Musings of a twenty-something entrepreneur.

Posts from ‘Making it Happen’

Jan
21

After nearly 6 months of product development, I’m currently entering the dark chasm that is startup fundraising. I have a lot to learn yet, but I thought I’d share the insights I’ve gleaned so far. This post deals with competitor research, perhaps the first thing you should do once you’ve got the idea and nerve to get going with your own startup.

Don’t underestimate how well you need to understand the competition. Your competition is smart, and you’ll find it helpful to get in the habit of listening to what smart people have to say, especially your competitors. Learning about the competition upfront will make the rest of your work much easier as you move forward.

Your competitors have already thought of features that you are 3 mental steps away from, they’ve tested and optimized their site, and they are more or less telling you their strategy. Get a grip on what’s happening in your industry, and use that understanding in developing your own plan. Why are your competitors failing? Succeeding? What really makes you better?

In the industry I’m going after, I’ve identified no less than 30 competitors that do some version of what I’m going to do. Frightening, I know. One of those things where you might just want to leave the lights off rather than look at the scary monster under the bed. But no one ever said this was easy, and its incumbent on you to face up to the reality that your competitors represent.

Here’s how I got started doing competitive research. What am I missing? What have I got wrong?

Table of Contents:

  1. Find you competitors
  2. Use your competitors
  3. Quantify your competitors
  4. Synthesize your research
  5. Keep up with your competitors

Find your competitors

First you’ve actually got to figure out who your competitors are, and trust me there are more than you think.

  • Search keywords related to your topic- anything potential users might search for. This is the fastest way.
  • The enemy of my enemy is my enemy. Look up main competitors on Alexa, Compete, Crunchbase, and iSpionage to see who the competitors of your competitors are. Rinse and repeat.
  • Get ahold of an iPod & Android  and do all the searches you can for keywords related to your company.
  • Google multiple competitors’ names at once- this way you’ll find lists that will likely include other competitors.
  • Create a “Competitors” folder in your bookmarks. Every time you stumble across a new one, bookmark it there. Later, you can open all of them at once, which is a LOT easier than typing them in each time.

Use your competitors

Buy their apps, get an account, use their services, sign up for their updates, and explore their websites. Get a sense for what they do, check out their features, and fertilize your mind to prepare yourself for developing your own product. Keep notes (mental or otherwise) on what you like and dislike.

Quantify your competitors

Getting a feel for competitors is good and necessary, but you’re going to need to justify that “feel” and communicate it to investors. You’ll need some quantitative (and qualitative) analysis for that. Following the steps below will help you clarify your analysis of the competition, remember who they are, and communicate to investors.

Get Traffic Info

Nothing points to a potential market like a huge number of visits to your competitors. Trust me- you want as many people in this market as possible because you’re going to go after them later.

Get an account at Compete.com, and do site comparisons for 5 competitors at a time. Save each one as a group so you can do this again quickly later. Download the CSV traffic file, and create a table with visits to your competitors. Always keep your raw data, but in my final analysis I assume that compete misses 25% of visitors based on what I’ve read, and from my observations 25% is probably conservative (if not downright charitable). In any case, knowing an aggregate traffic number for your competitors will give you a good idea of how realistic your own projected estimates are.

Get the Visitor Details

Type in each competitor on Alexa.com and you’ll be rewarded with a wealth of visitor information. In my opinion, the most telling signs of strength are pageviews/user, time on site, bounce rate, and the percent of traffic that comes from search. In this graph, I’ve colord-coded cells using Excel’s Conditional Formatting to make it easy to do a quick scan.

Visitor Details from Alexa

Do Qualitative Research

Not every piece of data comes nicely packaged in a number. How good is their design? User experience? What’s the high-concept pitch embedded in their “tagline”? How well-funded are they? What platforms are they on? What’s their marketing spend (see iSpionage)? Of the 10 features you’ve identified as relevant, how many of them do they have? How are they positioning themselves?

To tackle this issue, you’ll have to dig-in, explore each site, and be diligent. It’s kind of bitch work, I know, but it ain’t all roses and you might as well get used to it.

Qualitative Research

Synthesize Competitor Info

Great that you’ve collected lots of data! Unfortunately, you can’t just send it on over to an investor- they’re not going to bother. You need to summarize it- your brain is the hammer, analysis is the nails, and your data is the wood. You need to build something out of it so that you can communicate it effectively.

Like any part of your business plan, every situation requires an approach tailored to your specific project. But here’s a list of tried and true ways to organize your analysis:

  • Feature-based. You can use Harvey Balls to visually summarize the important features and who has what. Cliché, yes, and few investors will just take your word for it, but nevertheless if done honestly it can be useful. Don’t forget to include features that you will not have (part of the being honest part). You can download the Harvey Balls font here.

    Harvey Balls Feature Comparison

  • SWOT Analysis- For the uninitiated, SWOT stands for “Strengths, Weaknesses, Opportunities, Threats.” Right off the bat might be a little too early for a full-fledged SWOT, but it’s a great tool for structuring the way you think about competitors.Strengths and Weaknesses refer to the present situation, while Opportunities and Threats relate to the future. If you’ve got a lot of competitors, rather than do a SWOT analysis for each, much better to group them into categories. If you want to sell cars, you might have groups like “Paper Classifieds”, “Online Classifieds”, “Online Dealers”, “Brick and Mortar Dealers”, “Consumer-to-Consumer”, etc.
  • Detailed Qualitative Analysis for Fiercest Competitors- Your toughest competitors deserve the most scrutiny. Do a SWOT analysis for each. Take screenshots of their website and create a reference deck in powerpoint with them. If they are public, read their annual financial report- they are goldmines! Search the news and read their blog: find out how many employees they have, who runs them (and what else do they run), what makes them tick, what they had for breakfast yesterday.  Twitter is the best tool for this- go through their Twitter history and you’ll be delightfully surprised. And remember how fierce they are lest you forget and have your lunch money taken.

Keep Up With Your Competitors.

Set a Google Alert for each competitor. Not only will this give you timely updates on what your competitors are up to, but its also a great way to keep track of people who might be interested in writing about your own startup. Glance over them each day and bookmark the ones with potential- this will help you down the road when you’re concerned about press coverage and backlinks.

