This is a guest post by Brian Turchin. Brian is CEO/Founder of Cape Horn Strategies, a consultancy devoted to helping software CEOs create vibrant and flourishing businesses. Brian has helped dozens of CEOs successfully proceed from one business life cycle stage to another: he helps start-up CEOs become a growing profitable business; he helps CEOs with a more mature business grow and scale into a much larger business dealing with topics like business strategy, sales, leadership, organization, funding and acquisitions; and he helps CEOs sell their businesses. Complementing this work, Brian Turchin is an Executive Coach helping CEOs and other “C” level executives do what they do better.

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As a bootstrapped founder, your business has been growing at more than 20% per year and doing it profitably. You now have 50 employees. Your recurring revenue is high and you have built an excellent leadership team.

But you have competitors who are bigger than you. And you feel the need to push your business to another level in order to be able to compete.

Should you seek outside investment?

One of the CEOs I met at our last Business of Software conference in October had a problem like this.

He came to the conference like others to learn from the speakers and to network but he took it a step further.

He treated the conference as an extended Board of Advisors.

He made it a point to identify and talk to as many attendees as he could about his challenge. (I was one of the CEOs he met. And we first met like many others just by sitting near each other during the presentations and introducing ourselves to each other. )

How did it work for him? Here is what he said in an e-mail to me after the conference was over.

Thanks for spending time with me in Boston. Our talk was quite helpful to weed out my brain :>)

After also talking to 8 CEOs, 5 VCs and several other people at the conference I am quite confident that bringing a VC into the company is not the right thing for us to do. We simply can’t offer them an appropriate exit (at least not one that is in sync with OUR plans). So it might help us in the beginning but would create turmoil later. So: Don’t do it.

It was interesting that some of the VCs I talked to said exactly that after we talked about our plans and my motivations. While other VCs just wanted to “get in” without actually talking about the exit. 🙂

What’s this mean for you? You too can get more value out of the conference by thinking about it as your extended Board of Advisors.

How might you do this?

1. Identify Business Challenge: Identify a business challenge you have that would be useful to discuss with other CEOs. (These are usually not the topics you can discuss with anyone else other than fellow CEOs.)
2. Identify Possible Attendees To Speak To: Look at the conference list of attendees before the conference and Identify potential attendees to speak
3. Develop Your Initial Challenge Statement: Prior to coming prepare a short discussion about your challenge by thinking about these questions:
   1. Give a quick overview of your business situation to give your challenge a context
   2. Concisely state your challenge
   3. Review alternatives considered (Or leave it open so you don’t taint a possible answer.)
4. Network And Ask About Your Issue: At the conference, seek out others to speak with, but when speaking, listen to see whether others might have the appropriate background or experience that could help you. Then bring up your issue.
5. Go Beyond Initial Answers: In listening to the answers others give you, don’t just take initial responses at face value. Ask further questions to dig deeper into what others are saying and why.
6. Meet Outside Conference: For some who seem to have an in-depth knowledge set up to meet outside the conference. In my case, the CEO and I met for breakfast in the hotel itself where we could have a more private conversation.

So at next year’s conference get the kind of value that is “priceless,” as the Mastercard commercial says, treat the conference as your extended Board of Advisors.

Hi folks,

A quick update for you on two things that people seem to want to know about.

Where are those videos of the talks from 2012?

They are being processed – again – as there was a problem with the sound output. 🙁 The good news is that we have been able to get a better sound recording and this is being re-edited and they will start to be uploaded in the next week. We will let you all know when they are all done which should be by the second week of December. I am sorry it has taken so long but they will be worth the wait…

Business of Software Conference 2013

Also mark your diaries for next year’s Business of Software Conference, to be held 28th-30th October 2013, in Boston. More details as we pull the program together but we hope you will want to participate.

This is a summary of Adii Pienaar‘s Business of Software 2012 presentation.

The Beginning 

When Adii started WooThemes he didn’t have a whole lot of experience starting a business. And to complicate things even more, he did so from Cape Town, South Africa – not exactly a startup hub. So how did Adii get to where he is today? Adii shares his lessons learned with us.

2007: First product initial revenue.

2008: Adii quit his job. Met his co-founders online. Formalized the company in July.

2009: Met his co-founders in person for the first time. Hired first employees.

2012: WooThemes is four years old today, with 25 employees. $0 funding, 100% bootstrapped.

Cape Town is not exactly a tech hub. They don’t really have:

• Networking
• Mentors
• Advisors
• Investors

In Cape Town there is no startup culture, and there is a shortage of skills. When you attend an event, it’s hard to feel like you are the smallest person in the room. So, against all odds, Adii started WooThemes.

Lessons Learned

Lesson #1: Buck trends

Social network, web 2.0, etc. you’ve heard it before. There are so many great people working on crappy ideas. Why do people feel the need to follow the crowd?

What, you need a competitive advantage? Ignorance is bliss.

Also, tech bubbles haven’t reached Africa yet. One of the advantages of being based in South Africa is that trends and hype don’t play a major role in your business decision making.

Avoid groupthink, because it’s dangerous to copy trends. For example, bootstrapping vs. getting funding. When Adii started he didn’t think VC money was an option. He just had to get revenue as quickly as possible. That meant getting paying customers!

Image credit: @JimYoungPG

Lesson #2: Not based in Silicon Valley? New York? Berlin? Breathe. You’ll be fine.

It’s actually refreshing if you come from outside those startup hubs. It makes it easier to find new solutions to old problems (remember avoid groupthink).

You’ll be compelled to build something of international quality. And the Internet allows you to compete on a global scale. Invest in branding, because it’s free.

Customer service is cheap marketing. It’s about the way you react to a screw up that matters, not the screw up itself. The screw up is an opportunity for you. Every time you get an angry email it is a license  for you to market to them. But you can’t provide customer support to users that haven’t paid. Free users don’t get customer support, because it’s not financially feasible. However, give them options to upgrade to a paid plan that offers support. 

And in the end, nobody cares where you are from.

Image credit: @JimYoungPG

Lesson #3: Trust in People 

Put the right structure, processes and culture in place for your team to flourish, and trust that they will get the job done. Trust in the people you work with is of utmost importance.

The WooThemes team is spread out through out the world. Some team members have never even met each other in person. You should hire the best regardless of location. 

Image credit: @mdclement

Lesson #4: DIY Everything

Diving into the deep end is the best way to learn. Doing something and feeling a little pain is good, because you will be compelled to put on a Band-Aid. 

Work harder than anybody else. Imagine that someone else is executing a similar idea and is working harder than you. Thereafter, work smarter than anybody else.

Lesson #5: Enable others to make money, because it’s recession-proof

Adii prefers B2B over B2C, because businesses are always looking to make more money. It’s always safer to stick to a model that enables businesses to make money.

Lesson #6: Travel

It’s important to get out of your normal environment and meet new people. You can make new friends and meet mentors. One of the main enablers to running a business from South Africa is traveling. Having friends and mentors really helps, and if you are from a location where you don’t have access to these people travel is the way to do it. Having conversations with likeminded people is a great motivator.

Lesson #7: Design Everything

Instead of being put into a box, create your own box. Entrepreneurs have the ability to make their own reality.

When designers see a problem, they have the ability to see how A to B should look like and then executing on that. Constraints breed creativity. Take the creative approach. Go out and make your own box.

