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The one thing Steve Jobs did that turned around Apple

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After a nasty battle with Apple shareholders, Steve Jobs, then the original founding CEO, was ousted. He went on to create NeXt computers (later acquired by Disney). In the meantime, Apple drifted as a company. It proliferated product lines. Lost focus. And the share price entered a death spiral phase. A few years later in 1997, he was recruited back to save the company from very poor public share price performance.

“Saint Steve” at Macworld 1998

When we got to the company a year ago, there were a lot of products. There were 15 product platforms and a zillion variants of each one. I couldn’t even figure this out myself. After about three weeks. I said, “how are we gonna explain this to others, when we don’t even know which products to recommend to our friends?”

In this keynote at 1998 Macworld, he announced early successes, such as a 3rd consecutive profitable quarter. In my opinion, one of the most powerful parts of his talk was the following grid:

The 4 apple quadrants, source: Apple

In effect, after a strategic review of all 15+ product lines, Jobs decided that these four were the only products worth focusing on. Consumer was aimed at consumers and education. Pro was aimed at publishing and design. Everything else was shut down. Here was his rationale:

As a matter of fact, if we only get four, we could put the A-Team on every single one of them. And if we only have four, we could turn them all every nine months instead of every 18 months. And if we only had, four we could be working on the next generation or two of each one, as we’re introducing the first generation. So that’s what we decided to do: to focus on four great products. And the first one that we introduced of course was the Desktop Pro product.

Notice that the main practical reason Steve Jobs cited for this change is the reduced product release time, or cycle time. Or low velocity in agile terms. He could release a lot of resources. Focus them just on these 4 great products. And get out of the bureaucratic quagmire that was holding the company back.

This was the kind of “zero-based thinking” decision that a hired gun CEO would be afraid to make, but a founding CEO could find the courage to do. To implement a company redesign and rethinking from first principles, rather than just tinkering around the edges. Steve Jobs knew what life before Apple was like, because he was there. And he already had a successful “go” at building the company. So it didn’t take much to identify that the company needed to be slimmed down and focussed in order to become stronger.

Of course, there was uproar amongst developers with vested interests in existing product lines. To a lesser extent, among clients of the cancelled products. But this marked the beginning of Apple’s long climb to a corporate icon and stock market darling.

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SEO, PageRank, and the Landing Page MVP

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Landing Page MVP launch tomorrow

Quicksand for online marketing newbies

Here is a question that I got from a member of my audience: “How to improve page rank of my landing page MVP?”

So the question relates to the algorithm Google uses to figure out what page to display when preparing search results for particular keywords. That’s what Search Engine optimization (SEO) is. And PageRank is a key part of SEO. PageRank’s a patent Google has. It’s based on a system similar to how academic citations work.

If a lot of pages refer back to your page, then your page is considered more authoritative. So your page should rank higher. Now–to be completely transparent, I don’t consider myself good at SEO. In terms of SEO tactics, I can give you advice I’ve heard elsewhere, but I don’t think that’ll be useful. But I can tell you how I think about it strategically, as it’s easy to hire someone to do SEO tactics if you think it’s worth it.

Easy to hire someone to do SEO tactics if you think it's worth it. Click To Tweet

[Read more…]

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Reverse Engineering The Sale

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download (1)

Failures should not stop you from trying, keep on truckin

A friend of mine from when I was growing up is a true blue professional hacker for the US military. He gets paid to hack security software. Specifically, he writes software which figures out how other security software works. He figures out what the requirements are.

He prods the software, notes down its behaviors, and then uses that feedback to construct more ideas for tests. Based on the requirements he gleans, his team can build exactly the same thing from scratch, if they decide that’s what they want to. Geeks call this technique reverse engineering.

You can take the same approach when trying to sell a new product. While it might not always feel pleasant, the market tells you what it thinks by giving you feedback. (No feedback is feedback too.) I’ve put up offers which seemed like they’d be interesting for my target audience, but they didn’t sell.

