In a recent Capital Factory all-hands discussion, one of the founders started a question with a well-worn preamble:

“I talked to a bunch of the mentors and they all told me the same thing about pricing, but I’m telling you, they’re wrong. I know our industry, I know how our customers think, and in our industry …”

What followed was well-reasoned and sensible. Since none of the mentors have specific expertise in the industry in question, it was impossible to argue.

So rather than argue, I just asked:

“OK, so when you talked to the last dozen potential customers and proposed the pricing scheme you just described, you’re telling me they all said, ‘Heck yes’?”

“Well, I didn’t actually ask them, no.”

“Why not?”

“Because I know what they’re going to say.”

“Great! So, next week you’re going to a convention where you’ll talk to dozens of new potential customers. Do me a favor — humor me! — and include your pricing scheme in the pitch. I’m sure you’re right and they’ll be thrilled, but since you’re so sure it certainly won’t hurt to include it. In fact, it will strengthen your pitch because it will match their expectations and therefore mitigate any worry that you don’t ‘get it.’”

“OK, I will!”

I could already see the self-satisfaction on her face. She knew she’d have a great “I told you so” moment next week, and in fact I was equally sure she’d have that moment! She is the expert, I’m not. Case closed.

Of course (you know what’s coming), it turns out she was wrong. And whenever an assumption is kicked out from under you, that’s when you learn the most.

The following week she sent me this email (my emphasis):

Ever since accidentally stumbling upon lean startup 1+ years ago, I’ve struggled to implement the principles correctly. Somehow my version of “lean” customer discovery involved hour long phone calls, relationship-building networking meetings, vague answers to improperly formulated questions…

In the past week of quick phone calls to vendors, I’ve learned more about this market than I did in the past year. I also got a good feel for when I no longer needed to do further discovery.

We’re all plagued by this defect of human nature — thinking we know more than we do — which then causes us to miss opportunities to actually learn something. I still struggle — in every customer call I have to consciously restrain myself from pitching and instead ask questions, and really try to understand what they mean instead of mapping their words onto what I want them to say.

The worst is when you’re an “expert” because then you’re even less likely to challenge your assumptions.

As an “expert” you’ve devised your own laws about what makes your market different from other markets, and what makes your company unique. Even with prior experience, this knowledge based largely on feeling, not fact.

When I say this to “experts,” their first reaction is (of course) defensive. “But I have 15 years of experience selling into the financial services sector; I know what makes them tick.” Shoot, I used this excuse myself recently: “I built a company and forged dozens of customer relationships in the software development tools sector; I know exactly how to sell into that market.”

This is wrong for a number of reasons.

First, markets change rapidly. You can’t rely on five-year-old information about your potential customers — even the stodgy big-company ones but especially the mass-market consumer ones.

Non-technical people now employ technology (iPhones, Facebook). Industries built around control of information are now out of control (real estate, publishing). Methods of reaching consumers change every year (compare SEO or AdWords strategies from 2003 and 2010). Expectations of what software should do, or what it should integrate with, or whether it’s OK for data to live on your laptop or someone else’s server, or whether it needs to be accessible from a cellphone — it’s all changing, all the time.

Ironically your 10-15 years of experience “in the field” might be clouding your judgement. Some of that experience is invaluable — so much so that it’s an unfair advantage. But your outmoded ideas prevent you from addressing the market as it is today, allowing a competitor to beat you with innovative advances they achieve exactly because they’re not shackled by old ideas.

Another way your experience can hamper you is that selling different products into the same industry is different.

For example, I talked to an entrepreneur with years of experience selling a standard medical device to doctors. He has an idea for a new software package for managing an expensive, time-consuming aspect of practice-management. Of course his rolodex gives him an lovely advantage — he can bounce ideas off potential customers and line up ten alpha testers before writing a line of code.

But he hadn’t done that. He told me that he’s been selling to doctors for years. I asked whether it was OK to install new software on their computer; he didn’t know because he was selling hardware before. I asked whether it was OK to depend on an Internet connection inside a secured hospital; he said “probably” but he’d never asked. I wondered what they would pay for this software; he said they paid a lot for this medical device so it should be easy to get lots of money for this software. I doubted that the budget for front-office software has any relation to that for devices; he hadn’t thought of that. I asked how many people had agreed they actually wanted this particular software, even for free, and he said zero, so far. But that didn’t worry him.

Your knowledge of one slice of a market doesn’t automatically set you up for other slices. You’re not starting from scratch, but you have to have an attitude of re-learning.

Of course if you can fuse your special knowledge with an open mind, that could very well be an unbeatable combination.

But you have to set your ego aside and actively force yourself to explore anew with a “child-like” mind. Use that rolodex to set up meetings and sales calls, but don’t assume you know what they’re going to say. Use that experience to come up with plausible theories, not to make decisions.

It won’t happen unless you force yourself to do it.