Remember to sign up for their newsletters! I love checking the copywriting of my competitors- I’ve gleaned some very valuable insights from these, particularly about competitors’ future plans.

——————————————–

I hope these tips have given you a feel for how to approach competitor research. I’m sure I missed a ton though, and we’re only as strong as our weakest link, so share your own insights in the comments or hit me up at jesse @ this_website.


Onwardly,

Jesse

Jul
30


Introduction to “How to Come Up With Business Ideas”

I’m fascinated with the question of how entrepreneurs come up with new business ideas. An entrepreneur without ideas is like a writer without a pen. You can play a supporting role without ideas of your own, but to be a founder you’ve got to think of things or ways to do things that no one else has ever done before.

This is an immensely important topic, and frankly one that I feel is under-treated relative to its importance. Not that people don’t think about this, but usually inquiring souls are simply advised to go fix a problem that you have, or go work somewhere and find out what kind of problems people have and get ideas that way. This is actually good advice, but it certainly doesn’t give an accurate portrayal of the whole picture.

The fact is that coming up with good new ideas involves many factors. Even if you’re trying to solve your own problems, you probably have many more “problems” than you’re aware of. How do you recognize them? How do you prepare yourself to see them? What kinds of problems should you look for?  This complexity of this process and the important role of new ideas in business creation make this a topic worth examining thoroughly.

Over the next three weeks, I’m going to work my way through some of these questions by splitting this topic into five parts:

Part 1: Introduction to the Initial Spark

Part 2What New Business Ideas Look Like

Part 3Where to Get Inspiration for New Ideas

Part 4How to Prepare Yourself to Come Up with New Ideas

Part 5What to Do With New Ideas

This article, Part 1, is a tad theoretical and abstract, and is intended just to clarify our understanding of what we mean when we talk about the initial spark. Hang in there, we’ll get our hands dirty in the following parts and talk about specific, practical things you can do to improve your ability to come up with new business ideas. As always, I hope you’ll contribute your thoughts in the comments.

Part 1: Introduction to the Initial Spark

You already know what the Initial Spark is. Its the moment of inspiration in which every idea is born. Its the “AHA” moment, when something clicks and a big light bulb above your head goes ding! before lighting up in a blaze of glory. The initial spark is the ultimate encounter between inspiration and insight within one’s imagination. And while most sparks are duds, every great idea  began that way.

Of course, the spark on its own is meaningless. Ideas are worth nothing without action, and the Initial Spark is just the beginning of a long process before real action is taken. Still, as the genesis of every idea, its importance in the process of creation can hardly be understated.

This is a major topic, at the core of creation. Where do new ideas come from? How can we have “better” ones or more of them? How do we recognize them and what do we do with them when we get them? How can we prioritize them?

I’m going to try and tackle these questions over a series of posts. For this first one, my philosophy training is telling me to define my terms. So here I’d like to discuss the nature of the spark. What properties does it have? Forgive me in advance, as Part 1 is more abstract than the subsequent parts. The purpose is to place the initial spark in context so that we can talk smartly about it later.

At its most basic, the spark is simply an idea. Its a new idea, more exactly. At birth, there’s no telling whether its any good, because we know nothing of it until that moment. That doesn’t mean all ideas are born equal. In fact, that’s why understanding them is crucial. You can prepare yourself to increase the chances that each idea you come up with is good, or even great.

Ideas, and thus the initial spark, can take many forms. Ideas are composed of interlinked concepts. The concept of the utility of a car and of rental as a form of payment are linked together to create the spark that inspired Enterprise Car Rental. The concept that people want to find stuff on the web linked with the concept of search and the concept of targeted advertising come together to form Google. At its core, the initial spark is a new linking of different concepts. These concepts can be ones that already exist or newly created ones, but the initial spark connects them to form something whose sum is greater than its parts.

Ideas can be about anything, and not every initial spark is a business idea. Maybe you connect your mom’s affection for hummingbirds with her love of silver jewelry and decide on the perfect birthday present, or you realize that the trampoline is a fantastic way to realize your dream of dunking a basketball. And while those are great, the idea here is to understand and foster the ability to come up with ideas that have the potential to come up with practical ideas that can be turned into some kind of enterprise.

So what makes an idea practical?

An idea is practical if it has some use. An idea for a business has some use if it solves an old problem or creates a new opportunity. So that is what the initial spark is: a new idea that solve a problem or create an opportunity.

While these new ideas come in infinite variety, there are particular forms they often take. For instance, perhaps the initial spark is oriented toward identifying a certain niche whose needs aren’t being met, or maybe it is a method for applying a proven model to a new market. In the next installment, Part 2What New Business Ideas Look Like, I’ll dive into different forms the initial spark can take.


Jul
16

As Seth Godin brilliantly notes, the key to avoiding big failures is to allow yourself to fail “quietly, and often, in private, in advance, when there’s still time to make things better.” These are the types and frequency of failures and how good or bad they are, according to Seth:

FAIL OFTEN: Ideas that challenge the status quo. Proposals. Brainstorms. Concepts that open doors.

FAIL FREQUENTLY: Prototypes. Spreadsheets. Sample ads and copy.

FAIL OCCASIONALLY: Working mockups. Playtesting sessions. Board meetings.

FAIL RARELY: Interactions with small groups of actual users and customers.

FAIL NEVER: Keeping promises to your constituents.

This great advice. Nay, sage advice. But I want to talk about a different kind of failure: when your company/idea/self runs out of cash and you have to stop operating.

The kinds of failure where the ship is going down, and everyone on it is going to drown: investors, employees, customers that rely on your product.

It seems like everything I read about these big failures, from guys like Gary Vaynerchuck and countless other entrepreneur bloggers tries to say one of three things:

  1. Its OK to fail, it happens and you should
  2. Whether something is a “failure” is up to how you look at it
  3. Don’t be afraid to fail

The intention of these “failure advocates” is good- they don’t want you to let the fear of failure to prevent you from doing something. And I absolutely agree with that: if you let fear of failure prevent you from doing something, then you’ll never experience the flip-side of failure: success.