Image credit: @JimYoungPG

This is a summary of Dharmesh Shah‘s Business of Software 2012 presentation.

Your Company

Your company should be coming from a place of love. Zynga’s motto is “do evil.” It is one of the most evil places from a culture perspective, and in its business approach. Before you gamify your product, you should decrapify it.

Go big great or go home. Attention is finite, problems are infinite. Build companies that solve problems. Work on a problem you care enough about that you’d be happy even if someone else solved it.

Valuation

Valuation vs. Value

• Value: What it’s actually worth.
• Valuation: What someone is willing to pay for the company at a given time.

The valuation equation -> Valuation = Revenue x Multiplier

Valuation is based on revenue?! Not profits?! Yup. This isn’t Dharmesh’s rule. He’s just telling you how things are done.

The multiplier for SaaS companies is around 5.0. Historically the multiplier is around 3 for software companies.

So how do I get my multiplier to that? Growth is hugely important. The faster your revenues are growing, the higher the multiple goes. Profitability is negatively correlated with the multiplier for companies about to go public. The market rewards growth. They are investing in growth, they don’t want dividends.

Factors affecting the revenue multiplier:

• Growth
• Predictability
• Sustainable competitive advantage
• Scale

How to increase revenue:

• Get more customers
• Increase price
• Increase retention

At this point Dharmesh used a car metaphor to highlight a few important points.

• A better engine lets you go faster.
• Visibility: The further out you can see, the faster you can go. (Achieve more visibility into the business wherever possible. For example, what impact is this changing economy going to have on my business? VCs like to see things that can give you more visibility.)
• Brakes: The better your breaks, the faster you can go. (For example, don’t sign a five year lease for a space that’s too big.)
  

  Image credit: @mdclement

Culture

How important is culture?

• Your early culture sets your future destiny.
• Build the kind of company you want to work in.

How do I scale my team without losing my culture?

• Raw transparency.
• People overvalue transparency.
• Take the mask off.
• It makes it hard to do stupid things out in the open.

Strive not just to build a great startup. Strive to build great entrepreneurs.

Your Competition

Barrier to Entry

Warren Buffet quote: “Build a moat around your castle.” The idea is that you want to make it hard to attack your castle (i.e. create a barrier to entry).

Determining your revenue multiplier is determining your risk. Mitigate your risk, because your success will attract competitors.

You don’t just want customers. You want crazy, loyal fans, because this discourages competition. The most attractive thing to your competitors is when you suck as far as your customers are concerned.

Technical switching costs should be low, and emotional switching costs should be high. This makes an awesome barrier to entry.

Porter’s Five Forces Framework

Porter’s five forces is a framework for industry analysis and business strategy development. The five forces determine the competitive intensity and attractiveness of a market. Attractiveness refers to the overall industry profitability. An “unattractive” industry is one in which the combination of these five forces acts to drive down overall profitability.

Pick markets where the barrier to exit is low. If your competitors can get out easily, they won’t fight to stay in.

Really, I can build my business on your platform? Platform partnerships are awesome…until they’re not. It’s easy to fall into this trap. When you get awesome (i.e. big enough), they will either buy you or kill you. Unless you’re so big the costs will outweigh the benefits.

[I’d like to thank Bill Horvath, founder of DoX Systems, for sharing his notes with me.]

Jonathan Cogley, CEO at Thycotic Software writes…

“Thanks for a great conference.  We thoroughly enjoyed it!  Learned lots of new things that we will be applying at our company over the next 6 months.

“I came to BoS in 2011 and again in 2012.  One thing I have noticed is that the conversation works best in person so it would be great to find other people in my area that are also interested in BoS so we can keep the conversation going between each conference.  Unfortunately many of the great people that I met were from all over the place (Australia, West Coast, etc.).

“I threw together a meetup.com group for BoS people in the Washington DC Metro Area – http://www.meetup.com/DC-Business-of-Software-Group/“

So, ‘Yes’, I could blog about it but sometimes I feel lazy…

If anyone else has set up a local Business of Software meetup, let us know in the comments and we will try to pull a list of the others together.

This is a summary of Joel Spolsky‘s Business of Software 2012 presentation.

Joel is the CEO of Stack Exchange. Stack Exchange gets about 266 million monthly page views and 22 million unique views. Stack Exchange is about the size of Texas in terms of the number of monthly visitors.

Usenet and Online Forums

Cultural Anthropology was the most boring class Joel took in college, but it has been the most useful in the long run and now it is the only thing he uses. Building a website with 22 million users is an exercise in cultural anthropology.

The whole Usenet culture was a result of accidental and intentional choices in the software. The world’s first Internet troll used a straw man as the target of his flames.

We evolved from Usenet to online discussion forums. However, the behavior of discussion forum users is still similar to what emerged from Usenet, even if it wasn’t intentional. When you copy the same format of Usenet, you get Usenet.

We wanted Stack Exchange to be different. The whole idea of Stack Exchange was to disrupt all the accidental design choices resulting from the Usenet era, and make a culturally distinct site. If we know we’re going to build a culture, and what we want that culture to be, we can design for it. We designed Stack Exchange for the culture we wanted from our users.

Stack Exchange

Every time you see a group of people, you decide whether you’d like to join them. That’s the purpose of the homepage. Everything about the first impression on Stack Exchange is designed to drive the wrong people away, and incentivize the culture they want.

• Reputation: Reputation is based on voting. When you first join the site your reputation is 1. Voting up (and down) answers and questions is a form of peer review that leads to a user’s reputation increasing over time on the site. Reputation provides recognition. As your reputation increases you are trusted more and are given more and more privileges and access to site functionality.
• Badges: Badges can be obtained by doing certain tasks, and they let everyone see how awesome you are. The number of badges you’ve earned is displayed on your user card for everyone to see. Most people claim not to care about badges, but as soon as you think someone is seeing what you’re doing, you start to care about it more. That’s because it’s motivating to have someone notice something about you. The list of badges serves as a guideline for the kind of behaviors the founders of the site like to see.
• Government: Every culture has it. Governance is up to the members of each Stack Exchange site. Each user earns more governing control of the site as their reputation increases. As you gain more reputation we begin to trust you more, so we give you access to more policing privileges. There is even a special site dedicated to discussing the governing aspects of the Stack Exchange sites – meta.stackoverflow.com. Stack Exchange’s blog and various chat rooms also make up part of the government.
• Laws: Every culture has them. All of the laws on Stack Exchange are intentional – they’re encoded into the software. Stack Exchange hates fun.

The goal of Stack Exchange is not to have super popular pages (it would be Reddit then). The goal of Stack Exchange is to have super useful pages. The most useful posts on Stack Exchange are not necessarily popular…they’re intensely useful to those who need them.

Religious debate type of questions get an enormous amount of page views, but they don’t teach you anything. Hence we close them down for further discussion and eventual deletion. Examples of such questions are

• What’s better X or Y?
• What’s the worst API?

Off-topic questions are an attractive nuisance, and will also be closed and eventually deleted. Some ask, why not move off-topic questions to another site that is strictly for off-topic questions? There are two reasons:

• It won’t attract experts.
• The site will become one of those sites that attract high school students.

The purpose of Stack Exchange is different from that of discussion forums. The goal is to create a permanent, useful artifact for the Internet. If your goal is to produce something of permanent value to the Internet, you start to think differently about what you want on the site. Stack Exchange caters to the millions of people that never create an account on the site, but have questions they need answered.

