Niccolo Machiavelli

I’m writing this from the office of www.rescueargentina.com.  Rescue Argentina is run by an Irish priest who was posted to Oberá, Argentina over twenty years ago.  Although Argentina is a rich country, at one point the seventh the richest in the world, it is also huge.  There are parts which are in dire poverty and where there is poverty there are people who are left at the margins to die in filth.  Sounds emotive, but this is the language needed to divert the money from your Xtravision account, to something more worth while instead.

So here is the thing.  The first time I was here, feeding clothing and just keeping company the abandoned residents, I was way to embarrassed to admit it.   There was nothing worse than a do-gooder bigging up themselves and it seems icky to be talking about my own supposed benevolence.

So why fess up now?

Well, two reasons.  First up; I’d like to leave a legacy.  I don’t have kids, and have no current plans to have any, and I’m keen to make a mark on the world.  Twee as it might sound, growing up I was inspired by the efforts of Bob Geldof et al to make a difference in the world.  The guy has two arms, two legs, just like me and yet he’s arguably helped hundreds of thousands.  Wouldn’t it be nice if I could do something like that?  Rather selfishly, I’ve decided that before I can really get around to doing anything that great, I’ve got to free up time (ergo: have hundreds of people paying tens of euro for some service) but in the mean time, I might as well get practicing.

The second reason is that I’ve looked on with bemusement as Pat Phelan has lead the charge in taking lumps out of Evert Bopp and his Haiti Connect project.  Evert has been getting a lot of heat for his project, which basically aims to set up communications equipment in Haiti in a bid to help the humanitarian projects there.  I’m not going to go into the pros of this project.  Its up to whoever funds the project to decide whether it is worthwhile.  I have not chosen to support the it.

The attacks on him personally and his efforts seem strange as they come from what might be termed entrepreneurs.

Evert’s plans are unproven, untried, he has no experience and the outcomes are uncertain.  You might describe him as innovating.  He’s taking a chance with other people’s money and his own.  That sounds pretty much to me the definition of what an entrepreneur does.  I don’t hear anyone criticizing any of the myriad Irish tech startups in the same way, even if at least some of them seem doomed to failure.

So why is it okay to condemn an entrepreneurial charitable project and not a business one?  Are charities immune from the need for new thinking?  Do market forces not apply to them?  Are the best methods for delivering aid all discovered?

If the criticism came from anyone else I might understand but it is hard to see why Pat might decide this bone to pick.  He already has a successful blog, and business.  Maybe he has been revising his copy of the Prince.

The home in Oberá does fantastic work, and is funded in large part by the efforts of small Irish business owners.  Starting or running your own business is an inherently self-centered activity.  I think this is why many feel a need to search our projects like RescueArgentina.com and support them.  I might be self-agrandising myself here, as Evert was claimed to have been doing, but giving back is good – period.  It is dangerous to vilify Hait-Connect, if only for the fact that it puts off people sharing their experiences when it come to giving back in some way.  Worse still, it is an implicit criticism of a culture of giving. People who do make an effort to do something, while may not deserver to be lauded, certainly don’t deserve to be lampooned.

This isn’t my fight and I’m not sure why I’m getting involved.  I have met Evert once, briefly.  He may be the greatest bollox to walk the earth for all I know.  What I have read about him just doesn’t seem right.  Staying quiet didn’t either.

I’ve also started listening to Dan Benjamin’s Pipeline podcast which features interviews with tech entrepreneurs.  Neil Patel of KissMetrics and CrazyEgg was chatting to Dan about how he had no problem blogging about his failures as much as his successes.  What a good idea.  So here we go, lets bring these two beautiful concepts together and run down my bias mistakes.

Representativeness Bias: I used to try and avoid putting people in boxes.  It is not PC, but I do it anyway.  Most notably, a now good friend of mine, was introduced to me as a cleaner from Romania.  I watched a little condescendingly as she presented at a local business networking group.  No need to go to college for that!  It turns out of course that she actually had a engineering degree and had built the cleaning business to a stage where it supported a property portfolio in Dublin (which she exited before the crash) and Bucharest.  All as a single mother to 2 kids.  Inspiring lady.

