FailCon

Do you see yourself as much different than a regular psychologist?

Well for a start I don’t see individual clients for therapy. My background is as a researcher. A therapist working with a client needs to know what to do and whether it’s working. That’s where us researchers come in. You need to do research to understand things like ‘why does someone get an eating disorder?’. I specialise in forensic psychology, which is the psychology of crime. So a lot of the questions I’ve answered in the past are ‘why do people commit that kind of crime?’ or ‘how do we support victims of crime?’

And how does ‘failure’ feature in your research and work?

I’m very interested in failure. It can hold us back massively for lots of different reasons. Some people are worried about what other people will think of them if they fail; some people are afraid of finding their own limitations; some people have experienced painful failure in the past and therefore avoid it. It can be very debilitating for some people.

So what’s the solution?

Well for sure the solution isn’t to ‘get rid’ of failure. There is nothing wrong with failure itself. It’s natural to fail. It’s part of learning and growing. Think of a toddler learning to walk – this is an exercise in failure. Toddlers fall constantly, but they are not deterred. They keep going and eventually they get it. Failure is part of the path to success for a toddler but as we grow older we start to worry about what other people think about us, we don’t ‘fall over’ so often so the idea of falling is much more scary, we build an idea of ourselves where we are infallible. None of this is helpful at all – but it’s very common. I think seeing failure as simply ‘part of the process’ is very important. I don’t enjoy failing – it feels uncomfortable. But it also makes me smile – for me the worst ‘fail’ would be to not stretch myself, to give up on growing. When I fail it’s useful feedback – I know I’m trying to grow, I know I’m trying something that is difficult. The sad thing for me is to see people give up on themselves because of their fear of failing.

Have you ever failed?  Were you able to apply your own beliefs to this, or did you struggle as well?  

My biggest recent ‘failure’ is not getting anywhere near my target for a book I crowd funded for. I was really disappointed, but my disappointment was really about my passion for the project – not my failure. I was trying something I’d never tried before – that’s something I’ll always celebrate doing regardless of whether I succeed or fail. Real failure is only ever trying something you know you can do.

We definitely need to understand and accept failure more easily, but how do we get there? Society continues to tell us otherwise. What's your advice to someone who's failed on how they can start the path to recovery right now? What techniques or practices can they start applying now? I don’t think it’s realistic for me to think that I’ll succeed every time I try something new or difficult. If I’m not failing on a regular basis then I can only assume I’m not testing my limits. If I want to continue to grow then failure has to be part of the story. I aim to fail. Not because I want to fail but because I want to push my own limitations. When I fail that’s feedback – I know I ‘succeeded’ in finding my limits. Often people are afraid of failing because they are afraid of finding out what their limitations are – but to choose not to try is to put the straight jacket on yourself. For me it’s a balancing act between – how will I feel about myself if this fails? And how will I feel about myself if I never try. ‘Not trying’ is always the worst option as far as I am concerned. I hope I continue to fail spectacularly throughout my career – and if I do I will consider myself to be a great success.

However, I was assigned to the Smithsonian and my project there is a perfect fit for my skillset. We’re developing a crowdsourced transcription website and growing a community of volunteers. Everything I learned about user research, fostering engagement, and finding distribution channels is now helping me support America’s cultural heritage at the Smithsonian Transcription Center.

2.    What is something awesome you’re working on at the moment?

Outside of my work at the Smithsonian, I recently published a book called Winning Isn’t Normal, which is all about how to beat back the forces of mediocrity and turbo-charge your mind, body, and work. It’s been a ton of work but a super satisfying experience to put together.

3.    Tell us about one business lesson you’ve learned this month. 

It's hard to overstate the value of

Confidence, especially in speaking confidently and cogently one-on-one or in groups.

Jumping on top of opportunities when you see a good one.

4.    What is the biggest piece of advice you have for first time entrepreneurs?

Don’t think that your hunger will end after your company becomes successful. You’ll always want more. 

I know founders who have sold their companies for eight figures and they still have a chip on their shoulder. They’ve just moved their target upwards. It’s in our DNA.

5.    What are you most excited to speak about at FailCon?

Until something really terrible happens.  When Jody Sherman, the founder of Ecomom, killed himself earlier this year, all sorts of people started opening up. As it turns out, the perpetual performance of being a founder – pitching, pitching, pitching – is exhausting. It’s emotionally corrosive. And it has the perverse effect of making other entrepreneurs feel like they’re the only ones having a rough time.

That’s the real story. I’d been wanting to write some version of it for a long time. So when Bobbie Gossage, editor extraordinaire, approached me about doing a “dark side of startups” assignment in tandem with the Inc. 500, I jumped on it.

This summer, I read stacks of journal articles, grilled mental health experts and spent hours on the phone with a couple dozen founders. The interviews were long and very slow. My job was to listen. I was impressed by how vulnerable people were willing to get with me when I explained what the story was about, and why we were doing it.

