The Keene View on Web 2.0, Ajax and SaaS

Matt Asay broke the news that the talented COO of SpringSource, Neelan Choksi, left the company recently just as SpringSource announced 250% annual growth. Savio Rodriguez expanded on the theme and wondered why an exec would leave a growing company.

I have no particular insight into Neelan's situation, but I have a lot of insight into the difficulties of managing a startup with a CEO and a COO (at SpringSource, Rod Johnson is the CEO and Neelan was the COO). I have found that splitting the CEO/COO in a small company, also known as "two in a box" is pure trouble.

Two in a box means putting two people in charge of essentially the same job. You don't need an MBA to see that there is great potential for mischief here. The inevitable conclusion of two in a box is always the same … and then there was one.

The whole thing reminds me of Zaphod BeebleBrox, the two headed character who was always arguing with himself.

Here's how the Zaphod BeebleBros brainstorm pitched by the board: "this will be great! Zaphod here (the CEO) will be the external spokesperson for the company, while Beeblebrox (the COO) will be the internal, get it done guy."

Needless to say, it never works quite this way. Even when you have two really strong players (which I believe is the case at SpringSource), it is extremely difficult in a small company to keep from stepping on each other's toes. Here are just a few of challenges in a two-in-the box startup team:

1. Who's vision? Inevitably, there are differences in vision between the CEO and COO and these differences always come out at awkward times.
2. Maybe I'll get a better answer from mom. Any exec who gets an answer from datd they don't like can always try asking mom.
   
3. The buck stops over there. Particularly for difficult decisions, there is a natural tendency for each exec to palm off some of the tougher calls to their counterpart.

Labels: startup, two in a box

While startups always make a big deal about introducing new products, the real birth of a company comes not when you launch your first product but when you land your first big customer.

Here's the difference: it only takes a demo to launch a product, it takes a business model to land a customer. Thus the scariest time in a startup's lifecycle is the period between shipping the product and closing the first big customer deal (this is period that the VCs call "proving that the dogs will eat the dog food").

In true ClueTrain Manifesto fashion, product launches are largely a vendor driven activity, that is to say mostly wishful thinking and hand waving about your new, improved, bright shiny thing. Getting a customer to dig deep and pony up 7 figures for your bright shiny thing puts you in a whole different league.

Launching answers the following questions:

1. Can we give a good 5 minute demo? Silicon Valley is littered with technology in search of a market.
2. Can we sound like we know who might want to buy this in the abstract?

Landing a big customer answers much more interesting questions:

1. Is my product solid enough for somebody else to bet their job on?
2. Does my product solve such a big problem for that person that they are willing to bypass much more established, safer vendors to bet on an unknown startup?
3. Is my business model credible enough that another company will bet their business on our being around 5 years from now?

WaveMaker launched our visual Ajax development tool in February. Yesterday, WaveMaker announced a 7 figure deal with KANA. KANA sells customer service software and has over 700 customers, including 60% of the Fortune 100. They are also one of 16 strategic partners of IBM's WebSphere division.

The most exciting element of this deal is that KANA will ship the WaveMaker Studio as a built-in customization tool for their call center platform (similar to what the Force.com platform does for SalesForce.com). For WaveMaker, this will give us 700 licensed customers by the end of the year, putting WaveMaker in the top tier of Ajax tool providers in one fell swoop.

Cool technology and $2.50 will buy you a latte at Starbucks. Having a $70M company bet their future on your product puts you into the running for the Next Big Thing! Congratulations to the whole WaveMaker team for taking the step from demoware to solving hard customer problems.

Labels: Cluetrain, KANA, startup, WaveMaker

Over the course of three software startups and 10 years of teaching entrepreneurship, I have seen one flaw kill more software startups than all the other flaws combined. That flaw is caring more about your technology than your customers - failed software startups are smart about technology and stupid about who is going to use that technology.

Inexperienced technology entrepreneurs usually almost always focus more on what their technology can do, not what the market needs. If you don't have a specific customer in mind when you build a product, you are performing the marketing equivalent of walking outside on a sunny day and hoping to get hit by lightning.

