Breakthrough on turning ideas into splash pages

I had an amazing day, yesterday. Met with another entrepreneur to work on a new project. For the first time in my life I was an active contributor on the creative side of the process. He had many creative ideas for this product which is geared toward the Indian matrimonial process. I was able to listen and synthesize graphic images to test the different ideas.

I cranked out logos, logos with gradients, different colors, sizes, letters kerned. Then we looked for imagery around Indian weddings. Grabbed examples and synthesized images to go on the splash screen. We ended up here:



Still not finished, but the experience of being able to finally work productively with graphical tools such as Photoshop and Fireworks was exquisite. The breakthrough book for me was, Layers: The Complete Guide to Photoshop's Most Powerful Feature .

I tried to take a chapter a day and work through the examples using the images he shows in the book. It is small (a great attribute in my opion) and instead of trying to describe every feature he sets out to build useful workflows for the majority of work.

It also requires some CSS knowledge to lay out the images on the page which I had built up over the last year. The feeling of cranking directly on what the user sees is great. Combine that with the ability to code the backend and test rapidly using splash screens, I think I am getting close to having a toolset for trying multiple ideas over the next year or so until I find one that sticks.

Managing queues can make a big difference for product creation

I read a book called The Principles of Product Development Flow. I do not recommend this book for the casual reader. It is filled with math and graphs, but the ideas are pretty interesting and very applicable to startup entrepreneurs.

My first question when I am reading about something new is, how can I apply this to give myself an advantage in whatever I am working on? So I called up a friend of mine that is working on delivering web sites to small and medium businesses.

I launched into the central idea: how long it takes you to get individual projects finished and out the door determines how quickly you see the economic benefits. The studies and math show that the closer you get to 100% utilization of each developer, the longer each item waits in that developer's queue being blocked by other projects.

When the project depends on different people, then queue size can really slow down getting anything finished. Unfinished work doesn't make you or anyone else money. In web startups many people are involved in developing a new idea or feature: creative art, layout, browser code, server code, and database work to name a few. If each person that needs to work on the idea is scheduled to be busy 100% of the time, then total time to finish any single project goes up dramatically.

The counter intuitive answer is to have more idle time. That way when the high priority work comes through it gets done immediately by each worker. Being busy all the time equals not having time to push through critical items in a timely manner. Also choosing wisely the work with the highest economic payoff or greatest risk reduction has a huge impact. The group has to understand this or they won't work on the most important projects leaving projects waiting.

Another key idea is what the author called cadence. This means if there is some part of the project that requires a group decision, having a regularly scheduled meeting that is automatic makes the overall progress faster, as you don't have to wait for everyone to schedule infrequent meetings. This sets a tempo for getting work done. Otherwise more features get crammed onto a release which things makes the release recede into the distance. This is also counter intuitive, as you would think regular meetings would slow down things. This is one reason daily releases can work, as they set a regular tempo for pushing out work.

So my friend and I started discussing these ideas. Immediately he started rethinking his business. He had been focused on having 100% of his hours booked. This led to lots of projects that are not totally finished, which means he can't get paid. Now he is approaching clients with a new proposition. Blocking off a definite time frame to start and finish the work for a better rate. He gets better cash flow and the client gets the project finished so they can realize the economic effect. He is even thinking of charging more if the client slows down the turnaround thus gumming up his project completion time.

He has been doing this for 2 weeks and starting to see happier clients who want to do more business with him and a fatter bank account. It is unusual when you find a book that seems written for huge companies and realize that it also applies at the startup scale.

How an engineer started learning more about design

I had someone ask me what path I have been following while learning design. Like any engineer I started by breaking down the problem into components so I could tackle them individually.

1.) Where to start: first problem was the classic chicken and egg issue of tool versus techniques. I didn't know any design / graphics tools because I wouldn't know what to do with them. Then I didn't bother learning any design principles because I couldn't implement anything without a tool.

2.) Tools: I decided to start with Adobe Fireworks / Photoshop. Feel free to substitute your own tool here. I read through a basic book on how to use these tools. I tried not to get too hung up on specifics, but focused on learning enough so that I didn't freeze when opening either of them up.

3.) Design Basics: a couple of books by Robin Williams (not the comedian): The Non-Designer's Design Book and Design Workshop. What is great about these books is that they focus on basics, such as, alignment and contrast. Just by becoming more conscious of 5 or 6 principles, I saw an immediate improvement in my work.

