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Perspectives on the wonderful world of tech

Mark Zuckerberg & the Business of Software love Boston

November 3, 2011 by Mark T Littlewood

“If I were starting now I would do things very differently. I didn’t know anything. In Silicon Valley, you get this feeling that you have to be out here. But it’s not the only place to be. If I were starting now, I would have stayed in Boston. [Silicon Valley] is a little short-term focused and that bothers me.“

So says Mark Zuckerberg, Facebook founder and CEO in a recent interview with Jessica Livingstone, one of the founders of Y-Combinator.

We agree.

We just got back from Business of Software 2011 which was held for the second year in Boston. It was an honour putting it together. It is a conference that has been run in the valley in the past but we think Boston is a great place to locate the conference for the long term. Business of Software is a conference for people that want to build long term, sustainable, profitable software businesses. It is not an event for people that want to sell out in 6 months. It is not an event for people that want to raise money in six weeks in order to get the funds to build a prototype to raise more money from investors to launch, to raise more money… It is an event for people that are in it for the long term – from all round the world.

Boston is a great place for Business of Software to be located:

  • It is a lovely town.
  • It has developed a critical mass of extraordinarily talented engineers, entrepreneurs and investors in all sorts of disciplines.
  • While there is a talent war there, like anywhere there is innovation, the people seem, from the conversations I had, to have a longer term commitment to causes.
  • It is much more culturally aligned with Europe and the rest of the world than Silicon Valley. As one BoS attendee based in San Fran now said to me, “Being in Silicon Valley can sometimes feel like you are in a gigantic, porn-star orgy of narcissistic, self-congratulation where only the actors are important and all that matters is the money shot.”
  • Boston allows for the notion that there might be markets outside Boston that are worth exploring.
  • The time zone means it is easier for Europeans to participate in events – both in person where jet lag is minimised – and via the live stream.
  • It is a lovely town.
BoS2011 Speakers drawn by Neil Davidson

BoS2011 Speakers drawn by Neil Davidson

Thanks for having us Boston. We will be back for more next year. Business of Software will be held in Boston 1-3rd October. We can’t wait.

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Twitter Weekly Updates for 2011-10-30

October 30, 2011 by Mark T Littlewood

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BLN CEO Tales. Guest speakers – Barry Houlihan, CEO, MIG; Peter Bauer, CEO, Mimecast

October 27, 2011 by

We are pleased to invite you to participate in some of the best entrepreneur and investor networking in London in Taylor Wessing’s HQ, London. Join us and 130 founders, investors, senior executives from high growth businesses for quality networking and stimulating debate.

At our 10th BLN CEO Tales event, we will hear from Barry Houlihan, CEO, Mobile Interactive Group (MIG) and Peter Bauer, CEO, Mimecast. There is a small charge to attend. As ever, we offer a no questions asked refund policy if you attend and feel it wasn’t worth it.

Register for CEO Tales, 8th December, London. Guest speakers - Barry Houlihan, CEO, MIG; Peter Bauer, CEO, Mimecast in London, United Kingdom on Eventbrite

Barry Houlihan, CEO and Founder MIG Group

Barry founded MIG in 2004 and turned it into one of the fastest growing privately owned technology companies in UK and EMEA. The past year has seen many interesting developments for MIG, including significant partnerships with Facebook and Skype, as well as the acquisition of Zaypay, the mobile payments service provider and Digital Jigsaw, the digital technology agency.

 

Peter Bauer, CEO and Founder, Mimecast

Peter left his native South Africa in 2002 after selling his first tech venture during the dotcom boom. He started Mimecast in London with fellow South African, Neil Murray, Mimecast’s CTO. Together they’ve built a strong team that serves over 4,000 customers today. Mimecast’s cloud services work alongside Microsoft Exchange to improve corporate security, continuity and archiving. Mimecast’s HQ is in London. They employ 250 staff with offices in the US and South Africa. Mimecast raised over £20m from angels and VC’s including Index Ventures and were recently ranked in the Deloitte Fast-500 as EMEA’s 5th fastest growing tech company.

Drinks: 18:00

Keynote Talks: 19:00, followed by networking drinks until 21:00

Address: 5 New Street Square, EC4A 3TW, London

BLN CEO Tales is kindly hosted by Taylor Wessing.

BLN CEO Tales is supported by Intel Capital and NESTA.

