Buy-Sell Agreements

I've never had one, but I have seen a few at the small companies that I've worked for. This is an agreement among the founders, a legal document, that specifies what restrictions there might be in terms of  selling shares of the company. Wikipedia puts it well, a "premarital agreement among business owners."

The idea is to prevent control of the company from being shifted without the agreement of partners. It's often limiting how shares can be sold, including to whom. It might prevent a spouse from moving control to a third party in the event of divorce or death. It also specifies pricing in some cases.

Why talk about it? We are considering adding a partner, and this person mentioned that if things didn't work out, they would want to sell their shares to a friend. There's a concern about new partners that we don't know about, so this came up.

I'll write more as we get more details.

Networking for business

I had written a piece about networking, trying to show people how it can help you find other job opportunities. Someone commented that one other use of networking, at your current job or business, is that by talking and interacting with others, you might hear about business opportunities that you don't otherwise have.

You can network with people and try to do business with them, but that can make a bad impression on people. Instead network for information. You might learn what competitors are doing well, or doing poorly, and alter your business practice accordingly. You might get ideas about what would, or wouldn't work with your business.

Or you might hear about a competitor losing a customer. That might be the person you want to approach.

Genius Bar Rocks

I had an appointment to go to the Genius Bar at the local Apple Store today and have them check out my Nano. I'm glad I went as the "genius" who helped me actually gave me a new Nano, replacing my suspect one with a refurb for free.

Very cool for me, and great customer service.

This after AppleCare declined to do anything, and didn't even tell me anything. There's a disconnect in Apple customer service, possibly on purpose, and it's a little annoying. However the service at the Apple Store I got will ensure I am happy and willing to stick with Apple products. At least some of them. I'll also be heavily considering a Macbook for my next laptop.

This started when my Nano started acting up. It constantly rebooted when I attached it to my PC. So I did a few troubleshooting things online and decided it needed a repair. Actually I didn't do much since almost nothing would work. I'd hoped to reformat it, but that didn't work.

So I scheduled warranty service with Apple. I'd bought this in Jan. and since it was post 6 months, I had to pay a handling charge. $30, which isn't bad, I guess. I could have bought an Apple care support item, but that would have caused me to pay $40 more for 2 years coverage. Debatable if that's worth it. Best Buy wanted even more ($49).

So I paid it, a couple days later a FedEx box arrived. I packed it up, sent it off, and about 3 or 4 days later I got a box back. I opened it, found my iPod with a pre-printed form that gave various scenarios. Actually it gave 3, all of which were bad news. One was liquid damage, so sorry, one was something else, and one was "damage caused by excessive force." Mine was the last one, with a nice little X in the checkbox.

That's it. No other information about what was wrong with my Nano. For all I know they opened the box, put the paper in there and shipped it back. I looked over my Nano, checking for issues. I find no evidence of damage. A few people suggested online I check the connectors, but they look fine. They charge the device, but it won't sync. It plays music, even logs Nike+ stuff. The only thing it doesn't do is sync. Sounds like software to me.

The options on the paper were almost non-existent. A few people suggested contacting the Apple Store, so I did. They said I'd likely have to buy a refurb, but that only the Genius Bar could look at it.

And I'd need an appointment.

OK, no biggie, I go to make one online, and they don't have any for 2 days. I make one, and show up today. Every person in the Apple Store has an iPhone, they can check me in, and they Q me up for the next slot. There are like 8 or 10 Genius' people, at 12:30pm on a Wed, helping people. My appt was 12:40 and 12:42 they called me up.

They guy asked me what happened, looked at the paperwork, and then plugged in my Nano. He agreed it was likely software, but said since he couldn't format it, and it sounded like that was the issue, he'd give me a new one.

It took about 20 minutes, mainly him typing and filling out paperwork. They didn't have another green one, but I said no issue, and got a refurb, 8GB blue one to replace my 8GB green one.

Great customer service, the people were nice, and the constant videos on the wall, all showing hints on how to use your iPhone, iMac, Macbook, or iPhone were cool. I learned a few things while I was waiting and want to try them out. I actually did try one thing out.

I also got a hint for my books on CD ripped to iTunes, so I need to try that.

(cross posted at my dkranch blog)

Protecting Your Customer

It's good to have lots of information about a customer. I know that lots of businesses are looking at business intelligence (BI) solutions to help them better understand their customers, determine who to market to, how to market, and maybe sell more to each customer.

However finding out that information isn't a science with many companies. Instead they tend to use the same information for potential customers that they do with their real customers. There's a business that I like, it's a national chain, and so I went to their web site recently to see if they were offering coupons. They had a signup for email coupons, so I clicked it. The form asked for:

• name
• address
• email address
• phone  (day and night)
• cell phone

Very little of which is needed. What does all this information help you with? Maybe it allows you to mail things, but I've just asked for email coupons. I don't necessarily want printed coupons, but they could ask me.

Instead I'm annoyed by the large form, which could have been limited to email address and maybe zip code if you want to target a little more. Address isn't needed, and cell phone certainly isn't needed.

It's more information to secure, more for the customer to enter, and who knows how many people get annoyed and bail on the form.

Before you put something up, put yourself in your customers' shoes and see what's reasonable. I'm sure this is code being reused, but it's imposing a burden on the customer that can be detrimental to the relationship.

Nice Quote

Business conventions are important because they demonstrate how many people a company can operate without.

Since I got to so many, perhaps I'm not that valuable?

Trolling the Internet

I had to run to Tires Plus recently to get a tire looked at. The sensor was showing it as low, and it seemed that I needed to fill it weekly. They looked at it, and when they were done, the manager pointed out a survey at the bottom of the form. It would only take a few minutes, and it would give me $10 off.

So I went home, and was disappointed the next day when the sensor came on. It took me a week to get back there, but the day I wanted to go back, I remember the survey, took it online in 5 minutes, and got a code to put on my form. I brought it back, they apologized and said they'd look at the tire again while doing my oil change.

They finished in an hour, and the next day my sensor came on. I think something is wrong, but I'm willing to overlook it a little.

Why?

The people there are very polite. They also thanked me for my blog. Apparently someone at Tires Plus scans the Internet, or apparently has a Google Alert set up, and noticed my blog. Not only did they let the store know, but the manager remembered it and thanked me personally.

Very nice service.

A Great Business Model

Tia and I were moving dirt around the ranch this weekend. It was a chore that needed to be done, and we had some time to do it. Nothing was scheduled, no kid or family commitments, on a Sunday afternoon.

While we were working, a strange car drove up, and a lady got out with a package in her hand. Tia and I looked at each other, and since I was in the tractor, she walked over there to see what was going on. I finished dumping some dirt, and as I was walking back to the house, Tia came up to talk to me.

She showed me this:

The lady apparently takes photos of houses from the air, and then brings them around to sell. I'm not sure if she or her husband does this, but they offer the print for $119 or so, and then $30 for the frame.

