Archive for July, 2009

The Never Ending SaaS/Web App development Story

July 31, 2009

The development of a new SaaS /Web app often takes longer than you want or expect. The problem is the devil is in the detail. And it takes time to get the small things right. Unfortunately most bootstrapped startups have very little time to get customer traction and revenues before the money runs out.

The main causes of website/ Web app  development delays are an unrealistic  project scope, not enough time for the finishing touches and late engagement with potential customers. From our startup experiences of building a website monitoring SaaS/web app keeping focused and realistic can go along way in saving time.

Neverending-Story_l

Developing  the dream (The Never Ending Story movie)

The five main reasons for SaaS/Web development delays:

  1. Lack of resources – Obvious I know. After a lack of paying customers this is the biggest problem for most bootstrapping startups. Insufficient resources combined with an overly optimist project scope result in development delays. Startups need to be realistic  and minimal with their first version.
  2. Feature creep – Developing software is dangerous. Its so easy to dream of what it could do. ‘Would’nt it be nice/cool’ features just keep being added into the work list once started. The downstream  effect can be very painful: constant delays in releasing, a half baked/unfinished app being released or the app never sees the light of day. Keep it simple!
  3. Bug, bug & more bugs – Despite the tedious nature of regression testing and bug fixing it has to be done. As Paul Graham says,  “Users hate bugs, but they don’t seem to mind a minimal version 1, if there’s more coming soon.” We’ve found that fixing immediate code problems in-flow is the most effective way to to minimise bug fixing time in the long run.
  4. Those little things – They take much more time than you think. Ryan Carson referred to them as Teaspoons: You know when you are doing the washing up and you think you have done everything but then get to the bottom of the bowl and find 15 little teaspoons hanging around, and they take ages to finish! That’s us… lots of niggly little fixes, tweaks, minor design improvements.” Startups must allow the time to finish the job.
  5. Customer engagement – Rather than adding in features you like or think would be useful get the app out with potential customers. Let them lead the way. Beta testers and potential customers will show you new unidentified needs. This way time is not wasted on unneeded features. Remember Release early and release often.

Towards the end of developing a new SaaS/web app it sometimes feels like you are taking one step forward  and then two back. Finishing a product is not simple. It’s time consuming and requires a big final push of effort and resources.

Once an app is out it’s only the start of the development story. An app is never really finished. It can always be improved, refined and optimised. It’s a continuous process. Enhancements, new minor and major features  will be needed to keep customers satisfied and to stay ahead of the competition. Its a Never End Story!

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Tour De France 2009 & business: Competition is a good thing

July 29, 2009

The Tour De France epic is over again for another year. And what an epic it was.  The 2009 Tour had more competition than you could shake a stick at!! Lance Armstrong was back after a four year retirement to show us he is still made of the right stuff.  There were seconds between most of the leaders in the final week. And the last real stage (20) finished decisively on a mountain top.

Mark Cavendish TdF 6th Stage Win

Mark Cavendish magnificently winning the final Paris stage
taking this years total to 6 stage wins and 10 overall.

It may not always feel this way but competition is a good thing. In sport and business competition brings out the best in our abilities. Competitors help us focus on a target, drives our strategy and  brings determination to succeed.

7 ways to price SaaS and Web Apps

July 24, 2009

With Web 2.0 Ad funded sites going out of fashion subscription based services are on the rise. Setting the right pricing for your SaaS and Web App service is a difficult decision. It is also a critical choice. Get it wrong with high prices and you could be losing out on sales. Running with very low prices may result in too many low profit customers.  The secret is in knowing your customers and competition.

