Saturday, October 23, 2010

The 4-Hour Work Week and What I Took Away from Ferris' Book

I recently attended a conference where I received Tim Ferris' book, the 4-Hour Work Week, as a gift.  While much of the book is hyperbole, I found two enduring lessons in the book worth reflecting on further.  The first takeaway is the importance and power of fear.

Perhaps, Mark Twain said it best, "I am an old man and have known many troubles, but most of them never happened."  

What? My reading of the quote and Tim's points on fear is that we often let our brains beat us - fear of the unknown, fear of what might happen, fear of making mistakes, fear of change, fear to realize our dreams....fear is a self-defeating, calcifying presence in all of our lives. We all suffer from insecurities, self-doubt...however, we must recognize that most of the "bad things" that we fret about are figments of our imaginations/stories we tell ourselves. Overcoming fear and conquering self-defeating thoughts is vital to self-realization and achieving a life well-lived.

My other favorite quote regarding fear and overcoming it comes from Teddy R, "

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."

The second key insight, for me, from the book is reflection and projection. Am I happy/excited about my current direction in life, my job, my current reality?  If yes, then great. If not, then what must I do, what path must I follow, to align my life's work with my life's passions?

Projection?  Tim writes about the importance of taking a good, hard look at your boss. Do you want his/her life? In 15 years, do you want to be the person, live the professional life that they are/do?

If not, change it.

In summary - the book is a shot across the bow. First, are you fears holding you back?  What are you missing in life by letting fear trump growth, experiences, and discovery.  Second, are you sufficiently reflective about the path your life is on? Are you projecting where that path will lead? Do you like what you see? If not, what are you going to do about it?

Wednesday, October 20, 2010

Widgetbox Mobile: A Bet on Mobile Web Apps

Today, Widgetbox announced the launch of Widgetbox Mobile, a mobile app service that allows businesses of all sizes to easily make and distribute a feature-rich mobile app in minutes.  In addition, we are pleased to announced that Ali Diab, former VP of Product Management at AdMob, joined our board of directors. 
TechCrunch covered the story, click here for article.
Widgetbox Mobile: Build and Deploy Mobile Web Apps for iPhone and Android in Minutes
Widgetbox Mobile delivers the following to customers:
  • Mobile App Builder: make a mobile web app in minutes without writing any code; create a custom app for a fraction of the cost and time of traditional native apps.
  • Cross-Platform Functionality: create a mobile web app that works on both iPhone and Android devices.
  • Widespread Distribution: distribute the app through multiple channels including social media, email, text (SMS), quick response (QR) codes, and your own website. No need for complex and lengthy app store approvals—just quick and easy distribution on the customer's own terms.
  • Ripple Live Updates ™: edit an app anytime, any place and push live updates through the cloud-based online service.
  • Advanced, Detailed Analytics: detailed insight into how the app is performing to allow customers to continually optimize performance.
Why are we betting on the mobile web?  It is our belief that open standards and browser-based solutions, over time, trump native, client-side applications. While today's mobile web is native-centric and app-centric, the promise of HTML5/web standard technology allows for businesses to development, distribute, and optimize highly engaging mobile apps via URLs, QR codes, and text messages.

Please try out the service and let me know what you think. 

Tuesday, October 19, 2010

Why Don't More MBAs Go Into Sales?

This post seeks to address an interesting conundrum.

The conundrum? Why do so few MBAs go into sales?

Sales is the lifeblood of any company. CEOs are often picked from the sales ranks (Chambers, Palmissano, Ballmer, Thompson, Morgridge, Apotheker). Scaling revenue helps drive enterprise value and exit outcomes.  Sales management is a discipline that can easily be taught, like marketing, operations, finance. Sales is a career.

And yet, very few MBA programs offer a sales management track, let alone courses dedicated to sales forecasting, pipeline management, strategic selling best practices, quota and sales territory management, compensation best practices.

Why are MBA programs failing to teach the value of sales leadership and the role of sales as a worthy management discipline and career?  At Kellogg, where I graduated in 1999, I cannot remember a single class dedicated to sales, and yet, we took cost accounting, operations, international finance, organizational behavior...

When alums visited Evanston, they always spoke of the value of organizational behavior to their careers.  When I speak to MBAs, I plead with them to go into sales.

