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Losers Have Goals, Winners Have Systems

I blatantly stole this line from Scott Adams, creator of Dilbert. So if you can get past my thievery, I think we’ll be ok for the rest of the day.

My philosophy is that losers have goals and winners have systems.

– Scott Adams

One of the most common mistakes I see entrepreneurs make time and time again is that they set goals for themselves and somehow expect that by setting these goals, it will get them where they need to go. They won’t. Let’s not beat around the bush about that.

This isn’t to say that goals are useless. Quite the opposite. Goals are a necessary part of the equation. However, in and of themselves, they’re sort of useless. Think of it this way.

No matter what you’re trying to accomplish, you need three things:

1) A mechanism for moving in a particular direction
For physical travel, this could be a car, a dirt bike, a boat, a plane, a rocket ship, horse, etc.

If you’re driving traffic to a website, you need to determine whether your ideal vehicle is going to be paid advertising, SEO, blog posts, email newsletters, social networks, etc.

Whatever the mechanism is, it is your “vehicle”. In many cases, you will need more than one vehicle to reach your destination because it’s unlikely that the same vehicle is going to get you everywhere you need to go. Some vehicles are more suited to particular types of motion than others.

2) A destination
This is your goal. It’s where you’re going.

3) A feedback loop
The feedback loop tells you if you’re going in the right direction or not. If you get off course, you measure where you are in relation to your goal and make adjustments to get back on track. Without a feedback loop, you’re not taking into account your current location and use it to adjust your direction or velocity towards the goal.

I won’t bore you with any mathematical equations involving 3D vector-based math or control systems theory, but the problem with goals should be obvious at this point. Goals only tell you where you should eventually end up. They’re your destination and a single point on the map. They tell you nothing about what vehicles you should use to get there, nor do they give you an idea of whether you’re on the right track or how fast you’re getting there… or not getting there, as the case may be.

The Feedback Loop Is Not the Problem

In most cases, the feedback loop is rather obvious. If it’s related to physical directions, a GPS (or *gasp* a map and compass) can tell you whether you need to go further north or south. If your goal is 10,000 website visitors/month and you only have 2,000/month, then clearly you need more. Again, the measurements are the obvious part.

It’s pretty rare for people to set a goal and then do the exact opposite of what you need to do in order to reach that goal. Most people who set goals have a general sense of how to measure whether they’re moving in the right general direction and that makes sense because the vast majority of the time, the direction is fairly intuitive.

The Vehicle Is the Problem

Figuring out the direction you need to move to get closer to the goal is the easy part. Knowing what vehicle to use to move in that direction tends to be more difficult and thus, what is more common among entrepreneurs is to not move in any direction at all.

You see, when setting a goal, there’s a mental image we’ve created in our heads about where we want to be. The problem is that we haven’t given any thought to what we need to do to get there. And all too often, we procrastinate or don’t take the steps we need to in order to get to where we need to be because we haven’t put a system in place to achieve that goal.

Not having a system makes us think about our options and too often, those options are overwhelming. It’s more commonly referred to as “analysis paralysis”. When we set goals for ourselves, they are often perfectly reasonable. However without a system to move towards those goals, you don’t have a chance of meeting them.

Your System Should Move You Towards Your Goals

If your goal is to lose weight, set up a system to ensure that the calories you scarf down don’t exceed the calories you burn.

If your goal is to get more traffic to your website, then build a system to blog more often, do regular SEO & keyword research, create new pages, etc.

Want to make $10,000/month from your product? Put a system in place to regularly generate new sales. Bring people to your website, get them on a mailing list, email marketing, soft sales pitch, more emails, hard pitch, more emails, final pitch, and then fill the funnel.

Profitable Businesses Are Made Up of Systems

If you’ve ever looked at company X and wondered “How in the hell do they stay in business?”, then chances are really good that you’re overlooking the systems and systems they have in place for generating money.

It’s very easy to do. I’ve often wondered myself how companies like Oracle, Sun, and various others ever manage to make ends meet. But if you start to dig, you’ll see that there are a lot of systems in place that have been developed over the years to help those companies extract revenue from their customers. These systems may not have been perfect when they were first implemented, and may not be perfect years later. But over time they are tweaked and they get better at gathering that revenue.

Pretty soon, they’re extracting far more dollars than you could ever hope to out of a similar system. Building a business doesn’t happen overnight. It’s an incremental process and you need to start somewhere. It’s a lot easier to tweak an existing system after measuring how well it’s doing than to try to jump in feet first and bang out the perfect system for doing X.

Good systems take time. They take mistakes. They take feedback from those mistakes and make incremental improvements. Over time, they get better.

So now that we see that goals and systems fit so closely together, what should you do?

Build Your Systems

Start with your most recent set of goals and evaluate what systems you need to build to meet those goals. If you haven’t set forth any goals recently, then that’s probably the place to start. Once you’ve done that, look at each goal and ask yourself two questions:

  1. What are 3 things that I could do that would move me towards that goal?
  2. What are 3 things that I should be repeatedly doing to move me towards that goal?

These are wildly different questions, and here’s why. In general, the first question tends to be something that you can do once or twice but isn’t generally repeatable in the future to the same effect. The second question tends to be things that you can do over and over and will continue to yield the same or better results repeatedly.

If you’re trying to lose weight, then the answers to #1 might be:

  • Skip today’s morning latte, which is an extra 300 calories
  • Go to the gym on Friday after work because the kids have karate after school and won’t be home until later
  • Talk to a personal trainer to get some advice on losing weight

While the answers to #2 might be:

  • Skip my morning latte every day
  • Eat periodically throughout the day so I’m not so hungry at dinner time
  • Go to the gym 3x each week

If you’re trying to drive traffic to your site, then the answers to #1 might be:

  • Send out an email newsletter
  • Submit my application to a startup directory
  • Issue a press release

And the answers to #2 might be:

  • Hire a writer to send out regular email newsletters
  • Hire a VA to submit my application to every startup directory we can find
  • Build a content creation calendar so that we can identify when we should be sending out press releases for the next 12 months

Silver Bullets Only Work in Hollywood
(And possibly Transylvania…)

When it comes to business and launching products, far too many people pay attention to the answers to #1 because they’re looking for the quick wins. The easy scores. The silver bullet. As someone who runs three different businesses, I can tell you that without a doubt, there are none.

There’s no single thing you can be reliably done that is going to make your business an overnight success. Got an expo on TechCrunch? I’m sure you got tons of traffic. What about tomorrow? Landed on the front page of Reddit for a full day? Awesome. What about tomorrow?

This is essentially the difference between short term wins and long term wins. Question #1 identifies the short term wins. The things that can help move you forward quickly, but they’re not sustainable. They are short term speed bursts but don’t tend to last particularly long. It’s a one-time bounce.

Examples include: submitting your website to any of the various “Site of the Day” type websites, going on podcasts, or sending out an email blast. These kinds of things will give you an immediate boost, but it’s not sustainable and it’s really hard to build on it unless you’re constantly on the lookout for more, but even then this is going to eventually taper off.

Question #2 helps you to identify the things that will increase your overall momentum and even if you stop doing them for a while, you’re still going to see some of the benefits after you stop. If you continue doing them, they will help to maintain that momentum, potentially making it exponential. This is more of a flywheel. Once it gains momentum, it keeps going even if you stop for a little while.

