NestEgg is hiring!

I founded NestEgg a little over a year ago, and it's been an INCREDIBLE first year.  We've created an AI that replaces the need for a human property manager, delivering happier tenants, less stressed landlords, and better deals on tradespeople.

As a small team of co-founders we have achieved a lot over the last 12 months; validated our idea, launched a successful beta in a test market, signed a bunch of awesome distribution deals, and - most recently - closed our first round of external funding.  That last one means we can now dial it up to 11, so we need to grow the team!

WE ARE HIRING

NestEgg is at the center of two things that are exploding with new ideas, innovation, and investment - cognitive computing and prop tech.  As an ex-CTO I find this incredibly stimulating, and as a current CEO I am energized by the powerful customer outcomes we can create with this platform.  It's not just technology to us, it's technology with a purpose.  A purpose that really matters to tens of millions of people across the US on a daily basis.

We're offering all the creative freedom and influence an early startup usually provides, as well as a life-changing stake in that future outcome.  We're a distributed team with tons of flexibility, so finding the absolute best people is more important to us than current location.

Our standard package includes

• Competitive salary for early companies

• Significant equity stake - you will really own what you do

• Bonus tied to clearly established business metrics

• Flexible healthcare package

• 401k integrated with payroll

• Tech allowance to upgrade phones and laptops

• A 'take what you need' vacation policy

In return we expect

• Strong sense of urgency and ownership

• Accomplished technical skills in more than 1 domain

• Experience in a consumer facing internet business

• Comfortable working in a distributed environment

• Experience collaborating with a multi-disciplinary team

• Demonstrated intuition and proactivity; can execute against broad goals

• Appetite for personal growth and taking on new things

We need a couple more product-minded full stack engineers and a great, customer-first UI developer.  The people we want to bring on will know what it really means to be entrepreneurial; to execute quickly across a broad set of contemporary technologies (without sacrificing quality!) and be passionate about creating a future outcome that transforms an entire industry.

If developing your career in these areas is something you're excited by, then get in touch so that I can tell you more of the story of a better future you could be part of making come true.

Making good decisions in a startup

Welcome to my first post in a long time. What changed?

I recently started my own company and the single most important thing to get right is fast, good quality decision making. The quality comes from analytical thinking and a quest for evidence, but the speed comes from having a shared framework that makes conversations more efficient. So I wrote this for us as a team:

First, let's establish the case for not thinking. Using cognitive shortcuts (assumptions, patterns, heuristics) is an extraordinary evolutionary advantage - it is metabolically very cheap (compared with reasoning over the complete field) and allows you to focus your very finite attention on the one or two variables you're able to actively manage in flow. This kept us alive for hundreds of thousands of years when training a neural pathway to associate movement in tall grass with an imminent predator threat was a fundamental survival advantage. We seldom face such primitive and fatal threats any more, but our brains still parse the world in exactly the same way - we look for ways to reduce the complexity around us and respond from pre-established instincts, not analytical evaluation.

Thus an evolutionary advantage can become a hindrance in the modern world, although it is still very applicable in most ordinary, day-to-day situations. Most of your interactions with other people are straightforward and monotonous, and not thinking through every aspect of those from first principles is tremendously useful.

The downside comes whenever you're doing something new, which you almost always are in a startup. Whether it is taking on tasks that are new to you as an individual, or it is your disruptive company doing something that has never been done before, you haven't developed any useful pathways for these things. But that is not what your sneaky brain will want you to believe!  Because of the low cost and high success of this cognitive mode, you're brain has gotten pretty good about misleading your perception of what you've really though through and what you haven't.

So what can we conclude so far?
(1) Heuristics are super useful evolutionary advantages for dealing with most situations in daily life.
(2) They are so useful - and so cheap - that your brain will try and avoid any analytical thinking it can, even fooling you into thinking you know things you don't.
(3) The impact of this is amplified when you're doing something new, for example a startup.

Therefore, it is vital to build some introspective awareness of this, and be very deliberate about how decisions are made when you're building a new company by exercising [at least some] new skills against a new idea. The degree of novelty you face will be high, the frequency and importance of decision making will be high, and that's going to be demanding. You need to be deliberate about this and you need good tools for thinking.

