Giving us more Time. That’s the goal of technology. As CEO’s, we are time poor and are expected to perform miracles across many disciplines, and as such, we look for any tool that helps us save time while continuing to perform at our peak level.Over the years, I have tried and tested many software programs and am ruthless about hitting that “uninstall” button if it doesn’t fit my needs. So I have come up with my Top 10 list of software tools which have stood the test of time on my PC.

1. Microsoft Office (including Outlook)

Part of any IT setup is the ubiquitous Microsoft Office. Due to the shear scale of usage, this is a no brainer. Excel is my favourite for doing financial modelling, simple databases and charts. I use Microsoft Outlook as my personal information manager to organise email from my 11 email accounts, my tasks and calendar. Make sure you archive often to improve Outlook’s performance.

2. Firefox

The fastest growing web browser, Firefox, is easy to use, fairly light and fast. Good security and regular updates. 3^rd party plugins such as FireFTP, Google Toolbar and Roboform (see later) further enhance this product.

3. Roboform

How many passwords do you have to remember? I have nearly 600. Roboform is a program that manages your passwords securely on your computer. One master password gives you access to all of your passwords. Web browser plugins (Roboform Toolbar) allows you to easily fill-out and submit login codes into websites. This has saved me countless hours of frustration. Well worth the investment.

4. Google Desktop

So much time is devoted towards searching for relevant documents and emails. Google has a neat program that indexes your computer and your servers for files, emails, chat logs etc. It has saved me a lot of time searching for those elusive documents and emails. While it does take quite a bit of processing power from your machine, it is well worth it in the end. And it’s free.

5. Maxtor BackUp

When you purchase a Maxtor external hard disk you get a neat backup program. You can schedule an automatic backup of your important folders on your PC. I set mine to run at 3am every day. It also has a “Safety Drill” Copy which takes an entire image of your hard drive. So if your PC hard drive fails you can recover it (including your installed software) on a new hard drive. I run the “SafetyDrill” every week.

6. Evernote

Have you ever been working on a project and wanted one area to collect your notes (handwritten and electronic), emails, websites into one area? I discovered Evernote a couple of months ago and have been a heavy user since. I use it to store my current projects I am working on. It even has rudimentary handwriting detection, which makes searching fairly easy. It also has a feature (which I do not use yet) to synchornise with other computers, servers and your colleagues. Plus it’s free.

7. MYOB

Having a snapshot of your finances at an instant is vitally important for a CEO. For startups, you can’t go past MYOB. It is fairly intuitive to use, although you may need your accountant to run through the basics with you.

8. Avast!

Avast! is an excellent and low-cost virus protection. It automatically downloads and installs updates so you don’t have to worry about checking to see if you have the latest version. Be sure to remove your current virus scanner completely before installing Avast as it will conflict with one another.

9. CCleaner

Over time, your PC will accumulate a lot of information in the system registry and in temporary files. If it fills up too much, it can have a detrimental effect on your PC’s performance and stability. CCleaner is a free software package that runs a diagnostic check over your system and automatically clean up any unnecessary files and settings that you no longer need. I run it every fortnight.

10. SpyBot

With the open nature of the Internet, there comes the threat of spyware, adware and malicious programs can infiltrate your computer via the websites. Note that these may not be picked up by your normal virus scanners, so I recommend that you install this and run it regularly. I run SpyBot automatically every night to keep my PC clean.

So that’s my Top 10 Software Tools on my PC. Stay tuned for next month’s article: Top 10 Online Web 2.0 Services for StartUp CEO’s

One of the problems companies face during new product development is trying to predict if it is actually what the market wants. While this is a basic concept it is a fundamental problem that all organisations face. The mismatch between the internal product development team, the marketing department and the marketplace results in wasted time, money and energy. So what are some of the ways in which an organisation can improve its product offering without stifling creativity and a risk taking, “getting things done” culture?

Let’s consider product development as a “sausage factory”. The inputs include things such as: the creative team; the budget; marketplace trends; customer feedback; surveys; manufacturing or engineering; historic sales and the company’s overall strategic direction. The output is a brand new product or service that you want to test in the marketplace. Let’s focus on the customer-centric inputs of this “sausage factory” by breaking business types into four main organisation-types: High-Volume, Product-based; High-Volume, Service-based; Low-Volume, Product-based; Low-Volume, Service-based. Although I have broken them down this way, many of the tips below can be utilised in all four categories

High-Volume, Product-Based

Examples: consumer electronics, FMCG (Fast Moving Consumer Goods), software developers, fashion brands, web 2.0, internet businesses, media.

