When’s the best time to do this? It’s when his goodwill is at its peak – when he feels warm towards you and your product. When he wants to help you, in other words. But when exactly is that? It depends on your product. Here are some examples.

If you’re selling a product like Word 2007, then the time to ask for something is after the ‘hey, a shiny new toy’ phase, and before the ‘dang, why did they change that?’ phase. If you miss it, then you must wait until goodwill returns to neutral. Since the first stage might be extremely short and hard to hit, waiting as long as possible might be the least risky approach:

[Click on this, or any, image to see a larger version]

If you’re selling a product that people hate and buy because they need it and not because they want it (Norton Antivirus, say), then the goodwill curve is different. You should ask very fast, before the dip, or very late, long after it:

The goodwill curve of most web 2.0 apps mean you need to act fast, before it returns to boredom. iPhone apps are like this too (in fact, the curve peaks so fast you get to pay before the curve even starts and the goodwill has been created entirely by anticipation).

One reason that Application Lifecycle Management tools (and other shelfware) are a hard sell is because they generate very little goodwill, and it’s hard to know when that goodwill will happen. You need an aggressive sales force to shift stuff like this:

The goodwill curve of some software shows an initial kick (the shiny new tool phase), then a dip (the dang this is hard phase), followed by a prolonged rise as the user understands the benefits of the tool. Development tools and databases are like this:

Here’s the goodwill curve of some software we sell at Red Gate. People try it, and they like it. Then they don’t use it for a while, but some of the goodwill sticks. It peaks again the next few times they use it, and then slowly deteriorates into familiarity. The best time to act? At the first peak.

Finally, this doesn’t just apply to selling software. Here’s what – I hope – your goodwill graph from this blog post looks like:

I hope I’ve generated enough goodwill to ask you a favour and get you to act. If you enjoyed this post, then please follow me on Twitter (I’m @neildavidson)

There is a neat way round this though. It’s a trick I learnt from Bill Buxton’s excellent book about sketching, but it applies to much more than just product design.

Rather than asking for a single outcome (‘Tell me how you’re going to market X’), ask for options (‘Give me three serious ways of marketing X’**).

At this point, the person who’s done the work has no motivation to defend their sole proposal beyond all reason. The conversation stops being an argument of “I’m right / you’re wrong” and, instead, becomes a de-personalised deliberation of “here’s a bunch of different ideas; let’s discuss, together, the pros and cons of each one.”

It works, really. Try it.

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*Of course, you try to be constructive about this, but the message is the same

** Note that the ways need to be serious – not two obviously bad ideas and one good one that they guide you towards

You always have your eye on the far bank of the river, but your path zigs and zags, you hit dead ends and you back track, but eventually – hopefully – you make it across.

If this metaphor holds – and I think it does – then what’s the point of a business plan? First of all, here’s one thing a business plan does not do:

A business plan does not give you a precise set of instructions for how to cross the river. It does not tell you where each stone lies, and how to move from one to the next. It does not give you a mechanism for tracking your actual progress against your plan.

Instead, the point of a business plan is to answer a handful of fundamentally important questions:

Can the river theoretically be crossed? How fast does it seem to be flowing and how wide does it look? Would even tempting a crossing just be a dumb-ass thing to do?

Is it worth crossing? What’s on the other side? Do you really want to get there?

Where are the crocodiles? If you slip, will your feet get wet, or eaten?

Are you crossing it from the correct point? Or should you move a few hundred yards downstream? Maybe somebody’s already built a bridge there.

Where is the first stepping stone? And can you reach it, and will it bear your weight?

Of course, all these are essentially calls of judgement. Do your best to answer them, then reach out your foot, open your eyes and make that first step.

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That anybody can launch a successful web site or business is a common message. Just release early and often, and be embarrassed by version one, and you’ll surely succeed. But I find it hard to reconcile this with my experience that writing software is hard, dirty and time-consuming. Our Exchange archiving tool took an awesome team of fine people well over a year to build. How come?

There are a number of reasons – ChannelFlip launched into a market with few competitors; if they screwed up they had no existing customers to disappoint or brand to stain; what they were doing wasn’t technically difficult. I doubt these are accidental though – they’re the results of extremely smart choices that Wil and his team made.