Having said that, I have learned to lean on my instincts a lot more than I used to.  My old man meets thousands of people each year in his job, and he reckons he can suss someone out with a minute of them sitting down in his office.  Looking back, I can see how in the past, I’ve had a worrying feeling about a strategy of person which came to fruition.  Maybe this bias is here to protect me a little.

Anchoring Bias:  By and large, I’m not a detail person, but sometimes I let small details distract me from the bigger picture.  With an engineering background, this most often manifests itself in wanting to tinker with a website / product rather than step back and look at the cashflow as a whole.  For years, I developed countless features into SmartNote.ie in the hope that the killer feature would solve my lack of sales.  When I say years – I mean YEARS of my life were spent in a dungeon basement in Baldoyle coding away.  It ate my way through my savings and eventually the money that was supposed to go to the tax man because I was focused on the wrong thing, unable to step back and see the bigger picture.

Availability Bias:  Working with Priscilla on Piehole, you really get to appreciate the creative mind.  She is the creative force behind everything we do and I’ve come to learn that key to this talent is the ability to step past the first best thing that comes to mind.  If we need to promote a specific feature of the site, Priscilla can come up with 10 different concepts and counting.

Thinking more generally, I find myself unduly influenced by the poster boys of the web-scene.  The same tired examples of successful businesses (basecamp, Microsoft, Google) pop into my mind when I’m trying to consider what model or tactic we can attempt next.  I guess I should dig a little deeper and try to educate myself about the other successes out there.  Mixergy.com is a fanstastic resource for this.

Confirmation Bias:  Because I’m reading blogs and listening to tech startup podcasts, I’m re-enforcing a pretty narrow view of the world.  In reality, making money online is bloody hard and not the most sensible way to try and achieve financial freedom.  For all their faults, the property investments I’ve made still make far easier money for me that the night and day effort that goes into building subscriptions.  I tend not to listen to that voice in my head however.  I seek out information that confirms my own world view.  I get bored reading books on savings and mutual funds and all that malarky.

Worse still, I find myself slightly belligerent to anyone who seems to affront my strategy.  Public servants aren’t high on my list of people to be admired.  I guess this is mainly because their safe, secure and sensible position is an implicit criticism of my insecure, month to month, country to country existence.  I think I need to make more friends in the public service.  I hear they can be nice.  The self-help books tell you to avoid them like the plague (not civil servants, just people who aren’t on the same track you are in general).

Hmm.  Maybe I should keep this bias burning for while.

Self Serving Bias:  This one most often pops up if I have some custom development work to do for someone.  There is an implicit contention between my desire to bill as many hours as the best rate possible, with my clients desire to get it done for as little as possible.  Preparing a quotation sometimes feels like playing a hand of poker.  For fixed price work, someone is going to ‘win’ either them or me.  I even find it influencing my thinking when proposing improvements to projects.  ”Yes, you should consider upgrading the hardware for x, y and z reasons” – meanwhile I know it’ll mean I have to write less efficient code and I can spend less time on those projects for the same money.

Offering advice to budding voiceovers also puts us in an awkward position.  We try to guard against giving biased advice, but at the end of the day, it is hard not to let an upcoming rent payment influence whether or not you’d recommend a product or not.  A common problem in sales.

Ideally I’d like to decouple the value I deliver from the price I charge completely.  This means delivering value that isn’t attached to the number of hours I spend.  If I could charge €1, knowing they would make €10, I’d be a happy camper.

Expectancy Bias:  These ones are easy.  I expected a torrent of sales when

• I spent thousands on adwords listing
• Was a guest on RTE’s ‘the business’
• Appeared on national TV receiving offers from the Dragons
• I set up business networking groups around Dublin

Of course, some of them do generate sales.  My problem is, that none of them generate that much.  I’m always keen to find a silver bullet when an hail of arrows seems to be required.