Let's talk about protocols to make this more effective, if not necessarily easier:

When approaching an ambiguous decision - which we define as a need for direction or choice before progress can be made in an area that the participants lack significant prior experience dealing with - the place I like to start is establishing some criteria for the outcome. Making decisions is about selecting a path which is preferred over all available alternative paths, so ask preferred how? For example you might say that you prefer options that achieve a quicker time to market, or a lower cost, or require fewer external dependencies, or can be reused in other situations you're confident you will need to address in the near future, etc. Be specific and measurable, and avoid tautologies like 'best choice for us' etc, you are defining precisely why an option would be the best choice. These give you dimensions against which to evaluate options, and that's where good research comes in.

But - before we start on that - it is worth touching on weighting. Important decisions seldom come down to a single dimension (although it can be a real advantage if you can make that happen) and, whenever you are dealing with n criteria with n options, you will almost always find that each options outperforms the others along different dimensions. That is to say you more often end up with a collection of options that are all 8/10 instead of one 10/10 and a bunch of 3/10s. Giving each dimension a unique weighting is the most effective way to bring clarity - you declare what you value most, and the best path to that presents itself and makes its associated tradeoffs clear (ie the things it did not score highly on).

Next you need to take another step back, and question whether or not you're even aware of all the possible paths! I have seen a lot of regret from teams that rush to make a call on something, select from what they know, and then become aware of much better options they had available to them only once it's too late and they're committed. When enumerating the options keep in mind that you're dealing with a situation your group has little expertise in, so it is unlikely you'll be able to just get in a room and come up with all the relevant options as a team.

If the novelty is driven by your new, different idea, then there is unlikely to be a lot of prior art to uncover (i.e. you cant just learn off others). So you will need to engage in some generative exercises to create options. If you're familiar with product design, the product discovery process has a whole set of activities you can select from that will focus your creative energy in a practical way. Literature I would recommend here are things like Sprint and anything in general on discovery methodologies.

If the novelty is driven by you and your team members taking on new roles you're less familiar with, then congratulations, this is the easier problem to solve. All you need to do is find a few people (definitely more than one) who have faced the same situation you're currently in and absorb their experience.

When looking at prior art you will inevitably find a distribution of opinions on your current dilemma. If it were an easy issue then you wouldn't be struggling with it - regardless of novelty - and viewpoints on complex issues seldom converge. In fact, if you do find consistency in the opinions you're collecting, that is a red flag and I would suggest deliberately looking for outliers. Once you have a few different ideas to work with, you can further process that data by evaluating your sources. Look for things like quality (i.e. how qualified is the person and how do they index generally in this discipline), think about the context they were in when they made their similar decision that you're attempting to learn from (how similar was that to your situation), and what are their motivations or incentives attached to helping you (for example someone selling a solution which could apply to your current problem may not be as unbiased as you'd like).

The point is to differentiate the individuals you've sampled such that you can sort them into more credible/relevant and less credible/relevant. That will help you decide which advice to follow most closely. While you're at the stage of evaluating the quality and motivation behind the data points you've collected, I also think it is important to pause here and reflect on your own biases. It is human nature to love our own ideas, so anything you hear that confirms your own initial guess is likely to be taken more seriously than it otherwise might be on its own merits. Always tie things back to your early criteria for the decision - this technique can move the conversation from which idea you 'like the best' back to something more objective, and based on the measurable outcomes you've declared.

Most of these decisions are going to be team based - in a startup you're a small group and everyone is super engaged in everything. I recommend adopting some frameworks to help execute the decision and prevent it from becoming directionless or combative. Something like RACI can bring structure to the process by established clear roles relating to how input will be taken, how the decision will be made, and how it will be communicated. I have seen this radically accelerate how quickly and constructively a group reaches a conclusion.

My next protip would be to document everything. Keep some notes on criteria, options, key discussion points, and conclusion. Human memory isn't reliable in the way most of us think it is, and your ability to look back on today from some point in the future and review your performance will be extremely limited without a decent log. Closing the loop on what outcomes were realized vs what predicted is an essential habit to get into if you want your team and your company to grow and improve. Do not skip this, even when you're super busy.