 2.    What is one important takeaway from that article?

That founders, like other humans, need a no-bullshit sense of community. They need to know they aren’t alone in feeling utterly freaked out sometimes.

This was reflected in one of the story’s most re-tweeted quotes. Toby Thomas, the CEO of EnSite Solutions, explained that being an entrepreneur is like riding a lion.

“People look at him and think, This guy's really got it together! He's brave!” Thomas told me. “And the man riding the lion is thinking, How the hell did I get on a lion, and how do I keep from getting eaten?”

 3.    What is something awesome you’re working on at the moment?

I’m working on a couple of long-form stories that I’m very excited about. I can’t talk about the specifics until they’re done, but they involve two themes that are dear to me. One is subcultures, how people form communities. The other is resilience, how folks manage to get by in our extraordinarily messy economy.

Otherwise? I’m building a picnic table from decommissioned N.Y.P.D. sawhorses, the blue wooden barriers that get used for crowd control. It’s my first-ever carpentry project.

 4.    Tell us about one business lesson you’ve learned this month.

Despite myself, I’m always relearning Parkinson’s Law: “Work expandssoas to fill the time available for its completion.”

 5.    What is the biggest piece of advice you have for first-time entrepreneurs?

Don’t get bogged down in momentary setbacks. One of my favorite stories about this comes from my father, whose first real job was selling encyclopedias from door to door in Brooklyn. 

Most of the doors slammed in his face. But when you’re hauling the sum of the world’s knowledge – in heavy hardbound volumes – from one hostile apartment complex to the next, there’s no convenient place to stop and marinate in the frustration. You just keep on schlepping.

 6.    What are you most excited to speak about at FailCon?

Uncertainty cones, Risk and Product/Market Fit

Let’s first check out the original project management uncertainty cone, by which millions of projects and thousands of companies to this day manage product development. In short, when an idea is born, there is a high risk of misunderstanding between engineers , the founder of the idea and market demand and this risk can only be mitigated by project management as in:

Documenting the product definition (a couple of months later)

Approving the product definition (many meetings and months later)

Write a requirement specification (easily nine months)

Write a product design (another six months)

Actually doing the product (anything from six to 24 months or more)

Finally accepting the product (often time 2-3 years later)

 How we do it at CloudSigma, which we believe is the recipe for our success, is to first invert the uncertainty cone. This means everything gets shifted upside down. When we start out something we are probably quite close to reality but that over time the product idea, the market and the product itself will diverge and go each their way. This is a provoking thought and counter-intuitive; if a team works closely together, how can its work possibly diverge with the market? The reason for this is that the team is rarely able to listen to the market over time and has fallen in love with its own perceived brilliance regarding the business plan, which in part outlines the product they are building. At CloudSigma we believe that success has a relatively simple fabric:

No one knows the future. Predicting it is arrogant and dangerous.

Paying customers are the best source of market intelligence a company can ever have.

Give customers what they want now and they will reward you.

Therefore, we inverse the uncertainty cone, reflecting that when a startup (or a new feature, a new project) is first conceived, there is relatively good connection or fit between the idea of the product and market demand at that time. Over time, however, this gap widens. The distance between point A, where the market will be in the future, and B, where the product ended up, which determines if the project fails – which we will call Product / Market Fit.

 In other words, the trick is to push the trajectory of the product development up to the trajectory of the market demand, and give customers what they want as fast and as early as possible.

Making it operational

In order to push the product development up to the market or customer demand, we have a couple of favorite models, frameworks and tools. First of all, the obvious: if we want to check if the product is matching what customers want – then lets launch it and see what happens. For that to be operational reality, we develop all things we do (not just software) by the use of Agile Scrum:

PLAN the product in a single and simple semantic structure – the user story: As a I want because

DO the work – in two weeks of work resulting in several user stories done, so we can potentially launch something

CHECK the work by a demo of the results and approval of the product owner (the customer’s proxy – the product owner)

CHECK with real user stats IF the new feature or product is being used

ACT if the “plan” needs to be changed

Start over

We call these iterations experiments where we test our hypothesis and theories. We don’t have opinions because we want to avoid “I told you so”, darlings and other problems. In short, no one can make an argument out of a failed experiment since its nature is: maybe it works, maybe it doesn’t – lets check it out.

Minimum Viable Product

In this way our product development becomes a tightly connected set of trials and errors where we launch minimum viable product improvements into the market and see what reception we get by the demand in a never ending cycle of Plan, Do, Check, Act (PDCA). The first thing that is interesting with this approach is that there are no long term plans! Each release is simply a product/market fit optimization of the previous.

