Posts by pmengal

Ending a 50/50 partnership in two steps

Dec20
2011 Leave a Comment Written by pmengal

When two individuals want to start a company together, they often decide to split the shares into two equal parts. That scheme guarantees both shareholders equal rights in the company. But if the two individuals no longer share the same vision despite the application of best practices for that scheme, decisions can be blocked, at the expense of the company. I’m not going to give you more advice on how to make the 50/50 scheme work, but instead propose a solution to prevent you from having a really difficult separation in cases where there is no other solution.

Many resources on entrepreneurship will recommend that you avoid 50/50 splits and ensure that one of the two partners is the leader with at least 50% + 1 share. Sure it will solve the problem and it’s certainly what I would recommend myself, but for some people, it’s just not right. Lots of entrepreneurs are really serious about it and will consider inequality as something wrong that would damage their association right from the start. It has to be 50/50 or nothing.

Successful 50/50 partnerships are a truly amazing experience. Choosing the right partner is certainly the key to avoid painful separations, but even with lot of practice at selecting the right people to work with you, you will make mistakes. The worst case scenario must be discussed upfront and one of the ways to avoid difficult negotiations is to set the exit method by written contract. Both partners know exactly what will happen and accept it from the beginning.

The terms of the separation can be anything both parties agree to, but should always include mediation.  Entrepreneurs tend to be impulsive and having some time to think is a good thing. Most conflicts can be solved by increasing communication and awareness. That’s why mediation must be tried first.

A partnership separation becomes complicated when both partners want to keep the company. This is typical in a conflict about strategy. Here is a two step method that solves that problem very easily and can be used even in partnerships involving multiple partners but having only two in conflict:

Let’s say you have partner A and partner B. Collaboration between the two is not possible anymore without affecting the company negatively.

  1. Partner A makes an offer to Partner B to buy his shares.
  2. Partner B has two (2) weeks to either:
    • accept the offer and sell his shares to Partner A. (or)
    • buy the shares of Partner A for the exact same price as his proposal.

The big advantage of this method is that it forces both partners to propose a fair amount the first time since there is no room for negotiation or counter proposal. In case both parties want to make the offer or don’t want to make it, try tossing a coin to see who goes first.  Another advantage of this method is that it places a clear time limit on the situation.

The 50/50 split, when it has a strong significance for both partners, is the way to go, but every entrepreneur should be aware of the potential problems that can arise and plan accordingly.

Posted in entrepreneurship, essay, partnering, relationships

Choosing the right partner

Dec08
2011 2 Comments Written by pmengal

Over the past 12 years, I have partnered with 15 different people including friends, family, my own wife and even perfect strangers. Getting into a partnership is easy, but when it doesn’t work out, the separation is very often really painful for everybody involved.  In too many cases, the collaboration that started with enthusiasm ends up in a very long ego battle. When this happens with close friends or family, it’s leaves irreparable moral injuries.

Hope, enthusiasm, naivety or cupidity are some of the reasons why you forget to consider the worse case scenario while focusing exclusively on the best. This post is the first of a series on partnering from a personal point of view.

Competences

This is a mandatory criteria. Incompetent partners will drag you down, they will suck all your energy and will obviously make your work time a mental torture. In business, it’s obvious that competence should be your primary criteria in selecting a partner just like it is when selecting suppliers and employees. It’s very hard to identify incompetent partners early. It may take up to 6 months to discover that someone wasn’t who you expected, but sometimes you can avoid that step by being very cautious upfront.

  • Experience in your field: while a combination of complementary skills is certainly what you should look for, be sure to hire someone with valuable experience in your field. If you are building software, partner with software specialists. There is nothing more frustrating than working with someone that doesn’t (want to) understand what you do.
  • Reference checking: check them before you start, not after when it’s too late. Take their resume and start to call at least the 3 last references. Verify every piece of information you get. People that have worked with them will tell you how they were great. Sometimes not. Take this as a hint. Most professionals will prefer to provide you with zero feedback rather than bad feedback.
  • Test before engagement: much like dating in a relationship. You don’t get married after the few first meetings. Start with a small project and be sure to define objectives and compare them with the results. Don’t engage yourself until you have no remaining doubts.
  • Valence effect: also known as the positive outcome bias, is the tendency we all have to overestimate the probability of a favorable outcome in a given situation. Be careful to watch every signal during your discussions: positive and negative. Be sure to analyze them with critical thinking.

Compatibility

Competence is not enough. You must pick someone likable, who will make your work time pleasant. Creating a company is stressful sometimes and you don’t want to add unnecessary annoyance.

  • Similar work style: too much difference in work style may introduce resentment later. Especially if the partner is unable to accept that people are all different and don’t necessarily share the same values.
  • Personality compatibility: some people just don’t match. The more you know yourself, the easier it is to determine what type of person you are likely to fit well with. If you are not there yet, try to compare the partner to someone you know already. Visualize a partnership with that person. Will it work in the long term?
  • Emotionally intelligent: someone unable to control his emotions will likely cause trouble in the relationship. People with low emotional intelligence will tend to be generally aggressive, criticize individuals instead of ideas or actions, and are, most of the time,  self centered.