But the possibility that you will fail at something needs to be taken seriously, because it can have serious financial, relationship, and psychological consequences. I know this from experience, and if you’re in charge of something and the ship goes down, the blame and ownership of the failure is all yours.

And failure sucks. Failing usually means that promises, explicit or not, were not fulfilled, that expecations weren’t met, and you, your employees, investors, and customers lose.

But in a perverse way, that failure sucks so bad is a good thing, because its a strong motivator. They say that entrepreneurs beat big companies because Big Co. employees don’t stay awake at night worrying about their work. I think a large part of this has to do with their passion for what they do, but I also think that there’s also an element of fear inspired by the very real prospect of failure.

But the failure of your idea to “work” or exist in reality is bad enough on its own to be quite a strong motivating force. All the other stuff that comes along just makes it worse. So the question becomes how to mitigate the other negative consequences: relational strain, financial ruin for investors, and psychological stress.

Here are a few tips that I have that can help prevent an already-terrible failure from being a personal, psychological, or financial disaster.
  • Don’t exaggerate. Be honest with your employees, investors, and self. This doesn’t mean to lose that “We’re going to take over the world” can-do attitude, it just means that distorting the truth perverts people’s expectations and leads to frustration and a sense of betrayal when things don’t work out.
  • Don’t take any money that an investor can’t afford to lose. This is especially true when you’re dealing with friends and family as opposed to professional investors. This cannot be conveyed implicitly. It is incumbent on you to say something like: “There is a chance that this will fail and you will not get back a single penny. If that’s too scary a prospect for you, then this isn’t the right match and I completely understand.”
  • Have the right attitude. Failure is a fact of life, especially for startups. That doesn’t mean that you shouldn’t go down fighting, but it means that it is very likely to happen to you. Your own attitude and strength will determine whether it makes you depressed or whether you pick yourself up from the ground and ask for more.

Of course, the best way to avoid the terribleness of failure is to succeed! That is your focus, and anything less than success is unacceptable. But don’t be naive and ignore the possibility of failure. Remember in your mind how bad it sucks, and then give everything you have to avoid it.

What are your thoughts?

Jul
11

We should exercise. We should launch that product. We should be a different type of person.

“Should” is one of the worst words that exist in the English language, right above “regret” and below “addiction”. Its the worst kind of excuse for not doing something important. It just says “I know what I must do, but I’m not willing to do it.”

Should is a modal verb, meaning that it is the type of word that refers to whether something necessarily happens, possibly happens, or is an impossibility. “Should” means that something is expected, but circumstances might justify deviating from doing what we say we want to do. And that’s exactly what “should” does: it gives you an out for not doing something.

“Should”s are optional. The main problem with “should”, to put it crudely, is that “should” doesn’t light a fire under your ass. It doesn’t motivate you the way something does if you must do it. It doesn’t have the power of motivation because it just represents a possibility.

“Should” does not represent commitment, seriousness, or necessity. And if you’re neither committed to, nor serious about, nor driven by the absolute need for a given goal, then that idea is in dire straights. You’re not going to succeed,  especially if its ambitious enough to classify as a startup.

So forget what you “should” do and stop fooling yourself. Better yet, find it within yourself to transform that “should”. Do what you must do instead.

Jul
02

If you’re like me, you spend a ridiculous amount of time in front of a computer. Below are some principles for setting up your computer to ensure that you spend your time doing the important stuff.

The main goals of your computer setup are:

  1. Quick access to the files and programs you need
  2. Intuitive organization
  3. Scalable setup that can adapt as your needs change

With that in mind, here are 7 tips that will help you to make your computer to work for you. Any further suggestions, leave ’em in the comments.

Here’s the summary:

  1. Use Folders to Organize Your Bookmarks
  2. Tape a Motivational Note to Your Screen
  3. Use the Taskbar for Easy Program Access
  4. Have an Awesome Music Playlist
  5. Simplify Repetitive Actions
  6. Learn Keyboard Shortcuts
  7. Organize Your Documents Folder Properly.

1. Use Folders to Organize Your Bookmarks

Example of How to Setup Your BookMarks Bar (Split in two in order to fit)



You will come across lots of items of interest for your projects and personal enjoyment on the internet. But if you indulge every interest immediately, you will destroy your focus.

The key is to create folders and sub-folders to organize these links.  Folders give you quick access to items and allow for on-the-go organizing. I abbreviate the names in order to make them all fit. But I know, for example, that “E” means “Elance”, that “Arts” means articles, etc.

Here a few of folder examples that might be relevant for you:

  • Projects: Probably my most important folder, with subfolders for each project I’m working on. If I run across a related article, find a competitor, it immediately gets dragged into that folder.
  • Arts: Interesting articles that I like or want to read later
  • Blog Ideas: Things that I find interesting and potentially will write about
  • GP: Stands for “Guest Post”. When this blog matures a bit, this is a list of links to blogs I’d like to write a guest post on (which is a great way to help readers find you)
  • Tools: Links to useful tools. For instance: Google Site Traffic Estimator
  • Blogs: These are blogs I like. I have subfolders for each day of the week. Each day, I check the blogs listed under that day’s subfolder. This ensures that I don’t get overhwelmed each day trying to check every single blog I like and learn from.
  • Learn: I keep links here for things that I’m studying (currently: copywriting, second-language acquisition, lean startup tactics, etc.)
  • Design: Design is important on so many levels it deserves its own folder. Besides articles talking about good design, I also have a subfolder called “Designs I Like” which helps me keep tabs on examples of inspiring design.
  • Random: Some things don’t have categories. Its the internet, after all.
  • Net: Stands for “Networks”, and includes links to networks I belong to, such as thefunded.com, sandbox, triiibes. Makes it easy for me to remember to contribute to these networks.

2. Tape a Motivational Note to Your Screen

Mine says “Focus.” Taping a note to outside of your screen will get your attention and remind you of whatever you need to be reminded of. I’m a big fan of “Focus.”, but here are some alternatives:

  • “Breathe.” For those who freak out and get overwhelmed a lot.
  • “Do well, do good.” Reminds you to make things happen while being a good person
  • “$10,000 in Sales.” Maybe you’ve got a specific goal that you’re after; this is a good way to remind yourself.
  • “Smile”. Life is beautiful, don’t forget it.