Not a big money maker, but it can fund a hobby or some costs, and it's not a bad model. The power of showing a finished product to a client makes a big impression. While $120 isn't cheap, it's a nice photo, and is unique. I wouldn't, however, contract with them if they came by and said they'd go take a picture and bring it back.

I don't think that you'd ever earn a living with some hobby like this, but you likely could cover costs, perhaps even the fuel from flying your airplane around. If you had a similar hobby, woodworking, crafts, something where you can produce a customized product easily, making a sale can work well. Photography is easy: I see people taking pictures at theme parks, ski resorts, etc. and then selling prints later. It must bring in enough money to keep offering it year after year.

This is a nice example of contact hitting, making small, regular sales that people.

Don't Make Me Work, VIA Rail

I got an email the other day from Canada's VIA Rail, advertising "Discover Canada by Train" and the chance to save up to 70%. When my son was younger he loved trains, and one of the videos he had was of a train trip on VIA rail across Canada. It looked amazing, and they hooked me. I clicked on the link to see how much this might cost. I'm not necessarily looking for a trip now, but I might in the future.

I don't know how I got on their list, being a US Citizen, but they piqued my interest. A good thing.

Note: this applies to how the software APPEARS for VIA Rail. It's something you ought to consider when you're marketing promotions to your customers.

I got to this page, which looked nice, but it was WHAT WAS IN THE EMAIL. Don't waste my time. At this point I feel as though you've shown me the same commercial twice. Not what I want to see.

As a comparison, here' s the email:

Both of them essentially are trying to hook me, but neither one shows me

• the cost
• where I can go
• when I can go

That's a big mistake, and it starts to immediately turn me off. However I continued on to look at the next page, where they presented me with a map:

and below that a series of routes on which there were specials.

Again, I don't have a price, so I'm not sure I'm interested. But this is a promotion, and maybe they want me more interested. OK, I get that, so I click a few of the map locations and that limits the list of specials. I pick one of the interesting ones, Vancouver to Toronto, just to see. I figure I'll get a high price.

I find one I like

 

and click "Book Now, " which seems like a nice, highly visible link. There are booking instructions, but how many people click the instructions first? I'm hooked, I want to buy. I get...

OK, now what? My route is populated, but the dates aren't, and if you look at my choice, it has a date listed for the special. It also has a discount code, neither of which I have at this point. If I searched through and found a fare here, it wouldn't necessarily be the special they're shown me.

What's more, on the special, it doesn't list the time it takes for this journey, so I have no idea of what the return date should be.

It's a slow site, the search takes minutes, and were it not for the chance to write this blog post, I would have just bailed and not bothered to continue. But I'm curious at this point, morbidly curious, how bad things can get. I pick dates I want in September, the wrong ones deliberately, and continue.

When it does come back, which is literally 4 or 5 minutes later, I'm amazed. It didn't time out. I see this

Not bad, they moved my dates for me, but then I don't see the special fares. I do see the discounted berth, which was mentioned in the ad. I'm assuming this is more than a day's journey and I need to sleep, so I pick it and continue.

Eventually (another 5 minutes) it comes back to say that my return date is invalid. For eff's sake, can you not give me more than that? Clue me in as to the possible dates? What timeframe should I consider.

Curiosity is failing, but I go back, enter in the date on the discount (Oct 9), pick 3 days later since I think I remember from my son's video that it was 3 days to get across Canada by rail.

Minutes later, I get a return. I'm not sure how long because I'm writing this and doing other work, checking the page once in awhile.

The first thing I saw was just the "Upper berth" item in the drop down. At first I was confused why this was listed when I'd suggested the "upper and lower berth - discounted" item. It's annoying to me to see other listings here, but more annoying to show them as "sold out" I don't know if the search was too slow, or if there is a crappy design, and I'm really not sure if it's worth even searching. If I were seriously considering a train trip, I'd be very, very turned off now. Were it not for this blog, I'd have moved on.

I finally get the results:

I can't say I'm that surprised at the cost, though I am surprised it says "discounted" berth. What's the discount? And why is passenger one paying $2,421 and passenger 2 paging $2,265 ($156 less)?

I continue on, thinking that at some point I'll put in the discount code and see the discount. I enter my name, fake address, fake phone, and get to the payment screen where they want my credit card number. No discount, no letting me know what the discount is.

At this point I think they have horrible software developers, and are hiding something. They feel worse than the airlines to me.

Out of curiosity, I check on Amtrak and look over some deals they have. Their site was inifinitely easier for me to find specials, and get a price along with the results when I searched on dates. Not a lot faster at times, but definitely easier to use. I didn't compare prices at all.

I buy airline tickets 5-6 times a year, and at no time have I had as much of a hassle in finding a price as I did on the VIA Rail site. Likely I'll not be considering a trip across Canada by rail anytime soon.

Building an Alliance

A friend sent me this article from Problogger on Blogging Alliances. It's an interesting read, and basically involves setting up a limited partnership. I think it can be a great idea, but it really depends on the people you have involved.

As we started our company years ago, we had 7 people, formalizing our "partnership", but informally deciding to share the work. That didn't work out, and we ended up buying out people until there were 3 of us left. We found that we 3 could share the work pretty well and we ended up with a nice company we eventually sold off some assets from.

There is some power in synergies, and if you can find a similar business that doesn't necessarily compete with you, sharing some knowledge and helping promote each other could work out very well. I think this is an interesting idea for small businesses, especially software businesses, that could write about the products and cross promote with others.

You still have to do a good job in your blogging, but this could easily help build business for each other, as long as you are willing to contribute to the efforts of others without worrying too much about equal benefits back.

Keeping a Reserve

One of the things that we track in our business on a regular basis is the amount of cash we have in savings. On a month to month basis we have a checking account into which revenues flow and expenses come out. However since those don't always match, we have had the need to dip into savings at times.

Typically we haven't sent money the other way. If we have exceeded our monthly spend by xx dollars, we've ended up distributing dividends to the shareholders. That's a month to month spend. However we have capped those, so if we had a few really good months I could see us putting some back into savings.

However with the current economy, we've struggled to meet our expense number, and as a result, the savings have been going down. That's a tough thing to swallow, and at some point we might have to close the business.

In making that decision (and we haven't made it) , there are a couple concerns. We have a lease on office space, as well as some short term fixed expenses. The lease has over a year to run, and if we shut the doors today, we couldn't cover the cost with savings. So our plan is to try and keep making enough revenue to meet that number in the short term.

However as we get lower in savings, we have to decide at some point what to do. We're probably still a month or two off from a big decision, and we are trying a few things to build some revenue in the short term. We also canceled plans for an event next year since we don't want to commit the capital now if we can't build up some sales.

Pricing

There has been an interesting series of pricing posts over at The Client Revolution. It's a legal site where the company charges fixed prices for certain work as opposed to billing by the hour. There is one on Jet Blue's fixed price and another one about a barbershop. They're interesting ideas, and I think they work well if you can drive some volume.

