Lean Planning

I just posted a piece about a new business planning methodology called Lean Planning. Lean Planning takes the best of traditional business planning and merges it with the methodologies of 'The Lean Startup' by Eric Reis. It also extends beyond optimizing the startup process to incorporate better methods for managing growing companies.

We've been working with Lean Planning principals at Palo Alto Software for a while and I'm curious to see what other people think.

A question that every business should ask

Silicon Valley is buzzing about how the funding environment for startups is changing. Sarah Lacy has a good post on it. Fred Wilson provides his own explanation. YCombinator is even shrinking their current class size, although they are blaming it on internal problems, not the larger funding environment.

This feels similar to the crash in the early 2000s when companies with no real way to make money were funded with abandon.

Techcrunch is now reporting that when startups are getting meetings with investors,

"Investors are increasingly asking 'What’s the business model?'"

Call me old fashioned, but shouldn't every business ask themselves this question? It shouldn't take a savvy silicon valley investor to ask this. Anyone starting a business should be asking this question of themselves.

And beyond just asking how you plan on making money, it never hurts to explore a simple budget to see if the business is actually viable. I'm not talking about a 5-year forecast, but a simple model that shows the costs of acquiring and servicing a user and what that user might be willing to pay. This simple back-of-the-napkin exercise is fundamental to entrepreneurship and critical for anyone considering starting a business.

I know, some of us entrepreneurs want to change the world with our ideas. But the fact is, being an entrepreneur is about creating a business, and businesses need to make money. I don't think it gets much simpler.

Image courtesy Andrea Resmini on flickr

7 Keys to a Perfect Pitch

What are the 7 critical components to a perfect elevator pitch? Check out my latest post on Bplans.com to find out.

Why I Love Vote-by-Mail

The first election that I voted in was the 1992 presidential election.

I remember walking off campus in Princeton, NJ, to the local elementary school to cast my ballot. I was 18 and excited to participate in our great American democracy.

Stepping into the voting booth with my ballot, I was suddenly faced with not just one decision, but a multitude of options that I was not prepared for. I knew who I was voting for in the presidential race, but just wasn't familiar with everything else on the ballot.

Leaving options blank on the ballot seemed like such a waste, but I didn't want to accidentally vote for something or someone that I didn't believe in.

Frankly, this first voting experience was a bit disappointing. I was glad that I voted in the presidential election, but felt like a let myself down, not coming into the voting booth a bit more prepared. It was like showing up to take the SAT without a #2 pencil and having never seen a practice test before. I was completely un-prepared.

Having learnt my lesson the first time, I tried to be better prepared in future elections. My then girlfriend (and now wife) would study the election handbooks that came in the mail and put together "cheat sheets" to take into voting booths in New Jersey, and then California. But, this process still felt broken. Lots of preparation was required, and inevitably, we would forget to study a particular issue and not know how to vote in the few silent, private minutes behind the voting curtain.

And then we moved to Oregon in 2002 and experienced a fundamentally better way to vote. For those that don't know, Oregon citizens ALL vote by mail. There are no polling places, no lines to wait in. Your ballot is mailed to your home a few weeks before the election and you can send it in (or drop it off) anytime between when you receive it and election day.

My first experience voting in Oregon was after dinner one night at my in-laws house. We cleared the dinner table, all got out our ballots, pulled together some research material and went through, vote by vote, issue by issue.

Sitting around the table, we could discuss the issues. Debate the pros and cons of candidates, and make truly informed decisions.

There was no time pressure. No excuse for not knowing about an issue. And, most importantly, no questions left blank.

This type of voting is so far superior to anything else out there - except maybe internet voting, if that ever comes. I like being able to vote, knowing that my ballot was filled out intelligently. It's just such a better experience than entering a voting booth.

And, as an added benefit, vote-by-mail seems to improve voter participation rates. Oregon ranked in the top 5 in the 2010 midterm election.

But, regardless of how you vote or who you vote for, just get out there today and vote. As a citizen of the US, it's a privilege and a fundamental responsibility.

The difference between Apple and Microsoft

Here, in a nutshell, is the difference between Microsoft and Apple:

Apple’s products say, “You can’t do that because we think it would suck.” Microsoft’s products say, “We’ll let you try to do anything on anything if you really want to, even if it sucks.”

Quoted from Marco Arment's excellent post about Microsoft's Surface.

Failing Gracefully

Fred Wilson's Friendly Failing blog post reminded me of one of my favorite phrases: fail gracefully. I think I first heard this term when I worked at Yahoo. Engineers and product managers would talk about what would happen when users experienced an error on a web site and they always wanted to be sure that the site would "fail gracefully."