Motivation

The right motivation is essential. If you seek an objective for the wrong reason, it may affect the quality of your outcome negatively.

  • Necessity: do you really need a partner? Are you just looking for someone to do the things you don’t want to do? Are you partnering with someone only because you need his money to survive? Both of you should seek a partnership for the right reason: to empower your company. If it’s just for money, consider an investor instead or a loan.
  • Shared vision: one of the most common reason for conflict between partners is a difference of opinion on company strategy & vision. A boat can only go in one direction at a time. That point should be one of the first topics of discussion.
  • Entrepreneurship: be sure to evaluate his entrepreneurial ability. Being very competent as an employee or consultant is not a guarantee that he will perform well in a start-up environment. Starting a company requires a specific mindset. A real entrepreneur is motivated by the process of building the business (intrinsic motivation). Entrepreneurs only motivated by money or status (extrinsic motivation) are less likely to get through the first difficulties.

Competence, compatibility and motivation are the three main components of my partner selection checklist. Competence is obviously mandatory and should never be negotiable. Compatibility should also be taken seriously as conflicts are a serious factor in business failures. Finally, motivation is what will keep you climbing till you reach the top of the mountain. Be sure to make sure that you are roped up to the right people.

Posted in entrepreneurship, essay, partnering, relationships

Critical thinking for entrepreneurs

Nov21
2011 2 Comments Written by pmengal

You gain knowledge from information coming from many different sources including books, articles, blogs, conferences and all the discussions you have with other professionals. Being able to interpret, evaluate, assimilate, synthesize and apply the data you collect is called critical thinking and is an essential skill for the entrepreneur.

“A persistent effort to examine any belief or supposed form of knowledge in the light of the evidence that supports it and the further conclusions to which it tends” Edward M. Glaser

The word critical derives from the Greek word kriticos, which means discerning judgment. The roots of critical thinking come from analytic philosophy (Greek Socratic tradition) and pragmatist constructivism (Buddhist teachings).

In this article, I’ll try to isolate the 3 most common steps to practice critical thinking which is similar to scientific skepticism.

1. Identify potential cognitive bias

Cognitive bias, such as the confirmation bias, is a pattern of deviation in judgment that occurs in particular situations. Everybody is more or less affected by it. The more you know about those biases, the less likely they are to affect your judgment negatively. Here are some well-known cognitive biases:

  • Confirmation bias: the tendency to search for or interpret information in a way that confirms one’s preconceptions.
  • Mental filter: inability to view positive or negative features of an experience, for example, noticing only a tiny imperfection in a piece of otherwise useful clothing.
  • Gambler’s fallacy: the tendency to think that future probabilities are altered by past events, when in reality they are unchanged.  This results from an erroneous conceptualization of the Law of large numbers. For example, “I’ve flipped heads with this coin five times consecutively, so the chance of tails coming out on the sixth flip is much greater than heads.”
  • Overgeneralization: Extrapolating limited experiences and evidence to broad generalizations.

Sometimes journalists, politicians and even experts are affected by the overgeneralization bias and write like this: “The scientists confirmed global warming”. Try to replace words like “the scientists” or “the experts” respectively by “some scientists” and “some experts” which usually reflects the reality. It will give a very different meaning to the text. Be aware that identifying another’s bias is easier than identifying your own and don’t forget some people will use tricks to consciously manipulate opinion.

2. Separate facts from opinions

Anyone can post anything online and this is a great opening for narcissist leaders and other fake experts with extrovert personality.  The internet is full of information coming from these sources and a lot is based on opinions rather than facts. A critical thinker is able to separate the two.

You will prefer references to recent scientifical studies. Serious papers will reference multiple sources. But as you will see in next point, mentioning references is not a guarantee that the information and its interpretation are correct.

Always verify the credentials of the experts.  Has the business expert only created one or two businesses or has (s)he created several ones facing difficulties? Is it easy to find information about them or does any data about their past seem hidden or difficult to reach?

3. Analyze the data

To be reliable, the source must be based on empirical data that is produced by observation or experiment. The theory based on the experiment must be refutable.

“A theory which is not refutable by any conceivable event is non-scientific”. Karl Popper

In human sciences, any experiment which aims to define a theory or methodology should be reproducible in at least 95% of the attempts. A good example of non scientific theory is the Freud’s Oedipus complex in psychology. There is no way to refute the theory because Freud states that if the behavior doesn’t appear, it’s because it is repressed.  There is no way to validate or invalidate the theory. Even if there is a possibility than the theory is true, there is no way to verify it and so it should treated with care.

