Going to Trade Shows Like it Matters – Part 1

Posted on May 21, 2009 by steve blank

Ignore This Post
If you’re selling via the web and trade shows are something your grandfather told you about, ignore this post.  If you’re in markets that still exhibit at them (semiconductors, communications, enterprise software, medical devices, etc.,) you know they’re expensive in time, dollars and resources.

I wrote this “Going to Trade Shows Like it Matters” memo as a board member after I saw our company at a trade show. My observation was that they had the “Going to Trade Shows” part down, they just needed to add the “Like it Matters.”

————

To: Marketing Department
From: Steve
Subject: Going to Trade Shows Like it Matters

 

Setting Clear Trade Show Objectives
There’s no use going to a show if you don’t know why.  Answers like, “because our competitors are there,” or “because it’s on our calendar,” or even “because I think we should,” don’t cut it.  (Remember your department has a mission.) There’s a plethora of reasons why a company would want to exhibit at a show:

  • write sales orders
  • generate leads for future sales
  • research the competition
  • spot trends
  • generate awareness and visibility within the industry
  • build our mailing list with quality names
  • find better or cheaper suppliers
  • build rapport with current customers
  • get press
  • generate excitement around a new product introduction
  • get additional partners
  • recruit staff

The problem with this list is that every company can find at least five things they like on it.   For a small company this is like throwing your tradeshow money on the floor.  A company must pick the one or two top goals or nothing useful will happen. The number one reason a small company is going to a tradeshow is to generate awareness.  As the company gets larger and a large professional sales organization kicks in, its second priority is to generate qualified leads. This doesn’t mean that there aren’t tertiary goals, but they are just that – not the top one or two.

Before you go to a trade show sales and marketing need to agree to measurable goals. Everything you do before, during, and after the show should be evaluated in terms of whether it contributes toward reaching these goals.  While marketing can decide they are going to the show to generate awareness, marketing can’t decide they are going to a show to generate leads – unless the VP of Sales says that they believe those leads will be valuable and sales has a plan to follow up on those leads.

If sales doesn’t think the show is worth going to for the leads, and marketing isn’t going to generate awareness, remind me – why are you going to this show?

Generating Awareness
Ownership
If your company is going to a show to a tradeshow to generate awareness, then marketing owns the show, and sales is there for support.  Do not assign any sales people to the show who feel they “have something better to do,” 1) they might actually do (like closing an order) and, 2) bad sales attitudes are contagious.

Budget
A test for whether a show is worth going to generate awareness, is to total up the show budget.  Then offer those budget dollars to the VP of Sales.  They have a choice; they can tell you not to go to this show and they can use your show budget for anything they want in sales; or they can let you go to the show to use those dollars to create awareness for them.  If the VP of Sales doesn’t think that generating end user awareness and ultimately demand for them is worthwhile, then one of you is an idiot.  Hope it’s not you.

Once you know which show you’re going to and what your goals are, draw up a budget. Without a budget, costs can quickly spiral out of control (last minute impulse purchases to jazz up your booth, for example) and defeat your best laid plans. A rule of thumb is that your space costs represent about a quarter of your total show budget. So when you know what you’ll be paying for space rental, multiply it by four, for a rough idea of your expenses.

The Message
Sitting around a conference room table brainstorming messages that might resonate with customers, or worse having a PR agency doing that for you, is a firing offense in a small company.  You should be brainstorming messages with current and potential customers.  Your messages should have been pre-tested with prospects and existing customers way before you go to a show.

Say it Loud
Attendees are looking at hundreds of booths each screaming messages at them.  Why are your messages going to stand out?  Show-goers can’t sort through a pile of inarticulate or barely whispered thoughts.  Pick just one or two key ideas that you want to get across at the show and train yourself and your staff to “stay on message”.  Then that message needs to be translated into a theme for the booth, the staff and the show.

Then shout the messages out (virtually) at the top of your lungs. Visually, demo’s, wild colors, etc.  If you think you are going to offend your customers or embarrass your engineering organization, get out of the marketing department.  IBM doesn’t have to shout to get noticed, but you do.  Design your graphics, pre-show promotion, literature and show directory advertising around your focused message and theme.  However, scantly clad women, children and animals (in any combination) are still in bad taste.

Promotions attract booth traffic
Promotions and give-away’s drive traffic to your booth. Offer a free bestselling book in your industry (can you have the author there to autograph it?); Hold a contest, (If you’re giving away a big prize make sure your most valuable prospect wins.) Have a loud product demo; give away pieces of candy; hire a masseuse and offer free back rubs. While the promotion needs to fit your company’s image and the demeanor of the attendees, I’ll tell you that I’d be giving away dating-service T-shirts at the bereaved widows’ convention.

Location, location, location
A small booth is no excuse for being stuck in the corner.  Don’t tell me “that’s where they put all the small booths.”  I know that, so why do I need you?  Get yourself into the booth selection meetings and get to know the manager.  Call often and early and try to upgrade your location.  Shoot for a high-traffic location.  Be sure to look at a floor plan before you choose your site. Foot traffic is heaviest in certain areas of a typical trade show floor. Look for locations near entrances, food concessions, rest rooms, seminar rooms, or close to major exhibitors. Try to avoid dead-end aisles, loading docks, obstructing columns, or other low-traffic regions.

Partners Booths
While your booth may be small, some of your potential or existing partners may have much larger ones, in much more visible locations. Figure out how to get your equipment into every other big booth we can. But it has to come with one of your people to talk about the product. If you tell me we can’t find any established exhibitor whose products or services complement ours to let us in, I question why you are going to this show.

Tradeshow Seminars
Almost all tradeshows have conferences and seminar sessions; is your company keynoting any?  Leading or speaking at any? No is the wrong answer.  If there aren’t any that match your company, create some.  You ought to know who the conference or seminar chairman is a year a head of time, and they certainly ought to know you.  I can’t imagine your company going to a tradeshow to create awareness and not being a speaker.  (That means neither can you.)