Having a community is a huge advantage for Stack Exchange that can’t be overcome.

[I’d like to thank Bill Horvath, founder of DoX Systems, for sharing his notes with me. Justin Goeres also has a nice summary of Joel’s talk on his blog.]

This is a summary of Dan Lyons‘ Business of Software 2012 presentation.

Mobile as a Medium

Dan Lyons is the writer behind the Fake Steve Jobs blog, which at one point was supposed to be turned into a TV show. In the process Dan learned that the TV business is completely broken. Lesson learned – writing a blog is way more fun than writing a TV show.

Steve Jobs called mobile the post-PC era, because he got his ass kicked in the PC era.

The global population is 7 billion, and there are 6 billion cell phones.

Mobile is the fourth wave of IT. Bill Gate’s vision was that someday there would be a PC on every desk. Mobiles today are more powerful than PCs at that time. Mobile is the $100 laptop.

Mobile is a new mass medium that’s bigger (and better) than TV. Mobile is:

• Global
• Many to many
• Participatory – everyone is a producer and a consumer

A tale of two Internets: PC vs. mobile. Windows PCs accounted for less than 50% of Internet connected devices in 2011. Four years ago Windows PCs accounted for 95% of Internet connected devices. As with TV, hardware leads, content follows.

Apple is today’s RCA. A $112 billion business that didn’t exist eight years ago. There is a growing (and risky) dependence on mobile. Apple knows it’s about controlling the content, not the hardware. iOS revenue accounts for 2/3’s of Apple’s overall revenue.

The mobile wave is just starting, but bear in mind the story of RCA. By the 1980’s RCA was shutdown.

As mobile grows, what’s happening to TV? TV is already killing itself. There is a generational shift – young people are tuning out TV and using YouTube more. YouTube has lots of stupid videos, but the money is real. Memes are extremely short-lived TV shows. Check out Cats with Bread.

75% of YouTube users are mobile. Google has invested $300 million on content; doing an end run around the TV business.

Are companies becoming more like TV shows?

• Attract jerks like TV does.
• Require relatively little capital.
• Don’t last long.
• Different expectations. Not built to last.

Today’s hit shows:

• Facebook: A global performance space. You don’t just watch the show, you ARE the show. (7 hours/user/month)
• Instagram
• Twitter: Another performance space.  Over 60% of usage is mobile.
• Flipboard
• Pinterest: 10 million users. (7 hours/user/month)

These are still the early, experimental days. There will be numerous flameouts:

• Color app
• Airtime
• Quora – half a flameout

New world: light, fast, fragmented, ephemeral. Audience is in constant motion.

Who gets hurt?

• VCs: VCs are built for companies like Intel. They are not built for this world. More money than ideas is bad news for VC firms.
• Angel funds: Crowdfunding is a better fit for the new kind of company.
• Media: A daisy chain of destruction. Ads online don’t work.
• News and entertainment: Also funded by ads.

Why don’t online ads work?

• Advertising was a creature of the TV age. It was an industry built around 30 second spots.
• Ads are weak on social. Customers fight back with “anti-ads.”
• Mobile makes it even worse because of the tiny screens.

Shift to mobile is hurting Facebook, Google and Pandora (i.e. web-based companies).

But, what if we reinvented advertising? Make it all about context – not just who, but when and where and what they’re doing. However, mobile devices are incredibly personal, so we must be careful not to violate the circle of trust (i.e. don’t be creepy). This has high potential if implemented properly – the ability to reach 7 billion people on the Internet. Two things we need:

• A new kind of storytelling: A new way of crafting stories to the media, and in a language unique to the medium.
• A new business model: Based on something that isn’t advertising, but that accomplishes the same thing (allows you to reach customers).

Dealing with the Press

When you bring in a reporter for a story, have a story to tell. What makes a good story?

• You need a narrative.
• A good company is not the same as a good story (e.g. EMC).
• Drama = conflict.
• WSJ formula – the “hero’s journey.”
• Desire, obstacles, failure, struggle.
• Betrayal, revenge, resurrection. (E.g. Apple’s comeback, Apple vs. Google/Samsung)

Follow Joseph Campbell’s Hero’s Journey when crafting a story. The idea is that every story is about a hero that overcomes obstacles. So, who will be your protagonist? People don’t like to talk about their failures, so if you are willing to expose yourself you have an opportunity.

Pro tips:

• Understand what the reporter needs. What gets him a promotion?
• Build a relationship. Don’t “pray and spray.” Think of reporter as you would a sales prospect. Figure out the one to three reporters you want to know, and meet them without expecting anything from them. Maybe something will eventually come of it.
• Know what a reporter covers.

Example of a bad pitch: “I saw the article you wrote on company A and I represent company B.” Once a reporter writes about a topic he is good for a year.

What do print journalists need? Like everyone else, they need to impress their boss.

• Big names to put on the cover to sell copies.
• Exclusives
• Scoops
• Access
• An illusion of importance.

What about bloggers?

• Traffic, traffic traffic. Compensation is tied to traffic. Much easier to get a lot of traffic with a negative story.
• Most want a different, better job.
• They leverage VCs (Pando, TechCrunch, Business Insider, etc.). Sleazy?

Every once in a while you get to see how corrupt and craven we are. Yes, you can buy off a blog. It usually involves Apple since any Apple story drives a lot of traffic. Apple turns reporters into courtiers. Pogue, Mossberg et al. must get Apple devices first – if not, they’re dead. Since Apple does not tolerate dissent, those that get their hands on Apple devices first will always write positive reviews; fearing that saying something even slightly negative will get them banned from being the first to receive the next batch of new Apple products. Think of the recent huge failure of Apple Maps, and the strange lack of its mention from those that reviewed the iPhone 5 before its official release. Strange isn’t it?

Trading favors:

• Arrington: “Give me the scoop or I will ignore/destroy you.” Advice: Ignore him first.
• Mr. X (Dan didn’t want to say his name.): Top VC dishes in the background, and gets press in return. He is available as a source. He has a full-time PR person.
• Marc Benioff: Avidly courts journalists with dinners and gifts.

It’s all about building relationships and being useful.

However, be careful what you wish for.

• There is no such thing as puff pieces.
• An article is a transaction. What do you hope to get from it? What is the price? And are you willing to pay it?
• Write the story in-house before you pitch it to a reporter.

[I’d like to thank Bill Horvath, founder of DoX Systems, for sharing his notes with me.]

This is a summary of Mikey Trafton’s Business of Software 2012 presentation.

Company Culture

Company culture can have a real impact on your bottom line. Mikey shared two stories that demonstrate this.

Story 1: Mikey stayed at a Four Seasons hotel, and ordered room service with ice cream for dessert. When the food was brought up to his room, the hotel employee asked him about how long it would take him to eat his dinner. Mikey told him it would take him about 15 minutes, and asked why. The hotel employee explained that he wanted to wait to bring his ice cream up so that it wouldn’t melt while he was eating. During a later stay at another Four Seasons, Mikey ordered ice cream again from room service to confirm that it wasn’t simply a hotel policy, but an employee going out of his way to provide good service. And sure enough, the second time the ice cream was brought up with the meal.