Here are the research methods commonly used in human sciences:

  • Observation: usually the first step of research to attempt to identify potential causes of a behavior. It is impossible to use in most cases in entrepreneurship. How do you observe thoughts?
  • Surveys & tests: if you can’t observe thoughts, we can ask people to describe them. The problem with surveys is that you can’t be sure that the answers are correct.  Social desirability bias, demand characteristics, memory errors are some of the problems you will encounter in addition to the sampling bias. After that, when you interpret the results using correlational approach, it’s impossible to prove that changes in variable A causes changes in variable B. At best, this method can be used effectively to describe or predict a behavior (what), but not to explain it (why).
  • Case study: this is the most popular research method in entrepreneurship as it is easy to do. Observe a few persons and try to determine a pattern. You can’t really prove a causal effect,  just like with surveys. But like observation, this is a good first step for the experimental approach.
  • Experimental: the experimental approach is the only type of methodology that, if well conducted, is able to make causal statements.  They are very difficult to carry out, especially in the field of entrepreneurship. A well conducted experiment will include the following:

Have you ever read a book about business written by successful entrepreneur that converted his own and unique experience into a methodology? Your critical thinking would force you to evaluate the methodology by calculating how many successes have been made out of the millions readers. How many of these would have been successes anyway even without applying the methodology? As a reader with critical thinking you will be able to take what is useful in the book and leave the rest for what it is: a case study at best, observation in most cases. This applies, of course, to any source of information.

But even the results of well conducted studies can be wrongly interpreted, consciously or not, by the person that mentions it. Sometimes it is even conscious: a great example is how some people are caught lying with statistics. Politicians against the decriminalization of marijuana claimed that studies showed 87% of heroin addicts started by using cannabis. Cannabis would  therefore lead inevitably to hard drugs. What they forgot to mention are the millions of people smoking cannabis that never use heroin. The information is true, but manipulated.  In fact, we could present a study that demonstrates that 100% of heroin addicts used coca-cola! Should we prohibit coca-cola?

The 3 steps

Developing a critical mind is not easy, and we must be prepared to accept that a certain number of our current beliefs are wrong. To summarize, here are the three steps to follow to ensure you won’t be intoxicated by the information you gather:

  1. Step 1: identify potential cognitive bias.
  2. Step 2: separate facts from opinions.
  3. Step 3: analyze the data.

To learn more

How much of your current knowledge and beliefs are opinions rather than facts?

Check the cognitive bias list on Wikipedia to learn more about them. You can read more about the different methods summarized above on this page.

Book recommendations:

            

Posted in entrepreneurship, psychology

A life without a cell phone: case study

Nov14
2011 Leave a Comment Written by pmengal

I was an early adopter of the GSM technology. I remember how I was uncomfortable when my cell phone rang in supermarket queues or while I was on the bus. Today this is not strange anymore. What is strange today is not having a cell phone. Even in underdeveloped countries: you would be surprised by the number of people owning a cell phone! Cell phones are everywhere and have changed our lifes and the way we communicate with each other. However, it introduced what I consider as unwanted effects:

  • the thing can ring at any unpredictable moment. It’s more difficult than you think to choose not to answer it: have you ever observed people growling everytime it rings, but still, answering it anyway… You train anyone knowing your cell phone number that you are available at any time, and often this is abused.
  • your email & information addiction is reinforced by the fact you can now check them everywhere. Not to mention the message addiction you develop too: how often do you check your cell phone’s screen?
  • you can be tracked by anyone having your cell phone (including the annoying ones).
  • your health can be potentially affected, though it has yet to be proved.

Just like any drug addict, you are not aware of the addiction until you are forced to stop using. That happened to me.

In 2008, I was somewhat forced to experience life without cell phone for a few months. I worked in a building in which it was impossible to get a signal. At the time I used to get lot of phone calls from different people I was interacting with in my different activities.  Calls were related to problems they were encountering, information they wanted to transmit to me or other solicitations. The only place I was able to answer them or call back was in my car using the handfree system when I left the building. The first two weeks were really painful, but things got much better afterwards. That’s when I noticed the unexpected positive effects of a life without cell phone.

When I sold that car, I got a new one but without an hands free system, making it less easy to continue the experiment, until I finally decided to install one this summer. The reason was that I wanted to start the experiment again. This time for a longer period (one year) and I extended it to my whole life. I don’t wear a cell phone anymore, I leave it in the car’s handfree system. You can still reach me by email and I have a landline at home and in my office. Therefore I’m always reachable by the people that should be able to reach me, with one exception: at the university.

The purpose of the experiment is to determine if not having a cell phone is actually viable. Most of the negative effects listed above can be avoided by defining strict rules of usage, but this is not what I will test. I know usage rules will only work for a subset of people and not for the rest. Therefore removing the cell phone might be the only solution for many.

I started the process the 1st of September, so it has been only two months. Below are the effects I noted up till now:

- Problems get solved automatically: people that used to rely on me exclusively develop a new skill. They can solve their own problems and can take their decisions quickly. For more important matters, they send me an email.

- I have better concentration: I’m not distracted anymore in my activities. I used to check my phone frequently and the ring interrupted me (even in silent mode)

In general, I’m glad I don’t have that cell phone in my pocket anymore.  The only potential problem I have noted is the fact that in case of emmergency, there are gaps in my day where I’m not available at all.  But the probability that an unwanted event will occur multiplied by the probability that it occurs within a gap is very low.

