Steve Lohr writes:

"Google’s market power, it seems, is the economic equivalent of what in foreign affairs is called ‘soft power,’ a term coined by the political scientist Joseph S. Nye Jr. This is the power to co-opt rather than coerce."

That's in an analysis titled Google, Zen Master of the Market. Comparing Google's market success to Microsoft's, and then looking at possible antitrust implications, the piece starts with Microsoft and how Microsoft rode to power:

Microsoft was a master practitioner of “network effects,” the straightforward precept in economics that the value of a product or service often goes up as more people use it. There is nothing new about the concept. It was true of railways, telephones and fax machines, for example.

Microsoft, however, applied the power of network effects more lucratively than any company had done before it.

In context, he's talking about how in computers and software, you build the platform that everybody uses, and the world follows the bandwagon. DOS and Windows, then third-party software development, and then the whole world.

Google, in taking over the Internet like Microsoft took over the PC, is working in new ways in a new world, but also building on network effects.

Michael A. Cusumano, a professor at the Sloan School of Management at Massachusetts Institute of Technology, sees the difference in terms of what he calls “direct network effects” and “indirect network effects.” The direct effects, he says, include software document formats and technology standards that are owned by one company and that are incompatible with a rival’s technology. The indirect effects, he adds, include large numbers of users, the ability to learn from those users, the power of a well-known brand and user inertia.

“For Google,” Mr. Cusumano said, “the indirect network effects are very powerful.”

Google, however, has learned from Microsoft, and is managing the potential antitrust implications skillfully. U.S. law generally looks at antitrust as having 70 percent of a market. Google has more than 60 percent of the search market and about 70 percent of the search ad market.

Still, dominance alone is not an antitrust problem. The issue is the powerful company’s behavior, says Andrew I. Gavil, a professor at the Howard University School of Law. “You have to be big and bad, not just big,” he said.

That's Google, Zen Master of the Market. It's a good read.

Ebooks, Copyright, Piracy

Okay, world, what do we do about copyright? What, if anything, do we do about those big bad companies that sue Internet Robin Hoods and cute college students for giving somebody else's stuff away? Hooray, we say, screw copyright, stick it to the man. But then since when are writers, musicians, or artists "the man"?

David Pogue asked Do Electronic Versions Deter Piracy in yesterday's New York Times. That followed his Can e-Publishing Overcome Copyright Concerns from late May. The first post tells a sad story: Twice he sent unprotected ebook files to people who said they were blind. Both times those books ended up widely pirated soon after. The second post is about the comments, comments in all directions, from do the Kindle to right on to oh come on to oh shut up (or so it seemed, as I read through them). 

This is the same David Pogue, NYTimes tech columnist, who did the great "I Want an iPhone" video (iPhone: the Musical), setting the standard for Internet tech write-reviewer-commentator parody. Or, even more to the point, the equally great TED Music Wars video. (I've put both of those at the bottom of this post, for entertainment value, and I hope with proper respect to copyright; I'm using the YouTube versions, posted by copyright owners, with embed code, and, I believe, permission to embed.)

In yesterday's post he links to Must We Give away Digital Creative Works?, by John Cadell. He calls it "Well argued," and I agree.

There are some truly troubling sides to this many-sided argument. Serious people who say copyright is dead and authors should write for free; or that authors should give away their books and make money selling other stuff (t-shirts? speakers' fees?); or that books are too expensive, or too exclusive.

In the earlier post he quotes the following "Slashdot" argument from author Steven Poole, in Free Your Mind:

I’ll call it, for short, “the Slashdot argument”. It says that books, music, films, software and so on ought to be freely distributed to anyone who wants them, simply because they can be freely distributed. What is the writer or musician to do, though, if she can’t earn money from her art? Simple, says the Slashdotter: earn your money playing live (if you’re one of those musicians who plays live), or selling T-shirts or merchandise, or providing some other kind of “value-added” service. Many such arguments seem to me to be simple greed disguised in high-falutin’ idealism about how “information wants to be free”. Perhaps it’s not empty pedantry to point out that “information” doesn’t want anything in and for itself. The information in which humans traffic is created by humans. And most information-creating humans need to earn dollars or yuan to survive.