A few final thoughts specifically for leaders:

There's contemporary - and dangerous - rhetoric in many corporations along the lines of 'everyone is entitled to their opinion/all opinions are valid' etc. The problem with this is it removes an individual's responsibility to put forward properly researched and rational arguments. If you can just trot out any old utterance and have it considered equally valid input with an evidence-based analysis someone else worked hard to put together, then there is no incentive to put in the hard thinking it takes to get to quality decision making. Everything degrades into a war of opinions and, in those situations, a hierarchy always wins and we're all generally aware that HIPPO has a weak correlation with good results.  I recommend holding your team to a high standard of discourse, and being very clear that active participation is encouraged, but active participation comes with some expectations.

Speaking of active participation, you should always be looking for neurodiversity on important issues. That means deliberately looking for dissent, and it is especially important if everyone seems to be agreeing.  In On Liberty, John Stewart Mill said:

"He who knows only his own side of the case knows little of that. His reasons may be good, and no one may have been able to refute them. But if he is equally unable to refute the reasons on the opposite side, if he does not so much as know what they are, he has no ground for preferring either opinion... Nor is it enough that he should hear the opinions of adversaries from his own teachers, presented as they state them, and accompanied by what they offer as refutations. He must be able to hear them from persons who actually believe them...he must know them in their most plausible and persuasive form."

I think that is a powerful way to highlight one of our cognitive weaknesses. Human reasoning is fundamentally flawed and limited, and it is only when we push against one another that we gain real quality in our thinking. Seeking out opposing views - again, well structured and properly argued - is essential to fully testing the dominant hypothesis before you start acting on it. I have changed my mind a lot - and been glad I did - using this behavior.

To close with I offer you a 'brain hack' of sorts; small adjustments in the language you use externally can change how you process information internally. When formulating hypothesis I suggest replacing "I think..." with "I would like to find out if..." because it divorces you from your own ideas (so you're less likely to display bias towards that option) and it places the emphasis on discovery, not declaration (you're setting up an investigation and you'll be led by the evidence, not stating a position).

Career Advice and That Jason Post

Last week Jason Calacanis wrote this post, and I sent a kind of expansion of it to my team.  A few of them came back and told me I should post it, so here goes...

This one stood out from the general noise in ‘career advice tweetstorms’ because, when I read it, I thought to myself holy shit that is exactly how I think of people and exactly how I know my boss thinks about me. That is pretty important intel for anyone hoping to achieve meteoric growth in my kind of company, so I think it is worth you each internalizing what it means for you. Let me break it down a little more first, into some more grounded practicalities:

1 and 2 are items I consider pretty immutable, so just do it. Besides - this isn’t work. If you’re in the right career then this is fun, you’re passionate about it, and you eat it up 24x7 whether you’re paid for it or not. It doesn’t feel like work. Achieving mastery in your craft is its own reward. However I acknowledge that not everyone can be in a job they find personally fulfilling and enlightening and, if you are in a product or technology role just because it pays well, then I’m not going to get all preachy about your motives. Just keep in mind that if you want to stay in that role and keep growing the rewards over time, then you need to do this just as much as (and maybe more than) those who are pursuing their passions. Because they will leave you behind, and they will out-compete you for the best roles.

3 is where Jason and I are going to disagree or – at best – there is a subtlety we agree on for which ‘startup’ is useful shorthand. Where I think we might philosophically agree is that you need to get somewhere where you can be individually visible (not buried in a huge team of homogenous ‘resources’) and your ability to step up and take on more, to exceed the normal boundaries of your primary responsibility, are not structurally constrained. Big, mature organizations tend to be set up such that the system of production (roles/structure, process, inputs and outputs) is defined in the abstract, and pursued ahead of unique or especially talented individuals who may not fit easily into any one predefined box. And, because these things tend to become more rigid over time, it is difficult to exceed one’s personal remit in a constructive way. Pick a business in a growth industry, and pick a team which is big enough to do cool stuff but not so big as to require Vogon-like bureaucracy, and pick a boss who values utilizing (and stretching) individuals where their passions and aptitude converge over having everyone nicely fit into a tidy box with the ‘right’ label on it. Startups are like this out of necessity – that’s why I can agree that ‘startup’ is a compact way to communicate this kind of sentiment – but they don’t have a monopoly on this. It can be a sustainable lifestyle choice in any phase of a business. 