Sure you'll have people that take advantage of it. You have to ignore those people because someone will always look to game the system. And some of them will spend the time and effort to save money. Provided you can get enough people interested to try things, you'll make up for those few.

I sent it to my partners in the training business, and we're considering doing something like this. Sure we'll have a few people that want to train a lot, but if we could drive a couple extra people a month to try us out, even if they came back every month, it would be worth it.

Likely we'll try something like this with local people in Orlando. The dangers to us are that we'll have one person in a class, which can be a real money loser for us, depending on who teaches it.

An Incubator

I'm not sure how this works, but Springboard seems like a great concept for an incubator. I work for Red Gate, and I think they're a good company. However even for them this seems like a bit of a leap of faith. I guess they're assuming that none of these ideas are Facebook-like, and so they'll likely be products that Red Gate would eventually buy, or take some equity in and help the company grow.

I like it, and I like the trust factor. The Red Gate offices are large, plenty of space for now, and so I think this might not be a bad use of space. I know they helped out another company recently, actually traded some space for services, and they are a large sponsor of The Business of Software. They look to grow the right way, slow and with revenues, not looking for a big payoff, but rather a sustainable business.

There's a nice post about how this started, and if you're beyond incubator stage, think about attending the Business of Software conference. I won't make it this year because of two other commitments around that event, but it was one of the most inspiring events I've ever attended.

Changing Your Name

We're in the process of re-examining our brands at my company. We essentially have a holding company that then owns 3 other businesses and we're trying to decide if one of them is really worthwhile, or if we should merge it into another one.

It's a hard decision.

After all, we like our brands and the names. People have gotten to know us, I've passed out numerous stickers for laptops, included the logos in my writings and on web sites, they're fairly well known.

But well known enough? And enough to prevent confusion of the different entities? That's the question.

We're debating it, and it's not something that we've easily been able to decide, but in the end we decided that having two brands for two sides of the same thing isn't the way to go. So we'll change the names, announce it in our publications and move forward, hoping for the best.

We have decided to keep the old brands around. In some cases that means each different name points to the same content, which could be good or bad, but it will allow us to refer people to the new name somehow.

Just not sure how yet.

Invest in Business

A very interesting opinion piece by David Pouge at the New York Times about the cell phone industry. While you may or may not agree with him, and have similar complaints, the second to the last paragraph caught my eye. It said:

"Right now, the cell carriers spend about $6 billion a year on advertising. Why doesn’t it occur to them that they’d attract a heck of a lot more customers by making them happy instead of miserable? By being less greedy and obnoxious? By doing what every other industry does: try to please customers instead of entrap and bilk them?"

I thought that was very interesting. I completely understand the desire to advertise to grow your business. It works, and it makes sense. The hardest thing I've seen in my business experience is sometimes getting the word out to people about what services or products you offer.

However, I think the cell phone industry in the US is engaged in public lobbying, trying desparately to grow business through advertising, and is unbalanced in terms of doing a better job for customers. I would think that even taking 20%, or $1B in aggregate, of their advertising money and using that to improve service, add towers, solve some issues, might greatly enhance the customer experience.

And with today's blogs, word of mouth, and highly connected world, they might gain more business than they do by spending that money on advertising.

You need investment and advertising, but make sure that you spend on both of them with some balance.

Watch Your Employees

Apparently PC repair people have learned a few things from auto mechanics of the past. A news group in the US spied on repair companies with some crappy results. Technicians not only were devious, wanting to charge for repairs they didn't make, but they also violated the trust of customers by snooping through details.

In my mind, the results of this operation ought to be reported to the police as well, and these individuals arrested, and fined, with a nice mark on any background check in the future.

However for the business owner, it means that it's important you are aware of what is happening with your employees. You need to trust them, and I hope you do, but perhaps you ought to verify things as well. Secret shoppers might a good solution or even some monitoring, but ultimately running an ethical business is your responsibility.

This is a sad commentary on how many people behave these days, especially younger people that let their their emotions dictate their actions.

Hitting Singles

An interesting post from Mark Cuban today on Success and Motivation. People always post on his blog and ask for advice on business, and he writes on it. This is part of a series about business.

The quote that I liked in there: "I may  not hit many homeruns, but I sure hit a lot of singles and doubles and rarely strike out."

That's what I believe as well. Venture Capitalists do drive some things forward, but I think they ruin many more businesses because they are desperately trying to hit home runs. And long term, I'm not sure that's good for the economy or the world. We need some home runs, but we need many, many more sustainable businesses.

And Bad Customer Service

After I reconfigured the router/modem I bought and rebooted it, my son walked in and said his XBOX wouldn’t connect. A quick check of things on my desktop confirmed that my Internet connection was down. A nice red light on the router confirmed that.

I double checked the user, password, but the router wouldn’t connect. I had a DSL signal, but not an IP from the WAN side. So with my son urging me on so he could play XBOX live, I called Qwest back and got a new customer service rep. I explained my issue, and she asked if I had a Qwest modem. I said no, mine had died last year, I’d replaced it, and was now replacing the router again. At that point she said she couldn’t help me.

Silence for about 30 seconds.

I wasn’t even sure what to say. That is truly a way to turn a customer off. However with no choice in the matter, I went on to ask her to check my user/password. She did, they matched, and she said that she couldn’t help since she didn’t know Netgear and they program everything into their Qwest modems.

With subsequent questioning from me, she revealed:

• The DSL signal can be PPPoE or PPPoA, but PPPoE is recommended.
• The VCI setting needs to be 32 and the VPI is 0, and I can use either LLC or VC multiplexing
• Qwest modems are at Wal-Mart and Best Buy locally

She would not have mentioned any of these if I had not asked questions. She would have let me hang up the phone and call back for more tech support if I couldn’t figure it out. She at no time initiated information to help me solve the problem or even to move forward. She never told me that I should go to a store and get a Qwest modem if I couldn’t get this to work.

She just kept saying they didn’t support non-Qwest products.

I can appreciate the fact that they don’t want to support other products. Totally understand the training issue there, but providing settings, like the VCI/VPI settings (she never identified which was 32 and which was 0, I had to experiment), would be nice. Suggesting that I go get a Qwest modem if I had issues, and telling me where to go would have been acceptable.

Instead, I wasted almost 10 minutes of my time arguing with her, and Qwest’s time, because she didn’t want to help me.

Amazing.

Quick and Easy Customer Service

Great customer service isn't hard. It's tedious, it's thoughtful, and it's a little effort, but it's not hard. It can cost time and money, and so many people try to shortcut things here, resulting in badwill. In these days of automated voice response and speech recognition systems, it can be frustrating for the customer, and it appears that many companies don't worry about that.

I see it as a mistake, and one that small businesses don't want to repeat. They can't afford to churn customers as much as large companies, though large companies are realizing this is an issue as well.

I got a new modem/router the other day since my current one has issues. When I got it home, I realized that I didn't have the password to connect to the DSL line, and I couldn't retrieve it from the modem. Not sure why it's a big deal to get it back since that's likely a more secure place than on my desk, but in any case, I can to call Qwest.