Trial and Error – an opportunity to improve

Reflect a bit on this approach: is it not so, that everything we learn in life, we do in sequences of trial and error. From learning to walk as babies, to complex math skills as young adults, to dealing with friends, love and family as adults. All of it is done in trial and error with no long term plan, because we cannot predict reality nor our own skills before we actually do and check stuff. That is fine and respected and how it’s supposed to be. We are better human beings and more respected when we show how much we learn. Except for one domain: Business. Here we are suddenly required to write business plans that are flawless in predicting the future and model this future in financial plans. Isn’t it obvious now that the Business Plan is a Bullshit Plan? Every successful startup and founder out there knows it and had the guts to change what they do the moment they see failure in a cycle of plan, do, check, act. At CloudSigma, we believe it to be self evident that the only way to stay ahead of the competition is to admit that we cannot predict the future and therefore we must understand the market by fast iterations of trial and error. Each error or failure simply being an opportunity for improvement.

Three HR Rules - No Blame, No Complaints, No Justification

Most professionals do not like to be wrong or make errors. They would rather play politics in their companies to blame someone, complain about something or just make up justifications in order avoid the catastrophe of admitting fault. Therefore in CloudSigma we have three and only three HR rules to entirely avoid this behavior and at the same time make it possible that team members admit errors:

No one blames no one

No one complaints about anything

No justification

In order to empower factual and non-emotional PDCA iterations or learning cycles. We believe these three HR rules to be key to our success because not only do they empower the agile and lean operational reality, but also the result of blame and complaints is the creation of victims. Victims cannot win.

It’s about the engine - not the map: The Business Model Canvas

We think of business plans not much differently than planning a road trip around the world by dictating exactly which roads are allowed to be used, at what time, to get from a starting point to an endpoint. Over time and distance, it is of course entirely impossible to predict roadworks, mechanical problems and what ever else happens - and therefore, it is generally safer to understand your car and general navigation than following a plan blindly. Another problem with business plans is that they consist of 200 pages sitting in a ring-binder in the CEOs office far far away from the team and daily operations, only to be dusted at the occasional board meeting - no one reads it. This means that the team members most likely will never have had the chance to understand the business they are supposed to be part of building, except for their own little domain (sales, RnD, marketing…) leading to a siloed and eventually over time and scale, a dysfunctional organisation. In CloudSigma we believe that the 200 page business plan is better replaced with a one page diagram explaining the “engine of the car” - the business model - and proper training in how to drive! This is effectively done by using the business model canvas covering the nine generic areas which any business must master with excellence in order to sustain long term growth. The business model canvas is a brilliant way of hanging “what we do as a company” on the wall in your office for all team members to see and interact with on a daily basis. Because its a simple “one pager” with stick-it notes covering the entire business, chances are that your team members will actually understand and interact with all areas of the business other than their own day-to-day domain, which leads to cross functional teams that automatically finds areas of improvement once they see the big picture. 

Results so far

We launched Sonar with Facebook, Twitter, and Foursquare support. Shortly thereafter, users buffeted us with requests for Linkedin integration. Ostensibly, they wanted to use the app to meet fellow professionals. Eager to please, we rushed to add Linkedin.

The net effect? Nada. My guess is that the people asking were not actual users, but rather people that "wanted to be" users. We had mistaken noise for signal.

That's an easy mistake to make, one I've made myself as a product manager. One lesson I put into practice since researching my book is to test the experience of the product change before making the product change. This means not making decisions while hunched over your roadmap or backlog. It means mocking up the feature, observing actual customers use the feature, and then making decisions.

You can measure the result using Lean Startup / Customer Development measurement techniques. But you can also look to the field of design research for an arsenal of methods to directly measure the customer's experience, such as their emotions. Did anyone react emotionally when they used the WOW feature like you wanted them to? e.g. Did they laugh at the copy you intended to be funny? Measuring the experience directly starting with questions like these can help you understand the true impact of your work and avoid customer experience failures.

The "quick fix" that we got from closing such a big sale early on led to leadership mistakes, that resulted in execution mistakes, that culminated in several near-death experiences for our company. It turned out that our first few customers were classic early adopters, and the more we worked with them the more amorphous the "product" became. They all demanded a great deal of consulting and customization, none of which was repeatable, scalable, or ultimately viable for us.

The initial success led to a set of hiring mistakes. I brought on a project manager, which only further cemented our fate as a consulting/service company. This led to me and my cofounders being less involved with the day-to-day client interaction, which ultimately led to a lack of real understanding of what the customer wanted, and a delay in achieving the allusive "product-market-fit."

From a distance, absence real information or data, we "guessed" what the product should be and made decisions based on how persuasive or vocal we were. Worse, at one point we got sucked into a market we knew nothing about and made a drastic pivot from  being enterprise focused to creating a consumer mobile app.

Surprisingly, the app was well received, which led to "false positive #2."

Before I knew it I was in the Bay Area demoing the app for a well respected blogger. He in turn called Apple and Google and mentioned us. This led to conversations with them, along with another small company called Facebook. All of this was a huge rush, but our app was buggy, we didn't commit the entire company to it (I was hedging a bit), and we couldn't make it take off and grow to the level we needed. To be frank, I loved being courted by the big boys of technology. This fed my ego, which was a short-term distraction from the systemic pathology we had.

The pathology was that we built/ hired/ contemplated/ wrote/ consumed/ designed/ produced stuff without asking one simple question: will it make our customer happy and successful?

