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What Your Product Messaging is Up Against

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Since Apple was founded, a number of big changes have swept the technology world. Your clients live in a very different world. As a result, you market in a different environment. If you’re a technology entrepreneur, you need to be very clear on exactly how you are addressing the following:

1. Shortening Attention Windows: If you want to sell something, you need to attract and hold your prospect’s attention. As time goes on, the consumers you want to reach are awash in marketing messages, for products new and old.

In 2000, the average attention span was 12 seconds. Today, it’s 8 seconds. Less than the 9 second attention span of a goldfish. 1

Considering that the ancient part of our brain, i.e. the one we share with lizards, is responsible for attention, your message is up against an increasingly tougher competitive environment. This “wetware” evolved over millennia to cope with hunting for bugs and occasionally running away from tigers. It wasn’t “designed” for viewing hundreds of ads per day or checking your email every 3 minutes.

Within each niche, it becomes increasingly important to differentiate in order to grab attention…yet most messaging looks exactly like everyone else’s.

On the web, you have a few seconds to make an impression, according to various UX experts. In person, it’s pretty much the same. That first impression comes from one phrase or sentence said to the right person at the right time, in order to make a promise. It isn’t physically linked to anything about your product, service, or widget. It doesn’t even require a product, or writing a single line of code. If you figure out what your customers want, it’s much easier to deliver it to them.

2. Global Competition for Psychographic Segments: If you are selling online, for many product types your ideal consumer can live anywhere…from Alabama to Antarctica. Geographic location tends to be less important than unfulfilled psychological needs. Location doesn’t matter as much as it used to.

Particular if you are selling software or anything online, it’s better to group people together into common unfulfilled needs. In fact, online communities have arisen naturally around this. If you look at popular niche blogs, you’ll often see an entire community of people following that company or person. They usually share one or a handful of common needs, and find it helpful to share war stories with others.

While this started in the early days of the web, as time goes on, these are becoming increasingly fragmented. Based on feedback loops, where like attracts like, it’s critical to engage with the specific niches based on their interests. It’s much easier to sell something, if it’s already something that group of people want to buy.

For example, marketing psychologist Dr. Glenn Livingston did studies showing a person searching for “guinea pig health” and “guinea pig vets” are looking for vastly different things and are at different levels in the buying cycle. Glenn explains, “When you do a marketing information segmentation, you might find that people talking about guinea pig health and guinea pig vets are actually two different kinds of people that don’t really belong in the same group. People that are talking about guinea pig health might be people who really don’t own a guinea pig yet.” 2 This distinction is critical for your success as an entrepreneur, much more so than your physical address.

Moreover, the cost of buying or reaching targeted traffic is slowing rising over time. As demand for advertising increases, the cost of reaching a particular keyword–once you know how it works–tends to increase over time. It’s similar to inflation. The “price” of acquiring the same type of prospect goes up.

The same principle holds across other sources of traffic. For example, if you’re going after “free” traffic sources, you’re up against the same dynamic. Instead of paying for the advertising, you need to spend even more time and effort to make a dent.

3. Unmet Long Tail Demand: In his ground-breaking book “The Long Tail”, former Wired editor Chris Anderson picked up on a peculiar pattern in sales across a number of industries. Because the cost of distribution has gone to (nearly) zero online, most industries have a large number of sales in a handful of products and a large number of products with a small number of sales.

Previously, the second group of products was completely ignored. Who cares if you like both Reggae and Jazz, when you should be buying the latest boy-band’s album? The focus was on the mass market. By going after what the average user wanted in a large group, businesses maximized their profits. The cost of distributing the other options was prohibitive.

Now, the opposite is true. I found a number of great albums combining Jazz and Reggae online in the late 1990s, without visiting Jamaica. In fact, the genre is called Rocksteady.

By catering to this explosion of niches, you can take advantage of the improved economics of distribution. Now you can buy Rocksteady albums online. You aren’t limited to a few massive record stores in New York City to get selection. Neither are the customers in any niche you choose.

4. The Mimicry Epidemic: The dark side of copy-paste? It’s way too easy to just copy something without actually thinking. In internet slang, copypasta means “derogatory term for forum posts which contain a direct or nearly direct copy-and-paste of memes, posts from older forum discussions, or other material, often accompanied by an attempt to pass off the contents as new and original.” 3

At some point, all of this information overload has turned off our brains. It’s not original, and it doesn’t move the ball forward–either for you or who you want to serve.

In a wonderful Facebook rant titled the mimicry epidemic4, Srinivas Rao notes: “We settle for the guarantee of a mediocre replica over taking the risk of something that could blow up in our face, or make us stand out from the crowd.”

Copying someone else means you avoid taking a risk. Without taking a risk, you won’t make an impact. You’re also much less likely to make a profit.