Jason Cohen founded Smart Bear Software, maker of Code Collaborator, a tool for peer code review and recent winner of the Jolt Award. He took Smart Bear from start to multiple millions in revenue and 50 percent profit margin without debt or VC, then sold it for cash. He is also a founding member of ITWatchdogs, another bootstrapped startup which became profitable and was sold. He’s also a mentor at Capital Factory (like TechStars or Y-Combinator in Austin). And he’s the author of Best Kept Secrets of Peer Code Review, the most popular book (35,000 copies) on modern, lightweight methods for doing peer code review effectively without everyone hating life. He blogs at “a smart bear.” Email him: jason (at) asmartbear (dot) com.

Guest post by Aarjav Trivedi, CEO of RideCell

At RideCell, we make life easier for dispatchers, drivers and customers of public transportation companies. Our software automates the manual work so that service providers are free to spend their time on “human tasks”. Ironically, while focusing on removing headaches for our customers through automation, we found that an internal lack of technology was causing some headaches of our own, specifically with our invoicing system (or lack thereof). Luckily, we discovered Tradeshift, and our invoicing headaches are now a thing of the past.

Nothing irritates a customer more than calling a service provider for information only to be put on hold or shuffled to an unhelpful auto attendant. RideCell removes the friction and bottlenecks that cause these delays. Our customers are taxi companies, bus companies, universities, delivery companies—any organization that manages a fleet of vehicles.

Here’s how it works. A customer requests a pick-up either via telephone, our web site, iPhone app or Android app. The request immediately shows up on the dispatcher’s RideCell dashboard. The dispatcher can either manually assign a vehicle to the job, or, if they are using our GPS and Auto-route module, the system will automatically assign the best vehicle for the job based its route, location and capacity. RideCell then notifies the customer that a vehicle is on the way, and the customer can track the vehicle’s progress right up to arrival. Customers can always opt to speak to live person, but, because RideCell is so easy to use, we’ve found that 80% prefer to use the automated system.

RideCell keeps track of metrics such as what time the call came in, how much time it took to assign a vehicle, when the customer was picked up and when they were dropped off. It will compile these data into reports to help service providers analyze the efficiency of their fleets. We even offer a diagnostic module that will monitor each vehicle for mechanical problems, so maintenance issues are no longer a surprise.

While our product is very high tech, our internal invoicing system was decidedly low tech. As a young startup, it’s important for us to run a tight ship. We’re not large enough yet to have our own accounting department, so we have an outside accountant that we use on a contract basis. For invoicing, we were just using a Word template and emailing the form to our customers. This led to confusion for everyone.

We had no way to consistently monitor the status of invoices—which ones had been paid and which ones were delinquent. With many different employees sending out invoices, if a customer called with a billing question, it invariably led to confusion, as we couldn’t be sure which individual had sent the invoice in the first place. We tried cc’ing everyone on invoicing messages, but that just got more confusing and inefficient. Since our accountant uses her own native accounting application, there was no way for us to incorporate an off-the-shelf system like FreshBooks for invoicing and have it work with her software. Then one day, I happened to read about a company called Tradeshift in a tech publication.

Tradeshift is a free, web-based invoicing application, and it’s extremely easy to use. You simply import your customers and suppliers into the system, and you’re ready to go. When you invoice someone, they receive an email and can either choose to join your Tradeshift network or continue to receive invoices in pdf format.

We get notified when each invoice is received, and if customers have questions or comments regarding their invoices, they can list them right in the Tradeshift system. That way, the right person answers the right questions quickly and efficiently. We share access to our account with our accountant, and she can immediately see which invoices have been sent, approved, paid, etc.

RideCell is not a one-size-fits-all company. We pride ourselves on designing unique solutions to fit our customers’ specific needs. With that in mind, we’re constantly innovating, adding new features and improving what we already have—it’s what we do best. By helping us replace a time-consuming and inefficient internal process, Tradeshift has given us more time to spend on what is really important to our business.

More info:

RideCell web site: http://www.ridecell.com/
RideCell blog: http://blog.ridecell.com/
RideCell profile on CrunchBase: http://www.crunchbase.com/company/ridecell
RideCell profile on Twitter: http://twitter.com/ridecell
Tradeshift web site: http://tradeshift.com/
Tradeshift blog: http://tradeshift.com/blog/
Tradeshift profile on CrunchBase: http://www.crunchbase.com/company/tradeshift
Tradeshift profile on Twitter: http://twitter.com/tradeshift

Guest post by Peter Stein, President of Fox RPM Corp.

Fox RPM Corp was founded 23 years ago to help companies manage the extremely complex and often anxiety-ridden process of relocating. In our relocation management practice group, we maintain a team of highly qualified professionals with years of space planning and move management experience, and we back them with the most innovative technology in the industry. At the heart of that technology is FoxFMS^SM, our custom space and facility management system.

Most businesses relocate once every five to ten years at most, so, understandably, no one on staff typically has significant experience managing such an undertaking. At Fox, we go through that process 100 times a year with our clients. This experience gives us unparalleled expertise in relocation management and helps us anticipate challenges and propose creative solutions, which saves our clients time and money.

