2011 - The Summer of, eh, Work?

A year ago I wrote about our preview of the online social video editing software Creaza. Even though the social video editing service for consumers is still in closed beta, we have had two fun milestones lately:

• A two page article in Norway's largest business newspaper (DN), focusing on the big plans/hopes, the software itself and launch of the US company, Creaza Inc.
• Creaza was one of three startups that won the judges attention at a Plug and Play Expo in Silicon Valley recently, as Techcrunch noted

This could mean that we need even more scaling capabilities (we currently have user numbers in the hundreds of thousands on the educational version, a different ball game than if we get millions of active users) sooner rather than later.

That, and for me personally two-three other projects in an intense phase for other customers, could easily mean extra work this summer. Anyway, I just booked plane tickets for doing a late August road trip from New Orleans to NYC and I am also going to visit the Sziget Festival in Budapest, so no complaining! But I think we are in for an interesting summer of work and fun before that...

Full disclosure: I am a member of the board at Inspera, that holds a majority ownership position in Creaza AS and (directly and indirectly through Creaza AS) controls 52% of Creaza Inc.

Small Scale Globalization as a Practical Reality

The last two years, I have been teaching e-business at a college. When covering internationalization, I am talking about global supply chains and big outsourcing providers. We are probably all getting used to designs, components and finished products travelling across continents (to be fair very often produced in China based on a design from the US), before ending up in your lap(top). I had not really thought that much about how this links to my more down to earth business and software development projects.

The fact is, to me at least, doing business globally has become more practical and accessible to small firms. The Internet has changed how we work and collaborate and I will provide some facts about the work on a service we are launching in full scale soon, as a practical sample:

- I have been using an Indian firm, PixelCrayons, to implement the web page design - with excellent value for money and professional project management exceeding my expectations

- My partner in Romania, Exswap, has been doing excellent work as usual and collaboration from day-to-day is done a lot through Skype (acquired yesterday[1] by a not unknown software giant from Redmond) and other online tools

- My excellent hosting provider is based in Germany

- The core issue tracking and development hub, at heart is Jira, is delivered by Aussie company Atlassian (at first via their brilliant start-up scheme which gives you the software for free and the little you pay goes to charity), we use open source tools developed using what a more buzzword-compliant post would call crowdsourcing, and we build our product on top of many of Google's tools and services that live in the cloud

- I both learn from and contribute to groups/email lists that are truly global in nature

- When we actually want to meet in person, the competition in the airline industry has made the prices reach a level where it is not a total showstopper, even for small firms. To me, this "democratization of air travel" is a part of the same picture.

- And, a bit on side, maybe -- even on this very low traffic blog I have received comments from all over the world (US midwest, California and eastern Europe) on email

All of this might be small things that we take a bit for granted from day to day, but added together it is in fact changing radically how we recruit, manage, purchase and work - in the broadest sense of the word work.

To a certain degree the vision about a rich toolset in the cloud, using a best of breed strategy, is already a reality. It makes trial and failure less expensive for new entrepreneurs, and I believe it fuels the speed of innovation. Exciting[2] times.

[1] - As you can see, the final version of this post had a little time hanging around as well, since "yesterday" is "last week" when clicking "Publish" - but trust me, it is nothing compared to the time from rough bullets and the idea to the (semi-)finished post. :)

[2] - Caught up with the latest editions of Economist on the plane down to follow up with my partner and it seems the times, at least in and near Silicon Valley, is so exciting that even the more established analysts see it as a bubble (bubble warnings from the blogosphere have been here for a few years, from when Groupon was just a random small company)...

Pricing strategy: What is your next-to-nothing threshold?

A while ago (a long while, in fact - this post has been in draft state for forever), when travelling, my harddisk broke down. I had thought until then that my ad-hoc backup regime was sufficient. Not quite so. It was a combination of three things (in addition to the, too dated, ad-hoc backups) that more or less saved me: Subversion, web based email and Dropbox. My Dropbox account was a free one, but as you can imagine - I have now upgraded to a paid plan to have more space (I am really a fan of the service, by the way!).

But this post was not intended to be about backups, rather about pricing. The hours (and potential data) lost in the above transformed me from a enthusiastic evaluator[1] to a paying user of Dropbox. Their price point of 10 dollars per month was just above my next-to-nothing threshold before, but after this near (data) death experience, 10 bucks suddenly seemed like nothing.

Micro payment (when I say micro, I mean micro - think 1-10 cents for a one time access to some content) was for a while a sort of holy grail for many in the online business. I think the hope for this type of payment patterns might be waining, but a new "next-to-nothing" paradigm has certainly emerged in app stores, such as Apple's or the Android Market for mobile devices.

