David Duey

Complementary Products

Free RSS Readers
Not long ago, NewsGator announced that all of its client RSS readers would be free.  Someone asked me why they’d do that.  My response was that NewsGator’s management probably decided that free RSS readers would help drive demand for their more profitable enterprise services.  But, Joel Spolsky, in his Strategy Letter V, explains the complementary product thing much better than I can:

Demand for a product increases when the prices of its complements decrease.

In fact, Greg Reinacker explicitly states NewsGator’s goal in one of his blog posts, ”What we’re working to do is to saturate the market with our clients.”

The Chicken or the Egg?
I think it’s kind of interesting that years ago a small software company actually used the proliferation of its complementary product as the vision for the company, “a computer on every desk and in every home.”  Regardless of what you think of Microsoft, in the early days of the company, I think they did a great job of communicating their “change the world” vision by emphasizing their complementary product.

I suspect that most new technologies face the same chicken and egg problem that micro software faced 30 years ago.  I’ve been working with semantic markup (microformats and RDFa) lately and I see the same sort of problem with the semantic web stuff.  In order for semantic markup to be useful, there has to be content made available as semantic markup.  In addition, users (or computers) need something that can “read” and possibly interpret semantic markup.  I’m seeing signs of life in both areas; Technorati and Yahoo seem to be leaders with semantic content and there are several Firefox add-ons for micoformats.  Also, according to rumors, IE8 will be able to recognize microformats.

Not Implicit Enough
Currently, most semantic markup is “read” by a browser plugin, and once the markup is identified, it’s up to the user to do something about it (i.e. add an hCard to your list of contacts).  But I don’t think content and reader are enough for the semantic stuff to work well.  And, I think that’s one of the problems with the current state of the semantic web, it’s not implicit enough; users have to take some action.  Semantic markup is certainly better than nothing, but there’s still a wide, gaping void between providing content that a computer can recognize and process (i.e. semantic markup) and improving the user experience by implicitly using and consuming semantic markup. 

I think the killer complementary product or service for semantic markup will be a tool (add-in, application, web service, whatever) that not only recognizes semantic markup, but also interprets and processes the information on the users’ behalf.  I don’t think that capability requires artificial intelligence; I think it can be something as simple as tracking attention and user preferences much like RSS readers do today.  Twine is probably a good start.

Report Card

Update:  Heather posted a parallel entry where she gives us a passing grade, but just barely.  I'd have to agree.

For whatever reason, it seems like a good time to step back and assess all of the entrepreneurial things Heather and I have done over the past eight years (which includes seven absolutely fantastic years of marriage and two wonderful little boys).

First, I’ve listed, in roughly chronological order, many of the entrepreneurial things we’ve done over the years.  Then, I created my own little report card.  The report card isn’t very good, but I think it’s good enough for Heather and I to do a little self assessment.  The point of the exercise is to step back, look at what we’re doing, and then, with any luck, keep the good stuff and improve on the not so good stuff.

This is a long post and I decided not to provide a jump after this warning, so beware.

Stuff We’ve Done

Scubalicious.  We started the Scubalicious website to document our scuba diving adventures and to provide information about great dive sites.  The site was created in 1999; it was really a blog, but I don’t recall anyone was using the term “blog” back then.  We didn’t have a CMS; Heather maintained the site using static html. 

Although we’d discussed turning Scubalicious into a business, it was actually more of a hobby.  I thought I’d mention Scubalicious because it was the first thing we'd done together (although it was mostly Heather’s effort) and we did considered the business aspects of the site, so that must count for something.

I believe the Scubalicious site was live for about three years; however, it was rarely updated after the first year.

Lenfis (Law Enforcement Information Systems).  Lenfis was a web application that Heather built for law enforcement.  I was the one who suggested she try developing the application as a hosted application that law enforcement agencies could purchase using the subscription model (occasionally I’m forward thinking). 