Coordinating a move is an enormous undertaking. From IT planning, file planning, seating plans, and stakeholder communication to coordination with the design and construction teams, movers and other contractors, at Fox we represent our clients interests every step of the way. Each part of the process must be handled with thoughtful precision to ensure minimal disruption and a successful outcome.

Four years ago, a couple of our clients asked us take a look at Computer Aided Facility Management (CAFM) software to assist with specific projects. Most of the options we considered were too complex and too expensive to implement, but then we found a customizable enterprise solution, and FoxFMS was born.

FoxFMS is extremely simple to use and requires almost zero training. It allows us to import a floor plan of a client’s existing space as well as their new space and pair them with a database of people, furniture and equipment. We show the client where every employee, every printer, and every file cabinet will be located in the new space. This eliminates surprises and allows for more exact planning.

Before FoxFMS, the only digital way to approach this was to enter text in AutoCAD; however, most clients don’t have this software, and entering (and modifying) text in AutoCAD can be extremely cumbersome even if you do have it. More often it was done manually using laminated floor plans and grease pencils or printouts and sticky notes. As you can imagine, a few changes into a project and things started getting pretty messy.

The software allows the client to see and plan for adjacencies among employees and departments, which eliminates post project churn. Clients can print out different scenarios and circulate them among department heads for feedback. It allows us to print labels for furniture and equipment, so movers no longer have to rely on handwritten notes, struggling to decipher between a “6” and a “G” on a crate. As the move progresses, clients use the software to let us know if lights aren’t working in an office, if part of the space is too hot or cold, or if there are supplies missing in the restrooms.

For a monthly fee, we offer clients the ability to use FoxFMS long after the move is complete. This allows them to thoughtfully manage growth and appropriately arrange employees as changes in department sizes dictate. It also allows them to constantly monitor overall space usage.  A vacant office here and there over several hundred thousand square feet can quickly add up to where clients sometimes realize they’re leasing entire floors of space they don’t need.

Continued used of the software allows us to maintain a strong relationship with each client and demonstrate that we are a full service project management firm. The application is hosted online, so clients can access it anywhere at anytime. We have created a whole new practice group around FoxFMS, which currently constitutes 10% of our business and growing.

At Fox, we are passionate about delivering world-class facility services through exceptional teamwork and a broad range of capabilities. Utilizing cutting-edge technology tools ensures our clients receive the most current and comprehensive information necessary to execute their transition flawlessly. We have come a long way from grease pens and sticky notes over the last four years, and we look forward to where the next innovation will take us.

More info:

Fox web site: http://www.foxcorp.com/

This is a rough transcript of a talk I delivered recently at the start of Startup Weekend in Austin.

Startup Weekend is a friendly competitive event in which teams of 3-5 build a startup from scratch over the course of a single intense weekend. It culminates with informal presentations to a panel of judges who declare a winner, but of course the competition is only an excuse to facilitate the true benefits: honing startup skills through experience, the thrill of pressure, and working side-by-side with other ambitious people instead of superficial “networking.” Indeed, although most startups produced by Startup Weekend don’t persist, frequently participants recombine weeks later to form real startups.

You have only 50 hours to build an entire little functional company, so I’ll be brief. But I’d like to share one piece of advice which I believe significantly increases your chance of walking away on Sunday with a real business.

Everyone here is a builder, a creator — whether a back-end programmer, a Linux hacker, a front-end producer, or a designer. You make stuff.

That’s great of course, because in a startup you either need to be making stuff or hauling in revenue — there’s no room for managers and executives and strategists. But this also produces a natural weakness, and those who overcome this weakness over the next few days are most likely to win.

You and I know you can code an app and produce a simple clean home page. Everyone here can. So the quality or quantity of that creation will not be why your company succeeds.

In fact, I was on the judging panel last time, and the tech and design had nothing to do with our decisions. Judges don’t think “Which had the best algorithm” because this isn’t a programming contest. Judges don’t think “Which had the cleverest logo,” because this isn’t a design contest. This is a startup contest.

And this bigger than just Startup Weekend. Customers don’t patronize companies on the basis of the difficulty of the code or the unit test coverage percentage or whether you used Bodoni instead of Times New Roman on the home page. In fact I’ve made millions of dollars on companies with hideously ugly websites and buggy code. Those things are actually not the most important things. Real life is a startup contest too.

So if these things — the raw materials and skills used in web-based startups — are necessary but insufficient, what is valuable? What will separate the companies this weekend? What are those things outside your comfort zone which nevertheless are the things that will determine who wins?