Preshow Publicity
Does your company have any new announcements to make at the show?  Are you twittering your appearance at the show?  Did you create a Facebook page for the show?  Are you buying Google adwords and adsense for the show?  Did you issue any press releases targeted at the trade publications and local papers that will be covering the show?  Has the company talked to key industry analysts/press pre-show to ask them to stop by?  Did the company send out direct mail (email or postcards) to potential or pre-registered attendees reminding them to stop by the booth? Do you have press kits for the show, (electronic and paper) and have you posted them on-line and dropped them by the physical and on-line press room?

Key Influencers
Does the company have press/industry analysts scheduled for demos?  Does the company have demos or dinners/lunch scheduled for key industry influencers?  Is the company hosting/co-sponsoring some event?  Why not?  

Customer Discovery
Sitting inside of your company you’ve made a whole bunch of assumptions about who your customers are and why they will buy.  Now there are thousands of real live customers walking around the show floor with facts.  You need to get those facts back inside our building.  What are all the questions you’ve ever had about customers?  What do they read?  What other shows do they go to?  How would they reach them?  Have they ever heard of you?  Do they believe your key messages?  Do they believe the problem you are solving is important?  Who would buy your product? 

Measurement
How do you measure success at a tradeshow where the goal was generating awareness?  Ask the potential customers who actually came to your booth and call them after the show.  Take all the leads you got at the show (yes you are collecting leads even though you’re at the show to generate awareness) and follow up.  Ask them what they thought of your company/product before/after the show.  What message did they take away?  Did this help them to understand your company/product

Part 2 of the memo, to be posted tomorrow: using a trade show to generate leads. Plus tips on overall trade show strategy.

Filed under: Customer Development, Marketing | Tagged: , , , , | 2 Comments »

Founders and dysfunctional families

Posted on May 18, 2009 by steve blank

Startup CEO Traits
I was having lunch with a friend who is a retired venture capitalist and we drifted into a discussion of the startups she funded. We agreed that all her founding CEOs seemed to have the same set of personality traits – tenacious, passionate, relentless, resilient, agile, and comfortable operating in chaos. I said, “well for me you’d have to add coming from a dysfunctional family.”  Her response was surprising, “Steve, almost all my CEO’s came from very tough childhoods.  It was one of the characteristics I specifically looked for. It’s why all of you operated so well in the unpredictable environment that all startups face.” 74HGZA3MZ6SV

I couldn’t figure out if I was more perturbed about how casual the comment was or how insightful it was.  What makes an individual a great startup founder (versus an employee) has been something I had been thinking about since I retired. My comfort in operating in chaos was something I first recognized when I was working in the Midwest.

The Rust Belt – (Skip this Section if I’m Boring You)
Out of the Air Force, my first job out of school was in Ann Arbor, Michigan, in the mid-1970’s installing broadband process control systems in automotive and manufacturing plants throughout the Midwest. I got to travel and see almost every type of Rust Belt factory – at the time, the heart and muscle of American manufacturing – GM, American Motors, Ford, U.S. Steel, Whirlpool.  Our equipment was installed in the manufacturing lines of these companies, and if it went down sometimes it brought the entire manufacturing line down.

I always made a habit of getting a tour of whatever manufacturing plant I was visiting. Most plant foremen were more than accommodating and flattered that someone actually was interested.  I was fascinated to learn how everyday objects (cars, washing machines, structural steel, etc.) that ended up on our shelves or driveways were assembled.

My favorite factory was the massive U.S. Steel plant by Lake Erie. On my first visit the foreman walked through this enormous building, not much more than a giant steel shed, where they had an open hearth furnace. We came in time to see the furnace being tapped, pouring steel out into giant buckets. (Years later I realized I watched the end of an era. The last open hearth furnaces closed in the 1980’s.)

We stood on a platform several stories up and light streamed diagonally through windows set high on top of the building cutting through the black soot particles created when the incandescent steel hit the bucket. It was too loud to talk so I just watched the steel pour through the clouds of soot backlit by the blinding bright liquid metal. It looked like an update of the iconic image of Penn Station writ large.

And as I stared through the billowing clouds of soot flashing between black and white took on fantastical shapes as tiny figures on the factory floor scurried around the bucket. I could have stayed there all day.

Automobile plants were equally fascinating. They were like being inside a pinball machine. At the Ford plant in Milpitas the plant foreman proudly took me down the line. I remember stopping at one station a little confused about its purpose. All the other stations on the assembly line had groups workers with power tools adding something to the car.

This station just had one guy with a 2×4 piece of lumber, a large rubber mallet and a folded blanket.  His spot was right after the station where they had dropped the hoods down on the cars, and had bolted them in. As I was watched, the next car rolled down the line, the station before attached the hood, and as the car approached this station, the worker took the 2×4, shoved it under one corner of the hood and put the blanket over the top of the hood and started pounding it with the rubber mallet while prying with the lumber.  “It’s our hood alignment station,” the plant manager said proudly.  These damn models weren’t designed right so we’re fixing them on the line.”

I had a queasy feeling that perhaps this wasn’t the way to solve the car quality problem.  Little did I know that I was watching the demise of the auto industry in front of my eyes.

Operating in Chaos
Repairing our equipment could be time critical. One day, I was at the Ford Wixom auto assembly plant training my replacement and I was at met at the door by an irate plant manager.  He welcomed us by screaming, “Do you know how much it costs every minute this line is down.” As I’m troubleshooting our equipment scattered across the plant, (in the computer room, above the steel, in NEMA cabinets next to line, etc.,) the manager followed us still yelling.  My understudy looked at me and said, “how can you deal with this chaos and still focus?”  And until that moment I had never thought about it before.  I realized that what others heard as chaos, I just shut out.

A Day in the Life of A Founder
For those of you who’ve never started a company, let me assure you that it never happens like the pleasant articles you read in business magazines or in case studies.  Founding a company is a sheer act of will and tenacity in the face of immense skepticism from everyone – investors, customers, friends, etc.  You literally have to take your vision of the opportunity and against all rational odds assemble financing, and a team to help you execute.  And that’s just to get started.