But I think these reasons miss the point. ChannelFlip succeeds not because of the technology, but because of the videos. What distinguishes ChannelFlip from competitors current and future is content, not software. And like most companies, they have constraints. Every hour and dollar spent creating video is an hour and dollar less spent on technology. But – for now – the benefits of spending on content outweigh the costs of scrimping on technology.

If you think you’re in the business of software, here are some questions worth asking about your company or product:

• Of all the things you do, what really matters? What will delight your customers? What will make you damn hard to compete against?
• Of all the things you do, what doesn’t matter?
• Where are you focussing?
• Are you any good at what matters?

Maybe the answer to the first question is software – its quality, technical excellence or performance. But maybe it’s something else.

Enjoyed this post? Comment below, or carry on the conversation on Twitter (I’m @neildavidson)

* OK, so I’m exaggerating a bit

These two computers uncovered an itch. It took over twenty years – programming the Acorn Electron, BBC Micro, Acorn Archimedes and then, reluctantly at first, the Wintel platform – for me to finish scratching that itch. I still code now and then, but I no longer feel the same compulsion that I once did.

By the time my urge had dwindled I’d found a new obsession – Red Gate – to fill the void. But I sometimes ask myself what I would have done had I not co-founded Red Gate, and what my advice would be to other people who find themselves faced with the same realization that coding is longer enough.

Obvious, but – for me – wrong, choices would be project manager (I’m just not organised or disciplined enough), technical architect (flow charts and diagrams aren’t my thing) or technical lead (not a big enough jump away from the coding).

The unobvious – but correct – choice would have been product manager. Why unobvious? Because it’s a role that’s often misunderstood. Why correct? Read on.

Product managers help decide what products get built. They don’t necessarily generate the initial idea, and they don’t make the final call, but it’s their job to flesh out ideas and turn them into proposals so solid they can withstand any sticks and stones others can throw. Not only must they make sure the product solves a pain that people really have, but they need to work with developers to make sure their proposals can be - and do get - built, with marketeers to make sure that customers can be found and with sales people to make sure those customers will buy it.

Being a product manager is a bit like running your own business, but with much of the work that is overly familiar (actually building the product), frustrating (project management) and unpleasant (firing people) removed. If you do your job well, you can easily connect what you put in (defining the product) to the end result (happy customers), and that makes it a satisfying role*.

What can you do if you’re a top notch software developer but your passion for code is starting to fade? If you’re looking for the next step in your career, and if you don’t want to manage people or projects?

The first step is to learn more about product management and understand if it’s right for you. Here are three things you can do:

• Look at the Pragmatic Marketing web site
• Subscribe to one or two, or even three blogs
• Immerse yourself in the product management twitter stream (#prodmgmt).

The second step is to do it. If your organisation doesn’t have product managers, then it needs one. Become that person. If your organisation does have product managers, then talk with them and get involved.

Have you considered product management as a career? What are the pros and cons of this particular path? Post here, or carry on the conversation on Twitter (I’m @neildavidson, or tag with #prodmgmt).

Red Gate are hiring product managers. Check out our jobs page.

###

*The more Machiavellian of you will spot the flip side: if you do your job badly, there’s always some other factor to blame too, whether it’s changing market conditions, a recalcitrant development team or just pure bad luck.

http://blog.businessofsoftware.org/2009/04/the-red-gate-million-dollar-challenge.html

Employee: “Boss, this gentleman’s got a Word document he’d like to print.”

Boss: “Damn him. Microsoft? Microsoft?! What sort of person uses Microsoft software? Why doesn’t he use a Mac? Out! Out! Tell him to get out!”

Employee: “But he’s the tenth person today who’s asked for that. And we are a print shop.”

Boss: “Yes, and I’m sick of telling these people to sod off. I bet he brought his document on a floppy disk too. Pah! A luddite as well a philistine.”

Employee: “Maybe we should stop saying no? Printing Word documents might even be a money-spinner. Enough people seem to want it.”

Boss: “I’ve got a better idea. I’ll put a big sign on my window to keep scum like this out of my shop. I’ve got principles, you know.”

Employee: ”But aren’t you worried that you might scare off genuine, Mac-using, pen-drive-toting customers too?”

