February 27, 2007

The best video content delivery network on the planet!

Posted in Uncategorized at 10:17 pm by scottmaxwell

With all of the new companies surrounding video these days, I felt compelled to point to a company that I haven’t seen reviewed on TechCrunch (and ti is not in the product/company index). It is simply the best content delivery network on the planet! It is pretty amazing, and I can download songs, movies and other video content, store them, and and even download them and save them locally to watch later.

I can even connect it to my TV and watch High Definition videos or listen to songs through the TV. The downloads start very quickly and the resolution is amazing, with no jitter, flicker, or any other issues. I ordered an apple TV (which has apparently been delayed) to test out how it works, but I suspect that this is already better! I understand that the Google engineers also have done some research and determined that this technology has a significant lead on their approach and even Google may not be able to catch up (perhaps Google will buy them?)

My only complaint is that the UI for choosing the content is not great…they appear to be working on it, although they could probably use some better approaches for indexing and search for the content (perhaps the combination with Google does make some sense?)

The company has a sophisticated business model that allows video advertising on some of the content, allows subscription for other content, and even has some content that is paid for per file. They are even experimenting with video classifieds and are adding a significant amount of new content daily!

Here is the link to the company!

How to get things UNdone!

Posted in management at 4:47 pm by scottmaxwell

We all have goals for thinks that we need to get done. When was the last time that you had a goal to undue something? If you are not careful (and even if you are) activities build up, particularly as your company grows and time moves on, which raises your level of complexity and lowers your level of productivity.

Think about it. If you have ever tried to stop eating, stop smoking, or stop drinking, you understand how difficult it is to UNdo your personal habits. Businesses habits are similar, as most activities get started and then have a particular inertia to them. Most businesses don’t keep track of all their cumulative activities…much, much more often they focus on what they should do in addition to what they are currently doing.

It is much harder to stop doing something than to start doing something when it comes to business process, as employees get a “this is how we do things” mindset and they have a need to feel that the things that they are doing are valuable to the business (which leads them to have a high perceived value of the lower value activities)….net, net it is extremely difficult to UNdo things!

The only management systems that most companies have that help to manage the UNdoing of things is cost budgeting systems, but most emerging growth companies are not very sophisticated with this type of management AND very very few management teams budget from a zero-base (their starting point is past activities).

So, how do you manage to get things Undone? There are only two management approaches that I have seen work:

  • The best approach is when you can zero-base activities relatively frequently and be absolutely clear on what your people are working on and what the short-term priorities are (generally easier in development, sales, and customer services groups than in Marketing, Finance, IT, and Admin functions). This will allow you to explicitly stop certain activities and allow more time for the high value activities (this works particularly well in agile development environments for development, well managed sales groups, and well defined customer service processes).
  • If you can’t for some reason do the above, then put enough goals on everyone’s plate so that they have too much to do…this approach generally leads to a prioritization conversation (or more resources if you are not careful!), which leads to activities being dropped off the plate (the lower value activities if you do this right). Not perfect, but it works! (a related approach is to keep your hiring extremely lean vs. demand as you grow…it will keep the focus on the high value activities).

February 26, 2007

How should Microsoft capitalize on its place in the food chain?

Posted in management at 7:26 pm by scottmaxwell

I read Don Dodge’s post on Microsoft not suffering the innovator’s dilemma and had a similar reaction to Robert Scoble’s. I am a big fan of Microsoft and use their software every day on my Mac. It is great software from a great company full of great people.

That said, the issue is not whether they are suffering the innovators dilemma (all large companies suffer), the issue is what they should optimize their innovation given the limitations that large companies have (the innovators solution can help, but does not nail the solution in my opinion). Well run small companies will beat large companies if their angle of attack is right (see my “How David Can Beat Goliath” series on the topic), but well run large companies can stay relevant (and important) if their angle of defending attack is right. My sense is that Microsoft is trying to win all of the games all of the time rather than focusing on playing the games that it will win!

