Archive for the ‘Agile Business’ Category

SaaS: Where are you in this 2×2?

Wednesday, March 15th, 2017

Some SaaS ventures lead to category leadership while some lead to imaginary frozen quadrants. Here’s a little 2X2 to assess where you are in your journey to SaaS nirvana. When amazing products are sold in amazing ways, it produces the almost mystical flywheel effect.

2x2 Product vs Sales

Let’s dissect this.

Red: Weak Product and a Weak/Average Sales Team

This is a highly incremental quadrant where a single provider may be serving the exact needs of a handful of customers. It’s an equilibrium that doesn’t last too long. I’ll leave this quadrant at that.

This is a highly incremental quadrant where a single provider may be serving the exact needs of a handful of customers. It’s an equilibrium that doesn’t last too long. I’ll leave this quadrant at that.

Blue: Weak Product and a Strong Sales Team

When people say “that company is sales driven” this is what they are referring to. Founders of companies in this quadrant have a knack of story-telling and projecting a product market fit before a product is actually ready. What happens next is catastrophic. Sales drives the company’s culture, narrative, and product building. Both product and engineering go into a wild-balancing act of fixing the problems while trying to add features in a near random fashion.

It is unsustainable. It bloats customer service, support, and pre-sales. Lack of a strong product causes politicking, confusion, and populism in every department, which leads to relationship-driven rather than value-proposition driven outcomes. Unless a startup iterates on product rapidly or brings in a disciplined and creative leader, there’s a significant risk of revenues plateauing at $5m-$10m mark.

So why is it blue? Because it is fairly cushioned for a while though sales > everything is bad karma.

Yellow: Strong Product and a Weak/Average Sales Team

This quadrant probably causes hackers amongst us the most heartburn. A lot of strong products start with nobody focused on sales. They continue to write amazing code, design amazing screens, and setup amazing data pipelines, but they just don’t know how to position, craft a story people remember, distinguish themselves from 99 other guys who may have had the same idea. Many product founders suck at sales and often hire the first person who blinks.

Even for successful startups, this can be a transient stage, but successful founders realize their mistakes and then quickly hire a sales leader and move to the next quadrant. The good news if you’re yellow is that just like in real life, you can cross the traffic light before too much damage happens.

Green: Strong Product and Strong Sales Team

This is jazz improvisation zone. You can have a strong product and sales culture. It all starts with respect for both and it certainly involves finding the right talent that can craft what really works uniquely for you.

That’s why very few founders get there. A scalable sales model is crucial. A product alone can take you so far. For every Dheeraj Pandey ringing the IPO bell, there’s a Sudheesh Nair driving the quota home. For every Jyoti Bansal getting acquired at $3.7bn, there’s a Dali Rajic digging into sales capacity, and for every Jason Lemkin, there’s a Brendon Cassidy. When phenomenal founders and product builders pair up with their sales counterparts, to accomplish a sight to behold – a startup on a flywheel across the sky.

In each of these cases, the sales counterparts were able to hit their targets, because of a product which was able to either create demand or was superior to incumbents. If there was a product market fit, based on the narrative, the product scaled to bring in a perpetual stream of renewals and sources of new revenue.

Hopping in the 2×2

I hope you’ve found your color by this point. So how do we transition from a shitty part of the quadrant to an awesome one?

If you are Blue or Yellow, scale to Green quick. Here are some things that increase your chances in a hop

  • Listen to early feedback from customers and employees and suppliers. Setup key feedback loops
  • Iterate the product every week, every day, every hour. Continuous Beta. A living element
  • Once you cross $10 million, press the gas pedal. Go. Go. Go

Good luck and let me know if you think of additional colors.


Thanks to Leena for flywheeling this post!

The kind of engineering team to be built this time

Friday, April 8th, 2011

This time the software engineering team will not have any Quality Assurance person. All the manual testing is being thrown out of the window.