Ok, you get the point. Just keep it short so it doesn’t become too big of a distraction. If you really like this, consider a tattoo.

3. Use the Task Bar for Easy Program Access

You use some programs more than others, and having them at the bottom of your screen can save you the time and tedium of having to look up each program every time you want to use it. Moreover, it keeps my mind on the task at hand and ensures that my flow isn’t interrupted everytime I need to start a new task. In Windows, you can add programs to the task bar just by dragging their icon there.

A few of the programs that I use most frequently and have on my taskbar: Notepad, Paint, iTunes, Chrome, Camtasia, Balsamiq, Photoshop, SimpleMind, Excel, Skype. Check out this previous post if you want to read about some of these programs.

4. Have an Awesome Music Playlist

I’m probably twice as productive when I’m listening to music. It keeps my energy up and helps maintain focus. As you probably know, music with lyrics usually isn’t good for this (unless those lyrics are in a language you don’t understand, e.g. Some Indian Music).

My favorite artist for “work” music is Pretty Lights. Its electronica without all the weird stuff; strong beat, light lyrics, full of energy. You can download their music for free here: http://www.prettylightsmusic.com/

Other good music genres are classical, reggae, foreign music, hip hop, and percussion. Mix and match, or find one that keeps you going.

I have a playlist called “Making it Happen”, and a brick wall couldn’t stop me when I’m sitting at my computer, bobbing my head and, yes that’s right, making it happen.

To get you started, you can listen to my playlist on 8tracks.com. Even better, send me yours and I’ll put it on my Resources page.

P.S. I think the reason music helps focus is because it provides a continuoum of sound and mood. Once you get into flow (check this from Wikipedia) , the music helps keep you there. When your mind strays for a second, the music makes it easy to hop back into where you before because you’ve got the music as a mood-stabilizer. This is just armchair philosophy/psychology on my part, but interesting enough to mention to you.


5. Simplify Repetitive Actions

Some things you have to do over and over again. For instance, sending files back and forth between project partners. There’s usually a way to simplify repetitive tasks, here are a few examples:

  • Get Dropbox! Dropbox is a shared folder that automatically updates the file on someone else’s folder when you change it. Seriously, get Dropbox.
  • Excel Macros: I’ll cover this at some point in the future, but creating macros in Excel is pretty straightforward. If you find yourself repeatedly having to do a certain series of steps, macros can save you time
  • Get ExcellentAnalytics: If you’re job involves tracking website visits from Google Analytics, Excellent Analytics is an awesome tool that pulls data from Analytics and puts it in an excel file. Create a custom dashboard, or integrate stats with other reports with just the click of a button.

These are just a few examples, but the internet is full of useful tools designed to make your life easier. Find them and use them.

6. Learn Keyboard Shortcuts

One of the things I found in the consulting world is that using a computer mouse is amateur. Consultants are geeks like that- they’ll literally make fun of you for it. But there’s a reason, and I’m sure there’s a pie chart out there that explains why. (Kidding again; they’ll also make fun of you for using a pie chart, since it only conveys information along one dimension.)

Using the keyboard will save you TONS of time, especially in programs like Excel. My next post will be a file that you can download and print out that lists the most common/helpful shortcuts for key programs. It will be for advanced users, so if you don’t already know what happens when you press the “Alt” and “Tab” keys at the same time, then you really need to buck up and get with the program.

7. Organize Your Documents Folders Properly

This is key. If you don’t have your folders organized right, you’re going to create a giant mess in your documents folder. Its going to slow you down, frustrate the hell out of you, and you’ll lose documents. I made this #7, but only because I wanted to reward those that are still with me with the most important of tips. Its so important that you’ve probably figured it out already, but maybe this tips will help you a bit anyways.

Similar to organizing bookmarks, there’s not a one-size-fits-all solution. But the following tips should give you some guidance:

  • If you’ve got a “real” job, have a separate folder at the VERY top level of your documents folder. The other folder here should be called “Personal”. You don’t want to have your computer screen projected and everyone to see all the other stuff you’re working on.
  • Have a “Projects” folder with a folder for each project you have. Inside the “Projects” folder should be an “Old Projects” folder where you put old files to keep it uncluttered.
  • Once any folder has more than 10 or so individual files, its time to create subfolders. Common subfolder titles: “Design”, “Images”, “Business Plan”, “Research”, etc.
  • Have two downloads folders. One should be called “Browser Downloads”, and thats for all the random documents and setup files you download during the day. Put “Browser Downloads” under “Downloads”. “Downloads” includes media and other download files that you will use more often, and keeps them separated from all the other items you download, use, and then never want to see again.
  • In Windows, you can drag folders to the ”Favorites” section, which saves a tremendous amount of time when accessing common folders. This is particularly useful for folders that exist at different levels of the folder hierarchy. Especially if you’ve separated your folders into Work and Personal, this gives you quick access to the common ones without having to do so much navigation.


    Use the "Favorites" in Windows to Save Time

What tips do you have?

Jun
25
Image from theinteract.net , a new project I’m launching August 2010!

Growing up in the U.S., I was generally raised under the impression that prices and services are fixed. There’s a price tag, and there are few opportunities to negotiate this price or what the price includes.

But when you’re in business, and particularly when you are bootstrapping, you will undoubtedly be presented with opportunities to negotiate, and in extreme cases, negotiating well could be the difference in ultimate success or failure of your startup.
The following is a list of tips I picked up the hands-on way in over a dozen different negotiations. Negotiation skills are not something you’re just born with. With study, practice, and experience, you can learn to be a successful negotiator. But to be sure, negotiation is an art. Use these tips as helpful pointers of things to consider, but each situation is unique and there is no ideal formula for negotiating successfully. That’s why you have a brain!

These tips were specifically written for those negotiating with developers for software projects, but most of them apply to any negotiation, no matter which side you’re on. I welcome any new suggestions or anyone who disagrees with any of these; leave your thoughts in the comments!

Negotiating Tips and Tactics

1. Be fair

Bargaining often comes down to information disparities between two parties, which presents opportunities to exploit your information edge. Don’t do this. You’re negotiating for a deal that works for both parties, and the value of this relationship will in large part depend on trust between the two parties. The basis of any transaction is that both parties will be better off as a result. Be fair, and enter negotiations with the goal of crafting a WIN-WIN situation.

