from:
http://www.blogmaverick.com/2007/12/24/success-and-motivation/

Success & Motivation

Dec 24th 2007 9:59AM

With almost 4 years of Blogs in the hopper, I decided to bring back some of my favorites and republish them… Here is the first:

Success and Motivation, Part 1

Apr 23rd 2004 9:37AM

Success and Motivation

I did it too. I drove by big houses and would wonder who lived there. What did they do for a living? How did they make their money? Someday, I would tell myself, I would live in a house like that. Every weekend I would do it.

I read books about successful people. In fact, I read every book or magazine I could get my hands on. I would tell myself 1 good idea would pay for the book and could make the difference between me making it or not.

I worked jobs I didn’t like. I worked jobs I loved, but had no chance of being a career. I worked jobs that barely paid the rent. I had so many jobs my parents wondered if I would be stable. Most of them aren’t on my resume anymore because I was there so short a time or they were so stupid I was embarrassed. You don’t want to write about selling powdered milk or selling franchises for TV repair shops. In every job, I would justify it in my mind  whether I loved it or hated it  that I was getting paid to learn and every experience would be of value when I figured out what I wanted to do when I grew up.

If I ever grew up, I hoped to run my own business some day. It’s exactly what I told myself every day. In reality, I had as much doubt as confidence. I was just hoping the confidence would win over the doubt and it would all work out for the best.

I remember being 24 years old, living in Dallas in a 3-bedroom apartment with 5 other friends. This wasn’t a really nice place we all kicked in to move up for. This place has since been torn down. Probably condemned. I didn’t have my own bedroom. I slept on the couch or floor depending on what time I got home. I had no closet. Instead I had a pile that everyone knew was mine. My car had the usual hole in the floorboard, a ‘77 FIAT X19 that burned a quart of oil that I couldn’t afford every week.

To make matters worse, because I was living on happy hour food, and the 2 beers cover charge, I was gaining weight like a pig. My confidence wasn’t at an all time high. I was having fun. Don’t get me wrong. I truly was having a blast. Great friends, great city, great energy, pretty girls. Ok, the pretty girls had no interest in my fat and growing ass at the time, but that’s another story….

I was motivated to do something I loved. I just wasn’t sure what it was. I made a list of all the different jobs I would love to do. (I still have it.) The problem was that I wasn’t qualified for any of them. But I needed to pay the bills.

I finally got a job working as a bartender at a club. A start, but it wasn’t a career. I had to keep on looking during the day.

About a week later I answered a want ad out of the newspaper for someone to sell PC Software at the first software retail store in Dallas. The ad was actually placed by an employment agency. The fee was to be paid by the company, so I gave it a shot.

I put on my interview face, and of course my interview suit, which just happened to be one of my 2 polyester suits that I had bought for the grand total of 99 dollars. Thank god for 2-fer, 2-fer, 2-fer madness at the local mens clothing store. Grey Pinstripe. Blue Pinstripe. Didn’t matter if it rained, those drops just rolled down the back of those suits. I could crumple them. They bounced right back. Polyester, the miracle fabric.

I wish I could say the blue suit and my interview skills impressed the employment agency enough to set up the interview with the software store. In reality, not many had applied for the job and the agency wanted the fee so they would have sent anyone over to interview. I didn’t care.

I pulled out the grey for my interview at Your Business Software. I was fired up. It was my shot to get into the computer business, one of the industries I had put on my list!

I remember the interview well. Michael Humecki the Prez, and Doug (don’t remember his last name), his partner double-teamed me. Michael did most of the talking to start. He asked me if I had used PC software before. My total PC experience at the time was on the long forgotten TI/99A that had cost me 79 dollars. I used it to try to teach myself Basic while recovering from hangovers and sleeping on the floor while my roommates were at work. They weren’t impressed.

I was trying to pull out every interview trick I knew. I went through the spiel about how I was a good salesperson, you know the part of the interview where you are basically begging for a job, using code phrases like “I care about the customer”, “I promise to work really, really hard” and “I will do whatever it takes to be successful”. Unfortunately, I was getting that “well if no one else applies for the job, maybe” look from Michael.

Finally, Doug spoke up. He asked me. “What do you do if a customer has a question about a software package and you don’t know the answer?” All of the possible answers raced through my mind. I had to ask myself if this was the “honesty test question” you know where they want to see if you will admit to things you don’t know. Is this some trick technology question and there is an answer everyone but me knows? After who knows how long, I blurted out that “I would look it up in the manual and find the answer for them.” Ding, ding, ding…Doug just loved this answer.

Michael wasn’t as convinced, but he then asked me the question I was dying to hear: “Would you not go back to the employment agency at all, so when we hire you we don’t have to pay the fee?” I was in.

What does all this mean? Nothing yet. It was just fun to tell. You have to wait till part 2, if you care, and if there is a part two. Right now, it’s much more important that I go play with my daughter.

Success and Motivation, Part 2

Apr 25th 2004 3:41AM

So my career in Dallas begins. I’m a software salesperson with Your Business Software in Dallas. $18k per year. The first retail software store in Dallas.

I have to sweep the floor and be there to open the store, but that’s not a bad thing. When I tell my future ex-girlfriends that I sell software and am in the computer biz, I’m not going to mention the sweeping the floor part. Plus, I had to wear a suit to work, and the 2-fer madness specials looked good at happy hour after work. Better yet, the store didn’t open till 9:30am, which meant if I had a fun night, I had at least a little time to sleep.

I bet right about now you are questioning where my focus was? Where was my commitment to being the future owner of the Dallas Mavericks? Please. I was stoked I had a good job. I was stoked it was in an industry that could turn into a career. At 24, I was just as stoked that the office was close to where the best happy hours were and that I might finally have more than 20 bucks to spend for a night on the town.

Since I’m talking about partying, I do have to say that my friends and I were very efficient in that area. Beyond living off bar food and happy hours, we literally would agree that none of us would bring more than 20 bucks for a weekend night out. This way we all could pace each other. At least that was the way it was supposed to work, and it did until we figured out the key to having a great night out on the cheap. They key was buying a bottle of cheap, cheap champagne. I can’t even spell the name, but it was a full bottle, and it cost 12 bucks. Tear the label off and as far as anyone knew it was Dom. Each of us would grab one, and sip on it all night. It was far cheaper than buying beers or mixed drinks all night, and we never had to buy a drink for a girl, we just gave them some champagne! Of course the next day was hell, but since when was I responsible enough to care about a hangover…

But I digress. Back to business. As fired up as I was about the job, I was scared. Why? Because I have never worked with an IBM PC in my life. Not a single time, and I’m going to be selling software for it. So what do I do? I do what everyone does: I rationalize. I tell myself that the people walking in the door know as little as I do, so if I just started doing what I told my boss I would do, read the manuals, I would be ahead of the curve. That’s what I did. Every night I would take home a different software manual, and I would read them. Of course the reading was captivating. Peachtree, PFS, DBase, Lotus, Accpac… I couldn’t put them down. Every night I would read some after getting home, no matter how late.