Register for CEO Tales, 8th December, London. Guest speakers - Barry Houlihan, CEO, MIG; Peter Bauer, CEO, Mimecast in London, United Kingdom on Eventbrite

 

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Tobias Lutke – ‘Make businesses you will be pround of in 100 years’

October 26, 2011 by

Make businesses you will be proud of in 100 years

Most people would tell you not to take lessons from high school drop outs. How about high school drop outs who have just raised $22m in VC funding? Tobias is CEO and founder of Shopify – ‘the easiest way to create beautiful and scalable online stores’.

If you have a great product and time it well, you can reach success. DODOcase is a fantastic example of just this – unique and beautiful iPad cases made by LA’s otherwise out-of-work book binders. In their first year they created 40 new jobs and had a revenue of $4m.

If you really want to be proud of your business in 100 years, run it so that you primarily delight your customers – money will follow.

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‘Mummy, where do customers come from?’ – Jeff Lawson, CEO, Twilio on customers and pricing

October 26, 2011 by

Know your customer

Your customers are people – what are their hobbies, where do they go, what do they do? If you’re selling into enterprise – target the ‘Doers’.

The sales funnel

Twilio offer full payment and product services on their website – sales people only get involved in the selling process when:

– the sale is big

– the product is complex

– if the customer asks to speaks to a person

How to price?

Cost based pricing. Example: Target margin = 50% (0.5); Cost = $10

Price = $10/ (1-0.5) = $20

If your costs of adding a new customer are very low, then you can consider value based pricing. Consider how much value are you delivering your customer – by how much are you increasing their revenue, how much money/time are you saving them? A discount on the value created is important, otherwise the purchase doesn’t make economic sense.

Price = value created – discount.

Competitive pricing is not a pricing strategy, but is a good way to understand where you fit in the market.

It is easiest to start with conservatively high prices and lower then if needed. It is more difficult to raise prices,  but when you do make sure you are transparent – don’t try to fool your customers.

If you’re still unsure, make more pricing options for various product bundles and see which one works best. But don’t make too many bundles as the paradox of choice means people may be paralised by indecision.

Value framing. Quote a high price and then offer an attractive deal that references the original price. “This product usually costs $100, but we are offering it to you at $50!” Customers perceive that they are getting $100 worth of value for $50.

 

 

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Dharmesh Shah muses on building big ass software businesses.

October 25, 2011 by

Dharmesh Shah is CTO and founder of HubSpot, as well as a long standing Business of Software supporter.

The purpose of your business is to create delighted customers

A good way of measuring how delighted customers are is the Customer Happines Index (CHI). It measures how successful customers are at using your software and can predict the churn. It is important to measure the success of using your software as only then customers are extracting value from your product and are more likely to come back.

Types of churn:

1. Customer – number of money paying customers canceling

2. Revenue – the swing in revenue as a result of canceling customers

3. Discretionary – customers who cancel who have the option to cancel (as opposed to those who are locked in for fixed periods of time)

4. Involuntary – customers canceling as a result of something that neither the customer nor your business has control over

Pricing and “cheapium”

Pricing is hard. It’s very, very hard. And more importantly, the price always looks greener in your neighbours company.

One way to reduce churn from freemium subscribers is to adopt a ‘cheapium’ model. After all, it costs money to support a freemium customer with no promise that they will actually pay in the future. With cheapium you can price at the marginal cost of adding a new user to the user base. They are already better customers as they are prepared to pay a nominal fee to use your product.

Don’t screw your existing customers during the upsell or in the pursuit of new customers. Be transparent with your pricing and communicate the value of your product. Customers will appreciate your honesty and are more likely to stay. Assume your customers are connected and united.

If your sales channel is based online, you may need to involve humans in the sales process when

– the product you’re selling is complex and may need some explaining

– the market is new

– the price is somewhat high and needs further justifying

Strategy and MBAs

Strategy is just code for ‘we don’t have the data, but it sort of seems like a good idea’. But the devil is in the detail…

When valuing companies we generally add $250,000 for every great engineer or technician and then subtract $250,000 for every MBA on the team. However, MBAs aren’t intrinsically toxic to your business – they bring value as ‘business geeks’. Or you can look at it as a charity case – every MBA you employ you save from a life in investment banking.

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Alex Osterwalder – Building Competitive Advantage through Business Model Thinking.

October 25, 2011 by

Alex wanted to write a management best seller in a market that produced 12,000 new titles each year… and through carefully innovating the book and business model, he achieved just that – he innovated his book, Business Model Generation, to look and feel different. By publishing the book independently he could make the book truely unique.