Here’s just a few:

• Sharpen your pitch, achieving such clarity and brevity that any potential customer immediately understands that you’re relevant to their pain and your product could very well solve it, and so that it’s equally apparent to other intelligent people — like the judges or future investors. Your verbal pitch should be under 60 seconds; your home page should entice in three words and explain in under fifty. This is harder than it sounds because it forces you to make strong choices about what you’re building and why and who cares and what they’ll pay for it. It is these choices that are valuable; creating a brief pitch merely forces the issue.
• Get 5 strangers to give you feedback, if not on a prototype then just an interview. Validate the pain, what’s minimally needed to address the pain, and what they’d pay for it. Even if they don’t agree, even if you change your story each time, you’ll learn what’s critical and what you still need to resolve. A concept validated by five people is far more valuable than a working application that no one has critiqued.
• Construct a plausible business model. Not a business plan, but rather a simple spreadsheet with pricing model, how money flows in and out during normal operation, customer acquisition cost, and therefore how many customers you’ll need to break even on operating costs, and how many more to break even including human costs. It’s surprisingly difficult to build a company where revenues outweigh costs of marketing, salaries, and operations, even at scale. If you prove yours can work, you’re already ahead of the group.
• Produce evidence of potential customers already looking for a solution to this problem (e.g. complaining on Twitter, asking on forums, musing on blogs, paying too much money for crappy alternatives). Too many companies build cool tools which no one particular wants. Evidence of searching and asking demonstrates not only need but suggests a way to reach those people.

Your problem is that since coding or design is what you like, what you’re good at, what’s fun, you’ll be tempted to dive in and spend too much time inside TextMate and Photoshop.

But then you’ll have built a curiosity, a hobby, some trivial code and a typical website, yet another public repo on github and a free WordPress blog. Of course you can do that — all of you can — which means it doesn’t help you with the judges. All that work doesn’t make a company, it makes a website, and this weekend is about companies.

If all you build this weekend is a landing page that describes what your company will do and asks for an email address to be notified when ready, and if you manage to get 50 emails, that is far more of a real company than a team who builds something that works but no one asked for it. Because if you can identify a need, all of you have the skills to meet that need. The opposite is not true — a website cannot generate people who are interested in it.

So force yourself out of your comfort zone. You’ll also do coding and design and that’s fine of course. But force yourself to do those other things that create a valuable business, because those who make substantial progress on even one or two of those points are the ones who will win this contest and are mostly likely to have in fact built a viable little company.

This is a life-lesson that extends beyond Startup Weekend. You don’t need more practice writing code or creating logos — you can do that any time. Why not take this opportunity to practice something you’re not already expert at? Why not use this as a chance to grow and get better at other things which are equally important to the success of any startup?

You can go back to building things for the sake of building things on Monday. This weekend, build a company.

Jason Cohen founded Smart Bear Software, maker of Code Collaborator, a tool for peer code review and recent winner of the Jolt Award. He took Smart Bear from start to multiple millions in revenue and 50 percent profit margin without debt or VC, then sold it for cash. He is also a founding member of ITWatchdogs, another bootstrapped startup which became profitable and was sold. He’s also a mentor at Capital Factory (like TechStars or Y-Combinator in Austin). And he’s the author of Best Kept Secrets of Peer Code Review, the most popular book (35,000 copies) on modern, lightweight methods for doing peer code review effectively without everyone hating life. He blogs at “a smart bear.” Email him: jason (at) asmartbear (dot) com.

Guest post by Bradley Robinson, Director of Online Marketing at Solar City

SolarCity is the nation’s leading full-service solar provider for homeowners, businesses and government organizations—the first company to provide solar power system design, financing, installation and monitoring services from a single source. We often use videos that we post on the web or feature at trade shows to help people learn the basics about solar—how solar works, solar financing, etc. We’ve been using a new technology from a company called Market7 that has made the video editing process much easier than it’s ever been before.

Editing raw video footage among numerous, non-technical team members can be incredibly painful and time consuming. Each user must view the video on a local video play and do what’s called a “paper edit” where they write down the time code and comments for any changes to the video. The video project manager then tries to make sense of and reconcile multiple versions of the paper edits into a single, actionable document for the video editor. The process is extremely cumbersome and error-prone.

Market7 allows non-technical users to view video footage and make real-time comments. A video is uploaded to our account on the Market7 site, and we invite colleagues via email to view the video. Each team member clicks a button while the video is playing, types in his/her comments, and then clicks save. This saves the comments in the time code of the video, so it corresponds to the action happening on the screen and gives the project manager context for the comments. All comments are visible to all team members, which reduces duplication of comments to the project manager.

After reviewing the comments, the project manager can make any necessary changes and make them actionable for the video editor. The video editor logs in and actually downloads all of the comments into the timeline of his video editing software allowing the editor to work in his native video application.

The best part about this system is it was designed with non-technical users in mind. The first time I invited other members of the marketing team to review a video, I had a 100% success rate of users accessing the video and actually figuring out on their own how to add comments to the stream. You can’t do better than that.

The process of producing a short video—filming, editing to rough cut, circulating for comments, and then creating a final clip—used to take 4-6 weeks. Using Market7, our production time has more than halved to 2-3 weeks or even less. We recently produced a video in 12 days from start to finish!

SolarCity has an annual subscription to Market7, which allows unlimited projects or users. We just need to manage our disk space in our account, and as long as we don’t leave old projects from previous years on the servers, we have ample disk space. After implementing this solution to review videos, we’ll never go back to paper edits.