Next, you have to deal with the daily crisis of product development and acquiring early customers.  And here’s where life gets really interesting, as the reality of product development and customer input collide, the facts change so rapidly that the original well-thought-out business plan becomes irrelevant.

If you can’t manage chaos and uncertainty, if you can’t bias yourself for action and if you wait around for someone else to tell you what to do, then your investors and competitors will make your decisions for you and you will run out of money and your company will die.

Great founders live for these moments.

Creating the Entrepreneurial Personality – A Thought Experiment
Fast forward three decades back to today.  The lunch conversation was an interesting data point to add to a hypothesis I’ve had.

I’ve wondered, just as a thought experiment, how would we go about creating individuals who operate serenely in chaos, and have the skills we associate with one type of entrepreneurial founder/leader?

One possible path might be to raise children in an environment where parents are struggling in their own lives and they create an environment where fighting, abusive or drug/alcohol related behavior is the norm.

In this household nothing would be the same from day to day, the parents would constantly bombard their kids with dogmatic parenting, (harsh and inflexible discipline,) and they would control them by withholding love, praise, and attention. Finally we could make sure no child is allowed to express the “wrong” emotion. Children in these families would grow up thinking that this behavior is normal.

(If this seems unimaginably cruel to you, congratulations, you had a great set of parents.  On the other hand, if the description is making you uncomfortable remembering some of how you were raised – welcome to a fairly wide club.)

Over the last 5 years I’ve asked over 500 of my students how many of them grew up in a dysfunctional family (participation was voluntary.) I’ve been surprised at the data. In this admittedly very unscientific survey I’ve found that between a quarter and half of the students I consider “hard-core” entrepreneurs/founders (working passionately to found a company,) self-identified as coming from a less than benign upbringing.

Founders as Survivors
My hypothesis is that most children are emotionally damaged by this upbringing.  But a small percentage, whose brain chemistry and wiring is set for resilience, come out of this with a compulsive, relentless and tenacious drive to succeed.  They have learned to function in a permanent state of chaos.  And they have channeled all this into whatever activity they could find outside of their home – sports, business, or …entrepreneurship.

Therefore, I’ll posit one possible path for a startup founder – the dysfunctional family theory.

Throwing hand grenades in Your Own Company
One last thought. The dysfunctional family theory may explain why founders who excel in the chaotic early phases of a company throw organizational hand grenades into their own companies after they find a repeatable and scaleable business model and need to switch gears into execution.

The problem, I believe, is that repeatability represents the extreme discomfort zone of this class of entrepreneur. And I have seen entrepreneurs emotionally or organizationally try to create chaos — it’s too calm around here — and actually self-destruct.

So What?
Lets be clear, in no way am I suggesting that growing up in a dysfunctional family is the only path to becoming a founder of a startup.  Nor am I suggesting that everyone who does so turns out well. And in particular I’m not suggesting that every employee who joins a startup fits this profile, it just seems more prevalent in the founder(s).

And this hypothesis might be a good example of confusing cause and effect. Yet I am surprised given how much is written about the attributes of a startup founder, how little has been written about what “makes” a founder.

Let me know what you think.   Does any of this match your experience or people you know?

Comments and brickbats welcomed.

Filed under: Customer Development, Family/Career/Culture, Technology | Tagged: , , , , | 41 Comments »

The Curse of a New Building

Posted on May 15, 2009 by steve blank

At some point in my career as I began to ponder how/why startups morph from agile, “can do” companies to ones that have lost their edge. I didn’t need to look much further than the “new building” debacle I had a hand in.

Signs of Success
One of the things you do right in a startup, is you move from one cheap and cramped building to another as you grow, with desks, cubicles and engineers piled cheek to jowl.  74HGZA3MZ6SV

One of the signs of success is when you outgrow your last cramped quarters and can afford a “real” building. This happened to us at SuperMac when our sales skyrocketed.

That’s when things went south.

Lets Fix Everything that Was Broken
At SuperMac we were excited to finally get out of the crummy tiltup we had occupied since the company emerged from bankruptcy. Now with cash in hand, we wanted to fix everything that seemed broken and annoying about our office environment. We made what seemed to be a series of logical and rational decisions about what to do with our next office building.

  • Engineers were packed in cubicles or desks right on top of each other?
    Now every engineer can have their own office.
  • We can’t bring customers to this rundown building.
    The new building needs to reflect that we’re a successful and established company.
  • The lobby of the last building didn’t “represent” the company in a professional manner.
    Lets “do it right” and have a lobby and reception area that projects a professional image.
  • We had used, crummy and uncomfortable furniture.
    Lets get comfortable chairs and great new desks for everyone.  None of this used stuff.
  • The last building has stained carpets and walls that haven’t been painted in years.
    Now we can pick out carpets that look good and feel good and we can have clean walls with great artwork and murals.
  • We didn’t have enough conference rooms.
    Lets make sure that we have plenty of conference rooms.
  • Everyone left the building for lunch.
    We need our own cafeteria so employees don’t have to leave the building.

Designing the Perfect Building
Once the commitment to fix everything wrong was in place, we were off and running on the design phase. We hired an interior designer and a great facilities person to manage the process. The exec staff started meeting about the design of the new building.

The company decided that now engineers can have their own offices rather than cramped cubes. The staff got involved about what color the carpet and walls are. And there was lots of discussion of what style of furniture is appropriate.

Our exec staff spent time worrying about who had the corner office, and what departments had the “prime” location. (I was great at “office wars.”) There was lots of talk about the importance of natural lighting and maybe we needed our own cafeteria. And even better, marketing got to design the graphics for the lobby and hallway (bright and colorful neon) to better represent the color graphics business we were in.

We kept the board informed, but they didn’t have much to say since business was going so well, and a new building was needed to accommodate the growing company.

