Business of Software 2011 – mind food
A few weeks ago in October I travelled to Boston, MA for the Business of Software conference. This is the number one conference to go to for folks aiming to create a software business to last the long term. This isn’t a place to come if you want to create a Facebook then flip it and walk away with millions. Nothing sustainable about flipping companies.
Twitter seemed to come into its own at and before the conference. People using phones, iPads, laptops to coordinate who they were eating with and when. #BoS2011 became unmanageable. Mark Littlewood’s advice to use Tweetdeck was well received.
Its a self selecting audience. They’re all very bright, self motivated. A lot of the people attending run their own businesses, from one man companies to some larger organisations like Red Gate who brought a good chunk of their staff with them. 30 people? 50 people? I don’t know. A lot – more than many people have on their entire staff. I spent Saturday evening with 5 Red Gate people and most of Sunday with some more Red Gate folk. It seems that Red Gate is being quite entrepreneurial with its staff – exposing them to conferences like this and training them for the future. It seems like a much more thoughtful vision for their future than most companies take.
Microsoft had some people in attendance too. The only Microsoftee I met was Patrick Foley, who was brave enough to give a Lightning talk. One attendee had travelled all the way from Romania, using three planes to get to Boston. He was probably one of the youngest attendees too. I spent a chunk of Tuesday evening chatting with him in The Whiskey Priest. Not sure I’d have been that keen to travel that far for a conference at age 25. Kudos.
The quality of the speakers was incredible. I thought Clayton Christensen would be the top draw (I’ve read most of his books, found them really interesting) but as it turned out I preferred the speakers on the second day – Rory Sutherland and Josh Linkner in particular. Most speakers manage to weave humour into their talks. I don’t know if this was planned, opportunist or just something you get good at.
I typically record each speaker so that I can listen to them again. Unfortunately for me, although armed with loads of AA batteries when it came to record day two they all failed. So I couldn’t record what turned out to be my favourite talks. Next time, purchase the batteries when I get there, don’t rely on them being OK just because they’ve never been used.
Although at MicroConf I took copious notes, I took very few at Business of Software. I was just too wrapped up in what was being presented. When I look at my notes its in my typical unreadable “I should have been a doctor” handwriting, with a good chunk of the notes not about the talk being given but about ideas for improving the software process at Software Verification. Its as if being there was stimulating me to take action over what we will do in future. Part of me is pleased with this and part of me is frustrated I didn’t take more written notes.
The Business of Software goodie bag was unusual – full of stuff I will actually read. Books from some of the speakers. Their talks were interesting, so that bodes well for the books they wrote.
Business of Software Team
The team Mark Littlewood assembled were superb. They were always on hand to help. When I asked them for help with some nuts (I needed protein as the vegetarian food was all carbohydate and had no pulses etc) they to my amazement found some fruit and nuts for me. I expected them to tell me where I could find a shop. Later that evening two of them saw me collasped on a seat at The Whiskey Priest and came over. They wanted to walk me back to the hotel until I explained I’d be alright in about 20 minutes – when my blood sugar had become normal again after eating (I shouldn’t have had the beer so soon after eating with the noise of the Business of Software band – too much).
As well as the BoS team, the conference centre staff were helpful and courteous. Americans really understand service. So often I’ve had bad experiences in the UK.
Clayton Christensen’s talk was pretty much a summary of his Innovator’s Dilemma book. Given that I’ve read his books I didn’t talk many notes. I think the standout items for me were:
- The customer rarely buys what the company thinks it is selling him.
- You should be focussing on “What is the job to be done (by the customer)?”.
- Look to the bottom of the market, that is where the innovation will come.
The second point is really telling. Most companies create products they try to sell to customers. They don’t actually research what it is a potential customer is trying to do. Are you really trying to buy a car or just go from A to B conveniently? If its the latter a car may not be the best thing to sell them. On this point, in Cambridge, UK, there has been a rise in the number of people ditching their car and switching to electric bicycles. Job to be done is commuting around town. You don’t necessarily need a car for that.