In this segment, there is often a large research and development team developing new products and ideas. In most cases, these companies will have large global distribution networks that reach right to the end consumer:

The important type of marketplace information is:

• Feedback from your customers. This is usually a gold mine of information. Make sure it is part of your product’s evolution.
• Competitor trends and market share. What are your competitors doing? Can you do it better or with a discernable difference?
• Split A/B testing. This is where you release a control product together with slight variants of the product. You can then analyse the effectiveness of each product variant. This is popular with direct mail and BETA trials. Release new versions and variants, test and apply. Rinse and repeat.
• Analysis from focus groups. This can include surveys and organised group sessions or one on one interviews with subjects in your target market. Be sure to spread the results to all of your members in your product development team.
• Previous sales. What were your previous sales history? What products were stars; which ones are dogs?
• Partners and Distributors. What are your partners, agents and distributors saying about your products and your brand? Do they have any data that they can share with (or sell to) you?

High-Volume, Service-based

Examples: Airlines, fast-food chains

In this scenario, there is less “physical” products to produce but are more intertwined with your systems and processes. Due to the high volume, high turnover nature of your business, ensuring that you streamline your customer service processes is paramount. So when your team is creating a new line of services offering consider:

• Customer feedback about your processes. Do you have the systems and processes in place to support a new line of service? What can be improved? Let your customers know what happens with their query.
• Competitors. Have a group of people from your office (or outsource this) to sample what your competition is doing and report back. What was good and bad about the process?
• Web analytics. Many services can be ordered over the web. What service lines are working? Where are you getting your hits from? Do A/B split testing (see above).
• Focus groups. As with product based designs, involve focus groups early. Alternatively, try sampling a service in a defined geographic area to gauge interest and feedback.
• Front line staff: in many service businesses your people are the “face” of your company. Make sure you include them when trying in your development process. They are the ones that hear customer complaints on a daily basis. Have a system of capturing and synthesizing your front-line employee’s thoughts and opinions when developing new lines of business.

Low-Volume, Product-Based

Examples: commissioned artists, construction projects, industrial manufacturers, large software development projects, industrial designers

In this category, we can range from small commissioned art pieces to large million-dollar building projects. In most cases, companies in this sector have a very close (and sometimes rather complex) relationship with their customer. So what can you do as part of your product development strategy?

• Evaluate your requirements process. At the heart of every successful project is a thorough investigation of your clients needs. Be sure to include your sales and engineering/technical team early to understand your clients project aims.
• Get early feedback. This is a common practice with software developers – show incremental progress to your clients and get their feedback. Even with “physical” goods such as buildings and product packaging design, show computer models of what you are planning to your customer. I have found in the past showing incremental progress can spur further discussion and changes to the original design (just make sure you have a solid specification change process!)

Low-Volume, Service-based

Examples: law firms, accountants, custom software developers, dentists, advertising agencies.

By definition, this segment requires your business to be close to your customers to provide close, personal service. This is an increasingly popular area for small business entrepreneurs. To engage with your customers to continually improve your products and service to the marketplace consider:

• Feedback forms. When you are an owner operator of a business, sometimes it is hard to ask for feedback from clients. Sometimes your customer will be “polite” and not offer their true opinion. However, it is an important aspect of your business to an overall feel of your customer’s future needs. Think about hiring a third-party organisation to collect this data for you to get a more objective view of your customer’s perception of your business.
• Industry groups. With a limited budget, smaller companies can leverage industry groups as a potential source for market trends and try to get a gauge of where your competitors are at.

Conclusion

By adopting these tips in a systematic way, your business can use these customer “inputs” into making wonderful “outputs” – products and services that help you grow your business. Be open to sharing customer and marketplace data with your employees – you will be amazed at how they use it to improve product and service offering in organisation.

As a young technology company grows, the amount of time and effort spent on the actual technology is gradually replaced by other tasks such as operations, marketing, sales and management. When a new startup hits the $1 to $2 million turnover mark it has generally proven its technology and that a market exists for it. The next phase is to build upon early successes and drive further growth and scale. Moving the company forward at this stage requires a unique management structure and skill to implement this successfully. In the figure below, we try to portray the role of senior management restructuring, project management and operations and marketing/sales leading into profitability. Remember that this figure is focused on helping companies reach $10-15 million in turnover.

