A game you're supposed to enjoy?

"Keep your sense of humor. There's enough stress in the rest of your life to let bad shots ruin a game you're supposed to enjoy."
-- Amy Alcott, golfer

The End of Free?

Yesterday, I got this email from Google:

We recently announced upcoming changes to the maximum number of users for Google Apps. We want to let you know that, as a current customer, the changes will not affect you.

As of May 10, any organisation that signs up for a new account will be required to use the paid Google Apps for Business product in order to create more than 10 users. We honor our commitment to all existing customers and will allow you to add more than 10 users to your account for dinogane.com at no additional charge, based on the limit in place when you joined us.


The Google Apps Team
I thought Google was the King of Free. Free internet searches, free maps, feed mobile operating system (Android), free web analytics - just free, free, free. I'd thought their strategy was buying companies that did cool things, such as Keyhole (now Google Earth) and Grand Central (now Google Voice), and making them free under the Google banner.

Are times changing?

The Undiscovered Business

A veteran remarks, 'Sitting here in downtown Evanston, you'd little realize there is a big business, five minutes walk from here, that is spending over a million dollars a day. Over a million dollars a day is flying over our heads!'

Can you guess which business this is?

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The gentle ways in which investors turn startups away

I interned with a venture capital firm a few years ago. One of the many things it opened my eyes to was the way in which they turn away startups they're not interested in. Watching shows such as Shark Tank (in the US) or Dragon's Den (in the UK), you'd think they would spit on uninteresting startup businesses and laugh the founding team out of the door. In reality, investors are more shrewd. If by some chance your startup gains traction, and starts to take off, they don't want the startup team turning away the investor's money later on.

Here are a couple gentle ways in which they, instead, turn startups away.
  • They'll try and convince you that you don't need their money. You can do without it. You're better off bootstrapping.
  • They'll explain why VC money is a little evil, "taking advantage of entrepreneurs".
  • They'll offer compromises, such as introducing you to people who may be more interested.
  • They'll tell you what they don't like about your model, and that you need to fix it to be successful (... this can be useful).
All, in all, you have appreciate that they are trying to be as nice as possible in all they do, even when it can all be sometimes a bit of a pretense.

The Elevator Pitch

Everyone has a formula for the ingredients that make for a successful elevator pitch. Based on what I've learned from others, this is the formula that I'm using these days:
  • The problem. The problem needs to identify the person who will be paying for the solution, and it needs to sound really painful for that person.
  • The size of the problem. This is the addressable market size. How many people have this problem? How much are they currently paying to address this problem?
  • The solution. An elegant solution, differentiated from current solutions, preferably with a better profit margin than those current solutions.
  • Validation. Some data on customers, revenue or anything else that shows or suggests traction.

Arrive in a limousine with six assistants

A reading from MORS453 Power in Organizations describes how one young manager established the authority he needed to in an old stale organization, ensuring he got his way in driving through a turnaround.

From 'Power, dependence and effective management,' John P. Kotter:

When young Tim Babcock was put in charge of a division of a large manufacturing company and told to "turn it around," he spent the first few weeks studying it from afar. He decided that the division was in disastrous shape and that he would need to take many large steps quickly to save it. To be able to do that, he realized he needed to develop considerable power fast over most of the division's management and staff. He did the following:
  • He gave the division's management two hours' notice of his arrival.
  • He arrived in a limousine with six assistants.
  • He immediately called a meeting of the 40 top managers.
  • He outlined briefiy his assessment of the situation, his commitment: to turn things around, and the basic direction he wanted things to move in.
  • He then fired the four top managers in the room and told them that they had to be out of the building in two hours.
  • He then said he would personally dedicate himself to sabotaging the career of anyone who tried to block his efforts to save the division.
  • He ended the 6o-minute meeting by announcing that his assistants would set up appointments for him with each of them starting at 7:oo A.M. the next moming.
Throughout the critical six-month period that followed, those who remained at the division generally cooperated energetically with Mr. Babcock.

Proprietary Relationships = High Margin Business

I recently posted a recipe for starting a high-margin business. Here is a another one:
  • Find suppliers that give you some competitive advantage, comparative to competitors. Develop proprietary relationships with these suppliers, so only you can access them.
  • Obtain access to customers in a way that is proprietary. By 'proprietary', this means it is almost impossible for competitors to get to customers as easily as you can.

Proprietary relationships reduce buyer and supplier power - leading to higher prices, lower costs and thicker margins.

Businesses that exploit network effects are classic examples of this 'recipe'. An auction site such as eBay has so many buyers and sellers, the relationships that eBay has with each party is almost proprietary. Neither side is going to find better business anywhere else.