This third point was illustrated nicely with the example of solar power. In the USA and Europe we have government grants creating solar power and wind farms. But that is trying replace the existing fossil fuel based systems with intermittent solar and wind power. But if you go to Africa and parts of Asia where there is an underserved market (people with little or no power supply) then an intermittent supply of solar and wind is more useful than no power supply. It is in these markets that new technologies to improve the intermittent power supply (with better battery technology for storage and better solar cell technology for improved generation, etc) can flourish. Eventually these technologies will get good enough to start competing in the more traditional markets for power in the Western economies. The key thing is that the economic drivers are in the underserved markets, not in the well served markets.
More Information: https://www.claytonchristensen.com/
Jason Cohen talked about Honesty and how companies misrepresent themselves to make themselves appear different from reality. A bit like a bird puffing up its chest to look more intimidating we write our about pages to appear different than we really are.
Jason argues that this is dishonest and misleading and that by being honest it is more profitable in the long run (and feels better). Jason also argues that by being candid about what you can and cannot do you also inform your customers better than the one-sided comparison charts (where every feature your software can do is listed and only your software gets a tick mark next to everything).
Jason sold his previous company and now runs a WP Engine. WP Engine is smaller than most of his competitors and as Jason admits, he isn’t the cheapest solution. However he believes that by being candid about your strengths and weaknesses your company size doesn’t have to be a weakness. You size means you need every customer, thus you must focus on them. Contrast this to the approach you get from Big Corp, where you are a faceless customer and often get treated like one.
I wrote two quotes during the talk:
- “Truth in limitations earns believability advances”.
- “Open source is free like a puppy is free”.
I had two todo items on my list at the end of this talk and a big note saying I must re-listen to this talk when I get home. It made an impression. Dave Collins from Software Promotions was so impressed he wrote a post about it then posted the before and after About pages so you could see the difference.
More information: https://blog.asmartbear.com/
Alex Osterwalder gave a talk on Business Model Generation. I had thought Alex’s talk would be boring. And talking to some people later on (in the UX class lead by Richard Muscat) it appeared some other attendees also thought that. How wrong we were. One of the books in the goodie bag was Alex’s book on Business Model Generation.
On the face of it the title “Business Model Generation” sound rather dry. Alex demonstrated how to use a simple business model canvas to enter simple facts and figures about your business then use those to create other information you could use to see if the business is viable. If not viable, change some parameters and see if the new model is viable. It was surprisingly simple and easy and by the end of the talk I got the impression people wanted more.
To demonstrate a business model Alex used the Nespresso coffee making machines as an example.
- The machines are sold in retail outlets.
- Most of the profit from sale of machines goes to the business partners.
- Nespresso make their money from sales of the coffee pods by mail order, nespresso.com, call centers and from nespresso stores. These are all distribution channels owned and controlled by Nespresso.
- This allows Nespresso to keep all the recurring margins.
This talk also introduced the audience to Stattys, a non-sticky note that uses static electricity to stick to things rather than glue. After Business of Software Paul Kenny resorted to some awful puns because he liked Stattys so much.
Later on I was in the UX workshop (where we redesigned Business of Software) and talking with other attendees I found that my subgroup in the workshop all wanted to be in the Business Model Generation workshop but all of us had excluded that workshop because we thought it would be boring. None of us held that opinion after Alex’s talk.
Alex also demonstrated his iPad application which is a software implementation of the business model canvas. Looks quite slick and certainly an easy way to create and explore different business concepts.
More information at http://alexosterwalder.com/
Dharmesh spoke about customer retention and how to measure it, and pricing.
4 Churn Types:
- Customer. e.g. 5% 5 out of 100.
- Revenue. e.g. 10% 20K out of 200K.
- Discretionary. People cancel their account.
- Involuntary. Billing failure causes cancellation.
