From the latest issue of Res Extensa: thoughts on Andy Grove’s idea of “modes of control”, from High Output Management:
Thinking about this in the context of my own work, I can map past hardships and bad business decisions to mismatches in environment and mode. As managers, what we most often don’t respect enough is the nature of the CUA factor with a given job, project, or task. This mental framework for thinking about relationships is helpful for selecting the appropriate communication or management mode.
There is no villain responsible for this. Coordination simply becomes vastly more difficult far earlier along scaling trajectories than people realize. Things get worse than you expect, sooner than you expect. This is coordination headwind. It’s an exponential snowballing phenomenon.
Arnold Kling raises interesting points here about the nature of big companies. The incentives and physics of large company dynamics essentially demand that they move slowly. Sometimes this slowness looks like indecision or lack of conviction (and sometimes those are in there), but for the most part it’s a function of the upside/downside balance. As a business expands, the downside for failure starts to outweigh the upside of success:
While the technical oriented consultancies may do some good, it’s obvious at this point that the management consultancies do not serve any socially useful purpose in modern society. Mostly, they are a self serving group who exist to support their in-group and their customers. By “customers” I don’t mean the corporations and shareholders, I mean incompetent bureaucrats who have been promoted beyond their capabilities. Mind you, people from these groups have a lot of polish: they dress up nice and give good powerpoint. If you wanted to hire, say, a lobbyist or something...
For any company, keeping track of your position in the competitive landscape is an important element of making the right decisions. When I think about competitors, I think about them separately as “direct” vs. “indirect”:
Direct competitor: one with a product offering highly similar and seen by your customer as a direct substitute
Indirect competitor: one that might look glancingly similar (or very different) on the surface, but addresses the same jobs to be done
Direct vs. indirect doesn’t matter all that much at the end of the day;...
If you’ve been involved in investing or fundraising activities in the past, you’ve likely heard about “TAMs” (total addressable market), as in “So what’s your TAM look like?” The general idea is to determine a metric that communicates in few words the nature of a given market for a product or service. Investors want to know how a company thinks about its market opportunity (investors generally want large ones), and startup founders need to have a sense for what they can realistically target, build for, sell to, and capture to build a business. You may also...
Sam Arbesman shared this post in his newsletter — highlights from Maxis’s annual letter (the makers of SimCity, the Sims, SimEarth, SimTower, etc.).
As much as it seems like the simulation tech Maxis developed over the years was all about top-down, “god mode” design — especially in SimCity — they’re just as impressive for the emergent gameplay they pioneered. SimLife was literally about watching evolution play out, followed up by an even-more-advanced experiment with evolution in Spore.
In his newsletter, Brian Potter started a new series looking at why the construction industry seems to lack economies of scale, like you find in IT, media, and nearly every manufacturing business.
When you look at the data on construction, you find that there seems to be no or little advantage to scale when it comes to price or efficiency. A single-family residence costs about the same per-square foot to build as a high-rise condo (holding equivalent things like build quality, materials, etc.).
I thought this was an interesting figure — it also turns out that construction is a very diffuse...
Product-led growth has been booming in the B2B software universe, becoming the fashionable way to approach go-to-market in SaaS. I’m a believer in the philosophy, as we’ve seen companies grow to immense scales and valuations off of the economic efficiencies of this approach powered by better and better technology. People point to companies like Atlassian, Slack, or Figma as examples that grew enormously through pure self-service, freemium models. You hear a lot of “they got to $NN million in revenue with no salespeople.”
This binary mental model of either product-led or sales-led leads to a false dichotomy,...
This was the first episode I’ve listened to of Patrick O’Shaughnessy’s new podcast “Business Breakdowns”. He and Alex Rampell dive deep on the history of Visa and its unique business model. Alex saw Visa’s business first-hand after his company TrialPay was acquired in 2015.
So much good background here on how it started as a local credit card program in Fresno and evolved into the network backbone between banks.
They also mentioned a book on the history of the credit card (and other financial innovations of the same era) called ✦
Morgan Mahlock wrote recently about the promise of Stripe Press, Stripe’s book publishing outfit:
Within the legacy publishing industry, Stripe’s young publishing press is refreshing - it is Sutherland’s electric cover art on a dusty, tired bookshelf. An Authoritative Look at Book Publishing Startups in the United States by Thad McIlroy states, “Book publishing has never been a technology-adept industry; indeed it is historically technology-averse. This is a challenge for the (minority of) startups targeting existing publishing companies.” Stripe Press is different because it was born from a technology...
There’s a myth in popular culture that associates “being an entrepreneur” with “making a lot of money.” But do they, if compared to a world where an entrepreneur did the same job in the employ of someone else?
In this post, Jerry Neumann references a chart from Scott Shane’s The Illusion of Entrepreneurship that tells a much more realistic story of what creating your own business means financially:
The vast majority make the same, if not less than, their non-self-employed peers,...
Great insights here to some of the workings of Stripe from Patrick. Though I’ve never been on that ride, the hypergrowth company (even with its flaws and stumbles) is an absolute marvel that it can be made functional at all.