Boss: “The cowards, you mean? Why would we want to serve cowards? They’re as bad as philistines and luddites.”

Employee: “Yes, boss. How big do you want that sign?”

You wouldn’t do this, right? Or would you? Post here, or carry on the conversation on Twitter (I’m @neildavidson). I’ll give $20 of Amazon vouchers to the best comment or tweet.

But that's not what happens in real life. Take a look at this graph of revenue per employee*, generated from the 2008 Software 500 data:

The median annual revenue per employee is around $160,000. Almost all (90%) of software businesses generate under $300,000 / employee. By comparison, General Motors has revenue of $600,000 per employee; Walmart $200,000; Intel $450,000; Exxon $5,000,000. It turns out that shipping electrons is no easier than building cars, selling cereal, building chips or drilling for oil. There's nothing special about software.

How come?

In 1980, Theodore Levitt - Harvard Business School superstar professor - wrote that there is no such thing as a commodity (or more accurately, there need not be such a thing as a commodity). In 1986, Bill Davidow - erstwhile product crusader for Intel's 8080 and 8086, now venture capitalist - expanded this theme beyond commodities and wrote about the concept of 'device' vs 'product'. In Davidow's terminology, a device is the good that, at first glance, you sell. It's the coffee beans, the silicon chips or the bits and bytes of your software. But the product is what you really sell:

• Trivially, bits and bytes
• Reassurance that you won't rip off your customers and that they're doing the right thing ('nobody ever got fired for buying IBM')
• Reassurance that your software will work as advertised, and that you will be there for customers if they get stuck (Rackspace's fanatical support)
• Reassurance that there is a roadmap, that you will continue fixing bugs, refining the product and releasing new versions (Intel's chipset)
• A statement about your customers (anything from Apple)
• The chance to belong (ditto)

Of these, only the first is scalable and easy to supply. The rest require people to deal with customers, communicate with the market, investigate new opportunities, build brands, grow communities, write documentation, create a company culture and so on. Those are the activities required to decommodify the bits and bytes. They're not cheap and they don't scale.

But if you want to grow, they're the most important things you need to do**.

I'd like to hear what you think. Post your comments here, or carry on the conversation on Twitter (I'm @neildavidson).

(* Yes, I know that revenue per employee isn't as important as profit, but they're the numbers I've got. Also, these numbers are from the Software 500 so may not be truly representative. But they illustrate my point that software businesses don't, on the whole, scale).

(** Assuming you've done the hard - and it is extremely hard - work of building the bits and bytes already).

In November 2006, Red Gate purchased SQLServerCentral. In the two and half years since then, we’ve invested several hundred thousand dollars in the site, quadrupled its traffic and continued, with Steve Jones, the great work that Steve and the other original founders - Andy Warren and Brian Knight – started. Everybody - Red Gate, SQLServerCentral users current and future, and the original founders – was a winner.

Over the past decade we’ve purchased a number of technologies from third parties and brought them into the Red Gate fold: SQL Server Central, Lutz Roeder’s Reflector, PromptSQL (now SQL Prompt), pInvoke.net and Mini SQL Backup (now SQL Backup). In all cases, we’ve tried to do the same thing: introduce the products to a wider audience, and help them fulfil their potential beyond the means or ambition of their original creators.

We’d like to do this some more, and now seems like a good time. So we’re going to run a competition.

We’re setting aside a million dollars to purchase third party technologies. We might buy a single thing for a million dollars, or ten for a hundred thousand, or any other variation. We might decide to spend more, or less, but a million dollars is our target.

Interested? Here’s what we’re looking for:

• You’ve got to have a product. We’re not interested in prototypes. You must have customers. Happy customers, who – ideally - are happy to give you money for what you’ve built.
• If you’re giving away, not selling, your product then we’re looking for high numbers (10,000+) of users.
• It’s got to be software aimed at software developers or sysadmins. We specialise in Microsoft platforms, but will consider others too.
• The product might be a desktop app or a web-based app. We don’t mind.
• if you’re selling your product then it must have at least a 10% conversion rate. In other words, if ten people download it, or trial it, then, on average, one person should buy it. For us, this is a sign that you’ve got a product that works. We don’t care how many customers you’ve got – the fewer the better, in fact. It’s the ratio of trials to purchases that counts. If you’re not charging for it then we’ll look for a sign that a significant proportion of your users are actually using it regularly.
• Now is a good time for you to sell. Maybe you’re struggling with marketing your product, or maybe you’re worried about the recession we’re in. Or maybe you just need the cash, or are bored.