At Hubspot they use the Custom Happiness Index 2.0. This predicts how well the customer uses the software.
Dharmesh argues against Freemium pricing as this is a sunk cost. Instead if you want to do Freemium but without the sunk cost you should do Cheapium which is where you charge the customer the cost of supporting them. You don’t make any profit with Cheapium, but you also don’t lose money with Cheapium and you may convert some Cheapium customers to paid customers.
You need humans to sell Complex Products, New Products and products where the price is somewhat high (which Dharmesh defines as greater than $100/month). The point of indifference for most customers is between $30/month and $40/month.
More Information: http://onstartups.com/
Jeff Lawson gave a talk on “Saas Mating Calls” and value as perceived by the customer.
I don’t have many notes on this talk. The talk was somewhat ruined by a couple of people persistently talking behind me until I take no more and asked them to leave or shut up. I was so wound up by this point that I couldn’t really concentrate on Jeff’s talk. I found out later that many other folk had also been annoyed by these two people (perhaps they had not spent their own money to attend?).
So, sorry for no notes worth commenting on.
The last talk of day one was by Tobias. Again, I don’t really have many notes. I think I was struggling with low blood sugar.
Tobias talked about the culture of your company. What sort of company do you want to build?
“Do not start a company to make money. Start a company to delight customers.”
Patrick McKenzie talked about sales funnels and A/B testing. He also revealed an engagement ring he was going to present to his girlfriend when he returned to Japan.
- Describe the Funnel.
- Measure the Funnel.
- Optimize the Funnel.
Shorter funnels are better. Analyze your funnel. If you can find any un-needed steps in the sales funnel, remove them.
A/B Testing places:
- Home Page
- Landing Pages
- Pricing Page
- Shopping Cart
Test the following:
- Calls to Action
- Prominent graphic elements
- Important micro-copy – address customer objections.Example “Don’t worry, we won’t spam you” next to an email address field.
Patrick recommends doing the A/B testing yourself so that you have the test data, but if you don’t want to do that use Visual Website Optimizer (Note: Dharmesh also said Visual Website Optimizer is good when I talked to him about Hubspot – even though Hubspot now has Performable’s A/B testing suite). Be systematic about A/B tests. It works. He says it “prints money”.
Change your purchase page to do purchasing only. Remove all un-necessary links from the purchasing page so there are no distractions. I suspect this advice is much more important for B2C websites than B2B websites.
First run experience
Collect first run experience statistics. How many people run your software once? How many people run it twice?
If you know the search terms for an evaluating customer find a way to provide customised startup help for that search time on the first run of the software.
Find a way to provide an interactive tutorial to lead people through the steps to use your software effectively. This is called Tour Mode.
If you do gather telemetry from your desktop software be sure to ask the user’s permission to send that data back to your servers.
More Information: http://www.kalzumeus.com/
Laura talked about how your communication to your customers and potential customers should Be Useful.
Be Useful. Its not about you. http://inay.org
Laura advocates a sequence of actions you can use to be more useful.
Laura’s presentation is on www.slideshare.net/pistachio.
Recommended book: Content Marketing for Startups by Dan Martell.
More information: hubspot.com/pistachio
Josh Linkner is VC. He didn’t talk about funding or finance. He gave an excellent talk on unleashing your creativity. His book Disciplined Dreaming was part of the Business of Software Goodie bag.
Josh started by giving a background to creativity and explaining that although most of us think we are not creative, creativity is 85% learned behaviour.
Blocks to creativity are fear. Fear of failing. Fear that the idea/design won’t be any good. I’ll also posit that for a few people, they are afraid the idea/design will succeed and they will have to follow through.
Be curious. Make a point of being curious. Ask Why? Why if? Why not?
“Fail more to win more.”
Do not criticise small mistakes.
Encourage experiments, tolerate failure.