  1. http://www.statisticbrain.com/attention-span-statistics/ ↩
  2. http://www.howtodoubleyourbusiness.com/ThrowingOutInformationG.pdf ↩
  3. http://www.urbandictionary.com/define.php?term=copypasta ↩
  4. https://www.facebook.com/srinirao/posts/10152041225144605 ↩
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The Best Lean Startup Tool In My Experience

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tools

none of these will work: you need a “thinking” tool

There’s a specific agile tool which I think every early-stage product team should use, regardless of whether they’re following the Lean Startup methodology. Lean Startup drew its roots from agile software development. Eric Reis added Steve Blank’s idea of customer development to agile. Assuming we aren’t talking about re-reading Eric Reis’ book for the 17th time, the best Lean Startup tool is the dogeared post-it.

That’s it.

What? Why not some kind of fancy-shmancy online tool that defines, builds, and releases your product? In your sleep. There’s lots of those around. < grin >

Post-Its are placeholders for team discussions. Invented by accident at 3M, having slips of paper with adhesive turned out to be a fantastic tool for organizing ideas.

This harks back to the old Class-Responsibility-Collaboration (CRC) approach introduced in the early days of object oriented software design. Post-its and index cards helped create the internal design of a larger software program. If you don’t understand the problem domain well enough, then it’s hard to design good, clean software. Post-its allowed developers to note that they need to discuss something in detail at a later date. Once developers were ready, they huddled around a problem. They dissected the problem into sub-components. They formulated a solid hypothesis about the best way to solve a technical problem.

Over the years, software teams have attempted to create software versions of the same experience. There are lots of tools which approximate this effect. Of the ones which I think are probably as close as you can get with software: Jira and PivotalTracker.

Unfortunately, as soon as you get a team in front of computer screens you lose a lot of information. This holds true regardless of whether they are in the same room or in different time zones.

Here’s a handful of ways you can use Post-Its for your product development:

  1. General Brainstorming: A great way to pull out the gems from introverts in a group setting, you can write up Post Its individually, vote on them, and discuss them. In fact, this is a format we use at the Lean Startup Circle London #LeanCoffee sessions I help run.
  2. Marketing Copy: When speaking to customers, you hear the words which customers use to describe their problem. By tapping into the conversation already going on in their heads, you increase your own ability to convince them. Just because you know your solution will address their problem, doesn’t mean they do. Since you describe the problem exactly how they see it, you draw in their attention and fascinate them. When you have prospect language on postits, it’s easy to group post-its into similar themes. You can reorganize them based on whatever criteria you want.
  3. Developing An Unfair Advantage: Getting a team to think about their strengths is hard to do. But when you talk about your team’s strength, document them on post its. Have your discovered strengths hanging on a wall. Help everyone with day-to-day decision-making criteria, by focusing everyone on adding to those strengths. By building on your strengths, you are much more likely to succeed. You rapidly develop an unfair advantage, by reinvesting into your strengths.
  4. Verbalizing Your Unique Selling Proposition: Why should a prospect buy from you specifically? Immediately after they decide to buy your type of solution, this is the next question you must answer. It’s simple. It’s critical for your business. It’s also easy to forget about. Post-Its are a good way to organize your thoughts. You can add information about your competitors and alternatives. This will distill the one sound bite which will convince you and your prospects that your offering the best one possible.
  5. Identify Unmet Market Needs: Sometimes you may be struggling with identifying a problem worth solving. To build a successful product, you need to be addressing a difficult problem for your prospects. A good example of using post-its for this process is in the book Blue Ocean Strategy. You can map out the offerings of an entire industry against how customers “scratch their itch”. This identifies unmet needs in the customer’s process of solving their problem.
  6. Feature requests or bug reports: Post-Its are already the bread and butter tool of any decent development team. What about yours? Working from Post-Its, it’s much easier to deliver prototypes or new features faster. Post-Its capture nuggets of wisdom gleaned from direct access to customers or the product owner can be. Post-Its help gather together the relevant considerations for a new product. If everyone is looking at the same wall of post-its, it’s much easier to deliver.
  7. Long Term Planning and Vision: While there is often a strong focus on increasing certainty and clarity with tools like product roadmaps, you risk destroying value by pre-committing to things which don’t need to be committed to. A good example is the default setting of task dependencies within Microsoft Project. In contrast, if you continuously articulate your vision with post-its, you can adapt your vision as you learn. Even though Agile tends to be tactical and focussed on the short term, you can also track long term visions with post-its.
  8. Hypothesis Test Backlog: Post-Its help keep track of assumptions and hypotheses you still haven’t proven. This is the valuable “grunt work” which Lean Startup prescribes. A great way to keep track of what you still need to learn about your market, your product, or your business model, Post-Its allow you to adapt Lean Startup to your situation. Launch that product successfully!
  9. Map Features To Business Goals: Quite often product teams get lost in tons of feature ideas and “things to do”. It’s easy to feel overwhelmed. The most creative way I’ve applied post-its? Gojko Adzic’ Impact Mapping tool. Impact mapping helps you identify high level business goals. Then you organize your development around reaching those goals. It’s a powerful and subtle process.