Story 2: An IBM executive visited a bank to make a transaction. The bank teller told the exec that he had to come back another day to make the transaction, because the one person that could help him with it was not working that day. The exec said fine, and asked the teller to validate his parking ticket. The teller refused to validate the ticket, because she said that she could only validate tickets for those that have done business with the bank. The exec said, “I tried to, but you told me to come back.” The teller wouldn’t budge on validating the ticket, so the exec said, “Fine, I’ll make a transaction.”, and withdrew all $1.5 million he had in the bank! The bank teller was never fired for this incident, so it was pretty clear that this was the company culture and not a bad employee.

Allow employees to take the initiative to go above and beyond for your customers.

Culture is the personality of your company. Most companies have a split personality – one person is helpful, the next is mean. This results from the company not caring about the culture.

If you have a great culture, by definition you have a great place to work…but only for people who fit with your culture. A company culture attracts the right people and repels the wrong ones. An excellent example of this is the US Army. The US Army does a great job at attracting those that will fit in nicely into its culture, and does an equally good job at repelling those that won’t.

Culture attracts better employees who stay with you longer, stick with you through hard times, and work for less money. Culture trumps money.

Make sure your staff fits your culture. Mikey shared a story of his early days as an entrepreneur. He started a company and hired seven people over lunch who said they all worked well together. After some time, people started missing deadlines and pointing fingers. It turned out that these seven people came from a telecommunications background, where they always missed deadlines and liked to telecommute. Mikey liked people to work at the office so that they could collaborate more easily. And because of his consulting background, Mikey didn’t miss deadlines. This was obviously not a good culture fit. In the end all seven of them quit on the same day – one right after the other.

Image credit: ‏@JimYoungPG

3 steps to a great company culture

There are three steps to a great company culture:

1. Decide what you care about.
2. Hire people that care about the same things you do.
3. Pay attention to the things you care about.

Step 1: Decide what you care about

This is the one time in your business that you get to act like a king. When it comes to culture, you’re the decision maker. In every other instance you have to win people over – customers might vote for someone else, vendors might vote for someone else, etc.

Think about the place you want to work at and think about the place people you want to work with want to work at.

Think about what it is that you stand for. At Blue Fish, they strive for customer elation, not customer satisfaction. When you go to a restaurant you want to be elated after eating your meal, not just simply satisfied. So why do we set such a low bar for our companies?

Define your core values.

• Think about your strengths. Think about why people admire you. This could be food for thought for your core values. Make the core values a reflection of the best aspects of yourself.
• Think about what you admire in other people. What makes them so special? Make those the aspirational core values of your company. Hire to compensate for your personal weaknesses that are still aspirational core values.
• Write them down.

For inspiration, here are Blue Fish’s core values:

• Client focus
• Teamwork
• Accountability
• Excellence
• Communication

Mikey said he is strong on all but one of those core values. He said that accountability is not a strength of his. If he tells you he is going to do something he will definitely start it, but odds are he won’t complete it all the way through. He means well; he just has a hard time following through. However, accountability is important to him, so he included it in Blue Fish’s core values to drive the team to make up for his weakness.

Make it real. Think about what your culture would be if it were true that the only thing that can get someone fired is if they violate your culture.

Make a list of those values that could serve as a checklist for hiring.

For Blue Fish you are a culture fit if:

• People like having you around.
• You do more for others than you do for yourself.
• You love your job and are really freaking good at it.
• You’re not scared of a little hard work.

(Blue Fish has a total of 13 of these.)

Step 2: Hire people that care about the same things you do

Fire everyone who’s not a culture fit, and hire those who are.

Use culture fit questions in your interview.

• Describe the culture at your last job. Did you struggle? Thrive?
• What do you expect from other team members?
• What behaviors are you unwilling to tolerate?
• What does [core value] mean to you?
• Use weed out questions to narrow the field. For example, ask “Tell me about a project that failed.” Then no matter what the answer is, respond with something like “It sounds like the customer didn’t know what they wanted.” or “It sounds like your boss really dropped the ball.” If the interviewee takes the bait and blames the failure on someone else instead of taking some responsibility, they may not be a good fit for your company.

Step 3: Pay attention to the things you care about

This is where you make sure that you and the team deliver on what you want.

You will get the behaviors that you tolerate from others. You don’t need to fire someone, just say it. For example, at Blue Fish being late to a meeting is a no-no, so they implemented the “feed the fish” program. If you are late to a meeting, you have to take the smallest bill out of your wallet and drop it in the fish bowl sitting on the conference table – feeding the fish. At the end of the year, Blue Fish matches the contributions and donates the entire sum to charity. This is an example of how you can inform everyone about what you will tolerate without being a jerk about it.

Reinforce the things you care about, and recognize results you like. Some ways to accomplish this:

• Ring the good news bell. Whenever one of a small list of positive actions that align with your company culture is accomplished, ring a bell in the office and make an announcement.
• Use hero stories. A hero story is a story of an employee who has been heroic in aligning with your company culture in some way. Southwest Airlines does hero stories. One example is of a Southwest employee who drove about 100 miles on his own time to get a customer a piece of luggage that Southwest had lost. The idea is to set the bar high for the rest of the team.

At Blue Fish they ring the good news bell when:

• They close a deal.
• They deploy for a customer.
• Someone accepts a job offer with them.

At Blue Fish they don’t use hero stories, but they do something similar that they call “round of praise.” Round of praise is like a hero story but using a lower threshold. For example, John spent all day Friday helping me solve a problem, so he was unable to finish his tasks and had to come in on the weekend to finish his work.

Does it work?

The best way to find out if this actually works is to turn your company over to the team to see what happens. Mikey ran an experiment by firing himself from Blue Fish and turning over the company to the team. The result: the team doubled revenue over the past year!

[I’d like to thank Bill Horvath, founder of DoX Systems, for sharing his notes with me.]

Thanks to Stephen Kellett, English Bagpiper extraordinaire, for bootlegging the entirety of the BoS BOS Big Band live sets.

Here are the two sets, in their entirety.

• The classic rock set, (and listen from about 8.00 minutes in for the jam session that gives you just an inkling of the talent in that scratch band).

• The folk set.

I am a bit of a numb-nut when it comes to music so if anyone can let me know which song is which and when they start (I believe it is called a playlist in the trade), I will post too.

For some pictures and video – see the original BoS BOS Big Band live post.

This is a guest post by Brock Armstrong. Brock is a musician, web developer and digital media instructor turned personal trainer, marathon and triathlon coach. To fund his Triathlon & Marathon racing habit, he takes well planned designs and turns them into clean and consistent HTML and CSS code. Find out more by going to www.frozenpuck.com and/or www.skywalkerfitness.ca.

Brock gave a Lightning Talk at Business of Software 2012. This is a summary of his talk.

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After making the (partial) switch from Developer to Coach, I have become very aware of my fellow desk-jockey’s lack of… physical prowess and I want to do something about it. I don’t think everyone needs to run marathons, I just want you to feel better, look better and live a good long life.

The Problem?

We average North Americans work more than 47 hours a week and we’re sitting down for most of that time. In fact, we’re sitting more than ever before in human history: 9.3 hours per day. That’s more time than we spend sleeping!

Did you know that sitting for 6 hours (or more) per day makes you up to 40% more likely to die within 15 years than someone who sits less for than 3 hours per day? And here’s the kicker – this is true even if you get regular exercise.

