D-talk: What Engineers Must Unlearn to Sell
With all the technology people who have ambitions of joining the startup world, I thought I might talk about why technical people struggle so hard at learning the critical sales roles. The interest in this D-Labs sponsored talk was far more than I expected.
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Systematic Referral Selling
In a previous post I introduced the concept of Connectors (people who can introduce you to Targets) and how to think of them in terms of Introducabilty & Referencabilty as well as how to 'activate them".
Can this scale? Most people would say no. In my experience, the answer is Yes. How? Starting with the obvious assumption that you have a great product or service and Continue reading...
What is your Asset?
A better way to value technology license product company value
Using a Kawasaki-esque, practical approach, we see that the the Intellectual Property (IP or source code) is only valuable if and when people buy licenses. Moreover, existing license sales are only valuable if the licenses can be sold at a profit and the number of customers is only valuable if they are receptive to buy more licenses or support. Given this, how can we measure the value of the asset in a meaningful way?
I have never been impressed with any company evaluation equation in the technology sector nor have I found accounting standards good arbiters of success. However, in the case of mature mode, enterprise class software, I believe there is a simple measurement of one single value that defines the value of the asset in the same intuitive and useful way as Kawasaki. That single measurement: Total value of list license price under an active maintenance contract (LLPUAC) is directly proportional to company value and that two different companies (in the same sector) could be directly compared by looking at the ratios of their LLPUAC values to determine the ratio of their relative company value. I believe that this one single measurement encompass nearly everything likely to be important about a company (or product) value in this category. This means that lines of code, annual revenue, human capital, brand equity, cost of sales, and other common measures are irrelevant once you have LLPUAC. My reasoning: Continue reading...
The High Cost of Selling Software
The cost of getting software into the hands of customers is typically 2 to 4 times more than the cost of developing the software... 
During the current economic downturn, governments have looked to stimulate the economy, and have shown particular emphasis on the small businesses that are seen as the engine for creating jobs. One common stimulus has been to promote new software and other technology R&D efforts that create Intellectual Property (IP). From my way of thinking, they have it wrong in their stimulus target. Many small businesses are able to create software IP through "sweat equity", that is, labor that not directly compensated. The cost of licenses and hardware need to create the software is usually very small and the typical small business entrepreneurs invest their time while remaining in their home offices close to family and friends.
Unfortunately, after making the sacrifice required to create the product, many of these entrepreneurs then face the very sad fact that this software development effort is usually only a quarter of the total cost of getting the product to the final consumer. (Don't believe me? Look at annual reports of software companies and software divisions of publicly traded companies to see where their costs are: R&D is typically 15-35% of total revenue.) Continue reading...