Examples include: putting out new content on a weekly basis, building a mailing list, building links back to your website, building a following on Twitter, etc.

The reason you want to do both instead of just concentrating on the repeatable things is in part, to give you moral support for the long haul. It’s great to concentrate on the long term wins, but not all of them are going to pan out. So if you spend all of your time on the long term stuff, it can take too long to tell whether or not it’s working or not and therefore, a bit depressing. The short term bounces helps to give you an ego boost to help get you through the tough times when the long term flywheels don’t seem to be gaining momentum. This method of leveraging both short and long term wins is also a system! (It’s all systems and ball bearings these days)

Another reason for working on some of the short term wins is that it can get you bursts of publicity that can help you to understand whether or not your business is capable of handling large spikes in traffic. Problems you garner because of success are good and all, but if they compound and you’ve never had to consider how to handle them or that some things might even become a problem until it’s too late, they can sink your business.

Great, I’ve built a bunch of systems… Now What?

You have one job left: Fire yourself.

That’s right. Once you’ve built the process and have tested it to be sure a) it’s doing what it’s supposed to and b) has a feedback loop that lets you monitor it’s progress, you need to fire yourself from executing that process. Outsource it, hire someone part-time, hire an employee, use a virtual assistant, automate it with code, etc. Whatever the case may be.

If a process you’ve developed is functioning properly, then as the business owner, you probably shouldn’t be doing it.

Your job is not to build products. Your job is to build systems.

That’s how profitable companies are built.

Have a comment? Leave it below. I’d love to hear it.


The Biggest Threat to Your Bootstrapped Business

When you’re building a new business, there are a lot of things that can go wrong at any given point in time. Only a small subset of these problems have the potential to completely destroy your business, bringing it to a total halt. Most of these are obvious.

  • Problems with cofounders
  • Running out of cash
  • Natural disasters/Loss of data
  • Death of a founder

Disagreements among cofounders is one of the most common causes of business failure. If you’re reading this article, chances are good that you’re a solo founder. *phew* Dodged a bullet there, didn’t ya!

Running out of cash is also a common problem, but it’s not often one that comes as a surprise. If a massive, unforeseen expense comes up, then it can be really hard to deal with. If the business is sound and the expenses are “small enough”, you can sometimes float the business on credit cards until you come through to the other side but that’s not always an option. Cash flow problems can usually be seen months in advance. There might not be anything you can do about it, but at least you see it coming.

Natural disasters or data loss of any kind really sucks because you have little or no warning. Maybe a water main breaks and floods your office or your hard drive crashes Maybe hackers broke into your server and deleted all of your customer records. Hackers trashing your server isn’t as common as a hard drive crashe, but it still happens often enough to be a concern. ( *Blatant pitch*: I have a security product called AuditShark that helps detect whether hackers are messing with your servers. Only if you’re into that kind of thing of course.) If your server dies and you thought you had a backup but you never tested the restore, you could go out of business in a hurry.

With the exception of dying, these are all known problems with solutions that you can apply. It’s hard to solve dying, but I hear Google is working on that one too. But hang on a second. There’s one problem that’s more devious than all of the rest for two reasons. First, you almost never notice until it’s too late. And second, it’s incredibly common in single founder businesses.

You Might Be Treading Water

You’re probably familiar with the term “sink or swim”. It’s the idea that when you are thrown into the thick of a problem, either you’re going to drown in the depths of that problem, or make your way out of it. Those are reasonable assumptions, but it’s an overly simplistic and inaccurate representation of the situation because there’s a third possibility.

The worst outcome is that you might simply tread water.

Sometimes that’s enough. But in a bootstrapped business, there are lots of different aspects of the business that are constantly vying for your attention. It could be anything from engineering, customer support, bug fixes, new ordering systems, scaling your marketing, hiring, building new features, responding to customer inquiries, sales demos, etc. At some point, you’re going to find yourself overloaded and instead of doing anything to move the business forward, you’re simply treading water.

Business Overhead

As your business becomes successful, you end up doing a lot of work that is what I like to call “business overhead”. It’s the work that needs to be done to keep the business running, but none of it moves the business forward. These include things like:

  • Any type of government paperwork (Please people, let it stop!)
  • HR functions, such as payroll, retirement plans, taxes, health or dental plans, etc. (Show me the money!)
  • Paying bills, accepting payments, dealing with taxes, or other financial transactions not directly related to making sales. (No, just the inbound money!)
  • Desktop, server or infrastructure administration. (A defrag here, a software update over there.)
  • Purchasing hardware, software, office equipment, etc. (New iPad. WOOT!)
  • Employee or contractor management (I have minions!)

These things tend to be necessary to keep the business running. If you don’t do them, the business can grind to a spectacular halt. But none of these things move the business forward in any way. It’s busy work. Business overhead. You’re doing nothing more than treading water.

But it feels like you’re working on the business. Let me be clear about something here. You’re not.

The work is necessary. But it’s not important.

Let me clarify that, lest you misunderstand. It’s hard to dispute that some jobs are important for you to do, and others are not. Paying bills is necessary. Do you have to be the one to do it?

Of course not. Unfortunately, this kind of work can really creep up on you. Over time, there’s more and more of this business overhead that starts getting in the way of moving your business forward. As it creeps up, you will have a tendency to spend more and more time working in your business rather than on your business.

It’s a subtle distinction, but it’s an important one. If your business can’t live without you, then you haven’t created a business. You’ve created a job. And that’s probably not what you want.

The biggest problem is that many people don’t realize that they’ve done this to themselves. They keep plodding forward, thinking that they’re making progress and they’re not. Anyone who’s ever been employed full-time at a regular company will recognize the difference between showing up and moving the business forward. Between treading water and doing things that matter.

Step 1: Admit you have a problem

If you realize that you’ve been treading water, that’s the first step in solving the problem. Because unless you recognize that it is a problem, there’s no way out and you will tread water until you drown. But once you recognize it, you can take action to turn things around.

Here’s the process for turning things around. First, figure out where you’re spending your time. Personally, I’m a big fan of identifying the things that I procrastinate until the last minute to do. For example, I hate, hate HATE paying bills. It’s not that I don’t have the money, or that I have a bizarre aversion to seeing money fly out of my checking account. Actually I do, but that’s not the real problem.

My problem is that I have three businesses and I get a LOT of paperwork in the mail. There’s a separate set of financials for each of the three businesses, plus I have all of my personal finances to manage. The paperwork alone takes at least four hours every month and sometimes as much as 10-15. If I procrastinate on reconciling my checkbooks for too long and make a mistake somewhere, it can take quite a while to find.

It’s also mentally draining to switch back and forth between the different businesses. Is this receipt for my consulting company or my software company? Can I write off this expense or no? Do I get reimbursed for this expense on my personal card and if so, which account should reimburse it? One month, I had a $54,000 credit card bill from American Express. If you have one, you know those need to be paid off at the end of the month. And while I had the money, it’s still depressing to see $54,000 come out of your bank account all at once in addition to all of your other expenses.

Step 2: Outsource like it’s your job… because it is!

So now that you’ve identified the problem areas, the solution is to outsource them. Find someone who’s qualified to tread water for you and get those jobs done. Your key to outsourcing those types of tasks is to thoroughly document the process. I like to use Google Docs for this, since I can embed screenshots, add videos via my Wistia account, add detailed instructions, and share the instructions across multiple contractors. Another nice advantage is that Google keeps a detailed revision history so if you ever need to go back in time, you can.