2. Establish trust

The amount of trust you are able to establish is going to determine how much the other party is willing to accept the assumptions you’re bargaining under. Your promise of referrals is worth a lot more if they believe you.

Establishing trust is an art unto itself, but for starters don’t try to pull any cheap shots. Be transparent about what your requirements are; doing otherwise can cause serious headaches down the road.

Have an online presence and reputation that gives “social proof” that you’re legit. Don’t ever be late for a payment. Start with small projects and demonstrate your trustworthiness there.

Remember that trust is hard to earn and easy to throw away. Don’t blow it.

3. Pay on a project basis, not hourly

Not only does this help you control costs, but it also removes the administrative burden for your team of having to track their hours. Let them focus exclusively on what they do best. Besides, you should be paying for results, not time.

Project costs, as opposed to hourly costs, are also easier to negotiate since hourly rates are perceived as more sticky. Think about it: if you’re measuring your value in dollars per hour, you will be conscious of and resent rates below what you feel you deserve. Paying on a project basis places the emphasis on output, which should be a shared goal between parties.

Of course many startups hire full-time developers, but salary negotiations are a different beast. This assumes you’re hiring non-permanent outside help.

4. Request a breakdown of project costs

Its hard to trim the fat if you don’t know where the fat is. Find out how long certain features take to implement, and use that in prioritizing and selecting which features are practical and which aren’t necessary.
In addition, breaking down the work this way allows you to negotiate on a smaller scale as well as a larger scale. For example, you might find yourself saying: “Three days to integrate Facebook connect? That should be easy, this should only take one day max.”
Be careful though; if you don’t know code yourself, it can be easy to over/under-estimate what is actually required to implement something. In fact, even if you do know how to code software, estimating how long software development takes is a notoriously tricky task.

5. Add intangibles

You can offer things other than money to help reduce the price in a negotiation. If you’re negotiating with a developer, offer to put a “Powered by [Firm Name]” box in the footer. Be in a position to offer referrals (see below), offer a pleasant working environment, or be time-flexible. Share your vision, and let them be compelled by it. Money is not the be all and end all for most people, and making their life easier and their work more enjoyable can work to the benefit of both parties.

6. Don’t be the CEO

Atleast don’t claim to be when negotiating. You need a higher authority that can say “no”. In essence, this is the “good cop bad cop” tactic. “Good cop” is you, working through the details and utilizing the other tactics I’ve mentioned here. “Bad cop” is the “boss”, who, despite your best efforts to convince, says “No” when you’ve reached a stalemate or when terms of the deal are unacceptable.

7. Be prepared to walk away

If the other party knows that you need them, you’re at a significant disadvantage. Even if you *do* need them, don’t ever reveal that. At the same time, this can be a point of weakness in the other party: if they need *you*, then this gives you a significant advantage.

I’m not saying don’t use  as one point of leverage, but refer to #1 and be sincere in not taking advantage of another party’s desperate situation.

8. Prioritize what you need

In a negotiation, both sides have to give way a little. Sometimes you have to make sacrifices depending on time requirements, financial constraints, and technical complexity and competence. Maybe that one not-so-important feature is difficult to implement and is taking up a larger percentage of your development costs than it deserves.

The best way to prioritize is by being open about the uses, priority, and importance of the various features of what you’re developing.

9. Get a third party to help you evaluate

You’re hiring someone because you need that expertise. Not having that expertise yourself makes it difficult to evaluate costs and the technical competence of the person you’ve hired. You need a thirdy party. This can be a friend or a consultant, but this person’s interests must be totally aligned with your own.

Be transparent about this. This person is there to help all parties, not just you. They can ask the technical questions that will help the person you’ve hired to be critical of their own approach. They can discover potential problems, limitations, or opportunities that you might have missed otherwise. Just make sure they know what they’re doing and understand what you’re trying to do.

10. Be payment-flexible

Sometimes you can negotiate a reduced rate by making upfront payments, so if you’ve got the cash to make it happen this is a good point of leverage. This can be particularly effective with smaller firms, who are typically much more cash flow dependent.

11. Create competition

Some folks recommend hiring two or three separate teams for the first phase of your project, and then selecting the “best” one after the first stage of completion. In theory this is a good idea, but often whose work is “best” isn’t easily discernible. A working prototype may be limited in how well it can scale, whereas an intelligent architecture from another provider may not look so glossy at first sight.

My recommendation is to find someone who you trust, rather than trying your luck with many providers. Even so, it can be helpful to subtly remind them that they are not your only option. If you have quotes from other providers, you can use these as benchmarks and negotiating points with whomever you select.

12. Be the first to name a price

I’ve read some heated debate on this topic, but I’m still wavering on what the right move is. The conventional wisdom is that the party that states a price first is at a disadvantage.
A large part of it depends on what the costs are for the other party. If their costs are relatively inflexible (for instance material costs or licensing costs), then best to get their price first and work from there.

If the other party’s costs are more flexible, I’d prefer to name a price first to set the tone. This takes advantage of a psychological effect known as “anchoring”, which basically makes the price you namethe foundation for negotiation, rather than that of the other party’s. If a provider names the cost as $5,000, its going to be difficult to get them down to $4,000. But if you named $3,000 first, then it becomes much easier.

During negotiations, the other party will ask you what your budget is or how much you expect to spend. You don’t have to answer this. My suggested reply is:  “Lets see. First I want  to work on an estimate for what it will take to get this done”. You don’t have to tell them your budget, and you need to have a firm resolve beforehand not to breakdown and spill the beans, because it will be tempting.

And remember, you shouldn’t feel bad for negotiating or offering an amount less than what they ask. Its part of the process, so just don’t be an asshole about it.

13. Think first, act later

Negotiating is neither a race nor a beauty pageant. You’re not trying to be the fastest or the slickest, you’re trying to get from Point A to Point B, so take your time and make sure you do it right.
A good rule I use for important emails is to write them, then give myself atleast 4 hours before I send them. Four hours later, you’ll catch all kinds of stuff you wouldn’t have caught earlier. If you’ve got a partner, work collaboratively to fine tune your messages.
Don’t underestimate the value of external feedback and input. Making stupid judgment calls can throw everything off.

