Aug 31

A strange title, I know. Let me explain.

The interesting problems are the ones where a precondition for solving the problem is some level of sucess in already having solved it. Commonly known as “chicken and egg” problems, some examples are:

chicken.gifHow do you get hired for a job without experience?
egg.gifHow do you gain experience without having a job?

chicken.gifHow do you get users to beta test your product until it’s popular?
egg.gifHow do you make it good enough to become popular before you have beta testers?

chicken.gifHow do you raise money to build your product before proving to investors that it will make money?
egg.gifHow do you execute without having money to fund product development?

These paradoxical problems are seemingly unsolvable at first glance because (like one of those weird M.C. Escher paintings) they are inextricably deadlocked with themselves.

Startups by nature are a fertile ground for these types of problems; we encounter new challenges like these daily with JumpBox, where the solution demands resources that only become available after some part of the solution is achieved. The very term “bootstrapping” itself comes from a myth of a Baron who found himself drowning in a swamp and was able to grab his own boots an lift himself to safety- a physically impossible feat! Arguably though, bootstrapping a company from nothing is an equally “physics-defying” task.

So is there a repeatable formula for cracking a chicken & egg-style problem?

I used to back in the day. It was my first summer job while I was in college. The trouble with selling anything for the first time though is that it’s obvious when you’ve never sold before- your confidence as a salesperson comes only from making sales. Once you’ve sold even once, it becomes infinitely easier to sell again. But getting that first sale is the hardest thing ever. I’d say 70% of the people that were in our group dropped out without getting a single sale.

Having never held a real job at that point (let alone a sales position) I was pretty green. I lucked out with some quick initial wins though in pitching wealthy neighbors that either happened to need a new set of $700 knives or were just sympathetic to how crappy I was at sales and bought out of sheer pity. Whatever the reason, I went on to sell over $3k of cutlery in my first week driven purely by the confidence that I could sell. And I’m convinced that the secret sauce to that whole equation was a simple bit of advice from my sales manager, Don Gerould: “Fake it until you make it.” Not “fake it” in the sense of “mislead others” but mentally trick yourself into believing you have successfully sold before until you have actually done it and the feeling becomes substantiated by reality.

Here’s another example: you know those cardboard boxes that require assembly? They arrive as a pancake and require that you expand them and close the flaps at one end to make the floor of the box. The flaps, however, all lay together in an impossible interlocking arrangement. If you’re like me you flounder with it for five minutes cursing the cardboard until you manage to wrangle it just close enough where you can cram one of the flaps underneath the other and then, eureka! it all falls together. At some point though, you just have to bend one of the flaps and make it work.

So flap-bending tactics for the first three examples above are:

  • In the case of your first job: physically go to the place of your ideal job, confess you know very little but exude energy, convince them they need an intern. Once you’re working there for free, sponge everything, prove your value until you become inexpendable and demonstrate through achievements it’s in their best interest to put you on salary.
  • In the case of the new product dilemma: go to five people you know and ask them to beta test your product as a favor. Respond to their feedback, iterate the product incorporating good changes, thank them profusely, publicize their input and your response, give them a free account for life, rinse and repeat.
  • In the case of the investors: scrape something together that’s good enough where you would invest in it yourself if you had the money. Then take a loan, get a credit card or go hold a bake sale and then put your money where your mouth is. Tell your friends what you’re up to and why they’re missing out if they don’t do the same with a small chunk of their spare change. Point to the gradual early testimonials from your beta users.
  • The point is: in all problems that have solutions which are inherently deadlocked with themselves, there is some way to eek into it and bend one of the flaps and force it into place. Looking across the thirty-two stories in the book Founders At Work, if I had to identify one trait that was consistent across all the founders featured in the book, it could be distilled to this “flap-bending” essence. They understood that in theory what they were doing defied physics and yet they had enough irrational exuberance that they could suspend disbelief long enough to bend one of the flaps just right so the interlocking pieces came together. And once the flaps got past the initial lock, their pressure actually worked to the entrepreneur’s advantage.

    So what’s your biggest chicken & egg problem? What are the interlocking components that are seemingly deadlocked with one another? Which one can be most easily bent into place?

