Category Archives: Uncategorized

Usage-Based Pricing: Some Good Examples

Currently working with several companies on their pricing. In general, if you are selling direct and not via a self-service website then this advice still applies. 

But when you have to scale the sales force and/or sell via partner and/or sell via a self-service storefront then you will need a pricing scheme that makes sense. Which often means per-user based pricing. Nothing wrong with that

But there are scenarios where that is not the right metric. And where you will need to introduce usage-based pricing.

The key is to find a metric that your customer will find easy to understand, measure, and forecast. People absolutely need to know how much they will pay and when you will ask for more for a frictionless purchase decision.

Two good examples are:

Both intelligently structured and beautifully presented. Well worth imitating.

Top 10 Books of 2016

Note to self: Spend less time reading year-end top 10 lists and spend more time reading. Or, at least, make your own top 10 list. So here goes. Note: These are books I read in 2016, most of them came out before then.

In no particular order:

Paul Theroux: Deep South. A travelogue going to places in rural and poor southern counties that nobody knows and where nobody goes. Deep and meaningful conversations with the people who got left behind and stick it out. Bonus: Great photography from the one and only Steve McCurry.

Stewart O’Nan: Sunset. F. Scott Fitzgerald’s life at Hollywood, trying to make it as a screenwriter. Brilliantly written and incredibly interesting. But of course you could say that about pretty much any book by Stewart O’Nan. He just keeps churning out one great book after another.

Danilo Di Luca: Bestie da Vittoria. Among the many dozen of cyclist autobiographies this one stands out. Because he takes you straight into the mindset of the athlete who has to win at any cost. Not a nice place to be, but brutally honest.

Yuval Noah Harari: Sapiens. Wow. Just wow. So much knowledge, so brilliantly told, and incredible nuggets of insights both in generally available knowledge as well as unique observation and analysis. Mandatory reading.

Elena Ferrante: Storia del Nuovo Cognome. Yes, you can believe the hype. The books in the Naples tetralogy really are that good. The emotional depths of the two heroines, the description of life in the Neapolitan slums, and the socio-economic development of post-war Italy make this compelling on so many levels. 

Geoff Dyer: White Sands. A writer’s writer. Like nothing else. This collection of quasi-autobiographical essays is particularly rich. 

Cheryl Strayed: Wild. Unputdownable. The combined description of personal and physical journeys is unique. Maybe a bit dramatic in places, but so authentic and raw that you come on board and stay there.

Wolf Biermann: Warte nicht auf bessere Zeiten. Somewhat embarrassingly I did not know his work. Still don’t. But this description of life growing up in the DDR and then getting kicked out is precise, authentic, often funny, and incredibly interesting. Mandatory reading.

Anne Garrels: Putin Country. NPR journalist covers life and people in a mid-size Russian city over twenty years and charts and impressive course from the breakup of the Soviet empire to Putin Country. Rich, authentic, and not quick to pass judgment.

Helen MacDonald: H is for Hawk. Oh boy. What a journey. You get sucked in on the first ten pages and then you’re in for the ride. Who ever thought a book (seemingly) about training a hawk could be so incredibly interesting.

Books that did not make the list:

David Millar: Racer. Very good.

Klaus Modick: 24 Türen. Not sure.

Marlon James: A Brief History of Seven Killings. Overwhelming. 

David Mitchell: Slade House. Unputdownable.

Ragnar Hovland: Uber den Wassern schweben. Flott.  

Walter Bernardi: Sex and the bici. Divertente. 

Anthony Doerr: All the Light We Cannot See. Excellent.

Bill Bryson: The Road to Little Dribbling. Fun.

Amos Oz: Judas. Impressive.

Bradley Wiggins. My Time. Good enough.

Larry McMurtry: Roads. A pleasant surprise. 

Brian Benson: Going Somewhere. Not quite good enough. 

Alessandro Baricco: Mr Gwyn. Hhhhmmmm…

Reynolds: Slow Road.

Barnes: Noise of Time. Very good.