However, I think businesses such as Apple also make use of this 'recipe'. Apple is notorious for bringing together hardware components from suppliers in a bespoke way, rather than building the components itself. Apple has also developed fairly proprietary relationships with customers through its Apple Stores and cult-like marketing of its brand. It is difficult for other computer vendors to compete with the experience and presence of these stores in major shopping areas, as well as the consumer culture for Apple products.

Choosing your battles

Sometimes, when trying to do something with limited resources (such as starting a company), you come across road blocks that stop you dead in your path. Some of these road blocks have a finality that you can't argue with. There are others, though, that with a bit of work can overcome.

The question, though, is this: with so many road blocks appearing from multiple places -- which ones do you focus on? Which ones do you decide to expend your time and energy on, so you can turn them around and keep marching forward?

With limited resources, the war can only be won by choosing the right battles to fight.

Who's losing their job over this?

I once provided a recipe for starting a high margin business. It went something like this:
(1) Find a customer pain that costs someone a lot of money
(2) Find a new, much cheaper solution that fulfills that pain
(3) Charge almost as much for your new solution as the old solution cost
Well, it has since been pointed out to me that the 'old solution' can, in many cases, be someone's job. You new solution is technology that automates and removes the need for that person's job. This has always been the case, since the Caxton printing press removed the need for monks to hand-transcribe new copies of books.

So the more provocative recipe for starting a high margin business might be a simple question: who's losing their job over this?

Better than real life?

There are some things, you think, that can't be recreated online in a fashion that is better than real life. Greeting cards could be counted as one of those things. What could beat a hand-written note? Well, hand-written notes don't count for your awful hand-writing or the smudges and trampling they take on their journey to the destination. Then along comes Paperless Post, with an experience that wows you away. Wow.

Turning private to public

I sometimes wonder what the long-term effects of the Internet are. By 'long-term', I mean the 1,000 year view.

There is perhaps a hint in companies such as SharesPost, which seems to provide everything needed to make a private placement in a venture backed company, such as Facebook.

In the 1,000 year view - maybe the trend, and opportunities, are in turning private information and transactions into public.

There is no such thing as the 'natural touch'.

"There is no such thing as natural touch. Touch is something you create by hitting millions of golf balls."
-- Lee Trevino, golfer

Entrepreneurship is an Art not a Job

"Some men see things as they are and ask why.
Others dream things that never were and ask why not."
-- George Bernard Shaw

The analogy that I reported from Kellogg's PE/VC Conference, that entrepreneurs are artists seems to be doing the rounds as a meme. Steve Blank explains the concept in some detail. Here is a highlight:
Founders fit the definition of a composer: they see something no one else does. And to help them create it from nothing, they surround themselves with world-class performers. This concept of creating something that few others see – and the reality distortion field necessary to recruit the team to build it – is at the heart of what startup founders do. It is a very different skill than science, engineering, or management.

By any means necessary?

Winston Churchill was the leading anti-communist politician in Britain during the World War II ear. Yet, he asked the British government to support the communists as the Nazis invaded the Soviet Union. Why? He explained:
I have only one purpose, the destruction of Hitler, and my life is much simplified thereby. If Hitler invaded Hell I would make as least favorable reference to the Devil in the House of Commons.
Churchill understood the compromises he had to make to obtain his goals.

How Paypal got started

Interview with Max Levchin, co-founder of the e-commerce company PayPal, which was bought by internet auction giant eBay for $1.5 billion in 2002. Paypal started as a way for people with Palm pilots to exchange money through infra-red. They quickly realized there was a better opportunity.

See the interview in full and hear from more entrepreneurs at http://www.bbc.co.uk/startupstories

Thinking big vs Keeping it real

Last quarter I took two classes that, on the surface, seem very similar:
These classes seemed so similar, there were teams taking both classes and doing the same project in both classes. I was one of them, using my startup as the project for these classes. However, the approach we took in each class was different and consequently the projects we produced for each class were different.

New Venture Formation stresses realism. It focuses on creating the most tangible, easy to execute business possible. The judging criteria is centered around this. Can you execute? Can you be successful? It's a heavy workload class that calls on you to write an extensive business plan - typically fifty pages including exhibits and appendices. By the end of the process, you have a very good understanding of all the details around the business.

The one significant problem with New Venture Formation is that it calls on you to reduce risks as much as possible. The more definite you can be, the better is the plan. The problem with this is that some of the riskiest aspects of the business - those that are hardest to test - are removed, for the sake of creating a real, tangible business.