But will it work long term? We’ll see in a future post.

 

Posted in entrepreneurship

Controlled input: the missing piece of time management

Oct18
2011 7 Comments Written by pmengal

In this post, I’ll talk about a problem that affected me personally really badly and that I see in too many other fellow entrepreneurs & developers.

Ten years ago I thought that increasing my productivity would solve my problems.  It did the exact opposite.  My problems did not disappear.  They became bigger.  Until I learnt that I was missing an obvious piece of perfect time management: commitment or what I prefer to call: controlled input.  For those who don’t see the obvious coming (like me a few years ago), this is for you.

In 2000, I started freelancing as I was hit by the entrepreneurial fever. Very quickly I became overwhelmed by work and projects. Sometimes, I had to completely stop moving and think “what is it you are doing?”  I was doing 3 things at the same time, in addition to reacting to every external disturbance such as phone calls. That’s when I decided to invest in something I hadn’t been taught at school or by my parents: organizing myself.  At the time, delegating was out of my reach.

I purchased top rated books on the subject and went to training courses. I started to learn and to put everything into practice.  Productivity increased dramatically.  I became an unstoppable working machine.  In the less than 2 years that followed this, I was able to create 5 companies (with the satisfaction that all still exist today) in addition to freelancing and working on the numerous side projects I had.   This was made possible with increased productivity and the fact that almost 95% of my conscious time was spent working. I started to earn a lot of money, more than I could handle.  But all of this had a price: I became like a zombie and eventually, I burnt out.

I had missed something very important that I hadn’t learnt how to manage yet: my commitments.  I was tempted to say yes to everyone, and more importantly, to myself.  As an example, any new idea I had would be turned into a new company, immediately.  I finally learnt how to solve that problem the hard way.

When I talk about it to friends, employees or students, I use the illustration of the tap and the funnel. The tasks coming in flow from the tap, your input, while the bottleneck of the funnel is you, your maximum output, your productivity. What’s in the funnel is your commitment.

Below is an illustration of three possible scenarios.

  • Overwhelmed: you have too much work and you can’t face it. The fact you are overwhelmed affects your productivity negatively because of stress and other technical factors, eg having to multi task. Not to count the waste of unfinished tasks (or low quality).
  • Increased Capacity: you decide to learn GTD to increase your productivity. It works, you have a larger bottleneck, but you are still overwhelmed. You do more with the same time.  By your new behavior, you teach others (and yourself) that you can do even more. Instead of solving your problem, this actually worsens it.
  • Controlled Input: you control both external solicitations and personal commitments. Input is controlled and matches your capacity. Everything is under control. This is a part of self-awareness.

 

Properly or improperly managing your commitments has many other effects, for example – trust. The more commitment you fail to meet, the more you teach others (by conditioning) that you are not reliable. They will progressively lose trust. Everything you say will be seen as something said by the unreliable guy. It works both sides: if you succeed in meeting almost every commitment you make, you will teach others that you are very reliable. You will build trust and increase your circle of influence. This includes trust in yourself.  It will affect positively your self esteem.

Here are few ideas on how to manage input:

  • Deadlines set by others: in the developer’s world, we often face situations in which other people set deadlines for us. When I face such situation, I re-estimate the task myself and compare it to my actual commitments. If there is a difference, I confront the person who set the deadline. In short, I learn to say no, but with a proper argument. Saying no without any explanation is not only rude, but unprofessional.
  • External disturbances: I’m always amazed when I see someone looking at his ringing phone saying: “oh no, not him, he disturbs me all the time“. Why not simply ignore the call? You are NOT committed to answer the phone, you can call him back at a better time. This statement is valid for everything including emails. They can wait another 3 hours to get an answer, right? In addition, these interruptions are real productivity killers (Nass, Ophir, Wagner 2009). Note: I’m currently experiencing a life without a cell phone. It has been 3 weeks now and I’ll share the results with you in a future post.
  • Ongoing projects: Limit your ongoing projects. Don’t involve yourself in two big projects at the same time. I limit myself to one large project and one or two much smaller ones. In order to do that, I put every idea or thing I would like to do on a list. I update the list often with new stuff, but nothing goes out of it until I have the free room (time) for it.

Increasing your productivity is very easy. The techniques work and are easy to learn. The hard part is learning to say no. To others, but also yourself.  If you are like me, it will take some time to be completely healed from this bad behavior.  But being aware is certainly one big step.  Be productive, control your input, be happy (Oswald, Proto, Sgroi 2009).


 

 

 

Posted in entrepreneurship, freelancing, psychology, relationships

Hope, confirmation bias and entrepreneurs

Oct06
2011 Leave a Comment Written by pmengal

Entrepreneurs are often trapped in a vicious circle of hope.  Hope can be what prevents the entrepreneur seeing things clearly and taking the appropriate decisions.  Hope is so seducing that it’s what is used in most personal development or “get rich in x lessons” books.  Hope is also so powerful and rewarding that it is fed by proofs generated by the confirmation bias, that is itself fueled by hope. Entrepreneurs must learn its underlying concepts and learn to get objective opinions from others.