Microsoft needs to optimize its place in the “food chain” by considering what its natural advantage is, where it is disadvantaged, and how they should capitalize on this advantage. Microsoft has several natural advantages from its location at the extreme end of the food chain (see list here) and also has natural disadvantages (some listed here but written more from the reverse perspective). The net of it is that it is extremely difficult (impossible?) for the large companies (even the great ones) to create, develop, and test out the hundreds (thousands?) of innovative ideas that it takes to get one or two “hit” products/companies because most of the best ideas grow from the other end of the food chain!

Net, net, if I were the decision maker at a large technology company like Microsoft, I would put aside 2-3% of my market cap each year to purchase the innovative companies that have grown (and evolved) to the point that Microsoft can either

  • Put them through its current technology, sales and marketing, and customer service engines to supercharge their performance, or
  • Develop them (in whole or in part) independently to create new technology engines, new sales and marketing engines, and/or new customer service engines (depending on the uniqueness of these engines).

if they did this with the proper focus and magnitude, then we all would look at them as more innovative, even though a lot of the innovation would have been incubated by external parties (at the other end of the food chain).

(Yes, Microsoft will say that they are doing something like this, but they are not doing it with either the focus or the magnitude that is necessary to win the innovation game, at least right now.)

February 25, 2007

Metrics for User Engagement

Posted in marketing, Metrics at 7:47 pm by scottmaxwell

If you run an e-commerce website or have an otherwise clear conversion metric (e.g., filled in contact information, registration), then you probably have a small number of very clear metrics that you are using to monitor and manage to. But if you have a community, social, or entertainment oriented website, then your key metrics may not be as clear. Number of page views or Alexa ranking might be an acceptable starting point, but as you get more views and visitors, what are the truly best metrics for determining how “engaged” your users are with your site?

Eric Peterson has been running a really good series on measuring user engagement. His approach one of problem solving and also pointing out diverging points of view as he works through the issues in his series. Clearly, the issue is not fully resolved, but Eric (and others he points to) does a great job thinking through the issues as he works through the series:

Part I
Part II
Part III
Part IV
Part V

I like Eric’s definition of engagement (as well as the more detailed components that I am not listing here):

Engagement is an estimate of the degree and depth of visitor interaction on the site against a clearly defined set of goals.

I also like the thinking that Eric has done on the topic. While there is probably a long way to go before there are some common metrics that are shared across companies (that I am sure that Eric and others will continue working on), his thoughts are developed enough so that you can incorporate them now and probably get significant benefit from them (you don’t need industry standards to get benefit from them and many of the metric refinements will most likely be highly correlated anyway!)

The one, perhaps most important, issues that I would like to see Eric cover as he continues his series is How do you change your site to better engage the visitor? The obvious answer is that you should change things such that your engagement metric goes up, but you should also be using the components of the engagement metric to better understand what the users really want to do and then modify your approach as well as your goals (and metrics), so that they are more aligned with what your users want to do on your site!

10 best ways to burn capital

Posted in Economic Model, finance, management, Planning at 6:35 pm by scottmaxwell

Sometimes seeing how best to achieve the opposite of what you want to achieve can help you to clarify what you should do:

10 best ways to burn capital

  1. Hire a complete set of senior managers ASAP after forming your company. The great thing about senior managers is that they will want to hire other managers and you will end up with more layers of management to spend money on!
  2. Hire the senior managers from large companies. They are even more inclined to spend money on additional management layers as well as many different staff functions.
  3. Locate your team in an expensive city. Your staff will need more cash comp to live, so your salaries will be higher. Also, your rent (and everything else) will be higher!
  4. Ramp up your staff quickly in anticipation of high demand. Your current staff will spend more of their time recruiting and training (lowering productivity) and your new staff will have a lower utilization as well. If you do this really well, you will build a long-term culture of not being productive that will last through all phases of your company’s evolution.
  5. Use your marketing resources on branding and try to brand what you don’t have. Focussing your marketing efforts on lead generation and product marketing will have too much capital efficiency to meet your goal of burning capital.
  6. Use your sales resources on field sales and large company partnerships. These are the activities that cost the most and take the longest to turn into revenues. Activities like telemarketing, inside sales, and developing the natural business partners are too capital efficient!
  7. Put a large development team in place and then focus your development staff on the core technology and ignore the packaging and UI considerations…then hire some professional services, training, and customer service staff to help your customers implement, configure, train, and resolve issues.
  8. Do not hold staff meetings or company-wide meetings or other communication methods to help focus your team (e-mail, IM, etc.). This will create too much clarity and resolve too many questions.
  9. Get backing from 2 or more VCs with very large funds…the larger the better! They have a need to deploy more capital and will own more of your company over time, so will be less resistant to these ideas.
  10. Never, ever, ever put in place management systems such as budgeting, metric management, or incentive systems that drive the right activities. If you do put in place the management systems, be sure not to focus them on the key drivers of your business.

