Five Fine Years

Today it is five years since I quit my job to run my own company as a full time gig. It is quite different from doing some product development things on the side with the employer's blessing or in addition to studying as I did back in the days... You can't be half pregnant and it is hard to be a part-time entrepreneur as well.

Even if things may not have "taken off" by some measures (and some of the first products truly never got out of the phase with a few pilot customers), I am extremely proud of what we have been able to do with TapBookAuthor.com with no external funding since 2011. All the major publishers in Norway are customers and we also have customers in exotic, and less exotic such as San Francisco and London, places all over the world.

Today I met with an author that was so inspired by our tool that she was shivering from the opportunities it opened (we are working on our business model and technology to help indie and stand-alone publisher-authors, and are running a beta program to learn more). Such experiences makes it easy to find motivation for an extra long night of working (I've had my share of such late working nights, or to paraphrase Joey from good-ol' Friends: Actually, I've had a lot of people's share!).

If you read this and are considering to do the same and start your own company, should you do it? I will not claim it is easy and I am still not quite used to the insecurity of not knowing the economical situation just a few months into the future. That being said, I can honestly say I have never regretted jumping. So I would say jump, get the experience and find out for real if it is your thing. And unlike being pregnant, there is even a way back if it should not work out for you. Good luck!

Food for conspiracy theories

So, according to the WSJ Google is buying a maker of solar-powered drones. They are also talking to other companies in the sphere (pun semi-intended, semi-working).

It would not fit very well with the mantra of "Don't do evil" for Larry to go crazy and mount guns on these drones, but even without the craziest ideas it makes me a tiny bit uneasy knowing the same company may know where I am (GPS from mobile phone) and be able to record me from a drone with extremely sharp eyes. That company better have decent privacy policies and be strict with relevant governments and agencies...

Nir the Truth

Following Facebook’s announced acquisition of WhatsApp a week ago tomorrow, many interesting discussions about valuation have popped up (my stand on this is that the defensive argument makes a lot of sense and that improving ads on Facebook is probably the primary monetization strategy, but enough on that).  Yesterday I saw a blog post from Nir Eyal, one of the guest lecturers in our TINC program, that explains what I discussed with a fellow entrepreneur the other day: While it is super cool with such an event, there is a sting of jealousy to be felt quite clearly for most of us. “I could have written the prototype for this in a weekend and done many things better”[1].

It does not feel fair. What Nir basically points out, is that you will be happy with your car (or salary) until you learn the neighbor’s is better, or if you are a monkey in an experiment a piece of cucumber is a nice treat until your mate gets something nicer, like a grape. Then no way you are going to keep working for just a cucumber slice!

I have a personal experience to share, that is somewhat related to these types of feelings as well. I experienced my first “liquidity event” quite early, about 23 years old and still in university I got about 1% of a company as compensation for going the extra mile and working several nights to land a fixed price project, even delivering some interesting features like social scoring of the stock forum that was part of the service.

This company was sold (at 1/10 of the estimated price when discussions begun, one dotcom-crash in between…). Looking back, it feels somewhat like pocket money[2] - but at the time it was both significant in economic terms for me as a student, but not least it gave me a taste of what might even be an important reason for me being an entrepreneur today.

But my point is this: I remember how happy I was about the reward at the time. That is, until I learned that someone else in my university had earned more by just selling a domain (they had it by chance, same abbreviation as a bigger brand). On all my available scales, at the time at least, my effort was bigger, so it did just not feel fair! Like Nir points out, such feelings might have helped during earlier phases of evolution, but it does not help us being sympathetic (or happy!) right now.

Anyway, my personal cure to this is to always ask myself the question “if there is never an exit, will it still have been worthwhile?”. As long as work is fun[3] and meaningful from day-to-day and the economics work out somehow, I can easily live with not being acquired for heaps of money - even as we try to become “venture worthy” I will not let go of this. Then it is also easier to honestly admire other people’s success and just hope that some day a smaller scale version awaits you, knowing you are still good even if that is not the case.

[1] - Most people realize there are subtle details in focusing on such a narrow area, not least to viral growth and adoption, but there is of course some truth to it. You need luck and timing, in addition to gut feeling, dedication and hard work. Having worked a lot with scaling web apps, I think the engineering effort to scale to this level with such a limited team size sounds impressive - even if also this aspect in theory sounds like “easy” to scale since traffic (minus large group broadcasts) is very easy to partition.

[2] - Inflation adjusted, we are talking about maybe two months of my current salary. Now this may also show that we have decent salaries in Norway (but high taxes), but try measuring it in beers out on town. My best estimate for that is that it would have covered maybe 900 pints of beer in a bar. :-) If it had happened the months before at 10X the price, I could at least have been pretty beer-soaked in the rest of my student days...

[3] - A slightly tongue-in-cheek test that is in fact useful in practice for evaluating many options such as projects, features and partners is: It is either "no" or "hell yeah".

9 billions of patents

Google is selling Motorola Mobility to Lenovo for about USD3B, not that long after acquiring the company for about four times that amount.

Many interesting things to say about this (before converting to Mac, I was a sworn Lenovo user on laptops - can they win the enterprise mobility market?), but one thing that stands out is that the patent portfolio must surely be great... That, or it just did not turn out as planned for Google (since no-one quite seemed to 'get it' it could be a genius move, or...not) this time. But I think my 5 cents rests with the patents being the core motivation and that it is troublesome to compete with your own partners in the Android ecosystem.

All in all it seems, from the outside, like a good move from Google.

If you cannot keep up with one blog? Start another!