I got an automated system, as expected, and it wasn’t obvious which options to pick for a “need my password”, but it was simple. I selected “Internet” over “Telephone” and then “Tech Support” since it wasn’t billing or ordering. Next it was “Configuration” over “Installation”, “Email”, and “Troubleshooting”. That immediately brought me to an agent, well not immediately, but within 2 minutes. I got a message in the meantime saying the expected wait was 3 minutes.

That’s easy, using automation to efficiently schedule people and providing feedback. I’m not sure how expensive this is for small businesses, but lots of little call center applications exist, and they could easily do this for you.

I explained my issue and the agent told me to hold for a minute while he checked. I asked him what he was checking and he said he wanted to verify the old password that he had was working. That’s amazing. I can’t tell you how many times someone has reset or sent me a password without checking it. I’ve done that, and when it doesn’t work, it’s annoying.

He then read it to me, let me read it back, and then asked if I wanted him to stay on hold while I switched them. I said no because I wasn’t quite ready here, but I appreciated the offer.

Total time about 5 minutes from the phone number lookup to having the info. Very impressive.

Succes

Written for individuals, but applicable to the small business as well. Good advice from Mark Cuban on getting going in 2009. Worth a read for those early in their careers, but applicable to everyone as well.

Just These Two Chairs

I found this blog entry, and video, entitled “How I spent a Million Bucks and Ended up with These Two Chairs” and had to comment on it.

This is almost what I went through in two start ups, money being spent on “appearances” that for the most part didn’t matter. I’m not denying that having a nice office impresses people, but it’s a surface impression. If you can’t deliver on that impression with real value and services (or products), then it’s wasted.

I worked at one startup, renting the penthouse of an office building in the Denver Tech Center. We spent a bunch of money on a nice conference room, including a patio outside, thousands on a fancy reception area, and (of course) nice offices for the executives in a circular part of the building.

As expected, us workers were crammed into cubes and shared offices except for a few that had private offices with western views of the mountains. I had one, and I have to admit it was nice, but over the year or so I was there, we didn’t deliver on some of our promises, and we had issues on many more. I visited a few of our clients that paid us (literally) millions of dollars a year to provide a service and they all said that they’d be more impressed with better service and software than our office. We were profitable, but I felt that we wasted a lot of money that would have been better spent on a couple more developers and new hardware.

My other startup literally started from scratch. I was employee 22 or 23, and we packed in people into offices, we seemed to be doing things right, literally with people working on card tables in hallways as we grew. We added a second office down the road, and that’s where things failed. The plan was to keep people in both locations, being thrifty with space. However once again the executives wanted to “decorate” to impress people, primarily our Venture Capital investors.

Wasted money, that eventually doomed the company. Actually that company might not have made it in either case, but we could have been more thrifty.

Spending money you don’t need to, until you' are at least comfortably profitable, is not a good way to run your business.

If you want to learn more about the business of Software, attend the Business of Software Conference. I plan on going, and thought it was worth the time and money last year.

Grow Slow

I’ve thought this for a long time, and it was nice to see Time Magazine with a piece on growing slow. It talks about some Internet businesses that aren’t looking to hit a home run in the short term.

I’ve thought this for a long time. You don’t need constant growing sales, don’t need to be achieving 20% growth year after year. There’s nothing wrong with that, or for even trying to get there, but that’s not for everyone.

Slow growth, or even steady sales that are better than break even, is perfectly acceptable. Look around you in the local community. How many of those businesses that you frequent are happy and content with fairly steady sales, or slow growth?

Some people are gamblers, but most of us are not. Owning a business is a big gamble for many people, don’t compound the stress and concern by obsessing over the stories of those people that have hit it big and grown by staggering amounts every year.

Set reasonable goals that make sense for you, and that you are comfortable. Keep working on your business, but don’t measure yourself by the success stories in the media. There are hundreds, if not thousans of slow growth, steady sales businesses that provide their owners with a yearly profit for every Facebook story.

There are also hundreds of busts for every success story because the owners gambled or planned on exponential growth.

Bonuses – Management Inequalities

If you own a business, I believe that you have a right to make more money than the rest of your employees. You are taking on a risk, and greater risk should result in greater reward, at least that’s how capitalism is supposed to work.

But what about management? Often I see management (meaning directors, VPs, C-level) having different bonus plans than employees. They have different targets, which makes sense, but also different measures. As a result, management often gets bonuses when employees do not.

I think this is a huge mistake. It contributes to a lack of loyalty from employees, they don’t trust management, don’t see them as leaders, and don’t feel they have a reason to support the company.

In times past, in the military, in companies in the late 1800s, workers had much less power and management took advantage of that. Workers don’t have much more power today, but they have much greater mobility, especially in the technical world. That means that by not creating a more equitable distribution of incentive pay, or bonuses, you are destroying the goodwill you can build with employees.

If you are running a company that deals more with very unskilled labor, say a retail store, then perhaps it doesn’t matter as much. If you have high employee turnover, then perhaps you are not losing much, though I would argue that you could reduce training costs with better retention, and that’s what bonuses give.

I’m getting off track here, but I want to provide a basis for building a better bonus plan.

I think management should have different targets they need to achieve, but these targets much be tightly coupled to those targets for employees. In fact, one of the management bonus targets ought to be that employees get their bonuses. If this measure isn’t achieved, then how is management succeeding? They must be driving employees, who actually do the work, to do a better job, or at least get the best effort out of them.

Management bonuses should be larger, and you can’t do much about the anger there. They take on greater responsibility, arguably greater risk in their career, and should be rewarded, but in determining that reward, it ought to also depend on their subordinates achieving their goals as well.

The Twitter Ripples

I saw this post on The Business of Software Blog about a use of Twitter to spread the word for a marketing guy. As an aside, I attended the 2008 Business of Software conference and it was outstanding. I’d recommend it to anyone in the software business.

It’s an interview with Dan Nunan, with whom I used to work, and it talks about how he handled a recent trade show. Pressed for time, they created a reconstruction of the Huson River plane crash that had occurred recently. What’s interesting, is how he used Twitter to spread the word and have a fairly wide reach.

It’s unclear if it was successful, and I think for many marketing efforts it’s a cumulative effect over time that determines if you’re successful, not the immediate response. Still I think it was a creative use of the medium, and a recognition of how the ripples can spread out from Twitter to mainstream media.

Bonuses – Once a Year

I worked at a company that had a yearly bonus. Actually I’ve worked at a few companies, but this one in particular set a plan in motion in January of one year. This plan was structured as follows:

• Meet a target of xx revenue for the year
• Achieve a yearly profit margin of yy%
• Have no unprofitable quarters

I don’t remember the exact targets for xx and yy, but they aren’t important. Most employees I knew thought these were reasonable goals, would require some work, but not an extraordinary effort, and were fair. People were excited, and despite a slow economy at the time (this was around 2002), they worked hard.

Until April.

