A lot of companies talk about R&D -- Research and Development. If you're doing a startup, wipe that phrase out of your vocabulary!
It's simple, really. Investors don't want to pay for research. Research is open-ended. Research doesn't have an answer -- at best, it has a theory. I was talking with an entrepreneur recently who has an idea about something that might work. If it works, it might be cool. If it's cool enough, it might make money. That's all fine and good, but investors aren't going to pay for all those mights. They don't want to invest in a theory -- they want as much certainty as possible. Their ideal scenario is where you're already making money and you just need money to expand. Certainly, you can find investors who will take more risk, but the more uncertainty you can remove, the better.
Don't get me wrong -- research is important. Most of the time I spent on Puzzazz in the last year and a half was research. But unless you work at Bell Labs or Microsoft Research, don't count on somebody else paying you to do it.
Instead of R&D, you have to think about R then D, with investors coming after the R and some of the D.
Wednesday, February 24, 2010
A lot of companies talk about R&D -- Research and Development. If you're doing a startup, wipe that phrase out of your vocabulary!
Monday, February 22, 2010
Adeo Ressi of the Founder Institute likes to ask the question "What are you passionate about?"
I love this question because there are many wrong answers but there is no right answer. Adeo doesn't ask this question because he wants the answer, though he is interested in what you say. He asks the question because he wants you to think about the answer. If you don't think about your passions and if you don't do something that you are passionate about in some way, then your chances of success go way down. This is true in life, but it's even more true if you're an entrepreneur.
There isn't a one-size-fits-all way to be passionate. It's all about you. My mother opened an optical shop and she wasn't passionate about eyeglasses -- she was passionate about service. She wanted everybody in town to be able to afford a pair of quality, stylish eyeglasses. She succeeded in her business because of her passion, which permeated every aspect of her business. And her shop changed how eyeglasses are sold in Lawrence. Yes, the change would have happened eventually (it's happened everywhere else), but her passion made it happen sooner.
As I wrote recently one reason that I killed my coordination services startup was that I wasn't passionate enough about it. I still think it's a great idea, but it's not my last great idea, and somebody else -- somebody else who is passionate about it -- will do it, probably even better than I would have. I wish them luck.
In case it's not obvious, passion is one of the big reasons that I'm jazzed about Puzzazz.
What are you passionate about?
Sunday, February 21, 2010
It took me a surprisingly long time to come to this conclusion, but I'm taking the experiment that is currently Puzzazz and turning it into a real business, hopefully a big one.
I've been passionate about puzzles for most of my life. In my spare time, I'm a professional puzzle constructor, with puzzles published in the New York Times, GAMES Magazine, and plenty of other newspapers, magazines, and books. I've constructed thousands of puzzles. I also co-founded Microsoft Puzzle Hunt and Microsoft Intern Puzzleday, two events that are still going on long after I left the company. So what was the holdup? Did I think I was too passionate about it?
Honestly, that was part of it. I wasn't sure I had the proper distance. I was concerned that, because I loved puzzles, it would cloud my judgment and I wouldn't be able to accurately assess the potential business. But there were two bigger components.
Helping the World
Throughout my career, there's been a common thread. I do things which help people, enable people, or empower people in some way. Usually, it's been stuff which made them more productive, like word processors, web publishing software, databases, and personal information managers. But I've also done educational software (twice, most recently at DreamBox Learning) and even an embedded system for hardware that assisted the kidney dialysis process. How can puzzles stack up with any of that?
It took other people to help me realize what is now obvious. Mostly they just echoed back what I was saying, but hearing it from somebody else really helps. Puzzles aren't just fun. Like my current Puzzazz users who visit the site every single day, many people find the fun and challenge of puzzles an essential part of their life. There's a reason fifty million people in the US solve crossword puzzles regularly!
And, in the online world, there are an awful lot of crappy puzzles and puzzle games out there. Providing people who want puzzles, who can't live without puzzles, a better experience is definitely making their lives better.
Building a Big Business
How can puzzles and puzzle games be a big business? It took me a long time to see this, too. Sure, lots of people solve crosswords. Sure, people go nuts for Sudoku. But a big business? When I did some research I learned that the casual and mobile games markets combined are about a $5 Billion market and growing strong. About 20% of that is puzzle games -- honestly, not very good puzzle games. So, the market is there.
I had started Puzzazz as a fun experiment. I picked a narrow range of puzzle types and I did a number of different things to learn what would work, from the different perspectives of puzzles, site features, and revenue generation. Over time, I've come to realize that it's not just an experiment -- it's a successful one. Even though it's a tiny site at the moment, it's making a large amount of money on a per-user basis. Even if I did nothing else, Puzzazz could be profitable by just increasing the number of regular visitors. But I've got much bigger and bolder plans than that.
Learning from Failure
It turned out that by trying to make sure I didn't let my passion cloud my judgment, I allowed it to stop me from seeing what is now pretty obvious. Puzzazz has the potential to be a really great, profitable business!