Your goal is to document it in such a way that anyone off the street can do the work, but clearly there are certain types of work that you need to have some domain knowledge to perform. Book keeping is one example. Tax preparation, reviewing legal documents, doing payroll, IT administration, etc. These all fall under that umbrella and it should come as no surprise that this umbrella tends to also cover nearly everything that I previously listed as things that fall under the heading of “business overhead”.

Once you’ve documented the process, identify someone you can hand it off to. Hiring someone is a little bit trickier. Fortunately, there are a lot of great resources for hiring contractors. Can’t find any good ones? Here’s three from my podcast:

Step 3: Resist the Urge to Do It Yourself

This one is HARD. The problem is that you are already doing these tasks and have been doing them for a long time. You’re pretty good at them and you’re teaching someone else how to do them now. It’s easy for you because you’ve done it a hundred times. This new person hasn’t ever done them before so it’s natural to want to jump back in and take over when they inevitably make a couple of mistakes.

When you hand these tasks off, you need to set aside your expectations for two things: 1) Quality and 2) Response Time.

When I say that you set aside your expectations for quality, what I really mean is that you should recognize that this task is not likely to ever be done as well as you would do it. That’s ok. You’re the business owner. You’re supposed to care about the business more than they do. Mistakes will happen and there will be a learning curve. But given enough time, the person will learn what to do without your oversight. Eventually, it frees up your time and lets you swim, rather than tread water.

There are a few tips I’ve learned over the years here that I want to share:

  1. Make absolutely sure that you provide the person with not just the process, but the direction and ability to add comments, notes, and the authority to MODIFY the process. That’s right. You’re handing this off to someone else to make the decisions. They will need to make updates. So if you’re using Google Docs to manage the documentation, then make sure this person has read/write privileges.
  2. Stop worrying about it. You’re paying someone else to worry about it for you. I haven’t really said it until now but part of what you’re doing isn’t just freeing up your time. You’re freeing up space in your brain so that you don’t have to pay attention to this task anymore, or even remember that it needs to get done.
  3. Give the person a chance to learn, but have the guts to pull the plug if it’s not working out. I find that it takes at least 3-4 passes through a task for someone to get it right. Back in high school, I worked at a store where I trained for a few weeks and then was on my own. The next day that I came into work, the owner would take me aside and tell me all of the things that I either forgot to do, or didn’t do correctly. I hated that part. But I learned quickly that if I didn’t screw up, we didn’t have that “chat” and I was ecstatic the day he said “Good job, Mike”. I still made mistakes here and there. Speaking of which:
  4. Mistakes are going to happen. When we make mistakes ourselves, we don’t care so much about it. In fact, we simply correct it. There’s nobody sitting over our shoulders telling us the things we did wrong. In fact, quite the opposite. Your own employees and contractors will almost never point out that you screwed up! When someone makes a mistake, simply correct it and move on… EVEN IF IT COST YOU MONEY! Now if they ripped you off, then obviously you need to fire them and maybe get the authorities involved. But everyone makes mistakes. It’s not a big deal, nor is it generally a reason to take back a task that you’ve outsourced to someone else if they’re doing it in a reasonably competent manner.
  5. Don’t dive into outsourcing head first. If this is your first time outsourcing, then you should only outsource one task. It will seem like a waste of time, but I promise you it’s not. It’s an investment in learning how to effectively outsource and delegate tasks in your business.

Step 4: Review Progress For Several Iterations

A big mistake that I see a lot of people making when outsourcing is that they expect things to be perfect the first time. That’s not going to happen. You’re building a new process and putting someone else in charge of it. They need to learn how to do it and you need to provide guidance. They can’t do it alone. Expecting perfection out of the gate is a surefire way to disaster. You’ll end up firing the contractor and doing the work yourself, which is exactly the opposite of what you should be doing.

It should take anywhere from 4-6 iterations through the task, followed by a review of the work and corrections from you for the person to get things right the first time. If the process is complicated, it might take longer. If it’s simple, it might take less, but you get what you pay for so be careful.

Step 5: Walk Away

Once the contractor has started becoming comfortable with the process and the number of corrections after each iteration is almost zero, you can remove yourself from the process. If you’re still doing the approvals, stop doing them and have the contractor do it. Or better yet, get another contractor to issue approvals and have them work together.

By the time you’re done, hopefully you’ve been able to build a series of good systems for your business, some of which are fed from one contractor to another, and all of which free up your time to work on the business, rather than in the business. And you know what that means?

No more treading water.

Have some outsourcing tips of your own to share? Add them to the comments. I’d love to hear them.


My Preemptive Strike at Google

I can’t begin to count the number of times I’ve had to consider whether or not I wanted to host my own solution or use a cloud provider of some kind. When I was first getting started as an entrepreneur, there simply weren’t choices to be had. You hosted your own solution, or you didn’t have a solution.

This included even the basic things we take for granted today, like mail servers, databases, and websites. Well, maybe not websites. I’m exaggerating my age a little bit here. But if you wanted a database, either you paid through the nose for a hosted solution, or you ran a dedicated server. This was back when SQL Server Express didn’t exist, and mySQL was still just a baby.

Mail servers could be funky. Sometimes hosted solutions worked great, sometimes they didn’t. But in those days, you would change website hosting on a pretty regular basis as different hosting companies experienced growing pains that were so profound, that the benefits of changing providers outweighed the benefits of sticking with the same provider. I still remember buying iMail from Ipswich software so I could host my own mail server. Yes, I’m old. I know.

Unfortunately, it simply got too complicated to deal with spam at one point so the cost of a self-hosted mail server eventually outweighed the management cost. It became easier to simply forward all your email to GMail, set up account aliases, and let Google handle the details of filtering out spam.

Thanks G!


You knew that was coming, right? But, then there are times when using hosted solutions simply doesn’t work out as well. Maybe you need some customizations that your provider simply can’t do. Maybe they just won’t do them. Maybe they’re so big that they just don’t care about your needs and even the $19/month you’re paying doesn’t justify the effort it would take on their part.

In the best cases, you outgrow their ability to provide for you. That sucks in some ways, but if you’re growing quickly, at least you have the money to move to another solution.

There are also times when it’s just not working out anymore and someone pulls the plug. I would normally steal a line from George Costanza and proclaim “It’s not you, it’s me!”, but this isn’t one of those times.

Sorry Google. It’s not me, it’s you.

Some time back, Google announced that they were going to stop supporting Google Reader. The collective internet sort of freaked out. It didn’t matter that people were provided with plenty of time to move to new RSS readers. The problem for people who publish content was that RSS has always been something of a drive-by mechanism for picking up new readers and it’s not a lot different than the problems people encounter with TODO lists.

For every person out there who loves reading articles via their RSS feed, there are plenty of others who try it out for a while and then get overwhelmed by all of the incoming content. Their RSS feeds turn into a bunch of TODO lists that they never get around to. Eventually, they just cut their losses and give up.

The effect is subtle, and misleading. Since Google presumably doesn’t want to kick people off of their mostly free services, these accounts stay open. So when a user abandons their RSS reader, the software still goes back and pings the providers, making them think they still have active readers, when the reality is that they don’t.

Next, there’s not a decent mechanism for determining whether people are reading what you’re writing based on that RSS feed. I’ve seen some pretty wild fluctuations from one day to the next in my RSS subscribers and I know that I don’t lose thousands of subscribers one day, only to gain that and more the next.

