Concept projects can help startup software companies uncover clues to more distant futures. Once you have the idea and decide on what is possible, it’s time to pull out the camera and start filming – not the whole movie, because that would be expensive and you don’t know the complete story yet. Instead, start with just a movie trailer.

You’ve seen hundreds of trailers. Everybody loves them. Little one-to-two minute teasers. It’s a great way to capture the essence, the core of the emotional experience that you are seeking in your software product. The goal is a visual prototype.

Try writing the print advertisement as you are developing your product. This forces you to crystallize your unique selling proposition. The movie trailer helps you focus your team in a way no design or marketing plan can ever manage to. The other advantage to making the trailer before making the real thing is that if you can’t make a compelling trailer, may be it’s better to back to the drawing board. Use the popular ‘T-shirt Test’: If you can’t make a T-shirt about it, may be you don’t have a compelling story yet.

MVP is a state of mind that is all about acting before you have all the answers, about taking chances, stumbling a bit, getting up and running. Consider Jeff Bezos’s story about how he launched internet’s first multi-billion dollar business literally on the run.

In 1994, he came across a startling statistic that the annual growth rate of web would ramp up to 2300%. To tap such an explosive growth, he hurriedly made a list of things he could sell online – from music to clothing before settling on books. Within weeks, he quit his Wall Street job, and had his things packed in a van without knowing where exactly he was going. He had Boulder, Portland, and Lake Tahoe in mind. Unable to decide, he instructed the moving van to simply head west. He called the driver next day and asked him to go to Seattle.

Bezos was doing exactly what innovators do: breaking a problem down into parts, taking on-the-fly decisions in parallel. How could a moving van begin its journey without knowing a state, let alone an address? The reasonable thing to do would have been to first decide the destination. But Bezos gained a day of internet time by launching his ship before he had charted his New World. As his moving van traveled westward from New York, Bezos flew to Texas from where his wife drove the family to Seattle while he sat in the passenger seat carving out a business plan.

Think about it: nothing on paper, no fixed place to start his imagined company, yet he was already moving firmly towards his destiny. While on the way, he even took a detour through North California to interview potential vice presidents of development.

Once he started operations, the same principles continued to apply – get it up, get it out was the motto. Function preceded style and editorial content. Low on graphics and animation, the site loaded fast and excelled at the basics – making it easy to search and buy books.

Image credit: http://www.star-collector.net/

After he retired from NFL, Staubach started working in the Texas commercial real estate business. He saw how frustrated commercial tenants were when they dealt with landlords. As you know, buying/leasing office or retail space is not a simple process (http://www.zananetwork.com/business-learning/wiki/real-estate/faq/index.aspx)

The traditional real estate brokers were, in general, driven by the commission fee that they could collect from both the buyer and the seller. In the process, a few rules were bent and I guess many a heart burnt. Enter Staubach. He asked: Why don’t we build a company that focuses on being the advocate of the users of office and industrial space?

Staubach Co. was founded in 1977 with this simple yet powerful premise. At that time, it was indeed a pioneering effort in the brokerage business to build a company around tenants (as against owners or developers). What he recognized was that taking care of end-users/customers can actually help his business grow. To reinforce his approach, he offered the revolutionary “unconditional guarantee of value” – giving refunds to clients who thought they didn’t get the expected services/benefits. Though the refunds were not frequent, they did happen and it hurt. But for Staubach, there was no other way to prove the integrity and value.

Do you now see a connect with the license-fee-mongering-product companies to SaaS and the service culture? Are they any such stories in other industries that can be considered fore-runners for the current SaaS trend in the software industry?

Note: In July, 2008, The Staubach Company was sold to Jones Lang LeSalle for $613 million. ]]> http://producteering.org/2009/11/24/roger-staubach-and-saas/feed/ 2 http://producteering.org/2009/11/03/software-development-through-incremental-funding-methodology/ http://producteering.org/2009/11/03/software-development-through-incremental-funding-methodology/#comments Tue, 03 Nov 2009 15:24:31 +0000 Karthik Viswanathan http://producteering.org/?p=218 Here is an interesting approach to building software – www.softwarebynumbers.org developed by a team of two with a strong background in the technology industry and academia.

The IFM model tags financial benefits/returns to each major feature proposed for the software. At a fundamental level, it looks at software development as a value creation process which is how entrepreneurs tend to think about businesses at a macro level. An MMF, or minimal marketable feature, is the fundamental measure of software value employed by IFM.

MMFs are discrete units of value creation mapped to specific software features. They are the basic elements of an IFM development sequence. Net Present Value (NPV) is used as the measure as opposed to the usual suspect i.e. ROI. This model is not meant to be a substitute to established models such as Agile or iterative. In fact, the authors intended to strengthen such methodologies by introducing the financial aspect.

A quick description of NPV below (to jog your memory, just in case):

NPV: This is the net result of a multiyear investment expressed in today’s dollars. It recognizes that you would prefer to have $1.00 today to having $1.00 a year from now. If you earn 10% interest on your money, $1.00 today will be worth $1.10 a year from now. Or, the NPV of $1.10 one year hence is $1.00.

By considering the time value of money, it allows consideration of such things as cost of capital, interest rates and investment opportunity costs. It’s especially appropriate for long-term projects. But NPV doesn’t compare absolute levels of investment. It looks at cash flows, not at P&L – the way accounting systems do. Computing NPV requires use of a discount rate equal to some minimum desired rate of return. Determining that percentage may be the tricky part. In general, many IT projects use NPV only for large investments (eg:>$500k) as the process is complex and cumbersome.