Of course it was easy on the weekends. After drinking that cheap champagne, I wasn’t getting out of bed till about 9pm, so I had tons of time to lie on the floor and read. It worked. Turns out not a lot of people ever bothered to RTFM (read the frickin’ manual), so people started really thinking I knew my stuff. As more people came in, because I knew all the different software packages we offered, I could offer honest comparisons and customers respected that.

Within about 6 months, I was building a clientele and because I had also spent time on the store’s computers learning how to install, configure and run the software, I started having customers ask me to install the software at their offices. That meant I got to charge for consulting help: 25 bucks an hour that I split with the store. That turned into a couple hundred extra bucks per month and growing. I was raking it in, enough that I could move from the Hotel (that was what we called our apartment) where the 6 of us lived, into a 3 bedroom apartment across the street, where instead of 6 of us, there were only 3. Finally, my own bedroom!

I was earning consulting fees. I was getting referrals. I was on the phone cold calling companies to get new business. I even worked out a deal with a local consultant who paid me referral fees, which lead to getting a $1500 check. It was the first time in my adult life that I was able to have more than 1k dollars in the bank.

That was a special moment believe or not, and what did I do to celebrate? Nope…I didn’t buy better champagne. I had these old ratty towels that had holes in them and could stand on their own in the corner, they were so nasty I needed a shower from drying off after a shower…I went out and bought 6 of the fluffiest, plushest towels I could find. I was moving on up in the world. I had the towels. Life was good. Business was good and getting better for me. I was building my customer base, really starting to understand all the technology, and really establishing myself as someone who understood the software. More importantly no, most importantly I realized that I loved working with PCs. I had never done it before. I didn’t know if this was going to be a job that worked for me, or that I would even like and it turns out I was lucky. I loved what I was doing. I was rolling so well, I was even partying less… during the week.

Then one day, about 9 months into my career as a salesperson/consultant, I had a prospect ask if I could come to his office to close a deal. 9am. No problem to me. Problem to my boss, Michael Humecki. Michael didn’t want me to go. I had to open the store. That was my job. We were a retail store, not an outbound sales company. It sounded stupid to me back then too, particularly since I had gone on outbound calls during the day before. I guess he thought I was at lunch.

Decision time. It’s always the little decisions that have the biggest impact. We all have to make that “make or break” call to follow orders or do what you know is right. I followed my first instinct: close the sale. I guess I could have rescheduled the appointment, but I rationalized that you never turn your back on a closed deal. So I called one of my coworkers to come in and open up, and closed the deal. Next day I came in check in hand from a new customer and Michael fired me.
Success and Motivation, Part 3

May 7th 2004 1:48AM

Fired. Not the first time it’s happened, but it reinforced what I already knew; I’m a terrible employee. I just had to face facts and move on. So rather than getting back on that “how the hell am I going to find a job” train, the only right thing to do was to start my own company.

My first act of business? Pile into my buddy’s 1982 Celica, nicknamed Celly, and drive to galveston to party. Of course we stayed in only the best $19.95 a night, plug the hairdryer in the wall and the circuit blows, motel. Nothing but the best as I prepared for my journey into entrepreneurial territory again. I could say I was preocuppied with how to get my new business off the ground. That while my friends got drunk, did stupid tourist tricks and ate at greasy spoons, I sat by the pool on the 1 chaise lounge chair with rust on the clean side and wrote up my businessplan. I didn’t. I got just as drunk and ate the same disgusting food. Then we faced the road trip terror that everyone knows exists, but refuses to admit, the ride home. It wasn’t until we pulled up to the apartment that it hit me. No job. No money. No way to pay the bills. But I had nice towels.

Fortunately the hangover didn’t last too long, and I realized I had to get off my ass and make something happen. First day, first task, come up with a name. This was the start of the microcomputer revolution, and I wanted a name that said what the company was going to do, which was sell personal computers and software and help companies and individuals install them. I was going to offer microcomputer solutions. So after struggling with different names for about 30 minutes, I chose MicroSolutions Inc.

Now came the hard part. I had to call all the people I had done business with at my last company, and let them know that I had been shitcanned and ask them if they would come do business with me at MicroSolutions. I got the expected questions. No I didn’t have an office. No I didn’t have a phone yet other than my home phone. Yes it was just me. No I didn’t have any investors. The only question I dreaded was whether I had a computer to work with. I didn’t. Fortunately, no one asked.

I made a lot of calls, and got some decent response. We love you Mark, we want to give you a chance. A lot of lets stay in touch. I got two real bites. One from a company called Architectual Lighting and the other from a company called Hytec Data Systems.

Architectual Lighting was looking for a time and billing accounting system to allow them to track the work with clients. I don’t remember the name of the software package I told them about, I think it was Peachtree Accounting, but after going out to meet with them it came down to this. I offered to refund 100 pct of their money if the software didn’t work for them, and I wouldn’t charge them for my time for installing and helping them. In return, they would put up the 500 bucks it would take for me to buy the software from the publisher, and I could use them as a reference. This was my “no money down” approach to start a business. They said yes. I had a business.

My 2nd call Hytec Data, was run by Martin Woodall. I met with Martin at the S&D Oyster House on a beautiful June day, and I remember sitting there and him telling me, “I graduated in Computer Science from West Virginia University. I have 50k in the bank and I drive a brand new Cadillac. I know technology better than you. We can work together”. I had a customer, and now with Martin’s help, I had some hope. Hytec Data sold multi user systems. The old kind that used dumb terminals. He bundled it with accounting software and he and a contractor named Kevin, would make modifications to the Cobol source code. They were the hardcore geeks that could help me when I needed it. I was still just 10 months from my first introduction to PCs, and had zero clue about multi user systems. If I came across prospects that could use their system and software, I would get referrals. That was good.

Even better was Martin’s offer of office space. He and Kevin shared office space with the distributor of the computer systems he sold. They had this one office, that when the CEO of the distributors son wasn’t using it to study his spanish, I could use it to make calls, and keep my folders and paperwork. Still no computer, but hey, I had an office and phone. I was bonafide…

At some point I’m going to have to go back and look at my appointment books that I kept from those days to remind myself of who my 2nd, 3rd and on from there customers were. They were small companies that I got to know very well. People that took me under their wing and trusted me, not because I was the most knowledgeable about computers, but because they knew I would do whatever it took to get the job done. People trusted me with keys to their offices. They would find me there when they got in in the morning and I was there when they left. I made 15,000 dollars that first year. I loved every minute of it.

As time went on, my customer base grew. I got my friend and former roommate Scott Susens to help with deliveries. Scott was working as a waiter at a steakhouse at the time. I remember asking him over and over, would you please help me out. I have a customer that had bought a bunch of Epson dot matrix printers from me, and I had to sell Scott on how it wouldn’t be hard to learn how to hook a parallel cable to a pc and printer, and how learning all of this would be a career move compared to working at the steakhouse. Unfortunately, I couldn’t pay him as much as the steakhouse. My good fortune was that Scott worked nights and weekends and decided to take some time in the afternoons to help me out. Not long after that, he was working fulltime installing PCs, learning whatever he had to figure out before an install.

