The quality of your recruiting will determine your success. One of my favorite recruiting quotes of all time was from a Bill Gates New Employee Orientation. At Microsoft, twice a year, Bill Gates would give an introduction to new employees, and, as you might expect, he was a very inspiring speaker. During one of his speeches, he related the following wisdom:

“Do everything you can to avoid the average hire. The great hire is great for obvious reasons, and you want them immediately. The bad hire is obviously not ideal, but they can be dealt with in the appropriate way. The average employee, on the other hand, will cruise along, adding just enough value not to be removed, but, at the same time, not elevating your company to the next level.”

 I had no idea how many times he gave this speech, or whether this was some common bit of wisdom, but it resonated with me and has guided me throughout my professional career. You are looking people to go into battle with, who will change your company for the better. A mediocre employee will not weigh you down, but they also will not raise you up and achieve all that you otherwise could.

How do you find these dream colleagues? I strongly believe that organizations must have someone spending more than 50% of their time recruiting in some capacity.  And, regardless of whether it is a full-time employee or external recruiter, there are some important things to keep in mind:

• First, the recruiter is your proxy. For the potential candidate they are the face of your company, and they need to emit as much passion and belief in business as you do. If the candidates do not buy in with the first people they talk to, they will very rarely go through to the next step.
• Second, think about everything you are offering. A well-thought through HR and pay package is just the table stakes for getting great employees. Great candidates need to be sold on the vision, their upside and how the world will change when they succeed; they do not just want to be a cog in a machine and you would not be happy with them if they did.
• Third, be realistic about the time commitment. No matter how many people you reach out to, your total response rate is going to be extremely low, and the percent of people who qualify for even the lowest bar is going to be in the single digits.
• Finally, if there is any question whatsoever about a candidate, the answer is no. Anything that is even the smallest hint of a red flag is going to get worse over time and under stress.

One thing to note – “try before you buy”, where you engage a candidate in a consulting arrangement before you hire full time, does work it is not a cure all. If someone is not a great candidate, you cannot expect for them to grow into a great candidate just because you worked with them for three months.

More than anything, I stress to all startups that recruiting top talent is the lifeblood of your business. It is taxing both of your time and energy, but this is not the place to cut corners or go quick over quality. Finding the right employees are critical, there is simply no way you can take on the world on your own.

 

Lou Gerstner had it wrong – the question is not whether or Elephants can dance. They can dance very well. The problem is that they’re usually listening to entirely different music than you are, and, if you’re not careful you’re going to get stomped.

Elephants – the large, slow moving organizations in your industry who only engage in the largest deals – can make your quota for the year, which is pretty convenient, since it usually takes about that long to close them. The problem is that as a startup, spending that much time closing a single deal is a recipe for a very slow year, if you don’t go bankrupt in the meantime. So how do you dance with the big game without getting killed in the process? As someone who works in a company that works with many of these types of companies, I have two pieces of advice to make sure you’re lined up for success.

First, there are no stupid questions, just stupid people who forget to ask the right questions. Here are some that you need to be asking as you take on the challenge:

• How big is the needle you have to move? – Deals have to be significant enough to make something happen– it’s just not worth the effort for a small deal, no matter how cool or significant it is for you.
• Who’s your champion? – Are you being backed by a decision maker or a line-level employee? Both have their risks – from not getting enough attention to not having enough power to push the deal through without consensus. This will also certainly help you schedule when you expect to see results (if any).
• When are you going to hear from them next? And what do they need to hear from you? – It may be completely normal for your entire account team to disappear for a week, or send 20 mails in 40 minutes. Understanding their schedules (sales cycles, quarter ends, company meetings) and when the natural milestones are is critical.
• When it rains, how much is it going to pour? – How much work is going to be required when you hit your deal and project milestones? You could go months requiring no more than 20 minutes of your time a week, and, in the blink of an eye, you now have forty documents to finish in 24 hours.
• Realistically, how many can you pursue at once? – Understand that the payoff for these deals can be abysmal – I’ve seen sales and BD pipelines that are 20 deep where just one of the deals actually turned into something, and it was still worth it. Every additional attempt takes resources, but do not, for the love of God, put all your eggs in one basket.