The term ‘business model’ suffers from a great deal of conceptual cloudiness. What do we mean when we say ‘business model’? The definition is very relative and we recommend reading Alex’s fantastic book and using his app to understand exactly what the term ‘business model’ means to you and your business.

Business model analysis is composed of 9 key components. Understanding these will really help you find the right model for you.

1. Who are your customer segments?

2. What is your value proposition?

3. What is the customer relationship?

4.What are your revenue streams, how much do they generate?

5. What are your key resources?

6. What are your key activities

7. Who are your key partners?

8. What is your cost structure?

9. What are your distribution channels?

Designing your business model is a process, not a design. Talk to your customers and find out which model they like most and solves their problem in the most effective way.

Test your business model on a small scale before deploying across your company. Only through testing will you know it’s right for your company and won’t waste time and money.

 

 

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Naked Business – How Jason Cohen made more money through honesty than through typical business behaviour.

October 25, 2011 by

Lying and BS don’t make money. Marketing copy on most corporate websites is in the best case meaningless and in the worst case simply not true. Honesty has become a critical policy for every company on Earth.

Would it turn your customers away if you admitted your products are flawed, or introduced uncensored reviews? By admitting your products have faults, you can really get your customer to focus on the product’s advantages.

Jason found that by admitting that products are not the best (although also cheaper), revenue went up and returns went down – customers new exactly what to expect. Jason closed deals of $12,000 or more after enterprise sales meetings during which he admitted that his product had flaws.

Be proactively honest

Being honest about limitations earns believability in advantages. People appreciate the truth, even if you’re failing them.

Presentation vs omission

“We don’t have 24/7 support. But when you do call we will actually help you.”

Why do we lie?

– Continuing a lie. We were embarassed about our position/company/product and were compelled to lie about it. However, the benefits from lying are marginal – the penalties of being found out are massive.

– Fear. We fear that people won’t buy our products because they may not be suited to their needs. By lying we tackle their apprehenions, but then lose reputation and time dealing with the fall out.

Being honest is everywhere. But in truth, it is very, very rare.

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Professor Clayton Christensen. Business of Software talk

October 25, 2011 by

Disruptive Innovation

Big incumbent companies spend billions on incrementally innovating their products – making them a little more functional or a little better to use. Disruptive innovators displace incumbents by making their product significantly more accessible, significantly cheaper or significantly easier to use.

What is the technology that could kill your business?

Disruptors often compete with non-consumption. Sony introduced the first portable radio in the 1960s. All existing radios were big, serious and expensive; Sony’s cost $2. It was an appalling product by any standards, but appealed to those who couldn’t afford the big branded competition and was therefore better than nothing.

Don’t listen to your customer – see what job they need to get done.

Traditional marketing tells us that we must listen to the customer when developing products. Understanding the needs of your customer is actually what is important when developing products. The unit of analysis should be the job to be done, not the customer herself. The customer rarely buys what the company thinks it is selling him. What are you selling your customers?

If your product solves a problem really well in a way that customers understand, marketing is irrelevant – customers will come to you. Jobs to be done are very stable over long periods of time – they are not vulnerable to product life cycles. Products are easy to copy; integration around of job provides defensible differentiation.

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Business of Software FREE livestream and the BoS App Bundle – $6,000 of software – FREE

October 24, 2011 by Mark T Littlewood

Two ways to treat yourself at the start of the week.

Come and watch the FREE livestream of Business of Software 2011 starting at 9.00 am EST TODAY! First speaker is Professor Clayton Christensen who will be followed today by Jason Cohen, Alex Osterwalder, Dharmesh Shah, Jeff Lawson and Tobias Lütke. Enough said? Well the conference would cost $2,495 to attend if we hadn’t sold out, so some pretty well informed people think it is worth it. See what you think and follow the event on twitter – #BoS2011.

If that isn’t enough meaty, juicy content goodness for you and you just want us to give you more cool stuff for free, SHAME ON YOU! (But OK then). We have teamed up with App Sumo to produce a BoS App bundle.

Attendees at this year’s event have offered up a total of $5,921 of software & service for a total cost of, err, $0. You can however, only buy it at that price for the time that the conference is on so be quick. BUY NOW FOR TOTAL COST OF $0 (This equates to £0 at the current exchange rate).

Have a great Business of Software.

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