Last Build Date: Tue, 08 Mar 2011 20:23:16 -0500Copyright: Copyright 2012
Tue, 08 Mar 2011 20:23:16 -0500
Noticed something interesting today...
If you have an Android phone, you may have noticed that Google updated their Navigation application to include routing around traffic using predicted traffic patterns. Having this information fed into the routing algorithms is very powerful, particularly if you trust it!
I'm a daily commuter on a painful trip from Bedford, MA to downtown Boston. It's about 21 miles and typically takes me an hour to an hour and fifteen minutes. The fastest trip at normal commuting hours was 45 minutes, and the worst was 2 hours plus (not counting blizzards). Bedford is located so that I have a few choices of major highways to get to Boston, and each of these highway routes gives me the options of augmenting the highway with back roads. I generally take back roads because I prefer to keep moving rather than sit still on the highway.
Now, Google will figure out which is faster. I tried it out this morning, and, while sitting in my driveway, Google predicted that its route would get me to work in 58 minutes. Not bad. I checked out the route, and it had me staying on the highway almost all the way, but getting off the highway one exit before you would if there was no traffic at all. I was skeptical, but decided to try it out.
As I went, I kept checking its predicted time of arrival, and it didn't waver by more than one or two minute in either direction. I arrived at work within one minute of when it was predicted! And, as I sat in traffic or moved very slowly, I found that I was much more patient than usual. Being confident of when you'll arrive makes it much easier to take sitting in traffic. Google won't make the traffic go away, but I'll sit on the highway if I know that I'll get there as predicted. That confidence of arrival time made me much more patient.
Pretty impressive application, and good for my blood pressure. I'll keep testing it out and will report any further observations.
Sun, 07 Nov 2010 18:24:28 -0500My blogging has fallen off of a cliff. Work at Digital Lumens has been very hectic, with lots of travel. Lots of sales activity will do that to you. And, we’ve been busy at home with long-term houseguests from Central Asia, a son applying to college, a daughter’s first year in high school, Patriots and Celtics games, and planning an overdue family vacation! Before I knew it, almost two months has gone by since my last post. For the first time in more than 5 years, I took an international business trip this week. I went to a conference in Lisbon, Portugal (life could be a lot worse), and I had a chance to talk to Europeans in the energy efficiency business. It was very interesting to compare notes with others in a fledgling industry on a difference continent. There is a lot of government-mandated momentum around energy efficiency. They take reduction of carbon footprint very seriously. Portugal is positioning itself as a clean-tech testing ground, with the government sponsoring all sorts of projects and industries as a way to solve high unemployment in the wake of the global financial meltdown. Their stimulus was in the form of subsidies for solar and wind power, as well as tax credits to enable solar panel assembly for export to the rest of Europe. Although there is the threat that the subsidies will soon end, it seems clear that they were really focused on creating jobs that they hope will somehow outlast the government sponsorship. Is the kind of job creation that we should be doing the US? Clearly, some of the stimulus dollars went to high-flying clean tech companies to help them build factories and infrastructure. It’s probably too early to tell if they are creating enough sustaining jobs. In general, I don’t think that you can justify this type of investment on a $/job basis. What the government hopes to do is to get some sort of flywheel affect going that allows a new industry to start to create its own jobs, or at least start fully paying for the subsidized ones. I’m skeptical of subsidizing a business where the core business premise is uneconomic, but maybe some economies of scale will kick in to solve that. There was a great deal of interest in US politics. I don’t think we realize how much a large part of the world looks to us to lead. They want us to lead in foreign policy and in economic policy. The prospect of the US failing to get things done in the light of post-midterm election gridlock was very disappointing to everyone. And, the US’s shift to the right over the past 15 years has really been surprising to even the most conservative people I talked to. European conservatives would almost be considered communists in today’s US political discourse. And, as they pointed out, so would Nixon and Reagan. The most embarrassing was trying to explain how people like Christine O’Donnell, Sarah Palin, and Rand Paul could get so much support while seeming to take positions that are so much against the types of freedom that most Europeans associate with America. Our image in Europe is still one of real freedom. And, despite their cries of “freedom”, most Europeans associate the tea partiers with a loss of freedom – less tolerance, less help for those in need, and a harsher government. They are worried that the hard shift to the left for the US will be bad for the rest of the world. I just hope that the left and right can work together in the coming two years rather than having strongly entrenched views without compromise. [...]