Item 4 is one of the characteristics I have seen in almost every high potential high performer I have had the pleasure of looking after. To what Jason already has there I would add two things; first working hard and taking on more doesn’t mean being in the office 24x7. It just means intensity, urgency, focus, and prioritization. I won’t personally give you any points for being in the office any longer than me – in fact I am slightly more likely to wonder if you need a little extra support. Second thing here is to know your cake from your icing, as a really fabulous CEO I worked for a long time ago told me. Go after more, take on more, over-deliver unexpected surprises, but never at the expense of your core responsibilities. The reason your primary role exists at all is because a lot of customers and colleagues rely on you delivering on time and to a high quality. That’s your cake. And if your cake starts to suffer for more icing – all the extras etc – that marks the difference between a high performing high capacity individual who is obviously in need of a promotion and an irresponsible slacker who doesn’t understand the business needs and is letting the team down. 

I work with a few companies at different stages of growth, and I wish I saw a little more of item 5 everywhere I go. You should actively look for chances to do this, not wait until you’re asked to do a brown bag session or something. The fastest path to true mastery of anything is to have to teach it to another. Or, in career advice terms if you prefer, unless there is at least someone around who is as good as you at what you currently do then this will eventually become a blocker to your personal advancement. Giving you a bigger role is important but creates a difficult rubix cube-esque puzzle, but giving you a bigger role when you have a solid, practiced succession plan ready and waiting becomes a no-brainer. 

6 yup another JFDI. This I would enhance with Postel’s Law. If you practice a kind of ‘human equivalent’ of the robustness principle then you will shut down negativity instead of amplify it and deescalate potential conflict. ‘Assuming positive intent’ is such a powerful tool for keeping everything constructive and feeling awesome about yourself and others. 

I’d read 7 as never be reluctant to ask for things. And not just in reward; also resources, opportunities, mentoring, training, chances to join in senior forums, a place in special projects. Whatever. And I know this town is equity-crazed, and equity is certainly nice, but it isn’t the only way to be rewarded and it isn’t the only path to wealth. Regardless, you should be fairly compensated for the value you create. Amid all today’s rhetoric about leaning in and whatever, just keep in mind that the prerequisite to this is to actually demonstrate your value though real results, consistently over time first. Similar to my addendum on number 4, this distinguishes the merited from the ‘participation award’ crowd who want it all just handed to them for showing up. You own your career. 

8 is table stakes in product. You’re here to define an alternate future, where your company is better tomorrow than it is today. Startups are just one killer feature around which the rest of a business and a complete product emerges, so all the same instincts and behaviors will carry you to success in any product-led business whether or not you might call it a startup. 

So that’s some career advice I think everyone can take something away from. I believe that people achieve more and feel more passionate about the product (and stick around longer!) when they can see how doing so is helping them grow and taking them closer to their idea of success for themselves. That’s why this shit matters to me and it matters that my leadership team take it equally seriously for all my people.

Why don't we invent more?

I sat in on a conference call today (actually I'm still on it!) where we talked a lot about innovation - specifically why we haven't done more of it.  Lots of different stories but the common theme seemed to be governance.

When I say governance I mean things like roadmaps, product councils, architectural oversight, PMO, etc.  Basically the constructs we've set up to steer our technology investments and spend our resources wisely.  Properly applied, they are critical to the success of any significant engineering endeavour.  Improperly applied they are critical to the failure of any significant engineering endeavour!  So are they being properly applied to invention and experimentation?

I don't think it is a case of proper application as much as it is a case of application at all.  I think any engineer has two jobs; serve the roadmap - build the applications and systems defined and managed by our governance processes - and serve the technology - discover new ways of solving our business problems, advance your own knowledge by experimenting, come up with new ideas and see if they fly.  If you're only doing the former then you're only doing half your job.

These are two very distinct types of activity and they shouldn't be governed by the same controls.  It just makes no sense to apply ROI and risk controls and rigid scheduling to a journey of discovery with a totally unknown destination.  The difference between teams who innovate and teams who just talk about it is recognising the immense value in the journey alone...