14. Know a ballpark figure

Before you can name a price, you need to have an idea of what they would normally charge. Then, as a starting point, throw out a number 50% to %20 lower than what you expect. However, what % discount you estimate depends on the circumstances. Tim Ferris says go for 70% lower, but I think shooting this low will only offend the opposing party. Just make sure that you don’t OVERshoot it.
Also, “ballpark figure” is a misnomer. You really need a “ballpark range”, on both the high and low end.

15. Be a great “boss”

When you’re deciding on a job offer, you’re not just thinking price. And neither is the party you’re negotiation with. If they’re going to be responsible to you for getting something done, they need to want to work with you. They need to believe in you, and its your responsibility to create a pleasant work environment.
From my experience, in a nutshell: Give the other party full access to the scope and vision of what you’re doing. Make them a part of the team and give them meaningful work. Be flexible and understanding. Recognize your role as the person who is ultimately responsible for how things work out, and act that way. Ask for their input. Understand their peculiarities and help them manage their time effectively.
Do some of these things, and they’ll recognize and appreciate that you aren’t just a nutjob with a little bit of money and an idea.

16. Be forthcoming in providing referrals

This is part of being a reputable person. Have results to show, have an established web presence, and demonstrate that you know what you’re doing. At the very least, seem like the kind of person that has a lot of connections and that people would ask for referrals. This makes you a valuable customer, and one worth negotiating with. (See #22 below for a related tip.)

17. Do NOT offer equity

OK, never say never. And in many negotiations, you may be tempted to offer equity in return for a price reduction. DON’T. It will be a legal headache and they probably don’t want it anyways. Besides, equity is one of your most valuable assets. Don’t give it away for cheap. Saving $1000 now may cost you a hundred times that in a matter of months.

Please note that I am not saying to try to hog all the equity for yourself. 100% of $0.00 is $0.00. Get people on your team and be fair in distributing equity. More on that another time. But here I’m talking about a negotiation with an outside party, where the point is to not bring someone on full time and dilute equity.

But I repeat: don’t take the ship down with you because you’re so concerned about preserving equity. A rising tide lifts all boats, and your first priority should always be the success of your startup.

18. Barter

This won’t apply in most cases, but be open to the possibility that you might offer services in return for a discount for your project.

19. Get rid of emotions

Easier said than done, but don’t let a momentary flash of anger, swagger, or over-confidence obscure your judgment. To avoid this, don’t make decisions in a rush; giving yourself some time to make important decisions helps mitigate emotion’s impact on a decision. Even better, talk through your logic with someone else, and do so in a way that encourages them to be critical.

Working with people over the internet can actually increase the danger of emotional interference. That’s because never know exactly what’s going on with the other party. You may shoot off an angry email demanding a reply to some urgent matter, only to find out that the other party hasn’t had internet for three days because of a monsoon. (That’s actually happened to me.) Keep it friendly, and even if you assume the worst, give the other party a chance to explain before being an asshole.

20. “Split the difference”

When you get to a point where each party has drawn a seemingly unmoveable line in the sand, “splitting the difference” can help bridge the gap. Its a good phrase to use because it implies that both parties are “suffering” equally from the compromise, which on a gut level strikes people as fair. This tactic should be one of the last ones that you use, because the difference must already be firmly defined prior to splitting it.

21. Bonus Tip: Outsource Simpler Tasks to Lower-Cost Providers

If you’re spending $40 an hour for a developer, you don’t want them spending their valuable time on pieces that don’t require their particular level of expertise.

Work with whomever you’re hiring to identify areas that could be outsourced for lower costs.When employing this tactic, you need to communicate your needs very clearly to your main developer and the outsoruced one to make sure that it will integrate properly with the site.

22. Bonus Tip #2: Offer future work

If you work on a lot of projects, let them know that this one is somewhat of a test run, and pending solid performance will lead to more work from you directly.

Equally important, remind them that once the project is launched it will still need their help afterwards, which means ongoing work for them assuming they get the project.

Jun
22

From TechCrunch: Image of Evernote on the iPhone 4

First, either read this TechCrunch article or read this short summary:  basically the iPhone 4 is launching in four days, and Techcrunch wrote an article outlining the 11 iPhone apps, out of over 250,000, that are ready to support the new features. They were ready, and as soon as they heard Steve Jobs unveil the iPhone 4, they new exactly what types of features would be relevant and how to implement them.

And now, just 12 days later, just four days to go til launch, and these are the top 11, the top .00044% that seized the moment and made it happen. When you’re one of the first entrants into an arena the press is already in a frenzy about, then you’ll realize that this kind of publicity is hard to buy. All because they busted their ass for two weeks during a critical time for their field. (That is, when Apple’s servers literally were shut down from all the traffic from the 600,000 people that have pre-ordered the new iPhone as of 6 days ago).

Now watch this video, and make the parallel yourself. Tell me afterwards if you’re not fired up.

Right? Right?

Jun
22

There are many reasons it can be difficult to get in contact with someone you might like to work for, get advice from, or ask for investment. Such people are likely to get hundreds of emails per day, and making yours stick out might not happen even with the best copywriting. Try calling, and you’ll run into a heirarchy of receptionists, assistants, and voicemail messages, and you’ve also got to hope that you’re contacting them at a time when they’re not busy.

What’s an entrepreneur to do? Take out a Google Ad in their name, that’s what.

Thanks to Media Life  Magazine for pointing out the story of Alec Brownstein, who took out Google Ads in the names of the creative directors at some top ad agencies. The short story: he got interviews with four of the five people he targeted, and job offers from two. Read an interview with Alec here for the full story.

Why does this work? For one, from time to time everyone googles themselves. But we also google our friends, and in fact that is the most likely way your ad will be effective: someone who knows the target will tell them about it. Depending on who the person is, you may get bonus points for demonstrating your media savvy, and well, brilliance.

