Crossing the Chasm – on one page of A4

Crossing the Chasm Thumbnail

Among my many Business books, I thought the insights in Geoffrey Moores Book “Crossing the Chasm” were brilliant – and useful for helping grow some of the product businesses i’ve run. The only gotcha is that I found myself keeping on cross referencing different parts of the book when trying to build a go-to-market plan for DEC Alpha AXP Servers (my first use of his work) back in the mid-1990’s – the time I worked for one of Digital’s Distributors.

So, suitably bored when my wife was watching J.R.Ewing being mischievous in the first UK run of “Dallas” on TV, I sat on the living room floor and penned this one page summary of the books major points. We grew the DEC business from £12m to £52m in 2 years after using this work, so a lot of the lessons appeared to be good ones. Just click it to download the PDF with my compliments. Or watch him describe the model in under 14 minutes at the recent O’Reilly Strata Conference here. Or alternatively, go buy the latest edition of his book:

I did use this as part of a project to increase sales of Trafficmaster SmartNav jam-avoiding in-car navigation systems, which I conducted with the assistance of two professors from Cranfield Business School. We picked three target use cases to take us over the Chasm, with varied success.

I did manage to get 300 of them installed in the complete Virgin Atlantic “Upper Class” Chauffeur Car Fleet, which avoided the normal driver practice of having to wake the passenger up with an abrupt piece of braking as they neared the customers destination. Also saved a phone around to find out who was closest to a customer who just called in (found that the McDonalds outlets around Airports was a favourite haunt of their drivers).

By hook and by crook, we also managed to get test units in the cars of board members of 7 of the top 10 System Integrators in the UK at the time (given they had hundreds of expensive staff on the road every day; thought keeping them out of traffic jams would help their bottom line). Incorrect thought as it turned out; staff competitions to win a one of ten SmartNavs in each company (to promote them down the line, hoping for bottom up demand) invariably ended up with a glut of them on eBay.

Trying to engineer a bridge over a chasm proved difficult when the product is already designed and the B2B use cases wide ranging, especially when sales appeared to be over a myriad of different small segments. The company subsequently went B2C, and I suspect directly into the headlights of the steam roller that TomTom became.

My PA redrew my hand-drawn sheet of A4 into the Microsoft Publisher document that output the one page PDF. I may have the source file somewhere, so if you want a copy of the source file, please let me know – drop a request to: [email protected].

“Big Data” is really (not so big) Data-based story telling

Aircraft Cockpit

I’m me. My key skill is splicing together data from disparate sources into a compelling, graphical and actionable story that prioritises the way(s) to improve a business. When can I start? Eh, Hello, is anyone there??

One characteristic of the IT industry is its penchants for picking snappy sounding themes, usually illustrative of a future perceived need that their customers may wish to aspire to. And to keep buying stuff toward that destination. Two of these terms de rigueur at the moment are “Big Data” and “Analytics”. There are attached to many (vendor) job adverts and (vendor) materials, though many searching for the first green shoots of demand for most commercial organisations. Or at least a leap of faith that their technology will smooth the path to a future quantifiable outcome.

I’m sure there will be applications aplenty in the future. There are plenty of use cases where sensors will start dribbling out what becomes a tidal wave of raw information, be it on you personally, in your mobile handset, in lower energy bluetooth beacons, and indeed plugged into the “On Board Diagnostics Bus” in your car. And aggregated up from there. Or in the rare case that the company has enough data locked down in one place to get some useful insights already, and has the IT hardware to crack the nut.

I often see desired needs for “Hadoop”, but know of few companies who have the hardware to run it, let alone the Java software smarts to MapReduce anything effectively on a business problem with it. If you do press a vendor, you often end up with a use case for “Twitter sentiment analysis” (which, for most B2B and B2C companies, is a small single digit percentage of their customers), or of consolidating and analysing machine generated log files (which is what Splunk does, out of the box).

Historically, the real problem is data sitting in silos and an inability (for a largely non-IT literate user) to do efficient cross tabulations to eek a useful story out. Where they can, the normal result is locking in on a small number of priorities to make a fundamental difference to a business. Fortunately for me, that’s a thread that runs through a lot of the work i’ve done down the years. Usually in an environment where all hell is breaking loose, where everyone is working long hours, and high priority CEO or Customer initiated “fire drill” interruptions are legion. Excel, Text, SQLserver, MySQL or MongoDB resident data – no problem here. A few samples, mostly done using Tableau Desktop Professional:

  1. Mixing a years worth of Complex Quotes data with a Customer Sales database. Finding that one Sales Region was consuming 60% of the teams Cisco Configuration resources, while at the same time selling 10% of the associated products. Digging deeper, finding that one customer was routinely asking our experts to configure their needs, but their purchasing department buying all the products elsewhere. The Account Manager duly equipped to have a discussion and initiate corrective actions. Whichever way that went, we made more money and/or better efficiency.
  2. Joining data from Sales Transactions and from Accounts Receivable Query logs, producing daily updated graphs on Daily Sales Outstanding (DSO) debt for each sales region, by customer, by vendor product, and by invoices in priority order. The target was to reduce DSO from over 60 days to 30; each Internal Sales Manager had the data at their fingertips to prioritise their daily actions for maximum reduction – and to know when key potential icebergs were floating towards key due dates. Along the way, we also identified one customer who had instituted a policy of querying every single invoice, raising our cost to serve and extending DSO artificially. Again, Account Manager equipped to address this.
  3. I was given the Microsoft Business to manage at Metrologie, where we were transacting £1 million per month, not growing, but with 60% of the business through one retail customer, and overall margins of 1%. There are two key things you do in a price war (as learnt when i’d done John Winkler Pricing Strategy Training back in 1992), which need a quick run around customer and per product analyses. Having instituted staff licensing training, we made the appropriate adjustments to our go-to-market based on the Winkler work. Within four months, we were trading at £5 million/month and at the same time, doubled gross margins, without any growth from that largest customer.
  4. In several instances that demonstrated 7/8-figure Software revenue and profit growth, using a model to identify what the key challenges (or reasons for exceptional performance) were in the business. Every product and subscription business has four key components that, mapped over time, expose what is working and what is an area where corrections are needed. You then have the tools to ask the right questions, assign the right priorities and to ensure that the business delivers its objectives. This has worked from my time in DECdirect (0-$100m in 18 months), in Computacenter’s Software Business Units growth from £80-£250m in 3 years, and when asked to manage a team of 4, working with products from 1,072 different vendors (and delivering our profit goals consistently every quarter). In the latter case, our market share in our largest vendor of the 1,072 went from 7% UK share to 21% in 2 years, winning their Worldwide Solution Provider of the Year Award.
  5. Correlating Subscription Data at Demon against the list of people we’d sent Internet trial CDs to, per advertisement. Having found that the inbound phone people were randomly picking the first “this is where I saw the advert” choice on their logging system, we started using different 0800 numbers for each advert placement, and took the readings off the switch instead. Given that, we could track customer acquisition cost per publication, and spot trends; one was that ads in “The Sun” gave nominal low acquisition costs per customer up front, but were very high churn within 3 months. By regularly looking at this data – and feeding results to our external media buyers weekly to help their price negotiations – we managed to keep per retained customer landing costs at £30 each, versus £180 for our main competitor at the time.

I have many other examples. Mostly simple, and not in the same league as Hans Rosling or Edward Tufte examples i’ve seen. That said, the analysis and graphing was largely done out of hours during days filled with more customer focussed and internal management actions – to ensure our customer experience was as simple/consistent as possible, that the personal aspirations of the team members are fulfilled, and that we deliver all our revenue and profit objectives. I’m good at that stuff, too (ask any previous employer or employee).

With that, i’m off writing some Python code to extract some data ready ahead of my Google “Making Sense of Data” course next week. That to extend my 5 years of Tableau Desktop experience with use of some excellent looking Google hosted tools. And to agonise how to get to someone who’ll employ me to help them, without HR dissing my chances of interview airtime for my lack of practical Hadoop or MapR experience.

The related Business and People Management Smarts don’t appear to get onto most “Requirements” sheet. Yet. A savvy Manager is all I need air time with…

The “M” in MOOC shouldn’t stand for “Maddening”

Mad man pulling his hair out in Frustration

There was a post in Read/Write yesterday entitled “I failed my online course – but learned a lot about Education”: full story here. The short version is that on her Massive Open Online Course, the instructor had delegated out the marking of essays to fellow students on the course, 4/5 of which had unjustifiably marked an essay of hers below the pass mark. With that, the chance of completing the course successfully evaporated, and she left it.

Talking to companies that run these courses to over a thousand (sometimes over 100,000) participants, she cites a statistic that only 6.8% of those registering make it through to the end of the course. That said, my own personal exposure to these things comes down to a number of factors:

  1. If the course is inexpensive or free, there will be a significant drop between the number of registrants and the number of people who even invoke the first lesson. Charges (or availability of an otherwise unobtainable useful skill) will dictate a position in each persons time priorities.
  2. The course must go through a worked example of a task before expecting participants to have the skills to complete a test.
  3. Subjective or Ambiguous answers demotivate people and should be avoided at all costs. Further, course professors or assistants should be active on associated forums to ensure students aren’t frustrated by omissions in the course material. You keep students engaged and have some pointers on how to improve the course next time it’s run.
  4. Above all, participants need to have a sense that they are learning something which they can later apply, and any tests that prove that do add weight to their willingness to plough on.
  5. The final test is meaty, aspirational (at least when the course has started) and proves that the certificate at the end is a worthwhile accomplishment to be personally proud of, and for your peers to respect.

I did two courses on MongoDB a year ago, one “MongoDB for Python Programmers”, the other “MongoDB for DBAs” (that’s Database Administrators for those not familiar with the acronym). Their churn waterfall looked to be much less dramatic than the 6.8% completion rate reported in the post; they started with 6,600 and 6,400 registrants respectively in the courses I participated in, and appear to get completion rates in the scale of 19-24% from then and ever since. Hence a lot of people out there with skills to evangelise and use their software.

The only time any of the above hit me was on Week 2 of the Programmers course, which said on the prerequisites that you didn’t need to have experience in Python to complete the course – given it is easy to learn. In the event, we were asked to write a Python program from scratch to perform some queries on a provided dataset – but before any code that did any interaction with a MongoDB database had been shown.

Besides building loop constructs in Python, the biggest gap was how the namespace of variables in Python mapped onto field names within MongoDB. After several frustrating hours, I put an appeal on the course forum for just one small example that showed how things interacted – and duly received a small example the next morning. Armed with that, I wrote my code, found it came out with one of the multiple choice answers, and all done.