None of This is Good News
This is when things started to go downhill for SuperMac. The most obvious problem; the time we spent planning the building distracted the company from running the business. But there were three more insidious problems.

  1. While offices for everyone sound good on paper, moving everyone out of cubicles destroyed a culture of tight-knit interaction and communication. Individuals within departments were isolated, and the size and scale of the building isolated departments from each other.
  2. The new building telegraphed to our employees, “We’ve arrived. We’re no longer a small struggling startup. You can stop working like a startup and start working like a big company.”
  3. We started to believe that the new building was a reflection of the company’s (and our own) success. We took our eye off the business.  We thought that since we in such a fine building, we were geniuses, and the business would take care of itself.

While our competitors furiously worked on regaining market share, we were arguing about whether the carpets should be wool or nylon.  The result was not pretty.

The Curse of a New Building
If this was just a sad story about a single company, it would be interesting, but not instructive.  However, I’ve seen this story repeated time and again, and not just in Silicon Valley. There’s a mindset that says, “By the dint of our hard work, we are “entitled” to a building upgrade and this is our just reward.”  And on an emotional level it makes sense.  But if you are lucky you have a board of directors who have seen this before. (And they’ll take the CEO out for a trip to the woodshed.)

  1. An upgraded new building is a premature transition away from a startup culture.
  2. It’s a tipping point to a big company culture.
  3. This is a culture and values issue worth fighting over.

Letting this happen is a failure of a board. If the management team is thinking they’ve made it, the new building is just symptomatic of a company heading for a crash.  It’s a company that’s lost sight of the values that got it there.

Don’t let it happen to you.

Stay hungry, stay lean.

Lessons Learned

  • New buildings are a distraction. You should avoid them at all costs
  • Building upgrades can destroy a culture

Filed under: Customer Development, SuperMac, Technology | Tagged: , , , | 25 Comments »

Gravity Will be Turned Off

Posted on May 13, 2009 by steve blank

Part of marketing is the ability to communicate a message to thousands of people and convince them to believe your version of reality. When I was 19 I accidentally had a test run of my ability to do so. I created havoc at an air force base by convincing thousands of airman that gravity would be turned off so that the Air Force could make repairs under their buildings. 74HGZA3MZ6SV

Two Million Students
First some background. Ever since WWII U.S. Air Force aircraft have carried sophisticated avionics equipment – radar, navigation, electronic warfare, etc. While the sharp end of the stick were the pilot and/or crew, each of these systems required a cadre of technicians to maintain and repair the equipment. Keesler Air Force Base in Biloxi Mississippi was the Training Center responsible for teaching 10’s of thousands of students a year how to repair radar, communications, and electronics. Some 2 million students have trained there since it opened in 1942. Think of it as the ultimate vocational training school.

Trade School
At the height of the Vietnam War, I was at Keesler learning how to repair electronic warfare equipment, a skill which had gone from theory (our B-52 bombers might one day have to use this stuff –once – penetrating the Soviet Air Defense system) to practice (our fighter/bombers were encountering the murderously effective North Vietnamese air defense system every day.)

In hindsight the USAF did a damn good job. We spent the first five months learning basic electronics theory and the next months getting our hands dirty with the theory and practice of electronic warfare receivers and jammers. As it was a vocational school, I think the most math we had to do was to figure out whether we got a passing grade, and no one was in any danger of actually designing new equipment, but I left with an excellent education in troubleshooting, and solving complex problems in real-time.

Duality – Student Life – in the Military
Here we were, thousands of students with an average age of 19 going to school and living in barracks on the airbase. The barracks were like college dorms except we had to polish the brass doorknobs, wax and buff the hallway floors and make our beds.  We attended classes from 6am to noon – five days a week.  And we had to march to class (I’m convinced it was the only way they figured they were going to get us up and out of bed at that hour).

There was a duality to our existence.  On one hand, we were in a rigid command and control system where we had to follow orders, salute officers and understand the military hierarchy, yet on the other we were in an educational institution where we were encouraged to ask all the questions you wanted.  And we had afternoons and weekends off.  We could go off base and do anything a group of 19-year olds wanted to, like skydiving, but that’s another story.

Library Hours
I loved libraries since I was a kid. Growing up in New York, the library was the only calm and stable place in my life, a refuge from home. I read my way through our small neighborhood library.

My fondness for libraries and my reading habit carried through to the Air Force, and this technical school had an awesome technology library. One day I opened up a Scientific American magazine and read an article on a prank that had been pulled at CalTech the year before. And something about the story clicked for me. I thought that this practical joke would be even funnier in a military organization than it was at Caltech. (I’ll describe the actual prank in a bit.)

Alone with Letterhead
Every evening someone in the barracks had to serve as the “fire warden” for the night.  In hindsight, fire warden meant you were a manual smoke alarm. You walked around the barracks and made sure the building wasn’t on fire. (Anytime you put 10,000 19-year olds on a base you can bet one of them will go to sleep with a cigarette and burn his mattress, if not the building.)

The other minor duty of the fire warden was to update the squadron bulletin board. This was the one place you had to go daily to read all the official notices, and orders.  Reading official military notices and memos always seemed funny to me as they had the most verbose and obtuse ways of saying even the simplest things. You usually had to read two pages to realize the memo said, “No Smoking Indoors,” or “Mandatory meeting on Thursday.”

Following Orders
One night it was my turn on fire warden duty, and with way too much time on my hands, I was mulling over the philosophical contradictions of the literal interpretation that my fellow military students placed on even the most trivial orders.  Orders didn’t have to make sense, we were told, “an order is an order. Don’t think, just follow it.” I wondered how far that would really go.

Then I thought of the Caltech prank. If it worked on a college campus, I wonder what would happen on a military base?

So working into the wee hours of the morning I typed up a version of the Cal Tech prank (on official base letterhead,) translating it into military phraseology. I typed 30 copies, and using the master key I went into every squadron building bulletin board, and posted these orders from the base commander on all 30.