In any case, I think the Slashdot argument can actually be disposed of rapidly with one rhetorical question, as follows.

Oh Mr Freetard, you work as a programmer, do you? How interesting. So do you perform all your corporate programming duties for free, and earn your keep by selling personally branded mousemats on the side?

Didn’t think so.

I have to say, I'm biased. I'm one of those authors ... you know, the people whose work gets stolen? David Poole's entry into this issue was his experiment with giving away one of his books and asking for PayPal donations. Unfortunately no, not successful. Far from it. 

And I've also experimented, put some skin in this game, meaning, in this case, I've purposely given some of my stuff away. Not just this blog, and the other blogs I do, and a few hundred articles on bplans.com. I've been giving one of my books away for a year or so now. You can download the PDF of Hurdle: the Book on Business Planning at www.bplans.com. And at the present I'm giving away my newest, The Plan-As-You-Go Business Plan, at planasyougo.com. Results are mixed, and, for that matter, motives aren't all that altruistic either, because people who like the books can buy Business Plan Pro, and I get a royalty on the software. That's another related story, because although Palo Alto Software donates lots of copies to worthy causes like Small Business Development Centers, the software sells for about $99, and through the serial number system we've seen more than 100,000 attempts (and nobody knows how many successes) at hacked or pirated copies.

My kids thought I was completely obsolete, about 10 years ago, when I insisted that there'd be no Napster in our house. Remember Napster? I was delighted when iTunes and the subscription version of Napster came along so that I could give them a better answer than "because it's stealing." (that is, "Okay, I'll pay for it then.")

And then there's this viewpoint, from a comment on Steven Poole's post:

What I don’t get is that why creative professionals, artist, writers, record companies, publishing, newspapers etc are yelling that everyone else, the consumers, should come up with some new shiny business model that would rescue them. It’s your goddam business, it’s your job to figure that out. If my business was about to die, I wouldn’t count on some weed smoking artist’s help. You cannot blame it on technology or your customers. I don’t even believe that someone can come up with some kind of scheme in a economic vacuum. You have to think and try things out.

Things that can be copied, will be copied, and their value will come near to zero. Fortunately there is lots of things and attributes that cannot be copied. Check Kevin Kelly’s writings.

I have no way to conclude this piece, on this troubling copyright problem. I'd like some snappy irony. Actually, that Napster thing was supposed to be snappy irony, but I don't think it worked. So instead, I'm embedding the two David Pogue videos I mentioned above. If for some reason (it's not me) you can't see the following two videos, the links are in the third paragraph, you can click to see the source videos.

What Would You Do, If it Happened to You

I believe that the title of this post is the last line in The Cat in the Hat, the Dr. Seuss book, one of my favorites. That's just an aside.

This morning (which would be yesterday morning by the time you read this) I gave a 90-minute presentation on plan-as-you-go business planning for a room full of business people here in Eugene (OR), where I live.

No big deal, I've just finished the book on it (due out in August), I know the stuff very well, I enjoy doing that presentation. And no traveling, because it was right here where I live. I got to my office early, did email, drank my coffee, put some fine touches on the presentation (in PowerPoint, on a thumb drive) and took off for the place at 10 after 8. Looking forward to doing the presentation. I like the topic, and I like the slides.

As I was being introduced, I stuck my thumb drive into the computer connected to the projector. No dice. Nothing.

Which brings me to the title of my post: what would you do, if it happened to you?

I thought I'd learned my lesson in this context, back in the 1980s, when I went all the way to Caracas Venezuela for a presentation to an audience of about 3,000 people. The distributor was to provide the projector. For three days I asked to test it, and was assured it was working, no need. But please, let's just test it. Back then a projector weighed like 300 pounds, it took a pickup truck or something like it to cart it around. No need. And on the day, sorry, doesn't work.

By the way, there was no Internet connection available to me today. 

