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?

WhatsApp in Search of a Business Model

So today we apparently heard that WhatsApp is going to discontinue all consumer-centric monetisation, such as charging for the app or charging any subscription fees. Instead content owners and business that want to interact with me have to pay for connecting with the 900m user base.

Not obvious what that means for the WhatsApp user experience and how attractive this channel will be for advertisers. Seems like early days.

But what is obvious is that this is another indicator for how difficult it is to monetize consumer products, where advertising (especially on mobile and also in the context of communication services) really doesn’t work very well and where it’s incredibly hard to get people to pay beyond an initial app download fee.

And even that is hard enough.

Q3/15 Reading List

Lionel Davidson: Kolymsky Heights. Strong.
Mike Hawthorne: Hell of a Journey. DNF
Ivan Vladislavic: Double Negative. Solid.
Jens Mühling. Mein russisches Abenteuer. Naja.
Tim Moore: French Revolutions. Never boring.
Julia Pierpont: Among the Ten Thousand Things. Solid stuff.
Julian Barnes: Keeping an Eye Open. Not for me. DNF.
Joseph O’Neill: The Dog. Loved it.
William Boyd: Sweet Caress. Just great.
Daniel Friebe: Eddy Merckx. Solidly written but the mystery remains.
Martin Suter: Montecristo. Schwach. DNF.
Jonathan Franzen: Purity. Very satisfying.
Jonas Jonasson: Der Hundertjährige, der aus dem Fenster stieg. Sehr unterhaltsam.
John Banville: The Blue Guitar. Exquisite.
Karl-Ove Knausgård: Träumen. Stark.
Klaus Modick. Klack. Gut genug.
Salman Rushdie: Two Years Eight Months and Twenty-Eight Nights. What a wonderful fairytale.