4.) Typography: The Designers Type Book (also by Robin Williams), Mac OS X Fonts, Mac is not a Typewriter. Again substitute an equivalent for the PC if that is your platform.

5.) Color: Guide to Communicating in Color and Color Design Workbook. These just explain basics about how color communicates with users.

6.) Layout with: Making and Breaking the Grid.

7.) Usability (which is different than design), such as, Designing Web Usability and Don't Make Me Think.

8.) Interfaces: Designing Interfaces and Designing Web Interfaces.

They key is to set a pace and not get discouraged. It is all about getting better than you currently are and developing a vocabulary so you can communicate with designers better. I know find that I have a much better idea of what the design process is and am less frustrated when working with top notch designers.

I've been solving the wrong problem

My background is industrial engineering. So I am constantly ask myself, "How can I do this better, faster, cheaper?" I have spent the last 2 years concentrating on how to build products faster and better.

At first, I focused on how to create basic functionality faster. I became very successful at quickly creating functionality that worked but looked terrible and probably didn't provide a very good user experience.

Then I realized building terrible looking products faster, wasn't working. Starting at the beginning of this year, I started focusing on design and usability. I'm not saying that I became a world-class designer, but learned the basic ideas behind design. It allowed me to move from a terrible designer to an average designer. Plus, I can now have a conversation with designers and be discriminating about what they tell me.

However, I then found myself creating better looking and more usable products faster that solved problems nobody seems to have. I still wasn't seeing results equal to the effort exerted.

I ran across Eric Ries talking about how 9 out of 10 new ideas fail and the tremendous waste of talent and effort in this undertaking. He takes his cue from personal experience and a book called: The Four Steps of the Epiphany, which I started reading.

The point he brings up is most ventures fail because they don't find a product that people want before they run out of money. Or worse yet, they prematurely scale up and early adopter sales won't support the company and they collapse.

My new approach is to start exploring how to efficiently discover what I should be building. I had the good fortune to have discovered a product that hit square on with what customers wanted: online dating. We were extremely efficient at building out and marketing, but never had to wander around discovering what people wanted.

So last week I experimented with testing a product pitch against Facebook traffic. It took only a day and $50 to find some customer data.

I am focusing on finding a set of tactics that allow fast, cheap evaluation of ideas. I am confident that if I find a product that customers want, I can build that product and scale it. Been there, done that. Now I need to learn how to find that product without going crazy.

Starting to work on how to iterate on products faster

After working on an idea with Cindy Alvarez at Startup 2.0, I realized that there is a dramatically easier way to test product ideas. So this week we brainstormed and came up with a new product idea for helping teachers track students progress in the classroom. Normally to test something like this I would have worked several weeks on creating a simple version of the idea and run customers through it to see their reaction.

Instead, I generated a splash page with our value proposition:



The button led to another page with a Wufoo survey:



Several aspects of the questions that Cindy used that weekend really resonated:

What do you think this product will do for you? It tests what the user thinks they are getting out of it.

The next question checks for who they think the competition is. Then a list of value propositions to find out what they think is most important to deliver in a product.

Then since we have an interested user, go ahead and try to recruit people for further beta testing of the product.

I made sure I had Google Analytics added to the site so I could see what happened when traffic got to the page.

I went on Facebook and ran a targeted ad that asked: Help your students. This got 63 teachers to the site. Of which 33% clicked the button to try the product. Then 11 actually took the time to fill out a survey for a product they now knew didn't exists.

From my experience with many products that haven't worked, this was a strong reaction to the value proposition as we communicated it.

We are not moving forward on this particular idea, due to a inability to visualize a monetization scheme that we believe is worth the development risk. But the exciting part was the speed and small amount of money spent on discovering consumer reaction to the idea. It was simple to target and attract potential customers, always a key consideration. Once the consumers saw the value proposition, we had a huge acceptance of the idea. All this for 2 days of brainstorming and $50 of advertising.

I am seeing a whole new way to start vetting ideas and testing them.

Starting to see progress from learning new technologies

I have started to see some results from my experiment to broaden out my technical skills. I started 6 weeks ago to tackle all the languages on the top 10 Open Source Project Activity List. It has been quite a slog, but in the last week the quality of my conversations with other entrepreneurs who are working on projects has changed.