Martin also began to play a larger and larger role. His company was growing, and he was watching my company grow. I would get the PC based stuff, he would get the accounting system stuff. It was a nice split. The better part of the relationship was based on Martin being the most anal retentive person i had ever met in my life. While I covered my mistakes by throwing time and effort at the problem, Martin was so detail oriented, he had to make sure things were perfect so problems could never happen. We could drive each other crazy. He would give me incredible amounts of shit about how sloppy I was. I would give him the same amount back because he was so anal he was missing huge opportunities. We complemented each other perfectly. It would only be a matter of time before we both knew we had to be partners and work together instead of seperately.

That first year in business was incredible. I remember sitting in that little office till 10pm and then still being so pumped up, I would drive over to the gym I belonged to and run 5 to 10 miles on the treadmill going through that day, and the next in my head. Other days I would get so involved with learning a new piece of software that I would forget to eat and look up at the clock thinking it was 6 or 7pm and see that it was 1am or 2am. Time would fly by.

It’s crazy the things that you remember. I remember when my accounts receivable got up to 15k and telling all my friends. I remember reading the PC DOS manual (I really did), and being proud that I could figure out how to set up startup menus for my customers. I remember going to every single retail store in town, BusinessLand, NYNEX, ComputerLand,CompuShop, all those companies that are long gone, and introducing myself to every salesperson to try to get leads. I would call every single big computer company that did anything at all with small businesses, IBM, Wang, Dec, Xerox, Data General, DataPoint (remember them?), setting meetings, asking to come to their offices since I couldn’t afford to take them to lunch. I didn’t need a lot of customers, but my business grew and grew. Not too fast, but fast enough that by the time MicroSolutions had been in business about 2 years, I had 85k dollars in the bank, a receptionist/secretary, Scott helping me out, and a 4 room office that I moved into along with Martin and Hytec Data Systems.

Then I learned a very valuable lesson. Martin had done a great job of setting up our accounting software and systems. I got monthly P&L statements. I got weekly journals of everything coming in and everything going out, payables and receivables. We had a very conservative process where Martin would check the payables, authorize them and then use the software to cut the checks. I would then go through the list, sign the checks and give them to Renee our secretary/receptionist to put in the envelope and mail to our vendors.

One day, Martin comes back from Republic Bank, where we had our account. He had just gone through the drive through and one of the tellers who he would see every day dropping of our deposits asked him to wait a second. She comes back and shows him a check that had the payee of a vendor, WHITED OUT and Renee Hardy, our secretary’s name typed over it. Turns out that in the course of a single week, our secretary had pulled this same trick on 83k of our 85k in the bank. As Martin delived the news, I obviously was pissed. I was pissed at Renee, I was pissed at the bank, I was pissed at myself for letting it happen. I remember going to the bank with copies of the checks, and the manager of the bank basically laughing me out of his office telling me that I “didn’t have a pot to piss in”. That I could sue him, or whatever I wanted, but I was out the money.

I got back to the office, told Martin what happened at the bank, and then I realized what I had to do about all of this. I had to go back to work. That what was done, was done. That worrying about revenge, getting pissed at the bank, all those “I’m going to get even and kick your ass thoughts” were basically just a waste of energy. No one was going to cover my obligations but me. I had to get my ass back to work, and do so quickly. That’s exactly what I did.
Success and Motivation P4

May 25th 2004 11:01AM

You never quite know in business if what you are doing is the right or wrong thing. Unfortunately, by the time you know the answer, someone has beaten you to it and you are out of business. I used to tell myself that it was ok to make little mistakes, just don’t make the big ones. I would continuously search for new ideas. I read every book and magazine I could. Heck, 3 bucks for a magazine, 20 bucks for a book. One good idea that lead to a customer or solution and it paid for itself many times over. Some of the ideas i read were good, some not. In doing all the reading I learned a valuable lesson.

Everything I read was public. Anyone could buy the same books and magazines. The same information was available to anyone who wanted it. Turns out most people didn’t want it.

I remember going into customers or talking to people in the industry and tossing out tidbits about software or hardware. Features that worked, bugs in the software. All things I had read. I expected the ongoing response of “Oh yeah, I read that too in such-and-such.” That’s not what happened. They hadn’t read it then, and they haven’t started reading yet.

Most people won’t put in the time to get a knowledge advantage. Sure, there were folks that worked hard at picking up every bit of information that they could, but we were few and far between. To this day, I feel like if I put in enough time consuming all the information available, particularly with the net making it so readily available, I can get an advantage in any technology business. Of course my wife hates that I read more than 3 hours almost every day, but it gives me a level of comfort and confidence in my businesses. AT MicroSolutions it gave me a huge advantage. A guy with little computer background could compete with far more experienced guys just because I put in the time to learn all I could.

I learned from magazines and books, but I also learned from watching what some of the up and coming technology companies of the day were doing. Its funny how the companies that I thought were brilliant then, are still racking it up today.

Every week a company called PCs Limited used to take a full-page ad in a weekly trade magazine called PC Week. The ad would feature PC peripherals that the company would sell. Hard Drives. Memory. Floppy Drives. Graphics Cards. Whatever could be added to a PC was there. What made the ad so special was that each and every week the prices got lower. If a drive was 2,000 dollars last week, it was $ 1940 this week. For the first time in any industry that I knew of, we were seeing vendors pass on price savings to customers.

The PC Limited ads became the “market price” for peripherals. I looked for the ad every week. In fact, I became a customer. I was in Dallas. They were in Austin.

I remember driving down to pick up some hard drives that I was going to put into my customers PCs. I had no idea up to that point, but it turns out that they had just moved from the owner’s dorm room into a little office/warehouse space. I was so impressed by this young kid (I was a wise old 25 at the time), that I actually wrote a letter thanking him for the great job he was doing, and…I’m embarassed to say now, I told him that if he kept up what he was doing he was destined for far bigger and better things.

I kept on doing business with PCs Limited, and Michael Dell kept on doing what he was doing. I dont think he really needed my encouragement, but i have since told him that I thought his weekly full page ads with ever declining prices, changed the PC industry and were the first of many genius moves on his part.

Michael wasn’t the only smart one in those days.

One of the PC industry’s annual rituals was the Comdex trade show in Las Vegas. Every November, it was the only 3 days I knew I would get away and get a break from the office. It was work during the day. Visiting all the new technology booths. Trying to get better pricing from vendors. Trying to find out where the best parties were. If you could believe it, back in those days, the number one party was the Microsoft party. I sold some Microsoft products, so I could get in.

One particular year, I was on my way to having a memorable night. I had met some very, very attractive women (I swear they were). Got them some tickets to come with me to the big party. All is good. I’m having fun. They are having fun. Then we see him. Bill G. As in Bill Gates dancing up a storm. I’m a Bill Gates fan, so I wont describe his dancing, but he was definitely having fun.

At that point in time, Microsoft had gone public and Bill Gates was Bill Gates. If you were in the business you knew him or knew of him. The girls I was with were in the business. Long story short, I went to the bar to get some drinks for all us, I come back, they aren’t there. Come to find out the next day, Bill stole my girls. As I would learn later in life, money does make you extremely handsome.