Heather created Lenfis in 2001.  Lenfis was created before there was much mention of hosted applications (it was well before SalesForce was released).  Lenfis was ahead of it’s time and it was hard to convince people that hosted application would work well.  We actually had a booth at a TAC (i.e. SWAT) conference in Orlando.  Lenfis seemed to generate a lot of interest, but no sales.

Lenfis slowly faded away into our dead pool.

POTTS (Police Officer Training Tracking System).  This is another application that was developed by Heather.  It’s a desktop application and is currently in use by the Tallahassee Police Department.  Heather never very seriously pursued selling the application to other law enforcement agencies. 

Conservancy Software Group (CSG).  Heather started CSG as a sole proprietorship for her consulting work.  Heather did several projects under the CSG name. 

Duey Software.  This was another of Heather’s sole proprietorships for consulting work, although I don’t think any consulting work was ever done under the “Duey Software” name.  But, I still have a polo shirt that says, “Duey Software, We Do Software.” 

Item Banking (my market analysis).  This was never a product or a company; it was just a market analysis.  I mention it because it was my first really thoughtful foray into the possibilities of starting a software product company.

Item banking software is software that maintains a library of test questions for exams of all types.  With item banking software, you can create and grade exams and rate the effectiveness of test questions.  It’s a niche market that I was drawn to because I knew something about item banking and it’s kind of an esoteric niche market.

Over several months, I did an in-depth analysis of the item banking market.  I came to the conclusion that I could fill a void in the market at the high end of the market, but it would take at least two years of full time work to create a product that would fit high-end needs.  I was working full time and we had one little boy who was about one year old at the time; I correctly came to the conclusion that I didn’t have time to build a high end product.

Innovux, Inc.  Heather and I decided to go ahead and incorporate our software business.  The decision came after a lot of debate on my part.  I was afraid of failure and the consequences of failure, but fortunately, Heather was supportive and almost literally had to kick me in the ass so that I’d take the plunge.  I’m glad she did.

When we founded the company, we did it with the understanding that we wanted to become a product company, not a custom software development shop or an IT staffing firm.  However, we did think that we could do custom projects and staffing as necessary to help build the company.  We quickly found out how difficult it is to do custom projects and/or staffing with state agencies (state government is the largest part of Tallahassee’s economy).  We made a decision not to pursue any IT staffing opportunities because of the low margins and precarious nature of the business (good decision and probably worthy of another post).

Innovux is the company that we use to do all of our various entrepreneurial activities.  Currently, most of our income comes from contract work, but we’re hoping to change that soon.

2Ruffians.  2Ruffians was yet another one of Heather’s efforts.  2Ruffians provided us with a way to separate our “normal” Innovux business from the law enforcement software that Heather was working on.  I was insistent about separating the law enforcement stuff because I didn’t want Innovux to look as if we were heading in many different directions (which we were).  Looking back, that was a stupid concern on my part.

FeedGadget.  FeedGadget was going to be an ad-hoc RSS feed creation tool.  I wanted to develop a desktop application that would allow the user to add any information to an RSS feed and immediately publish the feed. 

FeedGadget has moved on to our dead pool.  I spent a lot of time developing FeedGadget, but the more I worked on it and the more I looked around at the various things going on, the more I felt like it would probably not be a product that many people would use.  I think I was correct in that assessment. 

One of the big mistakes I made with FeedGadget was attempting to develop a relatively large, feature complete product prior to getting any feedback and input from potential users and customers or mentors.  That’s a hard lesson to learn (and to sometimes re-learn).

Locker Monkey.  Locker Monkey was a hosted application developed by Heather to securely store personal information such as credit card numbers (in case of lost or stolen credit cards) and other sensitive information.  It never really went anywhere and is in our dead pool.

Georneys.  Geoneys is a web application that can be used to help find lost children.  The application is in beta and we’re currently seeking input from users about ways to change and improve the Georneys.

