Business of Software Blog

How to take advantage of your time at Business of Software 2009 - tips from @asmartbear (#bos2009)

This is a guest post by Jason Cohen, founder of Smart Bear Software and blogger about startups, marketing, and geekery. Jason gave a Pecha Kecha speach at BoS 2008 and has this advice for 2009 attendees.

So you're going to Business of Software 2009! It's going to be awesome.

There's a 100% chance you'll get your time and money's worth from the speakers alone, but that's not the only benefit of the conference. In fact, most of the folks I've talked to agree that getting to know the other attendees is half the experience.

This conference is unlike any other, and you should take full advantage of it, especially if you're working on a small business.

Here are some ways to get the most from your time:

1. Practice your 30-second pitch (w/extension). This is an amazing chance to hone your pitch. Getting your entire business down to a 30-second sound-bite is a wonderful technique anyway -- it forces you to clarify what's truly important, what sets you apart, who your customers are, and exactly why they give you money.

   Start by honing it before the show. Airports and airplanes are good places to practice under your breath. Use a stopwatch -- really force yourself into 30 seconds. Also develop a 60-second extension in case the listener wants more detail.

   Then pitch at the show, all day long. Watch people's faces: What do they react to? When are they bored and look around? Where do they interrupt you for more questions? Use this to hone further.

   Remember that the point of a 30-second pitch is not to tell them everything about your business! It's to get them to be interested enough to keep talking. That makes it easier to cut words.

   Not only will you walk away with a crisp pitch and a well-defined business concept, you'll have the perfect marketing fodder for your home page and advertisements!

2. Be direct and respectful. Everyone there will be smart, no-nonsense, small business folks. Many are founders, most are close enough. Sure there'll be some shills from big soulless corporations, but not many. On the one hand this means acting like you're the smartest, most experienced one at the table won't get you anywhere. On the other hand it means you can jump directly into deep conversations about business operations, philosophy, customers, growth, hiring, raising money, selling the company, or whatever else is on your mind. You're in extraordinary company, so take advantage!

3. Reveal your fears and commiserate. Because we all share your pain, being direct and genuine means you can "talk shop" about anything -- even normally taboo subjects like charging more, firing customers, or being completely sick and tired of your business.

   You can talk to people about stuff you can't even talk to your employees about (e.g. "Hey everyone, I'm totally burned out. Just wanted you to know I hate coming to work. Cheers."). So open up. Sometimes a 5-minute hallway therapy session can give you real perspective, even if it's just knowing that everyone else goes through this too.

4. Promote yourself. Don't be afraid to pitch your business or yourself. This is a business conference with business people. Of course you don't want to be an asshole either, so here's a tip: ask the other person about their business first. Then follow up with more questions -- dig, figure out what's interesting about them. Then you can pitch without looking like that's why you struck up the conversation. Additional benefit: You can tune the pitch to that person!

5. Don't stop at business cards. Everyone gets a pocketful of business cards. They're stuck in a drawer, never to be seen again, unless they get tossed immediately. Instead, every night go through your cards and connect on LinkedIn (or anywhere else). Put a personal message in there so the other person remembers who you are. (Remember they met 20 new people today too.) To remember who they were, jot down notes on their card while you're talking to them in the first place.

6. Have a goal. Like a trade show, it helps to define a result you want by the time you head home. Depending on the stage and nature of your business, a goal could be:

   • Pitch your idea 30 times and see what people say.
   • Get 5 really good critiques of your idea.
   • Get 10 new people to trial your software.
   • Get 20 warm leads for your consulting services.
   • Determine the 5 "keywords" that everyone is talking about.
   • Demo your product to 5 people (after hours).
   • Find a co-founder.
   • Find a whiz at [technology].

7. Take notes. This might sound obvious, but I took copious notes from BoS 2008 and I refer to them all the time. Sure they eventually put the videos up on the Internet -- and thanks for that! -- but you still don't want to scan around 90-minute talks when you could look at your own notes.