Self-consistency Bias:  This is hard.  I’d like to think I’ve always had a master plan to move abroad, live the good life and deliver value to hundreds of customers paying tens of euro.  Of course, I never used to even consider leaving Ireland.  I thought I had to network harder, meet more people, spend more time behind the desk.  The networking didn’t really seem to get me anywhere.  Sitting behind a desk certainly didn’t.

Now that I think of it.  Maybe some of my biases do me a favour from time to time.  I guess its worth bearing them in mind though.

• You apply for a voucher, outlining an area of expertise you would like assistance for from the University Sector.  In my case, I applied for a review of the literature related to medical compliance.
• Your proposal is approved or denied.  If you don’t have someone in particular in mind to help you then you are given a list of contacts in the major universities to whom you can send your proposal to.  I sent off a modified version of my proposal to about 10 designated contacts.  They then distribute the proposal internally and if someone is interested, they contact you directly.  I received one reply, although there wasn’t a fit in terms of what I was looking to have researched.

The Enterprise Ireland co-ordinator of the Innovation Voucher scheme is currently helping me to dig a little deeper and see if we can’t find someone who might be willing to help.  So far its been a pretty painless process.

Something has struck me as odd about the whole thing though.  I send in a proposal, and researchers decide whether (a) they are suitable to work on it and (b) they have time (c) they can be bothered. I’m taking it that I got no feedback to a proposal that must have been sent to upwards of 30 relevant researchers.  I’m guessing that this was probably because of (a) and (b) but there is no way to know if it was sometimes (c).

I’m not so sure how much valuable IP is locked up in Irish Universities, but right now, the system leaves it up to lecturers to decide whether they want to help with technology transfer to the SME sector.  As a sometime taxpayer, shouldn’t I be able to dig around in the research areas and get access to the right support when I need it rather than waiting for it to come to me?  Think of it a little like a freedom of information request – but for knowledge.  Shouldn’t I be able to get a list of researchers working in a relevant area and be given their contact details directly?  Shouldn’t researchers be mandated to help companies where they can?

Logo: We still don’t have a logo and don’t have any plans to get a logo. We just typed out RevaHealth.com in a font that we liked and left it at that.

Piehole’s logo is key to getting us noticed and lets our customers know that we are different to the competition.  Much to my chagrin, design, is key when making a first impression.  As I keep repeating, Rob on Software’s “market -> marketing -> design -> product” approach to product development seems spot on.

Barney agrees with Caelen on business cards.

Business cards and your website are NOT the most important things to sort out on day one.

Crazy stuff.  Business cards take about 20 minutes to order on moo.com.  Well worth the time.  Here is on reason why.

If you still have a full set of cards after 3 months – you are not doing enough sales/networking.  Both profess to talking to your potential customer.  You can’t be taken seriously if you haven’t met the basic hygiene factor of having some cards.

So who is right?  Me or them?

Well, rather blandly, you could say we both are.  It just depends.  Obviously, an insurance salesman needs card and companies marketing to advertising agencies need brand.  Cards are useless if you are selling stuff on ebay and Google doesn’t consider how cool your logo is when pushing traffic to your site.

So here is my advice.

Find someone who has what you want, and copy what they did.

Which advice you listen to is critical.  Building a world-beating health index website?  Read Caelen’s blog posts.  Boot-strapping a piece of webapp software?  Subscribe to Barney’s blog.  Want to drink ridiculous amounts of red wine in a Mendoza, Argentina?  Visit troutandwine.com.

Millions upon millions of pounds were spent, worldwide, telling young’un’s that “Cigaretets Kill”. Something we all know but mostly only those in their 30’s or older pay much attention to.

Why?

Dissonance

Telling young people that they will die from smoking contravenes a rather self-evident truth:  young people don’t die.  Certainly not in general and you would be unlucky to have reached the age of 13 (when most people start smoking) to have known anyone in your peer group that had passed on.

Saatchi & Saatchi changed tack and instead started running advertising pointing out how gross your breath smells after a cigarette.  Something that rings true and is oh so important when your still trying to get off your mark with Priscilla in 6b.

