Monthly Archives: April 2013

Stop listening to what they are saying. . .

Recently I had an epiphany that has changed the way I deal with almost every person in my life and I wanted to share it with you. My question for you? The next time you are involved in some sort of interpersonal conflict – with a spouse, friend, client or employee – what would happen if you quit listening to the words they are writing or speaking and start thinking about where they are coming from. Think about the why more than the what.

In high school and college I competed in cross examination debate, traveling nationally to argue any side of any argument (in rapid fire fashion like this young lad). By college I was really good at listening to the first 30 seconds of an argument and preparing my rebuttal as my opponent completed their reasoning and support. Back in 2006 I wrote a post titled, “Best Business Prep for High School Students?” where are I argue that debate is the perfect preparation for business. Perhaps I was right, but I think debate might be the WORST preparation for life. Throughout most of my adult life I’ve been really good at ‘winning’ arguments and losing battles. My debate experience trained me to be right – to win any side of any argument – my life experience has taught me that being right is not very satisfying.

The other day I was involved in a tense conversation with someone and for some reason I stopped listening to their attacks and starting thinking about where they were in their life. I started to realize that they were in a seriously compromised position. They felt vulnerable, at risk and generally messed up. Instead of trying to win the argument they began I simply expressed my compassion for their situation. It was cathartic. I felt at peace. Interestingly their pace slowed down and the conversation switched from a debate to a simple ‘how do we resolve this’ sort of exchange. It took us a few days to resolve our differences, but we didn’t resolve them because either of us convinced the other that we were right. We resolved our issues because we felt true compassion for one another.

Give it a try. The next time you are in an argument, stop arguing, stop trying to win the argument, stop trying to be right. Instead, try to understand where your adversary is coming from. You might be surprised how effective understanding the why is versus the what. It has helped me immeasurably. Let me know if it helps you.

Startup Mistakes: Building Everything Yourself

One of the biggest challenges startups face is deciding what is core to their business. For example, at ShopSavvy we spent a LOT of time developing technology around barcode scanning. We assumed that developing and owning our own intellectual property would make our company more attractive to potential acquirers or investors. Turns out this assumption was a huge mistake that cost us time – one of the most valuable assets that startups and entrepreneurs seem to lack. It is really easy to see other entrepreneurs making this mistake – it is really hard to see you are making it yourself. Figuring out your core/real business is vital to your success.

In the case of our barcode scanning technology we used a combination of open source software and proprietary code for the Android version of ShopSavvy. When we began working on the iPhone version of ShopSavvy we had to start from scratch – building everything from the ground up. The upstart competitor I wrote about in my last post had just released their iPhone app – it was horrible. The scanner didn’t work very well. The product database was incomplete. It was a mess, but they were working on it everyday. We had to hurry.

Around that same time, I was in Europe helping with the launch of the G1 and stumbled across a PhD engineer by the name of Benoit Maison who lived in Belgium. He had developed shockingly good barcode scanning technology for the iPhone. I think it was better than our Android scanner at the time. I was worried, but also excited about the prospect of potentially licensing his technology to give us a jump on the competition. I talked to our engineers about the ETA of our iOS scanner, they explained we were just 30 days away from having our own technology ready. I was hopeful and yet a little skeptical that we would be ready in 30 days so I began negotiating with Benoit to license his technology for ShopSavvy. In hindsight, had we implemented his technology in our application we would have stopped our competitor in their tracks – they were light years behind Benoit’s technology.

Thirty days came and went and we were on the fence about using licensed technology in our app. We were concerned that potential investors/acquirers might think less of our company if they learned we were licensing third party technology for the CORE feature of our app. At the same time, the developers were certain we were just weeks away from having our own technology – technology that would be faster and work better than Benoit’s software. It was a constant struggle at ShopSavvy – we couldn’t come to a decision so we didn’t – we just kept building our own scanner technology.

Six months later, version one of our scanner was available. (Side note, software often takes 6X longer to finish that you expect.) It worked pretty well for a first version – not as well as Benoit’s technology but a little better than our competitor’s software. The cost for ShopSavvy was time. We didn’t have the time to work on the UI/UX of the iOS version of ShopSavvy – all of our resources were focused on the scanner technology and keeping the existing apps running. Given our resource constraints, we contracted with an Indian company to build the app. The resulting app wasn’t very good – actually it was horrible. ShopSavvy had a great reputation – built upon the Android version of our app – and as a result we were able to generate a substantial number of downloads based on that reputation. While we were good at generating downloads we couldn’t hide the fact that the app simply didn’t work very well as evidenced by thousands of one-star reviews.

The real mistake was not understanding our business. Our business was the app, not the technology. We had built the preeminent mobile shopping brand – ShopSavvy – and we were worried about owning our own technology instead of safeguarding our brand. It opened up room for our competitor on iOS and has crippled us on the iPhone platform ever since.