Once you know how things are going to lay out, my second piece of advice is something that many people are pushing now-a-days – go lean. That is short hand for saying, be ready to respond to change, listen to your customers and do not weigh yourself down with endless process or planning. Some tactical suggestions:

• First, make sure your overall backlog of work is extremely fluid. You have no idea when a request will come in that will take your entire team sideways for a week. Making sure you have tasks/projects that are small enough to finish every couple of days means you’re not leaving large chunks of work unfinished.
• Second, around the rough milestone when you expect to see some work start coming in, only book 80% of your time. It’s not like you’re going to send everyone home at 4 PM, but by keeping slack in the system, you can pick up and respond more readily. And there will always be little things that can be addressed to fill the hours until the request comes in.
• Third, be crystal clear what’s important to them, and make it important to you. The KPI for elephants can vary wildly – page views, impressions, click-throughs, sales, video views, contest entries, and on and on. You need to put aside your own dashboard – you have a new one for the beginning, middle and end of this project.
• Fourth, do not get married - to anything. One thing you will be amazed about is how quickly large portions of your work will be thrown out, without even an indication as to the reason why. No amount of begging, pleading, or documents signed in blood will help you avoid this. Just review your work early and often.
  
• Fifth, when in doubt, over-communicate. These guys are enormous – they have more meetings and partnerships than they know what to do with, and you will fall through the cracks if you do not make sure you’re heard. As my friend likes to say, be lightly, but persistently, annoying.

One other thing to keep in mind – these companies LOVE to consider themselves “startup-like”, very nimble organizations with the decision making pushed down to the individuals. Don’t believe it for a second. The reason they are worth so much to land is because they are enormous – and you cannot get to that size without having far more friction than a true startup.

As a company that deals in the entertainment industry almost exclusively, we see elephants every way we look. They are absolutely worth going after, but you need to set your internal expectations correctly. You will be frustrated by speed of execution, amount of work, sales cycle – virtually every step of your engagement. But when you finish it, your company will be that much more successful for having navigated the Serengeti, and having come out alive.

Content farms are insanely hot right now, no matter what the chattering classes would prefer. These companies, who churn out large bodies of low cost and low quality content in order to win search results, have completely overwhelmed the professional content producers in the search engine result game. Yet, despite all the hatred, these same journalists cannot seem to coverthemenough. The biggest question is, are we truly on the verge of a new content world that will kill the market for quality content? And, more importantly, do you have any chance of rising about the low quality noise?

The filings for the Demand Media IPO gives us a particularly interesting look inside the business of this new class of content creators. Here are some choice nuggets:

• First, like any new business, Demand definitely talks a big game. A nice analysis of past statements by the CEO, Richard Rosenblatt (written by Scott Austin, professional journalist) shows the business is not throwing off as much cash as every one thinks.
• Second, the costs are far more centralized in content creation; Demands shows over $200 M in expenses in 2009. Though they do not break it out in detail, one must expect that a significant portion of this goes to paying the content creators – a huge chunk that they have to deal with. One must deduce that the breadth of the content created is not that valuable and/or they are still paying way too much to get it created. Either way, Demand will have to change this equation if the content farm business is going to be their long term bet.
• Third, 44% of revenues come from the domain name business, eNom, versus any of the content world. eNom is a domain parking and registration site and, while they tend to be more ethical than most, it is still a very gray area. Because the costs from that side of the business are likely to be much much smaller, it further stresses how unprofitable the content generation arm of the business is.
• But finally, and most importantly, there should be a huge banner on top of page one that stresses an enormous point: Demand Media lives and dies based entirely on what Google does. A very thorough review by Danny Sullivan, of SearchEngineLand (and professional journalist) shows that not only does Google send more than 26% of their overall traffic, but Google Ads (and presumably the Google Ad Exchange) delivers more than 26% of their revenue.

Demand has done some amazing things, but this last point is absolutely terrifying. Like my friend says - “It's a great business until it isn't.” And, with such a huge dependence on a single external company like this, the difference between a great business and zero business is razor thin.

I think there will always be room for this kind of company; there is far too much demand for very specific answers that professional content creators will never completely satisfy. But will this always be the black hole of search queries, gathering all the miscellaneous terms together? That is to say, is quality content in jeopardy? The simple answer is no – users are simply not satisfied with what they are finding, and the numbers show this in detail. At less than two pages per visit, and virtually no social profile at all, users are clearly looking for something more.