Also subscription based services of various sorts seem to manage to convert at least a small portion of its registered users into actual customers (in my world he is not a customer until he pays for the service!). Other examples of small payments include donations (Wikileaks, anyone?) through PayPal and others. Personally I have donated to a couple of open source projects, for instance the pdf generation program I use for all my invoicing etc. in my firm. I do not have hard facts, but I think these schemes are on the rise as well - and payments are often quite small, so I will include them in the next-to-nothing bag of pricing schemes.

Some, grumpy theorists in particular, may claim that the next-to-nothing threshold is just a special case of perceived value vs. price. That could be, but it is still an interesting one. I also think that in general, the next-to-nothing-limit can be very close to nothing for personal use, but often a bit higher for a service aimed at professional users. This is a particular challenge for the pricing structure for the launch of an exciting B2C service I am a bit involved with this spring - probably another post on that later.

One last thing: The power of really paying nothing should not be underestimated. Even if your next-to-nothing offering looks very compelling on its own, that could change very rapidly as soon as someone (such as Google, as a not quite randomly selected example) offers the same service for free...

[1] - If you haven't tried it, please do - it is purely great to have access to what you know is the latest version of the file both on iPad, phones, PCs and Macs -- as well as from a web based interface.

Norway - the land of opportunity?

When travelling this weekend I did some catchup in the pile of unread magazines and found this graph in The Economist:



It shows the relative income differences from one generation to the next (US=1). And it turns out Norway scores very well on this metric, so maybe state funding of educational loans and a pretty egalitarian society pays off in the end. The income mobility is almost 3 times that in the US and the UK.

Interestingly enough, the UK scores just as well as the US. I guess it is just prejudice, but I have always thought of the US as the classical meritocracy - if you are good, you can succeed no matter your background - while my oversimplification of the UK society is as more of a gentlemen's club where the right school, connections and parents are all a necessity to do well.

So the American Dream might just as well happen in Norway, today? I guess still lawyers breed lawyers more often than others, but on a macro level it does not look too bad. Anyway, I think it is a graph to be proud of (still a pity to be beaten by the Danes again, of course).

Vintage Code on a New Canvas

I wanted to do a small experiment with the HTML5 Canvas. To do it, I found some Java code I wrote in 2001[1] and ported it to gwt-canvas (thus compiling a Java subset to JavaScript). It uses a naive redrawing technique[2], but the point of this test was not to optimize performance or create production quality code[3].

Anyway, you can see the result here: CanvasPairs (external link). Try it and see how fast you can find all the pairs!

I did this and a few other, more graphically intensive, experiments to test canvas performance on a few devices (iPad, iPhone and Android-based phones mostly) and feasibilty for doing casual games or minigames inside edutainment titles using technology such as PhoneGap with the HTML5 canvas. The results were somewhat mixed, but for the iPad I have high hopes that IOS4 will improve performance in the Safari browser and on even the not-so-new 1.5 version of Android on a medium spec'ed phone, it was relatively impressive.

My feelings about the technology is ambivalent. On one hand I am excited about what will soon be possible to achieve in all browsers without plugins, but on the other hand the maturity feels a bit like Java applets in 1998 or Flash in 2003. At least I am sure progress will be much faster this time around.

[1] - This summer I visited Moet&Chandon and IIRC, 2001 and 2003 where the last years of vintage produced. I won't go as far as saying no good code has been written since 2003 :-), but the reunion with the code from 2001 was not that bad.

Rewriting it in GWT proved to be a little more work than I thought at first, but I am always (too) optimistic... The rewrite included just skipping a few parts (highscore lists, double buffering, keyboard input for pausing etc.) for now and reimplementing others (for instance a basic preloader to replace the ImageObserver and a string drawer based on drawing segments of an image of symbols, since text on canvas seems to be a bit shaky at the time of writing).

[2] - Basically it redraws the whole canvas for each and every frame. While this (minus some background caching, maybe) might be needed for more advanced games, this particular one might have gotten away with a bit of Image or DIV flipping, I guess - but that was not an option for the platform which it was originally developed in 2001.

[3] - One might also argue that the simplicity of the sample would have made it possible to do it without any canvas (HTML, Flash or Applet based) at all. Again, that might be true - but the main point here was not to implement the specific functionality of the game itself.

Getting beyond the first sale for a micro ISV

...or: putting a long time failed goal public.

In 1999, about the time I was ending my first year in college, I had created a few very simple Java-based games and established my first company. I discussed with my girlfriend (now wife) who was skeptical about paying for a domain/web site, but we (?) decided to do it. Then, with a strike of luck, the largest telecommunications company in Norway - Telenor - found and liked the games and wanted them and similar games for their ISDN-touch screen platform. In total I created 7 games. The payment wouldn't impress anyone (certainly not me) too much today, but as a student it was definitely significant and I also managed to do the deal on a yearly subscription basis rather than as a single payment.