To answer that question, first you need to commit to one customer persona, and determine what will constitute traction or success, and how much time or resources you would invest. We would walk away from this question when things became a bit harder. I know I did and that set the stage for all of us having little or no focus on what was really important. When the going got tough, we simply changed the customer persona!

Once we dialed in on the singular persona (and it turned out it was the SMB and emerging enterprise, not F500 companies like we originally thought!) we focused on the one use-case that we could deliver an amazing product for. Something that would make our customer say "Damn! I love Drumbi and MUST have it!" It's really important that you obsess on finding only one thing to build that delights your customer, makes them happy and successful. The easy thing to do is over-build, guess, confuse, etc. I had done that, and it was a miserable failure.

Laying off people you have hired is the most painful aspect of running a company. It's worse than losing money, your own or your investors. I squandered precious resources and failed at building a sustainable company for my first set of employees, and that is the most painful aspect of my failure.

It is that memory, the price of my failure, that guides me and our team today. Absolute clarity on who your customer is, and what will make them happy and successful.

Having been a consultant who has helped many organizations build a great culture, I've also seen a lot of misunderstanding about what culture is. At its simplest, I define "culture" as the organization's values and behaviors--and said in another way: how you want stuff to get done in your organization. They reflect what you value in your employees (Netflix refers to this as "who gets rewarded, promoted, or let go") and how the organization is when it's at its best. And the most important part-- the organization's leaders must embody and role model these values. Otherwise, you're left with what I call "wallpaper"--I can't tell you how many places I've worked over the years where the values were posted on walls all around the office, and I and many others thought they were a complete joke (i.e., the leaders didn't practice them nor were they a true reflection of what was really important). If what I perceived as the "real" values were on the wall, then they probably would have said things such as "sell the next project" or "make cool powerpoint slides" or "call another meeting". If you're looking for a great example of a company that has been thoughtful in defining its culture, the Netflix culture document is a great place to start. The easy part is sitting down and defining your start-ups values and behaviors--while many start-ups may not even go that far, I'd suggest you've only just gotten started. Culture is very much like the organization--it's dynamic, shifting, and evolving all of the time, and it's up to the leaders and employees to continue to shape the culture. Before I leave you with a few "simple" steps for defining and managing culture, let me share a story that illustrates what's possible from having a great culture. I worked with a financial services startup that achieved a valuation of over $4B within nine years of launch. The organization consistently achieved employee satisfaction scores of over 95% and the CEO said that the organization's culture was part of the "secret sauce". Aside from happy employees, it also meant that this organization was executing at world-class levels. The leadership team was completely aligned on the business vision and strategy, and were role models of the culture. Everyone in the organization understood that results and how those results were achieved were equally important. And that everyone owned the culture. All of this enabled people to focus on growing their business instead of wasting time and energy on in-fighting and spinning from a lack of a clear senior leadership direction. o to boil it all down, here are some steps for how you can define and manage your start-up's culture:

Define your organization's values--and make sure there's enough shared meaning around them so people don't have completely different views on what they mean. And figure out a way to make the process highly participatory so that everyone in the organization has a chance to shape them or at least provide feedback on them (Zappos did this in a highly successful way).

As leaders, be seen as a credible example of all of the values. If values aren't championed and role modeled by the leaders, then they will be hollow. And, your culture will also only be as strong as the weakest value, so leaders should be prepared to be held accountable for them. 

Keep your values alive--I have seen organizations that have gone through the work of defining values and printing out glossy pamphlets highlighting them only to never to revisit them again--that's a waste of time and money, and if anything, it creates cynicism. In contrast, I've seen organizations, where culture was lived and breathed at multiple levels of the organization; there were annual awards to specific people who embodied each value. To help the organization culture grow along with your organization, you're going to have to manage it, make investments in it, and give attention to it--just like the business itself.

Adjust as needed. Ultimately, values are a reflection of who you are and where you're going. And most importantly, having clear values should enable your start-up to execute with efficiency 

and excellence. Sometimes, after a while, you may realize that a value no longer has the same resonance or there's one missing. And that's a good time to make some tweaks. 

Building the right team is your top priority – It can’t be said enough, but finding a co-founder or a team that complements your skills is so important for building the initial team. Having the complementary skill sets and someone you trust deeply and can work closely with, should always be on the founder’s mind when looking for additional team members to bring on.  There’s a reason why investors like to see history between co-founders and the initial team.  It means you’ve been through the ups and downs together and have probably at one point or another, seen each other at your worst.  See here for a previous post re-capping a session with Dianna Mullins from Glam Media, about building the right team.

Clearly identify the roles of each member of the founding team – All too often, founders will get together and decide they want to start a company, but no one knows who the CEO is.  It’s important to have these conversations early on and to set the proper expectations for responsibilities.  The CEO’s primary jobs are to “get money in the bank, make sure there is always money in the bank, and recruit a great team,” says Rahim Fazal.  This will also come into play when figuring out how to split equity (see below).

