Breaking Rules: Either Business Model or Product, But Not Both

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I have a theory that you can only have one earth-shattering change at a time when it comes to building a business. What is the thing you a going to do that breaks the status quo?

Most technology businesses break on product. Salesforce.com was a great example of this. No one had made CRM software available in the cloud before them. Nike was a break through in product, too.

But some companies are a break through in business model. Google, I would argue, was one of these as no one had proved that people would pay for that kind of ad placement before on the web, in an open market competition. There were hints it would work but no one had truly been successful with it before. Dell is another example, at least when the company started. At that time all computers were sold in retail stores. Dell went mail order, reducing costs and becoming a new, low cost provider in the industry.

The theory, though, is that you can only break one rule at a time when you start a company. You can either be a revolutionary product with a proven business model or you can be a revolutionary business model with a proven product. You can’t be both.

The Search For Simple

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From Insanely Simple by Ken Segall (Amazon, Kindle, Powells):

What makes Apple stand out in a complicated world: a deep, almost religious belief in the power of Simplicity. As those who have worked with Apple will attest, the simpler way isn’t always the easiest. Often it requires more time, more money, and more energy. It might require you to step on a few toes. But more times than not, it will lead to measurably better results.

I’ve been obsessed with simple the past few years. I get frustrated by computer complexity, business complexity, even personal life complexity. There just isn’t enough time in the day to deal with any of it. (And that has become even more apparent since I had kids six years ago.) I haven’t been able to put a word to it as well as Ken Segall, the author of this book does, but it has been there.

I look at other people’s products, I look at my own products, and get frustrated with everything that needs explanation or isn’t obvious, simple, intuitive.

I bought an Android phone this weekend and its complexity struck me immediately. Maybe some of it is my lack of familiarity with the platform, but its nit-picky way of doing things drove me nuts. Hiding things in a menu drawer, navigating through email, the lack of consistency from app to app. (The hardware is magnificent, simple and responsive.) I love my iPhone (and iPad) for just that reason. I loved my BlackBerry before that for the same reason. And I loved the PalmPilot back in the day for the very same reason.

So this has been my struggle since the dawn of time: how do I make working with numbers simple? powerOne was amazingly simple compared to what came before it. Teachers, students and professionals in all walks of life loved it for that reason. But just as BlackBerry made the PalmPilot look complex and iOS made the BlackBerry look complex, powerOne doesn’t feel so simple anymore.

The evolution continues.

Reason #345,968 I’m Glad I Don’t Live In Florida Anymore

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I’d like to say that I am shocked and surprised, but I lived in Florida for 6 years and while I never heard anything like this, I heard plenty of other oddities:

One man was shot to death by Miami police, and another man is fighting for his life after he was attacked, and his face allegedly half eaten, by a naked man on the MacArthur Causeway off ramp Saturday, police said.

(Here’s the Miami Herald’s original story and the follow-up.)

There were lots of oddities about that place when I lived there. No one drove the maximum speed limits. The number of murders was unbelievable. There were neighborhoods you didn’t drive into, and they would be just couple of blocks from multi-million dollar homes. I remember one story about an escaped mental patient carrying an AK-47 rifle down the middle of a major road. No one was hurt. Of course, the dead German tourist thing happened right before I moved there. Nothing like this, but these other stories are so routine they don’t even make the paper.

We went to see The Avengers this weekend. I turned to my wife at the end and said if there is any one lesson from these super hero movies, it is that living in New York City is a very dangerous place. It seems NYC gets destroyed every year!

I was kidding about New York. Not so much about Miami.

What Would John Cleese Do?

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Absolutely hilarious post (at least to my weird sense of humor) from Nick Bradbury on a pair of shoes that fart when wet:

One recent rainy morning, I stopped at the grocery store after walking my dogs in the park.

As I strode into the store I realized that my wet shoes were making farting noises with every step. I tried walking more slowly, but that just resulted in slower, deeper farts.

So I paused for a moment, too mortified to move. Then like any geek of good conscience, I asked myself, WWJCD?

“What would John Cleese do?”

I don’t usually post stuff that I don’t have a comment about, but hey! it’s Friday before a long weekend. And this one cracked me up.

The Funding Conundrum

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This is tricky, as I’m quoting Bryce Roberts who is quoting the CEO of Heath Ceramics in the video Bryce posted here:

People ask, “So, what’s your goal with Heath? Are you going to build it up and sell it?” But I really like my job. If I sold the company I wouldn’t have the job I like. How many people do you actually know who have a job they like?

For the record, I really like my job. And that is at the heart of the issues I have with external (non-customer) funding.

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I’m conflicted. I can’t come to a conclusion about how I feel about funding.

This is an old conflict for me, by the way, one that goes back a decade to our first round of funding. At the time, I didn’t think much about it. Everyone said get funding or fall behind so I went after funding. I don’t think I even had the experience to question it. But now… it’s different.

Let me explain with simple pros and cons:

Pros:

  • Speed. Raising money allows a company to move faster than it could have before.
  • Time. It (hypothetically) gives a company more time to build it’s business.
  • Focus. It allows a company to focus on the long-term plans, rather than short-term necessities to make the next dollar.
  • Ego. Feels good. Other people believe in your business enough to give you money. And it carries cache.
  • Experience: The right investors can really bring significant experience to the company.

Cons:

  • De-Focus. While funding can let a company focus on long-term plans, too much money can also allow a company to focus on everything rather than the finite things that will make it successful.
  • Funding Perceptions. Entrepreneurs, by nature, prescribe to the school of “Just Do It.” Funding makes this possible — just go do it and we’ll figure it out as we go. But market success requires understanding before doing. I have to know who I’m selling to, why they’re buying, and what product they will purchase before I can deliver them a product. It’s easy to forget this when there is plenty of money to play with.
  • Accuracy and Precision. To be successful, a start-up must be accurate and precise. I must know where to aim and I need to roughly hit the same spot every time. Funding can distort the perception.
  • Forced Decisions: Investors have one goal; the employees and founders of the company may have an alternative one.

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I want to keep doing what I’m doing. I have a problem to solve — the world has changed but we still work with numbers they way we did in 1979 — I want to solve it, and I don’t want to move on until I do. I’ve tried many times now: FCPlus, powerOne, FastFigures, an education product that didn’t make it to market, a prototype of another that didn’t get productized, and now something new to be announced soon. The closest we have gotten is with powerOne.

I’m worried that taking money from outside investors will force me to make do things I don’t want to do. But the opportunity is big and I don’t want to miss the chance of taking it on and I could really use the help and guidance. And thus my conundrum.