Bill G also taught me a few things about business. Put aside how he killed IBM at their own game by licensing PC DOS to anyone that wanted it. What MicroSoft did to knock Lotus 1-2-3 and WordPerfect off their thrones was literally business at its best.

At that point in time, software was expensive. WordPerfect and Lotus 1-2-3 both sold for $495 and their publishers were proud of that fact. In order to be able to sell Lotus 1-2-3, you had to go to special training to become authorized. How crazy does that sound now going to a special class to be able to sell a spreadsheet. WordPerfect wasn’t quite as bad, but they had their own idiosyncrasies as well. Meanwhile, Microsoft was on the outside looking in. Excel, Word, Powerpoint were all far down the list of top sellers until lightning struck.

Microsoft decided to go against industry protocol and package those 3 programs as a suite and offer them as an upgrade to competitors’ products for the low, low price of 99 dollars. Of course you needed to have and use Windows for it to work, but in a time when people were buying new PCs with every dramatic increase in power and decrease in price, it was a natural move for us at MicroSolutions to sell the bundle. It made the effective price of the PC and software together far, far lower. We loved it. It also taught me several big lessons.

Always ask yourself how someone could preempt your products or service. How can they put you out of business? Is it price? Is it service? Is it ease of use? No product is perfect and if there are good competitors in your market, they will figure out how to abuse you. It’s always better if you are honest with yourself and anticipate where the problems will come from.

The 2nd lesson is to always run your business like you are going to be competing with Microsoft. They may not be your direct competitor. They may be a vendor. They may be a direct competitor and a vendor. Whatever they may be to your business, if you are in the technology business, you have to anticipate that you will in some way have to compete with Microsoft at some point. I ask myself every week what I would do if they entered any of my businesses. If you are ready to compete with Microsoft, you are ready to compete with anyone else.

Watching the best taught me how to run my businesses. Along the way I taught myself a few things those come next blog.

Success and Motivation, almost Part 2

Apr 25th 2004 2:42AM

This isn’t quite a continuation of part 1, but I happened to stumble across an interview I did last year for Young Money Magazine that covers a lot of the things that I probably would have included in part 2.

YOUNG MONEY TALKS TO CUBAN: During an exclusive interview with YOUNG MONEY, billionaire Mark Cuban shared his thoughts on using the fear of failure as a motivator, beating the competition, and why investing in the stock market may not be such a good idea.

YM: What is the key to recognizing a profitable business opportunity?

CUBAN: Knowing the industry very well. Most people think it’s all about the idea. It’s not. EVERYONE has ideas. The hard part is doing the homework to know if the idea could work in an industry, then doing the preparation to be able to execute on the idea.

YM: What personal characteristics should a person possess in order to become a successful entrepreneur?

CUBAN: Willingness to learn, to be able to focus, to absorb information, and to always realize that business is a 24 x 7 job where someone is always out there to kick your ass.

YM: Did you set career goals for yourself while you were in college? If so, what were they?

CUBAN: To retire by the age of 35 was my goal. I wasn’t sure how I was going to get there though. I knew I would end up owning my own business someday, so I figured my challenge was to learn as much as anyone about every and all businesses. [I believed] that every job I took was really me getting paid to learn about a new industry. I spent as much time as I could, learning and reading everything about business I could get my hands on. I used to go into the library for hours and hours reading business books and magazines.

YM: Do you consider yourself an innovator? Why?

CUBAN: No. I don’t really have new ideas, but I manage to combine information in ways most people hadn’t considered. They aren’t new ideas, it’s just that most people don’t do their homework about their businesses and industry, so there is usually a place to sneak in and do something a little different. You just have to make sure what you want to do can sustain a business and make it profitable rather than be a niche that can be crushed [by the competition].

YM: What advice would you give young adults just struggling to move up in the business world?

CUBAN: There are no shortcuts. You have to work hard, and try to put yourself in a position where if luck strikes, you can see the opportunity and take advantage of it. I would also say it’s hard not to fool yourself. Everyone tells you how they are going to be”special,” but few do the work to get there. Do the work.

YM: What types of opportunities would you pursue if you were starting over today? CUBAN: I just started a business called HDNet. There never is one area that has a door open to everyone. Try to find an area with something you love to do and do it. It’s a lot easier to work hard and prepare when you love what you are doing. YM: What would you tell entrepreneur hopefuls who are afraid of failing?

CUBAN: It’s good [for them]. I’m always afraid of failing. It’s great motivation to work harder.

YM: What is the most important piece of advice you could offer someone who’s just starting a business?

CUBAN: Do your homework and know your business better than anyone. Otherwise, someone who knows more and works harder will kick your ass.

YM: Did you have to sacrifice your personal life in order to become a business success?

CUBAN: Sure, ask about five of my former girlfriends that question… I went seven years without a vacation. (from the time I got fired from a job, and started MicroSolutions) I didn’t even read a fiction book in that time. I was pretty focused.

YM: Do you have any general saving and investing advice for young people?

CUBAN: Put it in the bank. The idiots that tell you to put your money in the market because eventually it will go up need to tell you that because they are trying to sell you something. The stock market is probably the worst investment vehicle out there. If you won’t put your money in the bank, NEVER put your money in something where you don’t have an information advantage. Why invest your money in something because a broker told you to? If the broker had a clue, he/she wouldn’t be a broker, they would be on a beach somewhere.

Success and Motivation – You only have to be right once!

May 30th 2005 1:46AM

In basketball you have to shoot 50pct. If you make an extra 10 shots per hundred, you are an All-Star. In baseball you have to get a hit 30 pct of the time. If you get an extra 10 hits per hundred at bats, you are on the cover of every magazine, lead off every SportsCenter and make the Hall of Fame.

In Business, the odds are a little different. You don’t have to break the Mendoza line (hitting .200). In fact, it doesnt matter how many times you strike out. In business, to be a success, you only have to be right once.

One single solitary time and you are set for life. That’s the beauty of the business world.

I like to tell the story of how I started my first business at age 12, selling garbage bags. No one ever has asked if I was any good or made money at it. I was, and I did…enough to buy some tennis shoes .

I like to tell the story of how I started up a bar, Motley’s Pub when I wasn’t even of legal drinking age the summer before my senior year at Indiana University. No one really asks me how it turned out. It was great until we got busted for letting a 16-year-old win a wet t-shirt contest (I swear I checked her ID, and it was good!).

No one really asks me about my adventures working for Mellon Bank, or Tronics 2000, or trying to start a business selling powdered milk (it was cheaper by the gallon, and I thought it tasted good). They don’t ask me about working as a bartender at night at Elans when I first got to Dallas, or getting fired from my job at Your Business Software for wanting to close a sale rather than sweeping the floor and opening up the store.

No ever asked me about what it was like when I started MicroSolutions and how I used to count the months I was in business, hoping to outlast my previous endeavors and make this one a success.

With every effort, I learned a lot. With every mistake and failure, not only mine, but of those around me, I learned what not to do. I also got to study the success of those I did business with as well. I had more than a healthy dose of fear, and an unlimited amount of hope, and more importantly, no limit on time and effort.

Fortunately, things turned out well for me with MicroSolutions. I sold it after 7 years and made enough money to take time off and have a whole lot of fun.