    Aug 21

    BuzzMarketingCover.gif If you like Seth Godin’s philosophy and the main message of Purple Cow you’ll dig Buzzmarketing. In a world of advertising in which we are deluged with thousands of sound bites and ads competing for our attention, the most successful marketing campaigns are the ones that achieve buzzworthiness and propel themselves beyond the initial transmission via word-of-mouth. Doug Hughes says the key to marketing is giving people a message that’s worthy of talking about. And I couldn’t agree more. Anybody who is able to convince an entire town in Oregon to rename itself to Half.com and literally put a company on the map gets my ear for a day. Here are the key points and takeaways from reading this book.

    The six buttons

    Hughes believes there are six traits of buzzworthy topics. If you find a way to incorporate a couple of these qualities in your messaging, you stand a good chance of having other people passing it along. By nature we like to talk about:

  • the Taboo
  • the unusual
  • the outrageous
  • the hilarious
  • the remarkable
  • secrets
  • Basically we like to be interesting. Couch your messaging in way that lends itself to 2-3 of these qualities and it becomes “conversation currency.” Hughes explores a couple marketing success stories to substantiate this theory. For instance Miller Lite was hugely trailing its competitor Budweiser until their marketers found their sweet spot in positioning the brand. From conducting ol’ fashioned face to face market research studies in bars they learned that most bar patrons weren’t truly concerned with calories, they instead gravitated towards a specific light beer because it made them less bloated so they could stay longer at the bar. Once they discovered this hot button, Miller crafted its messaging around this aspect and then delivered an ingenious marketing campaign around the idea of “tastes great, less filling.” It became such a popular refrain that it was literally sung by fans in stadiums everywhere and Miller became the 2nd most popular brand of beer in the world.

    Hughes recounts the story of a chiropractor in New York that built a multi-million dollar practice by working on homeless people for free. That’s impossible you say? He recognized the value of word-of-mouth advertising and what occurs when you truly improve the quality of life for a few people requiring only the payment of lip service. By deferring cash payment for the first year he was able to build a massive grass roots awareness of his practice and book as many as 10x the number of clients his competitors had. He established offices that allowed him to treat people on a massive scale and eventually gobbled up competitors that defected from their own practice to join his.

    Hughes dissects the success of the TV show American Idol and how it was able to achieve impossible growth in viewership season after season in spite of the fact that every network but one had shot it down initially. Citing a Bonnie Rait song (which I despise btw), he pounds home the point that as marketers our job is simple: “let’s give ’em something to talk about.” His analysis of the American Idol show, the community that developed around it and the countless water cooler conversations it has spawned reminded me a lot of the TV show “Friends” that was popular ten years ago when I was in college. There were social groups of people in every dorm that would spontaneously gather around the TV in the common areas to watch this show and at every commercial they would dive into lively conversation around the characters of that show. Complete strangers were united by their connection to the characters in this show. It was like meeting someone and having a mutual friend. What the makers of that show (and every other successful TV show like it) realized is that in the end people just want to connect with others. The show The Office on TV now is the current equivalent providing office workers with this shared common experience that reaches them on an emotional level. Marketers that continue with traditional techniques of blasting loud messages will eventually find that their target constituency has long ago donned noise-canceling headphones and are happily chatting away with each other via skype about the next product that shares one of the six traits of buzzworthiness.

    A major takeaway for me here was his point about “empowered interactivity” – American Idol single-handedly did for SMS text messaging what a failed $120-million dollar ad campaign around the mLife product could not do for AT&T. Give the people that use your stuff a way to show off their own intelligence via ratings, reviews, case studies, testimonials, whatever and they will become much more invested in your product. One-third of the people that voted on American Idol had never texted before the show- it was a compelling enough use case to drive 7 million people to adopt SMS. And all just so they could have a say in who won a contest on TV. The point is: do what Kathy Sierra preaches and recognize that it’s not about you, it’s about helping your users kick ass.

    The story of the Apple 1984 Superbowl commercial that catapulted the Macintosh to mainstream popularity could probably be a book on its own. Not only did that single ad (which again was initially killed by the company’s Board) resuscitate a struggling company, it arguably created the Superbowl Sunday ad pageant that’s become a yearly tradition for marketers to show off the best-in-show of advertising.