Confirmation bias refers to a type of selective thinking whereby one tends to notice and to look for what confirms one’s beliefs, and to ignore, not look for, or undervalue the relevance of what contradicts one’s beliefs.  [Skeptics Dictionnary]

Before talking about confirmation bias, let’s understand what is hope from a psychological point of view.  Hope is one of the many mental defense mechanism we have that is triggered in order to disconnect us from hurtful emotions (anxiety, sadness, despair, ….).  It uses thoughts to construct a positive scenario of the future.  People often grab these thoughts as a life buoy to avoid the reality of the present moment. We usually hope for a better future when we are  uncomfortable with the present.  Hope is what drives many wantrepreneurs.  Hope will make entrepreneurship’s book writers rich, not you.  Happy people hope for the best, once, then stop thinking about it.

In order to fuel hope, you need proofs that what you see in the future is possible and is likely to happen. This is when the confirmation bias enters into action. Every single proof you see that makes your predictions credible is highlighted, while every single piece of evidence that it won’t is denied. Those proofs stimulate hope that itself forces you to suffer from the confirmation bias. It’s a vicious circle.  One great example of the relationship between hope and the confirmation bias is seen with believers of the 2012 end of world event.  They can point to you dozens of  scientific  studies that prove it will happen, ignoring the hundred other proofs that it won’t.  One seducing thought in the 2012 case is that the event can potentially make them better than they are now.  Hope is triggered by a desire for change and fueled by confirmation bias.  Desire for change is not the only way to trigger hope.  Any unwanted emotion, such as fear, can also be a very good motivator: some religions claim that if you are not a good practitioner, you won’t go to paradise, but burn in hell forever. With entrepreneurs the desire for change is the key to the process.

Conscious thinking is not the only factor: things get worse when we take into consideration theories of biological psychology.  Desire to change is not the only motivator for hope. There is a physiological reward for the behavior. Dr. Robert Sapolsky, professor of biology and neurology at Stanford University conducted experiments that showed that there is a direct link between hope and dopamine (pleasure hormone) releases in the brain.  Studies even show that we get higher dopamine releases when there are more uncertainties. Uncertainties? That is certainly something that entrepreneurs can relate to.

The ability to cope with temporary difficulties is one of the entrepreneur’s required abilities. Too many people can’t go through what Seth Godin called The Dip.  Defeatism, the opposite of hope, is one of the obvious failure factors in entrepreneurship.  Often they decide to stop.  They think their efforts are not worth it anymore.  Defeatism works just like hope. Your judgment is biased and you see things from the negative side.  It is also fueled by the confirmation bias in the same way.

Optimism is often suggested as a strategy to fight defeatism.  It’s true that if you tend to be defeatist, hope can counter balance the feeling by replacing negative thoughts by positive ones.  It’s positive psychology. And it’s even suggested by the Emotional Intelligence guru Daniel Goleman.

Having hope means that one will not  give in to overwhelming anxiety, a defeatist attitude, or  depression in the face of difficult challenges or setbacks. [Daniel Goleman]

Just as defeatism must be avoided, hope can’t be a strategy on the long term. It can even  hurt as much as defeatism.  Do you remember how you felt after you really hoped that something would happen and it did not? You would be really surprised if you noted each prediction you make and compare them with what actually happened.  Hope will play against you.  It will hurt, it will hide a more concrete problem, and more importantly, it will bias your judgment.

Self awareness, again, is the key. To manage the process, consider hope (or defeatism) as a signal you must decode by being aware of the physical and psychological mechanisms. If we suspect we are biased, we must not believe entirely what we think and assess every hypothesis we make with realistic information.  Market studies and/or customer development are ways to assess our assumptions, as well getting mentorships from more experienced people who have learnt the hard way. With some practice, you will be able to acquire the self awareness required to avoid being trapped in those loops.

 

 

Posted in entrepreneurship, EQ, psychology

In praise of technical support

Sep27
2011 1 Comment Written by pmengal

I’ve been doing technical support for the last 13 years and still do it today, I love it.  I love it so much that I’ve now got friends all over the world.  I used to have a map of the world in my office with pins that located them.  I’ve even been invited to the wedding of one of them on the other side of the planet, which I attended with great pleasure.  This is invaluable experience and just for that, I’ll continue for the next 13 years in the exact same way.

But in addition to the social aspects that are obviously linked to my personal interest in multiculturalism, technical support is a real opportunity to grow for both developers & business owners.  Support connects you to your users and it’s one of the best channel of gratification you may have.  The comments and suggestions you receive positively from it help you improve your products, skills or strategy.  If you are doing great at support, there is a great chance you are or will be great as an entrepreneur or lead developer.