Besides, you don't need all that bureaucracy.  All you need to be great at this is to leave a space for it to grow and - if you have the right people - it will expand to fill it.  That is how I roll and that is what I want to see.

Intellectual Property in 3 posts – episode I

I originally called this ‘Intellectual Property Done Quick’ but, when I was finished and looked at what I had wrought, I realized that ‘done quick’ was likely to be in breach of the trade descriptions act.

So I’ve broken it up into 3 tasty morsels; today I’m doing an introduction to different types of intellectual property and I’ll follow up with applying for a patent and then finally some tips for managing IP in the enterprise.

There are 4 main types of intellectual property defined in UK law and, along with their relatively dry legal descriptions, they are:

Trade marks

Indefinitely protects signs which distinguish the goods or services of one undertaking from those of another.

A trade mark is a distinguishing badge of origin which can be a valuable asset when it imbues a product with the reputation and perception of a certain maker.

It can become a trademark either by initial registration or it can acquire trademark status over time through use.

McDonald’s golden arches, the UPS shield, and Nike’s swoosh are all good examples of a trademark – instantly recognizable and clearly identifying a specific brand.

Registering a trademark gives an organization or an individual the right to prevent others from using the same mark it in relation to similar goods or services (listed in the application). Even if you have no appetite for hunting down and suing IP trespassers, registration is still a good idea because it prevents that happening to you – priority (‘I was already using that before they registered it’) is a tough argument in trade marks. And, in the longer term, if you’re ever likely to want to license the use of your trademark to others then registration establishes an official article against which a license can be granted.

Patents

Protects the technical aspects of products or processes for 20 years.

A patent gives the patent holder exclusive rights to prevent anyone else making, using, or selling their invention for a fixed period of time (usually 20 years) before it becomes part of the public domain. Patents cannot be extended beyond their initial term – they arose as a way of governments encouraging innovation; essentially we agree to keep inventing stuff for the good of mankind in exchange for a period of state sanctioned selfishness in how that invention is manufactured and sold.

Patents are territorial – only good for the countries they’re granted in – but a number of international agreements exist which allow. In the EU we have the European Patent Office where a single application covers 36 nations, and for the wider world the Patent Cooperation Treaty covers 130 countries. In both cases you have 12 months from your ‘home’ filing date to extend internationally before it is considered a new application – this can be important as your initial filing date is considered to be the date from which protection becomes effective.

Check out James Cameron’s platform for stereoscopic image acquisition (also known as a camera mount) for example and improvement in velocipedes (also known as bicycles) for something a little more old school.

Registered designs

Protects the appearance of products for 25 years.

For a long time it has been recognized that the appearance of a product can be the key to it’s commercial success – may I present, as evidence, anyone who buys anything from Apple.

A registered design gives its holder the right to prevent anyone else making or selling products which look and feel the same as the registered design. It covers tangible, physical, crafted things (like the famous coke bottle) as well as conceptual, aesthetic things (like the famous coke logo).

Registering a design is quite straightforward – compared to a patent application – as it does not involve any detailed scrutiny by an examiner. Apply to the Intellectual Property Office and, within 3 months, you could be the proud new owner of a registered design. Also unlike patents, you have 12 months from when your design first becomes public to register it; with a patent when it’s out it’s out!

Design rights

Protection for appearance of products without any special application being made (for example copyright).

Design rights are a collection of automatic protections which apply to various original works. In practice they work very similarly to registered designs – and apply to similar works and materials – but do not need to be applied for in order to take effect.

The subclasses (if you want to be geeky about it) are:

• UK design right – protects shape and appearance, except for surface decoration, for either 15 years from the creation of the design or 10 years from the first time the design was marketed.
• Community design right – similar protection to the UK design right and also covers surface decoration, however it is only valid for a maximum of 3 years from the date the design was made public.
• UK copyright – can be thought of almost as the opposite of UK design rights because copyright covers surface decoration (not form and function) and ‘artistic’ qualities. In force for 25 years from the end of the year in which the design was first marketed.