I ended up getting 100% passes with distinction in both courses, and could routinely show a database built, sharded and replicated across several running instances on my Mac. The very sort of thing you’d have to provide in a work setting, having had zero experience of NoSQL databases when the course had started 7 weeks earlier. If you are interested in how they set their courses up, there’s plenty of meat to chew at their Education Blog.

MongoDB for Developers Course CertificateMongoDB for DBAs Course Certificate

I did register for a Mobile Web Engineering Course with iversity but gave that up 2 weeks in. This was the first course i’d attended where fellow students marked my work (and me them – had to mark 7 other students work each week). The downfall there was vague questions on exercises that weren’t covered in the course materials, and where nuances were only outlined in lectures given in German. Having found fellow students were virtually universally confused, an absence of explanation from the course professors or assistants to our cries for guidance, and everyone appearing to spend inordinate, frustrating hours trying to reverse engineer what the answers requested should look like, I started thinking. What have I learnt so far?

Answer: How to deploy a virtual machine on my Mac. How to get German language Firefox running in English. What a basic HTML5/Css3 mobile template looked like. And that i’d spent 6 hours or so getting frustrated trying to reverse engineer the JavaScript calls from a German language Courseware Authoring System, without any idea of what level of detail from the function calling hierarchy was needed for a correct answer in our test. In summary, a lot of work that reading a book could have covered in the first few pages. With that, I completed my assignment that week as best I could, marked the 7 other students as per my commitments that week, and once done, deregistered from the course. I’ve bought some O’Reilly books instead to cover Mobile App Development, so am sure i’ll have a body of expertise to build from soon.

Next week I will be starting the Google “Making Sense of Data” course which looks very impressive and should improve some of analytics and display skills. Really looking forward to it. And given the right content, well engineered like the MongoDB courses, i’m sure Massively Open Online Courses will continue to enhance the skills of people, like me, who are keen to keep learning.

Google Shares: Stick or Twist?

Danger - Will Robinson

A fairly quiet Sunday. Trip down to the gym for the last of my three weekly visits, finding that they were finishing their 24 hour Charity Spinathon, £20 duly donated. En route, listening to the last of a two hour John Gruber Podcast talking at length about Crypto currencies, which was fascinating. Then back home for a walk to the local shops with Jane to pick up some milk, then back to catching up on my various high technology news feeds.

I reflect on Robots getting more and more impressive. Saw a video of a guy in Germany debugging a table tennis playing robot, which is already showing promise (3 minute video here). Then saw that on Tuesday, there is a match planned between Timo Boll, the #1 German Professional Table Tennis Player (currently #8 in the world), playing against a KUKA industrial robot (preview here). Robots are one feature that keeps hitting news headlines concerning Google, who are making many related investments recently.

On a related thought, one thing that has started to bug me a bit is the so far excellent performance of my Self Invested Pension, which over the last 10 months has grown 10.68%. Given 64% of it is in an index tracker, the performance of various stocks i’ve traded (normally on a long term buy and hold basis) has been over 24% to date. The nagging feeling is always asking if i’m carrying too much of too few companies, albeit I tend to focus on ones that I feel have high market shares and future growth potential.

I’ve made good returns trading in then later out on Netflix, Splunk and I got slight losses from the early days in Red Hat, ARM, Baidu and Facebook, so reversed out with minimal damage. I made a returns of over 20% on GT Advanced Technologies (GTAT) and 49% on Liquid Metal (LQMT) in 3 weeks by joining the dots on some future Apple investments from patent filings. Those apart, I wound up investments in Google, Amazon, Apple and (having IPO’d) Tableau. I have more recently taken a position in Facebook (it was in the $20’s when I left it, and bought back in recently at $69).

One personal irritation about the Advertising Industry is its relentless pursuit to derive advertising revenue on mobile phones. This is a practice I hold akin to having a kiddie jumping up and down in front of the telly when you’re trying to watch something; something to be actively discouraged. The one concern I have is that Google are my biggest shareholding (at the time of writing, they represent just under 50% of my (non Index Tracker) stock investments), and derive almost all its revenue today from monetising purchase intentions – read: targeted advertising. Likewise Facebook.

Something that impressed me greatly with Facebook was CEO Mark Zuckerberg buying SMS app “WhatsApp”, which has over 400 million users (70% using the service daily) for a jaw dropping $19 billion. The ethos of WhatsApp is to never let advertising interfere with the user experience, instead relying on a nominal $1/year subscription to use their service. Despite that being the antithesis of Facebook’s current business model, they put the WhatsApp CEO straight onto the Facebook Board. While it may sound a very basic simplification, their willingness to do this sort of “eat our children” move gives me confidence that they are aiming for the long term – and not clamouring to keep hold of a business model that may go stale.

With that, I turn to Google. I put £40,834 in them and have so far seen that go up to £54,508 – an approx return of 35%. Around 98% of their current income is tied to advertising revenues. I have quite a wide view of the various initiatives they are undertaking, which while mind-blowing, don’t translate into a likely future revenue/profit stream for the next two years or so. Maybe Chrome Tablets will arrive. Maybe they’ll cotton on that it may be a good idea to sell their excellent ChromeCast outside the USA. One thing I don’t yet understand well is their fixation – and many investments – in both Deep Thinking technologies and in Robotics.