More info:

Solar City web site: http://solarcity.com/
Market7 web site: http://www.market7.com/
Market7 profile on CrunchBase: http://www.crunchbase.com/company/market7

We recently underwent a Cinderella-like transformation: A total redesign of the WP Engine website from despicable steaming pile of hideousness to a designed, thematic — dare I say artistic? — sleek new look.

Does it matter?

It must have mattered. Look how bad it was. Not only were the pages just ugly, they were peppered with database errors and CSS blowups:

Just look at us now, sporting a grayscale 1950′s automotive motif playing off the “engine” concept using the latest in CSS3/HTML5 trickery:

It was such a contrast, customers emailed us saying “Thank God you fixed that horrible website. I was embarrassed when referring you guys to friends.”

But hold on. They were still customers. And they still were referring us to friends. So I wonder, did it really matter?

Modern Lean Startup theory blares out from the red-tiled rooftops of Stanford: Seek the Data and Ye Shall Find!

First the bounce-rate. If our website design was repulsive — literally — the bounce rate should now diminish. Here’s the data:

Can you see at what point in time we changed design?  No?  Must not have made a difference.

Let’s look at time-on-site:

Nothing.

But this is all superficial — what Really Matters is the Conversion Rate: are more or fewer people signing up each week:

Hmm. Looks like everything objective is saying “it doesn’t matter.”

But as much as I respect and follow Lean Startup theory, objective measurements aren’t the only things that matter. Those customer emails matter too.

Maybe the most interesting change was in our own team. I heard things like “I’m soooo glad we fixed the site. I was really embarrassed by it.” That matters.

The other day we landed a large customer who said they could tell from our website that among our competitors we’re more mature and ready to handle a bigger customer like them. I can tell you — objectively — that we’re among the youngest of our competitors, and although I have a list of reasons why “we’re better,” the truth is that particular customer would probably be served just fine by several of those competitors. Was it the design that gave us that edge? Could be. Didn’t hurt, anyway.

Still, the more I look at the importance of design in the startups in my little career, the less it seems to matter. I’ve chronicled the eye-melting design work that punished potential customers in the evolution of the Smart Bear website, and yet with all that cringe-worthyness, here is a company that doubled in revenue and profit like clockwork for half a decade — a stat any startup would be proud to match. It doesn’t prove design doesn’t matter, but it does suggest design may not be the deciding factor.

An even more extreme example comes from my second company ITWatchDogs. I displayed its old homepage at the magnificent Webstock design conference in Wellington earlier this year; the crowd whooped at our violent assault on the visual arts, complete with calliope menubar colors, two broken images tag above the fold, and a layout model that could be seen as a “grid” only after consuming a pillowcase of mushrooms:

But you’re anticipating the punch-line — ITWatchDogs grew every month, made millions of dollars, stole business from competitors with billion-dollar market caps (and professional-looking websites), and had a successful exit.

Of course it’s only fair to also point out some of the many instructive counter-examples:

• Hipmunk is the same thing as Orbitz or Travelocity — the only difference is amazing design, not just because it looks good but because it’s so useable. In the words of Joel Spoksly — the design “affords usability.” (P.S. Early Hipmunk team member Alexis Ohanian is so cool and smart and rich and funny and successful and good-looking that really he doesn’t deserve to be alive. (P.P.S. Hey flamers, for God’s sake it’s a joke! Don’t you realize I’m just sore from losing the Pecha Kucha competition to him?))
• I always use and recommend Amy Hoy’s time zone tool only because it’s just nice to use and look at. (P.S. she also authors a terrific blog aimed at the solo entrepreneur.)
• Many people credit Mint’s smash success with their terrific design. Considering how many features were broken for how long, it’s hard to argue.
• 37signals documented — with data — how design changes results directly in more credit-card-swiping customers. It doesn’t get more “business value” than that.

So where does that leave us in the “matters / doesn’t matter” question of design?

I think you can go either way, but you must decide whether or not you’re going to value design as core to your startup’s identity, and then act consistently. Here’s what I mean.

It’s clear from the outset that design is the only competitive advantage Hipmunk has over its competition. Specifically, by making the flight-search problem pleasurable and useable instead of feeling like you’re navigating pivot tables from Excel ’98. They don’t have better data, better branding, better name, better SEO, or more money. Just better design, and not just easily-copyable incremental improvement, but a quantum leap better.

When design is that fundamental to the business — how it acquires and retains customers, garners attention and referrals, and distinguishes itself in the market — obviously design can be the most important thing.

Conversely, at ITWatchDogs the company’s internal and external culture was that we’re low-cost, friendly, approachable, regular guys, who understand exactly what you worry about, exactly what your budget is, and we nail it. The site might have looked bad, but our message couldn’t have been clearer.

In fact, all our competitors had these slick, corporate-looking sites, whereas the indifferent chaos of our website was not unlike our customers’ offices which themselves were littered with assorted hardware corpses and solder stains. (And I don’t buy the typical retort that “that’s design too,” because no designer on Earth would have put her name to that website in the name of looking “relatable.”)

Neither is it an absolute either-or whether design is important; WP Engine is a good example of this. We did fine before the redesign and we’re doing fine after it; I’m glad we did it, if not for objective data than for subjective feelings.

