Quack IA Weblog

Running kooaba now for a couple of years a few tools turned out to be handy. Let’s just assume you start a tech company with at total of six coworkers (3 engineering, 2 business development / marketing , 1 management). Here’s a setup that might work, for your convenience and your business plan including approximate cost.

Google apps

Get the power of gmail and Google Calendar for your business. What I like in particular: gmail with IMAP (accessed via Apple mail). Also, Google documents, to collaborate on documents and creating surveys. (Most used at kooaba: spreadsheets). The standard edition should be fine in the beginning.

Cost: Standard edition: FREE. / Premier: 6 x 50 = 300 USD/year.

Basecamp

The breakthrough tool for project management brought to you by 37signals. We use this for general project management, sharing docs, messages, etc. for all team members independent of role (sales or engineering). The Basic plan should be fine.

Cost (Basic Plan): 12 x 24 = 288 USD / year.

Skype or Yammer

We use Skype chat within the team throughout the day. Faster than email, but less obtrusive than talking to somebody or phonecall. (Why this is important? Ask Joel (Human Task Switches Considered Harmful) , or read Getting Real). Plus, obviously you can call clients, partners etc.

Cost: FREE.

Salesforce or Highrise

Salesforce is the tool of choice to manage your sales and customer contacts. What I like in particular is the web-form integration, which lets you create leads directly from contact forms on your web-site. You can really just use the Group edition, and this should be fine fort he beginning. Alternatively use Highrise from 37 signals. Is simpler and nicer in the UI, but it has less (no) features when it comes to tracking revenue etc.

Cost: 3×17x12 = 612 USD / year. (https://www.salesforce.com/smallbusinesscenter/editions/)

Trac + agilo

For software development, trac has been a popular tool for quite a while. Subversion integration, integrated WiKi make it irreplaceable for us. Since we switched to Scrum, we were also looking for a tool which supports Scrum and integrates with trac: we found it with agilo. There is a free and a pro edition.

Cost: Free / 4 x 10 x12 = 480 USD/year.

Amazon web services

Amazon web services are really the coolest thing since sliced bread. Just outsource all your computation needs. Now, how much you need obviously depends on what kind of business you are in. Let’s assume you run some kind of web service, The first year you may need some 2 web server instances, one database, and some 500GB of storage. (I wrote another post on how you run an image search engine like kooaba on amazon web services).

Cost:
2 reserved small instances: approx. USD 2000 / year

1 RDS database server (large instance) : about 2000 USD /year

500 GB S3 storage with some in/out : approx. 1000 / USD year

Total: about 5000 USD a year.

Google Analytics / web-site optimizer

Everybody knows what good (Web-) design is. So everybody wants to add his/her 2-cents. Let the numbers speak instead. Using A-B testing you can try several variations of your website, and measure what works best. Google web-site optimizer is a tool which helps you to do just that.

Cost: Free

Mailchimp

E-mail marketing campaigns and newsletters made easy. The coolest feature is in my opinion RSS integration, so you can publish your blog-posts to an e-mail newsletter, too. How we use it at kooaba: we have a dedicated category “Newsletter” on our blog, which has also its own RSS feed. This is attached to mailchimp. Whenever you post some stuff on your blog, you can decide whether to send it to put it on the newsletter or not simply by adding the post it to the Newsletter category or not. Settings at mailchimp allow to send the collected new blog-posts only once a week or month for instance.

Cost: There is a free plan which should be ok in the beginning.

Wordpress

Talking about blogging: Wordpress is an awesome and easy-to-use tool to publish your blog-posts. Even better, with its “Pages” feature you can use it as a Content Management System for your complete web-site. And it’s free, too!

All in all you end up with about 6600 USD a year (5000 computation and 1600 for „tools“).

So, start signing up.

So you just coded this really cool Internet application, which is kind of a mixture between, youtube, facebook and flickr, but targeted stamp collectors. Everybody likes it, even your former high-school sweetheart thinks it has enormous potential. Congratulations! Time to uncork the Champagne. Mmmm, but how are you gonna make money? No matter if you plan to get a Boeing 737 or you are just happy to cover the costs of running your service, you need some way of getting some income.

Are you gonna handle it like twitter (quoting their about twitter page):

Twitter has many appealing opportunities for generating revenue but we are holding off on implementation for now because we don’t want to distract ourselves from the more important work at hand which is to create a compelling service and great user experience for millions of people around the world. While our business model is in a research phase, we spend more money than we make.