Georneys has been hugely fun for me and Heather to develop.  We used Georneys to apply to TechStars and, although we were not selected for TechStars, I think we had the time of our lives during the process of building the application, applying and pursuing TechStars and gaining a mentor (David Cohen). 

Georneys is one of our on-going projects.  I have no idea how it will turn out in the end.  One of the problems I see with Georneys is that it doesn’t seem to reduce the “friction” of helping parents find a lost child.  But, with some tweaks and changes, it might become a very useful and much needed product/service.

I think Georneys has really helped us to become more refined as entrepreneurs.  And, we discovered a great entrepreneurial community in Boulder, Colorado.  We’ve decided to move there; we’re just waiting on our house to sell.

ListrBlistr.  ListrBlistr is a Facebook application.  It’s a “to do” list that Heather created so she could learn how to develop Facebook applications.

FevrBlistr.  FevrBlistr is a widget that Heather is creating so she can try her hand at widget development.

The Report Card

Below is my assessment of our (Heather and I) entrepreneurial abilities.  The assessment categories probably suck (I just made it up as I went along), but I think I’ve captured many of the things that are important.

Entrepreneurship:  A-   We’ve successfully started a company (Innovux) and we’re able to support ourselves via our tiny company.  We’ve tried a number of things and we’re constantly learning about creating and building a successful software company.  The reason I gave us an A- and not an A is because we haven’t yet realized our goal of deriving most of our income from a software product rather than contract work.

Execution:  B+  Heather does a great job of execution when it comes to getting started and building an application.  I don’t do nearly as good a job of execution as Heather does.  I’m more of a thinker and Heather is more of a “doer,” so together we make a good combination.  However, we haven’t executed well when it comes to marketing type stuff; things like getting and responding to customer feedback about our products and services.

Marketing:  C  Like I stated above, we haven’t done a good job of marketing.  I don’t mean sales, I mean things like getting feedback and building a product that the customer wants needs and will use.  We need to work on this, or we need to round-out our team with someone who is good at it.  Regardless, I think we’re both aware of the marketing void and we’re working to improve the situation.

Flexiblity:  A  I think we’ve proved to be flexible and willing to change, but, we may be doing this to a fault.  Instead of refining a product or service, we often become disillusioned by the lack of overwhelming consumer response and move on to fun stuff like developing a new product.

Focus/Becoming the Best:  C+  We’ve shown pretty good focus with Georneys, but I think we need to be willing to dig deeper and find out what customers need and make changes to provide those features.  We need to be the best at something.

Conclusion

I’m sure there are better and more relevant assessment categories, but I see a clear theme in my assessment; we need to actively seek feedback early on in our development process and continue the feedback process as we build our product/service.  Hopefully, Heather will post a parallel entry to this one to describe her assessments of our strengths and weaknesses.

Organizational Twitter

I came across an interesting blog entry by Ben Simon about Wrox's use of Twitter.  A good example of no-cost or low-cost opt-in marketing.

I think this goes into the clever department - apparently the book publisher Wrox has a Twitter stream. I've been following it for a day now, and it seems like the real deal.

The Planning Premium

A long time ago I worked at the Small Business Development Center at Florida State University (it’s long since been closed).  Sometimes it was a harrowing experience for me because I’d never owned or managed a business before and I was supposed to provide guidance and advice to business owners.  The only problem was, I was totally clueless and there was no one else in center that could help me; I was all alone.  (One really cool thing did happen to me while I was at the Center, I got to meet Jack Sams, the guy who headed up the team from IBM that negotiated the DOS deal with Microsoft.  That’s a story for another time.)

Fortunately for me, most of our customers where people who were just as clueless as I was about starting a business.  With those people things were usually fairly easy; just listen to their story, nod in approval several times and provide information about all of the business licenses and other stuff they’d have to do before they were “officially” in business.  And…don’t forget the business plan, you have to have one of those.  That was the party line and I knew it well and I knew you had to have one and it needed to be detailed.  I even had the Ernst & Young business plan outline; if you could complete all of the sections in that business plan, you’d surely have one kick-ass business.

