Are quality and price in conflict?

Most people that I know truly believe that in order to get a high quality service, one must pay a lot of money. Think if the following arguments ring a bell:

• The lawyer rips my skin off
• The graphic studio is expensive
• I need to invest much in good infrastructure

I bet that you have many more points like the ones above.

My experience proves that there are many hidden erroneous assumptions behind these arguments. For example, it is true that for a merger deal one needs a top notch law firm which is expensive and it is worthy of the money. But is it true in all cases you have? Probably your needs as a start-up are somewhat easier.

I will give a personal example of a friend of mine. He needed to phrase a user agreement and privacy policy for his website that involves some copyright issues. The offer he received from a good law firm was several thousands USD. He decided to try finding an expert that works on-line and get another proposal.

He used Guru.com and elance.com to seek for a professional lawyer in this field. One who is rated high by others. It is obvious he found one and paid about 1/10 of the proposal of the law firm without compromising on the quality. This lawyer does not need an office in downtown where the rental fee is sky rocketing and he does not need apprentices, a secretary, a big decorated meeting room, and so on. Of course he charges much less and make a nice margin as well.

Another example for graphics. A different friend of mine needed some cool flash animation clips for his marketing campaign. Instead of going to an expensive graphic studio. He hired a student from one of the best art schools that majors in animations during his summer vacation and paid much less. The student was very happy and my friend was very happy as well.

Regarding software and hardware - check used products or models which are not the latest ones. In my former company we bought new routers in perfect conditions.

The morale is: think outside the box. It is very easy to spend a lot of money since it seems normal and sometimes it is indeed necessary. However, as a start-up you must control your budget and find creative ways to put a better use for your money

Feel free to write comments with more ideas and experiences you had.

Fueling along the way

My last post was about the analogy between long distance running and building a start-up company. I wanted to continue discussing this analogy. If you find the analogy boring, please write a comment or email me and I will switch to another subject.

During a run, the runner loses much water. Therefore in long runs the runner must at least drink water.

This is me 1.5 years ago after going below 50 minutes in a 10K run

Alas, Drinking water is not enough. The runner also uses lots of carbs. Without available carbs, it is more difficult to run and not less important, it is more difficult to recover after the run. Add to that that during hot days where one sweats a lot, the runner loses both water and minerals (salts). Therefore if the runner drinks only water, the percentage of minerals in the body continues to decline (This is why an IV contains both water and salts)

The rule of thumb is: if your run is above 70 minutes, drink water and eat something during the run. Some eat bananas, or baked potatoes. Some take energy bar or liquid gels or even isotonic drinks (I won't share with you how the last two  taste :) )


Why is this relevant?
Building a start-up company is a very long distance run (no one even knows how long). You might be lucky and reach the finish line with sufficient energy and you might not be so lucky. Therefore, you must get new energy once in a while.

An energy can be in several forms

1. Money - Bring more money in. Either as revenues (best way) or as additional investments.
2. People morale - don't only have a single far away milestone - your exit. Get concrete smaller milestones. Some of them monetary (e.g. getting the first dollar), some of them are softer (e.g. launching a product, getting the first user). Make sure to celebrate them.

It is obvious that it is important to be efficient in consuming your existing energy, but no matter how effective you are, you must fuel once in a while and you need to plan the route where the gas stations are

By the way, you can follow me on twitter @a_weisen

Pace yourself

This is the third and final episode in the long-distance running series.

As many of you may well know, there are two types of physical exercises : aerobic and anaerobic. When the runner conducts an aerobic exercise, the pace is moderate and the body can endure it for a long time. When the runner conducts an anaerobic exercise, s/he can run much faster, but there are side effects such as lactic acid in the blood stream. Without trying to go for a full metabolic explanation, if there is too much lactic acid above a certain threshold (called the lactate threshold), the body will be forced to a halt after a period of time.

This chart shows how my lactic acid changes while I increase my speed.
Note that in 12Km/h the trajectory starts to sharply incline. This is the threshold

In short runs such as 100 meters there is no problem, the runner sprints and finishes. However, in long distance runs, the runner must plan the run carefully. If the runner runs too slow, s/he loses precious time, and if the runner runs too fast, above the lactate threshold, then s/he will not be able to finish the run.

The tactic for most runners is to learn where their threshold is and run slightly below this threshold most of the run (everyone sprints in the end).

The relevancy for a start-up is pretty straight forward. I saw companies starting too fast with a lot of energy. If they get funding they burn it very fast  and then they may perish. The lucky ones get another round of funding or a bridge loan and ... they burn it again. Saying that, I also saw companies doing the complete opposite, advancing like snails in the grass and never get anywhere.

I admit it is difficult to judge in real-time whether you are slightly slow or slightly fast then the optimal pace. An  athlete can go to a lab and test his lactate threshold. The entrepreneur cannot really measure the optimal pace. However, the entrepreneur can identify the extremes and make sure not to be in either one of them. S/he can make comparisons versus the speed of competitors. S/he can compare product time lines against to other projects, etc.