Stripe seems exceptional in many ways, but in others it’s just a solid example of the “doer” culture that great SV tech companies are known for. Stripe’s Atlas product now looks like a polished, full-featured platform for creating a company, but as Patrick notes in this example, even well-funded tech companies have to be frugal, iterative, and...
Ben Thompson follows up his 2017 piece with an update on the state of bundling strategies from some of the big tech and media companies.
I liked this description of where Disney+ fits into Disney’s overall strategy with the service:
While Disney’s hand was certainly forced by the COVID pandemic, the company’s overall goal is to maximize revenue per customer via its highly differentiated IP; to that end, just as Disney+ is a way to connect with customers and lure them to Disney World or a Disney Cruise, it is equally effective at serving as a platform for shifting...
Seems like every company claims to be harnessing some type of network effect in their business model.
This post goes in-depth at defining and comparing different forms of network effects, diagramming them in a radial pattern — from more to less defensible as you move outward. A helpful reference guide.
Most companies’ advantages aren’t cleanly put in a single bucket, the total picture of the business has factors in multiple boxes. This guide is a useful companion to Advantage Flywheels in describing business models.
Venkatesh Rao compares the evolutions of the coffee and consulting markets:
Both coffee and consulting are products for minds. Psychoactive products that link to producer and consumer personalities. You should expect to see echoes of generational personalities. Both are also mid-career markets. Your coffee tastes settle down around when you settle down into an adult career.
You typically land in indie consulting in mid-career too. By age 30-35, you know how you like your coffee, and have enough work experience to be fuel a consulting career.
In his article “Strategy Under Uncertainty,” Jerry Neumann contrasts the traditional Porter model of business strategy with one more suited to startups, the former being modeled around mature organizations operating in known competitive spaces, the latter around startups moving in opaque environments with higher uncertainty and more moving parts.
In the piece he defines “strategy” as a framework for “how to make decisions in situations that are not yet known.” To have a purposeful, intentional approach to an objective, whether in war, sports, or business, you have to formulate a model for predicting...
A new piece from Andy Matuschak and Michael Nielsen (beautifully illustrated by Maggie Appleton). Can we make reading a more engaging and interactive learning experience? This builds on previous ideas from the authors on spaced repetition.
Interesting take from one of Byrne Hobart’s recent newsletters. Contrasting a typical “full-stack” model of company-building and VC funding to a “sumo” model:
The amount of VC funding has been rising steadily, and returns are skewed by a few positive...
Ben Thompson published this piece a few weeks back on the state of Slack up against its competitive market for chat and collaboration, namely Microsoft’s Teams product. It covers the history well, dating back to Microsoft’s 2016 announcement of Teams, through to their traction, scale, and eventually overtaking of Slack in daily users on their platform.
We’re a Slack shop like many, but I’ve used Teams to join in on calls and it’s gotten darn good from what I can tell. The devil is, of course, in the details. I use Slack for hours a day and it’s become so second-nature...
I enjoyed this deep, transparent history from Nat Eliason on how he built up his website over the past several years. He covers basic technology, content, habits, promotion, and monetization.
The precis:
Tech stack doesn’t matter as long as it’s reliable, supports what you want to do, and doesn’t get in your way
Habit-forming is hard; being intentional and setting goals is the primary tactic
Topics and content don’t matter as much as you think in the early days; the best way to work it out is to start and gradually zero in on what...
Rory Sutherland’s latest column for The Spectator:
Covid-19 will change how humanity works. Lockdown has revealed that a large part of the busyness of business is driven by the need to signal commitment (presenteeism), rather than the creation of value. Many people have realised that the most stressful part of working is not the worthwhile work itself but the accompanying worthless bustle. We have seen how commuting is frenetic and often unnecessary. In the future, perhaps people will go into the office when they need to or want to, rather than simply because they must.
The more I use Figma, the more convinced I become that their approach to design tooling is unique. The first impression I got slotted it mentally in with tools like Sketch, Moqups, and in some ways even Adobe Illustrator or Photoshop. Academically I knew it was “different” than using a true power tool like Photoshop, but the first impression back in 2017 was a lot closer to that than where I’d place it after spending time with it.
In this piece, Kevin Kwok dives deep on Figma’s product and business dynamics, getting at...
A helpful resource here for understanding flywheels, the “causal loops” of different types of businesses. The reference examples show how the most successful companies ramp up the gear ratio by combining multiple flywheels to compound effects:
The most successful moats have multiple flywheels that feed off of each other’s momentum. Google’s technical advantages enable stronger brand allegiance and vice versa. Coca-Cola’s marketing-driven brand feeds off of it’s distributor/bottler based network effects. Facebook’s brands have at least 3 reinforcing network effects: direct (social network), 2-sided aggregator (advertising and developers), and brand-driven social proof.
Jeff Atwood on Robert X. Cringely’s descriptions of three groups of people you need to “attack a market”:
Whether invading countries or markets, the first wave of troops to see battle are the commandos. Woz and Jobs were the commandos of the Apple II. Don Estridge and his twelve disciples were the commandos of the IBM PC. Dan Bricklin and Bob Frankston were the commandos of VisiCalc.