Stewart O’Nan: West of Sunset. Excellent. 

David Grossman: Kommt ein Pferd in eine Bar. Sehr schwierig.

Seethaler: Ein ganzes Leben.

Di Luca: Bestie da Vittoria. Wow.

Stewart O’Nan: City of Secrets. Excellent.

Jens Voigt: Shut Up Legs: Fun.

Leta Semadeni: Tamangur. Schwierig.

Jan Cleijne: Legends of the Tour. Can’t remember. 

Juliana Buhring: The Road I Ride. Good stuff. 

Edward P. Sykes:  Along the Med on a Bike Called Reggie. Can’t remember.

Hughes Kehlenbach: Long-Distance Cycling. Not so good.

Ketil Bjornstad: Die Unsterblichen. Stark.

Bjarne Riis: Riis. Good enough.

Geoff Dyer: Sheer Rage. Brilliant.

Dave Eggers: Heroes of the Frontier. Very good. 

Leslie Jamison: The Empathy Exams. Impressive. 

Emily Chappell: Unburdened. Not bad. 

Jonathan Ames: Wake Up, Sir. Good fun. 

J.D. Vance: Hillbilly Elegies. Expected more.

Ian McEwan: Nutshell. Brilliant and then some.

Robert Harris: Conclave. Good fun.

Keith Foskett: The Journey in Between. Pretty dull. 

Keith Foskett: The Last Englishman. A bit better. 

Jack Hitt: Off the Road. So so. 

Rita Kuczynski: Mauerläufer. Da lernt man viel.

Manfred Krug: Abgehauen. Da auch.

Eva-Maria Hagen: Eva und der Wolf. Da auch.

Otessa Moshfegh: Eileen. Nasty and disappointing. 

Ian Frazier: Great Plains. Good stuff. 

William Boyd: The Vanishing Game. Great format. 

Geraint Thomas: The World According to G. What a pleasant surprise.

Sabine Bode: Nachkriegskinder. Enttäuschend. 

Josh Katz: Speaking American. Fun. 

Rühle/Zekri: Deutschland extrem. Ganz interessant. 

Tim Moore: The Cyclist Who Went Out in the Cold. Fun. 

George Plimpton: Paper Lion. Pretty good.

Jonathan Safran Foer: Here I Am. Excellent.

Saul Friedländer: When Memory Comes. Remarkable.

Kjetil Bornstad: Erlings Fall. Solide. 

MIchael Krüger: Das Irrenhaus. Toll. 

Arno Surminski: Von den Kriegen. Schwierig.  

Gerhard Jäger: Der Schnee, das Feuer, die Schuld und der Tod. Nicht schlecht.

William Boyd: The Blue Afternoon. Solid.

Top-Level Corporate Decision Making: Get It In Writing

So “Andreessen in hot water for texts he sent Zuckerberg”.  Some kind of collusion between board member and CEO. 

Not sure if there is anything untoward going on here. That is for the lawyers to discuss.

What I do know is that it’s really good news that this kind of discussion happens via texting, as opposed to clandestine meetings or off-the-record phone calls.

That way they are on the record and all parties involved have a chance to reconstruct the information exchange and to then make an informed decision. 

Wouldn’t it be great if all such communication in the past had been explicit and on the record? Then we’d have a much clearer picture on what may or may not have gone on at e.g. Siemens and Daimler and Deutsche Bank and Volkswagen.

Sequoia: “Why the next great SaaS company will look nothing like Salesforce”

Interesting article by Aaref Hilaly on “Why the next great SaaS company will look nothing like Salesforce,” distinguishing between Systems of Record (e.g. Salesforce, Workday, etc.) and Systems of Engagement. Where the latter take existing data and add value by making them available, integration, and analytics. And Aaref warns against trying to provide the next SOR and says that those franchises have been taken.

There’s a valid point there. Starting a new venture for e.g. wall-to-wall CRM would indeed be a bold undertaking.