Back then I can remember vividly people telling me how lucky I was to sell my business at the right time.

Then when I took that money and started trading technology stocks that were in the areas that MIcroSolutions focused on. I remember vividly being told how lucky I was to have expertise in such a hot area, as technology stocks started to trade up.

Of course, no one wanted to comment on how lucky I was to spend time reading software manuals, or Cisco Router manuals, or sitting in my house testing and comparing new technologies, but that’s a topic for another blog post.

The point of all this is that it doesn’t matter how many times you fail. It doesn’t matter how many times you almost get it right. No one is going to know or care about your failures, and either should you. All you have to do is learn from them and those around you because…

All that matters in business is that you get it right once.

Then everyone can tell you how lucky you are.

from:
http://www.blogmaverick.com/2007/12/30/the-one-thing-in-life-you-can-control-effort/

The One Thing in Life You Can Control: Effort

Dec 30th 2007 10:57AM

I remember the time well. I was 27 years old.
I finally had my own apartment for the first time. I still hadn’t bought a new car yet, but I was jazzed that I had a 4 year old Mazda RX 7. 4 Years old was as good as new to me, and driving a gold RX 7 back in the day was fun as well.

I still bought my suits used, although by then I did have 1 new suit I had bought at Neiman Marcus because my girlfriend worked there and brought me to one of their year end employee discount deals.

My business, MicroSolutions was about 3 years old and I would make 60k dollars that year. HUGE money for me. Back then, getting paid your age was good, double your age was great. Around Christmas of that year, after many welcome hints from my then girlfriend, I decided to take every penny I had in my savings, $ 7,500 dollars and get engaged.

It was a beautiful ring that cost me exactly $ 7,500 dollars.

Long story short. I got engaged. She lost the ring a couple weeks after I gave it to her and before it was insured. We broke up. (the good news is that I was too young to get married and we are still good friends).

27 years old. Zero in the bank. Messed up in the head because of the breakup. The good news was that I had my business. The one thing that I could always focus on to the exclusion of everything else. A trait that would serve me well in business, but had more than a little bit to do with my breakup.

MicroSolutions was growing. But it could be doing better. The PC industry had gone through a major slump and pullback and the local area networking industry had yet to take off. If we were going to grow, it was going to take working hard and working smart.

It was right around then I heard something that I would hear a lot once I bought the Mavs.

In sports, the only thing a player or coach can truly control is effort. The same applies to business. The only thing any entrepreneur, salesperson or anyone in any position can control is their effort.

I had to kick myself in the ass and recommit to getting up early, staying up late and consuming everything I possibly could to get an edge. I had to commit to making the effort to be as productive as I possibly could. It meant making sure that every hour of the day that I could contact a customer was selling time and when customers were sleeping, I was doing things that prepared me to make more sales and to make my company better.

And finally, I had to make sure I wasn’t lying to myself about how hard I was working. It would have been easy to judge effort by how many hours a day passed by while I was at work. That’s the worst way to measure effort. Effort is measured by setting goals and getting results. What did i need to do to close this account. What did I need to do to win this segment of business. What did i need to do to understand this technology or that business better than anyone. What did I need to do to find an edge. Where does that edge come from and how was I going to get there.

The one thing in our business lives is effort. Either you make the commitment to get results or your don’t.

from:
http://www.blogmaverick.com/2008/01/02/the-best-equity-is-sweat-equity/

The Best Equity is Sweat Equity

Jan 2nd 2008 9:59AM

The Rules of Success

As MicroSolutions became more and more successful, and as I paid attention to the common traits of businesses that I saw succeed and those I saw fail, I came to realize that there are “Rules of Success” that I saw in companies that excelled. Where companies failed to follow those rules, inevitably, they failed. I found myself checking with “My Rules” before I made decisions. When I traded stocks or considered investments in companies, I applied The Rules to their business before I made a decision.

The Rules are not infallible. They have their limits. I’m an entrepreneur. My businesses have had hundreds and now more than a thousand employees. My world has been limited to starting, building, growing and running businesses that are never going to make the Fortune 500. My dreams were never to build the biggest corporation in the world. So, if you are a middle level manager in a Fortune 500 company, these rules may not help you manage your department. If you are the CEO of a Fortune 500 company with tens of thousands of employees, some rules will apply, some won’t, but where they will help you is to know how little guys coming out of nowhere are going to disrupt your business.

Where The Rules will help you is if you are considering starting, or currently run your own business. There are always exceptions to any rules, but I can assure you that those exceptions will be rare. Entrepreneurs that don’t follow the rules are far more likely to fail. There is no doubt about it.

So let’s start at the beginning.

Rule #1: Sweat Equity is the best start up capital.

The best businesses in recent entrepreneurial history are those that have been started with little or no money. Dell Computer, MicroSoft, Apple, HP and tens of thousands of others started in dorm rooms, tiny offices or garages. There weren’t 100 page long business plans. In all of my businesses, I started by putting together spreadsheets of my expenses, which allowed me to calculate how much revenue I needed to break even and keep the lights on in my office and my apartment. I wrote overviews of what I was selling, why I thought the business made sense, an overview of my competition and why my product and/or service would be important to my customers, and why they should buy or use it. All of it on a piece of yellow paper or in a word processing file, and none of it cost me more than the diet soda I was drinking while I was writing it up.

I remember the foundation for each of my businesses. MicroSolutions was very simple. To use microcomputers and software to help our customers become more productive, profitable and gain a competitive advantage. AudioNet, which became broadcast.com was simple as well: use the internet to enable real-time, worldwide communications of entertainment and business applications. HDNet is to create great entertainment, originated in High Definition format to allow our distributors to compete for the highest margin customers.

Once I could put the idea on paper, I gave the company a name. From there, I took the most important steps: I tried to find people to shoot holes in it. When we started AudioNet, I remember getting an appointment with Drew Marcus of Alex Brown (it could have been Larry, but I think it was drew , an investment banking company. Drew followed the radio industry and I wanted to see if there was anything he saw from his experience that would blow up the concept. He loved the idea. We took it to Dan Halliburton of Susquehanna Radio. He was an executive in charge of several Dallas area radio stations. We discussed how he could broadcast his stations over the Internet using AudioNet and reach the in office market where there weren’t many radios on desks, and few of those could pick up the AM signal of his stations. He loved it. I took it to Tim and Eric Crown, who ran a newly public company called Insight Enterprises. I asked them if it made sense to broadcast their quarterly earning conference calls over the internet so their investors and the research analysts who followed them could easily listen to the calls and get up to date information, or listen to an archive of the call if they missed it. They thought it would help them reach their Investor Relation goals less expensively.

Each step cost me next to nothing to get great feedback. Each enabled me to check the foundation of my business idea to see if it was easy to shoot holes in it, and most importantly, they all served as sales calls. Each company eventually became a customer of ours.

I went through this in each of my businesses. The step gave me confidence that my business idea was valid. That there was a chance of success. At this point, many entrepreneurs think the next step is to take all this feedback, update their 100 page business plans and go out and raise money. It’s as if the missing link for success in a business is cash to get started. It’s not. Far more often than not, raising cash is the biggest mistake you can make.