So how can you compete with companies that fund armies of people eating ever search query that they can find? Just play into the area that they are the weakest. Users are desperate to find quality content that they connect with, and that is where content farms fail. At Entertonement, our content is shared constantly across all the major social media sites, and, every time it is, we never fail to rank number one for the result; you can do the exact same thing. Play up your most unique and highest quality content, and your users will respond by taking your content to their networks. Just a few wins with your customers and you'll be miles ahead of the content farms, who have never and will never be able to connect in that way. Yes, they will still own the most random long tail terms, but the more viral your content, the more you have a chance to reach the people who are interested in you. You will not win the search results game going head-to-head until Google cleans up the results, and in the meantime, the only winning move is not to play.

• Netflix signed an enormous deal with Relativity Media.
• Hulu is launching Hulu Plus to (finally) get Glee, The Office, and other full seasons of popular TV series to users on demand (rather than just the last five episodes).
• Redbox is planning an unlimited streaming service to compete with both of them.

Fanatic users are not as hard to find as you may think. A successful entrepreneur could do worse than spending all day and night recruiting them. Yet, all but a few entrepreneurs fail miserably when it comes to finding, talking with, and winning these incredibly valuable partners. How do you avoid this all too common mistake?

This past weekend, I listened to a great conversation with the author of A Full Cup, a biography about Sir Thomas Lipton. For those who do not know, Sir Lipton was a business man in the mid to late nineteenth century who completely reinvented the tea industry and brought it to America. Before tea, he had become an extremely successful shop owner by using sales techniques new to 1870s commerce. These techniques included things like: displaying his goods with flare; investing in interior and exterior lights; and ensuring quality goods, or making it obvious when they're day old products.

Lipton’s innovation assured his customers they were getting what they paid for, and that honesty translated into a commercial relationship they wanted to be a part of. When your business is repeat customers, nothing could be more critical!

However, the most important thing Lipton did when it came to selling was simply being extremely passionate about his store. Whenever you come upon a business where the owner’s soul shows through to the customer, the customer never fails to return the love tenfold. In Lipton's case, this meant having fun with the process: putting convex and concave mirrors at the entrance to create a fun atmosphere; hiring fat men and skinny men to walk the streets near his store with signs saying "Coming from Lipton's" (fat) and "Going to Lipton's" (skinny); and arranging for a parade of pigs to lead customers right to his front door.

Bizarre? Sure. But it's got character, which is something that people yearn for no matter what the time period. It gives people a chance to commit to something, rather than just interacting with a faceless entity. 

Recently, the founders of Trada left stealth mode, and one of the co-founders had a nice blog post about why they decided to stay silent for as long as they did. One of the most salient points I took away from it was the following quote:

Commit to the public conversation when you can actually commit to it.

Sir Lipton understood this advice, Woot understands this and any company that wants to have passionate customers needs to understand this. You will not get committed users until you are committed. Your users will never have more passion for your products than you do, and until your commitment to whatever you hold dear oozes from every pore, you'll have a bunch of half-hearted users who will be more than willing to jump on the new new thing.

The best way to think about your business is to think about every activity, product, and transaction as a conversation with your customers and users. It's not enough just to open your mouth and spew words. You've got to believe in what you say, or no one will listen. And you can't just keep talking, you've also got to pause and listen to what your customers are saying. It may feel unnatural or unprofessional at times to be so exposed, but if you are truly genuine in the way you interact, your dividends will be enormous.

"The only 'intuitive' interface is the nipple. After that, they’re all learned." – various attribution, most commonly to Bruce Ediger

While there is some debate (especially among new mothers!) how intuitive the nipple is, the nipple is the perfect product. It fits exactly to spec, even without user testing and with a variable user group. It's extremely portable and instantly available in a wide variety of environments (hot, cold, wet, dry, etc). It's (mostly) instant on, and (mostly) intuitive, and works without even thinking, when one or both users are half asleep. But best of all, it was designed with a singular purpose for a very select audience segment, and, for that segment and that audience, it is a wholly complete solution.

Product designers have a horrible tendency to creep scope. When they come upon a problem (my pancakes burn on one side and a raw on the other) which cannot be filled with the stuff people have (should I hold the pan upside down? should I grab the pancake with my hand?), and build a very useful tool which is pretty good at solving said issue (a spatula). Unfortunately, rather than stopping there, they proceed to add a whole bunch more features (slots, ultra sharp edge, clock radio) until it barely solves what for what it was initially designed, and most definitely does nothing else well. If they had just stopped after their first pass, and moved on, every one would have been so much happier - and their pancakes would never have been so well flipped.