Inevitably if you engage with someone who is already in the middle of starting up their idea, they will have picked a technology platform. Before this push on learning, if they hadn't chosen the technology stack that I knew (Ruby on Rails), then I had a very limited amount that I could offer in terms of concrete technical execution. At that point you are put in the same bucket as everyone else that is giving them advice, "Oh great, someone else giving me suggestions that add to my work load."

Last week, I starting talking with someone who is wanting to move their application to Google App Engine. This will require knowledge of either Python or Java. Now that I know the basics of Python, I am able to jump in and start looking at what that would entail. It is a great feeling.

Progress so far:
mastery: Ruby, Rails, Javascript, Dojo, CSS, MySQL
productive: none yet
literacy: Java, Python, C, Objective C, PHP, jQuery, Google App Engine
untouched: Perl, Django, Spring

This week, I am working on the iPhone stack with Objective C and leveraging Python on Google App Engine so I can move that one into the productive column.

My basic approach is still holding. I read a book and make flash cards, then as I exercise or find free time, review the cards. I rotate through existing stacks so that they stay fresh.

We will see. I won't know if this is a productive line of effort for another 3 months when more of the technologies move into the productive or mastery column.

Social Mobile Applications - what I see emerging

I have been going around for the last few weeks and looking at what people are working on and what seems to be getting traction. I have been describing it to friends as the social mobile revolution. People are taking older, successful ideas and asking themselves if there is a social or mobile aspect that would totally revolutionize how people use this product.

Can collecting data from people's phones that is geo-tagged make restaurant reviews better? One idea that won at Startup Weekend was FoodSpotter. It allows people to take photos of dishes that they enjoy at a restaurant with iPhone. This is then tagged by location and collected at a web site. Then you can use your phone to track down a dish rather than a restaurant. My wife understood the concept in 3 seconds and wanted to use it.

The common thread is that restaurant reviews have been around a long time. They serve a basic human need. However, almost every person now has a camera in their phone, and that camera knows (or soon will know) your location. This makes for an easier and more interesting version of the old product.

The second area is leveraging the social graph that sites like Facebook are creating. What would make restaurant reviews more interesting is knowing the opinions of people in your friendship network. Broadcasting out to your network or receiving from your network information about dining is more meaningful than a review by someone you don't know.

Again, it is taking a proven model and enhancing it with the two most exciting platforms to arrive in the last 3 or 4 years. I have been slow on the uptake but I am starting to see the new pattern. Now, I just have to find an area that hasn't already been staked out and turn over someone else's non-social, non-mobile apple cart.

The difference when you customer acquisition cost is $0

I spent the day at Facebook Rev's incubator launch event. Very interesting to think about what is common between all the startups. They all are iterations on successful business models from both Web 1.0 and Web 2.0. Travel, dating, jobs, etc. We have seen these models work pre-Internet and post-Internet.

There is a revolution in the distribution/advertising model that changes the business model. As an example, online dating took a $5 billion dollar industry and changed it into an insanely profitable $400 million dollar industry. I see the social networking companies doing the same thing.

Over and over at the event and after, I was asked by investor types, what is the monetization model???? As a coder and entrepreneur, I talked shop with the startups and here is what I discovered. When your customer acquistion cost is exactly zero per user, and your cost to service the user is around $.001 per user per month, you don't need much monetization. Most of the companies can put up some sort of advertising and get all of $.01 per visitor per month. This is a 90% profit after cost of goods sold.

If you look, Facebook's market share is at 250 million. A 10% market penetration will lead to a $250,000/month business with very little cost.

I think we are in the next revolution. It is making me rethink old assumptions and ask myself what business niche hasn't been overturned yet???

Unbelievable time at Startup Weekend

Went to the Women 2.0 Startup weekend. It was incredible. Over 150 people showed up to work on a startup idea in a compressed time frame: Friday 6pm to Sunday 6pm.

The skill sets were from programmer out to marketing and design. Ideas were pitched, teams formed, and prototypes designed and built.

The main thing I got out of it was a wonderful sense of the types of ideas that people are experimenting with. Truly talented people in product design, programming, and marketing showed me how to step up my game. I met some people that will I will continue to work and hang out with in the future.