Tue, 31 Aug 2010 16:18:24 -0500As I've written before, I work at a great start-up company, Digital Lumens. We make energy efficient industrial lighting and are growing quickly. In fact, one of our biggest challenges right now is hiring.We have a bunch of jobs listed on our website. Current listings are:Applications EngineerFirmware EngineerMechanical EngineerSoftware EngineerSoftware Quality Assurance EngineerIf you are interested in one of these positions, you can send your resume. And, even if you aren't the right fit for one of these, you can refer someone to us. If we hire them, we'll pay you $1500!And, keep an eye on our careers page. Additional positions will be added soon.If energy efficient lighting isn't your thing, maybe you're more interested in working in a great arts organization. I'm on the Board of the American Repertory Theater in Cambridge, and we're hiring a Senior Financial Manager. The job description is on Harvard's web site, or your can directly contact them via email. Please apply if you're interested, or pass along to someone who would be! [...]
Wed, 25 Aug 2010 10:39:49 -0500...unless you ask them the wrong question. Then they are merely deceptive.Here's an interesting lesson on figuring out the right way to present financial analysis. First some background:This is based on a sales proposal we recently made at Digital Lumens. We make energy-efficient intelligent lighting that can reduce lighting energy costs by 90% for industrial customers. These lights are often eligible for rebates from utilities, and sometimes those rebates are proportional to the amount of energy saved.Our light uses LED technology, but our current main competition is from fluorescent light fixtures. These fixtures are an improvement over prior technologies, but not as efficient as LEDs. What fluorescent fixtures have going for them is that they are a pretty cheap commodity these days.We had a situation with a customer where their local utility had put a significant incentive in place for warehouse fluorescent lighting. Because LEDs are pretty new for this application, they hadn't yet put in place a big incentive for LEDs. So, we were at a significant price disadvantage. Here's an obfuscated view of the numbers:Current monthly lighting energy bill: $5,100Fluorescent fixture upgrade cost, net of aggressive rebate: $15,000Fluorescent direct energy savings: $2600/monthSimple fluorescent payback calculation: 5.8 monthsLED fixture upgrade cost, with only a modest rebate: $70,000LED direct energy savings: $4700/monthSimple LED payback calculation: 14.9 monthsWhen you only look at energy savings, the LEDs are a tough decision here. They have a higher initial cost than these inexpensive fluorescent fixtures, partly due to the aggressive rebate. A customer could easily decide to buy the fluorescent fixtures as they are almost free and are paid for very quickly.But, there are other components of ownership: tax incentives, maintenance, and the chiller effect.This application is cold storage -- refrigerators and freezers. The cost of keeping those cold and frozen dwarfs the cost of light. And, LEDs have a benefit of running much cooler, greatly reducing the workload of the chiller. You wouldn't run an oven inside a freezer, so why have a hot light inside? This allows customers to capture an additional 40% or so of their lighting energy savings as reduced load on the chiller. Think of this meaning that our 90% savings with just LEDs is really more like 140% savings. In this case, you can save more than 100%With this factored in, the fluorescent payback goes out to 18.8 months while the LED payback is reduced to 9.5 months.If you graph the total cost of ownership month by month, it looks like this: With the total cost of ownership view, the LEDs very quickly become cheaper than fluorescent, despite the significantly higher initial purchase price. And, with the sort time horizon, we offered the customer a financing proposal so that they could match the lower initial cash flow of the fluorescent fixtures and still eventually get to the lower cost path of the LEDs. That's a win-win for everyone.Most importantly, it shows the value of digging into the numbers and understanding all the components of the total cost of ownership, even if industry convention is focused just on the simple payback. [...]
