Innovation to Products to Ventures

Unfair advantages - why technology startups need them

Richard A D Jones — Fri, 29 Jun 2007 21:23:40 +0100

I love the phrase "unfair advantage." Peter Crouch is a striker at Liverpool who towers over defenders and so gets more than his fair share of headers. I always look for the same thing in startups (and I don't mean tall people). Read on for more about the different types of advantages and how you can develop some for your technology company.

Startups and the trials of being an entrepreneur

Richard A D Jones — Wed, 23 Aug 2006 11:26:48 +0100

I think this should be the motto for entrepreneurs and those involved in startups...

It is not the critic who counts,
nor the man who points out how the strong man stumbled,
or where the doer of deeds could have done them better.
I think this should be the motto for entrepreneurs...
The credit belongs to the man who is actually in the arena,
whose face is marred by dust and sweat and blood;
who strives valiantly;
who errs and comes short again and again;
who knows great enthusiasms, great devotions;
who spends himself in a worthy cause;
who, at the best, knows in the end the triumph of high achievement,
and who, at the worst, if he fails, at least fails while daring greatly,
so that his place shall never be with those timid souls
who know neither victory nor defeat.

Theodore Roosevelt

How many prototypes did James Dyson make of his cyclonic vacuum cleaner before he succeeded? Scarily the answer is Five thousand!!

It's about where you are as well as what you are selling

Richard A D Jones — Mon, 14 Aug 2006 00:18:18 +0100

I was in a strange conversation today. Someone was asking about UK broadband opportunities and I told them it's a blood bath. It really is horrific with free broadband offers appearing (if anything is ever truly free). So why are my business partners and I are so keen on broadband in Eastern Europe. Broadband is broadband right?

Well, the difference is the adoption curve. You probably know this already but there is a profile of sales over time that starts to build slowly, then accelerates before flattening out again. This s-curve is seen in many industries. Sometimes your product or service can re-juvenate itself by finding a new niche or set of users and a second s-curve builds on your original one. Tricky but good if you can do it.

In broadband, we can see in the UK that we have achieved near saturation and companies are being forced to givie it away 'free'. However, countries in Eastern Europe have very low penetration and so are only at the start of the s-curve explosion.

This doesn't make it easy but it does mean that you can learn from what has happened in other countries and use strategies that have worked.

Real innovation requires real customers

Richard A D Jones — Sun, 30 Jul 2006 14:32:39 +0100

I get to work with a lot of new companies and corporate ventures and, you know what, they frequently have no clue about what a real customer wants. Cambridge (the UK one) is a great place for technology innovation but even the smartest people don't always understand about having a real market. They have the “Field of Dreams” view about customers - 'if I build it, they will come." However, this mistake isn't limited to startups - I worked with a European electronics multinational and I couldn’t believe their approach to innovation.

The division I worked with produced equipment for automating factories - essentially like computers with input and output connections to make machines work. Here were two classic conversations with them.

"Good news Richard - we have done a deal with M****** (identity masked to protect the innocent) and will be distributing their single board computer series. Our arrangement means we will have the same market price as them."

"Okay. What do you mean by market price?"

"Our list price is identical to their’s."

"Hang on," say I, "our normal customer gets a discount of 10% whereas M****** give a discount of 30% as standard. Our real market price to users or distributors is going to be significantly higher than their’s. In what way do you think that is market pricing?"

....silence....

Never work with idiots and.....people you can't get on with.

Richard A D Jones — Tue, 25 Jul 2006 16:26:14 +0100

Ten years ago, I had a discussion with a friend who was a serious rower. He's not Sir Steve Redgrave but understands what it takes to win. His assertion was that teams don't have to like each other to perform. In fact they can downright hate each other and still do the job. It was alleged that Eric Cantona would never pass to striker Andy Cole at Manchester United for example.

At the time I wasn't convinced that the sporting metaphor could translate to business. I'm certain now - he was wrong.

It's about customers (stupid!)

Richard A D Jones — Thu, 30 Mar 2006 09:18:46 +0100

When someone has to persuade you about why you need a service then you probably don't. Need is pain. When you have something that is really inconvenient in your life then you recognise a solution when someone shows it to you.

Sick of the shower burning your bum when someone flushes the toilet - you need the .......

Worried about losing your family photos from your laptop, then you need the ..........

If there is not a 'selfish benefit' to a company, one that you understand intrinsically, then you probably don't want to buy the product and I don't want to help it grow and succeed (because it won't).

So you thought marketing is fun - lessons from software companies

Richard A D Jones — Wed, 21 Dec 2005 21:05:36 +0000

An important part of any product based startup is to consider the marketing channels by which the product will be delivered to market. It’s a simple point but capable of extreme pain for a startup that get’s it wrong and painful enough even if you get it right!