Unfortunately for me, one day somebody challenged me about the value of the business plan.  What made it even worse; she challenged me in front of a group of startup hopefuls at one of the Center’s small business seminars.  Of course I repeated the part line, “business plans are a must.”  To be honest, for most of the people I worked with, the business plan was a very good thing; if they weren’t willing to put some effort into planning, then they probably weren’t suited to running a business.  Regardless, the woman’s questions about the value of the business plans haunted me for a long time; it seemed to me that she made some valid points about the usefulness of the business plan.

That brings me to the present; it seems like a lot of people “in the know” are starting to poo poo the business plan when it comes to Web startups (notice that I’m limiting this discussion to Web startups).  I think there’s still a lot of support for good old fashioned business plans, but it seems to be waning.  The reason that seems to be given most of the time is that the plan is “out of date” as soon as it’s complete and therefore it is simply a time consuming exercise in futility.  Most of the advice I’ve read says to ditch the plan in favor of a PowerPoint (or other tool) presentation and a prototype (preferably a working prototype).

I think the “out of date” argument against creating a business plan is valid, but I think there’s more to it than that.  I think the “no business plan” trend is really due to the falling cost of creating a Web business.  In terms of time, I think it’s often possible to create a working Web site in less time than it takes to create the “old fashioned” thorough business plan.  In other words, it’s more costly to do in-depth planning than it is to build something and test it in the real world.  What could be better than real customer feedback?  The difference between the cost of completing an in-depth (notice, I said “in depth”) business plan and the cost of creating the actual Web product/service is what I’ve called the “planning premium.”

I think the primary issue is that the business plan sucks one of the most critical resources out of a startup: time.  If the plan takes more time to complete than is required to create the actual product/service, then it’s not terribly smart to pursue the plan.  I think some planning is necessary; you’d probably want to know if there are competitors and you should probably have a somewhat educated guess about the size of the market, but in-depth analysis prior to product/service creation may no longer be necessary.  The rule of thumb should probably be: Do enough planning, but it should be in proper proportion to the Web product/service being created.

Lastly, what does the reduced cost of doing a startup mean for funding?  Money is always an issue because people have to support themselves (and maybe even a family) while working on their startup, but it seems like most of the startups that need large sums of money, don’t need the money to create a service, they need it to scale the service (think Medium).  However, there are two things that come along with funding that I think are usually overlooked: mentoring and connections.  That makes me wonder if organizations like TechStars and YCombinator are the VCs of the future for Web companies.  Some money is necessary, but mentoring is like gold.  And, which is the scarce resource?  I don't think it's money.

Forget the Book, Watch the Video

I read a lot of books; many of them are business books or business related.  In my opinion, one of the major problems with business books is that they’re too long.  They’re often repetitive and filled with too many anecdotes and stories that do little to support author’s assertions.  I’d much rather pay an equivalent price for a good, concise business book than I would the typical bloated business book that’s heavy on the anecdotes and light on insight. In fact, I believe that if you could iterate through the typical business book and remove redundancies and anecdotes, you’d probably reduce most of them down to a one page summary, or at best, a magazine length article.

That’s my segue to a really good TechStars video of the MyBlogLog founders’ session with the TechStars crew.  The video is a gold mine of information and advice for any web startup.  It’s 80 minutes long.  I’ve watched it twice.  I wish I could buy the book.  There’s a ton of information and I think watching the video is time well spent.  My only advice is to be sure to keep your favorite note-taking tools handy; there’s a lot of stuff you’ll probably want to jot down and think about.

The Business Plan Takes Another Beating

Don Dodge rips business plans.  Cool!  I've wondered about the value of a business plan.  The current consensus seems to be that the business plan is of little value because it's always out of date and often isn't grounded in reality.  It seems investors would rather see good execution and customers than a nicely written plan.

Garage Sale Weekend – Yikes!