Grouping offshore as the commandos do their work is the second wave of soldiers, the infantry. These are the people who...
Fred Wilson with advice to startups on keeping things simple:
I have sat through numerous pitches where I am listening to the founder explain their technology and go to market plan and I think “this is going to be a reverse triple somersault with two twists in pike and there is no way they are going to land it…
So the better approach is to pick something simple to execute, nail it, then build on it with another relatively simple move, nail that too, and keep going.
One of the benefits of staying in bootstrapped mode is that...
Benedict Evans looks at what could return to normal after coronavirus, and what else might have accelerated change that was already happening.
“Every time we get a new kind of tool, we start by making the new thing fit the existing ways that we work, but then, over time, we change the work to fit the new tool. You’re used to making your metrics dashboard in PowerPoint, and then the cloud comes along and you can make it in Google Docs and everyone always has the latest version....
Daniel Gross has a good list of things that will change post-coronavirus lockdown — patterns of lifesytle, businesses, real estate, and others:
A few notable ones:
The (temporary) end of cities. We might see a temporary exodus to the suburbs until there’s a vaccine. A few realtors have told me interest in SF apartments is down while suburban homes are up.
Trust. Suddenly all humans are suspect of carrying biological weapons. How do you feel when you see a stranger on the street today? The virus increases trust between smaller groups, decreases it towards strangers.
The COVID-19 pandemic is the biggest global event that’s happened in my lifetime. It hasn’t impacted me personally that much (yet), but the financial and public health implications are clearly already disastrous, and bound to get worse.
Most concerning, though, is how little we know today about what’s in store for the rest of 2020 and beyond.
I don’t use this outlet to make predictions, and I’m generally not a fan of trying to call shots on uncertainties. But as an experiment, let’s set down some open-ended questions to revisit in 6 months to see...
I was looking around for a summary of Clayton Christensen’s Innovator’s Dilemma and ran across this neat YouTube channel that does book summaries in visual form, with drawings representing the concepts in the book.
It’s a cool way of getting a different presentation of subject matter, especially of nonfiction and business books.
I’ve been doing a lot of thinking lately on our strategic objectives — where we are today, where we want to be in a few years, and the tactics in between to navigate us to a long-term maximum (and hopefully avoid compelling, but ultimately sacrificial local maxima). One of the most efficient ways to set up a business for successful long-term goals is to shrewdly align the go-to-market in ways that go around your competitors entirely, versus having to compete head-to-head.
Germane to this topic is this piece I’d bookmarked at some point from
Benedict Evans does a talk each year assessing the state of the tech industry, macro trends, and where we are the technology adoption lifecycle for big, trendy technologies like VR and AI.
This year’s deck from the Nasdaq event in Davos covers some interesting ground. He has sober takes on things like regulation, the “break up big tech” movement, privacy, and also how we analyze particular companies that cross borders from bits to atoms like WeWork, Uber, and others.
In this video interview from the event, he answers the question about “what is a tech company?” in an interesting way:
Venkatesh Rao has assembled a most compelling explanation for how the internet polarization machine works:
The semantic structure of the Internet of Beefs is shaped by high-profile beefs between charismatic celebrity knights loosely affiliated with various citadel-like strongholds peopled by opt-in armies of mooks. The vast majority of the energy of the conflict lies in interchangeable mooks facing off against each other, loosely along lines indicated by the knights they follow, in innumerable battles that play out every minute across the IoB.
“Tech domination”, monopolies, regulation — lots of concepts, fears, and proposed remedies are all getting confused these days in tech. Benedict Evans had this piece of sober analysis to peel apart the differences between companies being rich, dominant in their product space, or dominant in the wider industry.
The tech industry loves to talk about ‘moats’ around a business - some mechanic of the product or market that forms a fundamental structural barrier to competition, so that just having a better product isn‘t enough to break in. But there are several ways that a moat can stop working. Sometimes the...
As a poker player, the biggest determinant of your success is game selection, i.e. the quality of the games you choose to play in. The key is your skill level relative to your competition. If you’re a Little Leaguer but you manage to sneak into a T-Ball league, you might win MVP.
The most important decision we make is the market that we choose to serve.
Time is our most fundamental constraint. If you use an hour for one thing, you can’t use it for anything else. Time passes, whatever we do with it. It seems beneficial then to figure out the means of using it with the lowest possible opportunity costs. One of the simplest ways to do this is to establish how you’d like to be using your time, then track how you’re using it for a week. Many people find a significant discrepancy. Once we...
I enjoyed a couple of notes from this interview with Atlassian President Jay Simons. They’ve famously built a business with bottom-up adoption dynamics, allowing them to hit the $1bn revenue milestone without a traditional sales-led model. It’s especially impressive how they’ve been able to do that while also successfully going upmarket to larger and larger customers, who are typically high-touch by default.
My favorite comment:
“We think of the funnel as a product. Potentially when a customer raises their hand, when they actually need to talk to you, that’s...