The biggest personal change to my learning roadmap is that I am dedicating the next 2 days to learning JQuery. The projects that were using produced user interfaces made me feel like I am dating the ugly duckling by using Dojo. However, Dojo solves some problems that JQuery doesn't address in terms of plumbing, so I will continue to use it. Where the interface meets the user, JQuery crushes the alternatives that I have been using.

So, instead of whining or making excuses, it is time to add it to my toolset. It could also have a major impact in my work based on what I have learned in the last 6 months about using graphics tools and design. I was able to interact with the designers on the team, understand what they were driving at and have intelligent conversations about choices.

Before I would have resented the work being generated due to my lack of understanding of why it is necessary. I didn't need this skill set when doing personals, because the product was so strong that design was never a factor while I was there. This has changed now, so I have had to change.

Hit a major milestone - covered my first Java book

Got past the next milestone on my Open Source project. Finished my 800 page Java book and learned (90% at least) all the flashcards that I made from it. It reminded me of how difficult it is to program desktop applications, since much of the book covered this. I had tried to learned Windows programming 10 years ago, and had to set it aside due to working on my business.

Read a book on Google analytics, then another on Google A/B testing using their webanalytics product. Very interesting. If you have a web site, you should be using this to run tests non-stop for determining what works for your business plan. The book is: Always Be Testing: The Complete Guide to Google Website Optimizer. Really good stuff and totally free.

Also, read through my first C programming book today. Not very hard after Java, since Java was built based on C. Over 50% of open source data is built from C code. Not very interested in C for its own sake, but following the trail into Objective C for building iPhone apps.

I don't think that I am productive in the new technologies yet, but will start circling back to learn the tools needed over the next few weeks. Drupal will be the next goal. This will be a good project to apply the PHP that I have learned last week.

A new model is needed for tech startups and development shops

Spent some time with another entrepreneur recently helping them brainstorm. They have spent 2 years and over $100K on web developers. At the end of this, they have only realized a part of their original idea and have very little traffic to the main part of the site.

It was a story that I am becoming more familiar with. If you are going to get into an idea that involves technology, it is critical to have equity players that are comfortable with the different pieces required. Even if they don't do the work personally, they will be able to manage the development process with diligence.

The mismatch between the non-technical entrepreneur and normal technology development shop is huge. As a startup, you have a great idea, but must iterate and try as many variations as possible to find what will work. The development shop has a technical staff that has to be paid every 2 weeks regardless of how your idea is developing. They need to fill up hours and cover overhead.

And usually an entrepreneur wants to get several bids. So the development shop has to know exactly what you want to build. However, at this stage that is really impossible to know. So you create a huge technical spec and they crunch the numbers and get back with what seems like a really large number.

Why is the number so large? It is because typically to implement a web based idea, you have to go from the backend operating system, to databases, to web servers, to some server scripting language, to HTML, Javascript, CSS. And, oh yeah, we want it to look good and be well designed. Most developers are specialized so they can be the best at what they do. This translates into a large number of people who have to be involved, coordinated and communicated with.

What is really needed are boutique firms that have technical entrepreneurs. This uber-person would know the complete technical stack and be experienced at thinking like a startup person. They would work with the entrepreneur to define what are the key parts of the business plan that can be tested early to build confidence.

There are many techniques, such as paper prototyping, that require nothing in technical skills, but would allow many ideas to be tried quickly. Bad ideas could be discarded before wasting piles of cash on $50/hour programmers. Also, building stripped down versions, to find conversion rates for the core value propositions.

My guess is that for $20-$40K massive portions of most ideas could be vetted, lowering the overall project risk. At that point it would make total sense to take a project to a development shop, as you will have a much better idea of what needs to be built.

This may be an interesting area of the market to play in.

Staying motivated about improving my skills

I set off on a quest to learn the top open source languages to get access to what is happening in technology. I having being toying with this idea for a year now. Finally got the inspiration from the Julie and Julia movie last weekend.

It has been interesting. I have been plowing through several books this week. I read the book, make note cards and learn them while hiking or during down times. The first 2 areas, PHP and Python were fairly straightforward. They are very similar to other technologies that I am already familiar with.

Then I started on Java. Wow, it reminded me of why I never could get through my Windows programming books back in the 90's. I found myself walking up Windy Hill Friday evening, wheezing my brains out, and trying to remember FontRenderContext. It was the first time I couldn't get through a stack of cards before I got back to my car.