Tue, 24 Aug 2010 13:36:06 -0500
If you liked my Jon Stewart reference last week, you'll appreciate this follow-up. No rant this time, but it's amazing how Jon gets to the point of news stories when virtually no one else in the media can.
|The Daily Show With Jon Stewart||Mon - Thurs 11p / 10c|
|The Parent Company Trap|
Fri, 20 Aug 2010 14:15:36 -0500Probably not. But, last night Jon Stewart presented a compelling case: The Daily Show With Jon StewartMon - Thurs 11p / 10c[...]
Mon, 16 Aug 2010 08:13:44 -0500This is another post in my occasional series about Sales, after my recent session at the Momentum Summit in Cambridge. The first post summarized the session, and the second post talked a bit about sales compensation plans.One of the most important things you can do in setting up your sales compensation system is to figure out how to get your people to work as a team. Again, most of my experience is in the area of high-tech business-to-business sales. Some of these ideas won't apply, or won't apply in the same way, in other sectors or business models.If you sell your product through resellers or partners, you need to consider them part of your team, at least in terms of compensation. Whatever discounts or commissions they get will motivate them to work in a certain way, and your own people should have parallel motivations. One of the surest ways to fail is to motivate your own people to compete against your channel partners. Your company has many inherent advantages vs. your resellers. But, if you determine you need resellers, you have to be willing to make some sacrifices in order to make those resellers successful.Why would you need resellers? Maybe you need more 'feet on the street' than you can afford the direct cost for. Or, maybe your product is best sold as part of a total solution with other products. Maybe you need to take advantage of customer relationships that your channel partners have that you don't have.If you have resellers in your sales model, you should really commit to them to the exclusion of your own direct sales efforts, at least for the same type of accounts. Your own people may target larger accounts, accounts in different market segments, or some other segment, but make that distinction clear up front. What's more effective oftentimes is to have your staff support your resellers' efforts by prodding, answering questions, providing leads, assisting in closing, etc. Similarly, it works best if your own people are set up to collaborate in some way. At Digital Lumens, we have sales teams that consist of an inside sales person, a field sales person, and an application engineer. They work on the same accounts and are compensated as a team. Deals can be closed by the inside or outside person. The application engineer can do sales presentations in a pinch. By collaborating, they can cover more ground, cover for each other, and divide up the work. Our field people are the most senior, and they tend to lead their teams. We use salesforce.com to keep everyone on the same page and to capture information about all the sales activity.The basic rules of our compensation plan is: 1) there is no motivation to favor direct sales over reseller sales, 2) everyone on the team is compensated for all the sales activity in their territory, and 3) if we end up with some sort of complicated commission split situations for sales that cross territories, etc., I use the wisdom of Solomon to figure out what to do. [...]
Tue, 27 Jul 2010 13:51:11 -0500With apologies to one of my favorite Monty Python sketches: In February, March, and April, I wrote a series of posts about a serious issue with the Massachusetts municipal health care system. These were spurred by articles in the Globe by investigative reporter Sean Murphy. Sean's first article is here, and my first post on the subject is here.Here's a short summary: If you like in Massachusetts, chances are that your city or town has had a very rapid growth in the share of its budget that is used to pay health care costs. In addition to the health care inflation we all feel, many cities and towns have very sweet deals for their employees: very low or no co-pays, very high benefit levels, very low employee contribution toward premium costs, and the ability to get health care for life after a small number of years of service. In addition, many cities and towns don't force retirees onto Medicare after age 65, instead paying their health care costs until they die. The biggest obstacle to fixing this has been the cities and towns' ability to negotiate with municipal employee unions on changes to their health care plans. Most haven't been able to get their unions to give up the sweet deal they have. Instead, cities and towns have asked the Legislature to allow them to unilaterally change their health care plan as long as they make it no worse than the state employee union plan. Although it would be better if each city and town cleaned up their own mess (as my town did), that task seems so daunting that it would be better for the tax payers in the State if the Legislature allowed a unilateral change.Unfortunately, the effort to fix this problem died a quiet death in our legislature at the end of June. Sean wrote about it in the Globe at the time, but I missed it. I wrote to my Representative (Charlie Murphy, who has replied very thoughtfully in the past), but he has not yet replied. I'm disappointed that this opportunity to make our tax dollars go further has been lost for now.In the meantime, keep after your city or town to negotiate for a more reasonable health care plan with the municipal employees. Some towns are getting this done, and it is critical for both our fiscal health and to let us allocate our tax dollars to more urgent priorities. [...]