Getting that big customer will probably be classified as luck. The problem is that a micro ISV[1] cannot rely only on pure luck in the long term. Thus the key question becomes: How can you increase the chances of being lucky? And more specifically, how can you get beyond that first project sale?

In my experience recurring revenues are often calculated when pricing a complex software projects (ever heard the "but the next similar project will be much more profitable", only to find that the next project was not that similar in the end?). To talk about “productization” is easy, to successfully do it is not.

I will argue that you can increase the chances of being lucky by (1) securing your rights to the product, (2) thinking about it like a product, (3) building it as a real product and finally by (4) doing the marketing for the product - often only with the guerilla methods available to small firms.

I will go through each of these four points in order and I will use a system I made the first version of in 2003 as a working example. This system is a web-based recruitment system currently used by a single recruitment agency. I will try to see where I did wrong, comments regarding the specific project is inline in italic, and hopefully get some of it right in the aftermath of this blog post. Since I have NOT been successful in trying to sell this to customers beyond the first one, you are now watching live the first structured attempt at changing this (and could argue who am I to write this blog post[2]…).

By putting the failure public, will I finally manage to do it? Anyway, on to the four components I will go through, starting with the intellectual property rights (IPR).

Secure your rights

This might be basic, but if you plan to reuse the software from a project either in other projects or even in a product you must get the IPR correct from day 1. In my experience this is usually possible, but may vary according to type of customer.

On this point I was not too bad, I was sure to get full IPR (giving a partner pricing scheme to also get full IPR to changes developed over the years), but I had to give my customer exclusivity in Norway. In retrospect, a few enquiries have come over the years from Norwegian firms wanting to license the system - so negotiating away that clause at the outset might have paid off. My customer, although always constructive, did not want to give up local exclusivity the one time a customer that was ready to buy actually emerged.

Think about it like a product

Next, I strongly believe you have to think about your product as exactly that – a well defined product. It is easy enough to say that the core of some project is a “product”. But what is the product exactly? Be specific - thinking about exactly which user interfaces and functionalities are part of the product forces the thought process around the product.

Likewise, be specific about who is going to buy the product and what is their willingness to pay? What is important to the customer might be different from what you assume. One way of finding out is getting partly founding for new features from early adopters. This forces your pilot customers to put their money where their mouth is.

Think about the most likely competitors. If there are none you can either hope to be a true genius, but it might also indicate lack of market. Don't let a number of competitors scare you away, a micro ISV can be nimble and develop in new directions quicker than they can! Often it is great to be small and not have a lot of legacy code and customers that use it to think about.

On this point, I just have to say Mea Culpa. It was more a vague hope than a clear strategy behind the product thinking. A few years later it seems to clear to me this is not a volume product (also given what we can support) and it will be priced between the simplest competitors and the offerings from huge ERP/HR vendors.

I have tried to think more about it like a product lately, will return to that when I cover marketing, but first on to building the product.

Build it as a real product

It is not enough to think and talk about it like a product, if you are going to support it without too much grey hair and get the scale effects, you also have to build it like a product. This has practical consequences all the way down to the details of the technical architecture and the underlying data models.

Regarding user interfaces there is also a need to be clear on what is part of the product and what is customer specific – and find a clear cut way to manage that. If you throw hard coded texts or data fields specific to the first customer around the user interface, it is not a product. Also, if you have to fix the same error for all customers, it can be an indicator of a flawed architecture or structure.

In most cases you won't have partners selling your product from day 1, thus you need to think about supporting (and possibly hosting) the product professionally. Then it matters a lot that it is built in a way that grows maintenance work in a sub-linear way with the number of customers[3].

Again, on this point I did not do to well at the first attempt. When trying to generalize this now in 2010 for the new version, some rework had to be done to make possible installation for the next customer smoother. I also made what I think was a smart move by trying to provide easy hosting, or letting the customer forget about hosting all together, through possible single sign-on with their existing solutions. I also made connecting to enterprise systems easier by exploring a module that will run PHP (in which the original system was built) inside the Java application server Resin, called Quercus.

Marketing for the product

Many entrepreneurs seem to almost lose interest in a product once it is approaching something that looks (remotely!) like production quality. Then it is on to the next project, although they might claim they are both "products". Well, it might be fun (I think so!), but if doing so one should be honest enough to simply call them projects, not fool oneself by calling them products. That being said, it is nothing wrong with trying out several product ideas – if you can make even one of them fly, to me that is just plain fantastic – but remember that not all projects need to become products.