Life of Brian Huggling
“Haggle properly!” (Life of Brian)

The seven ways to price SaaS and Web Apps:

  1. Cost Plus – Conventional wisdom says price on variable sales costs. However this is more of a resell/retail approach. Operational costs per  additional SaaS/Web app customer tends to be very low. It’s the customer acquisition and developing new features that requires the high investments.
  2. Match the Competition – Don’t worry about the costs. Price the service the same as your competitors and move their customers across to your service.  Unfortunately this strategy offers limited differentiation and thus customers won’t move. If you don’t have any competitors check that there is a market in the gap.
  3. Undercut the Competition – Start a price war and storm the market! This may grab the attention of some budget conscious customers. Unfortunately if it does work the impact does not last long.  This strategy also leaves less money for acquiring new customers and future product developments.
  4. Price Higher than Competitors – If your service is very similar to your direct competitors charge slightly more than them. Then focus on being a quality service. However you’ll have do something much better than your competitor. Find a feature or service level that the customer really values and your competitor is weak at.
  5. Differentiate – Build a very different feature set and charge much more than your competitors. The challenge is you’ve got to have an outstanding service that fits a need. Your business message also needs to be very strong to justify the higher price.
  6. Hide Your Prices – Many modern SaaS services such as  TactileCRM and Freshbooks, etc publish all their prices. Some, like  Echosign, have a salesforce to sell the service. Others let the service sell itself. If you don’t publish your pricing your salespeople can upsell  the service levels when the customer comes calling. Pricing is often hidden this way in the corporate world of software.
  7. Segment – Offer several service level to suite different customer types. Huddle and DNS Made Easy offer and range of service levels for small businesses and corporate customers. The pricing on these service levels varies a great deal.

Like I said it’s not easy. A mixture of the above pricing strategies may be the  answer. A lot of the decision relies on knowing the market well i.e. the customers and the competitors. Choose a price strategy early on, test the market, and be flexible. A word of warning: it’s much easier to decrease prices than to increase them. Good luck!

Learning to fail: Startups aren’t really trying unless their failing

July 21, 2009

Your startup baby will fail at some point. Failure is natural. Its just like when you took your first steps. Failure is an inherent/systemic part of learning. The moment a baby tries to walk they will fall but they always get back up to try again. Will  you and your startup try again after  failing? Startup failures can be small or catastrophic. The thing is to overcome failures quickly. Lessons must be learnt. Otherwise the same failures will be repeated again and again. Failure will then become permanent.

learning-to-walk

Taking our first steps

Learning to fail from a startups first steps:

  1. Step 1 – Fail to trySome startups have  heaps of ideas but don’t actually implement a single one. Fear of failure may hold them back or they run out of enthusiasm as the reality of the challenge kicks in. Be prepared to fail.
  2. Step 2 – Fail & learn – Startups fail all the time. Small failures can be an unused feature or a poor marketing campaign.  Constant  small failures are an extremely important business lesson. Use them. An old friend calls it “the MBA of life”. We have to learn to be entrepreneur’s and innovate through failure.
  3. Step 3 – Learn & change – We are all at different levels of personal development. The important thing is to Know thyself. See your strengths and weaknesses. Learn to compensate weaknesses with others and let them bring out your strengths. VC’s and Angels look for well balanced teams for good reason.
  4. Step 4 -Try again – If a startup is not getting customer traction re-align the service or product around customers real needs. If the startup won’t or can’t change, quit and move on. Startups often fail to engage customer needs.
  5. Step 5 – Keep learning & trying –  Even when you have a successful startup pulling revenues ,  managing cash flow and  enjoying profits you have to  continue to  fail.  Any startup or mature business has to stay ahead of their competition. Successful Amazon boss Jeff Bezos still fails trying.

You and your startup aren’t really trying unless your failing. Failure does not mean taking all or nothing chances. Put yourself in a position where your experimenting with smaller manageable losses and keep trying. Churchill said: “Success is the ability to go from one failure to another with no loss of enthusiasm.”


Related posts:

I knew it would be hard, but I didn’t realize it would be this hard.

Website/SaaS downtime: bad planning or bad luck

July 17, 2009

Websites, SaaS and web apps do suffer from downtime and slowdowns. These problems can result in a loss of revenues, customers and even reputation. Amazon looses $310,000 for every 10 minutes of downtime!!  Can downtime be avoided?  Yes, it can. The root cause of most  slowdowns or downtime is bad planning. But very occasionally it is bad luck.

Dilbert Downtime

The root cause of downtime: Plan to fail or fail to plan..