Failing gracefully in this context means that a site shouldn't just deliver a random error message, but should explain to the user, in plain language, what had happened and what their next steps should be. These days, you see this done frequently with good 404 pages and other types of error pages on sites.

Ideally, an application will fail so gracefully that a user won't even realize that a failure has taken place. At Palo Alto Software, our site search uses a custom Nutch and Solr configuration to regularly crawl and index our sites. But, as with all things, this solution sometimes fails. In that case, the system automatically fails over to a basic Google custom search. The Google solution is still quite serviceable and works well. Most importantly, end users won't even know that our preferred solution failed and is off-line. For me, this is the best way to fail gracefully and we strive to achieve this kind of seamless failure in all of our development.

The other context for failing gracefully is when you actually lose. You lose a contract, a game, whatever. You failed to win. My high school rowing coach drilled this into me and my teammates: that no matter the situation, if you lose you take the loss gracefully, always respect the winner, and learn from the situation.  Not that we lost often (my coach was excellent), but if we did, we needed to learn as much as we could from the situation so that we could compete better the next time. When we failed, we failed gracefully and were never the sore losers who blamed a loss on others.

Microsoft Surface: This was my computer...8 year ago

When Microsoft introduced their Surface tablets a few weeks ago, I had a deja-vu moment. Hadn't I already seen this computer? Hadn't I used it as my primary computer for nearly two years around 2004/2005?

What I was remembering was my trusty Motion Computing tablet running Windows XP Tablet Edition. Granted, the Motion tablet was nowhere near as slick as what the Surface looks to be, but it honestly doesn't seem like Microsoft has evolved too much in the meantime, either.

I used my Motion tablet as my primary computer. Because it ran full Windows XP, I could run any applications that I needed to. I could grab the tablet and take it to meetings and take notes using One Note (which had excellent handwriting recognition, by the way). When I got back to my desk, I would drop the tablet into it's docking station and it would instantly connect to an external monitor, keyboard, mouse, etc. Although the image to the left isn't my personal setup, it did look something like that.

Although I am now a truly converted Mac guy, this setup was really very good. No hassles syncing devices. No reduced set of applications on the tablet. No missing files. I always had my full computer with me and it could be easily converted from tablet, to desktop, to laptop (with a keyboard case not un-like the Logitech Keyboard Case for iPad).

So, while the Surface looks like a pretty cool device, it doesn't feel like Microsoft has innovated very much in the past 8+ years. We're still looking at a laptop replacement that runs a complete version of Windows (with the Pro version of Surface). Granted, Windows 8 is very different than XP, but has Microsoft actually evolved all that much?

But, regardless of whether Microsoft has evolved or not evolved, the concept of a "complete" OS on a tablet is a good one. For those in the enterprise, all your applications will still work, and you'll be able to work on them in some form from both a tablet interface or from a "normal" laptop-style interface. The situation I described above was a great working environment. And, while I do work mostly in the cloud these days, I would love to be able to dock my iPad to a large monitor and keyboard/mouse and have a solid desktop computing environment that could easily convert to tablet format at a moment's notice.

Some are raising the question of whether Microsoft will have an "app" ecosystem to rival the Apple app store. I believe this is almost a non issue in the short term. There is tons of Windows software still out there and there is plenty of custom software in the enterprise that will ONLY run on Windows computers or in Internet Explorer. Hard to believe, but true.

Most Windows developers will only have to do a little work to make their software work for Windows 8. Many won't have to do any work at all. Microsoft has an app ecosystem that they've been developing for over 2 decades and it's not quite dead...yet.

And, by the way, isn't it ironic that we are now talking about the availability of software for a Microsoft product? That the major problem with choosing a Mac for over a decade... not enough software. Now, it looks like the shoe is on the other foot. Funny how the world changes.

I'm looking forward to see how the Surface does in the market. I think it has a decent chance at stealing market share from traditional Windows laptop makers. Will it steal from the iPad? I don't think so. Surface will succeed in the enterprise, though.

Writing a one-page business plan

If you're like most people, writing a business plan is something that frequently gets pushed to the bottom of your to-do list. After all, who wants to write a 30-60 page paper?

Well, gone are the days of the long, draw-out business plan that does nothing more than site in a drawer. My latest blog post over on the Bplans.com Up & Running Blog details how to get a business plan done in one page.

Check it out and let me know what you think.

Including assumptions in your business plan

I just published a new post over at the Bplans.com Up & Running blog about including assumptions in business plans. Every business plan should document the core assumptions that drive the business and include a test plan for validating those assumptions. Not only will this make your business plan actionable but it will help guide you towards a successful business.

Read the full post here.