As long as you consider linear algebra and eigenvectors “basic math”:
They’d noticed that hard-to-compute terms called “eigenvectors,” describing, in this case, the ways that neutrinos propagate through matter, were equal to combinations of terms called “eigenvalues,” which are far easier to compute. Moreover, they realized that the relationship between eigenvectors and eigenvalues — ubiquitous objects in math, physics and engineering that have been studied since the 18th century — seemed to hold more generally.
It’s common practice now in software development to do “continuous integration” — a constant reintegration of newly-written code with the master application to continuously run regression and unit tests, making the process of integrating new features a series of small efforts rather than one massive one at the end of a sprint cycle:
Many product teams have taken this principle to the next step and have learned that integration problems are time consuming, and that by integrating early and often (rather than a “phase” before testing), they can significantly speed up their overall throughput by minimizing the time that they...
There’s a really strange phenomenon in certain arenas (particularly politics) where it’s considered a virtue to strongly hold a viewpoint and never change your position. This is strange because, as Rory Sutherland points out here, if you did this in business you’d likely run into frictions that put you out of business. Changing your mind is an imperative when presented with new data.
And herein lies one magic quality of business. It is the only area of human activity where you get paid to change your mind.
In politics, in punditry, in academia, there is great value attached to...
This is a great post from my friend Joe Morrison assessing the state of the open source software movement in GIS against the biggest corporate competitive friction point, Esri.
Even as QGIS and comparable open source projects have invested in better branding, that doesn’t mitigate the ultimate killer in the quest to replace Esri at most large organizations: misaligned incentives. The typical IT department at a large company or government agency is defensive by nature due to the asymmetrical risk of adopting new technology; you can get fired for championing a new software that winds up...
In SaaS there are dozens of common metrics to measure on performance, like a pulse check on your company. Because of the often-high customer-to-revenue ratio with SaaS products, recurring revenue itself becomes a watermark metric to watch as an indicator. Recurrence leads to investing in and measuring customer success metrics, in order to keep that recursion happening indefinitely — customer lifetime value gets large with satisfied customers!
NPS, time-to-value, net retention, and customer health scores are just a few of those metrics that help give you a leading indicator...
For a long time, because attention seemed so intricately tied up with consciousness and other complex functions, scientists assumed that it was first and foremost a cortical phenomenon. A major departure from that line of thinking came in 1984, when Francis Crick, known for his work on the structure of DNA, proposed that the attentional searchlight was controlled by a region deep in the brain called the thalamus, parts of which receive input from sensory domains...
A deep, thoughtful analysis of competitive advantages, walking through and differentiating each type:
An innovation is a type of competitive advantage (though not all competitive advantages are innovations) and the strategic job is to make that competitive advantage sustainable over time1, to maintain the advantage as a bulwark against competition. Mechanisms to deter or slow imitation are called, colloquially, moats. Moats draw their power to prevent imitation from one of four basic sources:
The state,
Special know-how,
Scale, or
System rigidity.
Bookmarking this one for future reference. An excellent baseline.
On the power of starting with no baggage, sunk costs, or past poor decisions:
Part of the reason the economy recovered slowly after the financial crisis was that businesses, spooked by the recession, relentlessly reviewed their costs. “I just see business after business after business which has rationalized so that it can protect its balance sheet and earning power while utilizing fewer people” Charlie Munger said in 2010.
So began a new life for the concept of zero-based budgeting.
Zero-based budgeting is the idea that each year’s budget should be created from scratch, rather than using the previous year’s...
Ben Thompson had an interesting piece recently thinking through what ingredients make up a “tech” company in today’s market. The term has been used for a long time somewhat interchangeably with “startup” since the 2000 tech boom era. The context of the article was to compare companies in the physical space like WeWork and Peloton to more traditional pure tech like Salesforce or Atlassian. He came up with this excellent list of descriptors to define what classifies a company as “tech”:
Any business that makes money from the same customer more than once can be said to have “recurring revenue.” But the term in the SaaS universe has a more specific flavor to it, thanks to the unique nature of the business model, value delivery, and the commitments between vendor and consumer. You may think “so what” when you hear that SaaS revenue is special or somehow better than other ways of making money; after all, the money’s still green, right? But there are a number of benefits that come with the “as-a-service” relationship between vendor and customer. Software companies fit...
Evolution has a mysterious and amazing way of driving relentlessly toward simplicity and specialization:
Evolution figured outs its version of simplification. It (if you can imagine it talking) says, “Get all that useless crap out of the way. Just give me the few things I need and make them really effective.”
The question, then, is why complexity sells in the modern world.
Morgan Housel compares this phenomenon to why in the world of business, market motivations are almost always the reverse: consumers generally want a more complex product, service, or deliverable (or at least producers of goods convince...
I had my main blog/website on Tumblr back when it first launched in 2007, which I used for a number of years before migrating it over to this current self-managed iteration on GitHub back around 20111. At the time I loved Tumblr’s middleground between the long-form-friendly full Wordpress blog and the short-form nature of Twitter. Tumblr’s “tumblelog” concept easily supported either mode depending on what you...
In this essay, Kevin Kwok attempts to differentiate between productivity and collaboration, with a focus on how Slack has failed as yet to become the nervous system that combines these things.