The company should use its budget wisely and make sure it is advancing. I suggest setting milestones which are not trivial ones (or even better, challenging ones), plan the budget for the long run and not spend it all on the first several milestones since the path is long and bumpy.

If you like more running episodes, do tell.

Feel free to twit me @a_weisen

Long distance running and start-ups

I've just finished a run of 18K as part of my training for half marathons. This made me recall the analogy between long runs and start-ups and I wanted to share with you my point of view.

Let me describe the run first - It is very hot and humid in Israel during the summer. Even though I started the run  when the sun rose, the average temperature is almost 30 degrees Celsius (86 Fahrenheit) and humidity is about 70 percent. I also ran on rolling hills. Once can say that these are not the perfect conditions.

Since I need to keep my heart rate on a certain level and since conditions are not too good, my running speed was slowed down. Mentally it is tougher since you tend to believe that your physical fitness is deteriorating. It is like "Hey, I used to run faster in the past and I ran longer distances, what is going on?" I know that it is the affects of the conditions, but still there is a mental barrier there.

Another "mental crisis" in the past was after two consecutive illnesses each of 2 weeks each in the winter. I did a half marathon and shortly after I got sick. After I recovered, I started again running 5K runs and then gradually increasing distances until several weeks after I was in shape again, I was happy for 2 days, and then I got sick again. This was a bummer.

It took much time and practice to understand that indeed, the physical fitness is improving, my body does get stronger, and I am able to recover faster comparing to former illnesses. However, I needed a yardstick and perspective of a really long time (years) to comprehend it while I had to be patient and continue to practice.

I think that the analogy to a start-up is pretty clear. Building a company is not a 100 meter race. The money you will be making is far far away. There are many ups and downs. However, if you keep on fighting, it will improve. It might take years, but you can get there.

Fight one battle at a time

It is late. It reminds me of the times I used to spend with Dr. Eli Goldratt at his home office while he tried to figure out ways to teach me how to build strategies for the companies he consulted to.

For those of you who do not who Eli Goldratt is - Eli is the founder of a theory called Theory of Constraints (TOC). Eli basically changed the manufacturing industry in the 80s. Then he moved into other fields such as distribution, project management, strategy, HR, holistic solutions and more (Google Goldratt for yourself to get more info). I was very fortunate to have him as a mentor and a close friend for many years.

One of the things he used to shove me in the head is that most of the times we are used to fight many fires, we get so busy doing so, and we think this is the normal way of doing business. Instead, Eli suggested to find the key issues that block the business and concentrate only on them one while subordinating the ENTIRE organization for the tasks at hand.

Why is this relevant to us?
Typically, in a start-up there are many challenges ahead, you need to make a product, you need to finance it, recruit people, mange them, market your product, find business partners, etc. I think you will all agree that the list is long and just grows. However, if you stop for a second and think of what really blocks you, you are likely to see that only very few items in the list are blocking you now. So, focus on these items and forget the rest. This will stop the crazy multi-tasking, prevent headaches of non relevant issues for the present, keeps everyone in sync on a clear and meaningful target.

I know you think – this is a triviality. Is it?
Make a list of what you are currently doing, I bet I am right in most of the cases. You can try checking these question to start with:

• Are your sales not picking up but you still continue to focus on your R&D?
• Are you going to be late again on your next product milestone, but you still have zillion of features which are not really necessary?
• How many projects are you running in parallel while not even trying to understand what bottom line value they carry for your business?

Overcoming an obstacle

Several months ago we launched our service. It took us more time than we wished for. Some of our competitors even emerged before we did, and when we launched the product in its beta version, you can imagine it was still in ... Beta :)

This was frustrating. We thought (or at least hoped) to be the first out there with our new and cool idea, and after so much investment, we were not the first and not even the second. Our product in the beginning was not good enough (difficult to admit it, but it is true). Sounds familiar?

The question then became, "what are we going to do next?"  will we fight or will we simply give up?

The methodical way to examine this question is not looking at the investment done, but to see if there is a potential future. We believed there was and we saluted to all our competitors since together we can increase the market awareness to our product and services. There is plenty of room to all of us.

We are now several months after and it starts to pay off. The product is becoming better and better. Users start to visit our website and write nice books and we get very excited reading these books. Feel free to check them at batalugu.com

Do not give up easily, this is the easy way. Nevertheless, if you think your future is totally blocked it would be stupid to bang your head against the wall.

Never say or think "I know"

Today I met a good friend of mine from my early days at my first start-up. I wanted his advice regarding how to conduct effective marketing using a modest budget.

He gave me a lot of good feedback (I will probably add on this in another post). The main point I wish to share is that while speaking to him, many mistakes that I have made (ones which I should have known) simply appeared on the table and in retrospect they were obvious. Luckily enough everything is easy to fix.

My main point is this:
Always check your doing with another person outside of your company. We all live in some kind of a box and we are all trapped in what we think we know. Many times we do know the answer, but it is always worthy to check and outsider opinion, even if s/he is not considered to be an expert