Most entrepreneurs tend to think in terms of what raising money means to them. How it can get them started? How many people they can hire? How much they can spend on office space? How much they can pay themselves? They forget to put themselves in the position of the person or company they are asking for money from. They think they are considering that person’s position by making up numbers and calling them expected returns for the investor. If you only give me X dollars, you will get X pct back in X years. You will double or triple your money in X years. Any investor worth anything knows you are just making these numbers up. They are meaningless. Worse, if you tell a savvy investor that the market is X billions of dollars and you just need one or some low percent to make zillions, you are immediately kicked to the curb.

These investors, including myself, know what you don’t, and they are not telling you. The minute you ask for money, you are playing in their game, they aren’t playing in yours. You are at a huge disadvantage, and it’s only going to get worse if you take their money. The minute you take money, the leverage completely flips to the investor. They control the destiny of your dreams, not you.

Investors don’t care about your dreams and goals. They love that you have them. They love that they motivate you. Investors care about how they are going to get their money back and then some. Family cares about your dreams. Investors care about money. There is a reason why venture capitalists are often referred to as Vulture Capitalists. The minute you slide off course from the promises you made to get the money, your dreams fall in jeopardy. You will find yourself making promises to keep investors at bay. You will find yourself avoiding your investors. Then you will find yourself on the outside looking in. The reality of taking money from non family members is that they are doing it for only one reason, to make more money. If you can’t deliver on that promise, you are out. You will be removed from the company you started. You will find someone else running your dream company. If this sounds like a scene out of the Sopranos or an episode you would watch on TV about a loan shark, you are right. The only difference is that it’s all legal.

There are only two reasonable sources of capital for startup entrepreneurs, your own pocket and your customers pockets. I personally would never even take money from a family member. Could you imagine the eternal grief and guilt from your mom, dad, uncle or aunt because you blew your nephews college money or the money for grandmas last vacation… I cant.

You shouldn’t have to take money from anyone. Businesses don’t have to start big. The best ones start small enough to suit the circumstances of their founders. I started MicroSolutions by getting an advance from my first customer of $500. The business didn’t grow quickly in the first couple years. We didn’t grow past 4 people in the first couple years, and we all worked dirt cheap.

So what’s wrong with that? It’s OK to start slow. It’s ok to grow slow. As much as you want to think that all things would change if you only had more cash available, they probably won’t.

The reality is that for most businesses, they don’t need more cash, they need more brains.

from:
http://www.blogmaverick.com/2008/01/06/success-and-motivation-dont-lie-to-yourself/
Success & Motivation: Don’t Lie to Yourself

Jan 6th 2008 12:12PM

Mar 18th 2006 12:41AM

May 20, 2005

December 26, 2006

from:
http://andrewchen.typepad.com/andrew_chens_blog/2007/02/10_ways_to_chec.html
http://andrewchen.typepad.com/andrew_chens_blog/2007/02/verifying_start.html

10 ways to verify assumptions

I recently blogged about one of the websites I worked on straight out of college, and the lessons I learned about verifying assumptions early on.

Let me give you 5 customer-centric questions and then 5 business-model centric questions. These are all things you should be working on before, or along side, development of your consumer internet product.

1. Who is your product is for?
2. What is the context of your customers’ world?
3. What motivations and values do they have behind their actions?
4. When potential customers see your product, what happens?
5. Do you talk to your customers every day?

6. What is the “core mechanic” (or minimum feature set) of your product?

7. What factors can kill your business model?
8. How do you acquire users? Can you make an existence proof?
9. How do you make money? Can you make an existence proof?
10. What technology do you depend on? Can you prove it can work?

Verifying startup assumptions, Part 2

I recently blogged on 10 ways to verify assumptions around your startup project, but left the details as an exercise to the reader. I wanted to add a couple notes to what I wrote…

Notes on customer-centric questions

1. Who is your product is for?
2. What is the context of your customers’ world?
3. What motivations and values do they have behind their actions?
4. When potential customers see your product, what happens?
5. Do you talk to your customers every day?

In general, I found that when I was busy failing left and right on my various projects, a big chunk had to do with misguided assumptions about who users were, and why they would be interested in my product. In general, if you’re not declaring a target customer for yourself, and thinking about how to approach them in the best way, both from a marketing and product standpoint, then you’re not thinking about your user enough.

Are you building tagging/social networking/whatever for no reason?
One thing I did was build BitTorrent into a couple projects when it probably didn’t need to be there. Another example is building “tagging” or some other Web 2.0 functionality. Why are you building it? Is it really better for the customer? Or is it just something “cool” you wanted to add in? When you let the product and the technology drive the experience over what the user wants, then you are really shooting yourself in the foot.

Are you forcing things that don’t go-with-the-flow for users?
Another common thing that happens is, you want to develop feature X because it’s cool, but maybe it makes your user experience less convenient. “Oh, what the hell,” you say. This is bad. So if you are building a client that needs to be downloaded, rather than putting things in the browser, that’s bad. Or if you are doing something like tagging when simple categorization will suffice, that’s bad too. Remember that eBay got to many many billions of dollars on a stupid categorization scheme, and Yahoo did too.

Are you building a fashion website but you’re a poorly-dressed nerd?
I am, and personally know, lots of nerds building shopping sites for women. Even TechCrunch has an article about it. If you’re building a website for a completely different audience than you, then you need to understand you’re going into uncharted territory. Are you talking to your target market every day? Ideally one of your co-founders is a girl/old-guy/teenager/Mormon for your girl/old-guy/teenger/Mormon social-networking website? Because if not, you are forcing an entire world of assumptions into their world. This is very hard, and I’m glad I tried to do it, because it didn’t go so well and I learned a lot about how the world works

Notes on product and business model questions

6. What is the “core mechanic” (or minimum feature set) of your product?

7. What factors can kill your business model?

8. How do you acquire users? Can you make an existence proof?

9. How do you make money? Can you make an existence proof?

10. What technology do you depend on? Can you prove it can work?

These questions really kill me, because even if you get the user stuff vaguely right, you can still fumble things by getting too structured when developing your product. I think these questions are all about being “lazy” to the extent that you build whatever is the simplest thing that could possible work, and you try it out. Then rinse and repeat.

What’s the stupidest, smallest incarnation of your product?

Everyone knows eBay, which is a big complicated beast with lots of auction models, specialized categories, metadata, attributes, etc. But before you try and build that, what is the “core mechanic” of eBay? You could argue that it’s really just a test of whether or not people want to put product listings in a forum. You might even argue that the auction piece of it is extra, which Craigslist pretty much proves.

So take your product, remove the user authentication (use e-mail or something else instead), remove the fancy tagging and extended profiles, take it all out. What’s the thing that people spend 99% of the site doing? On MySpace, it’s messaging and browsing profiles. On YouTube, it’s viewing a video. On World of Warcraft, it’s walking around and clicking on things. Once you get the 5 minute “loop” of the core mechanic right, then extend it out with all the fancy stuff. But if you focus on the profiles, tagging, social networking, and other fancy features, and then have a crappy core mechanic, you’re screwed.