A product should have a name. Try to find a good one. Create some, if very simple, marketing material and try to get it spread. These days many channels are available, but it is still much easier said than done to create the amount of buzz needed to reach just those potential customers.

If you really believe in the product and it has a great potential, here is the area you are most likely to need professional outside help. It can be from partners or external investors (VCs). Marketing and internationalization can be frightening expensive and for a software company founder to be excellent at it is probably the exception rather than the rule.

If your product is consumer oriented, the Freemium model has gotten quite a bit of attention lately (some would say too much, it is certainly not a one-size-fits-all silver bullet). Andreas Göldi covered some properties on when the Freemium model can be successful in a blog post in 2009, it comes highly recommended. If the free version is great, maybe the word of mouth can help your marketing? In addition to pure guerilla tactics including wise use of social media[4], some forms of targeted advertising might be feasible. Very targeted search word advertising and doing talks and/or stands at conferences or conventions might be worth exploring. I am not the best example of this (again, look at the 7 years of a great system still with that single customer!), so I am sure you can come up with more creative ways of doing this than I can!

How did I do on this point? I simply didn't. But I have settled for a name in the process of upgrading the solution this year. RightCruit.com is going to be the proud new name of the product. And I have now written this blog post (and not least done the analytical work both leading up to it and starting doing the operational work coming out of it). I have to admit that my blog with very limited traffic is not ideal, but it is a starting point.

In addition, and more important, I have good ambassadors in my customers that have used the system since 2003. I still think the most likely way of doing a sale is through them and their international contacts.

So by posting this I have made public the goal of making the first international sale for RightCruit. If it happens, have no doubt there will be a follow up post or comment on this page. In the short term, I will use the comments field here to give a quick update as I progress in trying to make it right using my own medicine. The next month or so, I intended to record a small presentation video and maybe buy some Adwords ads for those to see if that can generate any qualified leads.

I welcome comments, both on the theoretical argument and on what I am still doing terribly wrong with my practical attempt at selling RightCruit to new customers. At least can't be the name? ;-) I thought it was utterly clever with a word play on “recruit” and good meaning to it as well...

[1] - ISV = Independent Software Vendor. When using the term "micro ISV" I generally mean companies with only a handful of employees, for most of the time in the specific example it was actually less than one FTE. But some of the argument above is valid also for somewhat larger companies struggling with the tension between customer projects and product development.

[2] - If I were to argue back I could mention that I have been involved in some successes as well :-)

[3] - This might sound easy. It is not. I have seen examples of the time spent being almost exponential and when having the first small handful of customers, the coordination and attempt to do projects for customers along with product development almost stalled progress completely for a while.

[4] – I don’t claim to be the biggest expert on social media usage. I do have opinions, however. Without attempting to lay out rules and certainly not a social media strategy here, I would say that adding some value to a discussion or offering something of value (I hope this blog over time shows some of how I think) is always a good idea. And always, always, always be honest about who you are and who you represent.

Also, thinking about real life parallels can be useful (in a party, would you go “hey, this guy that none of you know just said that something I wrote was great and I will repeat that without any other comment to all of you”?), even if it is not always straightforward to find a relevant analogy.

Internet as an application platform - even for HD movie editing?

I have read a lot and also written a bit about web based applications of different sorts and how business models in the software industry are changing. The move to Internet-based applications has been promised for maybe too long, but from my point of view it seems to be going more mainstream lately - which for instance a front page of the Economist in October 2009 indicated.

In addition to moving more mainstream in terms of users, I think web based applications are wideing the scope also in terms of types of applications that move online. The last weeks and months I have been lucky enough to be involved in a project taking this somewhat to the extreme - trying to do HD video editing online in the browser.

With the launch of Flash Player 10.1, Adobe brings hardware accelerated mp4 support to browsers on several operating systems - and based on technology from the Creaza movie editor a preview of a upcoming version of online video editing with HD video support has been made in record time by a dedicated team of developers in Norway and Romania. You can do a test drive yourself, by getting the new flash plugin and following this link to the online video editing application preview. Make sure to use the commenting function to tell us what you think.

The technology preview version does not have a save or export functionality, but you can render the movies live and watch them to test the quality. In the screenshot below I am changing a text about 10 seconds into the example movie. You can also add transitions and effects, and to be honest I was amazed how the results look. You can have multiple layers of effects, sound and video (including multiple videos playing in different parts at the same time) and it all renders on-the-fly.

Full disclosure: I am a member of the board at Inspera, who owns a majority stake in Creaza AS and has the IPR to much of the technology used in the preview application.