So here is the rub.  Entrepreneurs in Ireland don’t make it big.  We don’t really celebrate the successes and I think there is a tendency to expect failure.  This is especially acute when it comes to funded businesses.  At least two founders who raised multiple millions of dollars have both told me that they tell their founders that there was a 90% chance of failure.  Accurate and laudable as it may be – the intention can’t be helpful towards achieving success.

How can we plan on building world-class ‘google’ type businesses when there is no precedence for it?  It doesn’t make sense to encourage people to startup when the expectations for success are so low.

Contrast this with a plumber/accountant/solicitor/carpenter setting up a new business.  While they may be more ’self-employed’ than ‘running a business’ – it seems far more real and natural that these types of business make it.  We all know successful people in these fields.  Meanwhile I’ve been trying to build an online business for the last 10 years and I’ve met only a handful of successes (and believe me I had to dig to find them).

To encourage startups and avoid talking out of both sides of our mouths, we need to reset expectations of indigenous startups towards success.  Online businesses have a heritage in high risk funding backed ventures, but things have changed and the web has become more mature.  There is no reason that 90% of ventures should fail.  The business models that work are out there and available to be exploited.  Beyond that, even if individual ventures do not succeed, subsequent ventures by the same entrepreneur can and probably will.

“Unless you have the cure for cancer, there probably isn’t the need for your product you thought there was”

“I know how to cure cancer”, I thought, “maybe I should do something about that”.

Now, I am perhaps being a little dramatic for effect, but there is an opportunity for someone to literally prolong and enhance the lives of millions of people.  Lets run through some stats and see if you can guess how.

• One fifth of patients don’t fill out their prescriptions
• 125,000 American’s die annually by virtue of not taking their pills properly
• 60% of patients cannot identify their own drugs
• 1 in 4 people in nursing homes are there because they can’t figure out their own meds

You should be starting to get the idea.  Basically, hundreds of thousands of people die annually simply because they don’t take their pills right.  The problem is especially acute for diseases where the symptoms are apparent when taking the pills.  Hypertension is a good example.

“as many as half of ‘failures’ of treatment to bring elevated blood pressure down to normal levels may be due to unrecognized lapses by patients in taking antihypertensive drugs as prescribed.” source

So how do we solve this?  Send the text messages morning, noon and night?  Well.  Not really.  They get ignored quickly enough.  The real enemy here is confusion.  People don’t understand why they should be taking their meds until they are in the middle of a heart attack.  Then it suddenly sounds like a much better idea.  There are a couple of things to be done …

• Patient reminders
• Patient education
• Incentives
• Peer support
• Self-supervision

All well and good but where is the money?  Well, in theory, there are a lot of people who can gain by patients taking more pills

1. Patients:  they get to live and stuff.
2. Doctors:  ’refill’ appointments take less time and more profitable than regular diagnosis appointments.  Also a chance to up-sell.
3. Pharmacists:  More product getting refilled puts more money in their pocket.
4. Pharma companies: ditto
5. Goverment:  More peope self-medicating means less stress on public infrastcuture.

So what is the problem?  Why isn’t anyone fixing this?  Well there are various approaches which have been tried but it seems to me like something could be done in the technology space.  What exactly, I’m not sure.  Here is my progress so far on getting something off the ground.

• Pitched to a pharama company that has a hypertension product (twice).  You need a serious looking piece of kit parked in the car park to sell to these guys though, and I normally catch the Dart.  I could buy a better suit and try again but I’m thinking you’d need someone with serious big ticket sales experience to get it over the line.
• An innovation centre in Dublin had a look at it.  In a kind of chicken and egg scenario though – I’d no industry backer to get their interest with.
• Pitched to a GP.  He was actually interested.  Refill appointments are good money for doctors with a quick turn-around.  He is up for running a trial but I should perhaps rack up a few other volunteers before I dive in.

Ideally I’d like to run some kind of trial with one of the medical organisations and get the results published in a medical journal.