Or listen to the 37 signals crew, and start charging from day one? And who is right, anyhow? Do their cases even generalize, or does it just work for them? Should I build a user base first? Or is Freemium the right way of doing things? I am glad to announce that the final and definite answer is: it depends!

It really is! Way to little attention is put on that fact, instead too many people argue with absolutisms. (Example: DHH’ startup school video. This is by far one of the most notable talks I’ve seen, but his arguments just don’t hold for every type online business. An explanation why will follow below.)

Before doing anything, you first have to determine what kind of ecosystem your business actually is positioned in. Common sense might tell you this, but common sense is sometimes not so common.

I had my personal AHA moment recently when I browsed through some of my girlfriend’s Business Administration course material. The keyword that put order to the chaotic chitchat about business models on the Web is two-sided markets.
A two-sided market connects two different groups of customers. For instance, credit cards connect card owners (buyers) and store owners, game consoles connect players and game programmers, Google connects searchers and advertisers, or PDF connects readers and creators of documents. In a nutshell, you usually encounter a two-sided market situation, when you provide a platform kind-of-service for two customer groups. (Side note: in this situation turns out perfectly fine to serve two customer groups at once, it’s even essential to understand this. Even if some smartass advisor or investor tells you have to decide who your customer is.)

Now the interesting part of this is, which customer group should be charged how much to use the platform. And even more interesting: it turns out that it is not always the same solution - it depends (again…).
Some of the main factors this depends on is the value proposition for both customer groups and the network effects triggered by the platform.

For example, when Adobe first released PDF, it offered Reader and Writer as a bundle, in essence charging both sides of the market, i.e. document readers and document creators. Adoption did not take off, until Adobe lowered the price of the Reader to 0. The network effects shifted the demand curve at the document creator side so dramatically, that the revenue lost from offering the reader for free was more than compensated by selling significantly more writers at only a slightly higher price. (This is illustrated further in this Wikipedia article and this paper).

So, the learning here is that demand curves for the different customer groups in two sided markets are not independent. You may say it’s obvious: just offer the consumer something for free and things will take off. HA! Time for the next example: PC’s or Apple vs. Windows.

Apple started out the same way as Adobe, charging both software producers and software buyers. (Note, the PC is just the platform for software, software producers and software users are the two customer groups). The high price for developing Software on the Mac resulted in a limited amount of software available on the Mac, which made Windows more attractive, where Microsoft gave away the software development kit for free. So, here the situation is just the opposite, the user pays and the software producer is not charged at all.

Innnnarrrrresting!

Now, it gets even more confusing with example 3, the game consoles market: it may seem it is just the same situation as PC’s, but it turns out that here, the developers and the users are charged, in fact the developers have to pay quite high charges to develop for the game platforms (Playstation, xbox etc.). The reason for this may be quality: the users and platform providers request really high quality games, so not “just anybody” can develop games. (Side note: I think one intermediate way is to offer an SDK for a very low price, to keep away just “the worst” quality producers. It seems to me as if Apple does that with the iPhone SDK (itcosts roughly 100 dollars).)

So, with this we discovered one other factor, which affects pricing and strategy decisions in two sided markets. One further factor to consider is competition: if a competitor offers a very similar platform, pricing decisions are crucial, up to offering service for free initially. The reason is that two sided markets are often winner-takes all markets, where only very few big providers dominate. (Examples: Microsoft/Apple (PCs), Google/Bing (Search engines), Facebook (Social Networks), Playstation/xBox/Wii (Game consoles).)

The goal you want to try with your strategy is to enable the network effects to play freely in order to position your platform as the leader and profit from the maximum possible revenue triggered by the right pricing strategy. All of this is analyzed in more detail in the papers listed at the end of this post.

Now one also has to point out, that not all businesses on the web are platform businesses in two sided markets. For instance, if you offer a project management software (as a service), this is basically just selling a product. (Examples: 37signals’ basecamp, Salesforce, etc.). They only get some taste of a network if an API is offered, since this makes the software a platform on its own.