In some ways, it’s kind of like paying a college kid $100 and asking him to spend half of it to print 500 flyers and hang them up around his campus. How do you know he didn’t just pocket the whole thing and go throw a keg party instead? Sure there might be telltale signs, like the complete and utter lack of flyers. But who’s to say that he didn’t spend $10 on flyers and pocket the other $90?

There’s a big difference between zero and one.

As a self-proclaimed geek, I can assure you that computers are nothing but one’s and zero’s. If you’re not that into computers, you’re just going to have to trust me on that.

Similarly, it’s easy to distinguish the difference between whether zero flyers were hung up or whether at least one flyer was hung up. But was it 50 flyers? 100 flyers? 500 flyers? Without that feedback loop, it’s almost impossible to be sure. That feedback loop happens to be super important.

Unfortunately, RSS is closer to an open loop system with a mediocre feedback mechanism that is fundamentally broken more often than it isn’t. You don’t have any way of knowing whether people connected with what you had to say, or didn’t. There are plenty of indicators that tell you that it’s a non-zero number, but how close is it to your subscriber count? Are some people counted twice because they switched from one reader to the next? Have people abandoned their accounts and are no longer participating in the system? Nobody knows. And to be honest about it, I don’t think Google even cares.

Google has a tool I’ve used for years called Feedburner, which helps track some of this stuff, but it’s heavily dependent upon counting the number of unique, incoming RSS requests from various RSS readers. They used to do a decent job, but I think they’ve gotten bored. I’ve seen subscriber numbers fluctuate by more than a thousand from one day to the next. When it dips to triple digits, you know there’s a serious problem. Who knew that counting by 1’s was so difficult? I have a 5 year old who manages to get to 100 pretty well, but I digress.

Clearly I don’t lose 1,000 blog subscribers one day and acquire a different 1,000 subscribers the next. It just doesn’t happen. As the problems have gotten worse, I’ve felt that it was time to move on from Feedburner, but much to my horror, I’ve realized that I can’t. You see, Feedburner takes over your RSS feed so that the URL that people are subscribing to is Google’s, not mine. In a sense, Feedburner has artificially injected Google between me and my readers and I didn’t even realize it.

I trusted Google.
I said: “They’re not going to let me down. Their mantra is don’t be evil. What could go wrong?”

Survey says!!! *bzzzzz*

I’m sure we’ve all gotten into at least one relationship that we regret. Don’t lie. You’ve been there too. This is certainly one that I regret getting into, and like many other bad relationships, it’s one that’s difficult to get out of.

You see, my data feed has been pointed at Google’s domain servers for years. Anyone who has subscribed over the years currently has their RSS reader pointing at Google’s domain. And while I can use the “My Brand” feature to regain control of future users, there’s not a lot I can do about people who have subscribed in the past. In fact, I’ve already done that but as I said before, I think it’s already too late.

If Google arbitrarily decides to pull the plug on FeedBurner in six months, I lose every RSS subscriber I’ve ever had before today. Given the Google Reader fiasco and Google’s movement towards Google Plus, it seems like the writing is on the wall. But after digging a bit deeper, I feel like I should have gotten a letter from Google.

The Feedburner Developer API’s are no longer available, AdSense for Feeds has gone away, and they’ve said Goodbye on the Feedburner Twitter account. As someone who primarily uses Feedburner to stay in touch with my readers, clearly this is a concern.

The underlying issue is really that Google was offering me a free service and I took it, without stopping to think about how they were making money from it. When a company isn’t making money on a product, not even indirectly on that product, there had better be a good reason for them to keep it around. If there’s not a good reason, eventually it will go away and you’ll need to find an alternative.

So I’m letting you know that moving away from Feedburner. If you’re fan of me or this blog, and you want to continue hearing from me, I highly recommend that you subscribe to my newly created Bootstrappers Mailing List by visiting the site directly. You’ll see a popup near the bottom of the page where you can enter your email address.

If you received this post via email, then you’re all set. You either signed up to the mailing list already, or I’ve migrated you from the Google RSS email into my mailing list.

In the meantime, I’ve changed the RSS feed for this blog to point to: http://feeds.singlefounder.com so if I decide to do something with it in the future, I’ll have control over it again.

I still intend to be pushing stuff to my blog, so RSS will still technically work, but I’ve decided that that not everything I push to my email subscribers is going to end up on the blog. If you’re only subscribed via RSS, I can guarantee that you’re going to miss some things. If you’re familiar with my work on the Startups for the Rest of Us podcast and MicroConf, you’ll know that you can trust me when I say I won’t spam you.

I know I’ve slowed down a lot over the past couple of years in part due to my work schedule, the SaaS product I’ve been working on called AuditShark, and some previously undiagnosed health reasons. (More on all of that in a future email. *hint* *hint*). Since that diagnosis and ensuing treatment, my productivity has increased dramatically. I have the graphs to prove it.

And along with that resulting productivity increase, my writing is back on track again. I’ll be publishing a new article roughly every two weeks or so related to bootstrapping a startup or various other things that I think you might find interesting.

To get started, just add your email address to the popup near the bottom of any page on http://www.SingleFounder.com, confirm your subscription, and you’re good to go.

As a special thank you for subscribing, I have a new article waiting to be sent to my email subscribers with the first one starting the day after you subscribe with three more that I’m working on scheduling.

Until next time, here’s a homework assignment. Take a hard look at each of the services you’re using and ask yourself just one question. Am I a user, or a hostage? If you’re a hostage for any of them, then you’ve got some work to do my friend. Thanks, and take care.

PS: Have an RSS provider you would recommend? Let me know in the comments.
PPS: Since I’m moving towards an email newsletter format, do you have any friends you think might benefit from being on my mailing list? If so, please share this article with them and tell them to subscribe at SingleFounder.com.


MicroConf – Prague

For the last three years, my business partner Rob Walling and I have put on a conference for self-funded startups in Las Vegas called MicroConf. Something we resisted for the longest time was doing a second conference, but it seems we have no choice any longer. Early this year, we announced MicroConf 2013 in Vegas and put tickets on sale. It promptly sold out in under 52 hours.

We could make the conference larger, but we know that would change the dynamic and when too many people are there, it makes it difficult to meet everyone. Running a second conference is also problematic, primarily due to the fact that Vegas is cheap to host conferences, while the rest of the country is not. That’s disappointing, but even hosting a second conference means that you have to have a second lineup of speakers, another venue, etc.

Our solution was to host another MicroConf anyway, but to do it on the other side of the world. On October 5-6th, we’re having MicroConf -Prague. We’re keeping it small, and expect to only be hosting about 110-125 people, including speakers and attendees.

Interested? You’ll need to act fast.

Go to http://www.microconfeurope.com and enter your email address into the textbox at the top of the page to get on the Early Bird list. We’re selling tickets this week, so don’t wait until next week to sign up for the notification. Tickets could be sold out before they go public. Take care, and I hope to see you there.


Finding Your Entrepreneurial Calling

When building a business or a product for a business, you have to pay attention to a lot of different things. A short, but hardly comprehensive list of questions comes to mind:

  • Are you solving a problem?
  • Will people pay for that solution?
  • Is it easy to reach the market?
  • Are there no competitors or is the market saturated?
  • Is this a B2B or B2C app? (Hint: Go B2B!!!)
  • How quickly can you get to market?
  • What’s the size of the market for this app?
  • etc.