Just as a new building requires good design so does the software and hardware foundations of  a new website/web app. Both buildings and web systems also need regular maintenance or they will break.  Everyone knows this, right. Unfortunately these basic principles are sometimes forgotten during planning and once systems are operational. The result is unplanned downtime or slow downs. According to Yankee Group:

The major causes of Web site downtime are both technical – such as power outages, network failure, application problems and lax security – and human – such as inadequate staffing and monitoring or a lack of recovery planning.”

Causality (cause & effect) is at work here. Downtime is the effect and the  caused is often from one or several of the following:

  1. Poor code or app Poorly written or design code causes downtime. It can also be a result of unsuitable platform or an app that’s been shoes horned into doing something it was not intended.
  2. Under capacity infrastructure – Hardware and software demands grow and change over time. One eye must always be kept on capacity and performance. Web infrastructure monitoring can help avoid this.
  3. Overloaded comms– This is probably the most difficult area to keep under control. You have to rely on a comms provider/ISP. So choose a good one. And don’t skip on the plan. If you do keep a eye on capacity. Website performance monitoring can help.
  4. Insufficient systems admin and management – Procedures and processes keep systems healthy and in tip top shape. Outsource it if you must. Again Website monitoring helps warn of growing problems.
  5. Bad luck – Multiple failures and failure of backup/contingency systems take websites down. At this point the disaster recovery plan should kick in. Unfortunately many people don’t have one of these.

The only point from the above list that can’t be avoided or planned for is Bad Luck. When website or web app revenues stakes are high why gamble with the chance of downtime or slowdowns. The blame for downtime often lies with poor management decisions. Corners are cut on resources. However as a business owner it’s a tough choice. Over architect and resources are wasted. Under architect capacity and your potentially setting up a problem for the future.

Related post:

The reality of website/SaaS downtime & slowdowns

I’m calling a ‘time of opportunity’ for London/UK internet startup industry

July 15, 2009

I’m getting very bored of being told we’re no good at Tech startup’s in the UK. I’ve calmed down since reading Paul Carr’s I’m calling a ‘time of death’ for London’s internet startup industry” Guardian article, so this post won’t be a rant.  Admittedly Paul’s post is amusing , however he paints a very negative and bleak picture. If Paul is to be believed there’s no future for London/UK Internet startups. However, I believe there is hope and the UK Tech startup industry has great strengths.

Paul’s a journalist who once lived in London and is now housed in Silicon Valley. He believes The London internet industry is increasingly, and terminally, screwed”. If Paul is to be believed shouldn’t we just give up! Why bother if  there’s no hope. While we are here lets cancel the 2012 London Olympics because the Beijing games were exceptional. There’s no way London could be the same. Just as we’re not Beijing, we are not Silicon Valley.

beijing_olympic_opening_ceremony_drummers

The Awesome Beijing Olympic opening ceremony drummers!! (Image source)

The investment funds sloshing around The Valley are huge compared to UK/European funds. The VC’s and Angel’s in the UK/Europe also tend to be much more risk adverse. Although these factors are changing  in the US with the credit bubble bursting. The UK’s limitations doesn’t mean we can’t produce a wonderful Olympics or make world class profitable web apps, we can. Huddle is a great example. Their ranked as one of the globe’s top 50 startups. Bebo is an excellent example of a very healthy trade sale. Sage a global leader was once a UK startup. The list of great UK startup goes on. Mike Butcher of Techcrunch Europe did a splendid job of correcting Paul on London’s startup profitability.

I and  many others agree that the Web 2.0 bubble is coming to an end. But the end is not death, it’s change. The Internet continues to deconstruct entire industries: advertising, music, newspapers etc. This change brings new potential innovation opportunities for existing and aspiring entrepreneurs alike. The Tech community has always been about and embraced radical change.  We are more adept at change than many other industries including Paul Carr’s Newspaper sector which Mike Butcher also pointed out.

The underlying Internet market continues to grow strongly. Ecommerce sales growth remains healthy even in the recession and the use of web applications are forecast to increase massively. The future of software is going to come from Internet based SaaS services and Open source. Again we have world leaders in the opensource sector with UK companies like Canonical and Alfresco. As entrepreneurs shouldn’t we take advantage of change to bring new opportunities. Or as Paul suggests should we give up hope and all the strengths that we have in the UK.