Perennially, MBAs go into consulting, investment banking, brand management, and, sadly, business development.  The sales grads are often a null set.

As a CEO, I spend almost all my time selling. Selling my company to recruits, selling our product to customers, selling our equity to investors. The ability to manage a sales process - first meeting to order - and to understand account dynamics (decision makers, sponsors, technical buyers) - is vital.

Moreover, securing product-market fit, a hugely important milestone for any start-up, requires a passion for selling.

I'd love to see some comments that help answer the conundrum, let me start with a few ideas as to why sales falls lower than cost-accounting on the MBA curriculum and lower than investment banking as a career vocation:

  • MBAs are risk averse and don't like leveraged (quota) comp models
  • MBAs view sales pejoratively as many great sales people are not pedigreed
  • MBAs think sales is not strategic
Now, an indictment, why don't MBA programs lead the way here? Where are the courses, the research work, the career placement offices? Why don't business schools teach sales as a discipline?

Would love to hear your thoughts!

Monday, October 11, 2010

When to step on the gas and go for it?

When should you grow the burn rate- add headcount, marketing spend, operating capacity? When should you "go for it?" 

In order to answer the question, let's use the analogy of financial options. Start-ups are very much like financial options. The value of a financial option is a function of two variables, the duration (time to exercise) and the volatility of the underlying security (range of possible values).  Start-ups, therefore, increase in value as a function of extending the time before the cash runs out and being able to define the range of possible outcomes.

An obvious insight is that any CEO would want to maximize the value of both variables. Cash is a finite amount - each dollar spent means you are a dollar closer to running out. Cash is time. Less cash, less time. Less time, less value. Lesson: spend very carefully.

However...the range of outcomes, volatility, requires an answer to the question, "can this be a big company?" Such an answer requires the characterization of market size, revenue potential, strategic value,...  Lesson: spend resources to develop answers to customer demand, market size, financial model, etc.

The art is how much to spend on the latter without unwisely impacting the value of the former. The two variables - volatility and time - therefore can be at odds with each other. The key question is how to balance the two competing variables- preserving capital/cash while also characterizing the opportunity.

When I became CEO of Widgetbox, I was lucky to have significant cash reserves. We did not, however, have a well-understood set of market characteristics - TAM, SAM, financial forecasts, product-market fit, etc.  

We decided that in the face of material uncertainty regarding the "range of possible outcomes" that we would maximize the value of time - ie cash. Widgetbox went through a series of painful headcount reductions. Why headcount? In virtually every start-up, operating expenses are ~70% people. To materially reduce expenses there is really only one lever that matters - you need to reduce heads.

Therefore, "going for it," or not, really means ramping headcount, or not. After we reduced headcount, we more than doubled the amount of time we had before the cash ran out.  The extra time allowed us many cycles to iterate towards a well-defined business model, and, importantly, it also allowed for the serendipity required to get to the all important a-ha moments.

During our period of austerity - very low burn rates- I was often encouraged to increase spending - hire more people, invest more in the business. I was told, quite rightly, that you cannot save your way to a big company. One of my mentors insisted that I "find out quickly" if we had a business and that the "go slow" model would only lead to death by a thousand cuts.  I fought that advice and deep down I knew that to spend money without a clear sense of return would be folly.

The serendipity moment came in July 2009. We were able to pivot our technology to meet the market's demand for display ad innovation. The pivot enabled us to define an addressable market - display ($8bn), a clear customer segment (tier one publishers), a business model (CPM), a go-to-market model (direct sales and service), and a product direction. The uncertainty peeled away to reveal a very well-characterized market. As we reached product-market fit the demand began to outstrip our modest headcount.  Each day, a new deal demanded we work harder and we began to see clear bottlenecks emerge - in sales, service, product -that were limiting our ability to grow.

We were no longer projecting/testing a value prop onto a skeptical market, but rather the market began to pull us along. 

Now, each dollar we did not invest was a lost dollar of business, or more.  Now, "saving" money was costing us business.  The team was buried - working ungodly hours - and customers wanted more from us.

We decided to "go for it" and have now grown headcount by ~50% in the last three months.

In summary - preserve cash and extend the duration of your company as the primary goal UNTIL a real product market reveals itself, customer demand spikes well beyond the capacity of the organization to serve it, and you know in your gut that it's time to go "all in."