On the flip side our scanning technology is now one of the best in the business and used by hundreds of companies like Consumer Reports, Macy’s and Walmart. At first glance this might seem impressive, but being the BASF of barcode scanning isn’t worth as much as a consumer facing brand like ShopSavvy. If I had the chance to do it over I would have spent a LOT more time figuring out what our real business was.

 

This is just one post in a series of posts on startup mistakes. To start reading from the beginning click HERE.

Startup Mistakes: Starving your Startup

The biggest mistake we made at ShopSavvy was waiting three years to raise outside capital. Instead, my partner and I invested more than $2 million dollars in cash and services into the company over the first three years – a lot of money for us – but using our own money might have cost us millions of dollars. To put it in perspective, instead of being worth a billion dollars (in hindsight a realistic terminal value) ShopSavvy is likely only worth around a $100 million (a great return, but perhaps a huge missed opportunity).

In 2008 we released ShopSavvy, one of the first ten mobile applications in the world. The application won Google’s Android Developer Challenge and was T-Mobile’s featured application for the G1 – the first Android powered smartphone. We had a tiger by the tail – investors called us daily and even showed up in our offices uninvited. We thought we were being smart to wait to raise outside capital, but in hindsight it was a foolish decision.

First, raising money from investors is a great form of ‘social proof‘. Our early traction made ShopSavvy very attractive to tier one venture capital firms. If you can get a prestigious firm to make that first outside investment you send strong signals to potential customers, employees and other future investors that your company has a strong likelihood of success. For example, if you decide NOT to raise outside capital you spend a LOT more time trying to convince the ‘right’ employees to join your team. High caliber employees are acutely attuned to who has invested in your startup – I can’t count the number of times we missed out on great hires because we were ‘unfunded’.

Second, it should be obvious that with more capital you can move MUCH faster MUCH earlier. Not only can you hire better talent you can hire it faster. That speed means you achieve your successes and failures much faster. Without outside capital you risk missing out on the opportunity – a small, but funded, company in Boulder basically copied our application and launched it on the iPhone (using our name as a keyword) BEFORE we released our iPhone version. They generated more than a million dollars in revenue and sold to Ebay for around ten million dollars in less than a year. Had we raised outside capital we would have been able to release our iPhone application before them, easily capturing the value they were able to extract from our novel and early idea. Now Ebay is our biggest competitor instead of our acquirer.

Third, the earlier you take outside capital the more likely you will be able to attract the ‘smartest’ money. The best venture capital firms want to get in deals as early as possible – bootstrap for too long and you will miss the window for the majority of tier one investors. Tier one venture capital firms can help you find the best employees, partners and potential acquirers. Wait too long and your investor’s money might be green, but their help might be less than adequate. Worse yet their investment might preclude future deals and/or investments. For example, raise money from someone who sued the founder of Facebook and Facebook might not want to work with you (seriously, it could happen).

The good news is that by bootstrapping your startup you will have a lot more control and own a lot more of the company at the end of the day. The bad news is that your startup, by definition, will likely be a lot smaller than it could have been with the right investment from the right investors. Even if you end up building that billion dollar business it will have taken you much longer than it might have had you taken outside investment. We spent the last five years turning ShopSavvy into a hundred million dollar company – it is likely we could have done that in a year with the right venture capital partner.

This is just one post in a series of posts on startup mistakes. To start reading from the beginning click HERE.

Startups: The Family Business

This morning I learned that AutoSeis, the company that my father and little sister founded three years ago, will be awarded the 2013 Hart’s E&P Award for Engineering Innovation next month. The Hart award was established in 1971 and honors the world’s best new technologies and techniques for finding, drilling and producing oil and gas wells.

Ralph Muse and Caroline Branch started AutoSeis back in 2010 to build a smaller, smarter and cheaper 3D seismic node – three years later the company is the second largest manufacturer of cableless seismic recording nodes in the world! Nice work guys!

The pair engineered the sale of the company to Global Geophysical Services Inc. (NYSE:GGS) a $300M geophysical services company and now serve as President and Operations Manager respectively.

Startup Mistakes: The ShopSavvy Story

Back in 2008 when we started ShopSavvy we had no idea what sort of opportunity we had in our grasp. That was almost five years ago and while our progress has been impressive – our technology has been downloaded by more than 100 million people across the globe – I can’t help thinking about the price of all of the mistakes I made along the way. I thought it might be cathartic and perhaps helpful to share a few of my biggest mistakes here on my blog over the next few days/weeks.

I transitioned from CEO to Chairman of ShopSavvy in October and since then I have gained a new perspective. When you are in the fight (and running a startup is a lot like a war) you rarely have time to stop and consider what you might have done differently. Now that I’ve taken a step back (being Chairman of ShopSavvy is a lot like not having a job) it is hard to ignore the glaring mistakes I made. I’m just about ready to share my NEXT big thing with the world, but before I do I thought I might pause for a moment and reflect.