However, picked it back up this morning and pushed forward. I will only know toward the end of this year whether I see any new opportunities due to the effort I am putting in now.

The only thing that I have to relate it to, is during the startup phase of my dating site. We would often reach a point where there was a technological hurdle in the way. The choice was often, we could hire someone to solve it. This always seemed to cost upwards of $20K or I could read 2 $45 books and figure it out.

It was real easy decision back then. I didn't have the $20K so I read the books. Since then it has been more difficult to find the motivation. You often hear the advice to outsource everything.

Here is my take on this. If you have already found a successful business model, then outsourcing or hiring an employee to take care of details is totally appropriate. Heck, it is the only way to scale any business. However, if you are in the initial phase, and don't really know what twist and turn your idea will take, then I'm not so sure. It is often better to pick up the skill set within the sweat equity team. Preserve capital and keep iterating.

Iterate, iterate, iterate

Got back the initial results on a new product idea that I launched yesterday that is geared to finding out what teaching materials work best. Initial results were disappointing as it often is. So it time to roll up my sleeves and start iterating.

The amazing part is the it took only $8 to find the answer. I advertised on Google adwords and it took only 32 people to get the data I needed to see what the initial problems where. I collected the data on what people did after reaching the page. I got 4 questions answered and 2 other actions.

Google analytics showed that two people searched for a different course than we were offering. I then realized there are several AP History courses in addition to U.S. History that we are testing on. So I am going to start by putting up an explanation screen with choices for the course. That way I can weed out people who aren't interested in the course we have, as well as, determine if we need to offer one of the other courses as well. Also, we are going to work on explaining how our product works and what the next steps are.

The point is, that the best way to play the game is test with small amounts of traffic. You can purchase it easily and make it targeted to your offer. Turn off the traffic as soon as you get a good sample, can be anything over 32. Then sit down and look at the results and decide on what the next iteration should be. Then crank up the test again.

New goal, fluency in major open source project languages in 12 months

Saw a completely inspirational and funny movie this weekend, Julie and Julia. It told the parallel story of a blogger, Julie, and Julia Childs (the famous cookbook author). Besides being funny, it showed the power of setting big goals and moving forward.

The blogger, set the goal of cooking every recipe in Julia Child's cookbook in 365 days (over 500), while holding down a regular job. She then used the blog to document the journey. At the end, show transformed her life and began living her dream as a writer.

I began to think about what I could do that would apply this idea to my own life. I am not that interested in cooking, do doing all the recipe's in someone else 's book doesn't appeal to me.

However, I am playing in the technology startup space. I have been noticing that almost all the interesting projects are occurring in one of 10 or so languages. Several of which I currently know or have learned in the past.

My theory is that there is tremendous intellectual capital being created in all the open source projects that are peculating on the Internet. However, it is as if, you were a scientist in the 1700's and the research was being published in French, German, Russian, etc. And not all being translated into all available languages.

So if you don't understand the major research languages, your ability to use the different projects diminishes rapidly.

So my big, hairy goal is to gain fluency in: C, C++, Java, PHP, Python, C#, Perl, Ruby, SQL, and JavaScript and Objective C. I have a head start in that I currently know Ruby, SQL, and JavaScript.

So this weekend I pulled off the shelf the Learn PHP book by O'Reilly and made a set of flashcards. It is very similar to the ASP programming in the 90's before .NET. Took longer to make the study materials than learn them.

The next few days, I have been making Python flashcards from the 650 page book Learning Python. Should have them learned by tomorrow. Very similar to Ruby, seems like they are trying to solve the same problem set. Realized that in order to be productive on the web, I will have to also learn about Django, so I order the book today.

Tomorrow I start on Core Java by Sun, which is one of 2 volumes. I will let you know how this experiment proceeds. I am guessing that in 12 months I will be able to say that I gained very little from the effort or that vast new horizons opened up for me.

Either way I will be able to move on from this idea or get the benefit.

Starting to find resources for effective social media use

I have immersed myself learning about the tools that have developed for communicating with other people on the Internet in the last 10 years or so: blogging, Twitter, social networks, etc. This blog is my first concrete step in this direction. Of course the question is, "How to use these tools to get to my current goals?"

For me this is finding another startup project or creating interest in my current startup project. I want to create a product with a net revenue of $1 million+ a year. Hey, you have to think big, because all projects take tremendous effort.