But, and that is a big but, there are two wide open areas of opportunity here:

IT-poor environments that do not have the skill set to select and deploy a grown-up solution. They can benefit tremendously from a highly specific offering that gets the instant initial business value right and then grows footprint in a way that is manageable for the customer. Think of something like Shore, which starts out offering appointment management for very small businesses and then builds a more feature-complete CRM and analytics experience around that first, immediately valuable, functionality.

And while wall-to-wall SOR opportunities for the enterprise may have become limited, the game is wide open in those areas that have not been equipped with genuine SOR solutions. If you look in the e.g. HR, strategy, M&A, sourcing, planning etc. departments in the big enterprises, then 90+% of the IT stack is Excel and Sharepoint or some legacy ECM. There is a boatload of opportunity here for introducing new Systems of Record that support documentation, communication, and organization non-trivially. And where the products and companies that are successful will look a lot like Salesforce.

The rule of thumb here is: “Every spreadsheet shared in a business is an angel announcing another SaaS app still needs to be built.

O Brave New World

 
“O brave new world that has such creatures in it.” A foul world more likely. Now we are entering truly uncharted territory. A white male fantasy to get back to the uncontested leadership position of the fifties. In a world that has changed inside and outside the US. 
 
We’re likely looking at: 
 
(At least) half a decade of geopolitical vacuum
 
Foreign policy under the Obama administration was mostly isolationist. This will, apart from some stressful saber-rattling and brinksmanship, become even more so. The white middle-aged male who elected DT has no interest in taking on responsibilities beyond their own borders. 
 
So Russian, Chinese, Saudi and other governments will continue to enjoy an unchecked and unchallenged vacuum within which to assert power inside and outside their borders, with domestic unrest and civil war the only conceivable disruption.
 
A dumbing down of the public intellect
 
Increased surveillance at home and preemptive self-censorship will radically reduce free speech — less offered, less broadcast, less heard. And this is not just politics. Include science, economics, and, indirectly via populist attacks on liberal elites, also technology. Dulling down the debate and dullling down intellectual excellence and rigor. 
 
Add to that the expected decrease in the influx of super-smart PhD students from overseas and expect a sustained deterioration of activity and output in science, technology, economic thought leadership, and in the arts. “The greatest country in the world.” Really? Expect percentages of Nobel prizes won to drop around 30-35 years from now.
 
Less military, more spying
 
DT has no mandate to put boots on the ground outside the national borders. But in a globalized economy you cannot isolate yourself from geopolitical dynamics. So we expect (even more) surveillance, undercover operations, and financing of proxies, with an irreversible loss of accountability and even more rampant corruption (e.g. the Karzai brothers). 
 
That does not make the world a better place. You may not like boots on the ground, but at least they’re in plain sight.
 
More self-appointed world governments
 
When politics as we know it ends up catering only to local interests and is completely focused on winning elections, not on making a lasting difference, the vacuum is filled by well-meaning visionaries who have the means, the economic interest, and the global perspective to look at the big picture. 
 
Bill Gates and Mark Zuckerberg and Erich Schmidt and many more of the “Davos” elite have gained their outsized fortunes in a truly global market and now are putting their means to use addressing global and long-term challenges. Even if you applaud their efforts you may be wondering if there are any checks and balances there at all. You may also be wondering about the areas that they don’t address. 
 
Long term?
 
It’s too early and too unpleasant to think about the very long term effects:
 
A divided society where the coastal elites and the denizens of Trumpland have stopped speaking to each other a long time ago. There’s a fence there already.
 
A supreme court stacked with DT nominees. Remember Citizens United. Changed the world forever.
 
So?
 
The good news: After eight years of GWB we got Obama. You might hope for that kind of salvation.
 
The bad news: After four or more years of DT it might take a dozen Obamas over several generations to get anywhere at all. 
 
 
 

Annual Contract Plans for SaaS

Some good advice here re annual plans for SaaS contracts. Reduce churn and attract higher-value customers. Makes total sense. 