So if this is such a great idea – why am I blogging about it?  Well, in truth, ideas aren’t worth that much and I thought if I am not going to do anything with it, it might as well provide some blog content.

If we can just get 1% of our visitors to convert  …

Never have more dangerous words been written in a business plan.  It sounds plausible only because humans are mind-boggelingly bad at understanding percentages.  Even if you were a complete wingnut in school you probably still managed to get 10% in the honours math exam.  A 5% discount is nothing.  A doctor telling you that you have a 1% chance of not waking up after an op is hardly worth losing any sleep over.

However, I don’t see a lot of discussion on the chances of a 0% conversion rate in your business.

Just before Christmas we were on RTE’s The Business – a program with a listenership of 200,000 people.  It was great for getting recognised by mates or the odd bloke in a shop (don’t ask how you can get recognised from the radio, but it happens) but rubbish when it comes to converting sales.  Out of the piece we got exactly 1 signup for a Piehole voiceover training day.  I’m not sure what type of conversion rate that works out to, but lets call it close to zero.

The excellent Rob on Software makes the same point in a recent post.  All traffic is not created equally and much of it can just create ‘noise’ – making it much harder to figure out what is going on in your Google Analytics account.

With no background in statistics or even any data to back me up, I’ve created this completely fictitious 3d pie chart to illustrate the way I think about conversion rates for a new product.

It comes down to this.  The number 100% gives the illusion that there are only 100 possibilities – or options.  In reality there are infinite number of possibilities – and for the purposes of you and your product – the likely-hood you and I should prepare for is 0% or a figure so close to it that it completely mucks up your plan.

Now while this post is full of completely un-researched here-say, Rob has put together a altogether more scientific list of traffic generators in order of quality as measured by the conversion rate.  I’m posting a clip here so you don’t just head over to his blog and start reading instead.

Now I might quibble with the position of 8 and 9.  In my experience, Adwords does convert better than organic traffic – but I guess that depends on where the organic traffic might come from.

So what?  Well – the first step is to figure out what your conversion rate is.  That means tracking how many actual sales you are generating.  In a traditional e-commerce website this might be pretty easy.  Oftentimes, especially if you are driving traffic to someone else, it might not be.  If you are making money by generating work for someone else, it is not always easy to track.  That is a problem, especially with these 0% conversion rates hanging about.

Fortune 500 listing excerpt

According to Wikipedia, Raytheon makes …

• 3.2 Air Traffic Control Systems
• 3.3 Radars and sensors
• 3.4 Satellite sensors
• 3.5 Communications
• 3.6 Radioactive materials detection system
• 3.7 Semiconductors
• 3.8 Missile defense systems
• 3.9 Missiles
• 3.10 Hi-tech simulators
• 3.11 Training Services and Learning Outsourcing

Coca-Cola makes bottled sugary water.

So why is it then that according to the above Forbes 500 list of the most profitable companies in America, Coca-cola is almost 5 times more profitable?

Really, leave a comment, tell me why.  I have no clue.

Take for example the recent sale of Arantech to Techtronix.  I’ve worked at Aran a contractor and it is by far and away the best environment I’ve experienced.  The guys there are razor sharp, the product is mind blowing in what it manages to achieve and if I ever had to get a job again it’d be the first place I’d apply to.

Arantech was reported to have been sold for around €60m.

At around the same time, Jerry Kennelly, sold his Stockbyte business to Getty Images for a reported €135M.

Arantech is to Stockbyte as Raytheon is to Coke.  Stockbyte had 28 employees while from memory, Arantech has around 80.  At a guess, I’d say that the average wage in Arantech probably tripled the Stockbyte take home.  Which would I rather have?  Well, sorry Aran, I’d definitely go for Stockbyte.  And I guess I’ve got to remember that in my various escapades.