The following goes through the detail of some of the issues that will keep you up at night for a software business. Some of the points are equally valid across other types of product.

Dead project walking -why you have to kill projects to be successful

Richard A D Jones — Sun, 18 Dec 2005 22:04:44 +0000

Companies can be outstanding at generating new ideas – I mean really world-class and yet they struggle. The simple reason is they don’t have the resources to exploit them. I’m not talking about the resources not existing in the company, I am talking about them just not being available. If the resources are being used for something useful then is that okay? Well only if it is more valuable to the business than the project it is delaying. If not, then your resource prioritisation across the portfolio of projects better be good. However, the more frustrating problem for companies relates to when their resources are ‘lost’ to the business either still working on bad projects or doing ‘after sales’ on previous projects.

Technology startup funding tips - 'go faster' money

Richard A D Jones — Mon, 05 Dec 2005 23:23:06 +0000

Money invested in a company is there to make something happen. I normally refer to it as ‘go faster’ money – as the most normal use is to fund the business accelerating towards it’s goals using the extra funding as fuel.

In comparison, the following are not seen as reasonable uses of their money by investors:

Giving yourself a great salary
Taking expensive office space
Feeling better because you’ve got some ‘breathing space’ money in the bank
Acquiring a nice company car

10 rules for web startups

Richard A D Jones — Fri, 25 Nov 2005 17:58:00 +0000

I’m going to start mixing up my content with the best of what I find out there (or what makes me titter like a little girl and wet myself).

Given I’ve been going through a list phase, here’s the founder of Blogger talking about web startups. A lot of the rules are very applicable elsewhere in my opinion.

http://evhead.com/2005/11/ten-rules-for-web-startups.asp

7 things investors do wrong...

Richard A D Jones — Wed, 23 Nov 2005 23:03:26 +0000

Having laid into people pitching their ideas to investors and resource managers, I was challenged to come back with a blog about daft things investors do to provide some balance. Well, balance in this case is going to come from a chip on both my shoulders so let’s move into the shadowy and sometimes arrogant world of investment. A few dont’s and dont’s with the odd bit of personal experience thrown in…

Technology only rolls one way - downhill!

Richard A D Jones — Thu, 17 Nov 2005 23:39:02 +0000

Something is a specialist skill that only a few people can do and gradually it becomes more widely available, cheaper and easier to use (no punchcards in computers now - only blue screens of death and sanctimonious Mac users to deal with). This article talks about the inexorable march of technologies and produsts from high cost, scarcities to being cheap and on your desktop etc.

How to spot a crap technology startup - 1 "We don't have any competition"

Richard A D Jones — Wed, 16 Nov 2005 08:34:30 +0000

Here are the signs of how to spot if you are talking to a startup company that is doomed. Might be a bit harsh and an exageration but I bet I'm right almost all the time on this. Here is the first thing they say that should make you run out of the door screaming.

Pay or play - licensing mistakes and how they cost you big time

Richard A D Jones — Mon, 31 Oct 2005 23:37:10 +0000

Okay you've sold your idea to a big company for $1 a unit they fit it to..... and they make millions each year. Just before you start driving away in your Ferrari though, you realise they aren't building any units with your baby incorporated. What's worse, you can't get the idea back from them. You've been caught in the pay or play trap.

Maximising the return for your startup

Richard A D Jones — Sun, 30 Oct 2005 16:57:33 +0000

One of the most interesting problems in a technology startup can be figuring out where to enter the value chain. This real example shows the thinking needed to maximise the return for your company.

An electronics company had a revolutionary component for mobile networks. Thinking traditionally - they would be sold to form part of an assembly made by another company that would be sold to a systems integrator who would deliver the network for a mobile operator.

The overall savings in a network rollout by using this product would be in the order of 100’s of millions of dollars – by allowing the removal or down-speccing of other systems.

What the heck are investors looking for?

Richard A D Jones — Thu, 20 Oct 2005 23:31:14 +0100

You may have the best idea in the world but if you can't sell it, you're not going to get very far. To sell it, you have to understand your target audience - investors. Now without going into huge reams of psychological detail, if I suggested they want to make huge amounts of money off your hard work then could we agree on that?

Physical interfacing of your team

Richard A D Jones — Tue, 11 Oct 2005 18:36:57 +0100

This is really simple but works. Think about the processes involved in going from innovation to product/feature delivery. If they are supposed to work closely together then put them close together. Is that it? Okay not quite.

To maximise the interactions between different groups, try to increase the size of the physical interface between them. I'd say that in English if I could.

Maybe an example will help - doubt it but worth a try.