Ran across a really good blog by Aaron Uhrmacher called Disruptology. He has a really good analysis of Dell's various social media strategies. Dell has reached $3 million in sales via Twitter. Hey that is 3x my current goal, so very interesting. They are doing it by promoting time sensitive offers, so not really relevant to my current venture.

However, if you have a business or client that could offer this type of "special deal" content, it could be a relevant strategy. There was a company in Dallas that would buy a small quantity (50-200) of specialty items and offer one product for sale per day and people would rush to be one of the few that got to buy the item. It created a fanatical following and was very successful.

It leverages the influence technique of scarcity. If you know of any other great use cases please post them in the comments. I would love to get more input in this area.

One of my greatest friends - The Scientific Method

Read a post on the Scientific Method by Seth Godin. Using the Scientific Method has been one of the greatest tools in my arsenal. It is one of the greatest advances human kind has made.

In brief, when you approach a situation that you need to understand better, ask yourself, "What is my theory on how this works?" Many times this can be hard, because we have unconscious ideas and assumptions. So take some time to brainstorm about all the beliefs you have about the problem.

The next step is to figure out a way to prove one or more of your assumptions wrong. The key question is, "How can I test this?" And in business a better question would be, "What is the cheapest way I can find out if I am wrong?" You can save yourself huge sums of capital by working out the answer to this question.

For startups testing the basic appeal of the core idea is enough. I remember reading about IdeaLab putting up a web site offering cars for sale, even though they didn't have any. When the first person placed an order, they went to the dealership bought one and then resold it to the person. It was brilliant because it tested the idea that anyone would buy a car through the Internet when this was a novel idea.

If you are not testing your ideas, then you are participating in superstition. Human brains are hardwired to make connections, real or not.

There was an experiment with birds in a cage. Randomly pellets of food would be dropped into the cage. Over time each of the birds formed an opinion about what made the food appear. They would begin to do elaborate dances, bobbing their heads and jumping up and down, never realizing that this had nothing to do with the food appearing. Sounds a lot like some people I know.

ROI on Social Media

I read an interesting post at entrepreneur.com by Carol Tice on ROI on social media. It made the point that she has not found any or many business owners that have found a useful way of turning social media into business they can take to the bank.

It is the same sort of thing I remember people saying about the web in general in 1995 when I started my dating site, which is now making TCMS over $400 million a year in revenue. I guess what I hear, is "I don't know how to do this, so it must not be worth while."

The good part of the article is the basic question, "Is what I'm doing working?" You should always ask yourself this about any given activity. Then if the answer is no, the next question is "Is it working for anyone else?" If the answer is yes, then you should ask, "What technique are they using that is making them successful?"

I will admit at this point, I have no idea how to make the social media thing work. If anyone has read a great book or two, let me know in the comments.

I am using the strategy that has worked in the past for me. I am ordering any book written on the subject and saturating myself on the topic. Today I read through The Secret Power of Blogging and learned about 15 things that will help me learn how to get the word out about this blog.

I have decided it doesn't do any good to write good articles if no one knows about it. I haven't even gotten started on Twitter, Facebook, etc. I feel that it all probably works together when you are doing it right.

When I see phenomenally successful people like Tim O'Reilly and Seth Goodin using these tools, I realize that I'm just not getting it yet, but it will be worth working on.

Spotting and dealing with trouble clients

Just read another post about problem clients from Allison Nazarian. She points out some great warning signs:

• Deadlines that show a lack of understanding of the process.
• Need total attention - confusing an employee with a service company
• Unwillingness to pay equal to the amount of work.

After thinking about how several startups I know hit this same issue, I think it is a matter of training yourself to respond properly.

First off, if someone has a budget there are two equally valid ways to handle this. The person providing the service has to work for less than they want. Secondly, and this is the one to focus on, they can reduce their expectations and do the portion of the project they can afford. Maybe the do the rest over time, kind of like the rest of us on a budget.

Present the second solution to the potential client. If they refuse to see the light, then they have communicated to you what they actually value the work at. If this is less than you value your time then you should not expect this to change in the future.

There is always the promise of future work, however, I don't think their valuation of your time will increase. If anything once someone has results, they tend to devalue the other person's contribution to the results.