    Capture Media

    It’s no secret that the more newsworthy you become, the less you have to push things uphill via paid marketing initiatives and the more you get to enjoy the downhill toboggan ride of the press writing about you. Hughes believes there are five hot buttons for reporters, and they are stories that:

  • have a David and Goliath theme
  • are unusual or outrageous
  • incite controversy
  • include a celebrity
  • play on an already-hot topic in the media
  • So this isn’t an Einstein, ground-breaking discovery here but he retells the story of Clearplay DVD and how they drove a successful marketing campaign that consisted entirely of legal fees. This company was one of a dozen that produced a “vchip-like” technology for DVD’s that allowed parents to selectively screen out unsuitable content for their children based on thresholds defined by Clearplay. While every competitor yielded under impending lawsuits from the major Hollywood directors and studios, the Clearplay CEO saw the David & Goliath controversial showdown over the home remote and went for the jugular. The press ate up the story and people began to rally around the call of “who controls your remote, Hollywood directors or you?” In the face of copyright lawsuits from heavyweights like Spielberg who said “you’re damaging the artistic integrity of my work by altering it,” Clearplay struck a nerve with parents, kept to its story and ultimately triumphed winning major deals with studios and distributors. Hughes relates a nearly identical David & Goliath story around Ben & Jerry’s ice cream.

    My only problem with this reasoning is that, “history is written by the victors.” No arguments that taking a bold stand is going to make you newsworthy, but it also makes you a big frickin’ target for the opposition and sometimes Goliath wins in those situations. I’m reminded of the ReplayTV vs. Tivo battle and how sometimes riding in the slipstream of a competitor that chooses to lash out and absorb the brunt of the opponent’s attacks can be a more effective survival strategy. You don’t always have to outrun the bear…

    The takeaway here for JumpBox is that we need an adversary. And not an adversary as in a competitor producing virtual appliances, but adversary in terms of an iconic Goliath that our users can commiserate over and feel unified against. We had tossed around a clever idea for an ad campaign awhile back involving a “Lumberg figure” and how JumpBox was the equivalent of sawing your cube in half and gutting a fish on your desk. Sales are made when you connect with people emotionally and not from logical conclusions drawn from statistics and research. Even if you have something wildly useful, failing to connect with your market on an emotional level means you only capture people making head decisions and not gut decisions.

    Attention

    The fact you’re still reading at this point given the length of this post is laudable, so thanks for your attention. The point of this chapter is very simply: if you’re average you’re invisible. Hughes says we can do four things to better grab people’s attention:

  • follow a balanced multimedia diet for how we advertise
  • find clutter-free media – the spaces where there is nothing else competing for attention
  • take off the shine and reveal the underbelly of your organization – essentially the advice from the Wired cover story Get Naked and Rule the World
  • product placed inextricably in the content itself- think songs like “pass the courvoisier
  • There has never been as fierce a competition for people’s mental cycles as there is now. And we can expect the competition for attention to get more desperate over time. As Hughes says, “without attention nothing happens” (it’s the whole “tree falls in the woods” phenomenon). The pattern that manifests again and again in companies as they grow is that they start out with a bold approach that gets them famous and then they become complacent and reserved gravitating towards less-risky decisions- it’s essentially the Innovator’s Dilemma applied to marketing. Messaging evolves to a pasteurized, mr-potato-head-like jumble of blandness quilted together by committee. Viewers mistrust it, and more likely, stop caring altogether (kind of how we feel about Microsoft at this point).

    Supposedly in relationship counseling they say hatred is easier to resolve than apathy because at least the partner still cares and has feelings to work with. When it’s pure indifference and there’s an absence of feeling it’s impossible to fix. Same is true for a brand- it’s better to be loved or hated but when people just don’t care, then you’re hosed. Hughes delves into Britney Spears’ rise to stardom to see how her agent and publicist capitalized on attention to build her career. He recognized her talent when she was thirteen but held off on promoting her for two full years until he detected that the market was ripe for her debut. Mis-timing her launch would have almost certainly meant a fizzled career because of the scarcity of attention from the target demographic given the cycle of pop stars and that it was devoted away from poppy bands towards rock and hip hop. Obviously there was a lot more that contributed to her success than perfect timing, but launching when conditions were optimal as far as attention from the target market was a critical factor.