In fact, a rule of thumb should be that you can prototype the core mechanic within a week or two at MOST. Most people think in months, but you should think in days.

Where do your users live? Can you get a couple of them to fill out a form?

One other issue I wanted to touch on is the tactics of reaching out to users. I think nerdy, product-centric people like me typically focus on the technology and not on the people, which is a huge mistake. There are lots of ways to make sure you can tap a willing-and-able audience for your site. Here are two variations…

First, there’s the beta-signup page. Make one up that articulates the offer, and asks them to put in an e-mail address to get announcements when the site is done. Maybe put in a text field that asks them why they are excited. This will take you an incredibly short amount of time. Now go get some traffic from your site – from blogs, forums, Google Adwords, etc. Track your conversion rates, so that you know how many people are actually interested. Theoretically, if your site is awesome, people will want to sign up, and they might even forward the URL to their friends too! But, if your conversions suck and the people fill out weird things, you’ll have learned something.

Another option is just to hook up a SurveyMonkey landing page to Google, and ask your users a bunch of random questions. Do they want to upload videos of them dancing? Do you have a webcam? Do you spend money on shoes online? (Or whatever) This is NOT a replacement for qualitative interviews with your user market, but you can learn a thing or two. You can verify a couple assumptions around issues like, how much of the MySpace crowd has a webcam to shoot  videos? This can be life and death for your little project.

Go collect those startup scars

I’m just pontificating off of random scars I’ve picked up from starting projects, and I’m sure very smart, intelligent people have had different experiences. The most important part is to start trying, as often as you can, and learn your own set of heuristics at evaluating these situations. A couple have really stuck with me because of my product/technology-bent, but if empathizing with customers is your thing, you’ll learn a whole set of other interesting things about the product side.

from:
http://andrewchen.typepad.com/andrew_chens_blog/2007/05/how_to_fool_vcs.html
http://andrewchen.typepad.com/andrew_chens_blog/2007/05/how_to_fool_vcs_1.html
http://andrewchen.typepad.com/andrew_chens_blog/2007/05/how_to_fool_vcs_2.html
http://andrewchen.typepad.com/andrew_chens_blog/2007/06/how_to_fool_vcs.html

How to fool VCs into thinking you have traction, Part 1

In the Web 2.0 world, people love to quote user numbers, whether they are 50k or 50 million. These numbers are incredibly valuable, as they drive press buzz and even venture capital valuations!

Web statistics are often meaningless
At Revenue Science, a company that taught me everything I know about advertising and much more, I helped strike a deal with Nielsen which got me a bunch of deep understanding about measurement on the web. The truth of it is, there are deep nuances in the way that people use and quote statistics on the web, particularly when it comes to issues like “unique users” and “pageviews” and “sessions,” which are terms without standard definitions. I recently wrote about Alexa, which goes into some of these issues, which you can read: Are you misusing Alexa numbers? (probably)

Lies, damned lies, and web statistics
In the current Web 2.0 market, you can pretty much say the following:

User Traction = $$$

I guarantee that if you have 100k users, are showing some growth, you can raise venture money right now.  And in fact, your page stats will serve as the “comp” to value your company. Thus, it becomes very important to understand how to represent your site’s statistics – failing to do so will cost you real money.

Future blogs on this topic
Just off of a quick brainstorm, I have a couple ideas for what I want to write about. They are included at the end of this blog. In analyzing each technique, I’ll try to answer the following questions:

1. How does this technique help you bend the rules?
2. What should the stats really be?
3. How do you ask the right questions to see past the distortion?

I will write about the following techniques:

• Widget pageviews versus destination site pageviews
• Automatic page refreshing
• “Standards” and metrics like date ranges
• Counting hits versus pageviews versus ad impressions
• Search engine marketing
• SEO and page proliferation
• TechCrunch and other one-time traffic spikes

I’ll write the first one before Monday.

Shoot me a note at voodoo [at] gmail [dot] com if you think I’m missing any interesting techniques, or if you have questions or comments.

How to fool VCs into thinking you have traction, Part 2

In my last blog, I argued that that web stats are often meaningless, and can be used to fool people (in particular VCs) into thinking that you have traction when you really don’t.

In this first blog, I’m going to talk about Widget pageviews versus destination site pageviews.

Here’s what you say
When people ask you what kind of traction you have, this is what you say:

“Last month, we got 30 million pageviews and 5 million unique users.”

These are great numbers! You can then show them a graph that looks like a hockey stick, and have people multiplying CPMs by the pageviews to get big revenue numbers.

The reason why this argument is so incredibly compelling is that it’s easy to think that big numbers equals big traction. Between that and showing them a hockey stick graph, it’s easy to get seduced into thinking you have a huge company right away.

What’s weird with these stats?
Although these numbers can look great on paper, they represent a potential landmine for people who aren’t doing their math.

What’s misleading?
Ultimately, a widget pageview is not the same as a pageview on your site.

When you tell someone that you have 30 million pageviews on your site, it’s valuable for a number of reasons:

• It shows that users are engaged with your property
• You own real estate on your property where you can place ads
• Normal “comps” to calculate value, like multiplying against a CPM or calculating a $/user value, all sounds great

The problem is that for a widget site, you have the opposite reaction:

• Users may not be engaged with YOUR property, they are engaged with MySpace’s
• You don’t own any real estate to place ads – and if you did, they might cut you off
• You can’t multiple the pageview numbers by standard revenue multiples, since the pageviews and users may not really be yours in the first place

That sucks! That means that the % of users that exist in widget form may never be monetized – or if it is, it will be at a substantial discount to your CPMs. For more on widgets ad impressions, I wrote a previous blog on the topic called “Widgets = Ad Networks”.

How do you figure out the truth?
To avoid being seduced by the huge numbers, just ask the simple question:

How much of the 30 million in traffic comes from widget pageviews versus pageviews on your destination site?

If you get them to answer that breakdown, then you can ask a couple follow-on questions to show that you get how widgets fit into their marketing strategy:

• How well are you retaining users on your destination site? How often are they coming back?
• Where are the widgets placed? Are you concentrated on one partner? (uh oh!)
• How much of your destination site traffic comes through links on your widget?
• What happens if your widgets all go away? Does your destination site still survive?
• What are the CPMs on your destination site?
• Do you have ads on your widget? If not, do you plan to? How will the underlying platform respond to you monetizing their traffic?

Ask these questions, and you’ll figure out how dependent they are on their potentially hostile partners. Furthermore, you’ll figure out a bunch on how smart they are about “quality of traffic” and the difference in monetization rates between their destination sites and their widget business.

Conclusion
Overall, this is a very effective way to fool people into thinking you have a lot more traction than you really have. A lot of social networking sites have between 50-150 pageviews PER SESSION. If you can pass these pageviews off as your own, you are probably going to inflate your valuation by 3-5x. Pretty sweet.

How to fool VCs into thinking you have traction, Part 3

This is the 3rd article in a multi-part blog. Here are quick links to Part 1 and Part 2.

Today, we’re going to talk about using automatic page refreshing and other navigational tools to generate extra pageviews for every user, whether or not they are really using the site.