Wed, 21 Jul 2010 09:44:51 -0500
Yesterday, Fred Wilson posted about Immigration Reform. I agree with him on the need for immigration reform and am glad that he's supporting Sen. Chuck Schumer in his efforts to push this through Congress.
Our country's greatest strength is its ability to take people from all backgrounds and to unite them with a common set of values that cuts across cultures. Universal values like freedom, democracy, the presumption of innocence, and opportunity are magnets to people all across the world. When we compromise these, even in the name of our security, we actually lower our opportunity and increase our risk.
There are been several disturbing trends in immigration over the past decade. First of all, many people in the country mistake followers of Islam for terrorists. Or, even followers of other religions (like Sikhs). This creates a lot of ill will toward citizens and immigrants who don't happen to be Judeo-Christians. Shame on us -- we have to remain open to people of all backgrounds who embrace our American values. Moving away from that just reinforces the terrorists' message.
Also, the large number of Hispanic illegal immigrants has equated immigration reform with opening our borders to a large wave of Hispanic immigrants. I'm not in favor of opening the borders to anyone who wants to come in. But, I do think that we should always welcome hard-working people who want to live by our values.
We do need security at the border to ensure that people only come in through legal means. But, we have to recognize that we have millions and millions of people who have been here for a long time that took advantage of our porous security and lack of policing employers. If they couldn't get a job, illegal immigrants wouldn't come here. Only a very small number of them come here with the intent of committing crimes, so we shouldn't criminalize the rest.
We're about to welcome into our home two family friends from Kyrgyzstan who are coming to the US until things stabilize in their home. When you hear how immigrants and visitors view the US, you realize that we shouldn't take for granted how powerful our long-term values are. And, we have to guard against compromising them and cutting off our greatest strength -- being the magnet for the world's best and brightest and integrating their diverse thinking into high-energy inventiveness.
Thu, 15 Jul 2010 08:42:57 -0500
Don't let the title of this talk throw you off. It's safe for work. Matt Ridley discusses the power of trade and commerce and explains how we will only see an increase in innovation and our standard of living due to social networking and crowdsourcing of ideas.
One of the best TEDtalks I've listened to in a while.
Wed, 14 Jul 2010 20:45:38 -0500
I grew up a Yankee fan. The first year I remember was 1972. The Yankees were mediocre, with a .500 record. They had a few good players, but were far behind the better teams, including the Red Sox. In 1973, George Steinbrenner bought the Yankees from CBS for $10M. Baseball will never be the same again.
Steinbrenner was a fantastic businessman, finding ways to generate revenue and spending more and more money on the team. It took a few years to win a World Series, but there was a revolving door of managers (20 managers in 23 years including Billy Martin 5 times. This instability matched Steinbrenner's bluster and bravado.
Steinbrenner made baseball into a big business as other teams tried to keep up with the Yankees. He wasn't a great baseball man, but he had huge passion for baseball. He loved the game and he loved to win. And, after his second suspension as an owner, he stayed more in the background and let his baseball team won things. That has led to a fantastic Yankee era which continues today.
Steinbrenner made baseball interesting and kept the Yankees in the headlines. Red Sox fans should appreciate Steinbrenner as he epitomized what they hated about the Yankees. He was the Evil Empire. Without Steinbrenner, the modern anti-Yankee sentiment wouldn't have run as deep. And, the Yankee success challenged the Red Sox to step up their game, too.
Most importantly, Steinbrenner's philanthropy has been highlighted with his passing. That should be a key part of his legacy. On Boston sports talk radio today, one of the hosts said that for every charitable event, even the Red Sox own Jimmy Fund in Boston, Steinbrenner showed up with the biggest check. Inside his bluster and bravado was a huge, compassionate heart.
He will be missed.