Honestly, the list goes on and on. But one of the questions that you need to be asking yourself is:

Am I passionate about solving the problem or at the very least, am I passionate about what I’m doing?

This is more important for greenfield apps, but also applies to ones that you acquire because it can dictate how long it’s going to take before you get frustrated and either give up, or allow the product to languish.

This problem is described in Seth Godin’s book “The Dip”. At some point, things are going to get difficult. They’re not going to go as well as you would like them to. And you’re going to start to seriously wonder if you’ve made a mistake.

This is the dip. This is where many people give up. Things start to go wrong and you start to believe that you made a mistake. It’s possible that you didn’t make a mistake, but unless you persevere, you’re not going to know. You have to proceed. You have to move forward.

If you don’t continue to push, then failure is absolutely, 100% guaranteed. And how many things in life can be guaranteed like that? But even if you push through, you still might fail due to factors outside of your control. However in those cases, at least you can be sure it wasn’t because you gave up too early when persevering could have lead to success.

I’ve been working on AuditShark for a very long time now. I’ve received lots of advice along the way. Some of it has been helpful. Some of it is negative enough that it’s not worth listening to or mentioning here.

But the fact is that I’ve persevered. I have somewhere around 150k lines of code written. I’ve been speaking quasi-publicly about AuditShark since Episode 36 of my podcast, which was February 20th, 2011. That’s a full two years.

It’s been slow going. There have been some periods of intense activity, and other periods of intense slackerdom. Yes I just made that up. Sometimes, you just get burnt out for a while. But people question why I continue. Why do I persevere in the face of such a monumental task? Shouldn’t I be so burnt out by now that I’m ready to give up? It’s been two years!!!

Actually, it’s been longer than that. I won’t say how much longer, but it’s definitely been longer. The reality is that this is a challenging problem and I’m only one person. Sure I use contractors and outsource quite a bit, but it’s still a ton of work.

So why do I continue?

I’m passionate about helping other people. The interesting part is that this extends waaaaay beyond Auditshark. It’s why I like running the Micropreneur Academy and helping aspiring entrepreneurs. It’s the reason I like answering business questions from other people on my podcast. I like connecting people to other people who can help them. I enjoy lifting people up when they are down.

I don’t enjoy helping people who don’t want to help themselves and have given up, but if you’re willing to work at it, I’m generally willing to do what I can to help.

How does this relate to AuditShark?

I hate script kiddies. I hate the people who are out there who feed off of the hard work of others and don’t give anything back. In some ways, they’re the seedy side of the internet who are a detriment to the internet and mankind in general.

Most people don’t know a lot about computer security and it’s easy to get tricked into giving away information that can hurt you. Technology is complicated enough that even most software developers don’t know everything they should be doing to keep their code and applications secure.

And this is a problem because when a software application is compromised, so is all of the information for the customers. That’s a big problem and the larger the company you work for, the bigger the problem it is.

I want to help. I want to be there to make sure it doesn’t happen to other people when the sole reason that it did would have been because they don’t know any better. I want to be the guy they can turn to and say “Hey, I really need a second set of eyes on my servers to make sure I’m not doing anything wrong. Can you help me?”

Why yes. Yes I can.

Like MicroConf, it’s not about the money. It’s about helping people. If I could give it away for free, I would. But I need to make a living and I need to be able to work on this full time. I want to be the guy who helped make the internet more secure. I want to be the guy who others can look at and say “Wow, you really helped us out. Thank you!”

I don’t care about the fame. I don’t care about the credit, and I don’t care about the money. I want to help people.

That’s my calling. What’s yours?

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Post MicroConf 2013 thoughts

When Rob Walling and I put together the first MicroConf in 2011, we knew what we wanted to do, but weren’t quite sure if we could pull it off. Start to finish, we put it together in about 10 weeks. The following year, we gave ourselves six months and it still seemed like everything came together at the last minute. This year, the same thing happened.
However, in speaking with the attendees, it feels like MicroConf 2013 was the best one yet. In some ways, it’s gratifying, while in others, it’s terrifying. When you set expectations at a certain level and each year, you raise the bar, it’s tough to keep going. Nothing can improve forever.

I came to the conclusion last year that it doesn’t need to improve. So long as you put on a quality event, that’s fine. New attendees told us multiple times that it was the best conference they’d ever been to. MicroConf alumni commented that it was a great conference and even some of those said it was the best MicroConf so far.

But it begs the question. What makes it so great? Why do they feel that way? I think I’ve figured it out and like most things in life, it’s not just one thing. It’s a combination of several things.

It’s Not About the Money

First is Rob and myself. The fact is that we care. We want to put on a great conference and while we do make some money from the conference, it’s not about the money. Interestingly enough, people tell us to charge more because they want us to make good money from the conference. And while I appreciate the sentiment, our goal is to put on a great conference that we would want to attend.

We’re not out to gouge people. But it’s nice to make judgement calls at the conference and say “We need to order another 15 gallons of coffee at $59/gallon to make sure people are happy.” Having money helps us to do that.

The Speakers Want to Be There

Virtually every speaker we had spoke with either Rob or myself and commented on what a phenomenal conference it was and what an honor it was to be invited. They genuinely wanted to be there, which is great to see. More importantly, several commented that they were looking forward to next year. When your speakers can’t wait to come back, then you’ve done something right.

At some conferences, the speakers show up, give their talks, and you never see them again. That doesn’t really happen at MicroConf. The speakers stick around and talk to the attendees, listening, offering advice, and generally interacting as much as they can with everyone who is interested in talking to them. This is awesome.

Quality Speakers

And speaking of speakers, being a speaker at MicroConf is a bit terrifying, even if you’re comfortable as a public speaker. There’s not a bad speaker in the lineup. There’s almost no chance that the speaker before you is going to bomb, which might make you look like a rockstar. That’s not to say that it will never happen. Just that it hasn’t happened yet. The bar is set very high to begin with and the speakers know that, so they prepare accordingly.

This year, we tried something new and had eight guest speakers. Every single one of them brought their “A” game. People commented on how most of the attendees could have given a 45-60 minute talk and it would have fit right into the conference. They were amazing and we can’t thank them enough for the effort they put into their talks.

The Attendees Are All “Like Me”

One of the most common things I heard from the attendees was something like “It’s so great to come to a conference where everybody here is just like me.”

This speaks in part to our tight message around self-funded and bootstrapped entrepreneurs. Those are the types of people who want to come to MicroConf and those are the people who show up. I even ran into people who ditched other conferences in preference to MicroConf. We got some of that the first year due to the timing of Apple’s WWDC, but this year it was a conscious choice for some of the attendees.

Outlook of the Attendees

When I walked around the conference, I couldn’t help but notice the sheer number of conversations that were going on where attendees were helping other attendees. There wasn’t any competition going on that I could see. In fact, just the opposite.

If someone couldn’t help you, then chances were good that they knew someone who could and were more than willing to make an introduction or point you in the right direction. Everyone helped everyone else. MicroConf is an intense learning environment and everyone treats it that way. It’s not a competition. Actually, it is, but it’s everyone there against the world.

Almost nobody there is out to get venture or angel funding. They want to succeed on their own and build a company that they want to work at. Similarly, when Rob and I set out to create MicroConf, we wanted to create a conference that we wanted to go to. I think we’ve done that.