When we released our Q1 results (we were a public company), we hadn’t had a profitable quarter. Management gave us the usual story about being upbeat, we can still pull together and work hard, and we’ll have a good year.

Anyone want to guess what happened with moral?

Salesman still pushed hard, after all, they have a separate bonus structure called a “commission”. Most of the rest of the company was a little disillusioned. Not that they looked to quit, or stop working, but there wasn’t an incentive to work harder than necessary. Executives were mystified, they pushed harder, complained, and tried to motivate people.

I found out later that executives had a different bonus structure than the rest of the company, which is something else I need to write about in another post. So they were on track to still make bonuses.

Many employees, however, checked out for the year. “We’ll hope for bonuses next year” was the consensus for most people working there. The #3 item for our bonuses had been blown by a bad quarter, which meant that there was no longer an incentive to work harder.

Granted employees owned stock, so they would still get some benefit from a profitable company, but most don’t own enough stock, and tend to hold onto it, so this doesn’t provide any short term incentive.

And that’s what a bonus is, a short term incentive.

What could be done better? First, a bonus should stand on it’s own in a period. Each part of the plan above should have been assigned a percentage of the overall bonus. If we had 1% of our bonus come from each quarter and the other 6% from the first two incentives, people would still be motivated. They’d have lost one part of their bonus, but not all of it.

I also think that having yearly bonuses, the traditional “Christmas bonus” is a mistake. It’s a long time for employees to focus on the incentive, and with the uncertainty in many companies and the lack of loyalty from both sides, it falls out two ways:

• You have to overpay to make it an incentive.
• You don’t overpay and people just stop caring.

In either case you aren’t necessarily building a good business plan.

My thoughts are that you should motivate people in short bursts, provide incentives to change behavior for short terms, make them fair, and change them often.

My next post will look at some of the issues with management.

FedEx'ing Easter Eggs

My wife has had a hard week. Actually a few weeks where she's worked a lot of hours, lots of phone calls, computer work, all trying to get a big contract going with a customer. It's been stressful and hard on her, making her question this job a few times.

Apparently her boss has been paying attention and wants to let her know that he appreciates her and he's aware of how hard things have been. This morning, while Tia was on a conference call, the FedEx guy came and rang the doorbell. He dropped off a small box, about the size that a cell phone comes in. It was from her boss, so I took it in to her.

She opened it up, and inside was an envelope that contained 4 or 5 small chocolate Easter eggs and a handwritten note telling her that he appreciated her hard work and to hang in there as things would slow down soon.

It made her laugh, and made her morning.

That's a great sign that a manager is paying attention to how his direct reports are doing. Even doubly so since she's a remote employee and only sees him a couple of times a year.

Bonus Targets

The company I worked for met a sales target recently and that triggered a bonus that is paid on a company basis to each employee. That was a nice gesture, and it’s a common goal that helps everyone to push towards earning it, and it’s an equitable distribution.

I then got a note that the group bonus, which is different for different departments, is being altered to a “stretch” but not “impossible” target.

Bonuses are always an interesting motivational tool. You want to motivate people to do their best, and help grow the company. A bonus allows people to share in the success that results from their efforts.

But how do you set targets? How much of profitability should be shared? After all, I’d argue that some profits should be retained for growth and reinvested in the company. Shareholders also deserve some benefits.

Setting targets is hard. In the next few posts, I’ll discuss a few plans I’ve seen, and some good and bad results.

Bonus Don’t Help

An interesting post from Mark Cuban on bonuses, and one that I think is pretty accurate. People tend to act in their own interests, for the short term, and don’t really have loyalty.

Why should they?

At least in the US, most people don’t see loyalty from their companies. It’s not that people are fired or laid off without thought, but they aren’t treated well. They aren’t necessarily appreciated, and they certainly don’t get their bonuses that often. At least not great bonuses. While executives often receive good bonuses, the rank and file, who contribute a great deal to the success of the company, don’t. I’ve seen plenty of cases where the bonus plan wasn’t met for employees, but executives were still well paid.

Setting a bonus plan is hard. Owners, executives, they do deserve to get more, but not an outrageous 10-20x more. They don’t really produce that much value. A bonus plan shouldn’t be a lottery.

I say let people go, find employees that want to work for you, pay them fairly, and build your business. Overpaying someone because you think they make a huge difference, is almost always, a mistake.

Marketing Books

Marketing your products is hard, especially if you're not a marketing person. However my business partners and I have been trying to learn a bit more about what makes sense for marketing and how to do it as we strive to grow JumpstartTV and End to End Training in a soft economy.

I started Permission Marketing awhile back after seeing Seth Godin speak at the Business of Software conference. It was an interesting talk, and I found the book to almost be a common sense type approach to marketing. It has a lot of stories about various marketing strategies (good and bad) that have been tried. It also really tries to explain why permission marketing works better than interruption marketing.

My business partner started An Idiot's Guide to Marketing, which he liked as a basic introduction to marketing.

Great IT Teambuilding – Star Trek

When I worked at JD Edwards years ago, we were looking for monthly teambuilding exercises that would help our group of 20 stay focused, and ensure we bonded together. We tried a variety of things, we’d plan and discuss ideas at a weekly meeting, and we would rotate the odd-man-out, the person that had to remain in the office to provide coverage.

One of the choices we made was to attend The Matrix Reloaded on opening morning, catching the first show at a local theater. 18 of us car pooled down there one morning, watched the show, and then enjoyed talking about it the next day.

We were geeks. The Matrix was a popular movie, and seeing the sequel gave us a common bond, a point to touch each other, and a shared experience away from work. You might debate how beneficial this is for a company, but I’d argue that these bonds make it easier for people to do favors for each other, help each other out, and they build morale. All of that should help with retention and productivity.

There’s a chance to do this again for many companies in a little over a month. Star Trek has a new movie coming out on May 8th. While the original series, and even The Next Generation have been abandoned as series, there is still a lot of Star Trek fandom in the geek world.

If you have a team of people, consider scheduling a morning out. Grab that 10am show, treat your IT staff (or as many as possible) and give them a chance to grow tighter together as a team.

Very Cool Idea

If you can afford to do it, this is a great way of looking at the slowing economy and trying to stimulate things. Mark Cuban blogged about Tees and Tats, a shirt company. They decided they’d rebate customers if the economy continues to fall.

It’s a gimmick, but it’s also here, now, and relevant. As long as they can follow through, it builds a bond with the customer.

Thinking Things Through

We've been working on enhancing some of the tools that we use for automated processes like invoicing, commissions, etc. Using automation to reduce the labor costs, which are usually owner labor, can make a huge difference in the amount of work you can get done.

So before we undertake development, what we've done is think about the process that we need to implement. We go through what he normally does manually, entries into Quick Books, transfers from banks, invoices entered, calculating things, etc. We then note that down in a Word document, describing the flow.

Next we look at the process for places for breakage. Meaning where things can do wrong, or where we might need to correct/adjust things. Then we outline those as well and use that as a basic document to provide to a developer, and also for some testing.

It's a pain. It takes time, but it helps to ensure that we are actually building what we need.