I spent a lot of the time between the time I launched Puzzazz, in September, 2008, and now, trying to start another business that didn't make it. I'm avoiding the same mistakes. I have a good, practical plan, without unreasonable deadlines. I'm not trying to "boil the ocean" and the plan involves steady growth, with multiple solid revenue sources. I'm doing something I'm passionate about, where I already have a ton of knowledge, both in puzzles and in building large, scalable, quality web services. I've already gotten traction and revenue without requiring skills that I don't have (although I have started looking for my first business person). And I'm having fun with it. That doesn't mean it's a cakewalk. Nope, there are plenty of hard problems to solve to get it done right. And, though I've started the process, there's a long way to go before Puzzazz is what I want it to be.
In other words, like any good puzzle, it'll be both fun and challenging!
Tuesday, February 16, 2010
What ever happened to Groupthink?
I get asked that periodically. If you don't know, Groupthink was the name I attached to the startup I was trying to build more than a year ago. I started with an ambitious, overly public plan, and an announcement that I was going to launch in 30 days. What I didn't say was that I had a huge, gigantic plan, and the planned 30-day launch was just the start.
If you've been reading my blog, you know the first thing that happened (I didn't launch in 30 days) and you probably know the second thing that happened (I didn't ever launch it), but now I'll make it official: it's dead and it's been dead for quite a while. I learned a ton in the process and I think my future endeavors will be stronger as a result, but I figure I might as well let everybody else learn as well.
So what was I building?
Put simply, I was building a coordination services company for small- and medium-sized businesses. I had what I thought was a pretty cool idea -- an incredibly simple, easy-to-use scripting language for coordination activities combined with a highly stateful backend system that let people build coordination functionality into their applications without having to know anything about how it all worked or even running a server. You could use the same scripts to send and receive emails, provide web forms, make phone calls, send SMS text messages, even contact somebody through XMPP chat. The system could work 24/7 with any application, even one written in Visual Basic in Microsoft Access, running on a single PC sitting in the corner of a small business that gets turned off every night. The system was designed so that anybody from an expert to a casual spare-time developer could use it, with the sweet spot being VARs and ISVs delivering custom applications to specific types of businesses. These VARs and ISVs don't have the experience (or servers) to do these things on their own, but Groupthink would have allowed them to add a wide range of coordination activities very quickly. It's not a perfect analogy, but think of it as Varolii for everybody else. And I envisioned that Varolii (a Seattle company) or one of their competitors, or possibly one of the giants like Google or Microsoft, would be the eventual acquirer.
I knew that I couldn't launch a platform without a product, so I decided I needed to build one. Plus, I wanted to keep the larger vision secret. After all, I was still figuring parts of it out. So, I made my first mistake -- I picked a first product that I personally wanted to have -- a group task manager I called Groupthink Projects. When people asked me how it was better than Microsoft Project or Liquid Planner, I said "they don't make phone calls." Unfortunately, my little demo problem was just a bit too big. I spent time on Ajax UI that it needed but that wasn't critical to my overall vision. Because I'd publicly said I was going to launch in 30 days, I ended up cutting some of the critical features (including mobile access) in order to try to make my deadline. Then, I got sick for a week and lost another week to moving my father-in-law into an Alzheimer's facility (which I talked about at Ignite Seattle 6). When you only have a month, two lost weeks is huge. By this point, I also knew that I'd pick the wrong first product, but I kept going. In retrospect, it's pretty obvious I shouldn't have, but, at the time, I felt I ought to make my deadline and shipping would be good for me.
The deadline came and went, without me launching. I started spending much more time on the backend -- the important stuff. I took time out to build a couple demo apps, including a version of Eliza that I built in a day. Talking with your psychiatrist via email or text messages didn't seem so compelling, so I added voice recognition functionality to my backend just so you could just talk to Eliza. It worked quite well, except for the huge delays caused by telephony provider Twilio's incredibly slow voice recognition.
The second first app
Although I never announced it, I decided to completely abandon the Projects app and concentrate only on the platform, but I still needed a first app. When I'd been talking with people, the coordination problem that resonated with everyone was the scheduling problem, and I had identified a very solid market in restaurant schedule coordination. I knew from field research I'd done in visiting restaurants that it was a huge problem, that paper, computer-based, and even web-based scheduling system hadn't solved the coordination problem of rescheduling people and dealing with missed shifts. You should see some of the workarounds restaurants use! So, I latched onto this as my new first product.
Dumb move. It was even bigger than the first problem and I had no passion for it. Worse, everybody thought I had morphed into a scheduling company or a restaurant software company. And all the potential investors I talked to wanted to see traction there first. Yup, traction in the first app which was really just to demo the platform. And I didn't succeed in finding any customers for the platform. Truth be told, I didn't try hard enough to get those customers -- after all, I'm not a sales guy.
The skills you have vs. the skills you need
And that relates to the final problem. I had picked a problem where I couldn't succeed without an early business partner, because way too many of those skills. I advise people all the time that they should pick problems that needs the skills they already have, yet here I'd picked a problem where about half of the skills I needed at the beginning were those I didn't have. Without a business person with marketing and sales skills, I couldn't get traction that would matter to investors.
I still really like the concept I had and I think it's inevitable that somebody will build a platform like it. I learned a ton from failing. I've moved on and I'm trying to make sure that I don't make the same mistakes next time around.
I'll write about that next.