In ancient days of internet software development, testing was all manual; point-click-verify, check the database etc etc. Thanks to evolution of tools for automation of software development tasks around (a) build, (b) automatic deployment and (c) unit testing; it has become possible to automate the task of deploying a codebase without manual testing. This is what is being called continuous integration, wherein quality control / testing is applied continuously instead of being done at the end of the development process.

Let’s look at a chart depicting the evolution of resource allocation. For the sake of simplicity only the resources of type (a) Dev (b) QA (c) Design (d) Admin are accounted. Over the years, the staffing requirements of QA has gradually reduced due to automated testing, etc. However, someone is still around to “play” the test-suite, collect the data, push the release out, etc.

Fig. 1. Engineering resource allocation for Internet product dev

However, I’m thinking, “Why not cut the cord for Quality Assurance staffing altogether?” Put an extra 25% effort in setting up a Continuous Integration server during the initial days and another 15% on an ongoing basis for writing test cases.

No QA on the team technique is followed in small startups who lack resources. But not because of 100% automation. There is still somebody pressing the buttons. Even worse, developers or product management  or even sales / marketing at times end up doing the QA towards the end of the cycle. In my previous role as a startup CTO, the T stood for Testing. We had some automation but often the bugs were shipped to customers, so I ended up doing QA. That was more than two years ago, and the tools have improved vastly.

The chart below depicts the grand plan.

Fig. 2. No QA but resources reallocated

OK, so no QA. What do we do with the extra money? Reduce the engineering budget? No way. Instead, let’s reallocate part of that to engineering and increase the design resources. Design has become important. Increasingly important. Garry Tan, who is a co-founder at Posterous, quit to become the Designer-in-Residence at Y-Combinator. Last year, the lead designer of, joined as the ‘Designer-in-Residence’ at Bessemer Venture Partners. A lot of emphasis is being paid on usability, experience, simplicity. So much so that a question was raised at SXSW; who are the real rockstars of tech startups, Engineers or Designers? There is no looking back on design, the bar is being raised continuously.

One word of caution however on the grand scheme of automation; the plan may only succeed if the test suite is well developed. Unless every feature addition results in addition of new test cases and careful orchestration of the moving parts, the guy with the T would remain the Chief Tester.

How much money do you need to get started?

Tuesday, February 23rd, 2010

… You want to raise just enough money to solve a small problem for even a smaller set of customers to start with.

A lot of ventures start with a dream, a vision; to solve a problem in a specific Ruby Throated Hummingbirdway. The dream could be a INR 100 crore product or something as complex as an ERP on the web to a even more complicated, a Hospital Information Systems (.. search engines? they are easier to build these days).

The vision cannot be achieved in 6 months or even 2 years — Takes 5-7 years on an average to build an INR 100 crore company. So you want to start now, and want to start small, chiseling your idea, refining as you go, adding feathers in your cap and changing gears and accelerating as you move.

First, zero in on a handful of customers and a specific problem the customer may have. Do not worry if others mock you for building a feature & not a product. You know your destiny. You know where you want to reach. Validate what you have built. Give the customer something useful so that he can pay for what you have built. Iterate on your product.

There are a lot of examples where the companies started small and began by solving just one small problem and then morphed into gorillas; from companies selling PCs — to cloth merchants now with fully backward integrated perto-products chain.

A large amount of money spoils you, ties you up with your own experiments and forces you to deliver a product which does not have any takers outside your laboratory — You are forced to linger with the experiment because now you have a large amount of an external investor’s money and do not have guts to tell him that it is not working out. There are numerous examples. There are only a few brave entrepreneurs who took $5m only to tell the board in less than a month about change in the business model.

When you are starting out, you are building something and proving your hypothesis. The moment someone starts paying for what you are building, a part of the hypothesis gets proved. You continue to iterate.

Think 6 months, 3 people’s expenses.

Think 6 months, 2 people’s expenses.

Think the amount of first tranche you need to deliver to your first customer.

Think about knowing the sales process yourself before hiring a sales expert.

Think doing zero dollar marketing before doing SEM campaigns.

Think writing the code yourself before hiring a developer.

… start thinking about raising big money after your customer trusts you with his money.