It also works because there are very few ads targeted for people’s names. Not even Britney Spears or Bill Gates have any Google Ads targeted to their names, so you can be pretty sure that whomever you’re targeting doesn’t either. This has two major implications: 1) it will be cheap, since ads are priced by auction and you’re the only bidder, and 2) being the only sponsored result means your ad will stick out.

In Alec’s example, he set a maximum pay per click of $.15 with a $1 daily budget. Considering how effective this can be, its affordable to say the least.

Assuming you know or can figure out how to create a Google Ad at adwords.google.com , the main issue is what the content of your ad should be. Here are a few suggestions:

  1. Ad Title: Alec used “Hey, [name].” That strikes a pleasant tone, but another more excitable title might read “Attn: [name]”
  2. Ad Body: You’ve only got 95 characters to work with, so make it short and sweet. It really depends on what exactly you’re looking to get this person to do. Alec was looking for a job, so the body of his ad read “Googling yourself is a lot of fun. Hiring me is too.” Suppose there’s a particular VC whom you’d like to make a pitch. Your ad’s content could read “Attn: Fred Wilson. Would love five minutes to discuss a new product you’ll love!”. Just make sure you get your point across and don’t look sketchy.
  3. Ad External Link: Next you need the ad to point somewhere. Alec was looking for a job so he posted a link to his portfolio. Another idea is to point to your Twitter page and have left a recent tweet with instructions for contacting you. The best link, however, will be to a webpage you’ve set up just for this one ad (e.g. www.yoursitename.com/[name of person]. That demonstrates that you were truly targeting that person, and also shows that you put some thought and effort into getting them to contact you. Your ad and that page will be public, so best to just provide a short overview of what exactly you want and provide contact instructions.

The next time I launch a product, the key people I want to publicize it will definitely have Google Ads targeted to their names. Will let you know how it goes.

Do you have any tips for how to implement this well? If so, leave ’em in the comments.

(Thanks to Danny Warshay who pointed this out!)

Jun
18

Part of being an entrepreneur means taking on a variety of tasks, including strategy, data analysis, design, people-management, task management, presentations, and communication, to simplify and put it generally.

My advice: fight with tools.

The list below includes the major tools I use to plan, brainstorm, develop, and analyze. Not only will can they save you time, but many of them will help you improve the quality of your work and maximize your ability to innovate and execute.

In future posts, I’ll cover some particular aspects of those that deserve more time, such as creating models and efficiently using Excel. But for now, spending a few hours upgrading the tools at your disposal will start paying off immediately.

Sometimes people get in a tuss about affiliate links, and understandably so. Its disingenuous to link to stuff that’s junk or that you can’t vouch for. As I said above, these  are the tools I actually use, so if you decide to purchase one, might as well let the seller pay me a commission. I mean, I won’t say no if they want to hand me money! But I would link to them anyways, which is the main point.

Now, back to the matter at hand. I’ve grouped each tool into four categories, along with explanations: Communication & Collaboration, Creation & Design, Website Essentials, and Productivity.


Communication & Collaboration


Dropbox: The easiest way to share documents among a group of people. Dropbox installs a folder on your computer called “My Dropbox”. Within that folder, you can create subfolders for each project you’re working on and save the files you want to share there. After you share this folder with your collaborators, the files in that folder are automatically updated on everyone’s computer when someone edits them. Dropbox automatically saves former versions of the file in case someone screws something up. Bbest of all its free.

Skype

Skype: I almost forgot to include this because its so obvious, but Skype is the easiest and cheapest way to talk with others. You can host group chats, one-on-one video chats, and recently Skype added Screen Sharing, which allows you to show someone else what’s on your computer screen. Great for going through presentations, getting technical help with something, or demonstrating a problem you’re experiencing while testing out a product. A must-have.

Creation & Design


Kanvus Graphic Design Pen

Kanvus Graphic Design Pen: If you’re trying to sketch out ideas in any program, using a mouse and keyboard is clumsy and unnatural. When I get design drafts, the easiest way to mark them up is to have a Graphic Design pen. And while design is not an exact science, it is a fragile one. Spending the $60 on this has already paid off.

Moleskine Large Ruled Notebook

Moleskine Notebook

Moleskine Notebook: I’m not convinced that pen and paper can ever be replaced, and Moleskine Notebooks, besides getting you labeled a pretentious liberal yuppie, are a great tool for on-the-go note-taking, sketching, and brainstorming. I keep two: a pocket-sized one that’s always on me and perfect for note-taking, and a medium-sized notebook that’s more appropriate for outlining and sketching on a larger scale. In my experience, just having a Moleskine on me encourages me to use it and be productive in downtime when all I’ve got is a pen. my notebook, and my noggin.

Adobe Photoshop

Adobe Photoshop: Paint is great for quick edits to images, but if you need to do anything semi-serious you need to use Photoshop. Once you understand the basics, its quite easy to create some powerful effects. Overall, I’d say this is the fourth most important tool I use. I own over 40 domains, and at least 10 of them are active. However, only about six are in need of legitimate graphic design work, and the rest just need something passable. Being able to navigate Photoshop has saved me at least a few hundred dollars. Dedicate five hours to learning it, and you can be certain it will pay off.

Paint Windows 7 icon.png

Microsoft Paint

Microsoft Paint: A picture is worth a thousand words, so they say. Paint makes it easy to mark up design documents, which is especially important if you’re working with someone for whom English isn’t their first language, as often happens when you outsource. Photoshop is nice for anything more advanced than including some text and shapes, but anything less and Paint is simply the quicker and easier alternative. Below I’ve included an example of a markup that I did using Paint and the Graphic Design pen from above (Also, Paint is the easiest program to use with the graphic pen.)

Markup Using Paint and a Graphic Pen

Notepad

Notepad: The easiest way to take notes and save them for later. I keep a file called “Random” on my desktop and usually have it open, which makes it easy to jot down ideas or copy/paste blurbs for use later. A lot of people recommend Evernote, which is nice because it aggregates notes from multiple devices, but since I mainly use my laptop I don’t find it necessary.

Balsamiq

Balsamiq: Balsamic was made for the web entrepreneur. Its basically a program that allows you to easily make mockups of websites. If you’re developing the idea for a website and need to communicate it with designers and programmers, then typing out a long spec document can only help so much. Again, a picture can be worth a thousand words.  Balsamiq helps you to crystallize the general layout, functions, and features of a website. I’m just starting to use it, but when I found it the voice inside my head cried “Eureka!”.