There is no hard and fast rule for the number of co-founders a company should have, but it’s important to think about when equity comes into play – Most investors recommend having two co-founders, but the number is entirely up to you and your team.  As Aileen Lee mentions, there is no right or wrong answer, but it can be tricky.  “Oftentimes, let’s say that you have three co-founders and you split [equity] three ways, but whoever the CEO is, he or she will be bearing the weight of the world on their shoulders,” says Aileen.  “At the end of the day, the buck does stop with the CEO and if they all have equal equity stakes, it can create messed up dynamics as a result.”

Be strategic when approaching investors – Investors want to see that you’re being strategic and tactical about the mechanics of your business.  How will you scale?  What’s the business model?  Milestones and risks?  These are all questions to ask yourself when you’re preparing your pitch deck for the initial meeting with an investor. Quantify your results and know the upsides and downsides of your business.  Ben Jacobs recommends leveraging your secondary connections and never cold e-mail any investors in the Valley.

Just like a marriage between founders, board relationships are very complex – Just as important as your relationship is with your founders, the dynamics between the company and the board members are equally as important.  Make sure to be very tactical in your approach with board members and be sure to ask the right questions.  As Kent Goldman says, do lots of reference checks.  If you’re thinking of opening up a board seat to an investor (or multiple), do your due diligence on them.  Ask other founders they’ve worked with and find out what their reactions were towards wins and losses.  At the end of the day, if you’re looking for board members to be with your company for the long run, find individuals who can empathize with you and help move your company forward in all aspects.   

When it comes to your product, you should always be talking to the customers – Having a good product is important, but it doesn’t matter if the product isn’t being used by anyone.  Distribution is key and as Rahim said, if you’re not out there with the largest market share and in front of the most important companies in the space, it really doesn’t matter.  At the early stages of building your product, create your MVP and start talking to as many customers as possible about their needs.  Knowing your customers and what they want will help you build a product that will scale and scale fast.  Iterate on things that matter and make that a focus.

A good company is bought, not sold – When good companies are bought, chances are they’ll be bought again and usually at a higher price. It’s a good idea to be open with your founders early on about the trajectory and exit of the company so that you keep in mind founder liquidity along the way.  One of the things Gentry Underwood learned from his counsel early on was to say yes to every meeting with the corporate development companies.  Even if you’re not thinking about it now, much like everything else, it’s a courtship and takes time to build relationships.  “So think of it as laying down seeds and meeting people and getting into those relationships,” says Gentry.  “Maybe one of them at some point will come to fruition and play out in that way.  But if it does, it will probably be because it’s been building over a period of time.”

For your viewing pleasure, you can watch the event below in its entirety.

http://www.youtube.com/watch?v=U98avEVXIP4

Public speaking is still the number one fear in most people’s lives. So, when you combine that fear with nervousness, worry, anxiety, video cameras, microphones, and a live audience, it’s no wonder some people freak out and forget what they want to say and fail on stage.

Failure when presenting on stage can be one of the most difficult experiences of our lives, especially as an entrepreneur. Why? Because, if you are not able to effectively communicate the value of what you do and why you do it, it could mean the end of a really great idea or possibly never getting to the point of raising money.

I have seen failure occur on stage for over 30 years and it comes in many forms.

In my experience, the top five failure points on stage are:

Not knowing your audience and what they are expecting. This is one of the most important things you need to know as a speaker. If you do not have some idea of who is in your audience, it could and has killed many a presentation.

Having a weak opening. This is all too common. If you don’t have a compelling opening to your pitch or presentation, you will not stand out and it will take you much longer to get the audience on your side.

Spending too much time in the weeds. Sometimes, people love their product or service so much that they believe the audience wants to know everything about everything because they are so excited about what they are doing.

Too much emphasis on the product or service. The presentation needs to be balanced to be sure you meet the needs of the audience’s expectations.

Not identifying the problem/pain/unmet need in clear terms up front. When pitching investors, this is one of the most common mistakes. Without clearly identifying the problem before going into your product, service, team, or anything else, the listener will not know how to relate the other information back to the problem.

Here are four ways you can ensure a better chance for success on stage:

1. Don’t Let Technology Get the Better of You

Arrive really, really, really early and check out the room, stage, and audio/visual setup. Make friends with the AV people. By getting to the venue where you are presenting early or the night before, you can reduce your stress once you know the requirements for your presentation are all met.

Test your presentation on the computer that will be used for the actual presentation. Quite often, when you move a PowerPoint deck from one computer to another, the slides get all messed up because of something as simple as a missing font.

Carry a back-up copy of your presentation on a USB drive and put a copy in the cloud somewhere that you can easily access in an emergency. Test the version of your presentation on the USB drive by opening it on a different computer. If it looks okay when not on your computer, it should be fine at the event.

Pick up the wireless clicker before it’s your time on stage and be sure you know which way is forward and which is back. I have seen very smart people go up on stage and fumble the clicker to the point where they even need to ask someone how it works! This is not a good way to start your presentation.