8. Move your seat. Never sit in the same place in the auditorium. That way you can meet at least two new people (to your left and right) between every talk, which means dozens of new chances to meet a friend or make a pitch.

Oh yeah, and have fun too.

What are your tips? Leave a comment and join the conversation!

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#codingbythesea – throw four smart people into a house by the seaside and shake

At Red Gate we like to try new things. The million dollar challenge and the accidental incubator are a couple of examples.

Combine this with an occasional but nagging frustration at how long it can take to get stuff done nowadays and a curiosity about how much a small team can achieve if we just leave them alone, we’ve shipped Alex (developer), Dom (designer), Nagashree (tester), Rob (developer), and – oops, I forgot to send a project manager or scrum master - off to a house by the sea for a week.

I’m not entirely sure what they’ll be working on, but take smart people, a fast internet connection, a good house, beer (I should mention that it’s in Southwold – home of Adnams) and shake and I’m sure the cocktail will be good.

If you want to stay up to date with what the guys are up to, then search #codingbythesea on Twitter. There are some photos up and once Rob’s built an antenna they’ll hook up the web cam.

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Business of Software 2009 program

I’ve just posted up the BoS 2009 program (thank you @thatdesigner). You can download it here (.pdf).

It’s going to be awesome. There are still some places left. You can sign up here.

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Don't just roll the dice - a usefully short guide to software pricing

In 1938, two young engineers were ready to launch their first product. They'd struggled with what to build. After considering amplifiers, radio equipment, air controllers, harmonicas and even muscle-building electrodes for housewives, they'd finally decided to create an oscilloscope. Not wanting customers to be put off by a version one product, they sensibly called it the Model 200A.

The next step? Decide the pricing.

They eventually settled on $54.40. Was that because it represented the cost of manufacturing, plus a decent markup? No. These engineers hadn't taken that into account. In fact, they soon realized that the cost of building each oscilloscope was more than the price they were asking. Was it based on what the competition charged? No. They hadn't bothered to discover that General Radio charged $400 for an equivalent model.

They chose $54.40 because it reminded them of the 1844 slogan used in the campaign to establish the northern border of the United States in the Pacific Northwest ("54" 40' or Fight!").

What a dumb-ass way to price a product.

But these two young engineers recovered from their stumble. The Model 200A went on to become the longest-selling basic electronic design of all time, still selling 33 years later. The company they founded became an institution. Their names? Dave Hewlett and Bill Packard.

If Hewlett and Packard, two Stanford graduates with the rosiest of futures ahead of them, can flounder so badly when faced with the problem of how to price their products, what hope do the rest of us have?

Quite a lot, as it turns out.

You can read more in the free eBook of Don't just roll the dice - a usefully short guide to software pricing.

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Pecha Kucha finalists for Business of Software 2009

This year's Pecha Kucha finalists have got their work cut out for them. Twenty slides, twenty seconds each, it’s the haiku of presentations. Here they are:

Jurgen Appelo, Chief Information Officer of ISM eCompany on “Managing agility: from complex to simple”

JD Brennan, Distinguished Technologist at HP, on "The 6.6 minute design school”

Daniel Kuperman, Director of Marketing and Product Management of Quadrant Software, on “5 marketing secrets for software success”

Glen Lipka, Director of User Experience and Product Design of Marketo, on “UX design – building products people love”

Dave O’Flynn, Integration Product Manager at Atlassian, on “Learning about teams by jumping out of planes” 

Alex Papadimoulis, President of Inedo and Founder of The Daily WTF on “How not to be featured on The Daily WTF”

Adam Ruth, Senior Software Developer at Admin Arsenal, on “Developer addictions”

Mark Stephens, CEO of IDR Solutions, on “Asteroid impact – are you a big lizard or small and furry?”

For an example of pecha kucha, here’s Alexis Ohanian (co-founder of Reddit) on how to start, run and sell a web 2.0 startup. Alexis won last year’s contest.

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Are sales people different from you and me?

"Sales people are different from you and me."

"Yes, they want money more."