The same on the timescale issue. Again it is a valuation of the work. Someone with unrealistic expectation on how long it takes to create your product, won't value the output. Since in their mind it should take little time / effort to produce.

The key is training yourself to recognize the warning signs and respond properly. Kind of like saying, "Hello, this is Will Bunker", when I pick up the phone at work. Make it a habit and you will save yourself a world of pain.

Give yourself plenty of rope - in case you trip

Interesting situation came up yesterday. My bank wants to refinance my home, which would save me money and be a good thing. However the appraisal came in lower that the original purchase price (not very surprising right now).

So then the question to me was, will you put in extra money to get the loan to value ratio down to 70%. The amount was pretty high, but would save me monthly cash.

So I called my father, who managed to stay in farming during some of the toughest years. I could take the cash out of one business or the stock market. Both would leave me short cash if anything else came up wrong.

My father's analysis, which matched how I have seen him run his own business, was keep the cash available. He said, "if your rope is too short and you trip, you'll hang yourself."

Funny thing happened when I called back the mortgage agent and told him that I would have to pass (and eat the $400 appraisal fee). He said they would apply for an exception, it might cost me an extra $10K on the mortgage but I would make that back up in 10 months of savings. So I get the best of both worlds, safer mortgage and maintaining as much personal cushion as possible.

Have a game plan for staying in the game

Had a conversation today where we discussed someone's game plan for staying in the game of being an entrepreneur. It is very easy to either get discouraged and quit, or be so optimistic that you run into real financial trouble.

The key is to get serious about knowing what your monthly nut is to keep your lights on. This can be on a personal level and as a business. If you are a one person startup it is close to the same thing.

There are payments that you can't get out of short range, like rent / mortgage, food on the table, lights, etc. You should know this number like the back of your hand. Then make sure that you realize that everything else is a choice.

So many times the extra choices are put on auto pilot which uses up precious runway. If you reach the end of the runway before liftoff, it is not a pretty sight. The decisions you make here determine how long you have to try.

The other side of the decision is your personal limits. How far do you go into debt before failure becomes catastrophic. One of the lessons I picked up from Richard Branson (Virgin Airlines) is that he structures every new venture in a way that failure doesn't impact his other businesses.

Keeping the cost of failure tolerable is a huge factor. Otherwise you will severely limit the number of times you get to try.

At the end of the conversation, we discussed how it comes down to personal sacrifice of the extras and having an intelligent warning system (budget) that let's you know when it is time to fold your hand and try again a different day.

Problem customers / clients

There are 2 schools of thought on customers:

1. Customer is always right.
2. Fire problem customers.

I think both are probably right to some degree. Don't follow a rule of thumb religiously, but apply common sense based on where you are in the startup cycle.

I tend to look at where I am headed with an idea. If the customer's complaint fits into this roadmap or makes sense I will accelerate development in that area.

The hard part is separating out people who are legitimately frustrated with a poor implementation from people that are frustrated with their existence on this planet.

It really hit home to me when running a previous company. I would walk to work early (4 AM ) so I could get some programming done. One morning, I see someone else's shadow in the window talking on the phone. I think it might be someone calling their girlfriend in Russia, so I quietly slipped into the office to see what they are up to. Instead, it is an employee calling up the customer service departments of random companies and complaining about products he has never purchased.

That is when it hit me, not all customers are right even some of the time. So again it is using common sense. When I encounter a user that is of this kind, I flee the scene as quickly as possible. Give them their money back and hope they latch on to my competitor and waste as much of their time as possible.

Not always easy to tell the two types apart, but that is why you have to use your brain in this startup game.

Don't build other people's boat docks (unless that's your business)

A great lesson I learned from my father, who has been an entrepreneur his whole life (as a farmer, among other things), relates to staying focused on your core business.

We had put in a RV park one summer, as he was starting to find a way to transition out of farming. One of the tasks was to put in a fishing pier in the lake so that the campers could enjoy a day of fishing. He had the extra farm labor so he saved the $20K by doing himself.

He put in an extremely well built and beautiful pier, but the work was hot and messy (southern summers). Toward the end, someone else who had a house on the lake came up and starting asking my father about his work. At the end of the conversation he began badgering him about building a pier for his home and how much would my dad charge.

My dad kept insisting that he didn't do this for a living, but the guy insisted. So eventually my father said that he would be glad to build him a pier for $50K. The guy exclaimed, "Everyone else charges $20K."