But it is useful to decide where you come down on the question of design in your startup, because if it’s important you’d better work on that right now and develop a consistent culture of valuing design through-and-through, and if it’s not important you’d better decide what is important and nail those things all the harder, because you’ll be competing with people who are using superior design to cover up their lack of competency in those same areas.

Jason Cohen founded Smart Bear Software, maker of Code Collaborator, a tool for peer code review and recent winner of the Jolt Award. He took Smart Bear from start to multiple millions in revenue and 50 percent profit margin without debt or VC, then sold it for cash. He is also a founding member of ITWatchdogs, another bootstrapped startup which became profitable and was sold. He’s also a mentor at Capital Factory (like TechStars or Y-Combinator in Austin). And he’s the author of Best Kept Secrets of Peer Code Review, the most popular book (35,000 copies) on modern, lightweight methods for doing peer code review effectively without everyone hating life. He blogs at “a smart bear.” Email him: jason (at) asmartbear (dot) com.

Guest post by Carrie Johnson, Marketing Manager at Creative Edge

Creative Edge is an online collection of videos and books filled with the most current and thorough information available about graphic design, web design, photography, and more. In short, it’s online training for creative people. We are new to the market, celebrating our first year this month, and we use social media to reach potential customers and stay in touch with existing customers. To that end, we have been working with a social analytics company called PeopleBrowsr to help us design, implement and monitor our social media initiatives.

There are a lot of companies offering software, design, and photography training online, but what we do is a little different. We aggregate the training videos from many different producers. Our full collection of video training and reference books comes from over 40 publishers, including Peachpit, O’Reilly Media, Adobe Press, Focal Press, Course Technology PTR, Total Training, Apple Certified Training, Wiley, Class On Demand, VTC, and many others. By pulling together the best of the best, we can offer a comprehensive learning library for our subscribers.

O’Reilly Media founder Tim O’Reilly first introduced us to PeopleBrowsr. Tim has been a big advocate of ours and saw that with limited resources and a new brand in a crowded space, we would face an upward battle gaining traction in social media outreach. He knew of PeopleBrowsr and thought they could help us ramp up quickly and efficiently measure success.

PeopleBrowsr offers full service social media support. For us, they focus primarily on Twitter-based outreach. We meet with them every 2 weeks to walk through the target audiences we are focusing on, PeopleBrowsr then goes back and searches through their systems to find the best matches for us in the Twittersphere, and they put together a plan for how to attract them to our Twitter feeds. Following each initiative, they help us measure its effectiveness, which for us means increasing our brand awareness, site traffic, and positive mentions of our product.

We entertained the idea of hiring or contracting a freelance social media person, but the training and overhead would have been too expensive.  PeopleBrowsr was able to deliver what we needed with little to no ramp-up time. Plus, we get to learn from what’s working with their other clients.

Because we are such a young company, it is important for us to stay close to our customers and be able to listen and learn from them. Other web outreach firms often take over the relationship and pride themselves on being your outreach engine, but for us that wasn’t going to work. We want to grow our reach online, but we never want to give up our social media outreach. PeopleBrowsr has allowed us to ramp up quickly without completely detaching ourselves from our community.

The whole process has been remarkably painless. We basically met with them to discuss our product and our goals, they came up with a plan and schedule, and we reconvene every 2 weeks to measure and adjust the plan.

Since we started working with PeopleBrowsr, we have seen a 10% increase in Twitter followers each month and a considerable uptick in the response rate to our online promotional campaigns. We’ve also seen a huge increase in people who identify the name “Creative Edge” with online training—an increase in brand awareness that is critically important for a young company like ours.

More info:

Creative Edge web site: http://www.creativeedge.com/
Creative Edge blog: http://blog.creativeedge.com/
Creative Edge on Twitter: http://twitter.com/creativeedge
PeopleBrowsr web site: http://www.peoplebrowsr.com/
PeopleBrowsr profile on CrunchBase: http://www.crunchbase.com/company/peoplebrowsr
PeopleBrowsr blog: http://www.peoplebrowsr.com/Blog
PeopleBrowsr on Twitter: http://twitter.com/PeopleBrowsr

Netx is a results-obsessed digital marketing agency based in New York City, and since starting our company in 2001, culture has always been very important to us. A big part of that culture is to recognize and thank members of our team for the work they do, and recently, we began using an online tool called Rypple to enhance these efforts.

For some time, one of the ways we shared feedback was for select members of the team to send emails around whenever a client recognized great work, but we really wanted something where the entire team could thank each other in a similar way more frequently. We knew that we had a great team doing great things, and we wanted a more public way of sharing these successes.

At first we tried a system called “The Love Machine” that was started by the guy who built Second Life. That system was good for IM-like updates but we soon wanted more.

Luckily we stumbled across an article about Rypple. Rypple set out to change the somewhat arcane, traditional performance review process by providing a more efficient way to recognize achievements and give feedback online and in real time. When these conversations happen offline or via email, it’s typically in a closed environment invisible to the rest of the team, and it’s easy for the exchanges to get lost. Rypple provides a single location to provide feedback and set goals and saves these discussions so they can be accessed later. Not all interactions like this are appropriate for public consumption, so Rypple allows for private conversations as well.

