Thursday, March 20, 2008

My refrigerators social network

OK, so maybe my fridge will not invite my oven to join it's social network, but really the larger point is that EVERYTHING, not (only) everyone will have a social network. Huh?

Think about it, in a conventional social network there is a common element whether it is Business,Geography,School,etc. So why shouldn't all my physical possessions have there own? I own a Sears fridge, and was recently 'pissed' that Sears now charges $55 for their water purification cartridge for this model. When I first purchased the fridge, the cartridge was less then $30. This now adds over $600 per year to the cost a a refrigerator that only cost around $1000 to begin with. I would LOVE to speak with, and share stories, ideas,rants with other owners of my refrigerator, and so it goes.

Brands will want to have some level of control over this, to be preemptive in any PR 'damage control' they might need to do. This is a time where they can be pro-active, and not reactive. The Kenmores,Sonys, and other 'brands' should recognize the social trend first, and get their products their own social networks - One where they have an opportunity to steer and moderate the conversation to a greater extent then if their consumers started it for them.

Sunday, March 16, 2008

Time to make the Donuts (and Coffee)!

What you need to learn from Dunkin Donuts

One need only go as far as their local Dunkin Donuts to learn how to better monetize their own software. Give it a try... Go into D.D. and order just a Coffee - at the P.O.S. you WILL be asked "Would you like a muffin with that, or perhaps a Donut?".

Now Dunkin Donuts does not have a monopoly on "second selling" the customer, far from it. When I was just out of school, one of my first jobs was working in a retail clothing store. Every sale was the same... Customer comes in looking for a pair of pants. They would bring the pants to the cash register, and the first thing I would say is "I have an excellent shirt that matches those pants perfectly, let me show you...".

So what this means to you, is that at the point of your customer's shopping cart experience where they are about to hit the Buy button, show them an additional offer - preferably a product bundle where they can save even more money should they purchase more then one item. Only have one product that you have made for sale...No problem, there are ALWAYS other peoples products that you can offer. If you are a low volume vendor, you can easily use affiliate systems to locate others products that have synergies with yours. Should you be doing higher volumes of sales, consider reaching out directly to other companies, where you should be able to make yourself a better deal then what they are paying their average affiliates. Do NOT be afraid to ask if you can white label their product, this is even better as you get to brand your products, and not someone elses.

The Digital space is no different then brick and mortar sales, second sell them!

Friday, March 14, 2008

Buy or Build - Penny Wise?

When deciding whether to Buy or Build - The most obvious reason to lean one way or the other is cost. Other considerations include Time to Market, First mover advantage, and the "polish" of having something designed specifically to your needs, and not bolted up. Affiliate Management Systems, Shopping Carts, Social Features pretty much anything you need can now days be found from third party vendors, and even better some that are open source. But be careful not to fall into the "Penny wise Pound foolish" trap.

I once worked for a company whose founder believed he and his developers code were superior to any others solutions, and that more importantly he could build the functionality cheaper then any off the shelf solution. While he might have been correct about any initial costs, I simply could not convince him that he was dead wrong.

We ended up developing our product in house (this was a consumer software program that we had been white labeling for just a few dollars per copy) and were able to launch the product into beta 9 months latter.

Ultimate cost was not the money (a few thousand a month) he paid his off shore developers for those 9 months...the real cost? Looking back, when the product did finally launch, it started at a 20k per month run rate, and quickly ramped from there to 500k a year. So even if you just factor the first 9 months of missed sales - You're talking hundreds of thousands of dollars in lost sales.

At this same company, it was not just products, it was our infrastructure where he made that same WRONG decision... We built our own affiliate system internally at a cost of one year to get to market. It was just out right wrong to not have used a third party affiliate system even just temporarily ... That was one whole year of affiliate sales opportunities down the drain.

Thursday, March 13, 2008

Product Management 101

Good product managers do NOT need to have any technical knowledge. They DO however need to be able to communicate with the entire team though, techies included. More importantly, the key to designing great software is once again, "Walking that fine line". Though time to market is often critical, rushing bad and buggy software out the door is equally critical. Many users will only give you one chance, they do not understand (nor should they) the product/production lifecycle and how that works.

While off-shoring much of a products development makes a lot of sense (especially for a money tight start-up), proper development and budgeting for same is much more then going to India/China/Russia and paying $10-$15 per hour to hero programmers. At the critical early stage of a products lifecycle, a product manager (or CEO) needs to have their core team in house, this is a must.

An earlier Carnegie Mellon study "Quality Software development @ Internet speed" dictates a framework that works well at walking the fine line between Hero and Level 5 development. Hero being that scrappy buggy code not well thought out in advance, and Level 5 being the "Best Practices" of development environments:

The model uses the 3-phase approach: requirement analysis, design and implementation. It is in the requirement analysis stage that I am a big believer that someone with a Product management/ Marketing background need be involved, even more then the technical lead. Though I am certain there are MANY competent programmers able to lead here, my experience has shown that often a programmer looks at software differently then the mainstream. They often get hung up on arcane features, and niche detail that only they would use, or even understand. Remember "KISS" Keep it Simple Stupid, this could not apply more to the software development process. Software more then ever needs to be "Grandma Proof". Bury the details at this stage of the development process and focus on the UI...this is the foundation on which you will latter build great software.

At the other extreme we have "Analysis Paralysis". Analysis Paralysis is when your project leads refuse to get the software out the door until it is bug free and perfect. Note to team - YOUR SOFTWARE WILL NEVER BE BUG FREE, NOR PERFECT - It will always be a work in progress. Remember, walk the line and you'll be fine