The memo I posted looked something like this:gravity 1gravity 2Friday Formation
I had posted my memo on Wednesday, got a good chuckle over it and promptly forget all about it. I thought it was very funny, a good one-time joke and people would laugh and then remove it from the bulletin board. But a few days had passed, and I hadn’t heard anything, so I thought the joke had fallen flat on its face.

Every building/squadron had an officer in charge of us, and all 300 hundred or so would gather in the courtyard every Friday for our squadron meeting, where our lieutenant would give us orders for the weekend, (usually have a good time) and answer any questions.

We’re standing in the Friday squadron formation, and the lieutenant comes out, who is all of 22 years old. The sergeant calls, “Squadron a-ten hut,” we all snap to attention. The lieutenant reads the orders of the weekend, blah, blah, blah, and then says, “okay, any questions?”  And usually there weren’t any questions because everyone wants to go and be dismissed for the weekend.  But today was going to be a bit different.

I’m ready to run for the gate, but wait, there’s a raised hand.

“Sir, about the gravity being turned off, what if we have fish?  Should we cover their bowls?” I almost burst out laughing surprised there was at least one person in the squadron who believed the memo. The lieutenant is silent for a long minute, staring at the airman who asked the question, and calculating whether he heard it correctly or was being made fun of. But before he could respond, someone else raised his hand and says, “Sir, what if we have small children and they’re crawling, and we can’t get them off base, will they affected by the gravity?”

Ok, I think, maybe there were two.

But that was the cue for 10 more people simultaneously to burst out with questions, (“How about motorcycles will they be OK? Can we go to the bathroom when the gravity is turned off?”) And I started to panic as it dawns on me that this conversation is occurring 30 times the 300 people in each of the 30 squadrons on this airbase.

The lieutenant looks stunned.  Were we all on drugs?  What on earth were we talking about?  He sent the sergeant to get the memo from the bulletin board, reads it and he starts looking really confused.  It can’t be real, but yet… it does look like an official order from the base commander.

The lieutenant leaves to call the base commander,(about the same time 29 other lieutenants were doing the same.) “But sir, the order came from you.” An hour and a half later we finally get dismissed with a, “Ignore that order, it wasn’t really an order.”

Years later at different air bases, at the most unexpected times, I’d hear someone bring up, “Hey, were you at Keesler when they had those orders about the gravity being turned off?”  And I always say, “No, never heard of it, tell me about it.”  The story was even better when someone else told it.

Download the podcast here or here

Filed under: Air Force, Family/Career/Culture | Tagged: , | 28 Comments »

SuperMac War Story 10: The Video Spigot

Posted on May 11, 2009 by steve blank

I was lucky to have been standing in the right place when video became part of the Macintosh.  And I got to experience a type of customer buying behavior I had never seen before –  the Novelty Effect.

Present at the Creation
It was early 1991 and Apple’s software development team was hard at work on QuickTime, the first multimedia framework for a computer.  At the time no one (including Apple) knew exactly what consumers were going to do with multimedia, it was still pre-Internet. But the team believed adding video as an integral part of an operating system and user experience (where there had only been text and still images) would be transformative. 

But Apple had planned to announce and demo QuickTime without a way to get video into the Mac. They had this great architecture, and Apple had figured out to get movies into their own computers for a demo, but for the rest of us there was no physical device that allowed an average consumer to plug a video camera or VCR into and get video into a Mac.

A month or two before the QuickTime public announcement in May, the SuperMac hardware engineers (who had a great relationship with the QuickTime team at Apple) started a “skunk works” project. In less than a month they designed a low-cost video-capture board that plugged into the Mac and allowed you to connect a video camera and VCR. But to get video to fit and playback on the computers of the era, they needed to compress it. So SuperMac engineering also developed video compression software, called Cinepak. The software was idiot proof.  There was nothing for the consumer to do. No settings, no buttons – plug your camera or VCR in and it just worked seamlessly. (The Cinepak codec was written by the engineer who would become my cofounder at Rocket Science Games.) It worked great on the slow CPUs at the time.

Something Profound
Engineering gave us a demo of the prototype board and software and asked, “Do you guys think we can sell a few of these boards?”  Remember, this is the first time anyone outside of Apple or the broadcast industry had seen moving images on a Macintosh computer. (A company called Avid had introduced a $50,000 Mac-based professional broadcast video editing for two years earlier. But here was a $499 product that could let everyone use video.) Our engineers connected a VCR, pushed a button and poured in the video of the Apple 1984 commercial.  We watched as it started playing video at 30 frames/second in a 320 x 240 window.

Up until that moment Quicktime had been an abstract software concept to me. But now, standing there, I realized how people felt when they saw the first flickering images in a movie theater. We must have made them play the demo twenty times. There were a few times in my career I knew at that moment I was watching something profound – (Holding the glass masks of the Z80 microprocessor. My first IPO at Convergent. First silicon of the MIPS RISC processor.) I stood there believing that video on computers was another – and equally as memorable.

Lets Sell it Like There’s No Tomorrow
When we all regained the power of speech, our reaction was unanimous, “What are you talking about – can we sell it?  This is the first way to get video into a computer, we’re going to sell and market this board like there’s no tomorrow. Even though we won’t make a ton of money, it will be an ambassador for the rest of our product family.  People who aren’t current customers of our graphics boards will get to know our company and brand.  If we’re smart we’ll cross-sell them one of our other products. We might even sell a few thousand of these.”

Everyone laughed at such an absurd number.

The Video Spigot
“What are we going to call it?” Lets see…, it’s video input, … how about we call it the Video Spigot?”

Now, in hindsight, with a spigot, you’re actually pouring stuff out, and, in fact, the ad actually shows you stuff pouring stuff out, but into your Mac. It made no logical sense (a fact engineering reminded us about several times.) But it made the point that this device could pour video into your Mac and consumers instinctually got it.