One of the features that we really love is the ability to create custom badges (featured throughout this post) to recognize unique efforts or achievements. For example, we have the “Early Bird” badge for team members who consistently arrive to work early and the “Burning the Midnight Oil” badge for those who stay late. We created badges to recognize the winner of our March Madness and Super Bowl pools as well as a few other fun ones.

We’ve also used Rypple to upload pictures of the team and thank multiple people at once. We even mounted a flatscreen TV in our main office area to display Rypple updates thanks to a custom feed Rypple helped us launch.

Everything with Rypple is web based and really simple to set up. The only real challenge is to keep the ball rolling and keep the feedback continually rolling in. At first, adoption was rampant—everyone loved giving and receiving the recognition, but it has had periods of tapering off. As leaders in the company, we have a responsibility to continually re-energize that system to keep it going.

We only pay a few dollars per month per person to use Rypple. Considering that we definitely spend more on coffee, we think it’s a small price to pay to make someone feel appreciated about something they did. We’ve had very low turnover in the past 18 months, and I think this is one of the many things that helps contribute to people feeling good about the place they work.

More than anything else (even money) people want to know that the work they do matters and makes a difference. Rypple helps us give that pat on the back in a public environment and makes people want more of it. It’s helped us create an environment that fosters motivated, energized employees, and we’ve found that leads to happy, satisfied clients.

More info:

Netx web site: http://www.netx.com/
Rypple web site: http://rypple.com/
Rypple profile on CrunchBase: http://www.crunchbase.com/company/rypple

Guest post by Major Hayden

Anyone who says management is easy obviously hasn’t done it for very long or they’re not doing their job very well. Coordinating the activities and personal development of each person on the team is always a challenge and it introduces an unbelievable number of variables into an already difficult job. However, watching members of the team grow and succeed in their work is tremendously rewarding.

Taking on the job of a technical manager presents its own unique challenges. It’s easy for a technical manager to lose focus and get down in the weeds of daily work. It’s also very difficult to let go of the reins and resign to the fact that the direct involvement in technical work will have to be reduced.

These problems resonate with me as I’ve recently taken on another technical management role at Rackspace. My previous experience involved managing a team of technicians at various skill levels who were working on customer environments made up of dedicated servers and network equipment. The current position has quite a few differences. I’m now managing a small group of highly technical and extremely dedicated Linux engineers and we’re responsible for maintaining the systems and networks which run the Cloud Servers product.

One of my goals of this blog is to help others learn things much more easily than I have. Here are some things I’ve had to learn the hard way while working as a technical manager:

Get out of the mindset of an individual contributor
When you’re a system administrator on a team (or by yourself), you’re often judged on your personal job performance. Team interaction is important for some companies (especially at Rackspace), but not for others. Breaking the mindset of being an individual contributor was extremely difficult for me to do.

Managers are judged on the success of the team as a whole. Encouraging your team members to succeed and playing an active role in their personal and professional development is key. Each time you find yourself buried in the weeds of a problem rather than facilitating your team’s work on the problem is when your performance as a manager will drop. If you do it more often, you may find that your team members aren’t getting the support they need.

Don’t be afraid of your team becoming smarter than you
One of the biggest things I’ve heard from my team is: “Aren’t you worried about losing your technical skills when you’re a manager?” My answer: “Of course.” Anyone who has technical abilities will always be afraid of watching those abilities wane over time. However, as your team becomes stronger, you should be able to continue learning not through your own work, but through theirs. When your team members see that you’re still interested in learning and you’re now able to learn from them, they’ll become more energized about their own work.

If you find yourself thinking negatively about a potential job candidate because they’re smarter than you, step back and think for a moment. Put your own ego aside and consider what’s best for you, your team, and your company. Your goal is to build a strong and successful team, not to pad your own ego. If your managers are judging you (as a technical manager) on your technical ability, then you need to solve that problem first.

Inspire instead of direct
Every manager faces the challenge of working with team members who disagree with a particular company policy or with the direction of their particular infrastructure. Keep in mind that your team members are probably not intending to be insubordinate and they might have something useful to contribute.

When you find yourself locking horns with your team members, inspire a discussion about the problem. Break out the disagreement onto a whiteboard and let the team make suggestions for improvements. Even if the entire discussion leads back to the fact that the original problem is inevitable, fostering that feedback loop is critical. You’ll learn more about your team while they find ways to express their opinions and feel empowered.

The really tough part is when your team comes up with an alternative plan and you find yourself presenting to your leadership team. Always remember to take it seriously and know that you may need to refine the plan many times over before you find something acceptable for your team and the business.

De-stress by staying on task
If you’re anything like me, you need some way to keep tabs on action items coming from meetings, e-mails, phone calls, and walk-ups. I’ve heard great things about applications like OmniFocus and Things, but I settled on 2Do. I really enjoy a strong to-do list which allows me to set priorities, due dates, and write extended notes about a particular task.