This take is one of the better summaries of where Slack sits in the stack of business productivity tools:
A new generation of functional apps have risen, with messaging and collaboration built directly into them as first parties. And with them it becomes increasingly clear that Slack isn’t air traffic control for every app, it’s 911 for when they fail.
This talk from a16z’s Martin Casado covers how the market for B2B SaaS go-to-market is changing from sales-driven to a marketing-driven. We’ve been thinking a lot about this lately in the context of Fulcrum — how the “consumerization of IT” plays into how business users today are finding, evaluating, purchasing, and expanding their usage of software.
As he describes in the talk, consumer business tend toward a marketing-led GTM, and enterprise ones toward a sales-led GTM....
Andy Grove is widely respected as an authority figure on business management. Best known for his work at Intel during the 1980s, his book High Output Management is regularly cited as one of the best in the genre of business books. After having it on my list for years and finally reading it earlier this year, I’d wholeheartedly agree. It’s the best book out there about business planning, management, and efficiency, still just as pertinent today as it was when it was first published in 1983.
Its relevance more than 30 years later attests to the...
Earlier this year at SaaStr Annual, we spent 3 days with 20,000 people in the SaaS market, hearing about best practices from the best in the business, from all over the world.
If I had to take away a single overarching theme this year (not by any means “new” this time around, but louder and present in more of the sessions), it’s the value of customer success and retention of core, high-value customers. It’s always been one of SaaStr founder Jason Lemkin’s core focus areas in his literature about how to “get to $10M,...
This is great to see from a company like Atlassian with “openness” as one of their core values. Their take is that the standard M&A process affords too few protections for the company doing the selling and too many for the big buyer. Most importantly, to me, these M&A engagements are one-sided by nature: the buyer has likely done it before (often many times) and the seller it’s likely their first time around.
You hear the criticism all the time around the business world about meetings being useless, a waste of time, and filling up schedules unnecessarily.
A different point of view on this topic comes from Andy Grove in his book High Output Management. It’s 35 years old, but much of it is just as relevant today as back then, with timeless principles on work.
Grove is adamant that for the manager, the “meeting” is an essential piece in the managerial leverage toolkit. From page 53:
Geoffrey Moore’s Crossing the Chasm is part of the tech company canon. It’s been sitting on my shelf for years unread, but I’ve known the general nature of the problem it illuminates for years. We’ve even experienced some of its highlighted phenomena first hand in our own product development efforts in bringing Geodexy, allinspections, and Fulcrum to market.
Love to see the Rays getting some deserved attention in the mainstream sports media. They’ve put together a great, diverse lineup of consistent hitters that have performed well all season:
The Rays emphasize power now, but in a different way: Through Monday, their hitters had the highest exit velocity in the majors, at 90.1 miles per hour, and their pitchers — who specialize in curveballs and high fastballs — allowed the lowest, at 86.3. Hard-contact rates enticed them to trade for Pham from St....
As pointed out in this piece from Rahul Vohra, founder of Superhuman, most indicators around product-market fit are lagging indicators. With his company he was looking for leading indicators so they could more accurately predict adoption and retention after launch. His approach is simple: polling your early users with a single question — “How would you feel if you could no longer use Superhuman?”
Too many example methods in the literature on product development orient around asking...
This latest piece from Steven Sinofsky considers product strategy on 2 axes:
What problem is being solved and
How it is solved
The spectrum he paints here runs from the most conservative (old things in old ways, “incrementing”) to the most forward-leaning (new things in new ways, “inventing”). No approach in this matrix is “the answer” in all cases, each has its merits based on timing, product type, stage, customer set, sales approach, or business model. Also a product team growing over a course of...
One of my favorite tech figures, a16z’s Steven Sinofsky, gives a history of “Clippy”, the helpful anthropomorphic office supply from Microsoft Office. As the product leader of the Office group in the 90s, he gives some interesting background to how Clippy came to be. I found most fascinating the time machine look back at what personal computing was like back then — how different it was to develop a software product in a world of boxed software.
Wolfe’s work, particularly his Book of the New Sun “tetralogy”, is some of my favorite fiction. He just passed away a couple weeks ago, and this is a great piece on his life leading up to becoming one of the most influential American writers. I recommend it to everyone I know interested in sci-fi. Even reading this made me want to dig up The Shadow of the Torturer and start reading it for a...
Disney recently announced details on their upcoming “Disney+” direct-to-consumer streaming service at their Investors Day — big news for everyone in the tech and media scene since Disney is one of very few content companies with enough leverage purely from differentiated content to make a strong competing tech play against Netflix, Amazon, and others.
Most others in the traditional media space have no chance of competing on a tech level with the likes of Netflix or YouTube, but Disney has enough of its own unique IP to create their own garden and draw away enough...
Found via Tom MacWright, a slick and simple tool for doing run route planning built on modern web tech. It uses basic routing APIs and distance calculation to help plan out runs, which is especially cool in new places. I used it in San Diego this past week to estimate a couple distances I did. It also has a cool sharing feature to save and link to routes.