There are many motivational theories and they are not universal as we are all different. We are all driven by both extrinsic and intrinsic motivation at different levels.  A good example of extrinsic motivation is salary or threats (the donkey, the carrot and the stick). You do support because you are asked to do it or only for money (or because potential loss of money), or both.  Intrinsic motivation on the other hand is the motivation you get from just doing the task.  You are aware of your own performance and you are not specifically seeking for extrinsic motivation.  In fact, that kind of motivation often comes naturally afterwards.

“Many, many thanks Pierre for helping me out [...]. It’s rare to get such service and I really appreciate it. [...]. I owe you a beer or three next time I am in Brussels!” A customer from UK

Because technical support agents are often at the very bottom of the hierarchical pyramid, it is likely to be perceived as a low profile job.  Many technical support guys try to do the bare minimum and hope they will be promoted soon to get out of that awful situation.  I believe it’s the exact opposite.  The essential skills needed to be a great technical support agent are the same you need to be a brilliant developer or successful entrepreneur.  Great developers & great entrepreneurs have strong interpersonal skills.

Strong interpersonal skills include being genuinely interested in your users and being able to put yourself in their shoes.  Empathy through social awareness is one of the core element of emotional intelligence.  If you don’t understand your users, you will face strong problems.  Some users have difficulties expressing their needs or feelings.  Your great ability to decode what your customers need or want will not only make them happy, but also help you improve your products and overall company strategy.

“I must say Pierre that we are very impressed so far not only with the product but with your overall attitude and all the assistance you have given us. I can’t thank you enough but hope to thank you soon as a customer.” A customer from US

Because support is an integral part of your product, support is also one of your main sales & customer relationship channels.  A study conducted by RightNow® Technologies has found that 46% of Australians declared they would leave their current internet provider because of poor customer service.  The same survey states 21% already left a previous provider for the same reason.  How many customers can you keep or get with a great support?  In software development, support is often the first human to human contact your customers get and how it will goes will be weighted in their overall perception of your product.  In fact, your product is not the bits that get downloaded and installed on your customers machines, your real product is the whole experience your customers will get with your company.

Since your product is your company, including its support, any assistance you give to your users should be free and optimized.  To make it painless for both our users and ourselves, we try to use the following procedure once we receive a request:

  • If it’s a reproducible bug, we add it into the backlog and give its ID to the customer/user. We also take the ID of the customer/user to notify him of resolutions and releases personally. This is easy if you collect his email directly.
  • If it’s a problem using the software, we take this as an opportunity to improve the documentation.  Any answer is written like a knowledge base article that we add in our database afterwards.  It takes triple the time to write, but we don’t have to repeat ourselves later (most users prefer browsing in KB).
  • If it’s a feature request we connect the user with the product owner directly.  This is very valuable.  Of course we use systems like uservoice.com, but talking with the user directly is a lot better.
  • If it’s a complaint we try to manage that outside the process.  People that complain like to be considered as important (even if the complaint is trivial).

Support is your free & perpetual market research.  Support is one of your main sales channels. Support is your opportunity to learn how to improve your social awareness.

Posted in entrepreneurship, psychology, relationships

If you know neither the competition nor yourself, you will fail

Sep15
2011 Leave a Comment Written by pmengal

There are two common types of behavior I have noticed in people regarding their competition. You have the competition driven people, and the competition denial people .

The first constantly monitor their competitor’s activity by visiting their websites & forums or googling them constantly, while the latter meticulously try to avoid any piece of text mentioning their names.  Sometimes, the latter behaves like the former by accident, triggered by some source of information they have read by mistake… Both emotionally driven behaviors are very dangerous for their business.

A third widespread behavior, linked to the same concept, is to not enter a market because of the presence of one or more competitors or even worse, entering a market without studying the competition in detail. All these types of behavior will make your business decisions weaker. The solution is to take your competition for what it is, no more, no less and try to intelligently decode your emotions and thoughts (both are linked).

When someone is competition driven, he will often take any of the competition’s initiatives as something he doesn’t have (and therefore he must have), instead of taking it for what it is: an initiative that can be equally good or bad.  The resulting action is to try copying the competitor’s ideas (but perhaps doing them better…). The problem with that behavior is that the competition will always be significantly in advance and the market will inevitably perceive him as the follower, not the leader, constantly competing on basic stuff such as features & pricing.  It’s not only his innovation that will be affected, but his overall entrepreneur’s ability to take good decisions.  Being so abnormally obsessed by a competitor can be the start of very serious trouble possibly leading to burnout or worse, to the abandonment of the venture.  His fear of competition is irrational.  Many of his important decisions will be biased by his distorted perception of his challengers.  It’s not how he should develop a wealthy company.

Competition denial on the other hand, is the action of ignoring the competition completely. This is a very commonly suggested strategy to solve the results of competition driven behavior. That is, by ignoring anything the competition do, his judgment, innovation & decisions are not affected by what they are doing. After all, he may say, listening to the market and customers is the only valuable thing to do.  Instead of being competition driven, he becomes customer driven.  It’s a seducing way to drive your business, but ignoring the opponent can hurt you as much as being obsessed by them.