(The thumbnail is of a Ruby-throated hummingbird. These are solitary. Have one of the highest metabolism, and as part of their migration, they fly non-stop across the Gulf of Mexico, a distance of at least 500 miles. Pic courtesy)

Facebook for the Enterprise

Monday, December 18th, 2006

It is totally amazing how large corporations “engulf” 1000s of employees; minimal existence as an employee id or an e-mail address, contributing from a small cubicle in a functional department. I was talking to a few people over at my day-job — these are the people who have at least 100+ connections on LinkedIn. A lot of these connections are also from the work buddies. When I asked them about connections at work beyond the 1st-degree, very few existed.
Doesn’t it make sense to have connections beyond 1st degree at work, except for the ones coming through the bosses? More than that, doesn’t it makes sense to ‘show and tell’ the life at work and beyond work? One of the challenges within the enterprise is finding people who could do the job, but managers hire external consultants, spend time and money on external recruiting efforts to get it done.
A Facebook for the enterprise could be the answer. People would know what you do, who do you interact with and projects you are working on.
Sure, this would raise the “heckles” of the management, even more of the immediate managers — They would be worried as ever, thwarting further moves allowing employees to promote the brand YOU. What the heck, You have been successful in establishing 100s of connections on LinkedIn, have been writing a blog which the recruiters are reading and have been posting videos on YouTube and have made friends across the atlantic.
What a typical implementation of a Enterprise Facebook would have?
1. A Profile Page
2. A Project Page
3. A Friends Page
4. A Message Page
5. A Musings/Moods/Notes Page
6. A Groups Page
Organizations are pathetic in having Groups for intra-company discussions. Think about it. Knowledge is not contained in a department — it cuts across functional boundaries.
However, don’t do the following if you want the Enterprise Facebook to succeed:
1. Do not have implicit connections between manager and the employee. Have a “boss connection” only if the employee chooses to do so (Great HR exercise here to figure out the bosses who are disliked!)
2. Do not let this project ever, ever be run by HR
3. Do not moderate the content. People within the firewall are more responsible than outside
And yeah, if your Enterprise Facebook experiment becomes successful, open it up outside the corporate firewall and hand over an alumni account to every departing employee.
Doing the above, might improve your rankings by couple of notches in Fortune’s Most Admired Companies.
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Rethink your business — Innovate, Get uncomfy and change

Monday, October 2nd, 2006

Traditional way of doing business is changing. Average life-span of an employee on a job is decreasing from 20 years, five decades ago to 2-3 years today. Markets have become perfect (or are becoming close to perfect). Information about anything and everything is freely available. Companies, Managers, bosses, traders, and insiders thrived because of information zealously guarded. The digital age has set it free. Google is disrupting the ad sales model, YouTube is kicking out the Television advertising exec. sitting at the top. What we are leaning towards is a business which is changing at the speed of light. The digital age kicked the travel agents out, online trading kicked the $40 per transaction stock broker out and craigslist is making the newspaper classified business crying afoul. Fortune has an interesting article on how guarded walls of management is seeing change in business.
Here’s how to rethink your business:
Tough talk
Force a conversation on how the company will have to operate differently to be successful two years from now. Otherwise everyone dwells on today’s successful products.
Yellow flags
Pay close attention to what your sharpest, most mobile customers are doing. They’re your early warning of
business-model problems.
Remodel early
Start changing your business model when you’re most successful. When you’re in trouble, it’s too late.
Abandon yesterday
Maintaining what no longer works draws your most valuable resources away from your No. 1 job, creating tomorrow.
A new, improved story line
Explain the company’s changes within a larger context. Employees, investors, customers, and suppliers are more comfortable with change when it’s presented as part of a story line.
Corporations resist change and management often get in the “cruise control” of status quo. Globalization of economies (“flat world”) and access to remote markets, suppliers, and customers have changed the way companies project and view their future earnings potential. It’s no longer the big eat the small; it’s the fast, nimble and agile let the big delapidate under it’s own weight.