Great Customer Service

After a recent event where I saw a number of other “geeks” sporting stickers on their laptops, I decided to join the trend.

I Google’d for stickers, and the first result was from StickerGiant. They had a nice site, I answered a few questions and got to a contact form. Typically I don’t like that, especially as most of these products are commodities. There’s no value in involving a salesman since one site is the same as others.

I was out of town, didn’t want to research a lot, so I filled it out and moved on. I checked a couple other places as well, noted a few prices, but didn’t order anything. No one had a great interface like VistaPrint, so I put this on my to-do list and moved on.

A day later I got a quote from StickerGiant that seemed OK, but I wanted to check more prices, so I let it sit until I got home. The next week I was working on this and checked a few prices from 2-3 other places and compared with StickerGiant. Their prices were as good as anyone, they already had my logo, and so I replied to the salesperson saying I wanted to proceed. Inside of 10 minutes I had a reply asking for color matches, address, and how I’d like to pay. I replied saying I’d like an online payment method and gave my address. I said make a standard color match since I’m not sure that a Pantone match of my logo matters. Actually I have no idea if we’ve ever matched with the products we’ve ordered, and I didn’t want to start now.

I got a reply saying that I needed to pick the colors from their list with a link to the site and then a minute later an invoice link in a separate email. I clicked the invoice, it had my information in there and then a “pay now” button that took me to a place for my CC info. I entered that, got a confirm, sent my color choices and the salesperson confirmed I’d have stickers in 4 business days.

All together that process took less time than writing this post, and while I wasn’t sure a salesperson added value, they definitely made the process smoother.

I have no idea how many people one salesperson can handle, or if this is part time work for someone doing other tasks, but this was a smooth process and it worked well. In fact, I think I’ll order other stickers.

Grass Roots Marketing

When I started in the technical business, almost no one had a laptop. And for a long time, those that did have laptops were carrying corporate laptops. With the need to take care of those machines and turn them in at some point, people were careful with them and did not “alter” them.

Over the years, with the salaries being paid, people moving in and out of consulting, and the lower prices of machines, people are starting to purchase their own machines more and more.

And some manufacturer’s are taking advantage of that. Alienware, shown here, has a distinctive design that appeals to gamers. Those machines are a high end commodity, and I’m not sure if this helps sales, but there is brand recognition here.

At a recent conference, I noticed that a few people were handing out stickers for people to put on their laptops. At first I wasn’t sure how valuable or how well this would work, but I noticed more and more appearing on laptops.

And the more they were noticed by other people, the more those people started to put them on their personal machines. the one to the left is someone’s laptop that I never thought would put one on there.

So I decided to get some.

It’s a little bit of a me-too move, but you also ought to be able to recognize a good idea and implement it. Not everything you do has to be original, and borrowing an idea here and there can help your business.

As with most things, I started a quick Google search, found a few sites, went with one and ordered stickers. I’ll carry a bunch around in my bag and send some to friends to spread the word. Hopefully this will help promote my sites over time.

Just Do It

I was recently reading Joel Spolsky’s column in Inc. on management and I thought it was an interesting story. In general you want to be efficient with your time. You don’t want to waste it doing things that someone else could do better and possibly cheaper. Time management is a skill that you need to do well to succeed.

If you don’t want to succeed and just work for someone, that’s fine too, but time management can still help you.

In any case, I think it’s a balance that you have to find. Recently I asked to have someone else take over some of my duties on a part-time basis, mainly to give me more time for other things. I wasn’t sure how well this would go over with the boss since I’d been doing things fine and I was essentially asking for someone else to make my job easier. But I had a few arguments:

• Someone else needs to know how to do this, since the proverbial bus could strike me down at any time.
• I’m fairly expensive, and this isn’t really a good use of my time.
• I could take on other tasks.

I wasn’t exactly emphasizing the last item since I’m fairly busy, but I don’t mind taking on other tasks periodically. Mostly I was hoping to get more vacation in (I’ve never taken my allotment) and get ahead more on my writing.

In any case, I did get someone that helps out, but I still try to go and handle some of those duties, primarily processing email to the webmaster, on a regular basis. It helps me to keep in touch with my customers, but also to show that I’m not above performing duties.

I have a story similar to Joel’s, but with the opposite effect. I was working in an office early in my career, in a small company, and we had a break room. In it was the large printer that was shared by everyone in the office. One day I walked in right behind the President of the company and we were waiting for things to print. His job was ahead of mine, but stopped in the middle as the printer was out of paper, but I didn’t know that.

He asked if I would add more paper, I did, and the printer started back up, printed his job and then mine. Now I didn’t mind loading paper in there, and I might have felt differently if he had gone to get a cup of coffee or talk to someone while I took a couple minutes to locate paper and load the printer. Instead he stood there and watched me.

My impressions of him took a further turn for the worse when I witnessed him doing the same thing to someone else at the coffee pot, asking them to make him more coffee while he stood there. Needless to say I didn’t stay there very long.

I’ve always pitched in when needed. I’ve had CTOs help pull cable and make patch cables with me, and I’ve been happy to handle permissions issues as the senior DBA when I made probably twice what others in the office did.

It’s not always about efficiency. Sometimes it’s about showing that you’re a leader and willing to do whatever it takes to get things done. And you’re no better than the others in the company.

Interesting Blog on Social Media

I actually found this via Twitter, which is kind of funny. I think it's a good look at social media in business.

Social Media and CRM

It says that you need to do more than be on these media outlets. You need to be working with them, looking at them, and reacting to the way they work and what's said. It's really a pretty good investment in using the technology, and definitely a culture change.

You Need A Chief

I read two great posts, one was Does a company Need a Chief Engineer? and the other was Toyota’s Chief Engineer. The first is based on the second and both were interesting reading, especially from a business perspective.

The second post talks about the job of the Chief Engineer at Toyota and how important this position is. And then compares it to how poorly we do in software design. I think that’s a hard position to fill, and hard to groom someone for. Especially as we tend to want to move faster and not have the patience for someone to grow into the position.

But is it a chicken and egg thing? Can people grow into this role even if they work at multiple companies? Do we need this type of position in software before we can really advance the way we build things well? Do we need this in other industries?

This is probably a luxury in most companies, having a position that you can get people to strive for, and you can afford for someone to take a significant amount of time to learn. However if you can actually have someone that drives direction, that can see the forest and still understand the trees, then I think it can really give you a competitive advantage.

Get Ahead of the Game

I write almost every day, but I still can find it hard to keep up with all my commitments. I have really 4 blogs and while I cross post where appropriate, it's still a lot to do.

One of the things I think is important in building your brand online is that you need to show you're making regular progress. You show that you are constantly improving at whatever rate makes sense for you, but that you are making progress in your career. Or in the case of a business, that your business is moving forward, you’re thinking and you are trying to get better.

Blogging is a great way to do this, but it is work. And it’s regular work.