Rockstar Sponsors

Most people don’t know this, but I announce it every year just to make sure they know. Without our sponsors, MicroConf wouldn’t exist. More specifically, without Microsoft the first year, the second MicroConf might not have happened because we would have lost money.

It’s not possible to say enough great things about our sponsors, but I’m going to try anyway. So here’s my heart to heart talk.

MicroConf sponsors. You guys rock. Thank you so much. We couldn’t do it without you and we thank each and every one of you for your support. Here’s a list of the MicroConf 2013 sponsors:

As you can see, it’s not just one thing that went right. In fact, it almost never is. The combination of all of these factors creates a great atmosphere and a great environment.

Conference Overview

I could give a pretty in-depth review of all the things that went on at MicroConf, but Cristoph beat me to it. In fact, he beat pretty much everyone to it. As talks were finishing up, he was posting reviews and notes live to his blog. Check out a full review of MicroConf 2013 here.


What’s Next?

If you haven’t heard yet, we also announced MicroConf Europe, which will be held October 5-6th, 2013 in Prague. If you’re interested, we’ve started a mailing list which you can sign up for. We don’t currently have a lot of details, but we will be limiting the total attendance to somewhere under 120 people. which includes speakers/spouses. As of now, we’re only making 100 tickets available. If you’re interested in going, make sure you sign up for the mailing list. MicroConf is popular enough that it could sell out before we start selling tickets to the public again.

As a reference point, this year we sold out in just 52 hours. In some ways that worries me. I want people to get the help they need. But at the same time I don’t want to charge more, nor do I want to add to the total number of attendees. Doing either of those things can radically change the dynamic of the conference.

Small tweaks are acceptable. Small risks are acceptable. But when you make fundamental changes, you have a pretty good idea of what the result is going to do. And the last thing we want to do is destroy what we’ve worked really hard to create. If you’re interested in attending next year, then join the Micropreneur Academy, or sign up for our mailing list. Getting tickets any other way is really hard.

For all of those who attended, thank you so much and we look forward to seeing you next year.


Free ticket to MicroConf from Microsoft

One of the single, best experiences I have each year comes out of MicroConf, the conference for self-funded and bootstrapped startups that I put together with Rob Walling. If you’re extremely serious about building your software business, this is the place to be.

In just two years, MicroConf went from being a completely unknown conference, into the highlight of peoples’ conference schedule each year. MicroConf sold out this year in a mere 52 hours. I’d love to brag about that, but I really can’t. It’s a great statistic to share, but the reality is that I actually don’t have anything to do with it other than Rob and I having the guts to put together a conference that we thought other people would attend. The fact of the matter is that MicroConf is great because of the people who attend. It’s not about us. It’s about them.

MicroConf has been sold out for a few months now, but you have one last chance to get into MicroConf this year, and it’s compliments of Microsoft, who also happens to be one of our sponsors (psst! We love our sponsors!).

The MicroConf App Contest

Build a Windows 8 App between March 26th, 2013 and April 15, 2013 to enter to win a Free Trip to MicroConf

Must be a US resident to win


The Prizes

  • 1st Place – Ticket to MicroConf on April 29th – 30th, with plane Ticket from anywhere in the US and hotel in Las Vegas, plus a Surface RT
  • 2nd Place – Ticket to MicroConf on April 29th – 30th, plus a Surface RT
  • 3rd Place – Surface RT

My Take on This

I know there’s not a lot of time between now and the end of the contest, but first of all, it’s a pretty amazing giveaway. Grand prize gets a free ride to MicroConf, complete with airfare?!?! How often do you see something like that. Runner up gets a free ticket and while you still have to pay for your own airfare, that’s still pretty awesome. And the top three entries all get a Microsoft Surface RT. I’m a little jealous, since I’d really like one of those things and I’m not eligible.

This contest ends on April 15th, so given the short timeline, your chances of winning are pretty good if you submit something. All of the judging criteria are listed on the website. Good luck, and I hope to see you at MicroConf.

>>> Read the Complete Contest Rules <<<

Got questions? Post them below in the comments.


One of my podcast listeners forwarded me an interesting article from Adobe Software about how they had been hacked. It turns out that Adobe had a build server in their environment which had been compromised. This build server had apparently not followed their corporate standards for security, so when this server was deployed it was vulnerable to attack.

As a build server, it naturally had access to their certificate signing system so that code being built could be digitally signed as a signal to the end users that Adobe signed off on the executables that it came from them. Once the hackers had access to the build server, they started sending it other executables to be signed with Adobe’s certificate. Then these digitally signed executables (in the form of utilities that would dump the password files of the OS and then email them) were being emailed to people who rightfully assumed that Adobe had a hand in building them.

The sad part is that what happened could have been prevented. Corporate security standards for large companies are in place for a reason. As someone who thrives a LOT in small companies, I get it. Process sucks. It gets in the way of doing things that are meaningful. As your company gets larger, the impact that hackers can have on your business is compounded.

It’s not hard to imagine that this kind of thing can happen at a company that doesn’t have the resources to spare. But what I don’t understand is how this could happen at a company like Adobe which clearly does have the resources. You would think that they would have processes and systems in place which continually monitor their servers for non-compliance to the corporate security standards. After all, they obviously had a corporate standard and they admitted that it wasn’t followed in the article they posted. And system misconfigurations are one of the most likely ways that computers are hacked into.

Why don’t they perform follow up checks on their servers while they’re deployed to make sure that these standards are STILL being followed after they’ve deployed the server into production? It seems like a short cut that shouldn’t have been taken, but they did it anyway. Here’s why.

The answer is both simple and complex at the same time but it largely boils down to the fact that it’s not economical to continually monitor your servers unless you have to. When you are auditing your servers on a regular basis, you can find out when the standard isn’t being followed. But it’s a bit of a challenge to find software that is actually going to do that for you at a price point that is reasonable. This kind of software can easily run $1,000/server and the software tends to be very complicated. To implement it, you need to bring in professional services at $10k/week for no less than 4 weeks just to get it installed and minimally configured. That doesn’t include the cost of the software or hardware that you need to run it.

An Economics Lesson in Configuration Management Security

Let’s start with the services at $40k. You can’t get around this because it’s a fixed cost. Whether you have 25 servers or 2500, it doesn’t matter because the base time to set things up is about the same. Tack on $5k for the cost of the hardware, another $5k for the cost of Windows, SQL Server, and support software. Now add the $50k in auditing software to cover 100 servers. (MSRP is typically 2x the actual cost in the Enterprise space). That’s $100k to audit 100 servers on a regular basis. I’m not about to guess how many servers Adobe has, but I’m betting it’s a lot more than 100.

I take that back. I will guess. In 2012, they had 11,144 employees. Most companies have around 1 server per 25 employees. If we ballpark guess to say there’s 1 server per 25 employees, then they have around 445 servers. As a software development shop which relies a lot on software and technology to run the business, I’d guess we could double that number, add a bit, and we’d still be in the right ballpark. So you’re talking 1,000 servers and compliance software would run you about $500k for just the software licenses, never mind the additional infrastructure, and the full-time team needed to head up that effort.

Is it any wonder why they skipped out on regular auditing and only perform an audit when the servers are built? No, I guess not. But to me, this represents a big business opportunity.

The product I’ve been working on for the past couple years named AuditShark is nearly ready to launch and solves this exact problem.