In his new book Loonshots, author Safi Bahcall uses the concept of phase transitions to analyze how companies work. When a substance changes phase, like water going from solid to liquid, the same exact substance is forced to take on a new structural form when the surrounding environment changes.
As Bahcall points out in the book, companies exhibit a similar behavior in their inventions and strategy. He contrasts two different types of innovations that companies tend to be built to produce: “P” type innovations, where a company is great at producing new products, and “S”...
One of my favorite topics on Ben Thompson’s Stratechery, and one that underpins much of his Aggregation Theory, is the role friction plays in economies and cultural forces. Most of the pros (and cons) of internet companies can be tied back to the fact that they took existing businesses or customer demands and removed the friction. Whether it was shipping goods to your door, streaming movies, or communicating with friends, the internet stripped the friction from these interactions for good, but with some downsides that are only recently being realized and understood.
Another fantastic piece from Eugene Wei on what he terms “invisible asymptotes” — the invisible barriers companies collide with in growth:
One way to identify your invisible asymptotes is to simply ask your customers. As I noted at the start of this piece, at Amazon we honed in on how shipping fees were a brake on our business by simply asking customers and non-customers.
Here’s where the oft-cited quote from Henry Ford is brought up as an objection: “If I had asked people what they wanted, they would have said faster horses,” he is reputed to have said. Like most...
Amazon is famous for its “No PowerPoint” policy for meetings, requiring that those calling meetings for any new idea, project, or effort write a narrative document to describe the ins-and-outs of what’s on the table for discussion. These documents get circulated to all the right people beforehand for review, so that the team can really drill in on an aligned objective for the meeting with clear data at their fingertips about the pros and cons.
This piece talks about the experience with this process first-hand from a former employee, bulleted out to help understand how it works:
If you’re in any line of product management or product development, you’ll be familiar with the argumentation process around defining the product launch. The concept of a “pre-announcement” is something as old as the job of product marketing, with all forms of the process being tried by companies over the years. You have the Apple-like “no announcement til launch day” approach on one extreme, and the “announced before any of it exists” vaporware announcements of which there are hundreds of examples.
Investor Morgan Housel writes here about features that can, at face value, appear to be competitive advantages at one scale, while being destructive disadvantages at another. On being wiped out (local disadvantage) and being forced to start clean (long term advantage):
The two highest costs many companies face are employee compensation and an attachment to sunk costs. Sunk costs are so entrenched that it often takes a disaster to wipe them away. Part of the reason the German military was so powerful in the early years of World War II is because it had to forfeit every gun, tank,...
I’ve nearly finished reading Andy Grove’s High Output Management. Grove was the one of the founders and CEO of Intel, especially famous for his leadership of the company’s shift from design and fabrication of memory to microprocessors in the 80s.
The book is mostly well known for documenting Grove’s management style, which was later formalized into the OKR framework now widely used by Google and others.
But one of my favorite bits from the book (and there are several) is his concept of “modes of control.”
This post from Eugene Wei has been making the rounds in tech. It’s a lengthy article dissecting how status is really the secret currency of success for social products — not individual utility or entertainment. He draws some interesting parallels between social networks (as status-building entities) and cryptocurrency ecosystems. Just like with crypto exchanges, “proof of work” is an essential prerequisite for success on a social network:
Why does proof of work matter for a social network? If people want to maximize social capital, why not make that as easy as possible?
Seems silly, but this kind of thing is great for the open source movement. There’s still an enormous amount of tech out there built at big companies that creates little competitive or legal risk by being open. Non-core tools and libraries (meaning not core to the business differentiation) are perfect candidates to be open to the community. Check it on GitHub.
I’ve been thinking and reading more about OKRs and how I might be able to implement them effectively — both professionally and personally. The idea of having clearly defined goals over bounded timelines is something we could all use to better manage time, especially in abstract “knowledge work” where it’s hard to see the actual work product of a day or a week’s activity.
This is an old workshop put on by GV’s Rick Klau. He does a good job giving a bird’s eye view of how to set OKRs and...
A good overview from YC’s Kevin Hale on how to break down startup ideas:
The “solution looking for a problem” trap is all too easy to fall into, and to justify your way out of even if you fall prey to it. I love the approach here of starting with the end goal ($100M ARR) and backing into what the market size and price point would need to be to hit that target. So simple, but most of us don’t approach...
This was one of my favorite reads this week, on the topic of “build vs. buy” in IT organizations. In SaaS, this is one of the most common conversations you run into, particularly with medium to large sized companies. With large enterprises the lure of building their “own IP” is so attractive so frequently (because they have some resources), yet most of the time they have no real clue what they’re convincing themselves to do. Building something great...
This piece from Barry Ritholtz does a good job breaking down the real background behind the Amazon NYC HQ issues, how they were attracted and why they bailed:
The heart of the opposition to Amazon was how much the city and state bent the existing rules to offer a very generous package. The arguments are pretty clear: On the one side, net net the deal works to the city’s benefit, and $3 billion is not all that much.
The other side is less pragmatic and more philosophical. It is the same issue I have with taxpayers subsidizing Football stadiums....