Josh gave an example of an unusual and creatively inspired business – http://www.littlemissmatched.com/ – where you can only buy socks in odd numbers. The socks don’t match and you can’t buy pairs. It’s a roaring success. It’s remarkably different.
Josh recommends using the 5 Why’s technique. Ask “Why is this?” about the topic. Then repeat for the answer. Do this 5 times to get to different insights about what you are looking at. This technique is used in quality control, user experience design and other fields. You can use it creatively too.
Josh demonstrated learned behaviour by describing an experiment known as The Pike Syndrome where a carnivorous fish (A Pike) ignores the prey fish because it had earlier learned that it was unable to eat them. In the same way, although creative during childhood, many things during our adolescent years and adulthood teach us not to be creative. But you can learn to be creative.
Another technique Josh uses to encourage people to be creative is to “Role Storm”. This is where you take on the role of a particular person or character and approach the problem from their point of view. For example what would Business of Software be like if Darth Vader hosted it? What benefits and features would he be interested in? What sort of user experience would Darth Vader be expecting?
Josh demonstrated an alternative form of captcha that relies on understanding a caption and then acting upon it with a simple game. The layout of the game changes on a regular basis as do the captions. This makes it almost impossible for a bot to defeat the captcha. The example given was “Drag 3 peppercorns and 2 mushrooms onto the middle pizza”. It’s an inspired bit of creativity by taking the original problem and re-framing it.
Take 5% of your time (2 hours) to be creative each week. You will be more productive.
I’ll be posting more on creativity as I compose tunes and people always ask me how I do that as it must be so hard and complex. Wrong! Its easy. Anyone can do it.
More information: http://joshlinkner.com/
Rory Sutherland is Vice Chairman of Ogilvy, the advertising giant. Rory gave a talk about Praxeology, the study of human action. Rory talked about how creativity and rational thinking don’t necessarily go hand in hand. Rory was hilarious and the talk full of interesting nuggets.
I’m afraid my notes don’t do justice as I appear to have written short snippets to jog me into performing Google searches. As such I’ll list the phrases here and if any of them jog your mind or cause you to search then that is more use than me trying to frame them for you.
Creativity is policed by rationality but rationality is not policed by creativity. This can lead to very creative people being prevented from being creative but leave rational people to create things like the finance and banking meltdown that happened a few years ago and which we are still living through now.
If you want people to finish a task, split the tasks into chunks. People are much more likely to complete all tasks if approached this way.
You want your customers to avoid disappointment or complete surprises.
Rory introduced Ludwig von Mises and the subject of Praxeology.
Do not distinguish between subjective and tangible value.
Hueristics and biases
Framing, comparison and content
Information asymmetry and commitment.
Satisficing vs Maximising.
Make choosing easier
Choice making is easier with 3 items than with 2 items. Put the best choice in the middle and create cheap, average, expensive choices. Most people will choose the middle one.
Framing is all about the context in which you see the offer. Every thing is relative.
Reduce web steps from three to two improves conversion by approx 40%.
Resolve discomfort and disquiet to improve sales.
Behaviours lead attitudes.
Book: Ash Murya.
I didn’t take any notes on the Lighting talks.
The most memorable talk for me was Tyler Rooney’s talk about the failures he witnessed and experienced at Amazon. The most hilarious being someone nobbling the companywide internal DNS, which killed everything. Including killing the IP-based telephones so that nobody could contact anyone to tell them to fix the problem. Sometimes economies (like purchasing IP based phones) are not economies.
Justin Goeres won the Lightning talk competition, so I never did bump into him (we were going to go for a meal later) because he was invited to the Speaker’s Dinner. Would he pass that up for a meal with me? No… 🙂 We finally met up at breakfast the next morning.
The next talk was about being a design dictator at Fresh Books. I didn’t take any notes. I think I was struggling with low blood sugar.
Fresh Books is a good product. We use it.