What makes AuditShark different than other audit & compliance security products?

First, installation is incredibly simple. Just install the agent on each machine. As a SaaS application, there’s no console to install, so you don’t have to mess with hardware, OS, or database licenses. And since the product is primarily an agent that resides on each machine, you don’t need to acquire software licenses for all that other stuff.

Immediately, I’m addressing the $40k in professional services to get up and running, as well as the $10k in hardware, OS, and database licenses.

Next, is the cost of the software, which is completely an apples to oranges comparison. Most of this type of software is sold in downloadable form and the customer is responsible for implementing it in their environment. AuditShark is a SaaS based application, so you pay for it by the month on a given pricing plan. The most common method of charging for downloadable software turned SaaS is to divide the price by 12 to get a monthly cost. This comes out to a little over $40/month per server.

I’m charging slightly less than that on entry level customers, and large customers end up seeing a volume discount which cuts that amount in half on a per-server basis. It’s obvious that on the basis of price alone, AuditShark crushes any of the available competition. They just can’t compete on price.

But pricing advantages alone don’t make or break a product. The fact is that marketing trumps just about everything else, be it price, quality, features, support, speed, or anything else. When you win the marketing war, you can say anything you want and that perception becomes reality. Whether it’s true or not is immaterial. You need to win the marketing war.

And that’s where I stand today with AuditShark: in the middle of a marketing war.

Have a suggestion for me? Feel free to leave it in the comments and we’ll chat.


Your opinions are hurting other entrepreneurs

Last year at the Business of Software conference, I found myself in several conversations where I was either asking for an opinion on one of my ideas or giving an opinion on someone else’s. I thought I was being a good conference attendee. I thought I was offering people a different perspective and expanding the number of approaches they could use to achieve their goals. I thought I was helping people. Unfortunately, I was wrong.

Telling people what you think of their ideas is a terrible thing to do at a conference. It’s not helpful. In fact, unless you’re their target market and they’re pitching you on their product, you’re probably only hurting people when you give them your opinion.

The problem with offering an opinion is that it doesn’t solve a problem. What we think is irrelevant. What our peers think also tends to be irrelevant. What matters is whether an approach to solving a problem works or not. You get that from asking your customers questions. You get that from testing peoples’ behaviors. You get that from analyzing quantifiable metrics. You don’t get it from opinions.

There’s a fine line that needs to be walked between offering an opinion and providing alternative approaches to solving a problem. It’s the difference between “Have you thought about trying X” vs “I think you should do A because X, Y and Z”. This first provides you an additional approach to try out while the second tries to analyze which is better. The opinionated approach works when someone is in unfamiliar territory. It falls apart when two solutions are both on the right path and you’re trying to decide which is “better”, whatever that might be.

As entrepreneurs, we face problems all day, every day. We want to find solutions. We want to solve these problems so we can move on to the next problem. Debating whether to do X or Y simply isn’t helpful. Neither is debating which is better.

We need to determine how to test these ideas so that we can measure how effectively they’re solving our problems. We also need to be able to measure the solutions against one another. If you can’t quantify the results, it’s impossible to justify one solution over another. At that point, you might as well flip a coin. And I’m not personally fond of letting a coin flip dictate my future success.

One way to effectively solicit help at the next conference you go to is to rephrase your questions to people. Instead of asking what someone thinks of your idea, tell them what your idea is and what your underlying hypothesis is. Then ask how they would test it to see if it’s the correct approach because it turns out that testing your ideas is a crucial part of the learning process. You can substitute just the word “learning” with nearly any aspect of your business and it still holds true, whether that word becomes marketing, sales, software development, customer development, etc. This leads to the conclusion that it’s not that testing ideas that is important, but that testing in general is important. I think we all get that.

But the problem is that we’re not doing it. More importantly, when we’re meeting up at conferences to learn from others, we spend our time explaining our ideas and asking what people think in a futile attempt to pick out the best idea, presumably so we’re not wasting time on the second and third best options. As I said, what we think is generally irrelevant. It’s the reality of the situations that is important and until we test those ideas, we have no way to prove or disprove our ideas. In fact, it’s on that very basis that many companies get funded or don’t get funded.

“No customers yet? Here’s a pile of money.”

“You’ve been live for six months and have ten customers? Let’s talk later when you’ve got more interest from other people who are interested in giving you money because let’s be honest. I’m a herd animal.”

We laugh at that for the same reason we laugh at Dilbert. It’s not funny because it’s funny. It’s funny because it’s true. In the face of uncertainty, you must have the ability to quantify results if you’re going to optimize your efforts for success. Picking the second or third best way to do something will usually still get you where you need to go. But sometimes it won’t. And if there’s a better way to do something, you need to know about it.

Let’s try to solve this problem. Here’s a thought experiment to try out at the the next software conference you go to, which by the way, I hope will be MicroConf 2013.

The next time you hear someone asking what you think of their idea, don’t tell them. Instead, determine their underlying hypothesis and discuss how they can quickly test the accuracy of that hypothesis. It is only through testing our hypotheses that we will learn what does and doesn’t work for our own businesses because every business is different. Yes, I know that’s “consulting speak” for “it depends”, but the fact is that it does depend. And a single valid data point is worth a thousand opinions.


A good friend of mine who owns the Ben & Jerry’s in Saratoga Springs, NY once told me:

Amateurs study tactics. Professionals study logistics.

It’s interesting that so many people are looking for tactics to get ahead and do a better job than someone else. As if there’s some magical thing that you can do which is going to turn the tide of whatever you’re currently doing and make it into an epic win. The fact is that rarely happens.

Sure, you might get one or two wins to swing substantially in the direction you want or need them to go, but there’s a difference between winning the battle, and winning the war. I use that expression, somewhat intentionally, knowing that most people reading this have probably never fought in a war. I know that I haven’t. Like you, my exposure tends to be quite thankfully limited to movies, books, and the History Channel.

But the unfortunate part of even discussing tactics and logistics is that people don’t understand how to apply them to other parts of their lives. More specifically, I think entrepreneurs could greatly benefit from a solid delineation between what is considered tactics vs. what is considered logistics. So with that in mind, lets get started with some high level stuff. Then we’ll talk about some real world business cases.

What are tactics?

I think the closest non-military definition of a tactic is “any mode or procedure for gaining advantage or success”, which you can find on Dictionary.com. Ramit Sethi of IWillTeachYouToBeRich.com consistently rails against people who are trying all kinds of low hanging fruit tactics for saving money or spending less. Things like not buying a $3 coffee every day will save you about $600/year! WOW! $600! Wouldn’t that be awesome?

Big ole waste of time to Ramit. And to be fair, he’s right.

This is a tactic to save money. But it’s not an epic win. In fact, it’s a short term solution to a long term problem. It doesn’t run on autopilot. You have to constantly NOT buy coffee at Starbucks every working day of EVERY YEAR for this kind of thing to be effective. That’s a lot of work. So what does Ramit recommend?

You should get a raise. In fact, do the work necessary to set yourself up so that you are able to command a raise from your company. What if you got a $3,000 raise? Or maybe a $5,000 raise? Hell, I bet Ramit can point you to people who’ve doubled or quadrupled that. Think it’s crap? It’s not

I’ll point to two different times in my life when I negotiated for massive raises. The first was when I was working for Clearwire out of Buffalo, NY. I had just finished my Bachelors in Computer Engineering from RIT and they made me a full-time offer. I forget exactly how much I was making at the time. Maybe $13/hour or something like that back in 2000. But they offered me around $35k. I left early that day to get out of town because of an incoming blizzard. Yea, Buffalo is known for those. Two days later I had an interview scheduled with Wegmans Food Markets. A week after the interview, I had a second interview and a few days later I had an offer in-hand for a full $20k more than Clearwire offered me. That’s a lot of $3 coffee’s each year.

