Family, Friends & Fools

About technology, business & management issues..

  In the world of personal finance there is the concept of  FFF (Family, Friends &Fools) as initial funding source for anyone wishing to start a business or develop a project that will generate some wealth in a given time.

Interestingly, both in consolidated markets, such as the American or European who have developed  powerful stock markets and where, until recently,  had more than enough capital to risk. However, borrowing  money or finance your ideas with your parents, friends or any known, without fear of taking risks, remained the first choice of financing.

The reasons? Just the emotional factor plays a crucial role here. Family and friends are people who might be interested in developing your personal aspirations(especially your family) while friends see an opportunity to solidify your relationship as they could, tentatively, to have some sort of benefit. In either case a third party (fool) would be more interested in the factor of the potential financial rewards that helping you develop your personal desires.

However, it is the easiest way, without bureaucracy, without many formalities to access a modest amount of capital to start your business.

As with any risky investment, the latter could jeopardize your relationship with your family and friends in case things do not go well. You have to remember more than 80% of businesses do not survive beyond 4 or 5 years. Over 50% you will not have a higher life beyond 12 months.

In any case, any relationship will invariably be modified by entering the factor of money into the equaton.

Have to think twice if the journey is the reward after all.

www.clarensyst.com.mx

Feedback.

About technology, business & management issues..

      Last week  we started with the final testing in our web application named Carleon  which has been developed and will be part  of Clarensyst´s core Every.Cloud portal that will include some tools designed especially for the SME market in Mexico.

Consciously the web app was sent to multiple end users whose status ranged from friends, work colleagues, IT industry professionals, lawyers, vendors and ending with CEOs of construction and real estate companies.

As expected feedback has been mostly valuable because it allows us to understand how an end user can prejudice a tool based on their professional background and the objective that the user thinks that the tool should pursue.

We could classify the feedback in several categories, but the simplest is to group it like this:

a) Feedback  based on functionality.

Users who have previous experience on web apps relatively easily found the tool simple & intuitive to use. Although they suggested improvements they also had no trouble understanding its functionality. By contrast, users who are not related to this market found it hard to manage it

This is a clear example that you cannot design tools to serve "all the people all the time."

b) Users who are related to the industry quickly suggested improvements as to the information captured by the tool as it is  better deployed.

In this case the feedback is not based on the tool´s functionality but rather on the added value  perceived by users based on the  quality of the information managed by it.

As an example one could say that a salesman only needs to "monitor" the process of selling as systematic and simple as it should be but a lawyer would be more satisfied if the tool allows him to check out all the paperwork included in a closing sale.

In the end, as the old saying goes “one cannot meet the needs of everyone on the first try”. As a new-born baby, the tool provides an approach, a philosophy, an idea of ​​how to do things.

The problem is that whether or not this idea seems good enough for many people.

www.clarensyst.com.mx

Freemium.

About technology, business & management issues..

     Since the early eighties software developers began to look for ways to efficiently cover marketing and production costs for products and services delivered.

In those years it was easy to obtain “free” copies of computer games or basic-purposed enterprise software. The same companies "gave away" these copies as a way to advertise their products to their customers in hopes of them for eventually buying the "official" versions and thus generate relevant income for the company.

With the advent of the internet and specifically with the Web 2.0, this particular business model has started to rise again through the suppliers of products and technology services. Since the cost of generating these technology products is considered negligible compared to manufactured goods, technology gurus like Chris Anderson and Tom Evslin argued the benefits of it.

Specifically targeted for technology products, the model proposes, for example,  to develop business software deployed through a platform that could be used by hundreds of thousands of users (economies of scale), this software will have basic functionality that users can used without any problem.

In theory this approach will allow the adoption of the service / product by thousands of users without need to invest in expensive marketing campaigns and relying heavily on word of mouth advertising.

Eventually, as the user adoption was complete, it could offer an improvement (upgrade) in the service or functionality of the platform. The difference is that now, this upgrade would cost for the user. This service would be able to generate income.

It is easy to imagine and understand this model if you think of LinkedIn, the social network that brings together the professional profiles of millions of users around the world.

However, the model has its critics who emphasize the feasibility of opting for this type of model, in which high costs are incurred early in hopes of generating income in the long term. There are many venture capitalists who prefer a model scheme that focuses on generating revenue as quickly as possible.

Whatever the case, the model is here to stay. At least until the cycle of Web 2.0 comes to an end and the model has to reinvent itself.

Crossing the Chasm.

About technology, business & management issues..

    A few years ago Everett Rogers coined  the term "diffusion of innovations" which  has been much studied and debated over time to determine the stages of adoption of new technology, whether it is a business model, a gadget or  enterprise software.

In his book "Crossing the Chasm", George Moore discussed more in detail the ideas originally proposed by Rogers. Moore in this analysis focuses particularly in the point between the early adopters (enthusiasts) and the early Majority (pragmatists).According to Moore there is a space (gap) that most of the products or services does not seem to overcome frequently. Moore calls this gap as a chasm which is needed to successfully cross the product is adopted by a majority of potential users.

Unlike Everett, Moore proposes techniques and strategies to try to cross this threshold successfully. In fact the techniques are more focused on proper marketing, in this sense the theoretical framework of the 4 P `s (Price, Product, Positioning and Promotion) is totally admissible to achieve what you want to try to get an adoption of the public mainstream.