The fact they may pull a rabbit out of their hat on one of a wide range of initiatives means i’ll leave my shareholding in them where it is. Likewise the shareholdings held by my three grandchildren (Ellie age 12, Charlie age 9 and Ruby age 2 all have shares in Google, Amazon and Tableau alongside their index trackers). Google shares will split in April, so I think a likely increase as their Google shares get more liquid. After that, we’ll see if the value of those shares continue their relentless march northward.

I’m also confident Amazon will bounce back – I reckon up another 20% in the next quarter to recover from their recent downturn. Apple and Facebook will soldier on. Tableau Software will continue to impress (they are my highest returns to date – over 67% at the time of writing). Those apart, i’m keeping my eye out for signs of three potential IPOs that I think will become very valuable – when they’re ready. But that’s a story for another day.

Giving Kids (and Parents) the Greatest Gift of All

One thing you learn very quickly is that if you have a decision makers spouse, or children, engaged in any purchase decision, they carry a disproportionately huge degree of influence. At Digital in 1984, Mike Tait (who previously ran Commodores PC operation in the UK) bought on John Mitchell to run Dealer Sales Incentives; besides a misspent youth serving beer in a Munich Hofbrauhaus, he’d run Sales Incentives for Olympia Typewriters. I think he’d largely given up on their attempt in the PC market (Olympia’s machine was called “the People”), and his last exercise at the previous company was offering a special green model to Irish dealers, which he told them (with a straight face) was to be called “the Little People”.

He concocted a “points make prizes” campaign, which we were to announce in a nationwide 5 minute slot on TV-AM, to be aired at 7:25am precisely. While we had many of the 120 PC Dealers bought their staff in early especially to watch that broadcast, TV-AM duly screened it 20 minutes early – and refused, despite my managements very fast and vocal protests, to repeat it at the agreed time. Having pee’d off the whole channel, John nevertheless ensured that the “PC sales make points make prizes” campaign gift catalogue got sent to every participants home address. We had plentiful (positive – for us) feedback that suggested salesfolks were getting impaled on questions on how many Digital PCs had been sold on their return home, be it from their spouses and (where present) kids.

Fast forward to my time at Demon, where I got several opportunities to follow my boss, Sales & Marketing Director David Furniss, into unfamiliar but mind changing meetings. One to meet some management in an office opposite Harrods to agree outline terms for Demon to be shirt sponsor for Fulham Football Club, which we then did for three years. Another was to meet a team of people in an office above shops at the intersection of Regents Street and Oxford Street, London, to fund a campaign to promote Demon Internet in secondary schools up and down the country.

The company we met were experts at taking a brand product family and building course curriculum material for school teachers to reuse in class. So, a Sun Cream supplier could sponsor a class on Skin Cancer, and folks would know how to protect themselves in summer months. An electric razor company could sponsor packaging design in Art (and found that 14-15 year olds were very loyal to their brand when they bought their first razors – normally as presents for whoever they were dating!). A Computer Supplier could do some ICT work and sponsor “Computers for Schools” (which is what they did for Asda – ahead of Tesco doing a similar effort). David told me that one of his friends had done such a campaign for Microsoft, and he had done one while he worked at Compaq – and the brand recognition of both had major jumps in familiarity as a result.

We did one for Demon (project led from start to end by one of my staff – Wendy Sidaway), focussing on ICT teachers and giving a professionally produced course curriculum around “The Internet”. Besides the Demon branding on all the posters, course materials, teaching guides and homework sheets, we paid for a competition open to all students – and to their schools. Students would build an idea for a web site and say what they’d promote. Prize has one of the new candy-coloured Apple iMacs plus software and printer for the three top entries, and 5 iMacs for the school of the eventual winner. The take-up of the (free to the schools) materials and participation in the competition was unbelievably high – well over 80% of all the secondary schools in the country took it up. Brand recognition for Demon went off the dial, and our new per-customer acquisition costs kept to around 16% of that of our benchmark competitors. Total cost (in 1998) was circa £50,000 for the work and around £10,000 in prizes.

Fast forward to 2014, and I hear various proposals from the Government to fund the provision of Independent Financial Advisors to ensure people are getting good deals out of the Pension Industry, variously for selection of pensions and for Annuity providers. In reality, the education needed to pick a pension fund to invest throughout your working career(s) should be a simple three box flowchart. It’s even explained in one paragraph in Scott Adams “The Dilbert Principle”. Paraphrased:

  1. Management charges for an “active” or “managed” fund do not give better rewards than a monkey picking your stocks despite their disproportionately large charges. If the choices include either of these terms, move on and disregard the allure of thinking the high charges will buy you any advantage; the opposite is true.
  2. History (and this includes all the stock market crashes along the way) says that the consistently best performance is to bet on all the horses, aka putting your funds in an Stock/Equities index tracker. The charges should not exceed 0.5% of your fund value. Highest returns normally come where the funds are accumulating (ie: any dividends paid are used to buy more units of the index tracker shares automatically).
  3. Once you get within 10 years of retirement, you may normally expect to step the mix of the fund you’ve built up from being 100% equities to be a mix of equities plus a more predictable (but much poorer returns) proportion of government debt (aka Bonds).
  4. Steps 1-3 will give you the biggest snowballed returns with which you can live, or at your option, to buy an annuity after your retirement. If you do choose to buy an annuity (a company will take your fund and agree to pay you a specific weekly/monthly pension for the remainder of your life – but swallow any money left at that point), it’s good business sense to shop around. Don’t just accept the first offer you get. And if your fund is healthy, you may have enough to live off without having to buy an annuity – and your dependents can get the funds left over, less capital gains tax, after you pass away.

