Patents...

I came across a great post on Josh Kopelman's blog the other day regarding the value of Patents. It was really enlightening from a first-time entrepreneur's perspective, as I used to think that the 'patent pending' stamp meant a lot.

Kopelman founded Half.com in 1999 and sold it to eBay in 2000. The patent that Half.com applied for in 1999 was issued just recently, 8.5 years later. He goes on to discuss the long waiting time, currently averaging 4+ years, in the patent approval process. Given that even a month is a very long time in the tech industry, you need to make sure that you have other ways to protect your IP and other forms of competitive advantage. Indeed, it is crucial to apply for patents early (if you don't someone else will and then take you to court 8 years later for using 'their' technology) but it is important that you evaluate how important that patent will be in determining your success.

I really liked the analogy that Kopelman uses from Fred Wilson's Blog:

"Patents are like nuclear bombs, you just got to have some". But if you're fighting a war today, it's better to count on weapons you have at hand today -- don't rely on a nuclear program that could take five years to come to fruition.

Volunteer Groups- a Test of Your Management Skill

In this post I will discuss some thoughts on good management (which I think of as the ability of a person to motivate others to work productively to achieve desired outcomes), as well as an exercise to develop strong management skills

In business, problems of motivation can be overcome to a significant extent by monetary compensation; people who get more burdensome tasks with longer hours can be convinced to stay and do the work by way of larger compensation packages. If the boss drops the ball, employees aren't all that concerned about it, as long as they get their paychecks in the foreseeable future. Bonuses, overtime pay and stock options can be used to get people to give it their all and make sure the work is done. While I agree that these compensation schemes have been proven over time to be very effective, I contend that they can become somewhat of a crutch for managers and that they fall outside the realm of good management. This is because these schemes fail to address intrinsic motivations (a person’s internal desires for accomplishing the goal for the sake of it) and fail to make people work to their full potential. With this crutch it is difficult to say that one’s management skills are tested fully in the corporate environment.

Successful Volunteer Groups, however, are unable to rely on financial compensation to motivate people to offer their time and effort. Given the lack of extrinsic motivators in these groups, a very interesting question we must ask is: how do leaders in these organizations leverage intrinsic motivations to achieve organizational success? I believe that answering this question is the key to understanding what good management is. I'll quote my good friend Stu Stein on why I believe that this is so- "if you can motivate people to work for your cause for free, imagine what you could get them to do when you start paying them."

Some close friends in Volunteer Groups and I have spent much time discussing our HR issues and have found that certain practices have stood out as good management practices in volunteer groups, all addressing team members' intrinsic motivations:

1. Hiring/accepting people with strong intrinsic motivations. These motivations may be different for each person but the importance is that they WANT to help achieve something that the organization values because they believe in it.
2. Relate to people on the team on a personal and professional level. A key to understanding intrinsic motivations is to better know the person and how they work/think. This information is critical when the time comes to align interests. Socialization within the organization is a great way to create a culture through which managers can learn about people on their team.
3. Set the Vision, Mission and Values. Though these are overlooked in ordinary businesses (and not taken seriously by anyone who’s taken a management class that makes a mockery of this concept), this is crucial when it comes to intrinsic motivations. Each person has a different desire that they prioritize but if the team agrees to a common set of VMMs, the priorities will set themselves.
4. Make sure each person feels valued. You can’t compensate them with bonuses so you need to reward achievement and effort by recognizing it.
5. Flat structures. Utilize peoples’ intrinsic motivations to allow them to innovate- let them be the drivers of their own projects.

As you can see, the complexities of Volunteer Groups and the issues that their managers face make them an ideal ground to develop practical management experience. It is especially a good experience for aspiring entrepreneurs, who often don't have the resources to use money as a motivator for people to work for them.

Asking the Right Questions

This is a great follow up to the previous post about choice and product design. This video features Malcolm Gladwell, a social psychologist whose work has contributed to a plethora of subjects (teachers in 4 of my classes assigned readings from his works) and who was among Time’s 100 most influential people.