If you know the enemy and know yourself, you need not fear the result of a hundred battles.  If you know yourself but not the enemy, for every victory gained you will also suffer a defeat.  If you know neither the enemy nor yourself, you will succumb in every battle.

Sun Tzu, The Art Of War

This is something I learnt from practicing martial arts. Before an important fight, you must watch videos of your opponents previous battles (or previous fights in a competition).  Watch how he moves, what he is good at, what he sucks at.  It will helps you develop effective ways to attack him and defend yourself.  Strategy is not the only important thing in a battle.  Attitude can make all the difference.  If you have a very determined opponent in front of you, this will affect your morale during the battle, and therefore your performance.  Invest in strategy by analyzing the market, including competitors, and in self confidence.  The former will help your differentiation in the market.  The later will surely contribute to making your competitor fear you, leading them to one or both of the unwanted behaviors described in this post, and making you the leader.

It’s true with existing competition, before you enter the market.  When I tell my elevator pitch for my new venture, most of the time I’m asked something like “but doesn’t it already exist?“. The existence of competition is a pretty good indication that there are fish to catch.  If you are fishing and you see many wealthy fishing boats in an area, it’s a wise decision to go there.  In fact, in many cases, the market is big enough for everybody.  A given market can be under-exploited (new areas to fish) and only a small share is taken because of the lack of alternatives (new ways to fish).  Ten years ago leading companies such as Palm, Nokia, Microsoft or RIM released the first smartphones on the market.  Apple and Google revolutionised the market just 7 years later capturing 60% market shares alone in less than three years.  They did not invent the smartphone, they just did it better and more importantly: differently.

You must know your competitors and yourself.  Every business, even before starting, should have done some well conducted market research and applied customer development techniques.  In addition to that initial step, you must continue to monitor the market (including your competitors) in a rational way.  If you take your competition for what it is, you’ll get the information you need to take the right decisions and lead your company to success.  Once you understand that, you’ll probably need to work on managing your emotions.  Your ability to decode emotions, called emotional intelligence, is heavily determined by your childhood education and a bit by experiences in adult life, but it’s not too late to improve it.  In fact, it’s pretty mandatory.

Posted in entrepreneurship, EQ, psychology

6 steps to safely quit your job and launch your tech start up

Aug19
2011 2 Comments Written by pmengal

Many students and future entrepreneurs ask me how it is possible to leave their job and security without the risk of ruining their life.  In fact, this fear is irrational as is the illusion of security in your job.  That will be subject of a future article, but in the meantime here’s the one thing I generally recommend for start up without risk.

You must have enough money put aside to support you financially for an entire year.

If you do not, you will be at the mercy of each little setback, making your journey much more difficult.  And to launch your start up without working on it full time will also affect your chances of success.

Here are the 6 steps you need to go through to quit your job safely:

  1. Reduce your monthly expenses to a minimum
  2. Save any extra money
  3. Increase your income
  4. Get ready for the adventure
  5. Negotiate your departure
  6. Commit yourself fully

The first three points can be found in dozens of books on managing personal finances, with the common denominator : spend less than you earn and put the money aside.  The aim of these three points is to get yourself into a good financial situation.   The final three points are really important for a good start.  Missing one step can act against you.

Here’s an explanation of the 6 steps:

Reduce your monthly expenses to the minimum

Have a modest lifestyle then you can dramatically increase your level of freedom and your ability to seize opportunities. People with a very high standard of living are often prisoners of this lifestyle and slip into a vicious cycle called The Rat Race. They are on the treadmill never able to stop, because stopping would mean big problems. Having a modest lifestyle is a luxury accessible to all.

Get rid of all the unnecessary stuff in your life.  This could include selling your expensive car, reducing your frenetic shopping and the number of meals out in restaurants every month.  Instead of an expensive gym subscription try running or cycling outdoors.  Consider swapping your shiny, new, latest generation iPhone for a second hand android and don’t forget to cancel all the subscriptions that you don’t really use.  Next summer instead of going abroad to a 5-star all inclusive hotel try camping or bed and breakfast.

Worried about loss of your well being? Scientifical studies (Malka/Chatman 2003, Baucels/Sarels 2010, Boyce/Brown/Moore 2010 & Krugman 1999) prove that once your basic needs are met, any extra money won’t really affect your happiness. In fact, too much stuff in your life may introduce boredom and anxiety. More is less.

Still worried? Don’t forget it’s just temporary until you can afford it (again). In fact you should never buy anything you can’t pay for with cash. If you can’t pay in cash (with the exception of your house), it means you can’t really afford it. You’ll be able to buy all the luxury you want with the extra money you’ll get from your successful company.

I personally sold my brand new luxury car (Mercedes ML) for a simple and cheap second hand utility car (Ford Transit Connect for less than 8K). Less happy? On the contrary! Liberty of choice is priceless.

Save any extra money

The difference between your income and expenses, is your ability to save.  The bigger the gap is, the faster you will reach the goal of the equivalent of one year of expenses. If your start up requires an initial investment, you must include this in your calculation.