2. Have a Back-up Plan

Have a back-up plan, in case something goes wrong while you are on stage. Having a back-up plan to move to, if something goes wrong, can save you.  Coming back from a potential failure on stage can be quite endearing for an audience to experience with a presenter.

Practice your back-up plan. It’s one thing to have a back-up plan, but if you do not practice it once or twice, you won’t know if it works! Some people even have two back-up plans, depending on how serious of a presentation situation it is.

3. Be Mentally and Physically Prepared

On the day of the presentation, warm up your voice. To me, presenting is very much like a sport. You need to warm up so that you are ready to play/present your best work from your first word. Go outside or in your car and sing or talk for 5-10 minutes to warm up at least one hour before your time on stage. Some people like to rehearse the first 3 opening lines of their talk several times to warm up. This can also help reduce the stress of worrying if you’ll forget the first things you want to say.

Breathe. When people get stressed, their breathing usually changes to very shallow or short patterns. This starves your brain for oxygen and causes the adrenaline pumping through your body to have a negative effect on you! So, breathe three or four times before you go up on stage or just as you are walking onto the stage, but draw the breath down into the abdomen. You might feel a momentary sense of lightheadedness, so be careful.

Find a mood inducer that instantly puts you in the right frame of mind to deliver your best work. For me, I use the theme song from the original Rocky movie. The first 7 seconds of that music instantly transforms me into the person I want to be when presenting on stage. It’s visceral and works every time I need to get in the right mood to present. A music mood inducer can work wonders for your ability to deliver a great presentation with the right level of enthusiasm.

4. Let Your Personality, Passion, and Enthusiasm Shine Through

Finally, for some reason, I find many speakers leave their personality, passion, and enthusiasm at home. Either the nerves take over or someone is telling you to tone it down on stage. I don’t know which it is, but they are both killing you as a presenter. If you don’t transfer your enthusiasm for your topic, product, or service to each and every person in the audience, you haven’t done your best work and may be headed for failure. Your voice is the primary place where enthusiasm comes from. It’s all in how you say the words, plus gestures. But your voice is where it mostly comes from. I recommend that you have two voices: the one you usually use and one that makes you feel a bit like a stage actor. It’s the voice you will hear when you allow yourself to play with your volume, speed, tone, and pitch. Your voice is an amazing tool that you have a lot of control over. Allow your voice to communicate the passion, excitement, and enthusiasm for whatever it is you are talking about, and people will remember you for a long time!

Backblaze sells an online backup service that nearly everyone with a PC or Mac can use to backup their data. That’s a target audience of nearly 2 billion people. “We tried a couple of experiments to reach millions of people at a time,” Gleb recounted. “For example, we did a promo spot on The Ellen Show, reaching 4 million potential customers directly and 10 times that indirectly. We got a handful of sales. The cost of acquisition was 15 times what we expected.”

Just because it’s a target doesn’t mean you can hit it.

Learning from their Ellen experience, Gleb researched their existing customer base for “niches” of customers. “One prominent niche in our customer base was photographers, which makes sense given our unlimited data storage model and their desire to protect their photos,” said Gleb. “Another niche which we thought valued their photos, in our case digital photos, was Moms. The Mom niche was under represented in our existing base, so we tried to target money towards this audience.” Backblaze tried reaching the “Mom” group through Mommy-oriented websites, sponsored email campaigns, targeted Facebook ads, Mommy-blogs, and a myriad of other programs. None of these even came close in proving fruitful.

Sometimes love is not enough.

“Another niche we targeted was techies in startups. They live on their computer, have incredibly valuable data to protect, and don’t have much money. With Backblaze being in the Bay Area this meant techies were fairly easy to find,” Gleb noted. “Being a startup ourselves, we could go to events and talk directly with our target audience. What we found was that nearly everyone loved our service; they raved about us, they tweeted, they posted, and then they forget to buy.” While the amount of money Backblaze spent on a given event was low, the employee time investment added up. For example, Backblaze would spend $295 to be at a techie event, spend six hours there and come away with endless praise and zero sales.

It’s hard to hit the bulls-eye twice with the same arrow

More than half of Backblaze customers are Mac users – far above the percentage of Mac users in the general population. Having an online backup application written to run “native” on the Mac platform proved to be very popular with Mac users.

When Backblaze targeted Mac users with a chunk of their million dollar marketing stash, they found an interesting behavior. Gleb notes, “The initial program we’d run to Mac users, often produced acceptable to great results. When we’d go back and try again, the results were markedly less.” One prominent example was when Backblaze sponsored a podcast on a leading Mac enthusiasts’ show. The initial effort produced a cost of acquisition of $5 (yes, $5 really). The subsequent sponsorship of a podcast in the same venue a few months later produced a cost of acquisition of $500.

A million dollar fail?