What's Wrong with This List of Painful Professions

Pop quiz: what do these 10 various occupations have in common with each other?

1. Police
2. Firefighter
3. Long-distance truck driver
4. Pilot
5. Musician
6. Blogging
7. Motorcycle racing
8. Construction worker
9. Nurses aide
10. Dancing

I see some of them as the five-year-old's dream -- police, firefighter, pilot, dancer. Some as the 15-year-old's dream -- musician, motorcycle racing. And then there's blogging. 

According to 10 Painful Professions on abcnews.com today, what they have in common is chronic pain.

Police, firefighter, truck driver or pilot, dancer of course, and motorcycle racer, absolutely. But wait a minute. Blogging? Does that say blogging? Who writes this stuff? Just last month the New York Times said blogging can kill, and now it's blogging on a list of the top 10 most painful jobs.

Here's the expert quote:

Sean Conroy, director of pain management services at Beaumont Hospitals, said bloggers are the extreme version of any administrative work that requires using a computer because bloggers spend more time locked in one place.

"Many people who read computer screens lean forward and tilt their head up, causing back, neck and jaw strain," Conroy said. "Typically we don't think of bloggers and jaw pain."

See, you always have to have an expert quote for one of these. And then there's the up-close-and-personal example:

Kim Stagliano, managing editor of the blog Age of Autism, describes the blog world like a game of cat and mouse. Everything is faster on the Internet -- and bloggers feel the need to catch up.

"I always feel like I'm behind," Stagliano said. "I always think, 'Is this story old now, did I grab it fast enough … OK, now what's next.'"

Stagliano handles all the physical work required to keep the blog active. She monitors the interactive components of the site, answers comments and now enhances the blog's appearance.

"I'm constantly clicking, going through stories, writing, posting content, clicking," Stagliano said. "Some days I'm on from 6 a.m. until 9 p.m."

That too, is required; somebody who can be the example.

Here's a true confession. Dear reader: don't worry, I'm doing fine, thanks. Blogging is much better for my health than running the whole company was. I'm not "constantly clicking" from 6 a.m. to 9 p.m. myself -- (should I be?) -- but I appreciate the thought. Makes me feel brave. Damn the carpal tunnel, full speed ahead.

Whew, having said all that, tongue back out of cheek, here is a very interesting quote from that same story:

"The instance of chronic pain goes up with job dissatisfaction, a feeling of helplessness about your job," Freedman said.

That's Mitchell Freedman, director of physical medicine and rehabilitation at the Thomas Jefferson University Hospital in Philadelphia. All kidding aside, I'll bet that's true. 

How Many Web Alliances are 10 Years Old?

I suspect a 13-year-old Internet alliance is a rare thing these days, because 13 years ago was 1995, before the dot-com boom, and a very different world from now. That makes me happy to report on a pleasant conversation I had last week with Raj Khera, founder of MoreBusiness.com, which has been an ally of Palo Alto Software and our business plans site at Bplans.com since 1996.

Raj and MoreBusiness.com joined up with Bplans.com in the very early days. It was one of our first business development contacts. That many years later, both sites are going strong.

I had a nice talk with Raj. It's a reminder how time passes. The initial contact was between Raj and my son Paul, then a sophomore at NYU developing Bplans.com at the same time, now a married father-of-two in his early 30s, CTO of Huffington Post. Raj and his wife have had two kids since that initial contact, now 4 and 7 years old.

Raj and his brother started website consulting in 1995, and MoreBusiness.com in 1995, and GovCon.com shortly thereafter. That second site, GovCon, became the market leader in information about government contracts for government contractors, and was sold for a nice sum shortly  before the dot-com crash.  Raj added some detail in an email:

When we started working together, I had also started another portal called GovCon.com for government contractors. It grew to be the largest business-to-government portal and was acquired in 1999 by VerticalNet, a then high-flying public dot-com.

They are still running MoreBusiness.com and also mailermailer.com which provides tools and information for email marketing campaigns.  Raj said "we compete with Constant Contact among others."

So that came up, and I enjoyed sharing. Some business relationships last.