I find myself inventing terms sometimes, and lately I’ve been using the term killer customer as a parallel to killer applications. Today I thought I’d share with you what I mean by it and why it’s a good term to have in the back of your mind when considering start-ups.
A killer application is that thing about your product that is so awesome that it just compels people to buy it. It’s that first application of the technology that proves its worth. For example last year I came to talk with a student at the University of Oslo who had worked with some other people to create a software that reduced lag in networking. It would only have to be installed on a server and it would use some previously unused capacity to send redundant information and thus reduce lag significantly. My first thought when I heard about this was: “Give it to me! I’ll make us all millionaires”. Unfortunately (for me) it turns out it was open source, and the code was already meant to be implemented into the Linux kernel. But that’s really besides the point, the point is that I could see a killer application at once. Online gaming. Everyone that has ever played a MMO over a bad connection with loads of packet loss will understand why this is a good idea.
With this in mind, it's easy to imagine a killer customer: World of Warcraft. If this technology hadn't been open source it’s likely that they would gladly pay a lot to have it implemented. And with Blizzard on board it would just be a matter of calling those other MMO games to stack up the other millions. When that market is saturated you could go after video streaming, stock market information, and so on. A great opportunity.
The killer customers, thus, are the obvious customers that will give you cash flow quickly. Sometimes killer customers are those that need your product badly, and that will be glad to pay for it. Other times it may be someone that agrees to let you use them as a reference. For example I once met up with a start-up in Houston that was a spin-out from a major oil company, the company had extremely low market risk because the oil company had committed to being its customer should it succeed in productizing their technology. Having killer customers reduce your market risk, and will give you a much easier time getting funding and getting people to trust that your company will succeed. You don’t need to call them killer customers of course, just remember that the first customer is extremely valuable!
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Wednesday, 21 July 2010
Thursday, 15 July 2010
What does “make each other good” mean?
Part of my philosophy about teams is that each member should strive to better the other members, even at his own expense. This may sound weird, and in most cases it is in fact counter intuitive. That’s also why it deserves its own wording – making each other good, as well as its own blog post.
Let me give an example: consider two classmates that are applying for jobs after finishing their studies, they both have a lot of the same interests as well as the same educational background. This is a good example, because these individuals are not in a team, in fact they are competitors, it’s likely that they will apply for many of the same jobs. And just like them quite often team mates may find that what is good for one may not be so good for the other. Otherwise of course they would make each other good because there's no conflict of interest. But back to our example: So should they tell each other about interesting job postings they find? The intuitive answer is of course no, after all they are competing with each other for most of these jobs. Hmm, let’s look at some simplified math.
Let’s say these two have very specific interests, so that there’s not a whole lot of jobs, and they have to shift through a lot of information to find good prospects, now let’s say both find 10 jobs that are not overlapping, and that there are on average 30 applicants for each job (which I would say is a conservative estimate for good jobs these days). If they don’t tell each other they have a 1/30 chance to get each of their 10 jobs (assuming all candidates are equal of course) which means:
1-(1- 1/30)^10 = 0,29
29 % chance for each of them to get at least one of the jobs. If however they share their information so that both apply for all 20 jobs, they only have a 1/31 chance for each job:
1-(1- 1/31)^20 = 0,48
48 % chance each to get at least one of the jobs. The math here isn’t that important, it’s the principle that cooperation beats competition that is. This is transferable to other situations, but the issue however is how not to get locked in to a prisoner’s dilemma game where everyone wants everyone else to share but doesn’t share anything themselves. Nobody wants to share with people that don’t share back, and thus a negative spiral can reinforce itself until everyone walks around paranoid and keeping everything they do a secret. Sharing is a learned skill, one that involves reciprocity – quid pro quo. Teams and companies should be built on trust, we all know that, and one of the best reasons is that trust enables sharing, and sharing at (or despite) the expense of one individual creates synergy for the entire group.
Edit: I just thought of a little digression I should have included: When I was in the army I remember our sergeant would always ask for volunteers, and when nobody out of the 30 soldiers in our troop raised their hands the tension got so thick at times that you could cut it with a knife. One day we all decided that the next time he asked for volunteers we would all raise our hands, and the odds of having to do something would still be the same. This became a habit and later that summer it must have looked pretty neat when the officer in command of the entire base asked for a volunteer and saw 30 young boys eagerly raising their hands in the middle of about 1200 recruits that didn’t. We made our sergeant look extremely good that day, and that was not a bad thing for us.
If you liked this post or any other post feel free to click the “follow” button to the right to stay tuned to new posts when they appear. You can also follow me on Twitter as @vetleen.
Let me give an example: consider two classmates that are applying for jobs after finishing their studies, they both have a lot of the same interests as well as the same educational background. This is a good example, because these individuals are not in a team, in fact they are competitors, it’s likely that they will apply for many of the same jobs. And just like them quite often team mates may find that what is good for one may not be so good for the other. Otherwise of course they would make each other good because there's no conflict of interest. But back to our example: So should they tell each other about interesting job postings they find? The intuitive answer is of course no, after all they are competing with each other for most of these jobs. Hmm, let’s look at some simplified math.
Let’s say these two have very specific interests, so that there’s not a whole lot of jobs, and they have to shift through a lot of information to find good prospects, now let’s say both find 10 jobs that are not overlapping, and that there are on average 30 applicants for each job (which I would say is a conservative estimate for good jobs these days). If they don’t tell each other they have a 1/30 chance to get each of their 10 jobs (assuming all candidates are equal of course) which means:
1-(1- 1/30)^10 = 0,29
29 % chance for each of them to get at least one of the jobs. If however they share their information so that both apply for all 20 jobs, they only have a 1/31 chance for each job:
1-(1- 1/31)^20 = 0,48
48 % chance each to get at least one of the jobs. The math here isn’t that important, it’s the principle that cooperation beats competition that is. This is transferable to other situations, but the issue however is how not to get locked in to a prisoner’s dilemma game where everyone wants everyone else to share but doesn’t share anything themselves. Nobody wants to share with people that don’t share back, and thus a negative spiral can reinforce itself until everyone walks around paranoid and keeping everything they do a secret. Sharing is a learned skill, one that involves reciprocity – quid pro quo. Teams and companies should be built on trust, we all know that, and one of the best reasons is that trust enables sharing, and sharing at (or despite) the expense of one individual creates synergy for the entire group.
Edit: I just thought of a little digression I should have included: When I was in the army I remember our sergeant would always ask for volunteers, and when nobody out of the 30 soldiers in our troop raised their hands the tension got so thick at times that you could cut it with a knife. One day we all decided that the next time he asked for volunteers we would all raise our hands, and the odds of having to do something would still be the same. This became a habit and later that summer it must have looked pretty neat when the officer in command of the entire base asked for a volunteer and saw 30 young boys eagerly raising their hands in the middle of about 1200 recruits that didn’t. We made our sergeant look extremely good that day, and that was not a bad thing for us.
If you liked this post or any other post feel free to click the “follow” button to the right to stay tuned to new posts when they appear. You can also follow me on Twitter as @vetleen.
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