Did Gleb and Backblaze blow a million dollars on marketing? They certainly failed a few times. Some failures were epic as with The Ellen Show, and some failures were minor as with the techie events, but each failure was a learning event. Gleb summed it up this way, “We used failure to help us find and understand our target niches. We also learned that we couldn’t take these niches for granted, that each time we ran a program it had to be fresh, not frozen. Doing this has allowed us to get significant traction in these initial niches.” In the end it seems Backblaze traded $1 million in marketing for traction in a handful of niche markets. A good trade?

As a rally cry “Failure is not an option!” makes for a great tool to motive the troops but it couldn’t be farther from the truth. In reality that particular mission may or may not have been important, that particular battle may or may not have determined the outcome of the war but failure was always an option. In fact, the military has recognized that failure is such a likely outcome that it has created a process to identify and learn from failed missions, it is called the After Action Review (AAR).

In 1990, Peter Senge coined the terms “Systems Thinking” and “Learning Organization” to describe how organizations can study action-reaction feedback loops to better learn how to solve their own problems.

When an organization makes a plan, executes the plan, and documents what they learned they are completing the system. When they instead attempt to cover up their failures they are short circuiting the system and failing to learn from the feedback loop.

Most business scorecards remain pretty similar to the academic report card. Get more A’s and you get recognized in a good way but get more F’s and you get recognized in a bad way. In business you get compensated and promoted based on your successes. Failures can cost you your promotion, your bonus, and even your job. With this equation it is easy to understand why leaders would prefer to quickly kill a project and cover up their failures but the result is that the organization never really learns from the failure.

In 2007, I created a tool at Best Buy to ensure that we could learn from our failures. I started an internal series of Failure Forums to openly address our failed initiatives. It was a venue open to all employees where initiative leaders would share their story: what had they accomplished, what had their learned, and what would they have done differently? We kept the presentation sessions intentionally brief so that we had ample time for questions from the audience.

To be a learning organization you first need to admit that failure is an option and then build the necessary systems, process, and tools to address and learn from your failures. In my follow up article I will share my lessons learned and some of the best practices for starting Failure Forums within an organization.

Where I’m coming from

When I was 19 I had spiky hair, ½ a college degree and a fledgling startup helping real estate agents put their property listings on the interwebs, it was 1999, and yes we partied like it was.

The world was abuzz for anything technology related, it had been for a while. It had been a year since ebay had floated with a valuation around 150+ times it’s profit (it currently sits at around 26)

A set of serendipitous circumstance led to me pitching a new startup idea, an SMS gateway, to a group of angels in Perth, Australia. We raised the money easily and in 12 months went on to build out a product, secure a lead client (a major Aus bank) and start generating some nice revenue. In 2001 we easily closed a small venture round, the money hit the bank about 1 month after the entire tech market came crashing down. I’d successfully managed to start and grow a tech company 2 years before the entire market melted, but we had customers, revenue & money so set out looking for another sand pit.

As it turns out our banking customers had other problems so within 12 months we had found an opportunity to help them in lending, mortgage lending. By 2004 we had commercialized a platform to help their mortgage brokers streamline the mortgage application process, things were going well until 2007, when that market too started to unravel.

In 2009 I woke up realizing that I had managed to pick the 2 biggest industry collapses in a single decade and start ventures around 2 years before their respective collapses. I’d been swimming upstream for years.

In my next venture I swore I would understand the macro dynamics within the market before setting out. In fact, I would aim to build a business around an observable, established trend, with my bet effectively being on the impact of that trend. Equally I would try to understand the cycle of the market I was planning to go into.

This is what I learned about seeing, interpreting and backing trends & cycles as a result.

What is a Trend?

Firstly we need to define a trend, which I define as being a single long term shift in capability, behaviour or need within a market.

In short

Capability trends relates to the evolution of hardware or infrastructure, e.g. the shift from fixed to mobile

Behaviour trends relate to how people behave e.g. the shift from office bound jobs to work that can/is done remotely

Need trends relate to what people want to do e.g. be able to check email on the go

And yes, they are related - Capability enables Behaviour which drives Need.

  Finding a Trend

Picking a trend is relatively easy, you will read about it a lot and over a sustained period of time.

Mobile is a trend, there has been and continues to be a sustained move towards things being mobile.

Improvements in computing power and hardware capability generally, is a trend, a well documented, unbroken for years trend.

High speed internet is a trend, miniaturization is a trend, increased access to information is a trend.

These are a handful of the Capability trends that are established and will continue for years.

Connecting a Trend

This is where the trend shifts from capability to behaviour. If computers become smaller, faster and can connect to the internet faster what kind of behaviour will this enable in people.

The key thing to think about here is a core human trait that relates to the fundamental desire by all animals to do 3 things

- procreate

- seek pleasure

- avoid pain

Ignoring the first one for the moment the change in capability over time will result in new ways for people to find pleasurable things and/or avoid pain (more easily referred to as inconvenience). This shift in behaviour then drives the need on which you can build your product.

Let’s take an example.