However, where  Moore´s suggestions to focus is on selecting a specific niche in which to apply these strategies. As Jason Fried of 37signals say people cannot develop products "to meet all possible needs" and ending with "not a product at all".

It is curious that this point is ignored all the time. No successful business or technology guru has ever first recommended not to launch the product / service aimed at a particular  niche market. This will allow you valuable feedback, so you can correct errors and provide better service to your customers in a particular market.

Time will tell whether the product will go to a more horizontal market and can be adopted by thousands of people. What is a fact that it is better to cross a relatively small gap to try to cross many chasms at the same time.

www.clarensyst.com.mx

Lean Startup.

About technology, business & management issues..

     It is possible that when the engineer Eric Ries coined the term "lean startup" never thought his concept would cause such a stir within the academic and professional field of business.

The term of "lean" methodology is related to the Japanese "lean manufacturing"  as the series of processes, policies, quality control within a production line that minimize or completely eliminate the waste within a production process.

The lean manufacturing has been used primarily by automobile assemblers worldwide, with Toyota as the company who acts as a poster boy.

In his writing, Ries lined up this concept and transfer to the field of entrepreneurship. The "lean startup" stressed the need to create basic concepts (prototypes) of products or services that may be continually tested commercially in order to receive feedback from the market and to make the adjustments necessary to define a product that fits completely.

In many ways, Ries suggests that this framework provides a methodology that will allow startups a competitive advantage over its competitors: the ability to respond and set changes, creating cycles (iterations) continuous trial and error to the ideal product or service without wasting time or resources so unnecessary (waste).

These tactics, although they may be employed in medium and large companies, invariably need a hierarchical structure that rewards and empowerment of subordinates eficientize decisions regarding the development and products or services. If the process becomes entangled in a bureaucratic or authoritarian hierarchy, the lean startup will fail hopelessly.

We will have to wait a little longer to see if the ideas and approaches developed by Ries acquire the status that many proponents of this philosophy are looking to achieve: full recognition of academic and business worlds.


www.clarensyst.com.mx

Customer Retention.

About technology, business & management issues..

     Within the technology industry is a term in the cost structure that employers are aware at all times: the cost of acquiring a customer (Customer Acquisition Cost of CAC). As with any cost analysis for a company to be healthy  it should keep this cost at the appropriate level otherwise this amount will be incrementally reducing the profitability of the business.

The concept itself is not absolute, the metric has many variations depending on the type of customer, representing the average income and the time in which the client is committed to the service offered. Either way one of the strategies that many SMEs are developing successfully is to try to retain the customer captive through various tactics.

The point at issue is not whether the cost of acquiring a new customer is much greater than the cost incurred to retain a client who is currently committed to service and / or product offered. Many studies and statistical information set that the cost of holding captive customers is by far less than the cost of acquiring a new customer.

The tactics to achieve retention vary widely but it's worth paying attention to banking services to realize how this kind of specialized marketing functions, from tracking the financial performance of its clients, to offering personal lines of credit or sale of life insurance and property. If you have a bank account cross-selling coming straight from your bank on your person is relentless; everywhere trying to get you a credit card.

In technology companies, something similar happens. If you have a business solution, your provider will be looking for you to increase the bill of their products through upgrades of the same app or a functional increase of any particular tool. These companies are extremely efficient on segmented trends and consumption habits of their customers because they know that if they lose you it will cost them double or triple the effort and cost to acquire a new customer.

Although it sounds a concept that only medium and large companies could land effectively in reality the most remarkable results are given in small and micro enterprises: they offer more products and services to its customers. If you sell building materials may be a matter of expanding your  product range to provide waterproofing and industrial paints. If you sell computer equipment  you may have to consider to offer network services and telecommunications hardware as well.

It's a matter of developing and offering your customers a platform to solve most of their issues by means of one-stop shop.

The Right Approach.

About technology, business & management issues..

    On a regular basis one can read many articles, books, journals or blogs about technology companies and businesses. All of them mention a feature that most of the authors are quite clear on : the ability of applications and technology tools to achieve alignment and grow together with the companies to which they provide a service.

This approach is constantly striving to companies that provide business solutions: the constant change in business processes makes the business´s needs a constant change, which leads directly to the developers of the solutions to modify, upgrade or renew their products. This approach is costly for both sides. On the one hand the companies that develop technology platforms have to modify their products and services. In marketing terms can be defined as an "upgrade" which seeks consensus among the various end-users on what would be the "improvements" that companies are sued. This causes companies to invest heavily in R & D in order to push these upgrades.

Of course, the end user ends up paying the cost when this move reflected the increase in the renewal of their software licenses.

In contrast, some young, independent developers, especially those who display their products through cloud-like platforms, have adopted a more practical approach to the issue. Companies like 37signals talk about developing software for users which contains an approach and a philosophy behind it ( opiniated software ).

That is, seeking that the software meets the basic needs that all users within a company needs to make more efficient processes . This type of philosophy enforces the idea of avoid making "upgrades" unnecessary and concentrate  to give  customers a far better service experience.

This philosophy has been criticized by the status quo of technology developers in the sense that they feel that this approach limits the legitimate aspirations of the business of acquiring product enhancements.
Even with this ferocious attack by the establishement, companies like 37signals have been able to satisfactorily serve millions of users who are happy to adopt the philosophy that has been proposed.

Perhaps not entirely unreasonable to philosophize about business processes as it is about riddles of life. May lead you to a successful conclusion.

www.clarensyst.com.mx