Friday, May 23, 2008

Successful Entrepreneurs and the Stockdale Paradox

I've written before about the need for visionary founders to break their idea down into achievable chunks, but I was missing a referencable framework for the idea. After serving as a judge in their business plan competition, last night I attended an awards dinner put on by the University of Washington Center for Innovation and Entrepreneurship (UW/CIE). The keynote speaker was Mark Vadon, Founder and CEO of online jewelry retailer Blue Nile. In the Q&A following his remarks, he described the mindset of the successful entrepreneur in terms of the Stockdale Paradox, which is the perfect description of the idea I was trying to get across.

I remembered Admiral Stockdale as Ross Perot's VP candidate, but this morning I did a little digging (via Google + Wikipedia) and agree with Mark that there isn't a more apt description of the necessary mindset of the founder than this:
You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they might be.” - From the Wikipedia bio entry for Admiral Stockdale.
Thanks, Mark for filling in this gap in my pattern recognition library.

Wednesday, May 21, 2008

Reader Question: Local + Online Lessons Learned

Q: I have seen two articles about the local space recently (http://www.nytimes.com/2008/05/21/business/smallbusiness/21yelp.html?ex=1369108800&en=4491b116ff5db962&ei=5124&partner=permalink&exprod=permalink and http://www.techcrunch.com/2008/04/10/angies-list-gets-35-million-in-new-investment-from-battery/). Who did you sell Judy's Book to? Any nuggets of advice on going through the sale process?
Asked by Ben

A: Hi Ben, thanks for the question. I still keep an eye on the local space and noticed both of the same articles. A few quick thoughts:

  • I have reason to reflect almost daily on how glad I am not to be in the local reviews business any more.
  • As my partner Andy recently noted, it's amazing how often people mistake raising money for success.

On the first topic, I've said most of what I have to say in this post. On the second, and specifically with respect to Yelp, I've done the same here.

Judy's Book was acquired by a group of experienced internet entrepreneurs and investors here in Seattle. The sale process was mostly a reminder that it takes all kinds of folks to make a world. Most of the people we worked with through the process were forthright about their intentions and performed their role with integrity. A small minority didn't. As you can probably guess, we didn't much care for the folks in the latter category and are glad the product didn't wind up in their hands.

Having now sold two companies, one in happy circumstances and the other less so, my principal takeaways are that the process always takes longer and has more ups and downs than you can imagine, and that that you should never consider it done until the ink is dry and the money's in the bank. A corollary from the Judy's Book process is that - even if their bid looks good on paper - you shouldn't hesitate to throw bad actors out of the process as soon as you get a sense for their character as they're likely to screw things up for everyone.

Ask Chris DeVore a question.

Right on Om! Small *is* beautiful

Great post today from Om Malik titled "Why Small Really Is Beautiful". His argument is that bootstrapped (or "lightly financed") companies can deliver both more fun and better financial returns to their founders than venture-backed ones.

I've tried it both ways, and I can't agree more. Boostrapping is stressful as hell, but if you love the pirate ship phase of business-building and prefer to see the financial rewards flow to your team instead of your bankers, it's absolutely the way to go.

Our mission at Founders Co-op is to help passionate founding teams launch their own pirate ships by blowing just enough wind in their sails to get them underway. If you're building a pirate ship and just need a little grease to get it into the water, let's talk.

Monday, May 19, 2008

Is there a "killer app" in Groupware/ Online Collaboration?

As a companion effort to my recent deep dive on messaging, I've been trying to get smarter about the online collaboration / groupware space. Unfortunately, the closer I get to it the muddier it seems. I've now fallen back on the penultimate refuge of scoundrels, the 2-by-2 matrix, to try to create some order in my head. My current axes are:
  • Enterprise / Server-Side vs. Web / Cloud-based
  • Task-centric vs. Content-centric
In this framework, Groove is a Task-Centric product for the Enterprise, while Basecamp is a Task-Centric product for the Cloud. MediaWiki is a Server-side, Content-centric offering, and PBwiki is a Content-Centric product for the Cloud.