Some additional observations:

Annual plans are not just good for the vendor, they are also good for the customer, as they provide explicit budget control without any mid-year invoice surprises. So expect customers to ask for them.

Find a mechanic to deal with uncertain demand projections. Either work with user bands (contract size increases as they cross a threshold) or annual all-you-can-eat plans that get reindexed upon annual renewal. 

Don’t fret too much about cancellation mechanics required by customer legal. If they want out they will get out. So e.g. 90-day total contract cancellation clause would be OK.

For those cases where the customer wants a choice between annual and monthly make sure that there is a significant uplift on the monthly pricing and/or position that as an “on request” offer that will be handled as an exception and/or construct a mandatory bundling with professional services such as training or a rent-an-admin service package. This will differentiate the monthly plan quite a bit and also ensure that you have the resources required to make the customer instantly successful. 

And once you have a fixed-price annual contract then most customers will want to pay in advance, as opposed to quarterly or monthly invoicing. So if you offer several invoicing options, don’t discount the annual prepay by too much, 2-4% are a good place to start.

Two New Books

Tsundoku? Guilty as charged. But every now and then I actually open up some of the books that keep arriving at my doorstep. 
 
Such as:
 
Get Backed by Evan Baehr and Evan Loomis. “Craft your story, build the perfect pitch deck, launch the venture of your dreams.” This does not disappoint. While there may be many other ways to structure and order your pitch deck, this book will give you a very solid framework within which to start and from which to depart at your own risk. Probably most helpful are the dozen or so real-live examples that they include and comment on. And the exhaustive list of potential backup slides that you may want to have in your deck or, at least, be able to produce on short notice. Mandatory reading.
 
The Art of Explanation by Lee LeFever. “Making your ideads, products, and services easier to understand.” This is a bit of a mixed bag for me. Could be much more concise, but then that is a dilemma with all business books, where many authors need to pad the page count to reach book-length. Somebody should find a better way. Some good takeaways in this book re story-telling and not overestimating your audience’s previous knowledge or ability to absorb information. So what feels like dumbing down to the expert may often be exactly what is required to come across to an audience. 
 
 
 
 

Bad Habit: Downloading Samples on the Kindle

Love my Kindle. Actually I have a handful. Pry them from my cold dead hands. But I only recently discovered that you can download free samples for many books. Try before you buy. 
 
And now I find myself reading the sample chapter and moving on to the next book. Much like I often watch the pilot for a fantastic TV show and then move on to the next pilot. 
 
For TV that’s OK. For books not so much. Almost wish I hadn’t seen this feature.

The Curse of Free Software

Been a lifelong paying user of Instapaper. It’s just the best. When they asked people to pay (1 buck a month) I gladly did. Now Pinterest has taken over and it’s all free. Which sounds great, but then makes you wonder if and when they might have second thoughts and turn it off. Which would be genuinely painful if you have hundreds of archived links and it’s an integral part of your content consumption workflow. Better to start backing up and finding a second source, I guess. 

Per-User Based Pricing Still Makes Sense

Interesting article here on per-user pricing for SaaS products and what the alternatives are, specifically indexing into the number of employees in your customer’s organization or somehow tie into financial metrics, such as transaction volume.

A good question to ask and definitely worth a look, although in most cases you’ll end up staying with per-user based pricing.

Per employee only makes sense if your solution is designed to touch every single one of them (n which case it becomes almost identical to per-user).  

Transaction-based is only achievable if your solution somehow directly touches the financials of the transaction itself, e.g. some kind of payment processor, and directly contributes to a measurable margin increase for that transaction.

So in most cases, especially for departmental/LoB solutions you’ll end up sticking with per-user. But don’t forget to model:

  • Do we price diverse user personae differently? Might be needed if value derived is very diverse.
  • Do we need to package users into bands so that annual contracts can be budgeted with no need for incremental top-ups?
  • Do we account for users outside the customer’s organization (customers, partners, suppliers) that either get indirect value or that have to be pulled in in order to realize the primary value proposition?