Some interesting data on the current state of public SaaS company performance:
SaaS multiples look steady: of the 82 SaaS companies we follow, the average public SaaS business is trading at 10.03x revenue while the median is 7.72x. Interestingly, the gap between the average and median has never been larger for the time period shown, meaning more attractive SaaS companies are being rewarded with big premiums.
While valuations aren’t everything when it comes to company health (the calculus for valuation can change quickly), recurring revenue is still an...
When I first heard about his company Opendoor (a real estate startup with the goal of creating faster liquidity for home sellers), I started following Keith Rabois. His Twitter account is a good follow.
This discussion covered topics as diverse as his political views, his original ideas for his companies, and investing principles.
Interesting data here in Okta’s annual report. It’s clear that the way customer’s buy SaaS is very different than the “single-vendor” purchasing preferences from years past. SaaS allows businesses to buy and integrate the best-fit tools for any jobs:
We also looked at whether companies who invest in the Office 365 suite — the top app in our network — end up committing to a Microsoft-only environment, and the answer was clearly “no.” We found that 76% of Okta’s Office 365 customers have one or more...
This is a good series of bite-sized videos with lessons on various components of sales strategy for startups. Peter Levine of a16z talks through things like channel definitions, marketing vs. sales spend, setting quotas, forecasting, and more.
I’m headed out to San Jose, CA next week for the SaaStr Annual conference. It’ll be my third in a row; definitely one of the events I most look forward to nowadays. It always brings a great combo of interesting content, energy, diverse attendees, and fun side events to enjoy.
I wrote up this preview of sessions I’m looking forward to this time around. They do a great job touching on some of the same things year over year (helpful for tracking industry trends) but also mixing in plenty of new voices each time around.
This is a brief series for those interested in getting into product management, in four parts. This first post is about how I got into this line of work and the beliefs I’ve formed over the years on the discipline. Enjoy!
I never set out of college to get into product development. I was a geography guy with a penchant for maps and wanted to learn how to make them. I bounced from an engineering major over to geography early in school because I was passionate about it, with no clue what the ultimate career destination might look like. After...
Shot from the Oriental Pearl Tower, the picture shows enormous levels of detail composited from 8,700 source photos. Imagine this capability available commercially from microsatellite platforms. Seems like an inevitability.
I, like many, have admired Basecamp for a long time in how they run things, particularly Ryan Singer’s work on product design. This talk largely talks about how they build product and work as an organized team.
This is such a stellar piece from Michael Lopp. With a growing business, pains in process are utterly unavoidable, yet critical to be addressed. A couple of highlights — the first on the “rule of 3 and 10”, which is a vivid way to describe what anyone in a growing company has seen first-hand:
When you go from one person to three people it’s different. When it’s just you, you know what you are doing, and then you have three people, and you have to rethink how you are doing everything. But when there are ten people, it’s...
This is a great overview of the importance of CAC in a SaaS business.
One of the enjoyable things about SaaS is how much you can modify and optimize what you’re doing by measuring various parts of your process, especially in SMB-focused SaaS. Marketing, early-stage sales, late-stage sales, customer success — it’s like a machine with separate stages you can tweak separately to make incremental improvements.
Interesting work by Ford’s self-driving team on how robotic vehicles could signal intent to pedestrians. You normally think Waymo, Tesla, and Uber with AV tech. But Ford’s investment in Argo and GM with Cruise demonstrates they’re serious.
In product teams you’re continually faced with the challenge of scoping. When you build something directly for a customer, for a fee (consulting), the scoping process is explicit and has built-in constraints — customer expectations, funding, timelines, deliverables. Even in that scenario, agreeing on a firm scope for an effort isn’t simple, but it’s even harder when working in a product company. The same constraints still exist, but in a more nebulous, undefined form. Constraints aren’t imposed and enforced externally by a single client dangling the paycheck. The demands are dispersed amongst thousands of users with sometimes-competing desires, paying varying...
This is an interesting piece from OpenCorporates on tech disruption in corporate infrastructure:
Companies are nothing more than legal constructs. They are artificial persons created by states or courts, and given the power to enter into contracts, own assets, take on debt. You can’t see or touch them — though you can see the things they make, or the offices they own or rent — they only exist in the legal world.
As the article points out, it is remarkable that this manual machinery can still underpin a process as important as company creation. It’s worrying how easy such systems...
Spatial Networks is past 50 employees now, with a sizable remote group scattered all over the country. Even though we’ve grown substantially in 2018, we’ve been able to scale our processes, tools, and org chart to maintain pretty effective team dynamics and productivity. When we first started hiring remote folks back in 2010, we had nowhere near the foundation in place to have an effective distributed team.
This week is our 2nd “All Hands” of the year, where our entire remote team comes to St. Petersburg HQ for a week of teamwork, group projects, and fun camaraderie....
I’ve had R on my list for a long time to dig deeper with. A while back I set myself up with RStudio and went through some DataCamp stuff. This online book seems like excellent material in how to apply R to geostatistics.
Given where we are with Fulcrum in the product lifecycle, this rang very familiar on the struggles with how to listen to customers effectively, who to listen to, and how to absorb...