All this breakdown really does for me is illustrate that there's probably no single "killer" groupware application out there (nor is there likely to be) because the use-cases are too broad for any single product to address. I fully expect the leading applications to be cloud-based rather than server-side, but that just reflects my opinions about how software-based services are likely to evolve.

So far, the best single article I've seen on the subject is this one from Anne Zelenka of Web Worker Daily. Given the diversity of use-cases out there, and the multiplicity of component applications (e.g., GMail, GCal, Google Docs, Zoho, blog platforms, personal productivity tools, etc.) available for integration via API, Anne's conclusion feels directionally correct:
"This may be the way of the future: taking discrete tools and combining them (or using integration the toolmakers build) to put together a system that suits your needs and your team’s needs better than anything anyone else designed with their own needs in mind."
I'm not sure there's a profitable company to be built around that opportunity, but there might be. If so, it's probably a hybrid of software and consulting services that can generate custom integrations of the following feature list, with a layer of integrated dashboarding and reporting on top:
  • Project plans / milestone tracking
  • To-do lists / task assignments
  • Shared file storage
  • Group messaging
  • Shared document creation / editing (text / spreadsheet / presentation)
  • Wiki pages
  • Individual / group blogs
  • Time tracking
  • Contacts / user profiles
  • Search
Am I missing the boat here? Seen something cool in this area I should be paying attention to? Let me know.

Open Startup: Askablogr's 4-month Birthday

Not a ton of news to report this month but didn't want to leave anyone hanging (assuming there are folks out there who are still following this story...). A few stats to get you started:
  • Members: 492
  • Completed Q&A: 768
Good News:
  • We keep chipping away at feature tweaks (mostly based on member feedback)
  • We've gotten some nice feedback from some folks in the BlogHer network and are cautiously optimistic that the goodwill will spread
  • We see glimmers of an uptick in organic question velocity, coming primarily from what we think of as "advice" or "resource" blogs - e.g., Yoshithin, Always Foot Care
Bad News:
  • Somehow we let Movable Type integration fall off our priority list, blocking adoption by some folks who really liked the idea (it's back on and in progress)
  • Our right rail cleanup hasn't (yet) improved our AdSense CTR, so we're still upside-down on our hosting costs ($34/month - covering that cost is the only real financial goal for the product).
  • Overall adoption and organic question velocity haven't shown meaningful acceleration, meaning we still have some work to do to find product-market fit.
That's it for this month. As always, if you have questions, feedback or suggestions, just fire away.

Wednesday, May 14, 2008

Open Startup: New Askablogr Features & Tweaks

Q: Hey Chris, check out the new changes to Askablogr. We've expanded the number of characters for questions to five hundred characters now. Question lists (like the front page), should now sort in the order that they are answered, instead of when they were asked. Also, if you don't want to put the widget on your blog, you can get a simple HTML link, or if you want to be a little bit more fancy, a simple HTML badge that you can put on your blog.

A: Nice work, Craig. And for readers who are following the Askablogr story, here's a little color on these recent updates:

  • Expanded character limit on questions: We received feedback from a few new members that our 200-character limit on the question form was too short for their readers to really express themselves (and I'd noticed this myself as I sent welcome messages to new members). So we've, somewhat arbitrarily, expanded this by double-plus to 500 characters.
  • More widget / link options: Many of our international users were frustrated by our current English-only site and widget, and others just wanted a little more freedom to express themselves. We weren't ready to bite off full internationalization quite yet, but we've opened up the widget code so those who want to can take the raw HTML and style it any way they want (including rewriting the "ask" text in their native language). If you go this route your widget won't automatically update when we push new changes, but we don't do that often, and we're happy to give up control over the widget if it makes the service more useful to members.
  • Question list display order: This is a little bug that had been on our list for a while. Previously, Q&A lists displayed in reverse chronological order based on the date the question was asked. So if a blogger answered an older question first, replies to questions received later would be buried in their Q&A list instead of appearing first. We've changed this so that Q&A display based on answer date, so the freshest answers are always on top.
  • Right rail clean-up: Craig didn't mention this, but we also dropped some content from the right rail on most pages to see if it helped our AdSense targeting. We'd been experimenting with including recent questions and tags in the right rail, but they were confusing Google's crawler to the point that our ads on Q&A pages were usually not relevant. Since dropping this content the ad targeting has improved significantly, and we're expecting that to improve click-through over time as well.

