Archive for the ‘Startup Technology’ Category

 

Over the past year I have come across several startups that tried to outsource or have a small team build their product without proper requirements and either did not get a finished product or got something completely different.  Now cash strapped, they wanted to build the product as cheap as possible.  Cheap meaning mostly if not completely based on equity.

I try to help startups as much as possible.  One particular example, I was able to line 3-4 developers that were willing to give some of their time for equity and I even started working on high level requirements for equity.  The problem arose that since no one was being paid (myself included) progress was very slow.  There was a lot of wasted time between finally getting requirements done (the concept was still being flushed out and refined) and getting the developers engaged since no one was full time.  The developers, while intrigued by the idea, were not fully bought in due to the fact that this was not paying them so they worked on it in their ‘free’ time.  Eventually the developers got disengaged and the startup had just bits and pieces of their concept.  I tried to get some outsourcing companies to do the work but they wanted at least their costs covered.  While understandably reasonable request, still not within budget.  In the end, the startup was still at square one and precious time lost but in the end they took a chance on trying to get things done for free and it didn’t work out.

I admit I was naive to believe that part time work from non founding unpaid developers working for just equity would be something that could deliver a project.  Simply put I got too caught up in the concept and trying to help but I should have been a bit more practical and I should have listened to the logical side of me that told me otherwise.  I should have pressed for the startup to raise funding to build the prototype.  In my opinion, the valuation they would have gotten with just a prototype and no traction would have been comparable to a PowerPoint valuation. 

I firmly believe unless a startup has is building a product full time by either the founding team or a paid team (in house or outsourced), it is very hard to get their concept/product realized.  I don’t intend for people to overpay to get things built but as the old adage goes- “nothing comes free”.

I constantly run across entrepreneurs that have some good and some great ideas.  These concepts are vetted at a high level or have full detail specs. The entrepreneur has an in house or outsourced team building or ready to build the product.  They are looking at a high cost and lengthy implementation time line to build out their full product.

Whether the startup is bootstrapped or seed funded the founder(s) must do something that most are unwilling to do – Compromise!  Why?  Simply put, they need to take it one step at a time but each step requires compromises.  These compromises should reduce over time but the key to remember is that there are two primary drivers for these compromises:

  • Time to Market (TTM)
  • Cost

The above two factors should dictate the compromises made to build the the three main phases of the product:

  • Proof Of Concept (PoC)
  • Prototype
  • Production

Proof of Concept

This phase should focus on the core concept with many compromises and its goal is to prove that you can build the technology that delivers your idea.  In my opinion, look and feel of the user interface should not be a focus but if it applies- design should.  This phase should cost the least amount and should have the quickest turnaround.  Again the goal is to prove you can build it.  This is a true ‘”alpha” version of your product.

 Prototype

This phase should focus on extending the PoC so you can gauge traction of your idea.  Your focus should be User Experience Design (UED) and implementing some of the higher priority compromises made in the PoC phase to prove viability of the idea.  This will cost more than the PoC phase but TTM should remain aggressive.  You may also call this your “beta” version of your product.

 Production

This phase focuses on growth and metrics.  The prototype should be taken to the next level where you implement the remaining high priority compromises made and bring the User Interface (UI) to a close to finished look.  This is where some more compromises have to be made as you have to apply the Pareto Principle (80/20 rule) on past compromised functionality/features otherwise you will TTM for Live to Site (LTS) will be astronomical.  This phase will be your longest as far as TTM and your costliest but at this point you should have vetted out enough of the product to feel confident you can fully take it to market.

Pareto Principle

I believe this principle should be a mantra for startups for not just initial product phases but also projects post production version LTS.  I recall working on projects where the “nice to have” portions or the UI took up most of the implementation time line.  Applying the Pareto Principle and making compromises would have reduced the TTM for those projects to assess their value.  I am a firm believer that you build the base feature set that can prove viability by garnering meaningful traction by your customers.  If the base set show Return on Investment (ROI) or meaningful traction then you have the ability to phase in your remaining compromises.  In my opinion, for startups even projects should at least go through a prototype phase before they reach full production phase.