During this TED talk from 2003, Jeff Bezos compares the Internet revolution to the early years of electrification. Even 15 years ago he was already describing the core philosophy behind his future products, like Amazon Web Services. AWS is like electricity for technology companies: paying the AWS bill is like paying your utility bill.
Slack grew huge on the idea that it would “replace email” and become the digital hub for your whole company. In some organizations (like ours), it certainly has, or has at least subsumed most all internal-only communication. Email still rules for long form official stuff. It’s booming into a multi-billion dollar valuation on its way to an IPO on this adoption wave.
But over the last couple of years there’s been something of a backlash to “live chat” systems. Of course any new tool can be abused to the point of counter-productivity. As tools like Slack and Intercom...
On a recent episode of the Knowledge Project podcast, Dr. Atul Gawande compared the relative importance “breakthrough” versus “follow through” innovation:
”We’ve been fantastic at breakthrough innovation, with no real understanding of follow-through innovation… Follow through can seem like it’s about nuts and bolts, and not about new ideas.”
What follows is a discussion about the importance of follow-through and rigor with advances in medicine. A redirection of attention away from the shininess of “breakthroughs” is an interesting idea. It’s not that follow-through doesn’t happen, it’s that it gets backgrounded or treated...
We’re about to head to SaaStr Annual again this year, an annual gathering of companies all focused on the same challenges of how to build and grow SaaS businesses. I’ve had some thoughts on SaaS business models that I wanted write down as they’ve matured over the years of building a SaaS product.
I wrote a post a while back on subscription models, but in the context of consumer applications. My favorite thing about the subscription structure is how well it aligns incentives for both buyers and sellers. While this alignment...
Since Apple changed their subscription pricing options for App Store developers back in 2016, several high-profile apps that have made the switch from fixed pricing to the subscription model. TextExpander, Day One, and Ulysses are just three that I know of and use.
I may be biased as I’ve been building and selling subscription software for years, but I love that the Apple ecosystem is supporting this now. Ulysses provides a great example: their fixed model had the price at $45 for the Mac app and $25 for the iOS app. Their new subscription is...
AWS Glue is a fully managed extract, transform, and load (ETL) service that makes it easy for customers to prepare and load their data for analytics. You simply point AWS Glue to your data stored on AWS, and AWS Glue discovers your data and stores the associated metadata
Interesting new service from AWS (is there a need in computing they don’t cover at this point?), providing serverless ETL transformations on datasets hosted anywhere. The automatic discovery is particularly interesting for applications dealing in highly variable data structures.
For his final weekly column of his long career, Walt Mossberg talks about what he calls “ambient computing”, the penetration of IoT, AR, VR, and computers throughout our lives:
I expect that one end result of all this work will be that the technology, the computer inside all these things, will fade into the background. In some cases, it may entirely disappear, waiting to be activated by a voice command, a person entering the room, a change in blood chemistry, a shift in temperature, a motion. Maybe even just a thought. Your whole...
An excellent, extremely detailed analysis from Justin O’Bierne on how maps and cartography might evolve if autonomous vehicles negate our need for turn-by-turn navigation.
We can’t apply today’s maps to tomorrow’s cars – but this is exactly what those who think cartography is dying are doing. (It’s not that we’ll no longer be navigating, it’s that we’ll be navigating different things – and we’ll need new kinds of maps to help us.)
Trying out a new thing here to document 3 links that caught my interest over the past week. Sometimes they might be related, sometimes not. It’ll be an experiment to journal the things I was reading at the time, for posterity.
Good piece from Ben Thompson comparing the current developmental stage of machine learning and AI with the formative years of Claude Shannon and Alan Turing’s initial discoveries of information theory. They figured out how to take mathematical logic concepts (Boolean logic) and merge them with physical circuits — the birth of...
Great piece about the modularization of shipping and how it powered global trade.
More than any other single innovation, the shipping container—there are millions out there, all just like the ones stacked on the Hong Kong Express but for a coat of paint and a serial number—epitomizes the enormity, sophistication, and importance of our modern transportation system. Invisible to most people, they’re fundamental to how practically everything in our consumer-driven lives works.
Think of the shipping container as the Internet of things. Just as your email is disassembled into discrete bundles of data the minute you hit send, then...
This entire post comes with a caveat: I am not a software engineer. I do build a software product, and work with a bunch of people way smarter than me, though. I’m experienced enough to have an opinion on the topic.
I talk to lots of young people looking to get into the software world. Sometimes they want to build mobile apps or create simple tools, and sometimes looking to create entire products. There are a lot of possible places to start. The world is full of blog posts, podcasts, books, and videos that purport to “teach you...
I presented the day-two keynote to the CFGIS Workshop, talking about what the future of the geography and GIS discipline holds — new technologies for collaboration and sharing, the growth of the geo community and why it matters, and the importance of foundational knowledge of geography to our young people entering higher education.
Everyone in the SaaS product business should watch this. Great approach to thinking through putting prices on your SaaS service.
The key is to understand all the facets of your product and what things cost you as the creator, in addition to slicing and dicing options for your customers to buy what they need. Facets like:
Quantities (How many gigabytes? What kind of bandwidth is...