My father's reply, "Look I told you I'm not in the business of building piers, but for you I'll do it for $50K." That was the last he had to hear about it.

His point, if you are going to go off task, make it totally worth your while, unless you want to be building another person's business while neglecting your own.

Do you know what skills you need to succeed in your startup?

One of my habits to make a skills grid for any business that I am getting into. This tends to evolve as I progress further into the project. I use it as a guiding system for what skills I need to acquire, partner with, or have the money to purchase.

So for my current project YoYoBrain.com, my list looks something like this:

• Linux server administration - every website has to live somewhere
• Database administration - MySQL for this project
• Ruby on Rails for server side coding (could be PHP, Python, etc.)
• Javascript / Dojo - for making that Web 2.0 coolness
• Design - what should each screen look like
• Usability - what to include and how to communicate features
• Graphics / Photoshop / Fireworks - every site needs some graphics
• Marketing - how do people know about us

These are just the broad strokes, but you get the picture. Then at every stage of the project I look at how to find these resources. The funny thing is that my decisions change over the lifetime of the project. Maybe at some point I have more time than money and do it myself. Or I have the perfect partner that knows some of the skills and I don't have to worry about it.

However, most first time entrepreneurs don't have the money to hire all of the skills needed. I see people fall into several different traps.

1. Denial that the skill is needed at all. So they program an awful looking site and complain about why people don't get it (I have done this personally.)
2. Spend all their time trying to raise money. Sometimes this is successful but you should spend as much time coming up with other ways to fill the in the gaps.
3. Give up, saying that I just can't program/design/market...

I have actually caught myself doing all of the above. However I have a profound belief that I can acquire any necessary skill if I put in the time. On this particular project I have cut back the amount of money that I am putting into the business due to the economic downturn. This has meant that I have had to acquire more of the skills on the list. Things that I never imagined that I could do, I have gotten better at.

Am I ever going to be a world class UI designer? Probably not, but at least I don't suck at it anymore. Also I am able to have an intelligent discussion with any designer that I hire in the future and get twice my money's worth out of them.

There are tremendous books currently available by some of the top professionals in each of these areas. I read an unbelievably good book on design by Bill Scott called Designing Web Interfaces. He is head of Netflix's design. I couldn't possible hire this guy in real life, but he wrote down hours worth of advice.

So between books, blogs and videos, the information on how to get better at any piece of the puzzle is available. It is a matter of breaking it down into chunks and putting a plan in place that moves you toward getting better at doing this thing we call a "startup."

Why you should be an entrepreneur (or anything for that matter)

I am often asked how to know if starting your own business is right or when do you know it is time? My response is, "Even if f I knew that I would never succeed again with any startup, I would still be happy with the process of trying." I have given this much thought. 9 out of 10 of the ideas that I have attempted in my life end in one form of failure or another. At the age of 40 I am acutely aware that success can be extremely elusive. I have recently become aware that I might be over half way through this journey (no medical problems, just watching my parents get older.)

That is the reason that I moved half way across the country to Silicon Valley 2 years ago. I decided that if I wanted to accomplish anything or be involved with a group of people, now was the time to begin acting vigorously in the direction that I wanted to see my life taking.

But I always remind others that the trick is to avoid catastrophic failure. If you go bankrupt trying, it severely limits the number of times you will get to try. I started my first business (a dating site that is now Match.com), while both my partner and I had full time jobs. The first year was literally nights and weekends. Neither of us quit until we had revenue. I have always been a big believer of putting food on the table and keeping a roof over my head.

Yet there is an incredible amount of free time available if you are disciplined about finding and using it. I used to carry around a huge stack of note cards that had all the new technical information that I needed to learn to get better at starting technical ventures. It doesn't have to be technical, it could be anything that would make you better at whatever is important for the next step in your journey. When I had a free moment, I would drill through whatever I had time for.

The important part is to become clear about what you want out of the journey, then do the work necessary to get there. Listen to the feedback life gives you and get better at the parts that are today's stumbling blocks.

One of the reasons that I am starting this blog, is that I have become aware of a hole in my abilities, which is the usage of all the new marketing media that have become prevalent since selling my last Internet business in 2000. I am on a crash course to learn how to connect and contribute in a way that matters and people find useful.