Certainly made me feel like a doofus, although it clearly wasn’t fatal, since I’m writing to you about it! They attracted attention and freebie downloads successfully, but for some reason, people didn’t feel motivated to buy.

Keep on truckin’. If you don’t have a selling offer yet, keep prototyping new products and putting them up for sale where you think your market hangs out. Keep talking to them.

You can do this systematically by planning to launch a new offer every week. It doesn’t need to be perfect with a massive campaign and a perfect website. It just needs to attractive to a niche and buyable.

Once you are at the stage that people are buying, then go ahead and work outwards from there. Your first few sales, while they might seem insignificant, are a crucial step forwards. They give you the basis for reverse engineering who buys in your market and why they buy. You can feed this information back into your product and your marketing.

  1. You’ve identified who buys. Find out about them. What makes them tick. Why they bought. What they liked or didn’t like about the product.
  2. Once you know that, adjust your positioning. Test a change in the language used. Once you know exactly what people want to buy, make it easy for them to find it. Test the packaging, cover, or images. At this stage you can try to improve conversion rates with the usual suspects.
  3. At the same time, figure out where your buyers hang out. Use this medium to reach them. Instead of overwhelming yourself with 94 ways to generate traffic, or basing your whole business off Google traffic, start with a few sources of traffic. Master them. The best traffic sources to choose are the ones which your first buyers already use.

If you don’t have buyers yet, that is your first bottleneck. Figure out how to solve that problem first. Once you have customers, then you have your work laid out for you.

You’ll probably find my book on experiments valuable, to help you get your head around it.

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What Exactly Are Financial Options Then?

by

In order to understand real options, you need to understand financial options. Financial options are the biggest tectonic shift in finance of the 20th century. The main concept behind financial options is simple. In non-financial terms, an option gives you the right, but not the obligation, to buy or sell something at a pre-specified price, only up until a pre-specified time.

Options give you many new opportunities to make money and customize exactly which risks you want to bear. You can:

  1. position for a large market move upwards, with a much lower level of exposure to risk.
  2. minimize your future losses if you expect the market will go south.
  3. prepare to buy something for a lower price, if you predict certain conditions will arise.
  4. lock in a cash flow stream, without being exposed to market risk.
  5. allow for a core exposure to market risk, while still dabbling in various options on the side.
  6. conserve capital via limiting risk, so that there is more cash available for future investment.

In short, options allow you to assemble the exact financial risks you want to bear while discard those you don’t. As a result, you customize your risk profile in a more powerful (and accurate) way than investors who don’t use options. This high granularity will clearly make you more profitable in a highly volatile environment.

Types of Options

When you initially buy an option, you aren’t sure what will happen. Instead, you have a hunch that it will. You are betting on a particular event happening in the future, without bearing the full risk of it happening. With financial options, this typically refers to how the price of the something in the market changes.

There are two main types of options: puts and calls. From the point of view of an option buyer, a put prevents a big loss, but costs a bit up front. It’s the option to sell something at a pre-agreed price.

A call is the opposite. It enables you to get a big gain, but it also costs a bit up front. It allows you to buy something in the future at a pre-agreed price.

In both cases, when you exercise the option, you already know what happened. You know why you want to use it-when you do.

Underlying

The asset an option gives you the right to buy or sell is called an underlying. It’s the “what” of an option. What are you betting about?

What can be an underlying?

The price of the option is actually different than that of the underlying itself. It’s independent. This is because of the unique characteristics of each option.

Time

Every option has a couple of characteristics which affect its price, not just the underlying, i.e. the pre-specified price & time at which you can buy the underlying.

For example, consider these two bets (options):
1. betting that Poland will win the world cup at the next world cup
2. betting that Poland will win the world cup at least once in the next 100 years

If Poland does win the next world cup, you would win both of these bets. They have the same underlying. Simultaneously, they have different pre-specified expiry dates. Because of this difference, each bet will have a different value, even though the underlying is the same.

