The Wit and Wisdom of Scott Cook

Intuit's mini-conference on "Startups and the Cloud," which I wrote about here, featured a lively Q&A session with Scott Cook, Intuit's founder and chairman of the executive committee. Scott—who impressed me as knowledgeable, personable, and down-to-earth—offered a couple of sage remarks I particularly liked.

"Familiarity is 90% of ease of use."

Scott talked about the pains Intuit went through, especially in the early days, to eliminate complexity from their products' user interfaces. Convincing novice computer users to adopt Quicken as their tool for managing household finances was quite a challenge, particularly back in the days when an unformatted floppy drive could flummox a new user. (Intuit's solution: never tell the user the floppy drive is unformatted. Format the drive automatically, and let the user get on with his or her work.)

On a quest for usability, Intuit bought the rights to the interface of another product that was already popular and easy to use. Intuit engineers copied that other product's interface, pixel-by-pixel, and built it into a new version of Quicken.

"Familiarity is 90% of ease-of-use." If an interface design is already familiar, users don't have to think about using it. They simply use it and get on with their work.

I think Scott's advice about familiarity is spot on. Don't try to be overly creative or clever with your UI. When it comes to UI design, simplicity and familiarity are the cardinal virtues.

Later in the Q&A session, Scott Cook said this:

"Behind every successful entrepreneur, you'll find a supportive spouse and a couple of very surprised in-laws."

That remark rang true, too, and made me chuckle.

What Cloud Computing Offers Startups, Part 2

In a previous post, I discussed the operational and financial benefits of cloud computing for start-ups. Today I'd like to discuss another benefit that's just as important, and that has far-reaching implications for the direction of IT development in the coming years.

Cloud computing makes it easier than ever for software companies to deliver innovative, business-critical services to Small and Medium-sized Businesses (SMBs).

Until recently, most software start-ups avoided the SMB market. Selling products and services to SMBs seemed daunting for several reasons:

• Limited Budgets: SMBs are well known for having spartan IT budgets. Beyond buying basic networking gear, Microsoft Office, and perhaps an accounting system, a small business may make hardly any IT investment at all. Even larger, mid-sized businesses tend to be conservative spenders, leery of risk and demanding a clear ROI from a new product—even though it's often difficult or impossible to demonstrate an ROI with a brand new product.
  
• Distribution Overhead: Reaching SMBs has traditionally required a channel (e.g., a distributor who served SMBs in a given area or industry) or, worse, many channels and lots of advertising. Channels require a lot of attention in the form of training and support, and they take a bit out of a start-up's profit margin.
  
• Deal Flow: To achieve sufficient revenue, a start-up would need to close tens or hundreds of small deals to equal the same amount of revenue possible from one or two large enterprise sales. With limited staff, attention, and marketing funds, most start-ups (with the hearty encouragement of their investors) have preferred to pursue opportunities in the enterprise market.
  

But in the past couple of years, cloud computing has knocked down all these barriers. In fact, cloud computing solutions often start with the premise that the customer has limited time and money for managing complex, but important IT operations. The cloud computing vendor rushes in as the SMB hero, managing everything behind the scenes, while offering the customer an easy-to-use, comforting Web interface.

Old Obstacle	Cloud Computing Solution
Limited Budget	Cloud computing solutions, such as SaaS applications or hosted storage, can be delivered cost effectively. There's no need for on-premises hardware and time-consuming installation and configuration services. Customers buy just what they need, when they need it. Delivery on popular platforms such as Force.com and QuickBase greatly reduces customer-acquisition costs, which normally the vendor would have to pass along to the customer.
Distribution Overhead	Cloud computing services are marketed, sold, and delivered over the Web. Customers can discover point solutions built on cloud platforms offered by vendors they already know and trust (e.g., Amazon, Intuit, Microsoft, Salesforce.com). There's no need for a large sales team and offices scattered around the country, nor is there a need to sign on and train large numbers of resellers. Sales and marketing take place online.
Deal Flow	Through promotion in established platform communities, as well as through viral marketing, blogging, and targeted marketing efforts, vendors can find tens and then hundreds or thousands of new customers. At a time when enterprises are cutting their IT budgets, reaching SMBs who are looking for cost-saving, operational improvements and strategic advantages offered through new capabilities, seems like an attractive idea.