Naturally Clearwire declined to meet the offer, but the result was a massive pay increase, which resulted in year over year gains that I didn’t have to sacrifice anything for. The next example came at Pedestal Software where I negotiated a $13,000 raise in one year by successfully arguing that I was underpaid for my responsibilities, education, and performance level. They were able to justify it to the HR department by combining it with a promotion.

Epic wins. But are those tactics or logistics?

I would argue that they’re tactics. Before I explain why, lets talk about logistics.

What are Logistics?

If we go back to Dictionary.com and look for the closest non-military definition, we find that logistics are defined as: the planning, implementation, and coordination of the details of a business or other operation.

Pardon me, but what the hell does that mean?

Well, I’m glad I asked. (Yes, it’s easier to drive the conversation when I’m the one offering up nicely leading questions. Now pipe down sonny!) Businesses are guided by logistics. Not some businesses. Not most businesses. I mean ALL businesses.

Apple didn’t become the most profitable company on the planet by making a few cool products. They did it through good tactics used to build great products combined with incredibly awesome logistics. Steve Jobs drove the tactical wins with visionary products. Tim Cook drove the logistical wins by making sure the resources were coordinated to be where they were needed to be and doing it in such a fashion that they could drive the prices down to the point that other vendors couldn’t keep up. Oh and he made them affordable. Otherwise your iPad would cost $5,o00, not $500. Not bad for a guy from Alabama.

By streamlining operations, he reduced costs and made products available at prices that other vendors couldn’t even compete with. Then they packed in a tidy profit and still beat the pants off their competitors by offering superior products at prices others couldn’t come close to. By combining the tactics for building the right product, with the logistics of delivering it in massive quantities at the right time and keeping it all completely under wraps the entire time is why Apple is the most valuable company in the world today.

A Non-Technical Example of Logistics

How about a completely non-technical example of logistics. Let’s say you own a hypothetical ice cream store like. Oh, I don’t know. Maybe a Ben & Jerry’s. 🙂 Yes, you knew that was coming back. You’re very smart. Now shut up and let me finish.

If you own a Ben & Jerry’s, you probably own at least one store. Let’s assume that you only own one. So how can you make more money? In any given city there are only so many people living there and that creates an upper limit on the number of people who are going to come into your store. Also, in the northern areas of the country, there are going to be serious seasonal adjustments that need to be made to accommodate for the differences in demand between summer and winter months.

But let’s think about how we can maximize our income, and thus our profits:

  • Raise prices – Let’s face it. Ice cream is a commodity, just the same as coffee. Sure you can dress it up a bit with a good story, but there’s an upper limit of what you can charge and it’s not a lot more than what others are charging.
  • Open more stores – Lots of startup capital required for this, but it’s certainly possible to do. It can be twice the work though, not to mention twice the risk.
  • Increase foot traffic to the store – Again, this is going to be limited by the location and the number of people there.
  • Increase distribution – Difficult to do when you don’t own the national production chain.

So what else can we do? Let’s go back to opening more stores and work out a variation of that, combined with increasing distribution. Summer months are huge for ice cream vendors. No, actually I mean they’re HUGE. So can we capitalize on that? Sure. Let’s open more locations… but only in the summer. Better yet, let’s make those stores mobile so we can go out to people, taking the ice cream to them and increasing our distribution. There’s a carnival? We’re there. A company party? Got it. Massive horse races with tens ouf thousands of people? All over that like white on rice.

This avoids problems with getting people to the store, it increases your reach, and can be scaled up during the summertime. Epic win, right? Not exactly.

The problem here is that it’s summer. Let’s say that a mobile station can go through a few hundred gallons of ice cream in a day. (I’m just making stuff up here, since I really have no idea.) How do you keep 200 gallons of ice cream from melting when your nearest freezer is miles away and you’re constrained on your available space?

This is where the true value of logistics starts to shine. You go without a freezer and use just-in-time delivery to make sure that as the stations are starting to run out of ice cream, you deliver more. Now you don’t need a full-size freezer on-site, the ice cream won’t melt and can sell lots of ice cream to the masses during the time when they want it the most. Oh, and you probably charge more since they’re desperate for relief from the heat.

Now there’s just that pesky problem of figuring out how to make sure those lines of communication stay open and the ice cream gets where it needs to be, on time and without melting. But we’re software entrepreneurs so let’s leave that problem to the ice cream guys.

How does this apply to me?

Remember when I said that I’d come back to the part about getting raises and those being tactics rather than logistics? Here we are.

Saving money by not buying something and getting a raise are both performing the same type of operation, even though it’s on a different scale. Saving money is a small win and continues to take work every day. Getting a raise which gives you year over year gains is a big win and takes less work in the long run. These are two tactics in your arsenal for helping you to live the life you want to live but that’s all they are is tactics. You need to coordinate multiple tactics as part of a larger plan. That includes managing your real estate situation, your savings, your retirement fund, your primary mode of transportation, your career, your vacation time, etc.

In the ice cream example above, we used used tactics to overcome specific obstacles. We used logistics to coordinate resources such that we accomplished the goal of delivering unmelted ice cream to the masses during a critical timeframe that they’re willing to pay more for it. Overcoming individual obstacles is like winning a single battle. The coordination of multiple tactics to achieve a goal that cannot be accomplished without that coordination is logistics.

And that’s the important part that many people don’t realize about running a business. It’s all about logistics. Coordinating a lot of moving parts is a juggling act that only clowns and entrepreneurs could love. But when you do it right, and things are falling into place just when you need them, you’re  not just moving the needle forward on your business. You’re propelling it forward, and quickly.

As an overly simplified example, but slightly more relevant example: if Sally and Jim are working on two pieces of code that need to work together and Sally spends 2 weeks waiting for Jim to finish, you’ve got a logistical problem because you’re paying Sally to practice her Olympic Thumb Twiddling skills while Jim finishes up his work. It’s an extreme example that doesn’t usually happen in practice, but it serves to illustrate the point. There’s a certain amount of waste inherent in the fact that Sally has to wait and you want to minimize that.

The Job of an Entrepreneur

Your job as an entrepreneur is to deliver resources where they are needed at exactly the time they are needed so as to create as little waste as possible. Whether those resources are:

  • people (developers, designers, sales reps, customer support, etc)
  • physical goods (ice cream, boxed products, computers, etc)
  • digital goods (software, documentation, marketing collateral, etc)
  • tools & equipment (software utilities, scoops for ice cream, office space, etc)
  • information (training, press releases, etc)

Managing these things is typically a full-time job, which is why large companies have VP’s of everything. Those VP’s are in charge of managing the logistics of their own team, while the CEO/COO help to coordinate corporate direction from the top.

Unfortunately, most of us don’t have the luxury of having people report to us who are responsible for their own logistics. So let’s chat about it. What tips do you have for aspiring entrepreneurs for how to coordinate everything? What kinds of things do you wish someone had told you when you first started out? Leave your comments, questions, or tips & tricks below.