Here’s what you say
When people ask you for what kind of traction you have, this is what you say:

“Last month, we got 30 million pageviews – and wow were people engaged. We had an average of 40 pages per session!”

These are great numbers, particularly the engagement factor of many pageviews in the session. These are the kind of stats VCs are looking for when they think about the scarcity of attention. This is particularly true when you show them the hockey stick that’s driven by all these sticky pageviews.

If you need an example of why VCs value stickiness, just check out the excellent blog from First Round Capital on the subject, called “Catch and Release Business Models”. Basically, their view is that more pageviews per session is a proxy for more passionate users, which means more viral, and better growth, etc.

What’s weird with these stats?
Of course, these stats could look great on paper, but in fact they be caused by a number of negative factors which have been documented in the past, particularly two:

1. Inefficiently designed navigation that causes pageviews
   (See the MySpace analysis, called “The Click Factory”)
2. Automatic page refreshes which generate garbage pageviews
   (See the analysis on Drudge report in Valleywag)

In both of these cases, users are NOT more engaged, yet generate garbage pageviews that are hard or impossible to monetize. So while a simplistic analysis would just multiple the 30 million pageviews by a comparable CPM, the smart money would figure out how sticky or wasteful the pageviews are, and discount it accordingly.

The second problem of automatic page refreshes is a particular problem for news sites, where it’s gray-line justifiable. Oftentimes, this encourages people to stretch it a little further than they need.

On the flip-side, of course, this is the hidden downside of heavily AJAX-y sites that do everything very efficiently. Realize that early on in the process, a site like that might be decreasing their overall pageviews by close to 50%. That’ll generate a huge hit to the startup’s valuation. It’s advantageous for everyone to be educated on this topic, and the pluses and minuses.

How do you figure out the truth?
To understand if these numbers are being inflated, you really have to break down the source of the pageviews on the site. You should ask:

“When users come to your site and expend 40 pages per session, break down what is happening on the 40 pages. What pages are spent on the automatically refreshing news page, versus commenting, versus other activities on the site?”

You typically want to make sure you are separating engagement from the stickiness of the site. Some of this stuff cannot be faked. For example, here are questions that go directly to stickiness:

• How many users come back every day? Every 2 days? Every week? Every month?
• How long do you retain users over time?
• What percentage of your registered userbase is active?
• How many friends do most people have? How many articles do your users forward on?

If you ask these questions, you’ll get much more information on how people use the site, rather than relying on a simple metric like pageviews/session. You’ll also get a good understanding of how well they can interpret past their metrics into the behavior of the users, and why the users are acting different ways.

Onwards…
In my next article, I’ll be covering how people fiddle around with the definitions and standards around pageviews, uniques, and other numbers to inflate their numbers. Stay tuned!

How to fool VCs into thinking you have traction, Part 4

OK Go with point #3
Finally, here’s point 3 of a multi-post series on the question, “How can you fool VCs into thinking you have traction?” Here are links to older posts:

• Introduction
• Widget pageviews versus destination site pageviews
• Automatic page refreshing
• “Standards” and metrics like date ranges
• Counting hits versus pageviews versus ad impressions
• Search engine marketing
• SEO and page proliferation
• TechCrunch and other one-time traffic spikes

“Standards” and metrics like date ranges
Today, we’re going to talk about manipulating standards and metrics – in fact, let me roll in hits versus pageviews and ad impressions, since it’s all part of a similar issue. Basically this sleight of hand has to do with the fact that people treat $0.99 as much cheaper than $1 when they are both only a cent off. So if you pick the right metrics to measure yourself by, you can get a big boost in credibility.

Here’s what you say
When someone asks you what kind of traction you’re seeing, say something like this:

“Since we started public beta, we’ve served over 300 million ad impressions on the site”

I also love “peak” numbers or “run rate” info:

“We currently have a peak run-rate of 240 million pageviews”

This sounds great right? It’s actually more complicated than that.

What’s weird with these stats?
Even though they are a bunch of equivalent numbers, people really perceive the bigger numbers a lot differently than the smaller ones.

What’s misleading?
People don’t have a good sense of the ratios to translate between these numbers – some numbers sound bigger than they really are!

What’s a typical set of ratios? Every site is different, but these would all be reasonable:

• 1 registered user = 10 unique users
• 1 user = 10 pageviews
• 1 pageview = 2 ad impressions
• 1 pageview = 10 hits (or transactions)
• 1 dollar = 1000 ad impressions

What this means is that rather than giving a number like 500k registered users, you could in fact give a number closer to 500k x 10 x 10 x 2 = 100 million pageviews. And if your site is growing 20% a month, growing 500k users 20% a month is a lot less impressive sounding than 100 million pageviews growing 20% a month.

Even worse is giving someone a dollar amount for your advertising. 100 million pageviews doesn’t sound so great when it’s monetizing at $1 CPM or less.

Another way to compound this is by giving big numbers based on non-fixed time intervals. For example:

• “We’re hitting a run-rate of 100 million pageviews”
• “Our peak run-rate is 200 million pageviews”

This also includes what I wrote about earlier with “Since we did X, we got Y.” It’s very confusing what these numbers entail. If you wanted a great peak run-rate number, just take the HIGHEST number of pageviews you’ve ever had in ANY time interval – let’s say the 10 minutes right after you get a Techcrunch spike, and multiply that out to a month. You’d get a ridiculous number.

How do you figure out the truth?
It’s hard to figure this stuff out, but ultimately you want to heavily bound the problem. Rather than waiting for them to spit out a crazy metric, instead you should ask a very specific question:

“In the last month, what did your analytics tell you in terms of # of pageviews to the site?”

Asking a question like that, and not accepting a cryptic number, will give you the best chance at understanding what’s really happening on their site.

Ideally, you want to be able to open up their metrics and understand:

• How long is the average session length?
• How many unique users come to the site per month?
• How many pageviews did the site receive?
• How many ads are on each site?
• What’s the average CPM of the site?

The trick, of course, is understanding what typical metrics might look like for each of these.

The best case scenario is when you’re doing something a little weird and not a typical consumer internet site. For example, if you have a publisher ad network, you’d roll up a bunch of stats from sites you really don’t own or control. Or just disclose certain stats (like peak stats) but not the rest.

from:
http://www.briannorgard.com/?p=17

Focus as a Core Competency

Entrepreneurs by nature are inquisitive animals. They like to tinker. They like to dream. They like to explore.

The problem is, all of that passion can sometimes cause a lack of focus. How many entrepreneurs do you know have 2-3 half finished projects (I am one of them)?

Speaking with a friend the other night, I was pointed to this quote from Nick Peters:

Don’t scatter your resources among many mediocre ideas. Instead focus on one great idea and do it well. This will put you at a competitive advantage.

This got me thinking. Usually core competencies are relegated to some specific business or technical niche. However, a maniacal sense of focus is a competitive advantage unto itself. Going into hiding and focusing on nothing but the task at hand is often the difference between success and failure. The top entrepreneurs that I know have an amazing ability to tune out the noise.

Stop reading TechCrunch and the WSJ for 3 weeks and focus. See what happens.

from:
http://www.briannorgard.com/?p=49

Pitching 101