Between 1980 and the year 2000, exercise rates in the UK stayed the same but sitting increased by 8% and obesity doubled (obese people, on average, sit for 2 and a half more hours per day than thin people).

Desk jobs, commuting, watching TV, and playing video games all encourage us to be sedentary and even people who exercise regularly spend much of the workday planted in a chair in front of the computer.

The solution!

Reduce our sedentary behaviours to a total of 3 hours per day (or less) and we could increase our average life expectancy by 2 years (among many other more “fashionable” advantages).

Standing!

I have a confession to make… I’m one of those people who has a standing workstation – because standing workers (like a clerk at a Best Buy) burn about 1,500 calories while at work; a person behind a desk might burn 900. This explains why people gain 16 pounds within 8 months of starting a sedentary office job.

Really?

What it comes down to is that you don’t absolutely have to stand all day long but you should absolutely interrupt your sitting and move around as often as you can. I set an alarm on my iPhone to go off every hour, on the hour, and I do pushups, or calf raises, or squats, or jumping jacks, or burpees, or… you get the idea.

Getting up and raising your heart rate for 4 minutes, once an hour, gets you the 30-ish minutes per day that your doctor has been nagging you about. Plus it makes you more productive, clears your head, gets you refocused and energized.

NEAT!

Try these when you are not at work: Never sit on a bus/subway. Always take the stairs. If you are on an escalator, pretend it’s stairs. Never sit through a commercial break on TV. Ignore what your mom told you and bounce a leg or fidget whenever you can. This extra movement is called “Non Exercise Activity Thermogenesis” or “NEAT” and it all adds up.

Eat Real Food!

But… getting up and exercising alone is only part of the equation – you have to look at your diet too.

Here are 3 great phrases to remember:

1. “Eat food, not too much, mostly plants” – Michael Pollan from In Defense of Food
2. If it’s not something your great grandmother would recognize as food, put it down.
3. If you are not hungry enough to eat an apple, you’re probably not that hungry.

Lastly, remember the 80/20 rule: you don’t have to be perfect all of the time (that will set you up for failure), just be perfect 80% percent of the time… that other 20% probably won’t kill you.

Some short excerpts of the band at Business of Software this year. I know a guy standing at the front with an iPhone 5 got one of the songs complete on video. If you are that person, please get in touch. Would love to see it. If you see a man walking around Boston trying to navigate his way back to the InterContinental Hotel with an iPhone 5, please get in touch too.

Thanks to Stephen Kellett, English Bagpiper extraordinaire, for bootlegging the entire thing too.

Here are the two sets, in their entirety.

• The classic rock set, (and listen from about 8.00 minutes in for the jam session that gives you just an inkling of the talent in that scratch band).

• The folk set.

I am a bit of a numb-nut when it comes to music so if anyone can let me know which song is which and when they start (I believe it is called a playlist in the trade), I will post too.

Fair to say not many software based rock concerts feature English Bagpipes…

Bassist showing off shocker…

Something a bit more familiar.

If you were the guy with the iPhone and still have that video, please be in touch…!

The following is a guest post by Jody Burgess. Jody is a software marketing exec turned startup entrepreneur. She is cofounder and CMO of Tribbon, a service that makes it easier to remember the people you meet and the experiences you share at events. She also provides strategic marketing consulting and outsourced CMO services for technology clients. She blogs at http://www.tribbon.wordpress.com.

Jody gave a Lightning Talk at Business of Software 2012. This is a summary of her talk.

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I have been diligently practicing overcoming fear for 15 years. It is the reason I am so “obnoxiously happy” as my friends put it, and I want to share my story with BOSers because overcoming fear is one of the most important parts of being an entrepreneur.

What’s your fear?

We all have fears. What is the one thing that is holding you back from achieving your next business goal or your next dream. Big or small, doesn’t matter. Be REALLY honest with yourself. Just think about it for a minute.

My story

It was about 15 years ago that I found myself in sort of a sad, lonely, dark place. I was divorced. Alone. Broke. Living on my grandma’s couch. It pretty much sucked.

One day I decided to get a grip and make a better life for myself. I was going to start by setting some goals. I went to my favorite little cozy restaurant and wrote on the only piece of paper I could find, which was the little green paper wrapper that served as a napkin ring. Turns out it’s not a bad thing to boil all of your complex thoughts down to a little space. It makes them memorable.

Then I started to take an honest look at the obstacles that were standing in my way. That’s when it hit me. I was afraid. I was afraid to do the things I needed to do to achieve the goals I had set for myself. For example, I was a salesperson who was afraid to make sales calls. Ridiculous but true. I was also afraid to tell my boyfriend at the time that I was madly in love with him because I thought FOR SURE he was going to turn and run the other way.

I felt I was on to something so I ordered another glass of wine and I dug further. That’s when I got really honest with myself and realized it was the outcome or the reaction of others that I feared the most. I was afraid that if I made the sales calls people would hang up on me and the guy in the cubicle next to me would laugh. I would look like an idiot. THAT’S what I was afraid of. Looking like an idiot. I was afraid that if my boyfriend left I would be alone. I was afraid to be alone…

Oh my God!I had just had an epiphany. I was afraid of the outcome. I was afraid of the reactions I would get from others. I quickly scratched off all the goals and just wrote “BE FEARLESS” at the bottom of the slip of paper. I thought…”I got this”. And I did.

The very next day I woke up and started making the calls. People hung up on me and I got laughed at. My boyfriend left and moved all the way to Ohio! (note: he came back… we’ve been married 12 years).

I have been on a completely different path since making the choice that day. It has been an amazing journey.

I learned some lessons along the way…

1. It is way better to decide up front that you are going to be fearless.

Our brains are programmed to have a fight or flight response to impending danger. It is much more efficient and effective to decide up front that you are going to stay and fight. It takes all of the emotion out and allows you to think and act from a rational place when it matters most- in the heat of the moment.

2. Always fight. Peacefully.

I’ll never forget the time my new boss called me into his office after a week on the job to ask me a “what were you thinking!?” question. I recall reminding myself in that very moment that I had already decided to stay and fight. So I resisted the temptation to run and hide under my new desk for the next five years, and instead, I calmly sat down and explained my thinking. We ended up having a great conversation that turned into a great relationship. And THAT was a key moment in my career. Lesson: Stay. Fight. Peacefully.

3. Not everyone will be fearless and peaceful.

Fighting peacefully is a skill that must be developed. We are not born with the natural tendency to sit down and explain ourselves. It comes with diligent practice. Remember, not everyone is there yet. The people you interact with may still want to throw shit at a fan, pick a fight or storm out of the room. It is up to you to figure out how to deal with people like that, and your choices are pretty obvious. You either keep them in your life the way they are, try to fix them or move them out altogether.

4. Nobody ever died from…

Public speaking, looking foolish, being honest, starting over and not being perfect. I’m pretty sure.

5. Start now and see immediate results (unlike a diet).

There is no need to wait. Just like the cartoon says, “How do you know if you are a flying squirrel if you don’t jump?”.

Although I started my journey some 15 years ago, it wasn’t until 2012 that I got the opportunity and the courage to stand on stage at the BOS2012 conference and tell this story as an entrepreneur. I am pretty amazed at how far I have come from that day a long time ago.

This is a picture of the actual slip of paper. I have achieved everything on this list and more. And I am not done yet.

Thank you for listening to my story.

Be fearless!

Jody

This is a summary of Peldi’s Business of Software 2012 presentation.

