Month: March 2008

If you can’t say something nice about your competitors…

/ Robert Pease / Leave a comment

Interesting post picked via Venture Chronicles from Human Capitalist on a bit of a kerfuffle between Successfactors and competitor Softscape which has escalated to a lawsuit.  This may be an extreme example of what happens when you take a direct shot at a competitor, but it is definintely indicative of the consequences that can arise.  If you sell something….anything, you will always be asked about alternatives or competitors so best to be prepared. 

Beyond having the standard matrix that lists all the things you do better or more completely than your competitors, it is important to have confidence.  Confidence that the other team has a good product or service but that yours is superior in a number of ways. 

Direct shots at a competitor make you look like a chump but solid differentation in key areas can make the difference.  Invite direct comparison or competing pilots.  In many cases that is the only way a smaller or  early stage company can win business with big customers that have never heard of you.  If you don’t have the confidence you can win in this way, time to step back and re-evaluate.

Integration is the #1 barrier to SaaS adoption

/ Robert Pease / Leave a comment

According to Forrester Research analyst Ray Wang via Sandhill.com, integration ranks as the number one obstacle to SaaS adoption based on a recent survey.  This is consistent with what we are seeing in the market and is a quesition that every application company that chooses software as a service as their delivery model will have to answer over and over.  Time to production and realized value is not only important, it is the premise on which these companies operate and differentiate.  If you don’t have a good answer to this question, get one fast. 

Topconcerns

Introducing the B2B Long Tail

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Got an article placed over on CIO.com on this topic entitled "The Long Tail of B2B Emerges."  It builds upon the concepts laid out in Chris Anderson’s book The Long Tail but applies them to the B2B space laying out how the integration challenges that exist in the tail can only be served by self-service integration tools that scale down (both in terms of cost and effort) to meet the problem.  The opportunity in the tail far outstreches those in the head…you just have to use the right delivery model to access them.

Tragic irony or sweet justice?

/ Robert Pease / Leave a comment

The man who pioneered the smoking gun message looks to have been brought down by his own.  Eliot Sptizer wreaked havoc on Wall Street 5 years ago in the aftermath of equity research conflict of interests securing a massive $1.4 billion settlement from leading investment banks.  He has now admitted what can only be called a cliche of scandals. 

What a pathetic man wallowing in his own hypocrisy. 

Pick up the phone

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Picking up the phone and talking to someone is my preferred way to get a point across these days.  Email is the crutch of the business world where people can communicate in a way they would never contemplate in a direct conversation.  It dominates our daily communications and has changed the way we work (not necessarily for the better) where typing has replaced talking.

Here’s a story from the NY Times (via Instapundit) on the demise of the office phone and how that is impacting both work dynamics and organizational learning.  I especially like this quote:

"That brings up another reason the office phone call is worth preserving: there’s no ready substitute for practicing the necessary summoning of courage for potentially fraught encounters. Advancing in business is often a matter of gaining capacity for confrontation; to the best of my knowledge, no one has ever had to steel herself before sitting down to type a tough e-mail message."

If you have ever made a cold call, the quote above should hit home.

In a related post, Fred Wilson does a nice summary here of the running discussion on money saving tips for start ups including this bit of advice "Don’t buy a phone system. No one will use it."  Although the advice is based on the fact everyone already has a cell phone, I’ll still give Fred credit for scooping the Times.

Recognition well deserved

/ Robert Pease / 1 Comment

A really great friend of mine, Michael Barry, has been recognized by the University of Georgia’s Terry College of Business as the Outstanding Young Alumni for 2008.  Michael is a Partner with law firm Epstein, Becker, and Green in Atlanta and has earned three degrees from UGA (BBA, JD, & MBA). 

We met during fraternity rush in the fall of 1989 and have had no shortage of great memories together since that time including being my best man at my wedding.  Michael is a great lawyer, trusted adviser, and close friend.  If you know him, please reach out and congratulate him.  If you don’t know him, you should.

Congratulations Michael.  I look forward to celebrating with you on May 3.

You are only as smart as your questions

/ Robert Pease / Leave a comment

I’ve got hiring and interviewing on the mind as this business week comes to an end and found a great post via Boulder, CO blogger Bill Flagg.  I don’t know Bill and came across his blog via my on going affection from afar for the Boulder tech scene.  Marel and I often talk about making it our home at some point and maybe one of these days the stars will align.

Anyway, the post is about "the smartest interview question" and I thought this was a great point:

"You are only as smart as your questions and as dumb as your answers. The more I shut up and ask questions, the smarter I get. The more I spout off, the less time there is to learn from what other people have to say."

Hiring the right people can make or break a start up or early stage company.  Make sure you find those that want to help you build and know what that means.

What’s your Magic Number?

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If you are a SaaS company, this certainly has been sent to you a number of times by this point.  This was from Omniture CEO Josh James’ preso last week that I missed but have heard quite a bit about since.  Here’s Jeff Kaplan of ThinkStrategies take on that preso as well as the rest of the gathering. 

So, what is the magic number?  You’ll need the following numbers to find out:

1. Total quarterly recurring revenue for this quarter
2. Total quarterly recurring revenue for last quarter
3. Total sales & marketing spend for last quarter

How do you interpret it?  From Will Price’s blog:

The magic number ("MN") is a metric that can be used to tell you the health of your company from the perspective of growing monthly recurring revenue ("MRR"). It is a common mode metric to compare companies MRR scaled by sales and marketing spend. The MN provides insight into the effectiveness of previous quarter Sales and Marketing spend on MRR growth. Your MN will be penalized if the spend is wasted (bad marketing, bad sales execution), if your churn is high or if the market has issues (saturation, competitive forces). It also has a very high correlation with Q/Q growth rates so in general, high Magic Numbers are good.

To calculate:

QRev[X] = Quarterly Recurring Revenue for period X
QRev[X-1] = Quarterly Recurring Revenue for the period preceding X
ExpSM[X-1] = Total Sales and Marketing Expense for the period preceding X

Magic Number = (QRev[X] – Qrev[X-1])*4/ExpSM[X-1]

For example, consider a hypothetical company with the following financials
Q1 Q2 Q3
Revenue (recurring total) 1M 1.2M 1.5M
S&M Expense 800K 900K

Then the magic number is 1.0 for the end of Q2 and 1.33 for Q3.

Fundamentally, the key insight is that if you are below 0.75 then step back and look at your business, if you are above 0.75 then start pouring on the gas for growth because your business is primed to leverage spend into growth. If you are anywhere above 1.5 call me immediately.