Our CEO and our VP of manufacturing were incredibly nervous about manufacturing more than a few hundred of these boards. “There’s nothing to do with this product once you get the video in. You can’t manipulate it, you can’t do anything other than playback the video in QuickTime.”  And they were right. (Remember there were no video applications available at all. None. This was day zero of consumer video on the Mac.)

Our answer was, “People will love this thing, as long as we don’t oversell the product.” We knew something our CEO didn’t. We had seen the reactions of people playing with the prototypes in our lab and when we demo’d it to our sales force. When we saw our salespeople actually trying to steal the early boards to take home and show their kids, we knew we had a winner. All we had to do was tell customers they could get video into their computer – and not promise anything else.

But the rest of the management team really skeptical. We kept saying, “Don’t worry, we’re going to sell thousands of these.”  Little did we know.

We launched the product with this ad that said “Video Spigot, now pour video into your computer,” and this just hit a nerve.

We sold 50,000 Video Spigots in six months.

video-spigot-supermac-ad

(As an aside, we saved money by putting my daughter in the ad. (That’s every marketeers excuse for putting their kids in an ad.) She’s in the little car on the monitor, and she’s also, if you look very carefully, in the water. We had that little car around the house for a while.)

They’re All Coming Back
So, manufacturing ramped up our factory, and as we’re selling 10,000 Video Spigots a month, our CEO is now concerned that maybe all these boards were all going to be returned to us because they didn’t really do anything once you got video into your computer. (A rational fear, as the sum of all of our other graphics boards shipped was about 7,500/month.)

Marketing knew who the Spigot customers were; we had all the registration cards and all the data. So we turned to our customers, surveying a few hundred people who had bought the product and asked:

  • Question: Were you the person who bought the board? Answer: Yes.
  • Question Are you happy with the board? Answer: Oh, it’s great.
  • Question Are you using the board? Answer: No.
  • Question And … wait a minute, you’re not using it anymore? Answer: No.
  • Question So do you want a refund? Answer: No, no.
  • Question Why not? Answer: It did everything you said. We loved this product.

It didn’t do anything else. People loved it, they used it, and they put it in their desk drawer.

We accidently had a product with the Novelty Effect.

The Novelty effect
I didn’t recognize the behavior at the time, but anyone who loves technology and gadgets has at one time or another has bought a technology toy – USB memory sticks, iPod Shuffles, umbrellas with LED lights, alarm clocks that talked, Flip Video Cameras, etc. – used them for a while and then stuck them in the drawer. The product does what it said it would, and amuses you for a while. You don’t regret the purchase price because you got entertained and then you lose interest – the Novelty Effect. 

Unintended Consequences – Video Editing
As these boards are flying out the door, one of the software engineers at SuperMac got to thinking about what did you do with video once you did get it into a computer – so he wrote the first Quicktime-based video editor which we called ReelTime.

But you probably never heard of ReelTime.  You may know it by its final name.

Since we had gotten out of the software business when we came out of Chapter 11, and our sales channel didn’t know what to do with software, we licensed ReelTime to Adobe.  And, of course, Adobe said, “Oh, by the way, you don’t mind if the software engineer comes with us, do you?”

Adobe renamed ReelTime to Adobe Premiere.  And Randy Ubillos, its author, went on to author Mac-based video editing software for the next 18 years. His team wrote what became FinalCut Pro at Macromedia; it was bought by Apple, and now he’s at Apple doing new versions of iMovie.

So an unintended consequence of the VideoSpigot, and to the benefit of video editors everywhere, video editing for the masses was invented at SuperMac.

Thanks to Bruce Leak and the Apple QuickTime team, Peter Barrett for Cinepak and Randy Ubillos for giving us video editing on the Mac.  It was fun watching it happen.

Filed under: Customer Development, Marketing, SuperMac, Technology | Tagged: , | 41 Comments »

Love/Hate Business Plan Competitions

Posted on May 7, 2009 by steve blank

I love business plan competitions.

I hate business plan competitions.

I Love Business Plan Competitions
I had a breakfast with a friend who has founded a few companies in Thailand and started the New Ventures Program at one of their universities. He was visiting Stanford and mentioned how proud he was that several of his Thai students were here in the States for a business plan competition. 74HGZA3MZ6SV

For those of you who don’t know, business plan competitions are held by universities who get their students to enter and compete to see who has the best business idea. Local venture investors and/or companies offer cash prizes for the winners.  In exchange, these VCs/companies get early looks at new deal flow and offer aspiring entrepreneurs feedback and advice on their business plan.

These competitions started in the early 1980‘s at the University of Texas and have sprouted like mushrooms in the last 10 years.  Just Google the term and you’ll be amazed.  Almost every university, region and car wash now has a business plan competition; the rules, who can participate, how large the prizes and who are the judges vary by school.

Over scrambled eggs and diet coke, I listened to this seasoned startup veteran describe the excitement of his students who came to the U.S. to compete. I finally understood how valuable these contests can be for students in cities or countries without a venture capital or entrepreneurial infrastructure.  At a university business plan competition, for the first time they can swim in the sea of expertise that we/I take for granted in the middle of Silicon Valley.  Win, lose or draw, these students have a life changing experience where they can network and get smarter as they see what good startup thinking looks like.

I love business plan competitions (and with my valley-centric bias, I think Berkeley and Stanford have two of the best.) If you are outside of Silicon Valley, you ought to jump into them with both feet.  You’ll learn a lot.

I Hate Business Plan Competitions
Yet this same conversation reminded me why every time students at Berkeley or Stanford tell me they’ve entered a technology business plan competition, I question whether they are wasting their time.

For all the reasons why business plan competitions are wonderful for students from outside the U.S., or even outside of Silicon Valley, I am left speechless when a student in a 50-mile radius of Sand Hill Road (who tells me they’re serious about starting a company) thinks their time is better spent entering one.

I have seen students spend well over a year refining a business plan competition pitch when they have could have gotten the same advice within a month by literally stepping out the door and aggressively pursuing it.  And with the other 11 months, they could have been well into actually building a company.