ROI: Expected income divided by the amount originally invested

IFM is not new – it’s been around for about 4 years now. While IFM seems rational on paper, I wonder if it is feasible to do something like this in reality. There are several intangibles involved in an IT investment and those cannot be easily accounted for in such calculations. Long-term discipline in planning and execution is required for such initiatives. But at the very least, such calculations will trigger discussions within the product team and lead to evaluation and brainstorming of multiple ideas and options (apart from the heated arguments, fights etc).

At sunset (as against ‘at the end of the day’:) ), every decision-maker knows that data and numbers are attempts at rationalization of man’s intuitions and gut-feel decisions. That may be the single biggest reason why this model will never gain large scale adoption. What do you think?

In software development, we have seen how the waterfall model is gradually drying up; how agile/xp/scrum has already made huge inroads; and now we are also witnessing how kanban is heralding the ‘lean’ software development. I infer that similar shifts are happening in market/customer development for software products.

A start-up that builds the software and waits for the customers to find the product will possibly remain an up-start. More often that not, start-ups fail from lack of customers, not from lack of product development methodologies. But the reality is that most companies spend more energy on building products instead of setting up a structured (and repeatable) process for customer development. It is in this context that Steve and Eric recommend a 4-step customer discovery, validation, creation and expansion process. More details are available in their blogs and so I am not going to elaborate more here. Suffice to say that within the context of this customer development model, software development needs to be executed. At least, both should happen in parallel.

PS: Doesn’t this sound like THE thing to do? Why should smart entrepreneurs need such reminders about such basics? My hunch is that entrepreneurs (romantically and rightfully) see an Apple in their companies. Ain’t a software that is good enough for them, good enough for the market???

Although these trends have evolved independently, there are several ways in which open source and outsourcing are working together to present new prospects for the industry. Here’s how software businesses can derive maximum value from these investments while minimizing their risks.

The Similarities between Open Source and Offshoring

A recent report by The Standish Group states that adoption of open source software models has resulted in savings of about $60 billion to consumers every year. McKinsey predicts that the global software outsourcing business is expected to hit $1.6 trillion by 2010.

As the world moves towards SaaS and Cloud Computing, both OSS and ITO are facing several opportunities and threats. Some industry observers have predicted that the commercial vendors will be the saviors of OSS. Other pundits expect a downfall in outsourcing as we know now, in the face of rapid adoption of cloud models.

While these two phenomena have evolved somewhat independently, there are also many shared similarities. Consider the following characteristics:

Freedom

OSS is free in the way it gives philosophical and technical “freedom” for developers to use, study, modify and re-distribute it. The use of such software has helped reduce vendor “lock-in” in an industry dominated by many powerful mega vendors.

Read the entire article which was also recently published as an Op-ed on Sandhill.com

Visit any tech blog and I am reasonably sure you will see something about multi-tenancy (MT). In my humble opinion, it is an architectural style to serve multiple tenants (clients) with a single codebase. Many blokes swear by the necessity of MT for SaaS. Contrast this with the ASP model where each tenant has a separate instance/version of the software. The beauty of MT is that the same codebase is able to serve multiple org whose data may be co-located – with a physical/logical partition. Pundits claim that without MT, the holy grail of ‘mass customization’ in SaaS (i.e. economies of scale) cannot be achieved even in this era of commodity hardware. A builder looking to construct 50000 houses is well advised to go for apartment complexes rather than row-houses, right? Once you have different codebases (row-houses), as in the case of ASP, you will go mad sooner-than-later maintaining (i.e. bug-fixes, enhancements, customizations etc) all these distinct versions.

So with all these wonderful advantages of MT listed above, why do I say that MT is abused?

#1: MT is NOT new.

Apparently, apartment complexes called “insulae” have been constructed around ~100 AD in Rome: http://www.historyforkids.org/learn/romans/architecture/insulae.htm
We have worked with customers since the 90’s who designed (or had it designed by us) their software to be MT. And the words SaaS and multi-tenancy weren’t even born then. It is just that this style has gone mainstream now (atleast in the blogs). What became a necessity to some of our customers (after some not-so-successful attempts at other architectural styles) is now a well-known option to the beginner. There has always been some software or the other written to be multi-tenant, because of business or other exigencies.

#2: Hotmail

Wasn’t this service available through internet?” Didn’t it use the same codebase to deliver my mails to me and your mails to you? Of course, business applications (eg:CRM) are more complex than email – needing customized workflows, configurability, unique business rules etc but aren’t those part of the natural evolution process of software? I am not saying that MT is easy but does it seem rocket science?

#3: He who is a rich customer rules!

I read somewhere that SalesForce has a separate version of its software for its large tenant. It may be a rumor but in general, if a tenant accounts for 15% of your revenue, does he not deserve premium, customized service? So, MT seems to have been brought to its knees in front of a powerful (paying) customer.

#4: Anonymous: Those who know don’t speak; Those who speak don’t know

The hackers who have typically architected/designed multi-tenant apps seem to be the silent types, who dismiss all this hoopla about MT and prefer writing software (as against blogs). This paved the way for non/semi-technical thought-leaders/marketers/sales folks to usurp the buzzword and poison the internet forums. As they say, MT vessels make much noise:-) Am generalizing of course!

To conclude, I do understand that some of my arguments above are prejudiced and debatable but these are ramblings of an ex-engineer than a rational thought-out post of a seasoned marketer