Over time more people will have smart phones (simply phones with good internet, better screens, faster processors and other sensors like GPS). What behaviour will this mobility and mobile access to information enable? Perhaps being able to connect with friends who are also out and together find food that is good value, suits your tastes and not too far to walk to.

People will need (desire) an application that uses where they are to show them places to eat, of food they like, within walking distance that they can easily share with their friends.

What the trend does is multiply the number of people for whom this behaviour is enabled and thus need is driven.

Starting Yelp in 1998 before smartphones and high speed mobile internet access would have sucked.

A good way to try to predict the behaviour that will be enabled from the capability trend is to work in absolutes. If my phone was with me 100% of the time, always charged, had unlimited internet speed and could project video quality data on any surface.  What would I want to do that would give me pleasure or help me avoid pain or inconvenience.

The what if can be extended to any of the hardware or infrastructure parts of the puzzle from sensors like location (what if my location could be measured to within 1cm?) to data (what if I could transfer money to anyone, instantly at zero cost).

I might pay to overtake people on the freeway so I can get to where I’m going faster and be inconvenienced less.

Thinking in absolutes breaks you free from the constraints of a break in one part of the equation.

Picking the tipping point

Once you’ve picked your trend and predicted your behaviour in absolutes the most critical part of the process is required which is to pick when the underlying capability trend has reached a point where the behaviour you predicted is now also becoming a trend.

This may happen very quickly, think app stores and social media. In other cases it may happen over many years, think Salesforce/SaaS applications or online purchases.

The successful companies in just about all the major behavioural trends of the last 15 years in tech were backing the trend before it emerged and were ready with a viable, scalable proposition that closely met the final need. Trying to bringing a product to market and become dominant or successful after the tipping point is reached is rarely the case, gmail being a notable exception.

For you and your startup this means while you dont need to pick the capability trend, you in essence will have to bet the company on the behavioural trend you predict and the needs it drives. You will want to time your run so your product is viable & scalable at the tipping point.

Trends vs Cycles

Outside of Trends we also have Cycles, these being the more traditional ebb and flow and usually relate to things like business, political or social environment. There is an argument that you can start a company anywhere in the cycle and, if its good, it will survive at any stage in the cycle.

While this is true you startup success can be accelerated or retarded based on your timing in the cycle. The relationship between the cycle and the overall level of demand (a relative measure) for your product is both specific to your market unlikely to upset the long term trend.

For example the ill fated software I was making for mortgage lenders went through a small downturn in 2007 but then, despite a terrible mortgage market that saw some 40% of mortgage brokers (our users) leave the market, we saw an increase in both usage, volume & revenue after this. The trend eventually outweighed the cycle.

Making this work in your startup

People talk about luck or being in the right place at the right time. Others innately seem to read the market dynamics and tend to better see how a capability will drive a behaviour. There is even an argument for find the right place (in the market) and simply wait it out, although most startups dont have this luxury.

To make this work in your startup I would firstly be aware.

Consider the shifts in the hardware & infrastructure that affect your market, users & customers and at what stage these are at. Be super mindful of data/information, this is the most underlooked trend. Access to data, quality of data, timing of data, has driven more behavioural change than hardware alone ever has, and it tends to move it faster as it itself happens faster. (Granted in some cases the hardware trend has helped with the access to data).

Then consider if my users, customers or market had these capabilities to the nth degree, or in absolute terms, what would they do? … what would they need? am I building to solve that need? .. and will it be ready & scalable when it matters to enough people to make my venture viable?

The learning achieved from these games can help business leaders anticipate and mitigate potential crises.  Micro-games can simulate real-world limitations to decision-making and allow leaders to experience, model, and prepare for the negative impact these dynamics have on effective decision-making.  Practicing this type of preemptive problem-identification and problem-solving can inculcate crisis decision-making skills, which are critical to crisis preparedness.  There is a residual and sometimes profitable benefit to your organization from conducting these games: they spark creative thinking, which does not end when the game is over. If for no other reason, you should consider this a worthwhile and defendable objective to support engaging in this practice.     

I look back with a mix of emotions on the events of the following morning, because lack of unity and the silo-effect were contributing factors that plagued U.S. efforts to effectively develop a collaborative strategy of threat mitigation.  Hindsight bias notwithstanding, I wish my presentation on September 10, 2001, had focused less on the pedantic protocols of interagency relations and more on the process of developing and practicing creative problem-recognition and problem-mitigation techniques.   What will it take to move toward a model of problem recognition/mitigation and away from the current reactionary model of responding to wicked problems as if we are shocked they are happening?

 I had a conversation yesterday with Cass Phillipps, the founder and executive producer of FailCon. FailCon is a conference that focuses on failure and what we learn from it. We were musing on the many euphemisms people use in lieu of just saying “failure.”  

Experiment. Pivot. Learning. Disproved hypothesis. 

These words are fine, but so is Failure. Wouldn’t it be better if we could just talk about it directly, instead of tip-toeing around it as if it were toxic? There is a Buddhist saying: “No mud, no lotus.” A business corollary might be, “No failure, no learning; no learning, no growth.”