At the head is senior management. In many cases the CEO Founder (who is generally from a technical background) may want to step aside into a CTO (Chief Technical Officer) role and bring in an experienced CEO to take the company through to the next phase of growth. Having a strong CFO will bring in financial discipline and capital injection options to fund further growth. The senior management team must posses the leadership skills to steer the company through change to fuel growth. The senior management team must be comfortable in driving change throughout the organisation and be able to articulate the company’s shared goals and vision to its employees.

Sales are the lifeblood of a profitable organisation. A growing company must create a sales and marketing team capable of a) executing on a practical marketing strategy and b) being able to foster to the right growth environment to make it happen. Too often, we see sales teams and marketing teams separated and not working cohesively in the same direction. Sales teams need input into marketing activities and the marketing department needs to be able to practical and usable market knowledge to their sales teams.

One of the problems faced with growing technology companies is that as the number of projects (internal or customer facing) increase together with the number of people involved. This adds complexity in the operations and communications among staff, and can lead to a lack of focus and inefficient use of resources. One method is to control this is to create a project management discipline that will co-ordinate business activity and business data in order to oversee the scope, schedule and cost of projects. This can be a huge cultural shift for the founders and the initial technical team as there may have been limited project administration in the past and will now be expected to report to a new office / project administrator. There should always be a delicate balance between innovation and control. Like it or not, it is an essential part of the growth DNA in every emerging technology company.

So, in conclusion, change must be driven by a strong, talented management team; sales and marketing must work together to improve the “top-line”; and strong project management discipline will improve the “bottom-line” and therefore grow the “most important line:” profitability.

You’ve probably heard about offshoring and it’s potential yield significant cost savings for your project. Over last couple of years, I have utilized offshore developers to great effect and is a cost-effective way to prototype ideas. Below are practical tips and lessons I have learned along the way.

1. Choose a good intermediary service.

One question I am asked often are “how do you actually find your developers?” We use two online services: RentaCoder.com and oDesk.com. The main difference between the two is that RentaCoder is for fixed-priced projects whereas oDesk is mainly for projects charged on a per hour basis (Although oDesk recently introduced a beta version of fixed-priced projects).

Once you are registered for these sites you can search for developers and post a job. Developers will then respond to your posting and you can review and select which candidates are best for the job. Each candidate will have feedback history and an overall rating (just like eBay’s system). Once the job is complete you can then pay the developer through the intermediary service.

1. Fixed vs Per-Hour Charging

Fixed rate projects are a great way to get price security. However, price is only one third of the picture; you need to also consider the project schedule (ie. timelines) and scope (ie. what is it that wew have to do). Make sure you have a tight specifications together with your expected deadline before engaging with an offshore developer.

1. Ask for their CV and portfolio

As you would with hiring any person for your team, make you they give you their CV and with a portfolio of previous projects they have worked on. Portfolios are mandatory for industrial, interface and graphic designers.

1. Communicate!

As with any project, communication is the key and with offshoring this is critical. Make sure you schedule voice calls and regular progress reports. For small questions and issues, I use instant messaging for small issues. For larger issues and general project tracking, I use Basecamp to track and monitor projects. For even larger projects (ie. $500k+), think about meeting them face to face to build trust and rapport.

1. Try to get your developers in the same (or close) timezone

While getting developers in the same timezone may not be possible try to choose a timezone that overlaps at least a few business hours. Ask you developers to shift their working schedule to fit yours.

1. Use confidentiality and intellectual supplier agreements.

Do not be afraid to force your developers to sign confidentiality agreements. Have a standard template ready for them to print, sign, scan and email/fax back. Whilst you cannot be guaranteed that they will adhere to it, it sends a strong signal that you are serious of breaches of confidentiality. In your agreement, make sure you state that any IP developed by the programmer belongs to your organization.

1. Hire a local project manager

If you are not comfortable managing a project, hire a local project manager. The cost, scope and schedule issues that exist with traditional projects also exist with offshore projects. Having a local project manager ensures project communication is strengthened and any issues can be dealt with face to face.

1. Are they fluent in English?

Some offshore developers struggle with their use of English. If your specifications are a little loose and you need to problem solve and find creative solutions, then having someone who is fluent in English is a must. oDesk actually runs online fluency tests and rates a developers command of English..

1. Follow a design methodology

Be it waterfall, agile, spiral or extreme try to pick a design method and communicate your preference to your developer. Make sure you have links and documentation about your methodology that you can send to your developers to read before the commencement of your project.