My suggestion for anyone, whether you like to write or not, is to make yourself a meeting once a week and spend an hour or two just writing about some issue, some problem, something you’ve learned or tried and then explain it to someone that’s trying to do what you do.

Then schedule those out. Get a good pipeline going, which will be different for everyone, depending on how often you write and how quickly you finish things, but once you have 4-6 items done, then schedule them out. At least once every two weeks, but preferably once a week, showing that you are making progress in your endeavors.

That pipeline will help you and over time you’ll probably build that up to even more items, but be sure that you don’t change your publication schedule until you can maintain a good pipeline to stay ahead of the game.

Software East - Building a Software Business

While in Cambridge, I went to watch a panel talk about building a software business. Neil Davidson, CEO of Red Gate and organizer of The Business of Software conference was on the panel. He'd sent around a note a month or so back and since I was going to be in Cambridge, I asked if I could be booked. I'd enjoyed the conference last year, so I was looking forward to it.

I was late going, having forgotten about it, gone running after work and for some reason remembered it at 6:45 after it was starting at 7. Actually 7:15, so I had time to shower, figure out the directions to Downing College, and walk over from the hotel.

It was nice being back in academic environment, around old architecture, a lot of which the University of Virginia seemed to have copied. I got into the lecture hall just the panelists were being introduced. The host asked them to introduce themselves, talk about why they should talk about software business and then answer two questions, one of which was "Is now a good time to start a software business?" I can't remember the other one, but Neil started out describing himself and Red Gate and then said that it's always a good time to start a business.

However things went sideways from there, at least for me. The other panelists spent more time talking about their businesses or what they were involved in without giving advice. I didn't think it was possible to actually talk about your past without giving a useful anecdote, but I saw it done quite a few times.

It also seemed that the panelists lost sight of the idea of helping people setup a software business. They tended to get bogged down in their stories rather than keeping the central theme in mind.

They also seemed to talk about funding and venture capital, which are parts of the business, but they didn't give great advice, I thought. They walked the center line too much. I did like that my boss, Neil, came out against VC money and gave some specific alternatives.

There was a question on ideas, and I was hoping for some good advice there on finding ideas or evaluating them, but for the most part I didn't hear any/

All in all not a great session to attend, but I did like being back in an academic venue, much nicer than so many business offices where I've seen these things held. It was great to also see professionals out there taking time out of their lives to participate in these events and help others get started themselves.

It's Your Ship

I saw this book (It's Your Ship) in a Barnes and Noble and the title and cover attracted me. So I picked it up and read the back, thought it was interesting, and later grabbed it for the Kindle. I do still buy books from B&N, but for friends and family. I prefer my books on the Kindle.

As I started reading this book, I thought this was a book that everyone in management should read. And everyone that is a worker should recommend this to your managers, directors, VPs, and especially C-level people.

That thought hasn't wavered and now that I've finished it, I think more than ever this is a great management book that really describes well how you can lead. In the military or in business.

This is the story of Captain Michael Abrashoff's tour on the USS Benfold. He took over this ship, his first command, and a ship that was below average in many ways. After he received the command, he turned around the ship, making it the highest rated ship in the Navy. And not just in terms of getting people to perform as qualified sailors, but he reduced turnover, getting almost all of his sailors to re-enlist, he improved morale, lowered accidents, and really built an amazing group of people.

In many ways this reminded me of how great JD Edwards was to work for, though I think I recognize more flaws in their operations that Captain Abrashoff points out.

The book covers a variety of aspects of leadership, usually with stories about issues and problems encountered and how the Captain worked at it. Granted the job on a ship is different than a company, but with more serious consequences, however there are a lot of similarities.

There two big things I've gotten from the book. One is that you should empower your people, trusting them to make decisions, which is an old idea, but one that many managers overlook. The second is that you need to act quickly and decisively on issues, not letting them fester. In your actions, you have to show that people have to take responsibility, but that they also deserve a second chance.

Too many managers and attempted-leaders try to control workers, telling them what to do but not sending the message with their actions. Captain Abrashoff illustrates where he found ways to show people he meant what he said and I liked that.

I would have liked to hear more about things that didn't work since those mistakes can really help us grow, and there is a little at the end where he talks about problems he created with his policies, but they are problems with peers, not problems with his decisions. It's a motivational book, so I understand some of that, but it would have been a great learning experience to see mistakes being made and how they are corrected, or you back out of your actions.

I highly recommend this book.

Book Review: Big Brown

The book is actually Big Brown: The Untold Story of UPS and it was written by a retired UPSer that spent his whole career there. I picked up this book after being on the Underground Tour in Seattle. As an aside that was neat, but the guide mentioned UPS was started in Seattle delivering drugs (I never knew either one of them).

While we were in Seattle at a Barnes and Noble, I saw this on the shelf and took a picture of it on my phone. I don’t mind supporting Barnes and Noble, but I also don’t want to carry more books than I have to and this was a reminder to get a copy on my Kindle later.

The book starts with a bit of the author’s career and how he came to work at UPS and love it. He definitely shows his enthusiasm for the company and culture and his admiration for the way that the company is run.

From there it goes back and talks a bit about Jim Casey, the founder of the company, or one of the founders and how he got his start as a kid in Seattle delivering packages for retail stores at the beginning of the 1900s. Some interesting things I’ve learned:

• Prior to the late 20th century (sometime in the 70s), only the USPS could deliver packages person to person. UPS fought for exceptions state by state.
• UPS started delivering retail packages, becoming more efficient than the retailers and putting their fleets out of business.
• UPS was a private company, employee owner, until 1999.
• UPS gave out stock for most of it’s history to employees and managers.
• Very few employees were hired above package handlers.
• The founder, Jim Casey, never married and lived in hotels for most of his life as he traveled and ran the company.

I recommended this to my business partner, Andy Warren, and he wrote a review as well. He didn’t like it as much as I did (I think), but it’s a good read and I think it’s a good company.  I’d like to build a company like UPS, though not exactly. I’m not sure I completely agree with all the things said about the company, but they have done things the right way from what I’ve seen.

The book isn’t all a rah-rah book on UPS. There are definitely some issues and the author does a good job of bringing them out, showing that he doesn’t like it, but it’s a part of the history.

I know my delivery guy loves the company and I need to see if he’s read the book.

Influence

I saw Paul Kenny of Ocean Learning speak about sales least year at the Business of Software Conference. I thought he was great and so when we were talking about how we should present our case for changes in my group to management, I thought of Paul. I was going to be in the UK, Paul lives there, and so I suggested him.

My boss jumped on it as he had been at BoS 2008, and yesterday Paul came to speak to my group of 6 people. I wasn't sure what to expect since this was supposed to be a bit longer and was surprised that we spent the first 45 minutes or so talking about our priorities and what we wanted to present while Paul sat there and took notes. I almost interrupted a few times and I'm glad I didn't because apparently this was what Paul wanted.