A year - a few months, even - ago, I would have agreed with this. It's common knowledge that sales people are motivated differently to the rest of us. You need to keep them hungry, drive them with low basic salaries and hefty commissions. The best sales people are not only hungry, but greedy too. Harnessing that greed is the key to succeeding in sales.

Unfortunately, like much common knowledge - that we only use ten percent of our brain, that if you build a better mousetrap then the world will beat a path to your door - it's wrong.

Simon (the other founder of Red Gate) and I believe this so strongly that we've stopped paying commission to all our sales people.

We've experimented with sales commissions for the best part of a decade. We've never found one that really worked. Every compensation structure can be gamed, and has its unintended consequences. Pay people a percentage above a target and you encourage a sawtooth pattern – there’s a pressure for sales people to undersell one month and save up the sales for the next month. It makes more sense to be 25% under target one month and 15% over target the next month rather than being 5% under target each month. You can fix this - you can play around with the thresholds, add ratchets and fiddle around with commission debt – but the compensation structure gets increasingly complex.

The ancients believed that the earth was the centre of the universe and that the planets and stars rotated around it. This didn't quite fit the facts, so they shifted the centre of the universe slightly off the earth. There were still discrepancies between theory and observation so they put the planets on circles within circles: Venus didn't circle the earth, but it circled a circle that circled the earth.

That’s what our sales salary system felt like – a gigantic, complex and medieval spirograph centred on an assumption that wasn’t true.

So we decided to fix it. First, we tried to persuade our business unit heads to stop paying commission. “Interesting idea,” they told us. “We think we should try it, but not right now. We’ve got our hands full.”

Jeff Immelt, CEO of General Electric, once said “when you run G.E. there are 7 – 12 times a year when you have to say ‘you’re doing it my way’. If you do it 18 times, the good people will leave. If you do it 3 times, the company falls apart.”

Red Gate is several orders of magnitude smaller than GE, but the principle still holds. Occasionally – once or twice a year – Simon and I need to be dictators. So we stamped our feet and told our business unit heads that we were tearing the old system down. From October 1st we wanted all our sales people to be on flat salaries.

We managed to get everything in place a month early. Now, towards the end of September, the system has been running for three weeks. So far the signs are good.

It turns out that fear is not a good motivator. Sales people have mortgages to pay, kids to feed and bills to settle, just like the rest of us. Would the anxiety of not knowing whether you'd be able to eat at the end of the month help you code better? So why would it help sales people sell better?

Removing commissions allows sales people to behave in more complex ways. Sure, we want sales people to sell more stuff, but only if it's right for the customer. As a business, do we prefer to sell $100 of software today or $200 of software tomorrow? It depends - on the likelihood of tomorrow's sale falling through, on whether we'll make that sale anyway, on many other things. We need our sales people to weigh up complicated situations and make decisions based on their judgement as to what the right thing to do is. Any sales commissions scheme we could come up with would contradict these complexities.

Sales is no longer a zero sum game. Oversimplifying, in any month there are a finite number of leads we can contact; a fixed amount of money to be made. One sales person’s gain is another sales person’s loss. Imagine you could construct a sales robot, programmed solely by the rules in any sales structure. How would it behave? It would steal deals off other sales people, sell customers software they didn't need, argue with its boss over its commission and backstab its colleagues. That wasn’t the behaviour we wanted, but our commission structure sent a strong signal that it was.

Now that we’ve removed commissions, sales people are sharing more. If Alice is off sick then Bob will cover for him. If Bob is dealing with a customer that Alice would be able to help better, he’ll hand him over to her. If Alice’s product knowledge needs improving, she can spend some time away from selling. None of those things were happening before.

By removing the simplest, crudest and least effective motivational tool of money, we're forcing our managers to find more powerful, subtle and productive techniques to motivate our sales people. Rather than relying on carrots (sell more and you can buy that new car) and sticks (don’t sell enough and you won’t be able to feed your kids), we are compelled to make our sales people’s work more interesting, to set better goals, to encourage more teamwork.