Razeghi's version of Introduction of New Products and Services is a different kind of class. It encourages you to think big. It wants you to take risks, so you can hit the big jackpot. The emphasis here is not in creating a detailed fifty page business plan for a realistic and tangible business. Instead, it is to decompose a big, risky idea into a series of experiments that can be tested, to prove that your big crazy idea has a reasonable chance of success. It calls on you to create traction and iterate the model to make the big idea work.

In my opinion, both approaches hold merit and have their use. Since both class projects were working on a real startup, PreScouter, we're now working on integrating the two. We're finding one route to the big, crazy idea is the realistic, tangible business...

The way it's always been

Yesterday, our professor in the Sales Force Management class recalled a conversation he had with a VP of Sales at a large corporation. The VP didn't remember why they used an outsourced sales force. The VP had apparently said, "It's just the way it's always been".

Sometimes it's easy to forget why we are doing what we are doing. It's easy to not take risks and continue to do what we know works. In breaking away from this, questioning our assumptions is a good place to start.


This is the 101st blog post for the year. Since I've been blogging just about daily, it also means we've now gone through 101 days of the year.

In business school, and in corporations, we sometimes talk about 'the 100 day plan'. This is the plan for making our mark when we first start at a company or launch a new product. However, we don't need to wait for such events to create 100 day plans. 100 day plans are useful at every intersection.

This leads me to think: Now we're just over 100 days into the year, what's the plan for the next 100 days?

Opening up the process of academic research

Open Science by Michael Nielsen.

Scientists are not paid or rewarded for sharing data or working together to solve problems. They are instead rewarded for hoarding their data and writing papers, which is ultimately what helps them help get jobs. Yet, when one mathematician engaged readers of his blog to solve a difficult mathematical problem, they managed to solve it and make a breakthrough.

My experience of Mac Vs Windows

A long time Windows user, I've been using my new Macbook Pro now for a couple of weeks. As far as my experience with it is concerned, I have some good news and bad news.

The bad news is that I'd don't think the Mac OS is particularly better than Windows 7. In fact, I'd say there are some small frustrations. For example, I'm not sure how you copy a complete path name and paste it into Finder (Apple's version of Windows Explorer). I also like the way Windows 7's taskbar collapses several windows of the same application into the same taskbar icon, freeing up space on the taskbar. I can see how, at one time, Apple's dock would have been revolutionary compared to older versions of Windows. However, these days I genuinely think Windows 7 is a good user experience.

Beyond the OS, Office is the application suite that I -- and I imagine every MBA student -- uses most often. For Word, Excel and Powerpoint, I think the Windows versions are still far superior. I have Office 2011 for Mac and Office 2010 for Windows (thanks to some significant Kellogg student discounts) and I find the Windows versions to be two generations ahead of the Apple version. The ribbon interface, for example, just does not seem to translate as well to the Apple user interface. Thankfully, Apple have considered people such as me, and I find Bootcamp to be pretty effective for running Windows on the Mac. In fact, half the time I'm using Windows. With a little help from a hack, I also escaped paying the full cost for a full version of Windows, instead using my Kellogg super-discounted "upgrade" version for my Bootcamp partition.

This leads to the good news - the Apple hardware is significantly superior to anything else that I've seen or used. In particular, the multi-touch keypad is an amazing experience for scrolling through screens. Multi-touch is the strongest differentiator for me. The keyboard is also pleasant to use, and makes you feel like you want to type. The power-lead magnetically sticks to the laptop. The screen is sensationally bright and vivid. The battery-life is longer, though I'm not sure how long.

In sum: a mixed experience. If you're not using the Office suite, such is the case with many software developers, I can completely understand why you would want to just use a Mac. For those of us who love the Office suite's advanced features, dual booting is a reasonable compromise.

Amazon's frustration free packaging and Geek Porn

I wrote about Amazon's frustration free packing and argued that it was great way for Amazon to capture greater profits. Why ship items in fancy packaging when the consumer has made the purchase decision without looking at the packaging? They hold the packaging in their hands for only 10 seconds: the time between the item arriving in the mail, it being unboxed and then the packaging disposed of. But is frustration free packaging good for everything?

According to Business Strategy (from the Economics perspective, which is the Kellogg perspective), there are two types of goods in the world: experience goods and search goods. For experience goods, the quality of the good is ascertained after the product has been bought. With search goods, the quality can be ascertained before the purchase. Experience goods tend to be expensive items: cars and televisions, for example. Search goods tend to be cheap items: pencils and cutlery, for example. Amazon tends to sell experience goods.