In the real world, most business plans don’t survive the first few months of customer contact.

And even if they did – customers don’t ask to see your business plan.

Here’s a simple heuristic: if you are one of the lucky few who are within one- or two-degrees of separation of venture capital and startup resources (law firms, patent attorneys, etc.) and you are chasing a technical business plan competition, you are signaling that you really don’t want to start a company.  (And that may be fine with you. Just don’t confuse the time you’re spending with actual progress in building a company.)

I hate business plan competitions – when they encourage students to write a “winning plan” rather than teaching them how to get out of the building and use locally available resources to start a company.

Filed under: Marketing, Technology, Venture Capital | Tagged: , , , , | 17 Comments »

Customer Analytics – From Those Who Should Know

Posted on May 6, 2009 by steve blank

I ran into an interesting paper about thinking about analytics – A Tradecraft Primer: Structured Analytic Techniques for Improving Intelligence Analysis.

It’s a useful read to explore and challenge analytical arguments and mind-sets.

BTW, I don’t know to be hopeful or concerned that that this is the state of the art of analytical thinking at this agency.

Filed under: Customer Development, Technology | Tagged: , | 2 Comments »

The Sharp End of the Stick

Posted on May 4, 2009 by steve blank

The Sharp End of the Stick
At some point in my career as I began to formulate thoughts about mission and intent, I started to think about the broader role of marketing in a growing technology company. It became clear to me that the mission of marketing in most companies has to be to support sales.  While this may seem obvious to anyone not in sales and marketing, trust me, in a technology company this is a conceptual breakthrough. In my experience, every marketer with an MBA wants to “do strategy.” Every marketing communication hire couldn’t wait to produce the next great ad or PR program.  Every product marketer thought they should help define the product feature set, etc.  But without sales there is no revenue, and without revenue there is no company.  All the strategic thinking in the world won’t make up for a missed revenue plan.  74HGZA3MZ6SV

Sales was the Sharp End of the Stick, and Marketing was the Stick
The epiphany for me was that in any company where I was running the marketing department, marketing’s number one job (its mission) would be to support sales – and to make the (commission-driven) sales VP the highest-paid person in the company. We were going to do that by turning marketing into a machine to generate end user demand, drive the that demand into our sales channels, and educate our sales channels.  And the same time we were also going to do all the other strategic stuff about pricing, positioning, promotion and customer discovery and validation to help engineering understand customer needs.  But sales came first.

(By the way, companies that have a single individual as the VP of Sales and Marketing have decided that marketing doesn’t add any other value then tactical sales support, and the only way to get is to put it under the VP of Sales.  That’s why you almost never see a marketer as the VP of Sales and Marketing.)

My way of explaining our support and service role to the marketing department was that:

  1. Sales is the sharp end of the stick, and marketing at best, is the stick.
  2. But while the sales team works for commission, the rest of the employees have equity (stock) in the company.
  3. If sales revenue and profits are high enough, we could take the company public or sell it, and the stock would be worth more than the paper it was printed on.
  4. In exchange for being the “point” organization, performance of a salesperson is measured continuously and individuals who fail to deliver quota are removed.
  5. If sales as an organization failed to deliver revenue to plan then all we had were worthless shares.
  6. In reality the sales team was working for the rest of the company to make all of our stock valuable.

No one was confused after that.

Who’s on the Sharp End
In an early stage startup, instead of sales being up front, the point departments are likely to be product development and customer development. Later on in this same company’s life, sales will become the pointy end and product development moves to a supporting role.  In other companies it may be that manufacturing or finance is the sharp end of the stick.  In an IP licensing business, legal and finance are the sharp end of the stick. It varies by company and changes over time.  There’s no magic formula but there are always “leading” departments.  And all “leading” departments have some type of “consequence-based” feedback loops that make success or failure obvious.

The clearest example is the U.S. military.  Combat troops are the “tip of the spear” while everyone else is the logistical tail.  No one in the support chain of the troops is confused or resentful as they all understand that the greatest risk is up at the front.

Killing The Company With Equality
I’ve been on boards where the CEOs took the egalitarian position that “all our departments are equal, no one is more important than any other.”  The unfortunate corollary is that in these companies no department believed it was in a supporting or service role.

In these companies, departments that should have been providing support and service instead behaved like they were the “sharp end” organizations. I’ve encountered finance organizations with budget processes designed to simplify their lives, but not the rest of the company’s. Or expense reporting requirements that took hours of a sales teams time to fill out every week.  Sometimes it was the legal department crafting contracts so onerous I wouldn’t even sign it, let alone expect a customer to do so. At times it was human resources with policies that made people leave rather than stay, or it was a CIO more interested in standards than deployment.

None of these departments operated with any particular sense of malice – just with the certainty that the company revolved around them. But they were misguided because they lacked a clear departmental mission statement that reminded them of the corporate goals. If each department had a mission statement, it would have been clear whether their role was in support or at the sharp end. Having each department develop a mission statement depends on leadership and direction from the CEO.

“Going Out of Business” Strategy
I’m now convinced “all our departments are equal” is a “going out of business” strategy. Not understanding who are the “lead departments” makes companies feel like ponderous, bureaucratic and frustrating places to work.  The best people in the “sharp end” organizations simply vote with their feet and leave.

I loved to compete against these companies.  Their own internal culture would tie them up in knots, and agile startups could run rings around them.

Don’t let this happen to your company.  Embrace and then communicate the idea of a lead department(s).  Build a company culture where everyone supports the “sharp end of the stick.”  

Stay agile, stay focused. 

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to TwitterAdd to TechnoratiAdd to FurlAdd to Newsvine

Filed under: Customer Development | Tagged: , , , | 17 Comments »

Customer Development Talk Startup2Startup

Posted on May 1, 2009 by steve blank

Eric Ries of Lean Startup fame and the author of the Lessons Learned blog joined me at Startup2Startup for a joint Customer Development talk. Thanks to Dave McClure and Leonard Speiser for the opportunity to speak.