    Again, hindsight is always 20/20 but the takeaway here for me is that conditions now are primed for the AdSqueeze concept. Given the ADHD nature of people growing up, the fierce battle for attention and the existence of commercial-skipping technologies via DVR’s, something like AdSqueeze is sure to sprout up within the next year. And it will be a fad like Million Dollar Homepage that runs it’s course in six months, experiences a bunch of copycat competitors and then flames out. But not before somebody makes a mint on ad revenue reshapes the TV advertising landscape by offering a different model. I wish I had extra cycles and the ability to bankroll this project right now because someone will do it.

    Climb Buzz Everest

    The point of this chapter is that big wins only come with big risks. Find the Mount Everest-sized challenge that can put your company on the map and then tackle it. Hughes did precisely this with his company Half.com and persuaded a town named Halfway in Oregon to actually change its name to Half.com. Other instances of companies that climbed Buzz Everest:

    Pepsi goaded Coke drinkers to take the Pepsi Challenge after discovering from legitimate taste tests that people genuinely preferred Pepsi over Coke (the key here in this that the author neglects to mention is that Pepsi in small doses is preferable due to its sweetness – listen to a podcast from Malcom Gladwell for a discussion on this).

    The revival of Tie Dye t-shirts (and consequently the lesser-known brand of die behind them, Rit Dye) is another story of a marketing comeback from a guy that chose to ditch a comfy position marketing a sure-thing product in order to take on the impossible and climb a Buzz Everest. Doc Searls talks about effective marketing as the art of starting a forest fire of buzz by creating sparks in the right places. The Tie Dye story is a classic example of how to start a blaze by a few well-placed sparks.

    Discover Creativity

    At this point it felt like Hughes had said most of what he wanted to say and was stretching for two more chapters to round out his six points. His advice regarding creativity is to:

  • dump the idea of marketing strategy and simply define the marketing problem succinctly
  • understand your consumers intimately
  • swing the bat often and not be afraid of failure – (ie. Babe Ruth struck out more than anyone)
  • create internal competition and pit marketing teams against one another
  • produce creative content, not ads
  • He urges companies to think about failure differently- treat them like fouls in a basketball game rather than one-strike-you’re-out mistakes. When your players finish the game with four fouls that’s when they’ve pushed the limit and played their hardest. Anyone who finishes with zero fouls isn’t getting scrappy enough and taking risks. He talks about the Ford Mustang and how their marketing team did a masterful job of creating mystery around the product via “ads that hyped future ads” leaving people a secret to be discovered. Ford connected with local DJ’s and gave them individual test drives of the Mustang and then ran ad spots with the radio stations in which the DJ’s had to write their own copy for the spots relating the experience of driving the car. The result was an authentic referral from a trusted personality instead of a regurgitated sound bite from a large corporation and a product that had individuality infused into it from day one. Likewise, the Mini Cooper automobile has amassed so much personality associated with its image that 75% of their owners name their cars and 60% mod them with custom enhancements/decorations to make them more unique and personalized. When the user is that invested in the product, you can be they are going to show their friends wallet pictures of their baby.

    Police Your Product

    The last chapter is devoted to the importance of discovering and handling negative buzz early. This too seemed like brain-dead-simple common sense but Hughes points out that massive buzz blunders have caused irreparable damage to big companies. Ten years ago, the fires didn’t spread nearly as quickly because the communication means available at the time weren’t as networked and multi-media. The Internet-related technologies like web, blog, email, IM, youtube, twitter, etc. have amplified the voice of the consumer and both broadened the audience and condensed the time frame for the transmission of buzz down to seconds. Look at how quickly the Jet Blue debacle got away from them in February. Hours after being stranded on the tarmac people were taking pictures of overflowing toilets in the airplanes from their camera phones and posting them to their blog.