If you look at a variety of options for the same underlying but expiring on different dates, you can see this pattern. As you go further out in time, typically the later option will be more expensive. It compensates or charges you for the value of time. a bank also compensates or charges you for holding your savings with them or taking out a loan for the same reason.

 Strike Price

Assuming you have the same underlying, as the strike price (the pre-specified price) is lower on a put, the cheaper it is. Everyone thinks it’s unlikely the option will ever need to be used. There is less demand for each option where the strike price is further away from the current market price of the underlying.

Conversely, as the strike price gets lower on a call, the more expensive it is. Remember that as it gives you the ability to buy the underlying at a lower price. If it’s compared to the underlying, and the strike price is much lower than the underlying price, then you can buy the option and exercise it.

How options are different than stocks

Unlike stocks, all of the money you invest into an option will disappear when the option expires; this is the worst case scenario. Stocks have no predetermined lifetime, as they represent a claim on a company that is expected to be around forever. Accountants call such a company a “going concern”. In contrast, options always have a date by which they expire. It’s a necessary part of the option. Having the option to do something by next month or by the end of next year, even if it’s the same thing, will not cost the same amount. By holding an option, you might lose everything you invest, or you stand to gain a very large amount relative to the amount invested if the foreseen scenario happens.

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Not Sure About Priorities? Clear Your Big Bottleneck

by

changed.priorities.hockadilly

Launch Tomorrow

Landing Pages for your Lean Startup

The one thing Steve Jobs did that turned around Apple

by 2 Comments

After a nasty battle with Apple shareholders, Steve Jobs, then the original founding CEO, was ousted. He went on to create NeXt computers (later acquired by Disney). In the meantime, Apple drifted as a company. It proliferated product lines. Lost focus. And the share price entered a death spiral phase. A few years later in 1997, he was recruited back to save the company from very poor public share price performance.

“Saint Steve” at Macworld 1998

When we got to the company a year ago, there were a lot of products. There were 15 product platforms and a zillion variants of each one. I couldn’t even figure this out myself. After about three weeks. I said, “how are we gonna explain this to others, when we don’t even know which products to recommend to our friends?”

In this keynote at 1998 Macworld, he announced early successes, such as a 3rd consecutive profitable quarter. In my opinion, one of the most powerful parts of his talk was the following grid:

The 4 apple quadrants, source: Apple

In effect, after a strategic review of all 15+ product lines, Jobs decided that these four were the only products worth focusing on. Consumer was aimed at consumers and education. Pro was aimed at publishing and design. Everything else was shut down. Here was his rationale:

As a matter of fact, if we only get four, we could put the A-Team on every single one of them. And if we only have four, we could turn them all every nine months instead of every 18 months. And if we only had, four we could be working on the next generation or two of each one, as we’re introducing the first generation. So that’s what we decided to do: to focus on four great products. And the first one that we introduced of course was the Desktop Pro product.

Notice that the main practical reason Steve Jobs cited for this change is the reduced product release time, or cycle time. Or low velocity in agile terms. He could release a lot of resources. Focus them just on these 4 great products. And get out of the bureaucratic quagmire that was holding the company back.

This was the kind of “zero-based thinking” decision that a hired gun CEO would be afraid to make, but a founding CEO could find the courage to do. To implement a company redesign and rethinking from first principles, rather than just tinkering around the edges. Steve Jobs knew what life before Apple was like, because he was there. And he already had a successful “go” at building the company. So it didn’t take much to identify that the company needed to be slimmed down and focussed in order to become stronger.

Of course, there was uproar amongst developers with vested interests in existing product lines. To a lesser extent, among clients of the cancelled products. But this marked the beginning of Apple’s long climb to a corporate icon and stock market darling.

<< Help Yo' Friends

SEO, PageRank, and the Landing Page MVP

by Leave a Comment

Landing Page MVP launch tomorrow

Quicksand for online marketing newbies

Here is a question that I got from a member of my audience: “How to improve page rank of my landing page MVP?”