Cloud computing has changed the nature of the typical start-up. Instead of a capital-intensive organization building "enterprise-class" solutions for large companies, today's start-up is more likely a small, nimble team, taking full advantage of the economies offered by platforms like EC2 and open source, and delivering online services that are valuable to companies of all sizes—even another five-person company down the hall.


Photo of man and clouds by donabelandewen, Creative Commons License, some rights reserved.

What Cloud Computing Offers Startups

At the Intuit's mini-conference on "Startups and the Cloud," the discussions, which varied from investment to technology, repeatedly raised the question of what advantages, if any, cloud computing offered startups.

To answer that question, we need to know what cloud computing is. I'm going to borrow the definition developed by NIST, which Longworth Venture Partners analyst Vishy Venugopalan cited in his overview of cloud computing, which kicked off the day's events:

Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, storage, servers, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.

Five or ten years ago, it was not uncommon for a newly-funded start-up to spend tens or hundreds of thousands of dollars on infrastructure. Servers, disk arrays, back-up power supplies, management and monitoring software, an air-conditioned room with a raised floor—the list of capital expenditures could be impressive, and this investment needed to be made before engineers could begin any significant work developing products.

Cloud computing changes all that: it minimizes infrastructure investments, so that companies only need to invest in IT services when they're needed.

Cloud computing eliminates the need for that air-conditioned room filled with expensive server racks. It eliminates the need for the local IT manager to watch over them. And it shortens the management team's list of headaches, by sparing them the details of back-up tapes and server upgrades. IT can be provisioned cheaply and immediately—today, this afternoon, now, and development can begin right away.

Todd Hixon from New Atlantic Ventures put it this way:

Cloud computing gives you a sandbox for delivering solutions while assessing demand. It enables you to avoid needless investment in infrastructure.

Jeffrey Beir from North Bridge Venture Partners agreed:

Cloud computing allows developers to focus on the IP (intellectual property) that's unique to them.

After all, it's that unique IP that's ultimately going to make or break the company. It's the unique IP—not a rack of Dell servers in a computer room—that's going to be the quintessence of the start-up's brand, differentiating the company from the hundreds of other start-ups and thousands of larger companies already crowding the market.

By minimizing infrastructure costs and infrastructure management costs, cloud computing enables young companies to spend its precious capital on what's most essential. For young companies in this time of tight budgets and hard decisions, cloud computing is a financial and operational boon.

The Six Traits of a Fundable Entrepreneur

Yesterday afternoon in Waltham, Massachusetts, Intuit hosted on a mini-conference about the opportunities that cloud-computing offers start-ups. "Startups and the Cloud" proved to be an engaging event, packing a small auditorium on the campus of Bentley College. Sessions ranged from Longworth Venture Partners' Vishy Venugopalan's overview of the cloud computing marketplace to an open Q&A with Intuit founder Scott Cook to panel discussions with venture capitalists and CEOs about cloud computing and the changing economic environment for young companies.

The venture capitalist panel featured a seasoned team of investors:

• Jeff Bussgang from Flybridge Venture Partners
  
• Jeffrey Beir from North Bridge Venture Partners
  
• Todd Hixon from New Atlantic Ventures
  
• Shawn Broderick from
  TechStars
  

This group offered much wit and wisdom on a variety of topics. For now, I'll simply offer their composite profile of a fundable entrepreneur.

In response to a question from the audience, the panel offered this list of traits that they look for in an entrepreneur:

• Passion
  
• Domain expertise (the entrepreneur knows his or her area thoroughly, and isn't just coming up with an idea in response to a news story, for example)
  
• Unfair advantage (something that gives this team of entrepreneurs a sustainable head-start in the market)
  
• Street smarts (knowing how to get things done in difficult situations)
  
• A whip-smart mind
  
• Salesmanship
  

And Shawn Broderick offered this observation, which deserves to be mounted on a plaque over every entrepreneur's desk:

"Execution is insanely important."

Good CEOs May Lack Empathy, But Their Companies Depend on It

In a recent column, New York Times columnist David Brooks summarized recent research that found that successful CEOs were usually not empathetic, novel-reading, team-oriented people. On the contrary. The research—conducted by Steven Kaplan, Mark Klebanov and Morten Sorensen and published in a report called "Which C.E.O. Characteristics and Abilities Matter?"—found that people skills were overrated for CEOs.

"They found that strong people skills correlate loosely or not at all with being a good C.E.O. Traits like being a good listener, a good team builder, an enthusiastic colleague, a great communicator do not seem to be very important when it comes to leading successful companies.