So, with that, if the government ensures consistency in the way charges are published, annuities can be compared simply, and draw down options are presented, then the job is done, with no IFAs needing to be retained in order to explain how to navigate around companies giving poorer value.

However, what about children? That’s where “The Richest Man in Babylon” comes in. Originally prepared in the 1920’s as Insurance Industry Pamphlets to explain good financial practice, it got consolidated into a book. If a child makes it through to the end, they’ll learn all the core financial skills: budgeting, saving, avoiding scams, picking domain experts, structure of business models, the futility of games (read: lotteries) and above all, the art of snowballing. That of your money parenting interest, and the accumulating interest’s children, grandchildren, etc building up your personal wealth.

The book is not expensive, and you can even download the full audiobook from YouTube – either nearly four hours in one take, or in 17 individual chapters worth.

That said, it should be a simple job to spend around £100,000 to encode that into a modern version suitable for inclusion in every school curriculum. That would be a gift to all the children in the country unparalleled by any government in our history.

a16z brilliance vs the Leaking Bucket

Digital Ocean Logo

When I worked for DEC, I used to have a brass plaque on the wall in front of me that reminded us in the Software Services Division of our three priorities. It said, in order of importance:

  1. Warranty Customers
  2. Presales
  3. Consultancy

Paraphrased, this says: look after your customers before you go anywhere near trying to get new ones. Next, support the rest of the company selling the whole toolbox to solve customer needs (software was typically only 10% of a project sale). Finally, if we’d done those first, only then did we try to make profit for our own unit alone.

The other euphemism we knew was an old American Football one, which describes a now illegal play; that of “smacking the helmet”. That’s the crash helmet of a 30 stone athlete running at you, as anywhere his head ends up heading, the full weight of the body will follow. So, a well aimed deflection early in a move causes a disportionate effect when the rest of what’s behind it follows. And in the IT market, that front end constituency is the software development community – aka “Developers”. Hit that effectively, and you’re in great shape.

In theory, it’s a great time to be a software developer. Hardware, Storage and Network capacity is fairly inexpensive. Tools to build everything from Mobile to Enterprise applications are predominantly open source and available to all. So, a lot of the early decision making for where to site your applications is where you find a cost effective on-ramp – and more often than not, you’ll stick to where you first deploy as your business scales.

When you are a developer, you get to hear about Amazon Web Services (AWS) and their fantastic growth. This a result of their CEO Jeff Bezos telling his staff that they would deploy all their businesses as APIs, and allow other companies to use their spare compute/storage capacity. Spikes in demand necessitate massive over “just in case” provisioning, even though those spikes are few every year and very seasonal. That said, the amount of options on there is now wide and complex, and hence a learning curve before you can price your development hosting cost out. Examples here, but for my needs, it would be circa £80/month.

You also get to hear about Google Compute Engine, which open up Google’s capacity to developers who can write to their own specific APIs; that said, they appear to favour apps that can take advantage of their own unique database and auto scaling features. If you want a price, then there is a web site where you can enter a number of parameters, and it will articulate a dollar cost – which in my case, were not inexpensive. Or you can have a crack at this.

Likewise for Rackspace, who do a lot of work among the startup community, but again who have pricing suited to paying for their excellent support services. Most of which developers don’t actually need while starting to build their systems. Examples here.

Early in my own work, I saw a report from Mike Prettejohn‘s company (Netcraft) about a small New York company called Digital Ocean who were growing like topsy. From 137 machines in Dec 2012 to (at the time of writing this) 54,142 in Feb 2014:

Digital Ocean Server Growth

The main appeal to me (like a lot of developers) is that you can provision a server instance with one of a range of prebuilt Linux configs within 5 minutes. And once it’s up, it’s $10/month for a virtual server instance with 30GB of Flash Storage and 3TB of Network Bandwidth per month. Add a further $2/month to get weekly backups and the ability to take as many snapshots of your system(s) as you feel comfortable. Very simple, predictable and does the job. The words you’re reading here are being served off a Ubuntu Linux Server in Digital Ocean Amsterdam, using a WordPress network I built using one of their available images. DIY, not for everyone, but if you know what you’re doing and you can secure your site, it’s about as cost effective as you can get.

Besides seeing the volume of site growth, I look at the Netcraft Hosting Provider Switching Analysis, which gives an indication of how each provider was both growing or churning its customer base – and if there was churn, where it was going. The thing that struck me were the number of sites that were relocating from AWS and in particular Rackspace over to Digital Ocean. At a time when Rackspace have been giving profit warnings, the numbers were over 4 figures of customer sites per month – some 31,279 sites in a year.

Mention Digital Ocean to Rackspace staff (I know two of them), and the best positioning I have from them is that they have many competitors that keep them up at night. That said, I shake my head and wonder if they’re spending all their time looking at new customer acquisition (bath taps at full bore) while leaving that very large plug out of their bath.