February 23, 2007

10 best ways to lie with metrics

Posted in management, Metrics at 2:31 pm by scottmaxwell

We spend a lot of time with our portfolio companies trying to identify, manage, and track meaningful metrics that, when managed well over long periods of time, will assist in the building of a great company. ( I had a summary post last year on the topic.) As I meet with companies, read press releases, and hear presentations at companies, I find that many would rather present “feel good” metrics rather than metrics that give an accurate picture on the state of their company, including all of the positive and negative trends (or, more importantly, do the hard work of managing to get strong, positive trends for the key drivers of their business). If you want to make your metrics “feel good” (rather than “key drivers”), this post is for you:

10 best ways to lie with metrics

  1. Gather a lot of metrics and then only present the metrics that are positive. If you gather enough data, you will always have metrics that show positive trends. One good way of finding positive metrics is to look for the negative statistics and then look for the bright side. For example, if you lose a few great employees, focus on your costs being below budget. (When you show different statistics over time, you should also congratulate yourself on adjusting the metrics to new ones that are better indicators of your business…this will demonstrate that you are a “learning organization.”)
  2. Gather and present some metrics that are really easy to manage (this will allow you to consistently show some metrics over time that can have really good long term trends). For example, show “leads” or traffic, as you can always come up with ways for buying more (but be careful not to present lead quality, cost of leads, or ROI, as these are more difficult to manage to).
  3. When you are presenting, use many metrics. This will impress the audience that you are truly on top of your business.
  4. Use extremely precise numbers. For example, don’t say “about 100,000 downloads” or “growing roughly 100%,” say “101,243 downloads” or “growing at 102.4%.” The more precision that you use, the more your audience will think that you are a brilliant manager.
  5. Present your metrics quickly. The more quickly you go through your metrics, the less time your audience will have to consider the validity of your metrics.
  6. If your audience asks for some metrics that don’t make you look good, tell your audience that “we don’t break out those numbers” or “our systems don’t allow us to get that data” or “we put our resources against product development and marketing, so we have a very lean staff that doesn’t allow us to gather those numbers” or “I will get back to you with that information.”
  7. Hire a graphic designer to turn your metrics into really good looking charts (3D, movement, many colors, graphics, etc.). Your audience will focus more of their attention on the quality of your slides rather than the data you are presenting. The net effect will be very positive.
  8. Keep some of the metrics “in your pocket” so that you can share some of the metrics “off the cuff.” This really impresses the audience. A good way of doing this is leaving the most recent data out of your presentation and then sharing the most recent data orally.
  9. Prepare each of your functional heads with some of the more detailed data that supports your “feel good” metrics so that during your presentation you can say ” <name of functional head> would you like to expand on this?” the more your team members seem to be behind your metrics, the more believable the data.
  10. Never, ever, ever educate your audience on the small number of key drivers for your business. The simpler and clearer that you are, the easier the audience will grasp and remember how to think about your business and the more frequently they will ask for the same data. This education will completely destroy your future ability to keep your metrics “feel good!”

Note: You can get some additional great ideas on how to obfuscate the truth from the book How to Lie with Statistics, a classic!

