Book: Slicing Pie, Mike Moyer

Review

A good model on how to allocate equity in bootstrapped startups. The author also offers a software that simplifies the process.

Buy on Amazon.com.

tl;dr

It’s not about the money, people want to know that their contribution is valued. A “Pie” is a promise to allocate equity when the time comes. Calculate the relative value that each person brings. The percentage of pie for each person remains fluid and changes from day to day. 

The main value ingredients:

  • Time. Calculate your market hourly rate and multiply by two. If receiving a salary, then the calculation is based on whatever compensation is put at risk.
  • Cash and business-enabling equipment is the actual value times four.

Allocate equity at the point of diminishing returns or when the idea becomes a business that has a predictable revenue stream and cost structure.

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Book: The Mom Test, Rob Fitzpatrick

Review

Talking to potential customers about your idea is not enough. You need to ask the right questions, the right way to get relevant answers. Great book.

Buy on Amazon.com.

tl;dr

Ask about the customer’s life (problems, cares, constraints, goals), not about the idea. With requests, you need to find the root cause. Get commitments to the next step. Keep having conversations until you stop hearing new stuff. If you aren’t finding consistent problems, you don’t have a specific enough segment. Avoid receiving compliments. Talk less.

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Book: Small Giants, Bo Burlingham

Review

Company culture, an elusive ideal. Can you keep it once you start growing, and how? Lessons from a few companies, analyzed by the author.

Buy on Amazon.com.

tl;dr

A Small Giant has “mojo”, a buzz about it and everyone wants to be a part of it. To build a small giant, you need to stay private and without outside shareholders. Stagnation is a threat to culture.

Small giants excel in customer service. But customers come second – people/employees come first.

Create opportunities for great people to grow and take on new challenges. Create an atmosphere in which people feel valued and respected but also make it possible for them to have fun at work.

You can only excel only at one value type: the best price, the best product, or the best overall solution. Each comes with its own kind of organization, culture and mindset.

In the end, to be successful, you also need: healthy margins, healthy balance sheet and a sound business model.

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Book: Financial Intelligence for Entrepreneurs, Karen Berman and Joe Knight

Review

A great book if you don’t have a background in economics/accounting or if you want to refresh the knowledge.

Buy on Amazon.com.

tl;dr

Separate out whatever is most important so that you can track it easily. Highlight what is changing, which numbers are where they are supposed to be, and which ones are not. Operating profit margin percentage (gross profit minus operating expenses) indicates how well you are running the entire business. Train your team on financial literacy. Open Book Management (OBM) at its best creates an environment where employees feel that they are part of the success – and are at risk for the failure – of the business.

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Book: The Subconscious Mind In Business, Robert Updegraff

Review

A classic from 1929. It’s really hard to find and it costs an arm and a leg to buy (printed scan book is ~$30). It’s short and has some interesting stories, however you’ll get 99% of it by reading my summary below.

Probably all of us have found ourselves finding a solution to a problem when we were not actively thinking about it. We might have gone for a walk, working on a hobby or just went for a shower. This is the subconscious mind at work. When you give it time and relax, ideas start popping up that you haven’t thought of them when you were actively thinking about solutions.

I hoped this book would go into detail on how to do this effectively, however the lesson is just “leave the desk and relax”. Simple, really.

tl;dr

Desks are not thinking machines. Do not plan or think about business when behind a desk. When stuck with a problem, leave it and focus on something else. A solution will come up on its own later. Part of your day, do whatever you want to do, is pleasant and puts the mind at ease.

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Book: Differentiate or Die, Jack Trout

Review

Similar lessons to author’s previous book, Positioning, but worth a read nonetheless. Lessons here can be a difference between a failed or a successful company. Also great lessons for successful companies that don’t want to fail.

Buy on Amazon.com.

tl;dr

Quality is not a difference, it’s a given. When the market is confused, the leader wins. Every aspect of your communication should reflect your difference. Oversimplify your message. The more variations you attach to the brand, the more the mind loses focus. If you can’t get everyone to prefer you, find a group that will. When you chase after another target segment, chances are you’ll chase away your original customer. Differentiating has got to line up with the perceptions in the mind, not go against them.

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Book: Maverick!, Ricardo Semler

Review

If you’re not an entrepreneur for the ego-trip of being “the boss”, then this is one of the best books you can read. It emphasizes empowering your team, giving them more information, responsibility, power to make decisions, profit sharing, … In Semco’s case, the results speak for themselves. The Brazilian conglomerate has been one of the best to work for in the country for decades and it has survived through turbulent times in 90’s Brazil. The author credits a lot of the success to the methods described in the book.

At our company, we already had a lot of these elements, however the book gives a good guide on how to go even further.

Absolute must-read.

Buy on Amazon.com.

tl;dr

Workers are responsible adults outside the job, regard them as such on the job. Empower workers, give them autonomy to do the job. Open books, full information – everyone should know where the company stands. Flexible work hours. Minimize documents. Managers vote on each others proposals. Manager evaluations by subordinates.

A company should trust its destiny to its employees.

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Book: Traction, Gabriel Weinberg and Justin Mares

Review

Great overview of the most common and effective marketing channels, how to test them and how to scale up. Fantastic for startups and a great reminder for existing businesses.

Buy on Amazon.com.

tl;dr

19 traction channels. Brainstorm ideas for all channels and do a quick test for the promising ones. Then focus solely on the channel that gave you the best results. Targeting niche blogs is one of the most effective ways to get first customers. Build easy-to-use micro tools that are easily found and shareable.

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Book: Positioning, Al Ries and Jack Trout

Review

The first edition of this book was published in 1987, but the lessons are as important today as they were 30 years ago. If you can get through the outdated examples, this book gives fantastic advice on how to position a product in an overcrowded market. Highly recommended.

Buy on Amazon.com.

tl;dr

Positioning the product in the mind of the prospect. Not creating something new and different but manipulating what is already there to retie connections that already exist. Do not try to change the mind of the prospect. Oversimplify your message. Select a position that no one else has a firm grip on. Consistency – keep at it year after year. Name should begin the positioning process by telling the prospect what the product’s major benefit is. Avoid initials. Do not use an existing name for really new products. Keep in mind the line-extension trap.

The first rule of positioning is: To win the battle for the mind, you can’t compete head-on against a company that has a strong, established position. You can go around, under or over, but never head to head.

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Article: What Google Learned From Its Quest to Build the Perfect Team, NY Times

Review

This is just a bit longer article on NY Times but it has some very important lessons I thought should be noted and shared.

tl;dr

Create a safe, respectful environment where everyone feels safe to talk and contribute. If this is done well, you can expect all team members speak roughly the same proportion. Team members must be able to talk about hard topics and feel heard.

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