With that, Andreessen Horowitz yesterday put some major VC funding into Digital Ocean. Given they are gobbling market share – and that my gut says it’s heavily developer focussed – I think they are a fantastic bet. I wonder when AWS, Azure and Google will have a comparable offer, and until then, i’m sure progress will continue on the current relentless path. Digital Ocean have been a revelation to me so far.

Well done, a16z. You’ve picked a great team. Again.

The Hard Thing about Hard Things

I pre-ordered the Kindle version of Ben Horowitz’s new book back in January, and it was duly released and appeared on my iPad Mini yesterday morning. Fantastic book, finished it in two sittings.

Ben is co-founder with Marc Andreessen (of Netscape fame) of Venture Capital firm Andreessen-Horowitz, otherwise known in techie circles as A(16)Z. I recall the two companies he ran in his earlier years – Loudcloud and Opsware. At the time, the Divisional Manager of BT Ignite was more interested in a company called Jamcracker, principally because she liked their name. Meanwhile I was being sent in to do technical due diligence on a few potential acquisitions, just before the dot com crash.

While the VC’s feeding ideas were ex-colleagues of the then CEO (Peter Bonfield), the quality was generally shocking; promising scale to hundreds of thousands of users with software written in Visual Basic, or (with the help of Rothschilds) proposing sale of a domain name business back to BT for £70m before finding 2/3 of the customers were referred to them by… BT. That latter one eventually IPO’d for £12 million a couple of years later. Not to mention some hosting businesses, albeit they didn’t know i’d managed to size their server numbers and customer mix per Datacentre – routinely scuppering their slides when they deviated from an exact truth. One I looked at had 14 servers deployed in one very large building; others we monitored had frequent outages (and we knew which end customers were affected each time). But I digress.

Loudcloud and Opsware, unlike most of those companies I was asked to look at, were of the highest quality. Having said that, the impression reading the book is that being the CEO of both operations was quite a job. It sounded like someone running over a field chasing a tractor trailer with tons of cash accelerating away, but pursued at the same time relentlessly by a Combine Harvester. And then finding a lot of running track between the two was littered with tripwire and sinking sand. In both cases, Ben made it to the tractor trailer – just – despite enormous challenges. Very impressive.

I can relate to the story of folks visiting him where two co-founders wanted to share all the decision making in their proposed business. The one thing I learnt indelibly from my “Leadership and Followership” Management Training at Sandhurst was, that in any team setting, however ad-hoc, job #1 was picking one leader that everyone would defer to. So, while we were free to propose any action, the ultimate call was from that one person. And once they’d made that call, it was our job as a team to execute the decision made to the very best of our mutual ability.

There is a lot of truth in Business Books talking about “Peace Time” CEOs (which get written about all the time) and “War Time” CEOs (which rarely get mentioned). The first acknowledgement of the phenomenon i’ve seen outside the excellent writings of Simon Wardley (just wish his knowledge finally made it into book form). This will become key, as the world of Enterprise IT is going to descend into war type conditions for many vendors by this side of 2017.

The other thing that struck a cord was his coverage of hiring “older” folks to positions in a company. I went for 6 months trying to get interviews at the young age of 55, something that proved virtually impossible – this despite a long, successful track record of running large Software and Internet operations for Market Leading companies and always delivering my numbers. And of developing my employees, many of whom became regarded as “fast track talent”.

Ben reminds people that the chief advantage is “time”; while some tasks like engineering can be internally focussed, that there are several things that relationship networks and business building skills in an older candidate can deliver that truly make a difference between success and liquidation. So while HR and Management ageism is endemic (and it’s not controversial in any way to suggest that – it is a fact of life), it’s my job to point out areas where I can help any organisation. There are some excellent examples of techniques taught in Andy Bounds fantastic book The Jelly Effect: How to Make Your Communication Stick that should make a material effort to that effort.

In the meantime, Ben Horowitz has written a fantastic book. Very recommended.

Bill Gates, Compaq Plus and some new thing called Windows

Apple Lisa MouseMicrosoft MouseVisiCorp VisiOn Mouse

Back in 1983, I worked in Digital’s UK PC Dealer Team, where I was the sole presales technical guy helping to grow Rainbow PC sales through the PC Dealer Channel. Around 120 independent dealers, many of whom had a background in selling Commodore, Apple and miscellaneous CP/M based machines to consumers and businesses. As the second largest computer manufacturer in the world, everyone (including ourselves) expected the PC market to become an IBM vs DEC battle ground.

We had seen the launch of the Apple Lisa, a machine that scared everybody. While most of the vendors saw the windowing system and thought Apple would eat us alive, consumers got equally scared of the $10,000 price tag. However, it set in train an arms race to provide an equivalent for other PC vendors.

The authors of Visicalc (the first and most popular spreadsheet) started engineering a Windowing system called “Visi-On”, another called Quarterdeck a system called “DesQ” that could work out of the box with existing applications, and there was a rumoured response on the way from Microsoft.

In May, we had a visit from Phil Sutcliffe and his US CEO, Bill Gates, who carried in a Compaq Plus (IBM compatible as large and heavy as a portable sewing machine) and set it up to give a demo to around 20 of us around a conference room table. Two of the DEC VIPs were stuck in a board meeting upstairs, so we all sat around the table like lemons, waiting for their arrival, Gates included. I couldn’t help myself, so I turned to him and said: “I notice you have two buttons on your Mouse there. The Apple Lisa has one, and the Visi-On mouse has three. I’m curious, why did Microsoft pick two?”.