    Every citizen is now potentially a journalist. I learned this power first-hand through posting a negative experience on my blog after dealing with Sprint customer service. <- That blog entry has gotten thousands of visits appearing on the first page of google results for the search term "sprint customer service." As Hughes says, "23 complaints = 10,000 enemies” via the digital grapevine of communication that occurs from people posting and reading these painful stories when researching a product. Negative reviews on sites like Epinions, Yelp, Tripadvisor and Amazon cause severe material damage to companies and the smart ones have people trolling search engines to stay ontop of customer complaints made out in the blogosphere. You’re also seeing a rise of technologies like the Listening Post to monitor buzz and serve as the early warning radar so companies can detect and respond to potential PR disasters before they become catastrophic.

    Hughes says of all the survey questions companies ask, there’s really only two that matter:

  • How did you hear about us?
  • Would you be willing to go out of your way to tell a friend about our product?
  • This was a mild takeaway for me. The first tracks the effective sources of how people are finding you and your all important number: the word-of-mouth factor. The second gauges the buzzworthiness of your product and implicitly asks for a commitment from your users. We already do the first one and we’ll be implementing the second on JumpBox just as soon as I finish writing this.

    Conclusion

    If you’re into marketing, this book is worth a read. Of the handful of business books I’ve read recently, this one produced a respectable 3 1/2 takeaways and for me that factor is always the gauge of a valuable, thought-provoking read. There is one particular idea I got for a promotion which I need to run by our lawyers first. It’s so out there that I’m afraid it violates both SEC and gambling laws, but if not, you’ll be hearing about it soon enough as it will be coming second-hand to a water cooler near you.

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    Aug 16

    It was melted off at the Poison Ratt concert last night. As glam and old as these guys are, they still know how to shred. Watch this:

    My face is still in a puddle at Dodge theater. Mix in 15 friends who haven’t seen each other in awhile, one limo bus, 2 rock bands, enough spandex and 80’s t-shirts to clothe a small town and you the recipe for a face melting the scale of which has never been experienced. What a night. Some pics and videos here, here and here.

    Aug 14

    On the off chance this helps someone who faces the same weird Quickbooks error we did, here’s the resolution to this strange problem we recently encountered. I’m using Quickbooks Premier 2006 and have it setup to automatically connect to our Bank Of America account and pull all transactions from the various sub acounts. This simplifies the data entry in Quickbooks considerably.

    It stopped working last week however with an error that had a ton of junk and the error code OL-323. Turns out while we were at OSCON a few weeks ago, someone sniffed Kimbro’s credit card and tried to buy $2700 worth of flowers. BofA immediately recognized the transaction as fraud and suspended the account. They have since closed it entirely so it no longer appears in our online dashboard but Quickbooks was still trying to pull transactions from that account. The fix: deactivate the online access for that account in Quickbooks (chart of accts > right-click edit acct > online tab > uncheck online access).

    You’d certainly think Inuit could throw a more descriptive error message or at least allow the connection to pull data from the working accounts since it wasn’t an issue of authetication… Anyways, a week later having dealt with both BofA and Intuit, this turned out to be the resolution to this issue. Lesson learned: don’t send sensitive data over untrusted wifi at a conference of 2700 techies all using the same connection. Even when using SSL and presumably connecting to a legit wifi hotspot, people can emulate an access point by broadcasting their own wifi signal under an SSID like “OSCON wifi,” intercept your connection and perform a man-in-the-middle attack to steal your info.

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    Aug 11

    There is an inconsistency in the way in which proposed legislative changes are named at the Federal and State levels and I’m curious if anyone can provide insight about the possible rationale behind this discrepancy. Propositions up for vote at the State level are always named like “Prop 101” – you have to read it to know what the heck it does. Federal Acts, however, have vanilla names like the Patriot Act, No Child Left Behind, and the most recent travesty The Protect America Act of 2007 .

    Presumably the reason for naming a piece of proposed legislation is so that voters can talk about it, assign meaning and remember which proposal does what rather than trying to track a collection of numbered items. The only problem with this method though is that it introduces a naming bias into the equation- who is going to argue against something well-intentioned-sounding as the “Protect our Citizens Act” or the “Prevent Car Accidents Act?” And you would think the situation that is supposedly remedied by assigning descriptive names is less problematic at the Federal level since these things are voted on by Senators and Congress people- it’s their job to be knowledgeable of what each does (ie. they shouldn’t need the mnemonic benefit of descriptive titles). I would expect a Senator elected to his/her role to be able to keep track of these where I wouldn’t expect the same of the average citizen. I’ll refrain from a rant about how so many liberty restrictions have been recently submarined into effect under red-white-and-blue-colored titles. But I’m curious: if they’re going to use descriptive names for proposed legislative changes at the Federal level, why not at the State level? I’m admittedly not up on my US history so I may be off with the nomenclature of Acts, Proposals, Bills, Laws, etc but I would think intuitively this practice should be the reverse of what it is now given the voting constituency in each situation. Anyone? Bueller?