Entry Requirements: You probably have spent some time during school and college either running sports clubs or heading up the debating team or trying to con money out of your class-mates by selling fake driving licenses printed off from your 24-pin dot matrix printer.  Starting stuff is something you have always enjoyed and in some way, a little like the English, you would rather make up your own game rather than lose at someone else’s.  There are no intellectual requirements for entry and any old fool can give it a go.  Some kind of problem with authority or other chip on your shoulder is a distinct advantage.

Years 1 – 3: Enjoy early success as an employee working for someone else.  You prove good at your job but at the same time are impatient to be calling all the shots.  Having realised that your boss is an idiot and comforted by the large amounts of money he chooses to pay you, you start to develop ’sidelines’. Talk in the pub begins to be dominated for talk of not having to work for the man.  You secretly order The Seven Habits of Highly Effective People and The E-Myth.  Your sidelines start to occupy more and more time during working hours.

Years 3 – 5: Taking the plunge and going freelance you manage to escape the 9 to 5 and start working a 6 – 9 as you soon discover that doing the work is only half the job, finding the work is the hard part.  Gaping holes in your own ability to run yourself, let alone a company, start to become aparant to everyone apart from you.  The stash you put together during your full-time career ebbs away a little until your bank balance finally demands that you contract yourself, selling hours until the tax man cometh.

Year 5 – 9: The initial slack that the tax man gave you in terms of making returns starts to run out and you finally begin to grasp the amount of money you pay for those roads, hospitals, banks etc you use.  You may at this stage have taken on debt that starts to look rather less repayable that it previously had.  At the same time, your friends careers are starting to take off.  You cousin Mark recently became country manager for an international retail chain and your college friends are starting to make repayments on their new 5-series while your bus fair seems to be getting more expensive every day.  You occasionally check the job listings and perhaps go for one of two interviews which you fail to get.

Year 9 – 15: Things are starting to look desperate.  Just when it seams like you must have made every mistake in the book, you somehow manage to find more- and some of them are looking very familiar.  There are brief periods of light between bank repayments and tax bills which are enough to keep you going.  Economic conditions don’t seem to be doing you any favours but at least it starts to feel like it can’t get much worse.  You get audited for tax, unveiling a raft of things you’d rather not have thought about.  They levy a huge fine which you can’t pay and manage to negotiate your way out of it.  That feels good until you start to get behind with your payments again 3 months later.

Year 15 – 30: Rinse and repeat until you eventually hit it big.  You start to believe what your selling and eventually someone else does too.  You start to get asked to do interviews in the paper and the bank balance is looking good enough to make a down-payment on a pretty nice apartment.  You start to look at getting a professional manager in to run things for you and take that month long holiday you had always dreamed of in the sun.

Year 30 – 40: At some stage during these ten years, something catastrophic happens.  Rents go through the roof or property values go through the floor.  Either way your business starts to crumble. The professional manager you brought in turns out not be up to scratch when it comes to these new economic circumstances.  Letting people go and selling properties is the name of the game as it looks like that retirement you were starting to enjoy might have to wait for another 15 years.

So that is it.

Roughly, about 5 years of success tucked in-between a load of stress and effort.  No need to apply to anyone to get started.

technology > design > marketing > market

in that order.  When you have a hammer, everything starts to look like a nail, and nerds love hammers.  I liked the idea of building a Spanglish button for Firefox of a Irish Twitter SMS gateway.  The idea and challenge of getting it to work is so entoxicating that you just can’t wait to jump up and get started.

We’re handicapped by the fact that we can run off and start building things.  We don’t have to pay someone else to do it.  As such, we don’t value our own time and make an honest judgement on whether it is worth the investment.

That is all fine and well if fudging around with stuff in your spare time but there is a real opportunity cost.  Rob on Software’s excellent post on the correct order to come up with opportunities

market > marketing > design > technology

While we may consider our technical ability to be an advantage, it is actually our biggest handicap.  Outsourcing might not be as much fun as coding it up yourself, but it does force you to stop and think about whether its a runner.  If you had to spend your own hard earned cash on something – would you still do it.  I’d argue that maybe you should fire yourself as CTO if you ever really want to get over your technical handicap.