Not having a clue about your intended market leads to all sorts of misguided behavior. In particular, there are two dead give-aways to user-stupid companies:

1. Dog ball product management. There is an old joke about dogs and balls where the punchline is "because he can." Most of the Ajax products on the market today are stuffed with features for which the best explanation is that the developer added it just because they could. For example, there are roughly 2 bizillion Ajax toolkits out there, but every week someone introduces a new one, figuring no doubt that what the world really needs right now is yet another color picker widget. Adding random features does not make you look cool, it just makes you look confused.
   


2. Leaky marketing. When you have no idea who your target customer is, all you can focus on is your competition. Just like a celebrity stalker believes that if they scare off all the boyfriends, then the supermodel will have no choice but to fall in love with them, the leaky marketer believes that if they take a leak on everyone else's products, then the market will have to come to them. Among other problems, when you have a number of companies in a small market doing this to each other, all you really do is convince potential customers to wait until there is a serious provider for the technology. Making other companies look small does not make you look big, it just convinces customers to stay with IBM another year.

The simplest antidote to being user-stupid is recruit a business partner who is externally focused. Entrepreneurship is a team sport - it takes a passionate techie and an equally passionate business person to make an idea go (think Gates/Ballmer, Jobs/Wozniak, Ellison/Miner). Successful innovation happens when a company is user focused and tech smart about how to solve that user's needs.

For more on this topic, see Top 10 Business Idea Mistakes.

Labels: business, entrepreneur, startup

Making the decision to name a company is always difficult. Making the decision to re-name a company adds even greater complexity.

After nine months as ActiveGrid, we decided to rename the company WaveMaker. Our board asked tough questions about our motivations, making us think long and hard about what was wrong with the current name and what we could accomplish with a new name.

How to tell if your name needs changing:

1. Customer misdirection. A bad name makes people believe things about your company that are not true. For example, our name, ActiveGrid, implied we had something to do with grid computing, which we did not. That meant that every conversation would start out but explaining that our name was ActiveGrid but we had nothing to do with grids.


2. Employee alignment. Another negative effect of a bad name is to distract employees. A name that implies they should be doing something else makes it hard to keep everyone's eyes on the same ball.


3. Analyst fatigue. In sort of a tech version of "three strikes, yer out" a name that has been associated with a number of grandiose but never achieved visions starts to become a PR team's nightmare. No matter how compelling the next vision, press and analysts may just not be willing to get suckered yet again.
   

Having decided to rename, you now face the renaming process. We decided to go with a naming firm that did both the naming and graphic work (we worked with SB Master of Master McNeil and she did an outstanding job)

1. Identify your market: who do you want to know about your name? If you don't know who you are selling to, any name should be fine. Once you know your target audience, make sure the name is one that will resonate with them.


2. Crystallize your story: what attributes define you and make you unique? What do you enable? Think not just about nouns but also verbs


3. Brainstorm like crazy: the most naming fun I ever was with Persistence Software, where we had a nice dinner party with lots of wine, then each picked books, opened them to random pages and picked 4 company names from each page. The name Persistence came from a book of Yeats poems.


4. Make sure you have multiple viable names: just having a name doesn't mean you can own it. You still have trademarking and url-ing to go. Of the two, checking the trademark is easier (you can do it here http://www.uspto.gov/main/trademarks.htm)


5. Beg, borrow or buy the URL. Every imaginable url is taken at this point. At the end of the day, we had two names that would work. Of course there were squatters on both urls: one wanted $35K, one settled for $10K, but only after we got to the point where if we didn't get a deal that day, we would have just kept ActiveGrid


6. Spend for a good logo and color scheme. After all this work, you would be crazy not to get a good logo, color scheme and powerpoint template.


7. Change everything. Now the fun begins. Change your collateral, business cards, the lobby sign, the web site. Then take a long vacation.

As you might expect, there is some good stuff about naming on the web, by Guy Kawasaki, Dharmesh Shah and a post on where famous company names came from.

We won't know for some time whether all this work has paid off. But the day we re-launched WaveMaker with our new name we hit a whole new energy level in the business. Now we've just got to turn that energy into results!

Labels: naming, startup