    Aug 10

    A couple people have asked me recently how we do our Grid7 podcast. We have a humble talk show we do with entrepreneurs and innovators bi-weekly over on Grid7.com and we just did our 24th episode. There may be more streamlined ways of doing things but these are the steps involved from my perspective:

    Capture

    “Garbage in, garbage out,” as they say. The idea is to capture the highest quality raw audio to start with. If the guest is local I try to conduct the interview in person because I think the face-to-face interaction is a better dynamic. I use the internal mic on my MacBook and record directly to a track in Garageband.

    If the guest is remote and I have a good internet connection, I’ll use my skype account with skypeout and capture using a great piece of software called Audio Hijack Pro. It’s nice because you can isolate the inbound and outbound audio to separate tracks and equalize the volume levels later. It generates an mp3 on your desktop and is straight forward. If I have a crappy connection I can record calls on my Treo using an app I have called CallRec. This captures the conversation as a wav file stored on the SD card. With a 2GB SD card, storage is a non-issue.

    Produce

    I use Garageband to refine the raw audio, add an intro/outro to the track and do the final mixdown. Provided the call quality was good, there should be no need to apply a noise filter. I have heard that Audacity is a good open source audio editor that’s available though I have not used it personally. Once I have things sounding right, I export the track to iTunes, right-click on the track -> “get info” and adjust the details in the ID3 tag. I then right-click and convert it to MP3. Once it creates the MP3, right-click-> “show in finder,” grab that file and ftp it to our server.

    Publish

    Last step is to publish the audio track to our site. We use WordPress as a CMS for our website and it has an open source plugin called Podpress that makes it easy to serve a podcast. Provided you have the Podpress plugin installed and activated, you author a post as you would normally do for a text entry only you click the “Add Media” button under the textarea and tell Podpress the URL of your MP3. I like to add a paragraph or two on our guest explaining his/her background and the gist of the episode and also include a headshot. If you’re writing any type of extended entry, you want to author it in a text editor and then copy/paste it into the browser (I’ve had Firefox crash after authoring a long entry in the browser and it sucks). Podpress generates the proper RSS feed and even gives you a flash-based audio player that allows the visitor to listen directly from the browser. It handles stats and can syndicate your podcast via the iTunes Store.

    Promote

    You’ll probably want to list your podcast in the iTunes Store (and “store” may be a misnomer – it’s just a directory so you don’t have to charge $$ to be listed). There’s plenty of other podcast directories out there- google around. I added ours to Everyzing so that the audio itself is indexed and made searchable. Running your RSS through Feedburner allows you to get stats on the listeners that subscribe via RSS. Depending on the subject matter of each episode you can then submit them to various news sites as you go. We held the #1 slot all yesterday on news.ycombinator.com from an interview I just did with the Zenter founders.

    Monetize

    We have not actually tried to monetize our podcast yet. It currently serves more as a vessel of exposure for us and an in-roads to make connections and meet new people. There are various options for services that provide a simple way to splice in ads dynamically. I went though and researched a bunch at one point and found Kiptronic to be the most promising (plus it sounds like they now support video blogs as well if you’re into that). AdSense is always an option for the site itself. Feedburner lets you display ads in the RSS feed itself once you cross the 500 listener threshold. I experimented with Comission Junction but saw zero dollars ever come out of it. Amazon affiliate program was equally as dismal in terms of what it generated. We’re now in the Google PPA beta so that will be interesting to see how well it works. Short of having a program so popular that you can command a dedicated monthly sponsorship, a dynamically-inserted ad via a service like Kiptronic seems like the way to go.

    Anyways, of the million ways of hosting a podcast, that’s how we do things with Grid7. If you have a podcast of your own, what tools do you use?

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