Launching a new job site in this economy could be deemed as not profitable.  Two new job sites aren’t looking for profit (as of yet) but using innovation and technology.  Splits.org and Hash#Jobs are two such sites.  These are experimental job sites that leverage data aggregation of certain tags on Twitter.  They will battle spam and “freshness” as stated by this Cheezhead article.  The user experience in such cases will be the battle these two sites have to win though Hash#Jobs seems to have more of an uphill battle due to the use of a more general tag.  Even though Hash#Jobs users are pre-approved, it doesn’t guarantee “freshness” but it may reduce spam.  Splits.org shares the same battle.

 

I use the word “freshness” in relations to a job posting to define how up to date the job information is and active the job poster is too.  This is a term that Dayak defined over a year ago to make the lives of its recruiters easier.  We would send email notifications to a job poster when a job has not had any “activity” for a pre-defined duration.  If a job goes through the reminder process with no new activity or no action from the job poster to confirm that the job is still active, Dayak closes the job posting.  This keeps jobs “fresh”.  The project was fondly called “Bad Job Filter”.  As time evolved, the project has gone through fine tuning but still remains a key part of ensuring job “freshness”, though we do throttle it now and again.

 

Combining this “freshness” concept with the aggregation concepts above, could provide to be powerful, but would have challenges on its own.  I hope ideas such as these do well and new ones keep popping up.  Its Re-“Freshing” to come across such concepts.

Wow, so less than a week after my last post commented on how Google Apps was a good alternative for startups such as Dayak, Microsoft announces a new initiative called BizSpark.

BizSpark is an innovative new program that unites Startups with entrepreneurial and technology resources in a global community with a common goal of supporting and accelerating the success of a new generation of high-potential Startups.

This certainly mixes things up for startups but I don’t believe this changes much for a SMB. For a startup you know have access to Microsoft Exchange, Microsoft Sharepoint and Microsoft Development and Server software for 3 years for a mere $100 up front fee. If you have someone that can administer the various products, it would be hard pressed for a startup to not try to qualify for this offering –

http://download.microsoft.com/download/4/d/4/4d41081a-d8d9-407a-9bae-5127e6e931ca/BizSpark%20Startup%20Program%20Guide.pdf

Does this make me think about moving Dayak to Microsoft products and trying to qualify Dayak? No, the minimal administration needs and no hardware benefit of Google Apps is still a compelling reason for Dayak to remain with our current setup. Could we make a switch later? Sure, anything is possible but a big unknown is how difficult it is to get approved.

Outside of the internal use of Microsoft’s offering, there is a more compelling reason to use Microsoft for development and production environment. By deferring the cost of Microsoft Server products, this initiative offers a startup enough runway to validate their business model without incurring the heavy upfront cost of software licensing. This may prove useful to many startups.

Who doesn’t know about Google Apps? Steve Ballmer recently dismissed Google Apps. I do agree with him to a certain degree that Google Apps can’t fight Microsoft alone BUT the combination of OpenOffice and Google Apps must have Steve Ballmer sweating.

Its hard to deny that Google Apps and OpenOffice isn’t a compelling option. Steve Ballmer’s response shows a bit of arrogance that Microsoft could perhaps have afforded 10 years ago but not anymore. At Dayak we have people that use Microsoft Office and some that use OpenOffice. Why don’t we have it standardized? The reasons range from Operating Systems (Mac, Linux and Windows), costs and comfort level of the user them self. We are ok with that due to what Google Apps provides.

Where Google Apps comes into play is the ability to share, collaborate and view files without installing converters. So not only does it save us money on Microsoft licenses and Microsoft Sharepoint but also on administration costs of the same.

We also get 7GB email accounts and calendaring that don’t require us to have an Admin for an in house Microsoft Exchange or equivalent system. Our employees get a great web interface or the comfort of using Outlook Express or Outlook or Thunderbird. I know there are great options like Zimbra or Spicebird but those do incur administration costs. For Dayak we have no in house server for any of this and Google Apps takes care of all of our needs including Email backup for a nominal per user fee. We used to run our own email server using Postfix but the features we get bundled with Google Apps and with no Administration overhead, I couldn’t be happier.

Got Intranet? Yes, we do with Google Sites. Another benefit of Google apps that allows us to have an wiki style intranet with no cost of a in house hardware or administration.

So Dayak like probably many startups are following a recent trend. A trend that will save us a lot of money in the long run. Just notch us up as a Google Apps fan and avid user. I hope Steve Ballmer opens his eyes to what is really going on and acknowledge that this compelling option of Google Apps and OpenOffice is something Microsoft will have to compete with.

So… Do you “Google Apps”?

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