With that, he spent a good ten minutes relating a thorough drains up of his thought process, which included many examples of areas that really sucked when using both the Lisa and in VisiOn. Extremely thorough, well thought through, and left an impression of “Wow”. The sort you walk away with if you ever meet someone who turns into a walking encyclopedia.

When the VIPs arrived, the first thing he said as he shook their hand was “When are you going to drop CP/M and move to DOS?”. A reference to Digitals then preferred OS, given it already ran thousands of applications and was an on-ramp to Concurrent CP/M, which allowed you to hop and skip between 5 running full-screen applications. That done, he then gave a demo of a new product called “Windows” that Microsoft were at that point building.

He left with some degree of frustration at not persuading the senior folks to switch immediately. Phil told me afterwards that when he got back to David Fraser, then Microsoft UK General Manager, he told him “There was only one guy in that room who knew what he was talking about – hire him”. At the time, there were few UK employees – about 10 or so if I recall. I was duly invited for interview, spoke to David Fraser and International VP Scott Oki, but ended up declining the move.

The one thing that’s always struck me ever since is how asking a good question often has a much bigger impact than knowing the answers. It’s usually a sign of good management if staff are aimed at audacious goals, and questioned about detail rather than having it prescribed to them.

About 4 weeks in after I was first handed DECdirect Software to start, I got invited to a chat with Peter Herke – the General Manager of the DECdirect Catalogue operation at that point. He had a reputation of chewing out senior people who didn’t know every detail of the business they are running (in fact, for junior people, he just asks a few pointed questions and asked them to come back with the answers when they were to hand – people learnt to keep the finger on the pulse very quickly).

I spent the whole evening before thoroughly remembering every statistic and every detail of the emergent business, from helicopter view to the smallest thing. When I got to his office, I sat down, he closed the door and just said “Are you enjoying it so far?”. That completely threw me. I recall saying “Well, it feels like i’m sitting in an aircraft cockpit, and I can see all the dials moving. I’m at the stage of watching them all, trying to work out which are the important ones”. I then took him through what I was doing, what the challenges were and how I was addressing them. At the end, he asked when I was expecting to launch to the outside world, and told me that it was my call, and not to do it until it felt right. To me. He just wanted me to have $35 million revenue in the bag 11 months later, and apart from that, it was my ship to pilot. And to ask him for help and advice if I needed it along the way.

Big team effort (8 telesellers I shared, 2 tech support, 1 logistics person and me), but we launched 3 months later, flew past the $35 million target well ahead of fiscal end of year, and in fact hit $100m within 18 months – at over 89% gross margin.

Just goes to show what people can achieve if given the latitude to grow, and just having good questions asked of them to help them steer themselves along the way. I’ve treated every employee i’ve had since like that – and have been proud of the results every time.

What do you call a good version of “scarred for life”?

Pricing for Results Front Cover

There was an experiment some time ago where Students of a University were asked which lecturers had the most profound effect on their learning experience – 10 years after they’d left higher education. The names cited were rarely the ones that earnt the most, nor recognised for that achievement. I think I can relate to this in a couple of ways.

One from my education at Theale Grammar School – situated in the village of Theale, just west of Reading, who’s previous status as the half way stopping point on the two day London to Bath Stagecoach run blessed it with more pubs per head of population than any other village in the country. These days they call that route the A4, supplanted in most use by the M4 motorway in 1971 or so. I recall four morning assemblies of the hundreds served in my 7 years there (more detail in the footnotes if those are of any interest).

Secondly, while employed in my 17 years at Digital, I was blessed with many experiences that have had a material effect on several businesses since. The one standout has got to be two days spent in the company of John Winkler, who Paul Mears retained to take 30 of us through the art of Pricing; we did this in the surroundings of Newbury Racecourse in (I believe) 1992.

The first day ended with an overnight exercise to come up with a list of ways we could treble our retained profits based on learnings so far. Instead of going straight home, I took a detour back into my office in DECpark Reading, sat in front of my 19″ VAXstation, and started hacking around our recent sales transactions. Got home late, but was armed brimming with ideas for Day 2. Looked like countless ways of doing it.

Next day everyone gave their ideas, had some training on how to negotiate pricing, and were given guidance on how to behave in a price war. With that, the course finished, we thanked John and disappeared away into the night, armed with the training notes.

Fast forward to when I worked for IT Distributor Metrologie. They had bought Olivetti Software Distribution a year or so earlier, and moved their staff into the HQ office in High Wycombe. They were, at that point, one of Microsofts five distributors in the UK, all of whom were conscious of the vendors desire to reduce their Distributor line up. The guy brought in to run the Microsoft Business elected to leave, and in January 1997, Metrologie got slapped with what’s termed a “Productivity Improvement Plan”; basic Microsoft parlance for the path to the Firing Squad. Well, that’s what the Directors knew – I wasn’t told.

I was asked to park my other work and to go fix the Microsoft Business, and given a Purchasing Person who had ambitions to be a Product Manager, plus one buyer. We were doing around £1 million per month, 60% of the business through Dixons Stores Group, and (like most Microsoft distributors) tracking along at 1% gross margin.