The Customer Development talk can be seen here. 74HGZA3MZ6SV

Part 1

Part 2

Part 3

The slides are here.

If you’ve never seen Eric’s Lean Startup presentation, take a few minutes to at least watch his part. It starts at ~40:30 in the video.

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to TwitterAdd to TechnoratiAdd to FurlAdd to Newsvine

Filed under: Customer Development, Market Types | Tagged: , , , , , | 6 Comments »

SuperMac War Story 9: Sales, Not Awards

Posted on April 30, 2009 by steve blank

While this story is about my experience in packaging for computer retail channels, if you substitute the word “web site” for retail, you’ll get the idea why these lessons were timeless for me. 74HGZA3MZ6SV

SuperMac sold our graphic boards for the Macintosh through multiple distribution channels: direct sales to major accounts, national chains, independent rep firms, etc.  But the computer retail channel was a large part of our sales.  That meant that our boards were packaged in boxes sold to retailers and were displayed on shelves in their computer stores. Customers went into the store either looking for the SuperMac product by name (if our demand creation activities had been effective) or went in unsure of which brand of board to buy.  If they were in the store but teetering on the edge of a purchasing decision, there were only two ways to influence them: incent the sales staff (give the salespeople a special bonus to sell your product) and/or have box packaging sell itself by screaming “buy me.”

Maybe It’s Me
When I got to the SuperMac, our Marketing Communications group told me about our “award-winning” retail packaging for our graphics boards.  Yet when I saw our retail package, I was confused.  Confused because while I knew absolutely nothing about retail packaging, as a consumer I knew this box was not something I would pay attention to. It was black with absolutely no compelling reason to buy – no awards, no why-to-buy message, nothing.

black-supermac-box

While I wasn’t an expert in retail packaging, even as a consumer I knew that when I was in a store, I scanned four or five products on a shelf, grabbed the most interesting one, read what was on the box, and picked one.  And the product that “talked to me”, the loudest and most seductively, was the one that went home with me.

“Black Hole of Packaging” Strategy
Since we had no facts, other than my opinion that something wasn’t right, I took our staff on a field trip.  (You can’t do marketing from inside the building.)  We visited a couple of retail stores to look at how other companies were packaging their products and how ours looked next to theirs.  Standing in the aisles we collectively got a sinking feeling.  Our choice of black had made our retail box invisible on the shelf.

But worse, we had been relegated to the bottom shelf (death valley, since very few people look at their feet when shopping.)  We were down on the bottom because no one had done any “shelf merchandizing” – that is we did not employ “rack jobbers” or the retail stores themselves to put our boxes at eye level in the right place on the shelf.  (These are basic practices for companies selling through retail stores.)

We were on the bottom row – with an invisible box.  We labeled this our “Black Hole of Packaging” strategy. The package had won awards all right – for the ad agency.  The design was actually a negative drag on selling anything off a retail shelf.

Getting Smarter
While we all had opinions about what we should do, we realized we needed some facts from someone with retail packaging expertise.  Luckily (or maybe because we were in Silicon Valley where there was a domain expert for everything) there was a very smart consultant in the retail computer space, Seymour Merrin, who preached about the importance of packaging. He had teamed up with a former product manager at P&G to deliver seminars on just this subject. We learned the basics of retail packaging: make the box eye-catching, ensure there was a “why-to-buy” message, include just enough information to close the sale, fight and pay for eye-level shelf space, etc. Her packaging class was so good that we sent every new marketer at SuperMac to take it. From grumbling skeptics, they all became packaging design converts.

We realized that we needed to take all these lessons and redesign our packaging.

You May Hate It, But You Won’t Ignore It
The results of our package redesigns were packages like “SuperMac Thunder II”.  They were bright, they were loud, and they had lots of reasons to buy front and back.  And for sure they were never going to win any design awards.

colorful-supermac-box

To check how effective our new packaging was, we ran tests at our local computer retailer. We would run in and put test versions of dummy boxes on the shelf and just watch what happened – we wanted to see if people picked up the box, and when they did what they looked at and what they read.  (We would interview them after they put the box back on the shelf.  And we had to convince a few of them the box was really empty.)  The most interesting thing we learned was that people felt more comfortable about a product when there were words of encouragement on the package.  So we started putting stickers on the packaging every time we’d win an award. People would go, “Oh, this one won the “best of MacUser Magazine benchmark” award,” and it would confirm that this was a safe purchasing choice.

Owning Marketing for our Entire Channel
 In thinking about the packaging story, it would have been easy to blame the agency who designed the box for poor package design.  Or blame my MarCom department who approved it.  But that wasn’t the root cause of the problem. It was a management problem.  We had been outsourcing an important part of our demand creation strategy – packaging – to an outside agency without having the expertise to judge or manage the results. We hadn’t taken the time to learn the basics of packaging ourselves. And the final lesson was that we were keeping score on our packaging with the wrong metrics – it wasn’t about awards, it was about sales in the retail channel.

So we not only sent everyone through packaging school, we also brought the packaging design in-house. From now on we would design the retail boxes ourselves, not because we could do a better design job, but because this was a critical skill that our company and department needed to learn – using packaging to increase retail sales.  When we had mastered the art, then I was ready to outsource it again, but not before this became a core competency of my department.

Oh yes, and retail sales doubled with the new product packaging.

New Century, New Channels
For many of you reading this, boxes sitting on a retail shelf may seem hopelessly outdated, but the same marketing lessons hold for “award winning” web sites or social media.  Your design or ad agencies can impress you with their awards, but if you’re not moving product or creating demand, you’ve missed the point.

Worry about the sales results.

What did we learn?

  • The only “award” in marketing that matters is sales revenue
  • Marketing needs to own all the marketing in a channel
  • Core competencies cannot be outsourced until they’re learned

Filed under: Marketing, SuperMac, Technology | Tagged: | 7 Comments »

« Previous Page — Next Page »