If you’re interested, here’s what you have to do:

• Send me an e-mail at neil.davidson@red-gate.com explaining what your product is and why it fits what we’re looking for.

The closing dates for entries is May 31st 2009.

Here are some questions you might have:

Will Red Gate invest in my company?

No. We’re interested either in buying your company, or buying the product you’ve built. We won’t take a stake in your business.

Why should I sell?

You might have a number of reasons. The emotional ones might involve fear, boredom and excitement. Maybe you’ve taken the product as far as you can, or want, to and would like somebody else to continue to make it succeed.

Rationally, if your product is worth more to somebody else than to you, then it’s economically sensible to sell. Say you're making $10,000 a month profit with your product. That’s a decent salary. It means that, over your product’s lifetime, it might generate you $300,000 - $400,000 profit, but with a high risk (since competitive products might emerge, you might fail, and so on). If somebody offers you $400,001 with no risk, tomorrow, then you should sell.

Why should I sell to Red Gate?

We’ve got a track record of buying products and, frankly, not screwing up.

Who is Red Gate?

Here’s Red Gate’s web site

What’s the process?

Send me an e-mail at neil.davidson@red-gate.com explaining what your product is and why it fits what we’re looking for. The closing date for entries is May 31st 2009. We’ll get back to you shortly after, either to let you know we’re not interested or to ask for more information. At some point, we’ll meet up with you, make a yes or no decision, and sort out the details. It will probably take a month or two to go through the process.

Will you sign an NDA?

Not at this stage. If we decide to take things further, and start asking for sensitive information, then we might do.

Will I be able to carry on working on my product?

Maybe, maybe not. It depends a lot on you – why you’re selling, and what you want to do long term. Sometimes we’ve bought technologies and people have carried on working on them, but sometimes they prefer not to.

Why is Red Gate doing this?

We’re always looking for new ideas. We get e-mailed them occasionally, and stumble across them sometimes, but we figured it’s better to be systematic. If buying technologies is a good thing to do, then let’s do it well.

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Neil Davidson: Tell me the background of the reconstruction

Dan Nunan: It all started at Legal Tech – a big tradeshow held once a year at the New York Hilton. We were new to the industry, and initially were only going to window-shop. But I got offered a price for a booth that I couldn’t refuse. I felt pretty smug with my bargaining until I remembered that we only had four days to put something together. It wasn’t enough time to get a fancy stand built, and one look at the dust gathering on the office laser printer told me that we would be at the mercy of Kinkos for anything printed. T-Shirts weren’t really the style for lawyers – so what could we do? One of my team – Steve Breeze - was watching the news, and saw an animated reconstruction of the US Airways Hudson river crash – you know, the one where the pilot glides in and lands the plane on the Hudson without any engines. And everyone survives. Now Steve just happened to have a background of producing high-end animations for TV, and thought that he could do a much better job. So we thought we would see if we could hire a big screen, and just show this animation.

There were three hundred and fifty other companies at the show, and we wanted to do something that would stand out. The Hudson plane crash had happened a couple of weeks earlier. It was a great candidate – plenty of drama, and it had a happy ending. Everyone in New York was still talking about it. It took two people two days to put the animation together, working from the information we mostly got from the Wall Street Journal and other newspapers. Because we thought it was just for the show Steve decided to use his TV production skills to edit some sections and increase the dramatic effect.

Neil: So everybody came over to your stand to see the crash reconstruction, and it took off from there?

Dan: Yes, but it wasn’t as straightforward as that. The tradeshow started on February 2^nd. When we arrived in New York we realised we didn’t know anyone going to the show. February 1^st was Superbowl Sunday. So we decided to have a Superbowl party. The only catch would be how we actually got people to turn up, not knowing anyone being something of a stumbling block for throwing good parties. I got the member of the team who was the football fanatic to join Twitter and mention and put the conference tag into the ‘tweet’ There were a lot of people at the conference using Twitter, and searching for traffic about the conference, so a few people picked up on the party.