The main subject of his talk is how Howard Moskowitz reinvented product development in the food industry. Moskowitz had been hired to determine what the ideal level of sugar a new Pepsi drink was supposed to have (somewhere between 8-12%). What one would ordinarily do is make a bunch of different batches with different levels of sugar, increasing in small increments, and survey a large sample of people to find the 'ideal' level of sugar. However, this experiment seemed to produce no statistically significant result for Moskowitz. This led him to realize that he was asking the survey participants the wrong question- “He was asking for what was the best Pepsi; what he should have been asking was what are the best Pepsis?” In other words, there was not one ideal Pepsi that people were looking for, but multiple optimal solutions.

This realization led him to make breakthroughs in other food categories. When trying to find a superior spaghetti sauce for Ragu, he changed his approach. Instead of changing a limited set of variables in the batches, he changed every variable the he could think of, including how coarse the sauce was. A third of participants showed preference for a 'chunky' textured sauce; this proved to be revolutionary, as it contradicted the conventional notion of 'fine, authentic Italian sauces' and was not a preference that people would think of mentioning when being surveyed (especially since they have a bias towards the idealized traditional sauce). This opened up a third of the established market to Ragu and made them millions.

My takeaways from Gladwell's story are the following

1. The wording of your questions are crucial. People were giving Moskowitz the right answers to his question- he was just asking the wrong one! When we get a lot of ‘noise’ in our survey results the immediate response should be to analyze the survey and not to pick an average value in the hope of satisfying the middle of the bell curve.
2. How you ask the question matters. When you survey people, they will not always say what they really mean to say. Gladwell compares this to asking someone what their ideal coffee is; they will immediately conjure up the picture of a ‘nice dark hearty roast’ even if they like their coffee ‘milky and cold.’ Some creative experimentation like the spaghetti sauce experiment may be required to get the information that you want from your customers.

The Power of Mobile

This year I was lucky enough to find my way into a presentation given by Andrew Weinrich at the Wharton School, thanks to the guidance of a brilliant VC named Baris Aksoy. Weinrich is one of the pioneers of social networking, having co-founded Six Degrees in the mid-nineties. He was giving a lecture on the power of the mobile phone as an enabling technology and its potential applications by talking about his latest tech venture MeetMoi.

For the longest time I’d been trying to figure out why there was such hype about moving social media to the mobile platform. The presentation proved to be very enlightening in this respect. MeetMoi is a dating service, much like eharmony.com and chemistry.com, but with a twist. The idea is that they can use your mobile phone to determine where you and all of your matches are at any time, and alert you when you are within an X mile radius of each other. It also gives you the freedom to change your service preferences at any time, so you can activate the service on the way home from the office or when you’re out at a bar with friends and deactivate it while at work or asleep.

Now I won’t go into some of the clear issues that are associated with the service itself (people in the room thought of all kinds of situations where this idea could get you into trouble as the user) but it definitely highlights the potential of mobile: the power to not only match your interests with a cataloged set of services but to also match you geographically. Say you’re looking for a new apartment; there’s a good chance that you walk by half a dozen great apartments on the way to work each day without knowing it. Imagine that a service knows of this and sends you a message saying (“Apartment 411, 12 Barclay’s Street, $3500 a month, resident accepting inquiries now) on your way to the red line in downtown New York- now there’s an interesting start up that I would love to be a part of.

Choice and Customization

I'm constantly surprised by the fact that TED isn't receiving more attention. It's a fantastic website that I've spent countless hours on and I'd recommend that everyone check it out at least once (be forewarned, it can get addicting- I spent 2 full reading days during finals distracting myself with these videos). This video is a brilliant TED lecture that I found a while back on Choice by Barry Schwartz.