What's the solution to this? Allow me to build on the post of my Seattle 2.0 colleague last week, "You Are Not Your Target Market (Even Though You Used to Be)". The most important thing in designing products is focus focus focus. New features are fine, new audience segments are not. The more focused your solution, the more successful you will be. Let me give you some examples:

- The G.E. Volusion E8 Ultrasound Scanner - If you've never had an ultrasound, you've missed a truly amazing display. In complete darkness, Ultrasound technicians are able to move a wand with one hand and make detail measurements with the other, zooming in and out, recording locations and spotting for landmarks. It's not just that they are well-trained, it's that the designers of the machine knew exactly what challenges the users would be facing. You can't require key combinations, for example, because you have one hand holding the wand covered in goo. How, then, can they make the most of the five fingers their users have left? Trust me - they do.

- Avid Media Composer - Within twenty years, Avid moved an entire industry to a new technique, and became the ONLY solution for the space. Avid Media Composer is the reason why. In complete darkness, a master editor can fly through any length of video, faster and more accurately than you can imagine. The keystrokes and techniques are not obvious, but when you watch someone trained, the machine is like an extension of their arm.

- Oxo Measuring Cup - Ok, I've written about this before. However, it's worth bringing up again: this measuring cup indicates such creative and such a perfect solution, the designers should be nominated for the Nobel equivalent of product design. A chef no longer has to bend over to look at how much stuff is in the cup - you can see from the top. My God is this brilliant. The designers must have been looking at themselves trying to figure out why someone else didn't come up with this in the past 100 years, and not even realizing it's because it required a genius to think of something this simple.

I note, with some dismay, that it was basically impossible to come up with a candidate for this list that was software or Web software only (Avid is obviously software, but it really only shines when you pair it with the hardware workstation). It's not that software and Web sites don't make good UI and UX examples, it's just they are so broad, and do so many things, that it's very challenging to view them through the lense of a single user group. And, therein lies the failure of software development when it comes to developing the perfect product.

Because hardware is much more rigid (pardon the pun) in how much you can develop, it forces lots of decisions up front. How big is your device going to be? How many people can use it at once? How much are the raw materials going to cost (and thereby set your margins)? Software, on the other hand, is way too flexible - you can justifiably say that there are products that are designed to address a market of three billion people. But by doing so, you no longer have a perfect product - since three billion people cannot possibly have even remotely similar needs, you are guaranteed to have a whole bunch of unhappy users. They'll use your product, but they won't love it.

This may not be the worst thing in the world - I'd be happy to have the Google search business, for example. But you're not Google today, or tomorrow - and you won't be Google, likely ever. If you start out gunning for three billion, you're just going to generate unhappy users who are so-so on your product and who will leave you in a nanosecond for the new new thing. If you want to succeed, don't build Google - build the perfect product for a VERY specific market. Only when you satisfy them have you earned the right to build any bigger.

The true lean business demands nothing less than absolute agility. Anything less and you'll be doomed for failure.

Agility, in the world of software, is the focus on iterating quickly on customer demands, releasing regularly, and getting accurate customer feedback to start the process all over again. Instead of spending countless weeks and months gathering requirements and then putting together the absolute perfect product, the idea is that you release a MVP— minimum viable product —as soon as humanly possible and then change it based on what you see people doing with a live version of your product. There's a lot to love about this philosophy: it's creative, it's easy to test, and, best of all, it throws all the old ways of doing things under the bus!

However, there's an enormous hidden danger here. When you take on a project like this, all you get, every time you release, is exactly what you need to release and nothing more. One might argue that this is the case with all engineering projects. It’s possible there hasn't been a project that has launched on time to spec since the first caveman carved a rock into a wheel! Even then they probably slipped up on some feature somewhere, and it’s my guess they probably intended to have a cup holder of some kind—it's tough chasing a mastodon and holding your mug of beer (mug of beer) at the same time. But it's more complicated than that, because so often not even you really realize what you need to release.

When we sit down to think about the market we're trying to address, the best thing to do is to achieve total clarity in the vision. An ultra simple blogging platform. A social network to connect with the friends you already have. A mobile phone that actually works. But, in the strive for perfection, you leave off the little things that makes these products actually work. Posterous is awesome because it's not just ultra simple, it's because you can submit ANYTHING from ANYWHERE. Facebook wins because it isn’t just leveraging existing networks, it's also because they have a look that is clean and simple, opposed to the endless choices (and, sadly, hideous design) of MySpace. iPhones are works of art, being just a great phone (networks not withstanding) would not have been the same kind of game changer.