So, nothing dramatic in this release, but wanted you all to know that we continue to make little tweaks - mostly based on member feedback - to improve the product. If you have further suggestions, don't hesitate to let me know.

Ask Chris DeVore a question.

Tuesday, May 13, 2008

Microsoft Research: Cutting-edge ideas for the cloud, trapped in a desktop mindset?

I have a new obsession (more on that below) and have been scouring the Web to see who else is already working on it (there's always someone). The bad news is, in terms of running code, versions of the idea have been "in market" for years. The good news is that these products were developed by Microsoft Research, which means they're unlikely ever to get implemented in the way I think they should.

My mental shortcode for the topic is "personal search", summarized as follows:

Where’s the Pain?
  • As consumers and businesspeople shift their activity to Web-based platforms, they are losing control of their personal content archives (emails, files, contacts, etc.) due to fragmentation across siloed service platforms (e.g., Gmail, Flickr, Facebook, LinkedIn, Zoho, etc.)
  • As individual digital media creation expands and fragments (email, blog entries, digital photos, documents, bookmarks, etc.), it becomes harder to locate and retrieve individual items (or related collections of content) when required
Where’s the Opportunity?
  • Consolidated personal media storage and/or indexing in the cloud
  • Multi-modal search and retrieval from this personal content store (e.g., by date, source, file type, keyword / concept, etc.)
(I didn't realize it at first, but as the idea has crystallized in my head I recognize elements of what Brad Feld has been calling "glue" in this idea, so thanks to Brad for planting the seed).

As I started digging into this idea, I found that all the best work (at least that I could find) on the topic had been done by Microsoft Research. In addition to the better-known MyLifeBits project, two related efforts - Stuff I've Seen (an early prototype of Windows Desktop Search), and a follow-on effort called PHLAT - are actually much closer to the idea in my head.

Being from Microsoft, both of these ideas are almost entirely desktop-centric (as opposed to the distributed and cloud-based implementation I'm envisioning), but the value prop is very similar:
"SIS is a prototype tool that makes it easy for you to find information you've seen before, whether it came as email, attachments, files, web pages, appointments, tablet journal entries, etc. We do this by providing a single unified stored of different sources and providing an interface with quick sorting, filtering, previews and thumbnails" - Description from the SIS page on research.microsoft.com
That's it exactly, but the use case I want to support (and the resulting datastore) is entirely device-independent. All the data I want to aggregate and dig through lives in the cloud, including files I create in client applications but then pass to the cloud for archiving and ease of access. It's not about sync (which is where Live Mesh seems to be focused), the cloud is the device.

I know of a few startups that are touching various bits of this elephant, but nobody who's biting off the whole animal. Seen anything like this out there? Let me know.

Thursday, May 8, 2008

Reader Question: Is Xobni the likely winner in Email 2.0?

Q: Hey Chris - have you seen Xobni yet? It may not be the end-all, but it's on the right track. www.xobni.com
Asked by Casey Woodrum

A: Hey Casey, thanks for the ping. I'm definitely aware of Xobni, and they're doing a great job of building buzz around the idea that the current conventions for email and contact management are badly broken. I also noticed with interest their acquisition of the Zaplets IP, and will be on the lookout for where they head with that.

At first I thought the founders were just repeating their successful Lookout playbook, building a logical feature extension for MS Outlook more nimbly than Microsoft could and then selling it back to the mothership. But now it looks like they're at least positioning to compete with Outlook and become a messaging platform in their own right (though that may just be smart positioning to drive price).

If they really plan to make a run at the "Email 2.0" crown, though, I think they're going to have to move off the desktop and deliver their ideas in the cloud. At least right now, they're totally dependent on the Outlook client, and there's still room for someone to tackle the same value prop in an entirely web-based platform that coexists with Exchange (and all the webmail platforms), but is completely device-independent.

Let the fun begin!

Ask Chris DeVore a question.