So the question relates to the algorithm Google uses to figure out what page to display when preparing search results for particular keywords. That’s what Search Engine optimization (SEO) is. And PageRank is a key part of SEO. PageRank’s a patent Google has. It’s based on a system similar to how academic citations work.

If a lot of pages refer back to your page, then your page is considered more authoritative. So your page should rank higher. Now–to be completely transparent, I don’t consider myself good at SEO. In terms of SEO tactics, I can give you advice I’ve heard elsewhere, but I don’t think that’ll be useful. But I can tell you how I think about it strategically, as it’s easy to hire someone to do SEO tactics if you think it’s worth it.

Easy to hire someone to do SEO tactics if you think it's worth it. Click To Tweet

[Read more…]

<< Help Yo' Friends

Reverse Engineering The Sale

by

download (1)

Failures should not stop you from trying, keep on truckin

A friend of mine from when I was growing up is a true blue professional hacker for the US military. He gets paid to hack security software. Specifically, he writes software which figures out how other security software works. He figures out what the requirements are.

He prods the software, notes down its behaviors, and then uses that feedback to construct more ideas for tests. Based on the requirements he gleans, his team can build exactly the same thing from scratch, if they decide that’s what they want to. Geeks call this technique reverse engineering.

You can take the same approach when trying to sell a new product. While it might not always feel pleasant, the market tells you what it thinks by giving you feedback. (No feedback is feedback too.) I’ve put up offers which seemed like they’d be interesting for my target audience, but they didn’t sell.

Certainly made me feel like a doofus, although it clearly wasn’t fatal, since I’m writing to you about it! They attracted attention and freebie downloads successfully, but for some reason, people didn’t feel motivated to buy.

Keep on truckin’. If you don’t have a selling offer yet, keep prototyping new products and putting them up for sale where you think your market hangs out. Keep talking to them.

You can do this systematically by planning to launch a new offer every week. It doesn’t need to be perfect with a massive campaign and a perfect website. It just needs to attractive to a niche and buyable.

Once you are at the stage that people are buying, then go ahead and work outwards from there. Your first few sales, while they might seem insignificant, are a crucial step forwards. They give you the basis for reverse engineering who buys in your market and why they buy. You can feed this information back into your product and your marketing.

  1. You’ve identified who buys. Find out about them. What makes them tick. Why they bought. What they liked or didn’t like about the product.
  2. Once you know that, adjust your positioning. Test a change in the language used. Once you know exactly what people want to buy, make it easy for them to find it. Test the packaging, cover, or images. At this stage you can try to improve conversion rates with the usual suspects.
  3. At the same time, figure out where your buyers hang out. Use this medium to reach them. Instead of overwhelming yourself with 94 ways to generate traffic, or basing your whole business off Google traffic, start with a few sources of traffic. Master them. The best traffic sources to choose are the ones which your first buyers already use.

If you don’t have buyers yet, that is your first bottleneck. Figure out how to solve that problem first. Once you have customers, then you have your work laid out for you.

You’ll probably find my book on experiments valuable, to help you get your head around it.

<< Help Yo' Friends

What Exactly Are Financial Options Then?

by

In order to understand real options, you need to understand financial options. Financial options are the biggest tectonic shift in finance of the 20th century. The main concept behind financial options is simple. In non-financial terms, an option gives you the right, but not the obligation, to buy or sell something at a pre-specified price, only up until a pre-specified time.

Options give you many new opportunities to make money and customize exactly which risks you want to bear. You can:

  1. position for a large market move upwards, with a much lower level of exposure to risk.
  2. minimize your future losses if you expect the market will go south.
  3. prepare to buy something for a lower price, if you predict certain conditions will arise.
  4. lock in a cash flow stream, without being exposed to market risk.
  5. allow for a core exposure to market risk, while still dabbling in various options on the side.
  6. conserve capital via limiting risk, so that there is more cash available for future investment.