What mattered, it turned out, were execution and organizational skills. The traits that correlated most powerfully with success were attention to detail, persistence, efficiency, analytic thoroughness and the ability to work long hours."

So, can we throw empathy out the window? Not at all.

Empathy is vital to any company's success. Empathy underlies every successful customer interaction, even if it doesn't play an obvious role in some high-level decision making. Ignore the customer requirements in product design, or continually snub customers on the phone, and a company will find itself in trouble, even if it has a remarkably efficient, highly analytical CEO.

Take the case of Apple. Apple products are so attractive and easy to use, people flock to stores to buy them as soon as they become available. In surveys, Apple's customer service consistently beats out that of rival PC makers. And Apple's commitment to empathy is perhaps nowhere better expressed than in the Genius Bar, a walk-up help desk you'll find in every Apple store. At the Genius Bar, helpful Apple employees will listen to you describe your problems with an Apple product and try to resolve them—for free, unless the product requires a physical repair.

Apple is truly an empathic company. Empathy—expressed through great product design and great customer service—is an essential element of its success.

Yet Apple's CEO is, shall we say, not always known for his calm, patient, empathic demeanor. This hasn't slowed Apple one bit. Steve Jobs has always been passionate about building insanely great products for customers and serving customers well (even if the company has made a few misjudgments in this area over the years). He clearly values empathy, even if he doesn't always embody it himself. He pushes the people around him to serve their customers well—and they do.

So while it's true that organizations often take on the character qualities of their leaders, it's also true that a CEO with a cut-and-dried, even brutal leadership style can build and lead a successful, highly empathic organization.

Empathy photo by Pierre Phaneuf, Creative Commons License, some rights reserved.Apple Genius Bar photo by maebmij, Creative Commons License, some rights reserved.

Content Is Still King in IT Marketing

Another finding of the TechTarget/Google research I mentioned in yesterday's post, was that content is still king when it comes to marketing and selling SMB and enterprise IT solutions.

White papers, email newsletters, and case studies still play important roles in helping customers understand technology and best practices, and in helping customers with choose one product over another.

Customers look for different types of content in different stages of the purchasing process.

White papers are important in the awareness and consideration phases of purchasing. They're much less important in the final decision-making stage. By then, customers are interested in product comparisons, case studies, and, above all, trial software.

The table below describes how customers use various types of content. (For an explanation of these phases, see yesterday's post.)

Content Type	Purchasing Phase
Postings in online communities	Awareness Consideration
Email newsletters	Awareness Consideration
White Papers	Awareness Consideration
Case Studies	Awareness Consideration Final Decision
Product Literature (e.g., Data Sheets)	Consideration Final Decision
Online Vendor Demos	Consideration Final Decision

One conclusion from this study: Social media, however popular, doesn't eliminate the need for traditional marketing, when it comes to selling sophisticated IT products or products in highly competitive markets.

Google/TechTarget Research Ties Keyword Search Terms to IT Purchasing Cycles

One of the more interesting insights presented by TechTarget at this week's ROI Summit in Newton, MA, was this:

IT purchasers change their search terms as they move through a multi-month purchasing process.

TechTarget reached this conclusion after undertaking an extensive study with Google of 2,200 professionals who play decision-making roles in IT purchases.

Phase I: Awareness
TechTarget and Google found that IT purchasers begin by searching for information about an issue or problem (e.g., data leak protection or VoIP quality).

Searches might include keywords such as "risk," "troubleshoot," and "optimize."

Phase II: Consideration
Once IT purchasers are familiar with the nature of the problem and the types of products available to address it, they begin searching for information about specific products and solutions.

Keywords might include the word "solution," as well as specific brand names.

Phase III: Decision
Finally, as they focus on a few key vendors in preparation for making their final purchase decision, they search for information comparing one product to another. They no longer search for general information about the problem; they understand the problem well and want detailed information about product capabilities, strengths, and weaknesses.

Searches will likely include product names and the word "comparison."


The Changing Prevalence of Search Keywords in IT Purchasing Cycles

The chart below shows how keyword searches evolve across the three phases of the purchasing cycle: Awareness (of a problem), Consideration (of various approaches to solving the problem), and Decision (as to which product to choose).



Conclusion for marketers: Make sure you have content and search keywords that address each phase of the buying cycle.