Peldi’s Law of Learning

Learning is like a roller coaster ride. Peldi theorizes that we learn in a sort of upward sine wave pattern. We hit peaks and valleys in our quest to educate ourselves. At times we think “Wow, I’m smart and can share my knowledge!”, but other times we don’t feel so smart. Peldi felt knowledgeable and worthy of sharing his experiences in 2010 when he presented at Business of Software. He is feeling the same way again this year.

Image credit: @mdclement

Peldi’s epiphanies as he grew Balsamiq and moved through the various stages of the company:

• Vision: At first all you have is an idea. You think it’s a great idea, but you don’t want to tell anyone because you think people will steal it. This is despite the fact that no one recommends stealth mode, and that it’s well known that an idea by itself isn’t worth much.
• Product: Then you think all you have to do is build a product, and the masses will somehow manage to find you.
• Marketing: Then you realize “Oh crap, now I have to market this.” Marketing is just as important as the idea and the product. Lean startup helps at this stage.
• Support: If you do the above three right you end up with customers, which leads to doing customer support all the time. You realize customer support is just as important as the previous steps. Then you hire people to do customer support.
• Company: Now you realize you have a company. When you only have 2 – 3 people it’s just a hobby. This company is fragile and it’s going to take a lot of your time. If you hire the wrong person you could ruin the company.
• Ecosystem: Once you have a company you can build an ecosystem of partners around that company. That ecosystem gives you a competitive advantage.

There are many books and blogs that go into great depth about the first four topics, but there isn’t a whole lot of information about the last two. This presentation will focus on the last two – company and ecosystem.

Ecosystem

Your internal company ecosystem starts with the founders and the employees. From there it grows when you need services from professionals like lawyers and accountants. These people are an extension of the team. Then you add vendors, contractors and partners to the mix. Lastly are the competitors. Yes, competitors! Competitors are part of your ecosystem because they have an impact on your business.

Image credit: @ZulyGonz

There’s an external company ecosystem too. Your sales website, forum and blogs are the same website, but they might all be hosted on different servers. Then there’s your social media presence on Twitter, Facebook, etc. If you’re lucky you’ll also have a cottage industry of people that will extend your tools with plugins.

Image credit: @ZulyGonz

Embrace your ecosystem. Think about all these things because they are there and will continue to be there. You’re going to have to deal with a lot of people.

Surround yourself with excellence. Make yourself the dumbest person in the room.

Be a good citizen. If you don’t want people to screw with you, don’t screw with them.

Company

Growth requires gardening. Grow organically and grow all at the same time (revenue, employees, PR, etc.). Peldi recommends reading the Inc magazine article by Joel Spolsky – The Four Pillars of Organic Growth.

Company values (Pick your battles and deliver.):

• What kind of person do you want to be when you grow up?
• Reflect the qualities you want to demonstrate as a person in your company’s ethos.

Company policies:

• Use as few as possible. Don’t create a policy just because it’s easy to do. Laws are like features – easy to add, hard to take away.
• Policies are never frozen. They can be changed.
• Explain why the policy exists. How does it relate to the company values?
• Put policies on the blog. Ask the community what they think of the policy, especially if you’re not sure of it. The biggest spike on Peldi’s blog was because of a blog post on Balsamiq’s company policies.

The main goal of the policies is to keep everyone on the same page. It’s also helpful for new employees.

Guidelines used at Balsamiq:

• Pace > deadlines: We are all mature. Let people pick their tasks and go as fast as they can. If you push too hard, people will burn out.
• Vacation policy: Take some!
• Salary: Remove money from the conversation, so employees don’t have to worry about it. Balsamiq pays employees more than the industry average.
• Profit sharing: All Balsamiq employees have profit sharing. It’s not based on salary or skill. The idea is, if the company does well, the employee does well. For some employees it can be as much as their salary. The employees don’t have equity shares or stock, because Peldi says he hadn’t figured that out when he started the company.
• Donations: Employees are given money they can donate to whatever cause they want.

Guidelines posted on Balsamiq’s internal company wiki:

• Sales support bible
• Setting up a new development machine
• How we do development and QA (branding, TDD, etc.)
• Hipchat + Skype + Google hangout
• How we do support
• Website style/HTML
• How we use Twitter
• Sponsorship guidelines
• How we let people go

Things I wish I had known (time saving tips):

• Ignore Asian registrar notices. It’s a scam.
• Ignore award notices. It’s a scam. They usually want you to pay them money.
• PCI compliance is a mafia operation. It’s intentionally complicated. They are time wasters – if something doesn’t apply to you, say yes anyways.
• VCs will eventually start contacting you. Be nice when dealing with them, even if you don’t need them now. You may need them someday.  Keep in mind that for VCs growth is king, not profit.
• Know when to hire. At Business of Software 2010, Peldi recommended that you “wait until you are about to die” before hiring someone. He now takes that back and advises that you don’t wait until it’s so late. If you have good cashflow you should consider hiring someone sooner. But at the same time, be careful not to rush your hiring decisions, because you could make a mistake in hiring the wrong person. Something Peldi recently experienced. Peldi made everyone in the audience take his hiring pledge.

Image credit: @mdclement

How a typical conversation with a VC goes:

Image credit: @ZulyGonz

Don’t underestimate the importance and difficulty of growing a company the right way.

Balsamiq’s current challenges:

• Peldi is the bottleneck.
• Managers? Because Peldi is the bottleneck he’s starting to think he needs managers, but he doesn’t want managers.
• Valve envy. Valve is a company that has beautiful employee handbooks that Balsamiq wants to be like.
• Flat organizations. Is this the right choice?
• In over their heads (as usual).
• Is it worth it?

[I’d like to thank Bill Horvath, founder of DoX Systems, for sharing his notes with me.]

Justin Goeres also has a nice summary of Peldi’s talk on his blog.

This is a summary of Gail Goodman’s Business of Software 2012 presentation.

The Silver Bullet?

The inexperienced assume there is a silver bullet to success.

• Free
• Viral
• Network effect

Have you ever heard someone say that his marketing plan consists of going viral right after launching? It shows a lack of experience. 1 out of 100 will find the magical, silver bullet like viral spread. The rest of us are going to have to work.

Gail claims that she’s pitched more VCs than anyone in the room. There is no silver bullet, but instead it is a long, slow ramp of death. It takes a long time to get to scale. It takes a long time to get to minimum critical mass. Growth is fueled by doing a million things right. Don’t count on a silver bullet to get you to the hockey stick of revenue growth.

Mirages:

• Partners: Don’t worry about partnering until you’ve figured out yourself how to sell your product.
• Product changes: Thinking “One of these product changes is going to make the difference.”

There are no silver bullets. So how did Gail get to where she is now?

The Long, Slow SaaS Ramp of Death

Constant Contact’s sales were $1.5M/month in 2006. They are now at $20M/month, and they expect $250M in revenue this year – $39 at a time. However, it took Constant Contact $21M and 13,000 customers to get to profitability. How did Gail and her team get over the long, slow ramp of death?

The funnel:

1. How will prospects learn about you? How will you reach them?
2. How does prospect and customer engagement lead to customer value and conversion?
3. How will you drive retention and referrals?

How will you reach your prospects?

Content is the biggest challenge for small businesses.