1. Track progress

As mentioned, we use a combination of technologies to track and communicate progress. Aside from email, phone calls and instant messaging we use:

• Basecamp for tracking projects, setting milestones and capturing project know how.
• Subversion for version control
• A Wiki for project and technical documentation
• A online bug tracking system.
• Instant Message
• Skype (or Voice Over IP)

1. Make sure you are still eligible for R&D grants and tax breaks

In Australia, we have grants and tax breaks for R&D expenditure. In most, if not all cases, a significant amount of R&D spend must be done in Australia for your organization to be eligible. If your country has a similar program, check to see if you are still eligible. If not, then perhaps your offshoring project may not be cost-effective in the long run.

1. Use PayPal instead of bank transfers

PayPal is an easy way to transfer money overseas and offers some rudimentary fraud protections. Bank transfers are useful but you some institutions charge a hefty fee ($22 in our case) for international payments, which can add up over time. However, some developers force you to pay a “PayPal tax” of 1-2% to cover their withdrawal fees.

Most intermediary service providers like oDesk and RentaCoder provide a escrowing service and will facilitate the transfer of funds to your developer.

1. Get personal

Although offshore developers are in different country, they are people too. Make sure you ask how their families are, send birthday e-cards, exchange photos, invite them into your online social networks. Inspire them about your company, your dreams, your ambitions. You will be surprised how far your developers will go if they believe in you and that you really are the “good guy.”

Disclaimer:

The author is an affiliate of RentaCoder.com and Basecamp. Sharcmedia.com is an affiliate of eBay.

How smart is your state? US States Ranked by Patents per Million People

(To view this “Heat Map” click here for a larger version using Google Maps)

As we mentioned in our IP|08 article, we decided to look at the number of patents per million people and gave some surprising results. For example, California lead the US with had 22,888 patents in 2007, however, when we divide this by its population, California registers #4 with 633 patents per million people. Idaho is the winner with 1,034 patents per million people. Here is the entire ranking:

In the early stage of a company, cash and talent are in short supply. In order to attract talent you need cash, to get cash you need to be profitable, to get profitable you need investors, to get investors you need talent… it becomes a circular argument. Attracting talent to your growing organization is always a challenge. One strategy is to offer equity to your employees. It is a great way to both retain existing employees and bring in new talent to your team.

So how much do you give up?

Don Dodge from The Next Big Thing blog suggests the following:

A basic rule is that each level of the organization should get about one half the options as the level above. If a VP level person gets 100,000 shares, then a director level person might get 50,000, and a manager/supervisor might get 25,000 shares. Here are some “average” guidelines for equity percentages at a liquidity event. They start out higher and get diluted down to these levels after multiple rounds of financing (such as the multiple series of funding that is common with angel and venture capital investors)

• CEO – 4%
• VPs – 1% each
• Director level – .5%
• Managers – .25%
• Individuals – .05%

Now, lets do the math for a company that has 100 employees. The VCs will end up with about 60% to 75% of the company depending on how much was raised and how many rounds. Founders and VPs usually have about 10% and employees have about 15%.

The CEO will have 2% to 4% depending on when they joined or if they are a founder. Lets say you have a non-founder CEO and two founders who are VPs; they will account for 6% of the stock. There will probably be 4 other VP level people with 1% each. That is a total of 10% for founders and execs.

You might have five directors with .5% each and ten manager/supervisors with .25% each for a total of 5% equity. Then you have about 75 individual contributors at a variety of levels, but on average they hold .05% each for a total of about 4%. So, founders and execs end up with about 10%, directors and managers get 5%, and individual contributors account for another 5% collectively, for a total of 20% of the company.

Don also mentions an article by Paul Graham of the Y Combinator. Paul sums up the dilemma of equity diluton in one beautiful equation:

1/(1 – n)

He explains:

Whenever you’re trading stock in your company for anything, whether it’s money or an employee or a deal with another company, the test for whether to do it is the same. You should give up n% of your company if what you trade it for improves your average outcome enough that the (100 – n)% you have left is worth more than the whole company was before.

For example, if an investor wants to buy half your company, how much does that investment have to improve your average outcome for you to break even? Obviously it has to double: if you trade half your company for something that more than doubles the company’s average outcome, you’re net ahead. You have half as big a share of something worth more than twice as much.

In the general case, if n is the fraction of the company you’re giving up, the deal is a good one if it makes the company worth more than 1/(1 – n).

So taking Don’s figures of equity percentages we get:

So if you were to offer a Vice President 1% then he or she must add 1.01% to the total worth of the company. Use these figures as a rough rule of thumb on deciding how much equity to give to employees.