Once we'd come up with our list of priorities, Paul took over the show and started to talk about influence. What it is, how you get it, and what it means. He sees it as a state, meaning you have it or don't, but persuasion is how you use your influence to deliver a message. It was fascinating in that he talked about the stages of relationships and how people form them and create influence. A lot of his talk related well to dating as well as business relationships and he has a great way to of teaching by asking questions and forcing you to interact with him.

I'm not entirely sure of everything that was presented in the two hours, but I did learn a few things. One is that we need to present our case after having assumed they will say yes, and work backwards through all the questions we think they'll ask. We should answer them proactively in our presentations.

We should also work on building relationships outside of the presentation. Get to know the people that we work with and ask things of. Or might ask them of us. We definitely realized we were approaching our presentation the wrong way. The last thing I got was that it pays to understand the type of person you're presenting to, and Paul had a few times. Is this a conservative or radical person? Are they a big picture person or tiny detail person? Are they seeking pleasure (looking for the good) or pain avoiding (avoiding issues)?

I can't recommend Paul enough. He's the only motivational person that talks sales I've enjoyed listening to and I think he's worth hiring if you can to talk to any of you employees.

Who Do We Choose to Follow?

Think about your career and the managers, and potentially leaders, that you’ve had in your life. Think about life in general and who do you admire, who have you modeled yourself after or who you wanted to follow in sports, in a hobby, in life, etc.

I’ve heard about, read about or seen many people on TV, in newspapers, books, and more. Some of them I admire, most I don’t, but as I learn more about some of them, there are always some I like that I start to question whether they’re good leaders. To be fair, someone can be a good leader in public, or in some roles and have a mess of a personal life. They’re not necessarily related.

I started thinking about this after reading a post on herds. No, I still don’t like horses, but it’s my wife’s blog and I follow it just to see what she’s doing. I’m interested in her, not the horses and it helps me to better keep in touch with her.

Everyone needs someone to follow. We have to decide who inspires or motivates us, but do you know why any particular person does so? As I read about horses, I’m not sure that we’re much different. We feel drawn to one person or another, or some group, and we don’t always know why.

Honoring a Contest

Over the last six months or so, Pepsi has been running a PepsiStuff promotion on many of their products. They had codes printed inside bottle caps, packaging, etc, that you could enter at their PepsiStuff.com website. Each code was worth a point or two and you could trade in your points for various things like caps, shirts, and MP3s. There were larger prizes, but I never got close to those.

Typically I’d buy a Diet Pepsi instead of a Diet Coke to get the code, I’d save them and enter them in the site and use them to download Amazon MP3s. They had a great link with the Amazon site and for 5 points I could get an MP3. That worked out great for my son as he got a bunch of songs for his Zune that he wanted and I got a few here and there that I’ve wanted.

Just after the new year I took a few caps that I’d gotten while skiing and went to enter them into the site. I got the notice that the promotion had ended and I could send away by mail (mail!?!?!?!) for coupons. I wasn’t overly concerned about the caps in my hand, but I was a little annoyed as I had 12 or 13 points at Amazon already and could have gotten a couple more songs. I immediately went to Amazon, but sure enough I couldn’t “buy” songs with my points.

The $1.60 worth of songs isn’t much, but it creates a bit of bad-will between myself and Pepsi. Their product isn’t different enough from Coke’s and now they’ve annoyed me. I know the promotion has to end, but they could have easily let my points exist for a month or a week beyond the end of the redemption. What’s more annoying is stores are still full of products with the Pepsi stuff labels. They manufactured too much.

What should they do?

First, I’m not sure this hurts Pepsi a lot. It annoys people, but only until the next contest and we’re used to it. I see this stuff all the time with local businesses.

But they’re missing an opportunity here. They could easily generate a lot of goodwill in a few ways.

1. Extend the promotion. Get another splash and base the new date on the amount of product in the store.
2. Ping people with points in their accounts a week before it ends. They could get a boost in sales here.
3. Let people have an extra few weeks to redeem and/or spend.

None of the these would break the bank for Pepsi and they might give them a boost.

Running a contest is always a tricky thing. You cut into margins to try and boost your visibility and hopefully gain more market share and profit in the end. But the contest has to produce goodwill to be effective. There will always be a percentage of people that want something for free and then will never come back, but you can get a good percentage of people interested and if they’re happy, then they might continue to use your service/site.

I think Pepsi made a mistake here.

There's More than One Way

I've followed Joel Spolsky's writings for a long time and he's a programmer and business owner that I admire a bit. I think he goes about his work the right way, and he has done a good job of building his business. Can you duplicate his methods? Perhaps, but he has some advantages as a thought leader in the software development world and there is only room for so many of those.

I saw his column in Inc magazine for November 2008 and it struck me as very interesting. He talked about a new project he had in 2008 that he tackled in a way contrary to the way that he normally does business. The project was StackOverflow and it's a neat idea. I like some things about it, not others, but his talk about how the project was evolved was different from all the rules that he's written about and implemented at his company, Fog Creek Software.

What's the lesson here?

There are a couple, and none of them mean you should succomb to anarchy and abandon your rules for running your business.

First, I think that you should hire good people. I think the primary reason for the initial success of StackOverflow was that Joel worked with a great programmer (or couple of programmers). Some of the passion was probably that this was a startup-type project, but I think a lot was that Jeff and the other programmers were good at what they did.

Second, it's OK to break some of your rules, or even all of your rules, but in a controlled environment. Don't bet the business by changing everything, but set up a skunk-works type project or R&D environment and cut some people loose. Google's 20% projects have resulted in some interesting things, like Gmail, though the majority might not have amounted to anything. That's OK, just allow for some failure. One great idea can be worth it.

Third, Be open to changes and if you see something working in an experiment, start to roll it out to more parts of the business. At the same time if things aren't working, be strong enough to stop them and move on.

Business is a lot of luck, but it also consists of hard word, taking advantage of opportunities, looking for opportunities, and reacting (and learning) to what is happening.

Future Creep

Trying to decide what features to put into a system is always a hard thing to do. Often we’re guessing about which things will bring us an ROI soon, and how many resources we put into them. This is one of the reasons that I favor a fairly rapid change rate in your application.

37 Signals posted a note about future creep, and how you want to be careful about spending time on future features, things you’re not doing now, but might do in the future. It brings up some good points, and things to think about, but I think they might be getting a little too hyper-agile.

Spending a few minutes thinking about things, debating them, perhaps determining where they architecturally might fit in can prevent a bunch of costs (in time and resources) down the line. However you don't want to get bogged down into designing around every future possibility.

Instead, make sure that you are moving forward and letting your system evolve as it gets used. You'll learn things, things you anticipated will come up, some you didn't will crop up as well, but likely a lot of what you worried about will never come to pass.

Note that this doesn't just mean technology. It means any process.

Be Creative

We don’t have a lot of creativity in advertising, at least not that I see. The same old things are used over and over, making it easy on the advertising group, but not necessarily that effective.

I saw this ad at 37 Signals, and I’ll repeat the image here.

Not the best message, but for a local group, that’s pretty creative, catchy, and probably gets people to stop and look at the ad.