If you have a development team and an industrialisation team say - then don't design the office so they are separated. See if you can set it up so that as many people as possible are next to someone from the other department. I don't mean mixing them up completely as you want each group to still function well on their own. I just mean think about how you can create long borders between groups where colleagues from the different groups can talk.

Customer related costs and how to manage them (1 of many)

Richard A D Jones — Tue, 04 Oct 2005 14:08:17 +0100

There is some simple wisdom about having customers. It costs 10 times as much to acquire a new customer as it does to sell to an existing one. Then, with a strange lack of gratitude, a happy customer will tell between 0 and 3 people whereas an unhappy one will tell more than 10 people of their negative experiences. These figures were created before the advent of email, Internet forums, blogs etc. so I can only assume the picture now is even more extreme.

As part of the cost of having customers, support can make a big difference to the profitability of companies like ISP’s, ASP’s, software companies – in fact most companies that are driving towards low revenues per customer. These companies need to focus on operational excellence and hence low cost customer support.

Strong spin-outs and weak parents can be fatal

Richard A D Jones — Fri, 30 Sep 2005 22:41:00 +0100

Corporate venturing is a difficult area at the best of times. However, creating spin-outs from a weak parent can be fatal – no matter how good the new venture. I suggest you sit comfortably and don’t read on if you are of a nervous disposition.

A night with Jack Welch

Richard A D Jones — Tue, 27 Sep 2005 11:26:01 +0100

I was priveleged (along an intimate group of 1000 others) to hear Jack Welch talk about his career at GE. Despite criticisms of his job cutting programmes, he is someone I admire immensely for his intellect, focus on developing people and ability to cut through crap and business jargon to get to the heart of issues fast. Some of his simple principles from the night

Bootstrap Network Blog

Richard A D Jones — Tue, 13 Sep 2005 17:12:00 +0100

A friend of mine, Neil McEvoy has an intersting new blog here - http://bootstrap-network.com/bootstrap-bloggers

Neil's a clever guy (he once turned down a job offer to work with me so he's very perceptive). Sometimes his ideas on topics like social networking platforms are so clever they give me a nose bleed and a headache. I expect this to be an interesting place to look for news and ideas.

Consistency in leadership – say how you intend to work and stick to it

Richard A D Jones — Mon, 01 Aug 2005 18:32:36 +0100

People are cynical animals. More so perhaps in Europe than in the United States. When someone starts in a new role, they will not just take what they are told about fresh starts, new ways or working or anything at face value. They probably don’t believe it’s going to happen and wait to pounce on the first outward sign that the person involved is not actually doing as they said they will do.

Secrets - and why they're bad for you

Richard A D Jones — Tue, 26 Jul 2005 17:23:37 +0100

I meet companies that frequently say they want to keep a low profile, stay under the radar and other phrases that mean they are hoping that no-one will notice what they are doing for a while. Forget it!

Good and bad investors

Richard A D Jones — Thu, 07 Jul 2005 18:11:08 +0100

A company we started helping a couple of years ago has just passed a further funding round for $10 million. It was great news as we first saw them when there were 3 of them jammed in a windowless shed essentially. The downside is the strain on the team as they have struggled to put together the deal with the different interests of investors in conflict.

Instant messaging and strange communication effects

Richard A D Jones — Mon, 04 Jul 2005 18:16:37 +0100

It is amazing to see people who work quite closely together using some form of instant messenger (IM) to talk to one another. Software developers seem to like this best – as if the fear of human contact might be too much for them. It’s got benefits.

Hide and seek patenting - sometimes you hide what you are doing

Richard A D Jones — Sat, 02 Jul 2005 20:02:22 +0100

When a technology startup meets a VC, there is a question guaranteed to crop up - is there any IP? This means is there something we can patent......well in fact is there something that increases the barriers to entry of gives you a unique advantage..........or (if I am being cruel) are there any guarantees that I am going to make my money back as I hate losing money.

Panning for gold through the endless cycle of doomed startups

Richard A D Jones — Wed, 29 Jun 2005 18:56:02 +0100

Most weeks I try to meet a start-up with an interesting angle on technology. Partly this is because I like helping out and partly because occasionally I will find something that is worth investing in and building. However, I was thinking today about how many companies I have seen in the last few weeks where people are just working like mad. Committed, clever people who are out-punching their weight but they have dived into overly crowded and very competitive areas.

Taking on early stage companies

Richard A D Jones — Sun, 05 Jun 2005 17:45:55 +0100

Part of what I do is to help very young companies survive and grow. It’s the business equivalent of kissing a lot of frogs before you find your prince

Startup psychology 101 - 1. Dilution vs. Value

Richard A D Jones — Wed, 04 May 2005 19:37:42 +0100

...The difficulty is they never let go of the percentage fixation so when more money comes in, they get all upset about the dilution instead of concentrating on the 'value' of their shares.