How to measure “worth”

This theory is all well and good, but how do you measure the individual contribution to the overall company’s worth. A common approach used in the corporate sector is to provide specific and measurable deliverables. These may include sales targets or technical milestones that must be achieved. Often these targets are linked to further rounds of financing. For example, a VC will only cut the next $1 million cheque in exchange for 20% if you reach a certain technical milestone in 6 months. Assuming you own 100% of the company then if you hit that milestone your share will be worth $4 million ($1 million x 80% ÷ 20%). Assuming the current company worth is $3 million, then you should be looking to give your team up to 25% of your equity (by re-arranging the 1/[1-n] formula), only if you think that team can meet the milestone.

Conclusion

The 1/(1-n) formula is a simple “rule of thumb” that you can use when deciding how much equity to give your employees. Since reading about this technique, I am now using it to guide how much I give my employees (and also how much I ask businesses that I consult with). It acts as a quantitative figure that employees can measure and track their own performance and ask themselves “have I added 1/(1-n) to the worth of the company”?

Have you ever wandered how you can deliver even greater efficiencies from your online marketing efforts? Look out for the new kid in the crowded online marketing block: Affiliate marketing. Instead of advertisers paying for online ad space via a Cost-per-Click (CPC) and Cost-per-Impression (CPM) model, (for more information on these models see our previous article on this here), advertisers can now opt to pay via a Cost-Per-Action (CPA) model, where they only pay when a sale is made.

A merchant scenario:

So what are the benefits of a business selling product via an affiliate program? Let’s say you are selling a subscription based online space for families to keep backups of their digital photos. You charge $10/month for this service. Now with this kind of service, you need as many ongoing subscribers as possible as the incremental cost of servicing them is negligible. Let’s assume that your internal cost of acquiring a customer is $100. Now you are looking to set up an affiliate program to encourage your business partners to send as many customers your site as possible. In this case, you decide to give your partners $50 for every paying customer you send your way. Thus you are now expanding your “sales team” organically and reducing your customer acquisition costs while improving your return on investment.

A website publisher scenario:

What about website operators? What is in it for them? Well, as an example, you run a website that reviews the latest and greatest in video games. Your target readership enjoys reading your reviews and you make money via advertising through a traditional cost per click or cost per impression model. To expand your revenue potential, you sign on to Amazon’s affiliate program and link your game review of Mario’s Galaxy sold on Amazon’s site. Every time your readers click on the link and purchase the game, you earn a commission (usually 4%). Whilst these amounts are small, they are scalable and can act as an ongoing passive income for your website.

How does it work?

In the past, managing your affiliate partners was a labor intensive exercise. Now with improvements in web technology many of the tasks (such as tracking sales, codes, payments etc.) are now done automatically.

When you sign up as an affiliate partner with a merchant, you will be given a special id and a unique URL link that you can place on your website. Be sure that you read their terms and conditions – some do not allow these links to be used on email campaigns or from paid links from search engines.

Once you have placed the link on your website, when a visitor clicks on your unique URL link, a tracking cookie is placed on their computer and if they purchase from the merchant, your account is credited. Most affiliate programs have a minimum threshold before they pay you. Some of these thresholds can exceed $100, so be wary that depending on the popularity of your site you may not see any revenue under the CPA model for a few months at least.

Ethics etc.

As with all financial relationships between business partners, compliance with ethical protocols plays an important role. If you are a website publisher, do you disclose your financial relationship with your affiliate partners? It is really up to you to decide how much you want to disclose. In the website publisher scenario above, the operator could have a page of disclosures listing the affiliate partners, especially since you are writing an unbiased editorial piece. Generally speaking, consumers and users of your website will find out that you have a revenue based relationship sooner or later, so it is important that you have a clear and accurate disclosure policy, supported by plain English statements on your website. Also note that when you sign up for an affiliate program, most have a clause stating that you cannot use the service or the engagement as a source for spamming (as defined by the CAN SPAM act).

The Future

Web based affiliate programs will likely continue to grow in 2008. The CPA model is very compelling for merchant in many industry sectors, as the cost of managing such a program is falling (due to improvements in technology) and improves their return on advertising investment. Implementing ethical business protocols and procedures will also play a dominant role with bloggers and website publishers trying to find the balance between being independent and hooking into extra lines of revenue. In either case, the best policy is to be up front and honest with your website visitors.

Examples of Affiliate Programs

Below are examples of 4 affiliate programs.

Disclaimer

The author is a an affiliate partner of IXwebhosting.com and Basecamp.

Sharcmedia.com is an affiliate partner of eBay and Amazon.