So, it essential that you find out what kind of context you are in. In Internet and platform-like businesses you will often encounter two-sided market situations. If you are in a two-sided market, pricing strategies are complex and may involve offering a service to end-users for free, indeed. To that end, to enable the network to grow beyond a tipping point and network effects top play, you may need the help of a bit deeper pockets (i.e. VC money) indeed. If you simply offer a service to a single group of customers, pricing is simpler. You may still offer a free trial as a kind of loss leader, but it is a different situation than in a two sided market, where it can make sense to offer a product for free for ever to one group of customers. (This is also why I think a comparison with free muffins in a bakery is simply wrong.)

On a final note, all of this is also related to finding out or determining what kind of company you are, or as Joel Spolsky puts it: Are you Ben and Jerry’s or Amazon? Finding out in what market situation you are in might be a good start to figure this out eventually.

Further reading on two-sided markets:

Wikipedia has a good summary

Harvard Business Review: Strategies for Two-Sided Markets.

Geoffrey Parker and Marshall Van Alstyne (2005). “Two-Sided Network Effects: A Theory of Information Product Design.” Management Science, Vol. 51, No. 1

HARVARD BUSINESS REVIEW ARTICLE: New Rules for Bringing Innovations to Market

Further reading for expanded context

37 signals podcast: Episode #3: Making people pay.

Joel on Software: Strategy Letter I: Ben and Jerry’s vs. Amazon

Joel on Software: Strategy Letter II: Chicken and Egg Problems

Joel on Software: Camels and Rubber Duckies

Chris Anderson: Free, the future of a radical price
Book on amazon.
Article in Wired

One of the best things about the Mac are the little utility Software’s that solve some niche problem very well. Many of them are very well designed, both in terms of UI and usability. Yes, most of them cost money, but unlike their PC equivalents they usually don’t suck and a few bucks are well spent on them. Here are some of my favorites.

Things

Things, has become the most essential app to organize the daily overload of Todo’s. It follows the Getting Things Done approach. Some of the best features are adding documents and emails to the Todo’s by drag and drop. In fact, Things has become crucial for my personal Project Inbox Zero implementation. Emails that need action live as Todo items in Things now. I can schedule them, postpone them, tag them, search them …
The second best thing is the iPhone companion Software. It just rocks. How often have you had the situation, where you had this great idea, e.g. while commuting, or in the middle of the night? Instead of looking for a piece of paper and pen (which is particularly problematic at night… Except you are one of the paranoid people, who sleeps with a notepad and pen besides your bed. But then again, you might say, what’s the difference of having an iPhone next to your bed? Well, it’s an alarm clock, too…
Anyway. Just type it in Things on your iPhone, the next day it will sync via WiFi with your laptop. Or the opposite example, you go shopping and need to remember what to buy. While in the store, just find all the Todo’s tagged with shopping in your iPhone app. Helps to remember the milk.

Expandrive

This is a nifty tool, which allows you to map SSH/SFTP and FTP drives to your Mac. I use it daily. Lately it works also for amazon s3. It’s perfect.

TextMate

The missing editor for the Mac. The only problem is, that now, I miss TextMate under Linux. A no-brainer for anybody writing code. Buy.

ScreenFlow

Ever wondered how we create the nice screencasts for kooaba? This tool is just awesome at it. Even after recording you can select windows, zoom in and out, highlight parts of the screen etc.

MarsEdit

You publish a blog using Wordpress? This tool makes it easy to write and manage your posts on your desktop, without the browser.

Papers

This is for the scientists among us. A next generation tool, which allows you to manage your literature database. Highlights are the integrated Google and ACM search, the iPhone companion with synchronization etc. What it still lacks is decent reference formatting for conference papers (which dominate in Computer Science, as opposed to the journals, which are more important in most other disciplines).

At kooaba we use Scrum in order to deliver our Software products. Here is a reading list, that turned out to be useful (at least for me) for introducing Scrum:

Agile Software Development with Scrum Start with this book, because it explains you the philosophy, the underlying concepts behind Scrum. The main idea is, that Software development is a non-deterministic process, so you need a concept which is flexible enough to handle this uncertainty. The book is in parts a little “religious”, and also you may miss some practical guidelines or recommendations, but overall it’s a must.

Agile Estimating and Planning. Continue with this book to get some hands-on examples how to do things in practice. Tools such as planning poker have really helped us.

Succeeding with Agile The latest book by Mike Cohn just came out, and it has some in-depth look at some special topics, such as dealing with resistance, or integrating the design process into Scrum.