We were staying in a lousy hotel with a great lobby, so even if no-one turned up it was a short trip back to our rooms. In the end about fifteen people turned up, but these were some high-end influencers. Between them, they had thousands of Twitter followers. We bought them some beer, and then they started buying us beer. In the end, the whole thing only cost us fifty dollars.

Neil: Did you show them the animation at this party?

Dan: No – we just said that we had done one, and that they should come and see us at the tradeshow the next day. We hadn’t even gotten round to putting it on youtube at this point.

So we had lots of people come to see the animation – we probably spoke to 900 people, which was hard work as there were only three of us on the booth at a time. We become very good at running two or three conversations at the same time. They were all twittering about it: stuff like this conference is really boring, but check out the plane crash reconstruction at Scene Systems’ stand. A few people blogged about it too, and then the pro journalists started getting in touch wondering what the fuss was about. After the conference finished, we put it up on youtube and e-mailed some contacts we had about it.

Neil: Then they told all their friends and it snowballed from there?

No, not yet. About fifteen thousand people had viewed it on YouTube at this point. People were starting to pirate our video too – they were downloading it from youtube, editing it, and then putting it back up onto youtube. At the start these pirated videos were getting many more views than our original one.

Neil: How did you react to that?

My first instinct was to send them a legal threat asking them to cease and desist. But Virgil – he’s a recent graduate who’s just started working for us – told us that that isn’t the way it works on youtube. I started to feel really old. He wrote to the pirates and gave them higher quality videos to work with. We copied their idea of overlaying the audio onto the animation – we pirated the pirates – and put them into our video too. They linked back to our original video, so that drove even more traffic.

Neil: Was that the point it took off?

No, not yet. One of the people I’d met at the conference was Jim Haggerty. He’s a lawyer who runs a PR firm that specialises in crisis PR. He called me and said that he knows lots of journalists and could get us some really good press. I was sceptical - every PR guy claims to know journalists - but he was as good as his word – a couple of days later we had consecutive pieces in the Wall Street Journal.

That’s the point it started to take off. It was interesting watching it spread. We were tracking people’s IP addresses so we could see where the internet traffic was coming from. One day we’d notice that someone at Boeing had watched the video, then, within hours, two or three thousand people from Boeing would have watched it. The same thing happened with other big firms and government departments in the US, the Federal Aviation Authority and lots of big law firms too.

Neil: So it spread via e-mail and twitter?

Dan: Yes, but that’s not how it went mainstream. Most people, most normal people, don’t have twitter, or watch youtube. But journalists do. So we started getting calls from journalists asking if they could cover us. That’s where having a PR agency really helps. We tried to cope ourselves, but failed. In the heat of the moment we forgot that we had a PR agency. We had three national TV channels all asking us for information on the same day – they all wanted the video, but in slightly different formats. We screwed up, and lost the story on one of the channels. But it still went onto ABC that night, on the Rachel Maddow show, and was repeated on about a dozen channels after that.

And that’s when it really went mainstream. That caused the second wave. People saw it on television and then went on to the Internet and watched it. Pretty much every online publication had covered it in some way. Two weeks after we put the video online over a million people had watched it.

Neil: But did this actually generate any new business for you?

Dan: It’s too early to tell. We don’t specialise in crash reconstructions - we provide graphics and visuals for the legal system. One problem with the legal system is that it’s based on verbal argument. But this is often a bad way of presenting complex information to both judges and juries. Take a complex car crash - how do you explain what each person saw so as to establish what happened? You can have experts presenting reams of data, or you can show it visually. We use our own animation software to quickly create 3D reconstructions that explain complex evidence to an audience who aren't technical experts, such as juries. For example, we can quickly switch between different points of view, or focus in on a specific detail - such a pot-hole in the road or a part of the car that failed. The link between this and plane crash reconstructions is only tangential.

So, to come back to your question, although about two million people have now viewed the video, we’ve only had a dozen or so serious leads. It’s the difference between publicity and PR. A lot of eyeballs, but you aren’t after 1% of any old audience but 100% of the market that is right for you. But we’re hopeful they’ll be fruitful.

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