Category Archives: Success Factors

General writings on building a successful business.

The Expectations Game

Posted on by

One of the most stunning facts about my grandmother was that she was handling the bookkeeping for the family business at age 9. Age 9! Most kids are playing ball or barbies or whatever. My grandmother was doing the books for a successful auto parts and scrap business.

I discovered so much of myself in my grandmother this past week. At aged 9 and 10 I was trying to understand how to factually re-create baseball players and seasons through the use of statistics. I was creating dice and board based baseball games about that time. Like my grandmother, I had a head for numbers. (My mom’s side is stock-full of number-lovers too.)

Grandma Fannie was a true women’s-libber and an uncanny business person long before she could drive. Makes me wonder whether we expect enough of kids today. She can’t be the only one. What could kids accomplish if we just expected them to do it?

The Future Is Subscription For All Productivity Apps

Posted on by

To back up my comments about paid apps being dead, Ben Thompson writes about Adobe’s business model switch. [1] (If you missed it, all Adobe products will forever more be subscription only.) His point is that the economic surplus of productivity apps makes them far more valuable then the prices charged so a switch to subscription makes a ton of sense (for all productivity apps, not just Adobe).

(He makes such pretty graphs.) Ben’s comments:

The challenges facing Adobe are shared by almost all productivity apps.

  • Productivity apps are indispensable (and thus priceless) to some users
  • Productivity apps usually have high learning curves
  • Well-done productivity apps require significant investment up-front
  • Productivity apps require regular maintenance and upgrades

Unfortunately, app store economics don’t really work here.

  • If you have a low price, you need massive volume to make up for the upfront costs
  • If you have a high price, users are much less likely to buy your app, especially since there is likely a learning curve
  • If you can’t monetize over time, your users are extracting MUCH more value than you are receiving in revenue. That’s great if you’re a user, up until the company you love sells out because they can’t make money. Sparrow is the canonical example here. How many Sparrow devotees would gladly pay $5 a month to have the app available and continually updated?

The challenge here — and I think this is a huge challenge for Adobe — is that I’m not certain the traditional software apps can make this transition. Take Quickbooks for example. $20 per month gets you access and store your data with Intuit, and that price doesn’t even include everything the Windows version does for $100. Does Intuit make more? Sure, but it leaves me feeling bitter that Intuit is trying to extract $480 worth of value for what used to cost me $100. [2] My general feeling: over my dead body.

I have a hard time believing that my customers would accept paying even $20 per year for powerOne, even if it was available on all platforms and the web, synced templates and more. [3] powerOne is designed as a “buy one time” product, like almost all productivity apps of yesteryear. It’s not my customer’s fault that that product is now priced too low to support my company. That’s app store dynamics at work.

Re-thinking the product to go along with the model change is imperative.

—

[1] If you aren’t reading this guy, you should be. Amazingly good writer and thinker. Haven’t been this blown away since Horace Dediu at Asymco appeared on the scene four years ago.

[2] Most people I know only upgrade every couple of years.

[3] In fact I know I’d lose most of them. We asked about advanced features for even $5 per year and had very few takers.

Here’s To The Crazy Ones

Posted on by

Thank you, Seth Levine! In summary he says:

So here’s to those entrepreneurs who are toiling away because they truly believe passionately in what they are doing and are going to make their idea a success whatever it takes. Building a business is crazy hard. You’d have to be half insane to even think about trying. So kudos to those who are out there toiling away at it. You are the real stars of the entrepreneurial world!

Passionate? Check. 10 years? Uh, check (its like lying about ones age). Stubborn? Oh, yes, check. Insane? Ha ha ha ha ha ha ha ha. (Just a little bit.)

Return and Ridicule

Posted on by

Fred Wilson:

I have found that return and ridicule are highly correlated over the years. We have made more money on things that were highly ridiculed than on any other cohort. When I see people laughing at ideas and companies we have backed, I smile. It means we are going to make a lot of money on that investment.

George Gershwin, 1937, They All Laughed:

They all laughed at Christopher Columbus
When he said the world was round
They all laughed when Edison recorded sound
They all laughed at Wilbur and his brother
When they said that man could fly

…

They all laughed at Rockefeller center
Now they’re fighting to get in
They all laughed at Whitney and his cotton gin
They all laughed at Fulton and his steamboat
Hershey and his chocolate bar

Ford and his misery
Kept the laughers busy
That’s how people are

I hope they laugh at me.

Cognitive Overhead, Or Why Your Product Isn’t As Simple As You Think

Posted on by

The pursuit of easy and simple, even in complex systems, is a never-ending battle. David Lieb discusses this not as a physical thing but as a mental thing, a cognitive overhead that we as software developers need to overcome.

What is cognitive overhead? A Chicago developer named David Demaree called it, “how many logical connections or jumps your brain has to make in order to understand or contextualize the thing you’re looking at.”

As David says:

Minimizing cognitive overhead is imperative when designing for the mass market. Why? Because most people haven’t developed the pattern matching machinery in their brains to quickly convert what they see in your product (app design, messaging, what they heard from friends, etc.) into meaning and purpose. We, the product builders, take our ability to cut through cognitive overhead for granted; our mental circuits for our products’ patterns are well practiced.

But in reality most products are really difficult to use. Sometimes it is necessary. There is a learning curve for certain things. But the more we can eliminate those curves the more attractive our apps. In the article, David offers a number of ways to reduce cognitive overhead, and some examples of apps that both work and don’t work in this world.