The first few days were me just asking questions of reseller staff who bought Microsoft products from several distributors. Distribution staff turnover, lack of consistent/knowledgeable licensing expertise and price inconsistency across several phone calls were consistent concerns. We also had the concern of having one very large customer, who consumed peoples time like no tomorrow and had a few unfortunate ways of doing business:

  • obeying edicts from the top not to pay suppliers to agreed terms at certain points
  • routinely doing “reverse ram raids” at the Warehouse door, sending 40 ton trucks full of returned products for credit close to the end of a trading month
  • bad mouthing our performance in pursuit of a goal to trade directly with the vendor

We employed the learnings from John Winklers Course – in particular the guidelines of how to behave in a price war – and it worked with a vengeance. While the DSG business didn’t grow, the overall business went from £1m/month to £5/month in four months, and at doubled margins. Due to the dynamics of how a Distribution business works, and major suppliers being very strict on payment terms, I learnt how “overtrading” feels at close range. But at that point, i’d been headhunted for a role at Demon Internet, but extended my notice by 4 weeks in an attempt to avert the Firing Squad which i’d since learnt about on the journey. We already found we weren’t being invited to Microsoft Social Events that our status should have conferred on us.

I went into a meeting at Microsoft with my Chairman and the Group Marketing Director from France; their body language going into the meeting was all wrong, and we were told that despite our recent performance, that Microsoft were going to lose us as a Distributor. We lodged an appeal, and I left to my new role in Demon Internet; Product Manager Tracy left shortly afterward to a Software Business Manager role at reseller BSG, doubling her salary in the four months we’d worked together. A week in, I got a phone call from my immediate ex-boss, Bob Grindley, to be told that the Microsoft Contract had in fact been retained.

I learnt one set of very useful guidelines on how to measure and improve any business from our then Microsoft Account Manager, Edward Hyde, early in my time in that role – the core ones I still use to this day. That apart, the work on pricing I learnt from John Winkler made a material difference; I can think of no other reason that it took 4 months to grow the business 5x in revenue and 2x in margin in the middle of a 5-way price war.

The dirty secret is that the 2-day course is condensed into a paperback book entitled “Pricing for Results” by John Winkler himself. Now out of print, but if you’re quick, available for the princely sum of 1p plus postage from several third party sellers on Amazon. A real steal. Or you can hire me to assist with any business improvement project!

Pricing for Result - Back Cover Text

Footnote: John Winkler still appears to be running his Pricing Courses:

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Louboutin Shoes, Whitened Teeth and Spamalot

Picture of a Stack of Tins of Spam Meat

I run a WordPress Network on one of my Linux Servers in Digital Ocean, Amsterdam – the very machine serving you with this text. This has all the normal network protections in place, dropping virtually everything that makes its way in through what can be classified as a common attack vector. Unless the request to fire up root access comes from my fixed IP address at home, it doesn’t get as far as even asking for a password. Mindful of this, I check the logs occasionally, mostly to count how many thousand break-in attempts my security handiwork resisted, and to ensure no-one inappropriate has made it through. That apart, everything just hums away in the background.

A few days back, I installed the iOS WordPress app on my iPad Mini, and likewise the Android version on my Nexus 5 phone. Armed with some access credentials, these both peek at the system and allow me to update content remotely. Even to authorise comments where i’ve chosen to allow them in, and to approve them for display where i’ve indicated I want that control. Even though I have only one WordPress site that even accepts inbound comments, I started getting notifications that comments were arriving and awaiting moderation:

Screenshot of WordPress App, showing Spam arriving and attached to Gallery Images

Strange thing is that “Oktoberfest” and “Loddon Medal” were images in sites where I nominally had all comments switched off. However, WordPress appears to have a default where people can comment on images stored as attachments on the site, and also allows folks to insert trackback URLs – pointing to other (nominally more authoritative) sources of same content. Both features now seem to have fallen into wide disrepute and used by bots to load up comment spam on unsuspecting WordPress sites.

Job number one was to shut the barn door on these – for which there is a nice “WP Comment Control” plugin that can deny all future capability to exploit these features, site by site, in your WordPress network. Duly installed and done. The next job was to find where all the comments had been left, and remove them; on inspection, they were all on a dummy template site i’d left as an example of work that I could easily replicate and tailor for a new paying customer. Over 10,500 comments and trackbacks awaiting moderation, mostly relating to folks promoting teeth whitening services, or selling red soled Louboutin shoes. I’d never noticed these before – a nice side benefit of having my iPad and my Nexus phone plumbed in and telling me I had new content awaiting for approval somewhere deep in my site hierarchy

You can do things manually, 20 at a time, marking comments as spam, trashing them and then emptying the trash. None of the automated removal plugins appeared to work on a WordPress Network site (only clearing things from the first site on the system), so a more drastic solution needed to retain my sanity and my time. I ended up working out how the individual sites on the network mapped into MySQL database tables (the /ld3 site on my host mapped into table wp-5-comments in database wordpress). Then some removal with a few lines of MySQL commands, primarily ‘delete from wp-5-comments where comment_approved = ‘spam’ or comment_approved = ‘0’ or comment_approved = ‘1’;

With that, all unwanted 10,500+ spam records gone in 0.39 of a second. All locked down again now, and we live until the next time the spammers arms race advances again.