We’ve removed an enormous amount of management overhead. We no longer have to spend so much time setting targets (sure, we still set targets, but it’s not so important we get them right); we spend less time deciding who worked on which deal and where the commission should go; our managers can spend less time fiddling with spreadsheets and more time making their teams hum.

The idea that sales people are different to the rest of us is based on what psychologists call a fundamental attribution error. We tend to explain other people’s behaviour’s differently to our own. For example, I was late this morning because my alarm didn’t go off. But you were late because you’re lazy. In the first case, I blame the situation. In the second, I blame your personality. Similarly, I come to work because I love what I do. But you – and sales people – come to work because of the money. I am motivated by interesting work, the chance to make a difference and recognition by my peers. But you are motivated by cash.

Of course, some sales people do their jobs not because they enjoy them, but purely for the cash. Those people will, over time, leave. And that will be a good thing, for Red Gate and for them.

But, on the whole, sales people aren’t that different to the rest of us.

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Ten free student tickets for Business of Software 2009

I've decided to offer ten free student tickets to Business of Software 2009. Here's what you need to do to qualify:

• Be in full-time education
• Be a hacker, and show some evidence of this.  E-mail me a link to your blog / an open source project you've worked on / something you've built
• MBAs etc. can apply, but you need to be a hacker too
• E-mail me at neil.davidson@businessofsoftware.org by Saturday 19th September

I'll then choose ten people to get the free tickets. The process will be totally opaque. I might pick people at random, I might not. I might choose the first ten people to e-mail, or I might not. I don't know yet.

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Joel's startup workshop

Joel Spolsky is running a startup workshop in San Francisco after this year's Business of Software conference. It sounds really cool. You can find out more on Joel's blog.

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{smartassembly} wins the Red Gate million dollar challenge

Back in April I blogged about the Red Gate million dollar challenge. Red Gate is fortunate enough to be profitable and have money in the bank. We've bought companies in the past, and it felt like a good time to do it again. Finding great companies is hard, and we're lazy, so we set up a honey pot. A million dollar honey pot.

Some fifty companies entered. We narrowed it down to a handful over the course of a couple of months, and then to a single company. About a month ago we formally offered to purchase {smartassembly} from Jean-Sébastien Lange (for an amount I can't disclose). Jean-Sébastien negotiated hard and successfully, and then accepted. It took a few weeks to sort out all the legals, but now it's official.

We bought {smartassembly} for a number of reasons:

• It's an awesome product. It takes .net assemblies and applications, merges dependencies, obfuscates and provides exception logging for unhandled errors
• It's making money. It's a mature product, and has proven the market that it's in
• It fits in well with the other .NET tools we have
• It has a lot of potential. It's successful already, but we're hoping that Red Gate can develop it further and encourage even more people to use it.
• Jean-Sébastien is somebody we can work with. He's smart, friendly and laid back. Life is too short to work with people you don't get on with

For now, we're going to run {smartassembly} from its own web site. We've got it building on our servers in Cambridge, but we'll figure out how to integrate it into Red Gate properly over the next few months.

You can find out more about {smartassembly} on its web site. We'll do an official press release tomorrow.

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Joel Spolsky's talk at Business of Software 2008 on being number one

How come you can recognise the tune of the number one song of 1968 as being Hey Jude by the Beatles, but not the number two song?

Why has the iPod had the success that the Zune has been denied?

Why are Herman Miller chairs cool, but their functionally equivalent competitors lame?

Why is Ruby hip but Java square?

Why are clean code, usability and basic marketing just hygiene factors? How come they can get you to the number two spot, but not to number one?

In this video from Business of Software 2008, Joel explains the three important factors behind getting to number one. Along the way, he talks about anthropology, psychology, Brad Pitt and Angelina Jolie. And kittens.

This year's conference is in November 9th - 11th, in San Francisco. Joel will be speaking, as will Paul Graham, Geoffrey Moore, Don Norman, Dharmesh Shah and many, many other awesome people.

There are a few (under 20 - I haven't updated the web site in a while) tickets left at the special price of $1,845.

You can find out more at the Business of Software conference website. I reckon they'll sell out this week, so if you want to come then act fast.

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