 The problem is that when we're agile, these little bits of your product that change your product from good to great often fall between the cracks. There's a real tendency to look at something and say you're done and move on. Okay, search is all set, on to Twitter integration! But then you're left with a search product that may be 100% functional, but only appear 75% of the way there, and, as Joel Spolsky likes to say, "People Who Aren't Programmers Do Not Understand That Things That Appear 5% Done But Are 95% Done Think They Are 5% Done." (The Iceberg Principle Revealed) So, while you certainly have something awesome, and mostly done, the average person out there will not realize that it's 95% done and feel a sort of cognitive friction which may be JUST enough to put them over the edge and never come back. And, unfortunately, this is also the kind of thing that never shows up in the customer feedback.

The fact is the little things do matter. Any time people see little bits and pieces that don't fit together just right, they get the wrong idea(tm). But releasing SOMETHING because you were able to get it out quickly is better than releasing NOTHING because you're getting to 100% perfection, right? How do you remain agile without blocking on being pixel perfect?

The answer must be you. You have to keep focused, that release after release, you have the commitment to quality to carry your niggling little bugs through to the next release. You have to have the center of gravity to realize what your company represents and, while you want to focus on the big stuff first, never be satisfied with a product that does not meet the goal of what you want your company to be. When corners fit together, when the search boxes respond to tabs/enter/return on all platforms, when you can accept every file format from .wmv to .ogg— that's who you are. Getting there isn't easy, and you'll be making trade-offs between big features and fit-and-finish forever. In the end, as you build a product that actually goes from perceived 5% done to perceived 95% done, the response you get from your customers will be worth it.

You've got to hand it to MS - no one is better at hiding the best, most interesting features when it comes to "wow" for different audiences. I think of Powershell for infinite CLI programability, Homegroup (in Windows 7) for instant sharing, even the simple (but ultra cool) Outlook date converter. They pulled off another one with the release of the Windows Live Sync Beta last week.

I've been a long long time user of Windows Live Sync, back to the early days of Foldershare... I actually paid for it! It's an incredibly useful tool - I sync my browser favorites, my documents and all my photographs to every computer I own, and, presto, I have an instant virtual desktop and backup solution. There have been some annoyances, but I tout it to everyone I can possibly get in front of. You can keep your DropBoxes, Box.net, SugarSyncs, etc - all that matters to me is peer-to-peer from any folder on my machine, and that's what Live Sync gives me for free.

When the new version came out, there had been a lot of belly-aching about reducing online storage, and functionality changes since they merged Mesh and Live/Skydrive and Live Sync, but those users were using Live Sync for the wrong thing. If they wanted storage in the sky, there were a lot of other solutions for it and these changes basically just revealed a fraudulent market  that Live Sync had succeeded in winning. But the real genius of the new Live Sync is that it instantly transforms the same old Windows you've used forever into a machine in the cloud - with nearly all of the benefits thereof.

There have been countless pieces recently about how the cloud will overtake a little/a lot/everything when it comes to startups/games/processing/etc, even in this very space. And it is nearly impossible to overstate how much cloud computing will change the way IT is done for companies large and small. The question is, what happens to the hundreds of millions of machines out there with multi-gigahertz processors and yottabytes of hard drive space when everything is in the cloud? The answer is that they become a cloud too, and this Live Sync is the toe in the water for that.

How's that you say? How can you read all that in from a single little set of features? Well, it's not much, but you can see where things are going. Built into Live Sync are:

1) A device independent storage system (including your phone)
2) A remote desktop/control capability
3) A method for synchronizing not just files but actual application settings
4) A web site to provision and control them all

Add a way to share processing power and you've got a cloud. Sure it's not going to make the top500 (http://www.top500.org/) list, but could it speed transcoding of high quality content to your new device? Sure. Could it provide an instant backup solution? Absolutely. A distributed database for all your friends and relatives contacts, emails and history? You bet. But the coolest ideas are the ones that are so off-the-wall, we haven't even thought of them yet - SETI@Home on steroids.

Make no mistake, there's lots left to do. Beyond the distributing of the processing, there's implementing the user scenarios that make this work. And, there's building an SDK to wire all that goodness up so that devs can build greatness with Visual Basic. You'll see lots more movement here as well - Google will almost definitely make a move here with their toolbar/chrome browser/chrome OS as well. The future is cloudy - and it'll be rolling in to a desktop near you, shortly.