John Nese interviewed by Peldi
The final talk of day 2 was John Nese, the owner of an independent Soda Pop store being interviewed by Peldi. The interview was prefaced with a video. John Nese was fantastic. The little guy going against Big Corp (in the form of Coke and Pepsi). He had passion to spare and a true depth of knowledge about the products he sells, strong opinions on stuff he doesn’t like (Energy drinks and stupid recycling laws).
After the talk everyone was talking about him. Strong resonance between what he had to say and how most people felt business should be done (rather than how it often is done).
Paul talks about how to close a sale. How not to leave the sale dangling and how to not ruin the close by closing in the wrong way. Closing is a soft skill and not something that you can deal with in terms of cold hard data.
How many people in the audience are founders? Lots of hands. Good. “You are a founder. Therefore you are a salesperson.”
“The result of a business is a satisfied customer.”
How not to do it: Alec Baldwin (always be closing).
Closing is asking for a commitment. Commit to what?
Asking avoids the decision making process. (can’t read my handwriting, I think it says “avoids”).
- Ask the wrong way at the wrong time. (push)
- Fail to ask the right way at the right time.
People are pushy when the have only one way of asking.
Once you have asked for your commitment, shut up and wait for the answer.
David Cancel talks about A/B tests. David’s company Performable was acquired by Hubspot in late 2010/early 2011.
Failing is good. It is OK to fail. You learn by failing.
He recommends having a business dashboard so you can measure your company’s health.
All initiatives should show improvement.
Use the Net Promoter Score to measure satisfaction.
If using multi-variate tests, don’t bother if you are a small company.
David thinks 2% is average percentage conversion rate. (this is out of context).
Alexis Ohanian talked about different ways of making the world suck less.
I didn’t take any notes in particular except to remind me to give some of my time away to a local charity.
He also gave away an Apple MacBook. The two people that came up with winning entries both said they didn’t want or need the MacBook, so it was given away to a public school in Melrose, Boston and a local programmer has agreed to teach at a local class.
I attended two workshops at Business of Software.
The first workshop was by Richard Muscat from RedGate. This was a user experience workshop where we created user empathy maps for one member of a group of 5 or 6 people. Our workshop had about 30 people so we divided into 5 or 6 teams and redesigned Business of Software conference. The feedback from this workshop was given to Mark and the BoS team.
The second workshop I attended was with Dirk Paessler on the topic of “what do people do to keep their business online”. I had hoped to attend Nemo Chou’s workshop but it was cancelled at the last minute. As such I chose Dirk’s because I thought it may be interesting even if not directly related to what I do. It turned out to be surprisingly interesting, if only because of the extraordinary lengths Dirk’s company has gone to ensure it remains online. I got quite a few business specific takeaways from this workshop.
After conference everyone had a chance to grab some food, possibly be interviewed by the roving cameraman. He got me. I don’t think I made a very good subject. I think you’re either good at this or not. When asked a question that required a thoughtful answer I should have paused and thought. But no. So a bit of a disaster on that front. I’m sure other people had better things to say to the camera than I did.
I milled around for a bit then a group of us headed off to a local restaurant for some pre-flight food. Mark Littlewood said he’d come and join us, but he took so long he met us on the way back to the hotel. Better luck next time Mark.
The photo shows (left to right) Krishna Kotecha, Patrick McKenzie, Corey Reid, Patrick Foley, Levi Kovacs, Tyler Rooney.
My notes are littered with TODO items scrawled done as a speaker sparked something in me. On the plane home, reflecting on the conference, I found that every few minutes I’d have to write something down. In total I have about 4 pages of TODOs, 1 per line. Thats about 120 items to do or research. All directly from attending the conference. Not all of the TODO items were new to me at the conference, but the conference reinforced my pre-existing thoughts and coallesced them into an action point.
If I could summarise Business of Software into a few words, it would be “Incredible mind food, stuff to think about for a long time”.
Would I go again? Yes.
Am I glad its on the East Cost of America? Yes. 5 hours out is one thing. 8 hours out another altogether.