If design rights apply automatically why would you pay to register a design? If you rely solely on automatic design rights then you must prove that a similar product was copied from your protected material – with a registered design you can prevent another party from making or selling something similar whether they copied you intentionally or by coincidence. It’s pretty easy to determine that two items are similar, but a lot more difficult to prove why.

So that’s our 4 identified types of IP.

In the technology and software business you’ll mostly deal with copyright and patents. In my next post I’m going to walk though patent application process since copyrights kind of happen on their own and the granting of a patent looks simple from the outside but turns into quite an arcane art.

And finally, now that we’ve covered formally establishing and reserving rights using the various offensive and defensive legal tools available to manage IP, the thought I want to leave you with is that there is nothing quite like good citizenship. Treat the property and creations of others in the same way as you’d like them to handle yours – patents, copyrights, or not.

MVP in the Enterprise

Minimum Viable Product (MVP) is a well understood concept in startups.  It is all about distilling your features down to the barest of essentials – those things which really make your product your product - in order to get something out rapidly and be able to quickly iterate guided by feedback.  From working at both ends of the startup-to-mature-business spectrum, it occurs to me that the enterprise could learn a thing or two from its lighter-weight cousins.

To broadly generalise the circumstances I’ve seen:

We’re pretty good at this MVP thing in early stage startups.  Mostly because, as we plan an iteration, we are fully aware that we might not be around for another iteration so whatever goes into this one has to count (in fact it might count for everything).  We think lean.  We’re typically good at serving our customer’s most immediate and pressing needs.

In the enterprise we have the luxury of working with the confidence that, even if the immediate next set of features don’t quite hit the sweet spot, we’ll be around for many more iterations yet before times start to get tough.  We think deep and wide.  We’re typically good at serving a big strategic master plan.

Being able to take a longer term view of a roadmap is definitely an advantage and having to spend time worrying about things like scalability is a nice problem to have, but this doesn’t mean that we can’t also think lean.  In fact some of the most value I’ve added has been in the amount of work I haven’t done...

It can work in big business.

Recently I looked at a system to capture and analyse certain customer activity in order to get an earlier prediction of lifetime value and make data-driven cross selling decisions (which ought to push up average revenue a notch) and, on the surface, that seems like it’s worth the pretty hefty licensing, integration project, and infrastructure costs.  We started off modelling it and running the numbers; at first synthetically and later with real data.  What we learned through this early prototyping is that those features which were initially so attractive made very little difference to our business, however our little robot was uncannily good at identifying fraudulent activity.  So we switched the direction of the project, chose an alternative platform, saved a bunch of money and got some functionality which genuinely benefitted us.  Sometimes you know what the real benefits are going to be up front, sometimes you surprise yourself along the way.

We’re also planning to introduce a pay-as-you-go commercial model for our feed products.  When you add up a metering system to watch client consumption, a dynamic pricing system to set tariffs, a billing engine to produce the required invoices, and some reporting tools to keep an eye on its performance it starts to become a fairly significant undertaking.  Will customers like it?  Will it work like we hope (add top-up revenues to committed subscriptions) or like we fear (cannibalise commitment for shorter term hits)?  The best way forward in these circumstances is to ask what is the absolute minimum amount of work I can do to see if this works?  As it turns out we could do a some basic instrumentation (to get simplified metering), use some static pricing, and do the billing manually.  Net result?  A much smaller piece of work – useable in production with real customers – demonstrating how successful it’s going to be.  Now we can build on this with further iterations until we have the fully-featured and refined version we first dreamed up.

There are many more examples, some of which have worked out just fine – so we’ve kept building on them until they were feature complete, fully automated, and enterprise quality.  Others have failed – so we’ve cut our losses (fail fast fail cheap; writing off a few thousand not a few million) and moved onto something different which did turn out to be a winner.

Just because we have the budget and the appetite to do the whole shooting match right away doesn’t always mean we ought to.

The obvious risk here is becoming too short sighted with your plans.  The secret to making this work is to imagine big but plan small – keep a long term roadmap and have a clear vision of where you want all your products to get to, but take small, tightly scoped steps along that path.  Stop and evaluate frequently, adjust big picture where necessary, rinse and repeat.