You need both online and offline methods to reach your potential customers. Constant Contact used radio and TV commercials. Slowly test these methods – test, scale, tune. They learned that small businesses didn’t understand email marketing, so they created webinars and seminars to educate them.

Word of mouth continues to be their most important channel. If customers like the product, they tell people.

How does prospect engagement lead to customer value and conversion?

We are in a mixing bowl of technology and people. We live in a world where our attention span is miniscule.

Not only do you have to get them to buy, but you have to get them to stay. Be quick to wow them. Be quick to get your customers measurable results. Make them successful early. The default text in your product should inspire action, not just label stuff.

How will you drive retention and referrals?

Innovate everywhere.  Innovation needs to occur everywhere in your business, not just in the product or technical side of your business. Innovation should be guided by customer feedback.

You don’t own the gas peddle on word of mouth marketing. The best gas pedal on word of mouth referrals is a great customer experience. The more you direct your customers to the early path of success, the better you’ll be.

Metrics

Measure your business from customer view (inward), not from metrics (outward).

Gail says the best blog post she’s ever read on SaaS metrics is SaaS Metrics – A Guide to Measuring and Improving What Matters.

LTV = (ARPU * retention) * gross margin / (-) cost of acquisition

where

• LTV = lifetime value
• ARPU = average monthly revenue per customer

Gail recommends MixPanel or Kissmetrics for measuring business metrics.

[I’d like to thank Bill Horvath, founder of DoX Systems, for sharing his notes with me.]

Here are some links to some of the blog posts from attendees at this year’s Business of Software Conference. Drop a link into the comments below if you want to add yours.

First up, the BoS blogging demoness:

Zuly Gonzalez from Light Point Security who is summarising each talk in a series of guest blogs. 

Paul Kenny, Resistance is futile!

The job of a sales coach is to listen to lots and lots and lots of pitches. After listening to sales calls for a while you develop a sense for how it’s going. Therefore, you should start listening to your interactions with your customers. Create a sales culture in your business that allows you to repeat your successes.

Bob Dorf, How Silicon Valley innovates

Most startups fail to scale. More startups fail from a lack of passionate customers than anything else. Code is only half the job. You can pretty much build anything these days. Technology isn’t the problem, figuring out who your customers will be and finding passionate customers is the hard part. If you are a passionate founder, putting in 20,000 hours gives you about a 1 in 8 chance of success.

Dan Pink, The surprising truth about motivating others.

Dan Pink started his presentation by crediting Neil Davidson for the idea behind his new book, To Sell Is Human. Dan told us about an email he received from Neil and the followup conversations where Neil described how his sales force was gaming the compensation system. Neil tried to modify the compensation system, but every time he did his sales team would figure out a new way to game it. So Neil eliminated commissions for his sales force altogether, and it ended up working phenomenally. Dan suggests that if/then rewards are extremely effective for simple, repetitive tasks, but fall short for conceptual, creative tasks.

Gail Goodman – The Long, Slow SaaS Ramp of Death

The inexperienced assume there is a silver bullet to success.

• Free
• Viral
• Network effect

All nonsense. Have you ever heard someone say that his marketing plan consists of going viral right after launching? It shows a lack of experience. 1 out of 100 will find the magical, silver bullet like viral spread. The rest of us are going to have to work. Gail has run a successful SaaS business, Constant Contact, (market cap now c $1billion, employees c 1,00), for 13 years. She did SaaS before it was called SaaS.

Peldi, Balsamiq. Coding is the easy part.

Peldi’s epiphanies as he grew Balsamiq and moved through the various stages of the company:

• Vision: At first all you have is an idea. You think it’s a great idea, but you don’t want to tell anyone because you think people will steal it. This is despite the fact that no one recommends stealth mode, and that it’s well known that an idea by itself isn’t worth much.
• Product: Then you think all you have to do is build a product, and the masses will somehow manage to find you.
• Marketing: Then you realize “Oh crap, now I have to market this.” Marketing is just as important as the idea and the product. Lean startup helps at this stage.
• Support: If you do the above three right you end up with customers, which leads to doing customer support all the time. You realize customer support is just as important as the previous steps. Then you hire people to do customer support.
• Company: Now you realize you have a company. When you only have 2 – 3 people it’s just a hobby. This company is fragile and it’s going to take a lot of your time. If you hire the wrong person you could ruin the company.
• Ecosystem: Once you have a company you can build an ecosystem of partners around that company. That ecosystem gives you a competitive advantage.

There are many books and blogs that go into great depth about the first four topics, but there isn’t a whole lot of information about the last two. Peldi’s talk focused on the last two – company and ecosystem.

Andrei Pop – Andrei Pop summarised why Business of Software is all about the people in his blog, ‘Find your tribe”

“I really struggled to write this blog post summarizing my learning from Business of Software. I spent three caffeine fueled days in Boston last week with some of the most intelligent, thought-provoking people I have ever come across. The conversations and learning were almost impossible to summarize in a blog post. I tried, several times actually; I have about 6 or 7 unfinished posts sitting on my hard drive. I could have produced any number of bullet point lists summarizing my learning – “5 things I learned at Business of Software”. But that wasn’t the point, and it wasn’t the post I wanted to write. Had I written it, you would have read it and nodded along, as you’ve done with countless other startup advice posts that tout generic advice any entrepreneur should probably heed – “of course I should listen to my customers”. You would quickly move on to another post and 10 minutes later you would have forgotten what i said. You see, this is the fate of 99% of the blog posts, books and conversations. The other 1% is people. That is what I found at Business of Software, and that’s what I want to write about.” Read more…

Matthew Dean – Matthew scored big by writing summaries of every presentation for Onstartups. Very comprehensive and well written writeups.

“Within the past week, my son turned four, my daughter turned one, and I attended the hands down best conference I have ever attended. It has been a great week and thus, I was inspired to share my experience at the conference, Business of Software, or BoS for short. The conference website is businessofsoftware.org and the hash tag was #BoS2012.” [Thanks Matthew!]

“The remainder of this post will summarize my thoughts in each of the presentations at this year’s conference. Unfortunately if you weren’t in attendance, these summaries simply won’t do the presentations justice as there were so many stories and anecdotes to go along with them that provided much context and value as well. Thus, I would highly recommend that you follow the BoS conference blog as videos will eventually make their way onto the site.” [They will when they have been edited, processed and checked. This usually takes about a month.] Read more…

Alex Czartoryski, the co-founder and Chief Innovation Officer at Fresh Air Educators wrote about key actionable takeaways. This post is also being run as a guest blog on Business of Software.

“Here are some actionable insights and take-aways that I felt were most significant at this year’sBusiness of Software conference (2012, Boston)

“Make your Customers Awesome (aka Badass)

“To encourage your customers to spread your product via word-of-mouth, your product should make your customers “badass”.  Don’t focus on making your product awesome, focus instead on making your customers awesome.  This may seem like a small semantic difference, but what triggers the word-of-mouth snowball is when your customer can impress his/her friends because of something you did.” Read more…

Justin James – Business of Software 2012 highlights, letdowns, and a controversy. One paragraph summaries of all talks.

“Business of Software features presentations and workshops from some of the most successful people in the world of software startups, including Kathy Sierra, Gail Goodman, and Bob Dorf.

“One of my biggest dreams in this industry has been to attend the Business of Software conference. Business of Software is an annual event aimed at software entrepreneurs and people involved in startup software companies. It is a multi-day event that brings together presentations and workshops from some of the most successful and experienced people in the world of software startups.

