The Start-Up Sine Curve

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It is nearly impossible to describe to someone else the emotional extremes that encompass the planning, building and releasing of something new. Most describe it as a roller coaster but a roller coaster does not give justice to the extremes, to the sudden ups and downs and the fact that the process smooths over time. I think starting a new product or new company looks more like this:

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Time starts to the left and works its way to the right. On the positive side, all the stuff above the line, are all the good things. This includes the accolades, the re-tweets, the positive customers conversations, seeing code turn into a usable product and the plans turning into reality. On the negative side, though, all the stuff below the x-axis, is the negative feedback, the “why in the world would I use this” comments, the ignored emails and delays, server crashes and general human fears and frustrations.

It starts way on the left and juts up and down quickly and rapidly. Sometimes it feels like I go through 10 of these positive/negative swings in the same day and sometimes it feels like I’m wallowing in negativism or sailing on a sea of positive thoughts for weeks at a time.

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I turned 40 a few weeks ago and now have almost 20 years of entrepreneurship behind me. One thing that gives me a sense of ease with this process is that I always know what goes down comes back up. (Of course the opposite is true, too, but I prefer not to focus on that.)

The second thing I know is that, over time, the ups and downs even out, the turbulence isn’t so turbulent. As we approach 0, I think that’s the point where we attain product/market fit, the point at which we start seeing a repeatable sales process and positioning that works with prospective clients. This also happens to be the inflection point where companies grow, the point where we share the ups and downs with others.

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I’m going through this now. I’m somewhere around the mid-point in the chart, somewhere around -10, on the x-axis approaching a private launch in the next week. Two weeks ago I was mired in code that would break every time I made a change. Then I had some amazing customer conversations followed by some very negative ones. I was bogged down in that for a few days before a few phone conversations with “true believers” helped lift me up. My fears are numerous: where is the money to keep going, the energy to see this through, whether anyone will care and be interested. Can we keep servers up? Can we build something that people are really willing to pay for?

When people say building a start-up is hard, they don’t specify that building the product is only a small portion of the battle. Fighting off the negative demons that affect our dreams is the true center of the fight. What keeps me going, though, is that I know it will get easier in time.

Good Reads IV

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It’s been a long few weeks of programming here, completely bogged down in trying to make HTML behave the way I need to behave. I’ve read tons of amazingly good articles with little time to link to them or write about them, so instead I will dump an entire batch on you at once.

  • The Perils of Shiny New Objects by Mark Suster. Oh, man, is this killing me right now. We are so close to shipping Equals. After months and months of working hard it is so easy to feel like all of this will be for naught. So my mind wanders to shiny new things. The “grass is greener over there” syndrome.
  • The Innovator’s Curse by Horace Dediu. Horace argues that innovators are cursed with the need to always innovate, to always use previous innovation revenues to funnel future innovation revenues. But markets rarely believe in the next thing until it has already come to pass, at which point the innovative company is already using those proceeds to funnel the next innovation. Fascinating argument on why innovative companies are undervalued and why markets reward companies who stop innovating, eventually killing those companies. Oh, what a tangled web we weave.
  • Sometimes The Best That A Company Can Hope For Is Death by John Kaye. Following The Innovator’s Curse post, here is an incredible article on corporate death. John argues that death is as natural apart of corporate life as it is human life. At some point all companies come to their conclusion, and that’s okay. (via Ben Thompson)
  • Giving Up the PED Guessing Game by Gabe Kapler. Interesting look from the inside on what drives athletes to use performance enhancing drugs. Gabe played major league baseball during the steroid era, was a solid to good ballplayer, and says he was tempted but never used PEDs.
  • Anatomy Of A Hack: Even Your ‘Complicated’ Password Is Easy To Crack by Dan Goodin. Oy! Maybe the best we can do is make it harder. After all, if a thief has one house with an alarm and one with an open window and no alarm, he will likely pick the one with the open window and no alarm.
  • Balky Carriers And Slow OEMs Step Aside: Google Is Defragging Android by Ron Amadeo. In short, Google has figured out how to protect itself by embedding an updatable runtime within Android that only it can update and is only available to Google apps. Oh, Google, have you ever heard the phrase, “eat your own dog food?” You created this mess. You should have to live with it, too.

Should I Write An App?