Finally, to put things back into perspective, read Joel on Software. Lot’s of common sense advice, also some critical questions about Agile. (The latest version of his FogBugz Software is optimized for Scrum, though. Can’t be that bad then ;))

Overall, this will give you a pretty good overview and tools to get started with Scrum. In a few follow up posts I plan to give some more details of our very subjective experience and thoughts that came up while introducing Scrum. Obviously, besides reading you also may want to talk to some of your friends in the industry.

You want to have multiple effects executed after each other? From a controller method using rjs? Using the naive way of calling them just one after the other results in strange flickering effects. The key to success is to use the effect queue parameter, which is very weakly documented. Here is an example:

page[@object].down(’.star’).visual_effect :appear, :duration=>1.2, :queue=>’front’
page[@object].down(’.star’).visual_effect :fade, :duration=>1.2, :queue=>’end’

The trick is the queue parameter. This way, first the appear effect is executed on the DOM object, and then fade. Omitting queue won’t work.

The baltic states are hit hard by the crisis. It will be hard for countries like Estonia to keep their libertarian economic (including the flat tax, which I mentioned a few times in this blog). A recent article in the German Financial Times points out, that the country tries to focus on their competency in IT, which can be felt in everyday life:

Vieles, was in Estland heute zum Alltag gehört, ist in Deutschland noch ein Zukunftstraum. Die Mehrheit der Bevölkerung besitzt elektronische Personalausweise. Weil die Identifizierung auch per Handy möglich ist, können die Esten am Flughafen per SMS einchecken. Sogar ihr Parlament wählen sie per Mausklick. Geschäftsleute können ihre Firma online registrieren. Wer alle notwendigen Nachweise beifügt, kann mit schneller Bearbeitung rechnen. Der Rekord liegt bei neun Minuten.

Auch die Steuererklärung wird in Estland im Internet gemacht: Am ersten Tag der Abgabe im Februar gingen 16.000 Anträge ein. Das elektronische System hilft, die Bearbeitungszeit deutlich zu verkürzen - fünf Tage später erhielten die ersten Bürger ihre Steuererstattung zurück. Ein wichtiger Nachfrageimpuls in Krisenzeiten. Zudem spart der Staat im Jahr rund 180.000 Euro Lohnkosten.

The full article (in German): http://www.ftd.de/politik/europa/:Agenda-IT-Industrie-soll-Estland-retten/482151.html

Looking forward is certainly the right thing to do in these times. Investing in IT is one thing, another option would be green tech. I wish even more in this direction would be done here, in Switzerland. (While obviously at least up to now, Switzerland has not been hit as hard as other countries such as Estonia.) Instead of trying to save the current form of the Swiss banking system with all measures, a more sustainable strategy would maybe be to diversify and invest more in R&D - especially in these times.

EXCELLENT talk, and very entertaining. (Side note: also note the different clothing style compared to the video in the previous post )

What to strive for, and how to do it. (and how not to do it):

Yeeha, thanks to some digging in old files and some SQL magic I could import my old posts from my handwritten blogging software from 2001. As a result, the archive contains now my posts back to 2001.

Favourites / Evergreens:

This post could have been written yesterday: Mit Optimismus in die Krise (written June 2001).

Announcing Mozilla 1.0 (2002)

“Finally there seem to be some Swiss weblogs. Linklists can be found at Chuchichaeschtli and Eatonweb.” In 2002 it was hard to find any other Swiss bloggers

Zeldman’s Style vs. Design (the article mentioned is now here).

I was right on some things:

That Flash will/and should be used only to power some interactive elements in web-sites, and not complete websites (2002) (today, Flash is almost exclusively used for flash video, in 2002 this was drastically different. Many argued, that one should use flash for everything, due to the controllable looks, and the screen-size independent layout, … well, well, well …

On the importance of switching from table based layouts to Standards and CSS.

I was wrong on some others:

That SVG and SMIL would replace Flash (Ajax instead replaced most of Flash)

I just upgraded wordpress while moving hosting from one supplier to another. To get my WP content back in my blog I just exported mysql tables and imported them. So far so good, but at one point WP moved from the categories table to some terms and term_taxonomies tables. Here are the SQL queries you need to get your stuff back running

insert into wp_terms (name,slug) SELECT cat_name,category_nicename
FROM `wp_categories`;

insert into wp_term_taxonomy (term_id,taxonomy) SELECT
term_id,'category' as taxonomy FROM `wp_terms`;

update `wp_links` set link_category=0;