In short, options allow you to assemble the exact financial risks you want to bear while discard those you don’t. As a result, you customize your risk profile in a more powerful (and accurate) way than investors who don’t use options. This high granularity will clearly make you more profitable in a highly volatile environment.

Types of Options

When you initially buy an option, you aren’t sure what will happen. Instead, you have a hunch that it will. You are betting on a particular event happening in the future, without bearing the full risk of it happening. With financial options, this typically refers to how the price of the something in the market changes.

There are two main types of options: puts and calls. From the point of view of an option buyer, a put prevents a big loss, but costs a bit up front. It’s the option to sell something at a pre-agreed price.

A call is the opposite. It enables you to get a big gain, but it also costs a bit up front. It allows you to buy something in the future at a pre-agreed price.

In both cases, when you exercise the option, you already know what happened. You know why you want to use it-when you do.

Underlying

The asset an option gives you the right to buy or sell is called an underlying. It’s the “what” of an option. What are you betting about?

What can be an underlying?

The price of the option is actually different than that of the underlying itself. It’s independent. This is because of the unique characteristics of each option.

Time

Every option has a couple of characteristics which affect its price, not just the underlying, i.e. the pre-specified price & time at which you can buy the underlying.

For example, consider these two bets (options):
1. betting that Poland will win the world cup at the next world cup
2. betting that Poland will win the world cup at least once in the next 100 years

If Poland does win the next world cup, you would win both of these bets. They have the same underlying. Simultaneously, they have different pre-specified expiry dates. Because of this difference, each bet will have a different value, even though the underlying is the same.

If you look at a variety of options for the same underlying but expiring on different dates, you can see this pattern. As you go further out in time, typically the later option will be more expensive. It compensates or charges you for the value of time. a bank also compensates or charges you for holding your savings with them or taking out a loan for the same reason.

 Strike Price

Assuming you have the same underlying, as the strike price (the pre-specified price) is lower on a put, the cheaper it is. Everyone thinks it’s unlikely the option will ever need to be used. There is less demand for each option where the strike price is further away from the current market price of the underlying.

Conversely, as the strike price gets lower on a call, the more expensive it is. Remember that as it gives you the ability to buy the underlying at a lower price. If it’s compared to the underlying, and the strike price is much lower than the underlying price, then you can buy the option and exercise it.

How options are different than stocks

Unlike stocks, all of the money you invest into an option will disappear when the option expires; this is the worst case scenario. Stocks have no predetermined lifetime, as they represent a claim on a company that is expected to be around forever. Accountants call such a company a “going concern”. In contrast, options always have a date by which they expire. It’s a necessary part of the option. Having the option to do something by next month or by the end of next year, even if it’s the same thing, will not cost the same amount. By holding an option, you might lose everything you invest, or you stand to gain a very large amount relative to the amount invested if the foreseen scenario happens.

<< Help Yo' Friends

Not Sure About Priorities? Clear Your Big Bottleneck

by

changed.priorities.hockadilly

There is a simple heuristic, which you can use to determine the top priority activity you can engage in-at any given moment. It comes out of the “lean manufacturing” camp. It can apply to a business as a whole, a specific product and its backlog. Your developers typically apply it, when improving software performance. Now you can use it in the context of your product development process.

Your biggest priority at any given moment is clearing your biggest bottleneck. This will give the largest non-linear jump forwards in system productivity, because of the Herbie problem . This includes business productivity (read profit). Cycle time goes down. You reduce “friction” around production.

Once you clear a bottleneck, you create another one (a relatively smaller one) elsewhere. This is the nature of this game. Then clearing that bottleneck will give you the highest possible non-linear improvement in the output of the business as a whole. In that context, if you aren’t releasing your software to production automagically with every check-in, you have bottlenecks to clear. 🙂

The end game of clearing bottlenecks is simple. You become a “pull-based” organization. You can respond immediately to customer requests, if you want to, if you need to, or if it tickles your fancy. That’s a pretty valuable place to be.

[image cred: hockadilly]

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