This past weekend, we had a garage sale.  I’ve never liked garage sales; I don’t like going to them and I certainly don’t like having them.  (I don’t see much point in garage sales because the competition, Walmart, does a much better job of dispensing cheap junk.)  However, since we’re moving, we have a bunch of stuff to get rid of, so my wife and I decided to try the garage sale thing.

We were fortunate enough to have a co-conspirator; a friend (and our realtor) wanted to put some of her junk up for sale as well.  That was nice because I was able to pretty much avoid the garage sale.  My wife and her friend managed the garage sale and I watched the boys.  Cool!

The results of the sale weren’t impressive; we made enough money to take the family out for a nice dinner -- that’s about it.  But, on a positive note, we had to go through all of our junk and find a way to dispose of it anyway, so the garage sale didn’t really cost us anything.  And, there was one really positive aspect to the whole garage sale thing: it’s really cool to have people pay you to haul off your junk.  Incredible!

By the way, if anyone is interested in some scuba equipment, we’ve decided to sell a couple of our most prized possessions:  two sets of steel 95 doubles.  Perfect for cave diving. 

Startup: The Hero's Journey

I've been reminded of the hero's journey several times recently.  I think the hero's journey reflects a startup founder's progression.  I don't really know for sure, because I'm at the very begining of the journey, but I intend to find out.

...the hero's journey which he says consists of 1) separation, 2)initiation, and 3) return: A hero ventures forth from the world of common day into a region of supernatural wonder: fabulous forces are encountered there and a decisive victory is won: the hero comes back from this mysterious adventure with the power to bestow boons on his fellow men.

Regular or freemium?

Speaking of neologisms, I came across two good blog articles recently that discuss the “freemium” business model used by a number web sites.  Freemium refers to the practice of providing a free level of service or membership, but providing a paid-for, premium service for people who want more features.  Evidently the name was coined via VC Fred Wilson.  About a year ago, he discussed the as yet unnamed freemium business model in one his bog entries and he asked for an appropriate name.  Freemium was the lucky winner.

Anyway, back to the recent blog entries about the freemium model.  Don Dodge discusses the financial viability of the model and Dharmesh Shah discusses issues and challenges when considering the freemium revenue model.

My wife and I have discussing the freemium revenue model in the context of Georneys.  We’ve decided to provide a free service (as yet unannounced) as well as a premeium service.  One of the issues that we will have to wrestle with is just how much should be free, supported by advertising, and how much should be premium, supported by subscriptions. 

Neologisms and Business Names

I’ve always enjoyed neologisms, even before I knew what neologisms were.  As a kid, I’d combine words to describe various bodily (often gross) functions that occasionally occurred at he same time.  For example, a violent sneeze that causes one to release a fart was named a “snart.”  Here’s the equation:  sneeze + fart = snart  (simple mashup mathematics).

Neologism  A neologism is word, term, or phrase which has been recently created ("coined") —often to apply to new concepts, or to reshape older terms in newer language form. Neologisms are especially useful in identifying inventions, new phenomena, or old ideas which have taken on a new cultural context.

What does that have to do with business names?  Well, when my wife and I were trying to decide on a name for our new business endeavor, it really came in handy.  Both of us had spent quite a few agonizing hours trying to come up with a good name for the business.  The moment of epiphany came when I was in my youngest son’s room lying on his bed.  The whole family was in the room playing (myself, my wife and our two sons).  My wife kept tossing out name suggestions that I kept rejecting (with a bit of an edge because it was interfering with my unusual cognitive processes).  Finally, I said, “This is going to sound strange, but how about “Georney” spelled with a “geo” instead of “jou.”  She loved the name, but said that it should be plural (she’s responsible for the “s”).  Thus, Georneys (pronounced “journeys”) was born. 

Getting back to neologism: Georneys is, of course a neologism that is made up of the two words “geography” and “journeys.”  Since Georneys deals with geography plus some of life’s journeys (lost children as well as a service yet to be announced) it seemed to be an ideal name.  That ended the business naming agony.