The Product Management Boundary

Talking to a few of my industry peers (web CTOs and CIOs) about what they do, and to a few CEOs about their expectations, something that’s becoming clear is that we’re increasingly being expected to know what to do, not just how to do it.

Traditional IT uses that age old you-give-us-requirements–we-give-you-back-[mostly]-matching-systems paradigm or variations on that theme. Something we do would typically have a sponsor who dreams up a course of action and a handful of stakeholders who detail it out. What you call those people will depend on whether you think you’re doing agile, RUP, waterfall, etc but typically you’d place them in ‘the business’ rather than technology.

That seems to be changing.

Less and less are we being handed requirements documents or project specs and then going off and doing work to order. Now we’re being asked things like; how do we reach new users? What things can we do to increase wallet share? Should we be doing something with social media? How are we going to internationalize this product? Yeah, that’s right, we’re finally dealing in problems not in todo lists, and - in a trend which is gaining popularity - product management is increasingly being based inside the technical delivery teams.

The days of a business giving us defined work and us delivering projects against it are going to come to an end. A pessimist might suggest that this is ‘the business’ escaping responsibility for defining it’s future. I’d simply argue that technology is an integral part of any modern business, not something else extra and external, and since we’re all part of the same ‘business’ anyway then why shouldn’t we take our fair share of determining the strategy?

I think this is pretty awesome and, in some cases, overdue – after all, don’t we want a bigger influence over what the future of the business looks like and how we get there?  Do it CxOs!

The ISO standard for business plans

If I had a quarter for every time a budding entrepreneur has asked me about what should go into his business plan, then I'd have - let's see - three fifty? I don't know, but put it this way, it's in my top 10 FAQs. My two secrets behind this one are; a) there is no such thing as a standard format or expectation and b) it matters a lot less than you probably think.

Don't agonise over format and presentation - the vital thing is to intimately know your key facts and be able to provide a logical narrative for them. What are your costs? Where does the revenue come from? Who are your customers and how big is the market? How soon will you start bringing in revenue? How is your product different from any competitors (current or future)? What does it cost you to acquire new customers and what is their lifetime value? Have you done this before and who do you plan to work with? Even if you just talk through it you're always better off knowing those things inside and out than having a 200-page glossy document.

And when I say that a business plan matters less than you think it isn't because investors won't want one - they very much will - it's because in the early stages of a new idea what matters most is working product. The best, most detailed, most polished business plan in the world will always be worth much less to a potential backer than a pretty basic, hacked together but functional, beta product.

The Paradox of Freemium

One of the businesses I advise recently flipped over to a freemium model and – as expected – saw a step change in paying subscribers. It does lead to the question; in a world where we typically make money by making things and then selling them to others, how did we decide that giving valuable things away made commercial sense?

Firstly, for those who may have spent the last few years in a cave, I broadly define freemium as giving away something of substantial value along with an associated upgrade/expansion path which returns benefit to the organisation.

This is already commonplace. So many of the everyday tools I use have an element of freemium to their business model; google apps, zen agile, bitbucket, linkedin, mockingbird, a number of podcasts (which lead to paid-for books or other products), and of course almost every iPhone app I see these days has a fairly comprehensive ‘lite’ version.

For a long time we’ve given away tightly limited trial versions, exposing a very small subset of the functionality (or usage time) in order to coax users into a purchase to unlock the rest, and freemium is almost a reversal of this. Give away quite a rich set of functionality with no expectations, and you’ll pick up a group of buyers for that additional stuff on top.

Making this happen comes down to product design; you have to make sure that you hold back something(s) compelling enough to encourage purchases while making sure that your base product is functional and complete enough to be of significant utility on its own. There are so many ways to slice this, and sometimes the differences don’t even need to be rendered – you might simply impose several distinct licensing terms (free for academic or home use for example).

In one of my all-time favourite Ted Talks, Dan Pink says:

"The mid 1990s, Microsoft started an encyclopedia called Encarta. They had deployed all the right incentives. All the right incentives. They paid professionals to write and edit thousands of articles. Well compensated managers oversaw the whole thing to make sure it came in on budget and on time. A few years later another encyclopedia got started. Different model, right? Do it for fun. No one gets paid a cent, or a Euro or a Yen. Do it because you like to do it.

