Monday, 25 June 2012

What to do when your business goes wrong

There's two reasons why things don't go the way we want.

1. The Universe is a source of infinite possibilities. You're doing the right thing - more or less - it's just that you can't plan for everything, and something just slapped you in the face for trying:

2. You've got it wrong. The Universe and a number of your colleagues and customers have been trying to tell you so, but you won't get the hint until they explain through the medium of breakdance to a soundtrack co-written by Björk, Metallica and Wagner, sung by Ruby Wax and a backing chorus of penguins.

The trick is to identify which category applies.

Yes, I'm being flippant, but the principle stands regardless. As I'm hinting, the problem is often ego: we're damned sure we've got the Next Big Idea, and despair at a Universe that doesn't "get it". So how do we tell?

Now, I'll admit I'm no expert here - but I've run six companies to date, with results varying from complete success to abject failure, so at least I've some experience and a few mistakes from which to winnow an answer.

And that answer seems to me to be metrics: impartial ways of analysing your idea, your approach, your cashflow - to find what's good and what's bad. If things are going wrong, you need to find out where the point of failure is, and be prepared to discover it's you.

Every company has a product, whether that's a widget or a service. That's the starting point.

If it's not selling, find out why. If it used to sell, but isn't now, what's changed? If it's selling, but not making money, understand your cashflows: are you charging enough?; are your overheads too high?; have your unit costs risen unnoticed?; do you have a problem getting invoices paid on time?; are returns killing your profits? Is your marketing pitch-perfect, being seen in the right places, and cost-effective?

It's by no means a comprehensive list, of course, but it's intended more to help you stop and try to take an impartial view. If you find that too difficult because you're "too close to the business" - and a lot of people do, it's not unusual - buy in an outside opinion. A business consultant to look at your business end-to-end. An independent accountant to scrutinise the cashflow model. A surveyor to poll your customers, current and (critically) past. A marketing consultant to examine how you're promoting your business and products, and check your media coverage for message and volume. If you're uncomfortable with any of these, that's probably the one to go for first! (We instinctively avoid exposing our weaknesses - it's a primal thing.)

If you don't understand why things are going wrong, and getting in help sounds too much like admitting fault, then - excepting Divine intervention - your business is doomed anyway: sorry, but that's how it is. The outcome might be that anyway, but at least you can walk away with your head held high, and eyes on the next chance.

On the other hand - and even now, I believe this is the most common outcome - you may well find that there's a kernel of value in the business that just needs food, water, time and effort to germinate into profits, if you've the will to do what's needed.

Thursday, 7 June 2012

An open letter to Werner Vogels, Amazon's CTO

Dear Werner,

Firstly, I want to congratulate Amazon for the remarkable success of Amazon Web Services, and the remarkable vision that gave rise to it. I've been a user of AWS since before most people in the industry had heard of it. AWS has completely changed the technology startup model: no longer must a funding proposal include $100k or more of machine room fit-out and infrastructure - in fact, many startups that would have needed venture funding can now grow purely on turnover, paying for their infrastructure at the same rate that the infrastructure's generating cash.  The impact on Big Business has been no less revolutionary, allowing a tighter fit of cost and need than ever before.

But it's startups that I wanted to talk to you about.

I was one of the many who encouraged AWS, through feedback forms at your technology events, and mercilessly lobbying your staff, to introduce a Developers' Conference.  I was delighted to read, after the London events this year, that you had listened, and that the first re: Invent AWS Conference has been scheduled for November 27-29, 2012 in Las Vegas. This is a really positive move, and reinforces the message that Amazon is putting as much effort as possible behind developers.

I have no doubt it will be oversubscribed. And it will be tempting for Amazon to exploit that fact, and charge substantial rates for delegates. I think that that would be a very, very bad idea.

I know you're very well aware of this but, since this is an open letter, I'll say it for the audience anyway: this year's startups will be Amazon's biggest income generators a few years from now. The problem is that right now, those self-same startups aren't flush with cash.

Silicon Valley companies can just send delegates for a short hop over the hills. The picture is very different for those of us outside North America: airlines typically charge around $1600 extra for a return flight - even in coach - if we don't stay over a Saturday. So whether we do that, or take the hit for a shorter stay, it's going to cost us $2,500 or more just for flight, hotel and living expenses...per delegate. That's a big hit for a small firm. And each delegate's just taken a week out of the office, when they could be generating value. That's a lot different to a short internal flight and two nights at TI.

I won't belabour the point - but I will make this bald statement: if Amazon chooses to make re: Invent a profit centre, not a loss-leader or promotional write-down, I do believe it will have a negative impact on your business five or ten years down the line - an impact far more substantial than the cost of staging re: Invent.

I don't want that to be the case. I'm an outspoken and enthusiastic advocate of AWS, and I don't want to see you lose your global thought leadership in cloud computing provision, because so far your ideas have all* been absolutely on the money, you've anticipated my every cloud need to date, and you're way ahead of your competition.

So please, make it easy for us startups, and not just the North American ones, to send our delegates to re: Invent. And we'll do our damnedest to help you fly, too.

Thanks for listening - all the way from the very start to today.


(* Well, apart from not allowing non-North American requesters use Mechanical Turk, but we'll let that ride. :) )