February 17, 2007

Managing XAAS systems- Disk Failure

Posted in Data Center, management, Product Development at 10:18 am by scottmaxwell

If you have a XAAS datacenter (or any other type!), then this post by Werner Vogels is probably of interest….good data on the failure experience with hard drives. He also points to his S3 storage service…I am starting to hear some feedback from entrepreneurs that suggests that the service has a lot of merit.

Pretty important topic, as the last thing you want to be telling your customers is “sorry, a hard disk failure caused a loss of your data.” The second worst thing is “sorry the system is down do to a hard disk failure, but we hope to have some of your data restored in a few days.”

Clearly not as sexy an issue as UIs and feature/function, but equally (more?) important!

February 15, 2007

A metric for messaging

Posted in CEO, marketing at 6:34 pm by scottmaxwell

Firas Busnaq recently sent me a link that completely clarified why I can’t read some of the technology company websites and understand what the companies actually do. It turns out that they are using an automated system for generating their branding 🙂
Getting your message to stick is one of the inexpensive and most important activities that you can do. if you think that you do have your messages clearly articulated and as simple as possible, here is a test that will give you a metric for your messaging:

  • Write down your messages on a piece of paper (btw, if you need more than a postcard, simplify your messages!)
  • Ask 3 board members what you do (score 1 point for each board member that comes close within 30 seconds after the question is asked. Score -1 point for each board member that takes longer than 60 seconds to complete the answer)
  • Ask 3 of your most senior people what you do (score 1 point for each board member that comes close within 30 seconds after the question is asked. Score -1 point for each board member that takes longer than 60 seconds to complete the answer)
  • Ask 3 salespeople what you do (score 1 point for each board member that comes close within 30 seconds after the question is asked. Score -1 point for each board member that takes longer than 60 seconds to complete the answer)
  • Ask 3 customer support people what you do (score 1 point for each board member that comes close within 30 seconds after the question is asked. Score -1 point for each board member that takes longer than 60 seconds to complete the answer)
  • Ask 3 customers what you do (score 1 point for each board member that comes close within 30 seconds after the question is asked. Score -1 point for each board member that takes longer than 60 seconds to complete the answer)
  • Clearly, the top score would be 15 points on this test. If you score less than 10 or less than 2 points for any of the groups that you interview, you should work on simplifying your message, making your message “stickier” by making it resonate better, or work on your message delivery systems! (btw, in my experience this test results in negative numbers the first time it is given…a score of -15 is not uncommon for the first test if you are accurate in your scoring)

    The more you can push the score toward 15 with a relatively random sample of people closely related to your company, the more clarity your message and the easier the message will diffuse to your prospects!

    Note: if you don’t have a company large enough to connect with 15 people, then interview the group that you can…you are actually in a better position to get your messaging right as early in your company development as possible…

How to focus- an accidental approach…

Posted in Execution at 5:14 pm by scottmaxwell

I have written several times about the need for focus. ( Here, for example.) Since writing on the topic, I continue to notice that most people I meet need this advice.

Today I discovered a new approach to creating focus: Today most of my e-mail inbox disappeared from both my e-mail client and the server. User error? Bug? System out of capacity? I spent about 30 minutes trying to figure it out but then I realized that I didn’t have to keep struggling to catch up on e-mails (a constant and increasing source of frustration)…I didn’t have any e-mails to respond to…at that point I stopped trying to figure out how to fix the problem. Losing the e-mails solved a different, ongoing, and increasing problem that I am having with e-mail…that is, trying to be responsive to everyone that sends me e-mails.

All of a sudden, a tremendous amount of time freed up and I was able to focus a lot more of my attention on the core of what I like to do…work with my portfolio companies (spoke with 4 today), talk with entrepreneurs (spoke with 3 today), worked on longer term projects (2 today), and periodically write in this blog (first post in a long time)…it was a great opportunity to focus!

I have not figured out how to institutionalize this approach while still being responsive, but if you have any ideas please let me know…

endnote: I really did lose my e-mail inbox with about 8 weeks of e-mails that I have not caught up on. If you sent me one that I have not responded to, I apologize!