Now if you had, just 10 years ago, if you had gone to an economist, anywhere, And said, "Hey, I've got these two different models for creating an encyclopedia. If they went head to head, who would win?" 10 years ago you could not have found a single sober economist anywhere on planet Earth, who would have predicted the Wikipedia model."

I think those same sober economists would probably have said much the same thing about freemium, and probably much more recently. Getting customers to pay for your product by first giving most of it away wasn’t common sense – and maybe it still isn’t – but you certainly can’t ignore the evidence that it works.

A better way to manage equity?

When we get together to start a new venture, the structure of the equity is always an early topic. The usual format is something along the lines of 'you do X for 20%, he does Y for 10%, and I do Z for 30%' and then we carve up the company up front.

The problem with this approach is that it doesn't easily cater for all the things that really happen during the course of a startup. For example, you can't always predict who's going to stick with it or how many people are ultimately going to be involved. As the idea evolves (because you almost never end up with the same plan you started out on) the bias of work can shift to a point where the equity split no longer reflects the effort split, and of course the value of effort to a business changes over time.

I don't think there is such a thing as a flawless mechanism for this, however I think I might be onto something a little more elegant. Here's how it works...

Break all the work - this same approach works for commercial and marketing tasks just as well as it does for the technical stuff - required to bring your idea to market into tasks or jobs which can be done individually by the members of your team. Decide on a number of points for each task, based on a sensible blend of value to the business and effort required to deliver. Points are the key to the whole thing; do the task -> earn the points -> exchange the points for shares.

Because you haven't fixed the equity allocations up front, it doesn't matter if you gain or lose co-founders and you minimise those 'who isn't pulling their weight' discussions, as you only get the shares you directly earn.

But why points when you could just do the same thing with the shares themselves?

Points give you a couple of extra controls you might not have if you immediately issued the shares; for example you can set an exchange rate between points and shares, allowing you to increase the relative value of tasks not being picked up, or offer individuals a better exchange rate once they have accumulated a large number of points (thus encouraging fewer greater contributors which makes for a more coherent project and a simpler shareholders register).

Setting specific milestones (for example beta launch or first partner signed up) at which points can be exchanged for equity ensures that everyone still focuses on bringing together an overall business delivery as well as their own contributions.

Forming your company with a healthy allocation of shares and some fairly accurate record keeping on tasks and points (I can recommend zen if you're an agile/lean thinker) is all that's required administratively.

There are a number of more subtle points to this, such as making sure you've got strong enough acceptance criteria on each of these tasks, but that's the meat of it. I'm running a project using this method now and - while we're not done yet - it's going pretty well and has already afforded us some flexibility we wouldn't otherwise have had.

Doing it on the side

Something new managers often struggle with is what their response should be when members of their team are involved (or are considering being involved) in external, perhaps even related, business activities. I encourage it wholeheartedly, with a small number of key caveats, on personal development grounds.

Trying out "their own thing" will teach your guys about responsibilities well beyond those that you can reasonable expect to expose them to in their role, and give them some insight into the difficulties of running a business, taking care of finance, marketing to customers, and making product decisions. There is so much to the operational side of an organisation (even a tiny fledgling one) that they would otherwise not have many chances to experience first hand. This can help your team members develop their creative, entrepreneurial side and give them a much better appreciation of the challenges their colleagues elsewhere in the business face. This is so beneficial that I'm even found guilty of supporting such ventures with advice and coaching from time to time.

The caveats? There are only 2 key things that must be true to qualify what I’ve said above:

1 - You still have a job. Outside interests should not impinge on the quality, quantity, or timeliness of work, and if they do then one of these things must go. My policy is to provide a flexible working environment, but I'm not here to subsidise your startup either.

2 - You shouldn't compete with your employer. For most people in our industry, our roles come with a duty to innovate and develop new product to further the companies interests. Whenever something extracurricular can be even slightly interpreted as related, it needs to be raised with management and explicitly categorised into 'company IP' or 'fair game' for everyones benefit.

Regardless of which side of the employer/employee relationship you sit on it is always worth finding out what your company policies are on this kind of thing before getting underway. Being uninformed might mean you start out with the best intentions and end up having to make difficult choices later.