Techcrunch Europas Awards: And the winner is..

July 10, 2009

The creme of UK and Europe’s Tech startup community were at  Techcrunch’s Europas Awards last night. The inaugural event was held at the highly  fashionable Delfina in London. We also had guests from across the pond, including Sarah Lacy and a very hoarse Scoble. An endless stream of beer, wine and Tech startup high energy made for a great evenings entertainment. The evening started with six startup pitches, followed by a panel discussion and then the awards.

The Oscars AwardsThe Awards are up (image source)

The Pitches

First to pitch was Bernhard Niesner from Busuu with their Language learning and community app. Bernhard gave a energetic pitch with  amusing Austrian humor. Next up was Heikki Haldre from Fit.me a Virtual fitting Room app. A female from the audience had the crowd in stitches when she commented that most women don’t know their breast size. You can image the follow on comments.. Philipp Hubertus  Mohr from Comufy pitched their award winning personal communication aggregator.

Pitchero will help the UK find the next Jonny Wilkinson according to Mark Fletcher who gave a fast paced tour of their sport community websites app. The next pitch was from GigLocator who launch next week. James Proud gave a very relaxed, honest and friendly pitch. The crowd loved it. Last up was Ravi Sharma from Emarket with their CMG on-line exchange site.

Some great pitches and new European startups. BREAKING NEWS: Mike Butcher announced a European startup league table based on YouNoodle results. Way d’go Mike. A Champions league!!

The Panel

After the pitches a distinguished panel discussed the European startup scene:

  • Stefan Glaenzer, from Last.FM feels that Europe is 3-4 years behind The Valley and falling further back. Stefan believes we need to focus more on sales and marketing. However we do need to keep in mind that Silicon Valley is in its own bubble.
  • Sarah Lacy, author & TechCrunch editor, is on a world entrepreneurship and Innovation tour. Sarah’s visiting many emerging markets including India and China. Sarah sees demand increasing from non Western markets and Silicon Valley slipping back.
  • Michael Birch, co-founder of Bebo and Brent Hoberman, MyDeco’s, announced they are setting up PROfounders Capital. This is an investment fund for startups. Its run by experienced founders for startups founders. Nice idea.
  • Tariq Krim, founder of Netvibes – Tariq talked about the need to think globally with your startup.

It seems from the discussion we’ve come along way in Europe but have much further to go in today’s global economy.

The Awards

Spotify scooped up the most awards. They won: Best Web Application; Best Startup Founder(s); Best New Startup; and “The Europas GRAND PRIX”.

Ali Huddle Spays Mike Butcher

Alistair Mitchell & Andy McLoughlin, Huddle founders, win
The Best B2B category (source)

The full list of categories and winners are:

  1. Best Bootstrapped Startup (less than 3 years old) – Soup.io
  2. Best Design – Songkick
  3. Best Social Innovation (benefits society, EMEA) – Mendeley
  4. Best Cleantech / Environmental Startup (EMEA) – Alertme
  5. Best European Hardware / Real World Gadget (EMEA) – Poken
  6. Best Entertainment App or Service (EMEA) – SoundCloud
  7. Best Mobile Startup (EMEA) – Nimbuzz
  8. Best Mobile Application (EMEA)  – Spinvox
  9. Best Web Application Or Service (EMEA) – Spotify
  10. Best Enterprise / B2B Startup (EMEA) – Huddle
  11. Best Startup Founder(s)Daniel Ek and Martin Lorentzon, jointly for Spotify
  12. Best Investor (VC or Angel fund, EMEA) – The Accelerator Group
  13. Best Investor Personality (EMEA) – Yossi Vardi
  14. Best New Startup, Summer 2008-2009 – Spotify
  15. The Europas GRAND PRIX” – Spotify

It was an evening of much fun and frolicking:

Mike on high

Mike on high!! (source)

Well done  to all the pitchers for their efforts and congratulations to the Award winners. Mike and his team did a wonderful job of organising this fabulous event. Until next year. Our startup may even enter with our new website monitoring app..