Schwartz's delivery is just superb and really makes one ask questions about the current trend in design that's moving towards customization. The idea is to cater to individual tastes by allowing consumers to shape their own experiences. This puts users in the driver's seat and saves the designers the trouble of spending endless hours trying to determine what the average customer wants. Yet there is significant scientific evidence that too much choice makes us unhappy, as we struggle to make the right trade-offs and end up focusing on the happiness we could have had with one of the other choices. The result: either we are unhappy with our choice or we don't make a choice at all (a well known study conducted in a supermarket showed that increasing choice decreased sales of a particular item.)

The lesson here is that designers need to be careful in how many customizable features they incorporate into their products. Sure, they should offer some options for various types of people but they still need to do their homework and create products with optimal settings for different cohorts.

An Aside --> for people looking to get some more exposure to TED here's a good sample of the types of lectures you'll find. Enjoy!

http://www.ted.com/index.php/talks/view/id/66 - on rethinking our education systems

http://www.ted.com/index.php/talks/view/id/7 - simplicity sells.

http://www.ted.com/index.php/talks/view/id/93 - ridiculous statistics.

Go To Your Customers

When I was in high school my father had just reached retirement after 35 years in commercial banking and was eager to share the wealth of experiences that he'd accumulated. The one concept that the pounded into my head week after week when discussing business was, "Go to your customers!" Though it's fundamental to the marketing process, many entrepreneurs that I've seen to date think it's inconvenient and ignore it for a number of reasons. Examples are (paraphrased from what I've heard):

1. "I don't have any patents and I don't want to risk making the idea public until I make some headway into developing the product"
2. "Customers don't want to take time to talk to us, and if they do they don't put thought into surveys."
3. "How can you go to your customers if you don't have any yet"?

My time as a consultant at the Wharton Small Business Development Center showed me how important it was to ignore these excuses. Don't get me wrong, they are legitimate concerns that certainly make the process more difficult but they aren't good enough to make it impossible. Most of our clients had strong business plans with graphs/tables/quotes from research reports but were still unable to meet their sales targets because they were lacking enough data points from interviewing potential/existing clients. Indeed, gathering and analyzing this information was probably our biggest value-add activity. Did we sometimes come across difficult (and even rude) people? Yes. Were people often rushed and able to answer only a tenth of our questions? Yes. But the answers to the few questions that we managed to ask were sometimes so insightful that we were able to make small adjustments to our clients' business models and help them grow revenues significantly. This is a lesson that my partner and I are taking forward in the process of developing our business plan.

The Bottom Line: You've done your secondary research and developed some important hypotheses on what the customer should want. It's up to you to prove that this is what the customer does want before investing a single dime into the business. IF you find that the costs to reaching your clients/acquiring this information are too large, you may want to rethink whether you really want to risk being in this business.

Undergoing MyBlogLog Verification

First Post (Introduction)

Hello blogging world! I've been wanting to start this blog for a year now but I kept pushing it back (college becomes pretty time consuming once you switch to the 3 year track 1.5 years into it.) Now that the summer's finally here I'll be updating the site frequently so I hope to offer some interesting insights into the world of tech from a young aspiring entrepreneur's perspective... what? there are already millions of people doing this already? I'll play the 'diversity' card by offering some views/news on tech from back home in Europe and focusing on my personal experiences in the world of entrepreneurship.

So... what is the 'Tech Road Trip'? I've recently started the first stage of a tech venture with my close friend and peer from school (currently in stealth mode- more details to be released over the course of the coming months) and have immersed myself in the world of internet technology. Though I decided to take the summer off after a grueling experience at a couple of banks last summer, I've been spending 5+ hours a day reading on the internet/blogosphere and talking to other entrepreneurs in an effort to learn as much as possible form others' experiences. It's a gift and a curse that there seems to be no shortage of people willing to share knowledge and tips/tricks, but it's rare that we see a chronologically organized guide to understanding the product development process from start to finish. I hope that this will serve as a resource to other aspiring entrepreneurs, both present and future.