We saw earlier that your income, after a certain point, won’t affect your happiness much. Lack of savings can really affect it (Gavin 2005).

What you do by taking all your extra money is pay yourself first, a lot. Here are the definition from Investopedia:

A phrase commonly used in personal finance and retirement planning literature that means to automatically route your specified savings contribution from each paycheck at the time it is received.

Because the savings contributions are automatically routed from each paycheck to your investment account, this process is said to be “paying yourself first”; in other words, paying yourself before you begin paying your monthly living expenses and making discretionary purchases.

Increase your income

To speed up the process, I strongly recommend you increase your income.  You can do this simply by asking for a raise (it works, really, just try), finding a second job on weekends or evenings, or by getting rid of all those gadgets that you do not need anymore by selling them on eBay (whatever you may think of it). Ideally, you can do all three at once!

One really original way that I have had occasion to test with success is proposed by Timothy Ferriss in his book The Four Hour Workweek.

Please note that this mustn’t be to the detriment of a well balanced life. If you really can’t afford to work extra hours, don’t do it.

Get ready for the adventure

Just because you work full time elsewhere does not mean that you cannot clear a little time to prepare your start up. This need not be more than 4 hours per week. If you have to choose between working more (previous step) or this one, pick this one!

I highly recommend that you use this time to talk to the potential customers of your projects. This will allow you to adjust your business plan in order to develop a product that truly meets market expectations.  This is called Customer Development.

Many start ups fail because the entrepreneurs have never talked to customers and therefore “derived” requirements based on their own experience. What they did not know is that their experience is unique, and often does not reflect reality.

Starting well prepared will help you to face the challenges in a more serene manner. Of course you cannot predict everything, but read enough about the subject and you can protect yourself from most common mistakes.

Additionally, start to subscribe to every major blog of your industry and follow the specialized press. Watch similar companies and try to attend to few trade shows to observe the market.

Finally, to help you prepare, I recommend that you read Four Steps To Epiphany, you can get a pdf version here.

Negotiate your departure

Once you have gathered a year or more of expenses, it’s time to get started.

This is the simplest step, and yet it is one that can seem to be the most insurmountable! It’s not really the fact of announcing your departure to your boss that causes the most concern, but actually making the leap.

Many choose to apply for a sabbatical year (this is a legal right in some countries), others consider this step as a liberation in itself.

If you have fully realized the previous steps, you will be much more confident. You will have enough money to both achieve your business and live normally.

The most elegant way to announce your departure is to request a meeting with your boss and explain that you are going to try the great adventure.  During the interview, take advantage of their experience to ask for advice!   Send your official letter of resignation only after the interview.

Make sure that your departure is not too detrimental to the company and that your departure is not too painful for your employer.

If you are lucky enough to have a good boss, they will let you go without putting any obstacles in your way. Otherwise, they might try emotional blackmail.  If your departure harms your employer, it is likely because you have been poorly managed. It’s rarely your fault. This will be your first test: to deal with this while remaining professional.

Commit yourself fully

You have started!  Now you need to focus on your business full time.  This is no time to indulge in other things. If you chase two rabbits, you won’t catch either.  Don’t start two businesses at the same time. Focus on one and only one. You’ll be able to work on different things at the same time once you get more entrepreneurial experience.

You will probably read in many other information sources that the best entrepreneurs work 100h per week. I really think this is as ridiculous as it is dangerous.  It’s true that working many extra hours will provide you with extra productivity short time, but will likely harm you long term.  You must work hard, but not destroy your health, which is more important than all the money in the world.  In fact, I believe that working too hard can prevent you from being successful as much as not working enough!  Dead or burnt out, you are useless to your business. Your start up needs a healthy entrepreneur with a well balanced life.  I highly suggest you that you don’t work more than 9 hours a day, with regular breaks, including lunch time away from your computer.  Invest the rest of the time in what should be the most important: your family and yourself.

Whatever happens you have this advantage: you will not have the pressure of needing an immediate result. You know you have enough money to support yourself and in case of problems, you know you have the capacity for a much better job than you had before.

What if I fail?

The success of your business is not the subject of this post. That being said, you do need to consider failure.  Statistically, it is even quite likely that you will fail, but if you prepare properly you greatly improve the chance that you will succeed in developing a profitable business in which you blossom.

In the event that it just does not work, know that you come away from this adventure much stronger than before, which will greatly increase your chances of finding a better job.

The reason is simple: Employers love people who take things in hand, those that turn problems into opportunities.  They are quite rare and generally, people who can do this are probably already employed and so not likely to be applying for jobs, or have already set up their own business – this means these skills are in demand.

Indeed, fear of failure is so great that very few people manage to succeed as far as point 5 point, even the brightest. You will be in a unique position that allows you to find an exceptional job.

If you can afford it, save a little over a year in advance to give you a few more months to find a job in optimal conditions, ie without pressure.  For you, the key to finding a better job is that you have become more competent, with no debt and most importantly, with no regrets for not having tried.

Posted in entrepreneurship, investment

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