“Last week I was able to go to Boston and attend Business of Software 2012. In the coming weeks I will write about some of the most useful things I learned there, but today I will talk about each speaker’s presentation to give you a feel for the event. (Recordings or transcripts of the presentations will post to the event’s website in the next month or so.) Read more…

Jody Burgess, Tribbon. BoS2012, Personal lessons learned.

I am just now recovering from the whirlwind of Business of Software 2012. It was the most exciting, exhausting and rewarding event so far.

This is the fourth year for me as an attendee but the first year as a founder/entrepreneur. Words cannot express the difference in mindset. Instead of having conversations in my head like “Wow, I wish so-n-so was here to hear THAT” and “How am I ever going to convey that awesome point to others back home?”, I was able to actually focus on how I would use the ideas right away. Like… in real life. Starting tomorrow. Amazing!

You hear what you want to hear. Listening to stories of those who have walked the path before me has always been an inspiration. This year was no different. However, I also heard cautionary bits of wisdom that I didn’t quite pick up on in years past. Maybe because I wasn’t paying close enough attention. Instead of hearing “you can do it” and “you got what it takes”, I heard things like “be careful of this” and “watch out for that”. Holy cow! What a difference a little perspective makes. Read more…

Larry Gregory, Competegy. Partner Strategy and the Business of Software.

I recently attended the Business of Software conference in Boston.  Attendees ranged from developers to CEOs, mostly representing small but fast-growing software companies.  I have condensed the more compelling talks down to their key points and correlate how they relate to ISV Partner Strategy as follows: Read more…

Drop a link to your write up/blog post if you have one in the comments and we will link to them.

Beautiful and useful. Double win. Great illustration from Marine Barbaroux, Chief Awesome Officer (I made that up but she is), at Red Gate Software.

We want more Marine… 🙂

Guest blog post from Alex Czartoryski, the co-founder and Chief Innovation Officer at Fresh Air Educators who attended last week’s Business of Software Conference that we ran in Boston and got one of the first write ups in…

To encourage your customers to spread your product via word-of-mouth, your product should make your customers “badass”.  Don’t focus on making your product awesome, focus instead on making your customers awesome.  This may seem like a small semantic difference, but what triggers the word-of-mouth snowball is when your customer can impress his/her friends because of something you did.

This is one of the powers of Instagram — it allows average people with no photography skills to start taking awesome pictures that can impress friends and family.  Spend some time thinking about what your customers are doing AFTER using your product, because that’s when the word-of-mouth happens.

Gamification

Although “gamification” is hot right now, it is generally NOT the type of behaviour you want to encourage.  It is a behaviour that triggers similar brain functions to those experienced during slot machine use and is not something that promotes long-term loyalty in your customers.  Gamification works only in very narrow verticals and in general will not produce sustainable or desired results.

A/B Testing

When running an A/B Test, ALWAYS start with a theory and then use the A/B test to try and prove or disprove that theory.  Don’t just run random A/B tests that show and hide various elements, hoping to stumble upon a magical winning combination.

To find out if your test results are statistically significant, don’t trust your A/B Tool.  Instead use this formula: Don’t trust your A/B testing tool to determine if your test is statistically significant.

Instead use the following THREE STEP formula:

1. Define N as the total # conversions in A + B
2. Define D as the difference in # conversions between A and B divided in half
3. The test result is statistically significant if D squared is bigger than N.
4. Act on it: Badasscode13

[Update 26th September. This is it but sadly someone else got there first – we have to make these harder… Your search isn’t completely in vain though. If you’re quick – first three people to use this get $1,000 off.]

Thanks to Jason Cohen at WP Engine for this formula

The Idea Factory:
Nurture Entrepreneurship in your Organization

This is a framework (un-polished and in need of improvement) to nurture entrepreneurship in an organization (mainly geared towards developers, but not necessarily):

Company Culture

As an owner, if you don’t “design” your company culture, your employees will do it for you.  You shouldn’t let  your employees do this, because they usually suck at it.To design your own company culture:

1. Decide what you care about
2. Hire people that care about the same thing
3. Remember the things you care about.

In terms of scaling company culture during rapid growth, “transparency” is a big help.  A by product of transparency is that it is very difficult to do stupid things because everyone will call you out on it.

Profit Sharing

Here is the profit sharing strategy that is implemented at Balsamiq.com

Customer service should be like a “par 3″ golf course:

If there are more interactions than this, then you are not spending enough time either understanding the problem or finding the perfect solution for the problem.

How our jobs are killing us

Sitting down for more than 3 hrs a day decreases your lifespan by AT LEAST 2 years on average. Try to stand up and move around for a few minutes at least once every hour, or consider getting a standing desk.

Salesmen and the Art of Selling

Turns out that contrary to popular belief, the best sales people are NOT extroverts.  They are NOT introverts either.  They are “ambiverts” — which is the majority of us: those that are not on either extreme of the scale.

Interesting Sales Pitches

The Question Pitch: If you ask your customer a question, and you know what answer they will come up with in their head (and it’s a favorable answer), then this is much more compelling than just telling them in the first place. (Should landing page headlines be questions to our customers?)

The Rhyming Pitch: Rhyming messages trigger a cognitive part of the brain that makes them more memorable and seem MORE TRUE.  ”If the glove doesn’t fit, you must acquit”

The Pixar Pitch: All pixar stories are fundamentally structured like this:

Once upon a time __________________
every day ________________
until _______________
because of that ____________ and because of that _______________
until ___________________

(Think of Saving Nemo or any other Pixar movie).  Apparently a sales pitch like this is very effective.  Should you consider a story like this on your About Us pages?  Or perhaps below the fold on your landing pages?

This year’s workshop sessions were designed to help get people talking and thinking together in smaller groups. We hope everyone had the opportunity to enjoy themselves and meet some interesting people. Each team had a maximum of 20 people from different companies and they all worked together to produce a series of specific outputs to 10 challenges. Overall available time was 90 minutes and the results were submitted online. Here are the outputs of HERMIONE IS BADASS.

The Outputs

Name of team: HERMIONE IS BADASS.

HERMIONE IS BADASS didn’t disclose names or superpowers. They went straight to the rest of the challenges.

Using a single packet of spaghetti and marshmallows, HERMIONE IS BADASS built a spaghetti tower 104 inches tall. (Though it was clearly stuck to the window by marshmallows…)

To better their BoS experience, they wireframed a special Mobile App. They shared some screen shots with us.

HERMIONE IS BADASS members talked about something important they learned in BoS 2012 in a 1 minute video.

After cutting a piece of letter paper into a ring, HERMIONE IS BADASS claimed 24 people passed it over their head to the floor without ring breaking. You can see for yourselves here.

Where is Hermione?

They built a spaghetti bridge to span a 98 inches wide gap. Here is the photo.

They drew a cartoon to encapsulate the Business of Software Conference. Have a look.

In less than 140 characters, the proposed business strategy for Twitter of HERMIONE IS BADASS is

• “Become the universal messaging plumbing for the internet: from people and machines to other people and machines”.

Finally, HERMIONE IS BADASS explained how software could solve a big problem in the world.

http://youtu.be/DPqIxrF1e44

Thank you, HERMIONE IS BADASS members for participating and being up to the challenge of BoS 2012 Workshop!