The best way to tackle a wall of tasks is to keep them organized into a concise list. Even if it’s a small task, get it into your list so it’s on your radar and you won’t forget it. Work through the simple tasks and the high priority ones first but watch out for tasks with due dates.

Conclusion
All of these processes get easier over time and although your job will surely have challenges and pitfalls, the enjoyment will greatly increase. I feel privileged to lead a team of talented people who work on a complex and ever-expanding product.

Also, I’d like to mention that I’m not an expert on management! There are probably much better ways to do much of this than I’ve outlined in this post. Be sure to share your ideas in the comments section below.

This post was originally posted on March 29, 2011 on Major’s blog, Racker Hacker.

Major Hayden is a Linux Systems Engineer for Rackspace in San Antonio. He works with the Cloud Servers and Slicehost virtualization products. Major’s primary focus is on base image maintenance, kernel customization and tactical optimization solutions. He also maintains multiple blogs and a MySQL optimization script called mysqltuner. Outside of Rackspace, Major enjoys contributing to the open source community, running, and taking care of his chinchillas.

Guest post by Major Hayden

If you work for a growing company like I do, it’s inevitable that you’ll have to do your fair share of interviewing. I love it when I leave an interview with a good feeling about the candidate. That “wow, they really nailed it” feeling is always great to have when you need to fill a critical role. Most often, the successful candidates are the ones who do their homework before they ever walk in our office doors.

What do I mean by “do your homework?” Here are some bullet points to get you on your way:

Know what the company does.
This one is critical and it should be easy. However, make sure to do thorough research first. For example, if you interviewed at a company like Apple, becoming familiar with their hardware lineup should be a no-brainer. That’s their bread and butter. On the other hand, remember that Apple isn’t solely a hardware company; they write lots of software, provide online productivity services, and they distribute music, movies, and other entertainment media.

While you’re doing this research, try to discover what makes the company unique. Sure, Apple sells laptops and desktops (just like a lot of other companies), but what makes their particular products unique? Is there something unique about the way they provide their services? Have they cornered a certain market segment by providing a combination of products and services to that group of consumers? Answering these simple questions may help you tip the scales in the interview process.

Try one or more of the company’s products.
The feasibility of trying a company’s product before an interview could be debatable. For example, if you wanted to interview at Cray, you probably don’t need to drop $2M USD on your own XE6 before walking in the door. For companies where the barrier to entry for purchasing a product is much lower, such as cloud computing companies, there’s no excuse to not try things out first. Amazon has a free tier and a Rackspace Cloud Server could cost you as little as $2.50 per week.

It’s concerning when I talk to an applicant about a job working with Rackspace’s Cloud Servers and they haven’t tried out any cloud products from any provider. How can I take a candidate’s interest seriously when they haven’t shown interest in any portion of my group’s market segment?

Know what the company’s competitors do.
It’s often more impressive to an interviewer to know what a company’s competitors are doing and how it compares to what that company is doing in the market. For example, if you can walk into an interview and say “I like the way your company makes these widgets, but Company X is able to make them more lightweight, and I value that more than the added customer service your company offers.” This shows the interviewer that you’re familiar with various products in the segment and you’ve used them enough to understand what makes them different.

Some of you might be thinking: “Why would I say something like that to the interviewer? They’ll think I’m being too negative about their product.” That’s always possible, but you can guard against it by wording everything carefully. Make sure you have a solid reason for the way you feel that is based on something substantial (usability, price, features, etc). I’ve had candidates talk for five to ten minutes about why one of our product is inferior to one of our competitors’ products and I was very impressed.

One quick gotcha: your interviewer might turn your comments back on you and ask you how you would improve one of the inferior products (I do this regularly). Make sure that you’re prepared for that question and consider offering up a suggestion before the question is presented to you.

Can’t get the information you need? Ask!
When you reach the end of the interview and the interviewer asks if you have questions, be sure to ask any questions about topics you had trouble researching. Going back to the Cray example, compare what you know about an XE6 to servers you’ve used before. You could mention a problem you had with the density of your previous configurations and ask how they overcame that hurdle at Cray. If it’s a proprietary trade secret, you might not get an answer, but they’ll know that you did some serious research ahead of time. If they can share the answer, they might still be impressed, and you might end up learning something you didn’t know prior to the interview.

Conclusion
In summary, doing your homework and learning about the company shows the interviewers that you not only have what it takes to do the work, but that the work interests you as well. I’ve interviewed folks in the past who lacked on technical ability but had plenty of desire and drive. More often than not, those people are now Rackers.

This post was originally posted on May 2, 2011 on Major’s blog, Racker Hacker.

Major Hayden is a Linux Systems Engineer for Rackspace in San Antonio. He works with the Cloud Servers and Slicehost virtualization products. Major’s primary focus is on base image maintenance, kernel customization and tactical optimization solutions. He also maintains multiple blogs and a MySQL optimization script called mysqltuner. Outside of Rackspace, Major enjoys contributing to the open source community, running, and taking care of his chinchillas.