Tuesday, May 6, 2008

PRM: Personal Relationship Management

Continuing on the "messaging" theme I started in on a while ago, here's a deeper dive on the role of contacts and contact management, a.k.a. "Personal Relationship Management" (thanks to Om Malik for pointing me to a topical post by Tristan Louis). Here's how Tristan defines it:
"...provide me with a high level contact overview (listing all the ways to get in touch with someone), and then allow me to drill on the different conversations I’ve had with the person across a variety of systems (Email, IM, phone, social nets) as well as give me an overview of what they’ve been up to thanks to a status message and socially aware apps screen."
The macro theme here is the quest to reintegrate all the distributed personas - ours and others' - that have been created across the range of Web-based services we all use. FriendFeed skims the surface of this need with their newsfeed approach, but there's a more fundamental need that has yet to be addressed by any company I'm aware of.

Tristan's summary (quoted above) is headed in the right direction by including message history, but there are a few more needs I'd like to throw into the mix for this fantasy service to truly solve the problem:
  • First and most importantly, the universe of "embedded media" that come with most email exchanges these days - links, file attachments, etc. - needs to be folded in, as they are often the real content payload of the messaging exchange.
  • Second, as online collaboration becomes more commonplace, the system must take into account these new co-authored documents (e.g., wiki pages, Google Docs, Zoho, etc.) as "social artifacts" relevant to a fully inclusive view of my social interactions.
This is starting to sound dangerously meta, but I think it's where we'll wind up if current trends are any guide. The real point is that no single vector - contacts, messaging, or files - is as useful on its own as an integrated datastore that maintains relevant linkages among these content types and allows me to query based on combinations that make sense to me, e.g., "show me all files containing the keyword 'semantic' that are connected to my friend Andy and timestamped December of last year".

My contacts aren't vCard files, they're people I communicate and collaborate with over time; my Personal Relationship Management system needs to reflect that fact. All the required technology building blocks for this PRM suite are readily available, so it's only a matter of time before we start to see versions of this idea hit the market. Seen anything like this already? Let me know.

Friday, May 2, 2008

Simple but useful ideas: The Zeigarnik Effect

I'm a firm believer that every good application designer is an amateur behavioral psychologist at heart, and this conviction was reinforced (again) by two different product strategy sessions I participated in recently.

Because I tend to work with startups at the earliest phases of the customer adoption cycle, I spend a lot of time thinking about the emotional experience early customers have when they first discover the application, and what motivates them to engage more deeply, come back, and (best case) share it with friends.

The Zeigarnik Effect is one of a handful of behavioral heuristics that comes up again and again in these conversations. The narrow definition of this term is 'the human tendency to remember tasks that are unfinished more indelibly than those that have been completed', but in practice the definition is broadened to mean 'an unconscious appetite to carry a task to completion rather than abandoning it midstream'.

Used wisely, the Zeigarnik Effect can be a powerful lever to draw customers more deeply into an application. By setting up initial engagement processes as a sequence of simple tasks (e.g., with a progress bar or step numbers that indicate where you are in the flow) it's possible to lead users more deeply into the application's promise than they would likely venture without scripting. This approach can also backfire if each step provides insufficient 'payoff' for the effort required, or if the tasks include steps that cross over into sensitive emotional territory (e.g., by crossing privacy boundaries).

In my mental framework (though this is probably stretching the idea too far), this effect is a close cousin to what Amy Jo Kim calls "The Power of Completing a Set" in her excellent outline of social gaming dynamics.

Messaging Mania

You know how it goes: as soon as you start paying attention to something you start to see it everywhere. For the past several months I've been working with two different companies (both still under wraps) in the "messaging" space. I was already aware of a few related efforts, including Xobni and Xoopit (plus Seattle-based YC alums Chatterous), but in the last few days I've stumbled across several more, including ZenBe (who just announced) and another Seattle-based project called Cirqe.

Most of these companies are chasing after different opportunities, but there are obvious areas of overlap, and even some direct competition among them. I'm still trying to figure out how the more recent entrants change the "market map in my head" but overall my impression is that there's a ton of exciting innovation happening in messaging right now and it's fun to have a ringside seat on the action.

Seen any new messaging startups I should be paying attention to? Let me know.