If you cannot keep up with one blog, it might not seem like a super tactic to start another... Anyway, if not exactly started, we have lately published more frequently to our company blog at blog.tapbookauthor.com.

Wanted to mention it here, in case you wanted to have a look. Not that I have a lot of traffic, but to paraphrase my philosophy regarding exercise: Any additional traffic is better than none at all.

And about that "not keeping up"-part, I actually have managed not to be all that far from my original goal of posting maybe once per month (OK, sometimes not really close either). I do admire people like Fred Wilson posting something quite insightful each and every day, but that was never my goal when starting blogging. And that the focus of the posts here have shifted a bit from lean project management and into entrepreneurship is just fine and reflects my current focus at work, which was exactly what I promised to do. OK, probably thinking and writing too much right now - will stop. :-) Would be cool if you checked out the TapBookAuthor Blog.

Correct, Clay? At least in theory.

In a well-written post titled "What Clayton Christensen got wrong", Ben Thompson uses the iPhone as a proof that the theory supporting the disruption-from-below pattern might be wrong. He puts forward that the faulty claims of Christensen are:

(1) Buyers are rational & every attribute that matters can be documented and measured
(2) Modular providers can become “good enough” on all the attributes that matter to the buyers

The grouping of his first two items into (1) is intentional and lets me come to my quick response right away:

(1) Non-functional attributes are of course important to buyers, even professional ones[1]. This is kicking in open doors. Just because Clayton Christensen is not good, or at least has missed here, at predicting just how important they can be, it does not really make the theory wrong. Brand counts. Feeling counts. (And why touching the iPad 1 screen still feels superior to the very newest Android tablet is a mystery to me, but that is a side track!) I'm no expert of rational choice theory, but accounting for these non-functional attributes does not make it less rational in my use of the word - and if the theory is to have any use modelling consumer behaviour, for sure such non-functional elements must be factored in as attributes in some way. If not, it would be useless for this purpose.

(2) The good-enough-curve[2] for mobile phones, a product with usage patterns very personal and frequent, might be pretty high. So iPhones may still not over-serve their customers as much as Clayton Christensen thought they would in the interviews mentioned, thus the theory as such can be correct. Maybe the high positioning of the curve is particularly true in countries with strong buying power, but another piece of anecdotal evidence pointing to the same being the case for developing countries is how smartphone penetration is increasing there (not yet so much for iPhones, but relatively speaking $100 Android devices are also put pretty high on the list to make the cut for many of their recent purchasers!).

I've heard Clay Christensen speak on the topic a couple of times (a long time ago, but I still recall it with joy), and he does not really claim this is the only pattern of paradigm shifts - which means it cannot really be proved wrong by providing counter-examples as such, if it still accurately describes (and maybe even predicts) others.

It is very useful to point out, as I tried to do to the students in my Entrepreneurship class today - leading to one of the students reading Ben Thompson's piece with plenty of great references, that it cannot be used as a simple acid test for new ventures. It does not have to be a disruptive innovation to succeed - and planning to disrupt an industry segment is easier than doing it anyway. Thinking about it is still useful for positioning the product and learning which segments will appreciate your value proposition.

In my opinion it is bold to claim at this point that Apple will never fall into the trap of marginalizing their real market over time, by only focusing on the top end. In some of the old examples in The Innovator's Dilemma, there were "genius CEOs" (and they were, at the time!) focusing on the high end of the market for improved profits. Of course right now, with 5Ss and 5Cs flying out of stores of the rate of 9 million over one weekend (AAPL stock price was up the day of this blog post because of this), it seems Apple is far from in that situation just yet.

[1] - The claim that professional buyers are extremely rational might be about as misleading as saying consumers are not. It all depends what you measure into that value. What is the value of the McKinsey brand for a strategy project and is not some of that irrational and/or unconscious? Why does Coke taste better than the white label variant sold as as a store chain's private label, even though they cannot be separated in blind tests?

[2] - I'll borrow Clayton Christensen's own illustration of this from a guest lecture at MIT Sloan back in 2007:

What I called the "good-enough-curve" is that dotted red line of average consumer performance utilization of a product.

Teaching what cannot be taught?

Today I started a teaching gig in Entrepreneurship at NITH again. Hopefully it is going to be good fun (at least for me) and I try to make it as practical as possible. The students will work out their own Business Model Canvas and hopefully get experimenting (they are going to hear me quote Steve Blank's "get the heck out of the office" more, in fact I said it twice already...) for real as soon as possible.

Some groups have already founded companies, while for others it will remain mostly a normal school subject. It will be a challenge to make it interesting for such a diverse group of people, but like I said in my intro, I truly think (even if it may sound a bit cheesy) that if they'll give it all, it will for sure make it the best school subject they ever had, and it might even be life-changing if they come out in the other with a successful company founded.

The group is a bit large, so the final pitch/presentation is going to be done via handing in a video. Goods and bads about that, but will be fun to see what the students come up with. I told them "screen capture of your presentation with voiceover is fine", but I certainly hope some of them will take the opportunity to get a bit more creative.

Trying to explain stuff is at least a good way to force yourself to think stuff through, which is also my main motivation for doing these gigs (besides fun and what one might call the CSR side of it - the pay is truly awful). And this semester I will be doing much of the same exercise my students are doing, but for real with my own company (as mentioned in the previous post, I will be going to a tech incubator in Palo Alto with TapBookAuthor this autumn). After the best summer in 30 years in Norway weather-wise, let's hope I'll experience the entrepreneurial equivalent this autumn both with my company and my students.

PS. My answer to my own rhetorical question, if you can really teach entrepreneurship, was that I can at least try to teach them a bunch of techniques that will be very useful for them as entrepreneurs...