Pitching 2.0+ : A clear, concise & complete message

July 8, 2009

It’s not as easy as you think getting your pitch/message down to a few very clear and concise words. I’m pitching our website monitoring startup again. This Pitch is part of a national Pitch competition. Click the links to see my last pitches: Understanding Pitching and Learning to Pitch. We’ve been short listed based on our application form. All the hard work we’ve been putting into our Website messaging is really starting to come through. Our message must be improving.

ChurchillChurchill. Good with words.

Like a marketing strapline a pitch needs to be boiled down to a very few key words. It says what your company does and what you stand for. This message is then developed into longer pitches to include more and more detail as required. 3 second, 30 second, 3 minute pitches, etc. Its a bit like a pyramid of descriptions with the shortest and simplest pitch at the top. This structure brings consistency and clarity. Ultimately the culture of a startup is formed around the principle messages and values formed by the founders. In this way employees, customers and investors understand what your company stands for.

How we get on today at The Pitch competition is important but its not critical. Its the journey that’s the useful part. Improving, testing and refining our message is the reason to pitch. Although the £50,000 worth of prizes would be nice. This practice is preparing us and our message for potential customers. After all The Pitch panel will not be buying our product, customers will. Keep pitching – practice makes perfect 😉

The reality of website/SaaS downtime & slowdowns

July 3, 2009

As you can imagine the subject of website downtime/slowdowns is very close to my heart. Our startups new app monitors websites for uptime and performance. The full impact of Website downtime has just really hit me. This week part of The Pitch website frustratingly went down. On the same day the premier Web host provider Rackspace had a full hours outage which impacted many, many websites. These failures got me thinking. How common is downtime and what are the downstream effects for both ecommerce and SaaS apps/sites?

Downtime with the XXXX

Customers get angry when web pages are down. Don’t blame them.

Sh*t downtime Happens

As our good friend and Cloud Computing expert Simon Wardley says Cloud downtime is inevitable. Its going to happen. However that does not mean we should be complacent and accept it. Ecommerce consumers certainly aren’t. They’re increasingly less tolerant of downtime. The effects are real. A Harris survey in 2008 found that consumers abandon or switch 42% of all transactions when they have a problem. This is up 12% on 2007.

Also 84%  of online consumers share negatives  experience’s with others (Harris).  Many of these problems are technical and performance related. A reputation which took considerable effort to establish can vanish overnight. The downtime message spreads at the speed of light through Twitter across 10’s millions of users. You can become known for being unreliable.

I’ve done some routing around to find evidence of how common website downtime is. According to Pingdom the average website is down for two hours per month!! That could be alot of visitors or customers lost. Sainburys, a leading UK supermarket, website was down for three hours during one day last year and at various other times. A large number of customers were tracked immediately moving from Sainburys to a competitor.

Downtime costs

Back in 99′ Ebay’s 22-Hour outage was estimated to have cost them $2 Million. The Register figured UK  Website downtime to cost £565m a year in 2002. This included “indirect costs, such as loss of reputation, lost future sales and the cost of storing unsold goods”. Harris says (2008) transaction problems impact £11.9b of sales. The impact of downtime has other downsides. Google penalizes your long term Ads Quality Score when your site or landing page is down.

Despite the interruptions the outlook remains very strong for ecommerce and for other web services.  Cloud/SaaS is forecast to grow massively over the next five years. IDC are saying upto 33% of IT spending growth by 2013!! This growth includes many of the free services such as Gmail, Facebook, etc which we have come to love. As Cloud inertia grows more and more chargeable apps are going to switch to the web.

A very similar downtime and slowdown reality to ecommerce also applies software-as-service (SaaS) apps. Only the churn rate of customers is slower i.e. SaaS users/consumers are on short term billing contracts. The effect is not a immediate loss of sales. Unless they are trying to sign up of course. However the resulting loss of sales and reputation is the same. The Cloud and SaaS apps have much to learn from ecommerce’s 15 years of experience. And ecommerce still has a long way to go.

Related Post:

Website/SaaS downtime: bad planning or bad luck