I argue that packaging is part of the experience of any good. As such, with experience goods, packaging is important. In fact, unpacking of experience goods has almost become a ritual, called Unboxing. Wikipedia defines it as follows:
Unboxing is the unpacking of new products, especially hi-tech consumer products. The whole process is captured on video and later uploaded to the Internet. The term has been labeled a new form of "geek porn."
The proof is in videos that float around on YouTube of people unpacking goods. Unless Amazon can offer superior - or exclusive - products in it's frustration free packaging form, I think it will struggle in many large product categories.

Amazon's frustration free packaging

Amazon has started offering frustration free packaging. As they explain:
The Certified Frustration-Free Package (on the left) is recyclable and comes without excess packaging materials such as hard plastic clamshell casings, plastic bindings, and wire ties. It's designed to be opened without the use of a box cutter or knife and will protect your product just as well as traditional packaging (on the right). Products with Frustration-Free Packaging can frequently be shipped in their own boxes, without an additional shipping box.
This is quite a clever move. In the old days, when people would buy products from retail stores, the packaging was one of the main product elements a person would use to determine if they wanted to buy something. Packaging costs a lot of money. To give a (slightly extreme) example, a bottle of Coca-cola is over 95% water. Most of the cost is the plastic containing the liquid.

However, when a shopper buys from Amazon, they are often not buying based on the packaging. They often don't even see the packaging - instead presented with images of the actual product. Particularly on Amazon, other shopper's comments play a big role. They only see the packaging for the 10 seconds between when they receive the product in the mail, and when it is trashed in the bin.

How is this for an idea: sell the same goods you currently sell on Amazon, but use much cheaper packaging instead -- and charge the same price as the version with the expensive packaging. To the consumer, position this cheaper packaging as having a great benefit to them -- it is 'frustration free'; you don't need to get tangled up trying to cut up weird shaped plastic.

Innovation comes in many forms. This one looks like it might have just made Amazon, and the wholesaler, a little extra money.

Has anyone ever angered you?

Has anyone ever angered you? Have they frustrated you such that you really just want to shout at them? I've sometimes felt like that. And sometimes reacted in that way too. But anger leads to anger. A downward spiral is inevitable. Reciprocity rules.

Perhaps one lesson I've learned at business school, that I've started to appreciate on a more systematic basis than I might have done before business school, is perspective taking.

Perspective taking requires that we consider the other person's point of view. Why are they acting the way that they are? What are their fears? What are their pressures?

Twice now I have been close to severely burning bridges. I resisted both times thinking, 'Ah, it's just school'. No one remembers what happens at school. Why leave a lasting bad feeling?

Both the people I nearly burnt bridges have since paid great dividends for me. I doubt they would have if I had burned those bridges.

A bold, vigorous assault

"A bold, vigorous assault has won many a faltering cause."
-- Ira Eaker, General

You can do anything - but not everything

Fortune has an interesting article on productivity; here is a highlight.
If you allow too much dross to accumulate in your "10 acres" -- in other words, if you allow too many things that represent undecided, untracked, unmanaged agreements with yourself and with others to gather in your personal space -- that will start to weigh on you. It will dull your effectiveness. You've got to dig into the mess and put those things to rest. Productivity is about completion. 
Isn't it interesting that people feel best about themselves right before they go on vacation? They've cleared up all of their to-do piles, closed up transactions, renewed old promises with themselves. My most basic suggestion is that people should do that more than just once a year. In fact, I tell people to take inventory weekly -- to sort through all of the stuff that they haven't yet acted on. If you can get a clear picture of everything that you have to do, you'll be able to say, "Oh, this is what I have to do right now" -- and then take the next step in getting it done.

Going to Northwestern is like...

When you're from out of town, sometimes it takes a little while to understand the culture of your environment. This is what I learned today...
"Going to Northwestern University is like having a beautiful girlfriend that treats you like crap." - The Princeton Review
The reference is in relation to academic competitiveness.

E-mail: Is that where all the time goes?

Email is a big time cost that I probably don't account for properly in scheduling my daily activities.

Just look, left, at the timestamps from the emails I've sent out over the last few hours.

Am I spending too much time in writing every email? What is the right amount of time to spend on each email?

And then there is the time required to think about other people's emails -- to digest, and think about their thoughts and words.

If only it were possible to send emails at the speed of thought. Just as email revolutionized snail mail, perhaps that's the next big revolution?

Corporate Spam Mail

When I registered the company, I didn't think it'd open the door for my mail box getting crammed with spam mail. Who'd have thought I'd have to wade through all this on a regular basis? Can you spot which one has the check from the client? Neither can I.