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There was a discussion on the email list for Mobile Portland recently about whether or not someone should get into the app business. Jason Grigsby at Cloud Four suggested reading these articles first:

Developing an application and making money at it is very very hard to do. Maybe your idea is the right one, maybe it isn’t. No matter the case, though, there are likely faster ways to validate the idea then writing an app. I’ll let Jason say it:

The app store has created a goldrush-like mentality. I believe a lot of validation can occur before you talk to anyone. Simply look at the numbers, what you bring to the table in terms of unique information or exclusive access to data, and how hard you’re willing to work to promote the app, and then look at costs and try to evaluate how likely you are to recoup those expenses. Talking to customers and developers will help you understand better if the app will succeed and what it will take to build it. So once you’re comfortable that you have the risk tolerance and capital to pursue it, go for it.

Want to proceed anyway? Good for you. Just don’t go forward with blinders on.

Assault On The Humble Productivity App

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I believe today marks the day war was waged on the humble productivity app. We’ve been teetering on the edge for a while now. Open hostilities from Microsoft on everyone not named Microsoft and then Google on Microsoft itself meant a Cold War broke out. But that’s all it was: a Cold War. Google, after all, still charged businesses $50 per year to use its productivity suite. Apple, too, played in this game, once charging $80 and more recently $30 for its Office suite. The three sides faced off.

Until today.

Today Apple announced that the iWorks suite will forever more be free. Couple this with iCloud sync and web versions of iWorks (all free) and suddenly the game has changed on productivity apps. We are now at war.

This is how good businesses work: make money on your thing and commoditize everything else. Apple makes money from hardware so it wants everything else to be free: syncing, back up, web storage, apps. Google makes money by selling us (ads) so it wants all software and hardware to be free.

Historically, as a developer, our priorities lined up nicely with the big player in the market: Microsoft. Microsoft makes money from software so it wants hardware and peripherals to be free. Since we make money from software, too, us developers have been in pretty good shape. Add in the fact that  Microsoft primarily sells productivity software and us productivity app developers have done really well business model-wise [1].

But the market has shifted. Apple and Google are the top players now and their priorities don’t align as well with ours. Neither store offers upgrade pricing, both emphasize low prices and neither does a good job of enabling recurring business models. [2] And making money from productivity software has just become a little harder with Apple making their word processing, spreadsheet and presentation software free, available on the web, on the Mac and on the device, and syncing between them. Those are amazingly complex and powerful products.

Where does that leave developers of fine productivity apps? Clearly fighting an uphill battle. Adjust your businesses accordingly.

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[1] Except, of course, when we got stepped on. That happens in all businesses.

[2] Yes, Apple offers subscriptions for newstand apps but not other applications. Plus the 30% charge is really high for annual subscriptions.

When Microsoft Drove Off The Rails (Part 3)

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(This is the third and final post in this series of Microsoft. Part 1 and Part 2)

Yesterday I talked about an event outside of Microsoft’s control that led the company to this point in time: the changing structure of software sales. Today I want to discuss an event completely within its control: the abandonment of its corporate strategy.

Most Microsoft business books talk about Microsoft’s strategy in the 1980s and 1990s as an “embrace and extend” strategy. In short, Microsoft embraced existing technologies or products and then extended them to do new or proprietary things. It was wildly successful. A few examples from this era of Microsoft’s history:

  • Microsoft embraced the deal with IBM and then extended it to other vendors, particularly Compaq.
  • Microsoft embraced the mouse-driven interface and then extended DOS with it.
  • Microsoft embraced the word processor and spreadsheet, extending them to mouse-driven interfaces.
  • Microsoft embraced the idea of individual apps and extended them to sell as a bundle (Office).
  • Microsoft embraced Office’s success and extended it with new applications, including OneNote, Outlook and PowerPoint.
  • Microsoft embraced the Internet and extended it with new protocols that were non-compliant with Netscape and 3WC.
  • Microsoft embraced Java and C and extended them to be more proprietary.
  • Microsoft embraced the browser and extended it by bundling it free with every copy of Windows

In the late 90s, however, this strategy ended. In almost every case since that era ended — game consoles, handhelds, smartphones, tablets, you name it — Microsoft has abandoned the “extend” portion of the strategy. [1]

What caused this? Maybe it was Bill Gates retiring or the Department of Justice’s anti-trust investigations. Maybe it was just hubris. Whatever the case, with only “embrace” remaining from the strategy, Microsoft stopped differentiating its products. Yes, Windows Phone looks nice. But really is this device fundamentally any different from iOS or Android?

“Extend” was Microsoft’s differentiator. Without a differentiator, Microsoft was just a sitting duck waiting to be shot.

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[1] This doesn’t mean the company wasn’t successful with many of them, just that the strategy changed. And I say “almost” since Azure is definitely vintage Microsoft.