Part One: Startup Mistakes: Starving Your Startup

Part Two: Startup Mistakes: Building Everything Yourself


Dallas is accelerating, AGAIN!

Last week I had the opportunity to have lunch with Kraettli Epperson and Dave Matthews to discuss VentureSpur – a new startup accelerator coming to Dallas. Started in Oklahoma City last year, VentureSpur is expanding their 12-week startup acceleration program to Dallas. They are now accepting applications – deadline for applications is May 17th – the program start date in Dallas is July 29th (so hurry up and get your application in now). The program invests up-to $30K into each company plus an additional $100,000 at the end of the program based on the company’s success (office space, other services and mentorship are included for free). Apply HERE.

Quit Building Mobile Apps NOW!

…unless they include these three things:

1. an inherent mechanism for user growth

2. an inherent mechanism for user retention

3. measurement and analytics

So often I meet promising young entrepreneurs who are building equally promising mobile applications that are missing all three components. When I press them on why they are NOT including these traits they explain that they PLAN to include them sometime in the future. I will argue that your MVP must include all three if you want a chance at success.

User Growth: There are scores of mobile applications on the market that are well designed and very useful – the problem is that you’ll never hear about them. There are simply too many apps vying for too few users. Even BIG brands have a hard time attracting users – why would an independent developer think he would have a snowball’s chance in hell at success? I suspect the same psychology that causes people to buy lottery tickets is at work in the minds of developers – there is a CHANCE they could win and so they roll the dice.

You should consider designing your app in a way that it becomes more useful when your user gets his friends to use the app as well. This is the most simple way to ensure that each download will result in multiple downloads. You might consider creating incentives for getting people to help you drive downloads – sweepstakes, premium features and so on.

My advice to mobile developers is simple: do not start building your application UNTIL you have a well thought out mechanism specifically designed to drive user growth. If you can’t come up with anything inherent in the design of your product that would drive user growth – don’t build the app – start working on something new.

User Retention: Getting users is actually EASIER than keep users engaged in your app. It is heart breaking to acquire a user only to realize they have forgotten that you exist a month later. You shouldn’t be surprised to learn that the majority of apps are only opened once. Don’t make that mistake – create a reason to keep in touch with you users. Create excuses to contact your users via push, text or email on a regular basis. The contacts need to be relevant and wanted – make them regular. This is why Facebook and LinkedIn have such great cohort numbers.

Again, my advice to mobile developers is simple: do not start building your application UNTIL you have a well thought out mechanism specifically designed to drive user engagment. If you can’t come up with anything inherent in the design of your product that would drive user engagement – you simply aren’t trying. Get back to work.

Measurement: Don’t just focus on ‘Vanity Metrics’ like downloads, total sessions, total first time users – instead focus on REAL Discovery Analytics. Things like cohort-based analysis – quantify exactly how specific groups of users continue to use and engage with your app and which groups generate revenue over time, user-centric funnel analysis – understand how distinct user segments covert on specific goals and ARPU – calculate the average revenue you are receiving across all, or segments of your users. The reason? You need to know how well you are doing BEFORE you pivot, before you update before you make a change. By constantly measuring you will know what works and what doesn’t work.

At the end of the day – set yourself up for success. Want help? Feel free to email me at amuse@startupmuse.com

My Foursquare Experiment

Since Foursquare’s launch at SXSW back in 2009 I have successfully avoided using the application – at least until a few weeks ago. We are working on a project that necessitated my use of the app and I decided to double down for two weeks and use the app prolifically. Here are my stats:

  • 194 Check-ins (13.9 per day)
  • 358 Points (during last 7 days)
  • 162 Friends
  • 123 Photos
  • 9 Tips
  • 13 Badges
  • 1 List
  • 6 Mayorships
  • 12 Office Check-ins
  • 11 American Restaurant Check-ins
  • 4 Museum Check-ins
  • 4 Athletic & Sport Check-ins
  • 4 Home Check-ins

Foursquare just announced $41M in additional funding to give the company time to figure itself out. The company only generated $2M in revenue last year (really?!?!). Anyway over the course of the last two weeks I had several interesting and a few annoying experiences.

The Good:

1. Found out about a Maroon 5 concert by watching friends check in at the AA Center. Dropped by and scalped a ticket (turns out the seats were horrible). Checked into the concert and friends with amazing floor seats saw my check-in and invited me down to sit in their extra seats. Nice!

2. Saved $15 on a dinner at Houlihan’s Restaurant.

The Bad:

1. Several deals offered in the app were not honored by retailers – most brazenly the Park Tavern failed to honor the deals shown in the app.

2. I checked into one location for a meeting and four uninvited folks decided to stop by to say hi as a result. Not cool when the meeting was to discuss a secret rollout of our new product.

The experiment is over much to my friend’s relief, evidently my check-ins were overwhelming. I did get lots of feedback – most of my friends think I need to slow down and do less. I haven’t checked in for several days and I feel like I should – it didn’t take long for me to make the action a habit.