SimpleMind X

SimpleMind X: SimpleMind is a mind mapping program that is a great tool for brainstorming. Mind maps are surprisingly simple and powerful; they allow you to quickly brainstorm and create unstructured outlines. For example, I start with “Birthday party”, and the boxes that are connected I call “Guest list”, “Entertainment”, “Food”, and “Possible Locations”. Under “Possible locations”, maybe I put “bar”, “house”, and “restaurant”, etc. If you can force yourself to sit down for 15 minutes per day and brainstorm using MindMaps, you’ll really do yourself a favor, especially if you’re juggling multiple priorites at once (which I know you are). You can get a free 30 day trial on the website, give it a shot. SimpleMind costs $35, but there’s also a free mind mapping program called FreeMind that I haven’t tried.

Camtasia Studio

Camtasia: At some point, probably in a pitch to potential investors, you’ll need to show off your product. Camtasia is a fantastic and easy program that will make a video recording of your screen. Its intuitive to use, has loads of useful features, and is perfect for creating product demos. You can also use it to record an entire Powerpoint presentation which you can then post on a website. Pretty neat!

Website Essentials


Google Analytics

Google Analytics: Free and powerful, Google Analytics does all the gruntwork in tracking website visitors. Its easy to install, and its intuitive interface helps you determine how many visitors you had, where those visitors come from, what content they viewed, and for how long and when they viewed it. It also has a lot of advanced features, which allow you track events or create custom goals that it measures. If you have any website, you need Analytics.

Bluehost.com

BlueHost: BlueHost is awesome. It is by far the easiest way to buy a domain and get a website going ASAP. For beginners, if you buy a website domain (www.jessemaddox.com), you still have to host it somewhere. Bluehost costs $7 a month, and you can host unlimited domains on it. Basically, if you own 10 domain names and host them separately, you have to pay ~$7/month for *each* domain. With Bluehost, you just have to  pay for one domain, and Bluehost will hold the rest of them for free.


Adobe Dreamweaver

Adobe Dreamweaver: The main advantage of Dreamweaver is that it has powerful editing options, and is really useful for making changes to static pages that you don’t alter too often. It takes a little work to become familiar with it (maybe 10-20 hours), but once you do it gives you a new level of control over the webpages you own. Its a must if you use Dreamtemplate.com, described below, but even if not its absolutely a great tool to have in your arsenal. However, if you’re only the most basic of web users (e.g. you don’t know what FTP is), you should start with start somewhere else (like WordPress) and work your way up to Dreamweaver.

DreamTemplate.com

DreamTemplate: At first, I thought DreamTemplate was a scam. It just had the air of a scam site, with ads all over it and promising thousands website designs for a year for a one-time $70 payment. But they offered a 60-day money back guarantee and so I took them at their word. If you are a serial entrepreneur, you probably end up buying a lot of domains as placeholders. Pretty early on you need to get something up there for when you start to develop content. There are a ton of pretty decent websites you can download here. But you need to be able to set the site up yourself, so you need to have some familiarity with hosting a website. Or, you could just buck up and teach yourself! The template for this site I actually bought on ThemeForest, but I did use Dreamtemplate for VentureJ.com, the holding company I set up. Also, the “O” in Onwardly came from one of the logos they have available for free once you’re a member. 

Productivity



Microsoft-Excel-2007-Logo.png exel image by moh_anto

Microsoft Excel

Microsoft Excel: I’m constantly surprised by how poor many would-be entrepreneurs’ Excel skills are. If you’re serious about being an entrepreneur, you need to become comfortable modeling and doing data analysis in Excel.  If there was only one tool that I had to recommend, Excel would be it. That’s because it is so vital to so many tasks you’ve got do. Whether its crunching some numbers to prove a point in your business plan, analyzing user data to adjust your marketing, or planning cash flow to ensure the nightmare doesn’t happen (being OOC- out of cash!). Excel is such a huge topic that I won’t got into it more here, but expect a lot more tips and tricks from me in the future, as I consider it one of my specialties and is something that I really enjoy working with.

HootSuite.com

Hootesuite: Let’s face it. For startups, Social Media is a must. It isn’t the be all and end all of marketing, but it certainly is an important complement. Hootsuite allows you to simultaneously manage the social media profiles of multiple projects on networks like Facebook, Twiiter, LinkedIn, and more. You can do this all from one place, and its free. I wish they had a desktop application, but I’ll settle for what they’ve got.

Google Apps

Google Apps: Google Apps is basically the way you install Gmail, Google Docs, and other Google Products for your company. So instead of going to gmail.com, you go to yourcompany.com, but you are still using Google products as the backbone of your online presence. It costs around $50 per year, but is a complete solution for email and other back-end functions for a startup or even large corporations. Really, Gmail is the best email application out there, and this is how you get it for your company.

Microsoft Office

MailMerge: Mail Merge isn’t a product per se, but its a crucial tool for contacting large groups of people. It all comes down to the difference between “Dear Valued Customer, ” and “Dear John,”. But it goes further than that, and allows you to personalize your emails in all types of ways. You can also use it to create a lot of Word documents quickly, perhaps with the “To:” address changed in each. There are several services that use mail merge, but in my opinion the easiest is to use Microsoft’s built-in version. To use it, you need Excel, Word, and Outlook installed, and the email address you want to send it from must be active within Outlook. To give an example of how powerful Mail Merge can be, suppose I have an Excel file with School Name, Principal First Name, Principal Email, and Number of Students in it. Using Mail Merge, I could send an email personalized like this to each person in the file (with customized fields in bold): “Dear Henry, I saw that you’re the Principal of Calhoun Elementary, and I was hoping to get a chance to speak with you about a product I’m selling that can help your school save $30 per student. Since Calhoun Elementary has 500 students, this means your school could save up to $15000 every school year…. Its obvious how that is more effective than just a bland form email, and its only one of the many powerful applications of mail merge. This is another topic thatrequires further treatment, so I’ll return to it in a future post.

So, what’s missing from this list?

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