More Visibility + Less Structure = More Learning

If your goal with Lean Startup is to de-risk a product idea as soon as possible, you need to identify where you are going. To do that quickly, you need “signal”. Signal will help you achieve that faster.

A smattering of post-its on a physical wall are a true “information radiator”. Anyone and everyone can jump in, comment, or move the post-its around. This means you engage everyone’s head.

Post-Its are a thinking tool. They help your team think clearly about

  • your problem
  • your product
  • your role in delivering a solution to that problem.

With Post-Its, it’s not really about using post-its themselves. Using PostIts means that you interact more effectively: in-person, on-location, face-to-face.

As you can see, the lack of structure which post its give you, help you to discover and learn about your problem much faster. By using a software tool, you are hard-wiring in assumptions which may not be true for you or your product.

Stay light. Move fast. And share this with your network. 🙂

[image: infinity studio]

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What Exactly Are Financial Options Then?

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In order to understand real options, you need to understand financial options. Financial options are the biggest tectonic shift in finance of the 20th century. The main concept behind financial options is simple. In non-financial terms, an option gives you the right, but not the obligation, to buy or sell something at a pre-specified price, only up until a pre-specified time.

Options give you many new opportunities to make money and customize exactly which risks you want to bear. You can:

  1. position for a large market move upwards, with a much lower level of exposure to risk.
  2. minimize your future losses if you expect the market will go south.
  3. prepare to buy something for a lower price, if you predict certain conditions will arise.
  4. lock in a cash flow stream, without being exposed to market risk.
  5. allow for a core exposure to market risk, while still dabbling in various options on the side.
  6. conserve capital via limiting risk, so that there is more cash available for future investment.

In short, options allow you to assemble the exact financial risks you want to bear while discard those you don’t. As a result, you customize your risk profile in a more powerful (and accurate) way than investors who don’t use options. This high granularity will clearly make you more profitable in a highly volatile environment.

Types of Options

When you initially buy an option, you aren’t sure what will happen. Instead, you have a hunch that it will. You are betting on a particular event happening in the future, without bearing the full risk of it happening. With financial options, this typically refers to how the price of the something in the market changes.

There are two main types of options: puts and calls. From the point of view of an option buyer, a put prevents a big loss, but costs a bit up front. It’s the option to sell something at a pre-agreed price.

A call is the opposite. It enables you to get a big gain, but it also costs a bit up front. It allows you to buy something in the future at a pre-agreed price.

In both cases, when you exercise the option, you already know what happened. You know why you want to use it-when you do.

Underlying

The asset an option gives you the right to buy or sell is called an underlying. It’s the “what” of an option. What are you betting about?

What can be an underlying?

The price of the option is actually different than that of the underlying itself. It’s independent. This is because of the unique characteristics of each option.

Time

Every option has a couple of characteristics which affect its price, not just the underlying, i.e. the pre-specified price & time at which you can buy the underlying.

For example, consider these two bets (options):
1. betting that Poland will win the world cup at the next world cup
2. betting that Poland will win the world cup at least once in the next 100 years

If Poland does win the next world cup, you would win both of these bets. They have the same underlying. Simultaneously, they have different pre-specified expiry dates. Because of this difference, each bet will have a different value, even though the underlying is the same.

If you look at a variety of options for the same underlying but expiring on different dates, you can see this pattern. As you go further out in time, typically the later option will be more expensive. It compensates or charges you for the value of time. a bank also compensates or charges you for holding your savings with them or taking out a loan for the same reason.

 Strike Price

Assuming you have the same underlying, as the strike price (the pre-specified price) is lower on a put, the cheaper it is. Everyone thinks it’s unlikely the option will ever need to be used. There is less demand for each option where the strike price is further away from the current market price of the underlying.

Conversely, as the strike price gets lower on a call, the more expensive it is. Remember that as it gives you the ability to buy the underlying at a lower price. If it’s compared to the underlying, and the strike price is much lower than the underlying price, then you can buy the option and exercise it.

How options are different than stocks

Unlike stocks, all of the money you invest into an option will disappear when the option expires; this is the worst case scenario. Stocks have no predetermined lifetime, as they represent a claim on a company that is expected to be around forever. Accountants call such a company a “going concern”. In contrast, options always have a date by which they expire. It’s a necessary part of the option. Having the option to do something by next month or by the end of next year, even if it’s the same thing, will not cost the same amount. By holding an option, you might lose everything you invest, or you stand to gain a very large amount relative to the amount invested if the foreseen scenario happens.

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