Tue, 13 Jul 2010 08:24:30 -0500I posted a new entry on the Digital Lumens blog today about how energy efficiency investments must make financial sense. There is a lot of 'green washing' that happens today when cool green ideas get a lot of hype because of their potential. But, to get a customer to buy something, the product has to make financial sense right now. Very few customers, particularly business customers, will make an uneconomic decision in the name of going green. But, if you can tie strong economic benefits to strong 'green' benefits, you have a winner. Energy efficiency is an obvious candidate because the energy savings can deliver a strong ROI. But, the returns have to be pretty high to offset the upfront costs. We've done that at Digital Lumens, and we try not to get too caught up on the 'green' side without keeping our eye on dollars and cents.
Tue, 13 Jul 2010 07:49:58 -0500In my last post which summarized the session I ran at the Momentum Summit, I discussed some of the issues involved in scaling up the sales effort. In this first in a series of follow-ups, I'm going to cover things to think about in setting up a sales commission plan.All of my sales management experience has been in high-tech start-ups, including Digital Lumens, which is a mixture of high-tech and cleantech. I don't think that my advice would necessarily apply outside of that environment.First of all, why do sales people get commission? Everyone who works at a start-up is expected to work hard, and everyone gets measured by results. Engineers don't get paid by completed working software modules. Support people don't get paid by completed support calls. They work hard and work long hours. Why do sales people get aggressive incentive compensation, and the others don't?I don't want to get overly philosophical in this post because some people may argue that everyone should get incentive compensation. And, in some sense, it's traditional that sales people earn commissions. The best sales people expect it. So, it can't be avoided.The one thing about sales that doesn't apply to most other positions is that it can be measured by the numbers. Trying hard, making lots of calls, doing lots of demos, working long hours and asking for lots of orders doesn't count. What counts is getting POs that the company accepts (no crazy terms or pricing, etc.). So, sales, in one sense, is the easiest to measure and to be subjected to incentive compensation.Also, in most sales jobs, your work is never done. There is always one more call to return, one more lead to follow-up on, and one more prospect to check-in with. The incentive compensation keeps you motivated to continue to chase down every opportunity.Lastly, the company really needs the sales people to hit their revenue targets. Obviously, everyone's job in a start-up is important. But, once companies get to the revenue stage, measuring revenue vs. plan becomes one of the first things that a Board does. So, the CEO, who feels the heat from the Board if the targets are missed, really needs to know that the salespeople are doing everything they can to hit the numbers.But, what numbers are they trying to hit? The most important thing about sales compensation planning is to make sure that you are motivating the salespeople to produce what the company needs. In a single product company, it's pretty straightforward. The company needs to generate a certain amount of dollars of revenue, and that is divided up among the sales teams. I'd advocate keeping the sales comp plan very simple so that it can be explained in no more than a few sentences. The more complicated it is, the more likely that the salespeople will find a way to hit their number that doesn't necessarily help the company hit its number. If that's not clear, let me know in the comments, and I'll try to come up with a specific example.There are two related ways that I like to structure simple commissions. In both cases there is a goal or quota for the sales person. The easiest way to pay the sales person is to give them a percentage of everything they sell up to the quota and then a higher, accelerated percentage on everything over the quota. Never put a limit on what a sales person can earn. If you grossly underestimate the sales potential of your product, rejoice in the fact that the salespeople can sell twice as much as you expected and are making a lot of money this year. In most sales roles I had, I was the highest paid person at the company. And,[...]
Fri, 02 Jul 2010 16:07:31 -0500
Back on June 23, I moderated a lunch-time breakout session at the Momentum Summit at MIT. The topic of my session was on scaling up the sales effort. And, since so many entrepreneurs are frustrated with this subject, my subtitle was Lies, Damn Lies, and Salespeople.
My time in sales was very important in my career. In fact, I'd recommend that every CEO, marketing, product management, or business development person spend time in sales. There is nothing like having quota pressure and seeing how hard it is to get a customer to part with their money. I think that my sales experience made me a better marketeer, investor, and entrepreneur.
Every entrepreneur is in sales. They are selling their idea to investors, potential employees, early customers and partners, and just about everyone else. In many companies, the founder closes the first deals. One of the challenges we discussed was how to transition the sales responsibility to a sales team when a founder had done all the initial sales.
To me, the most important thing to understand before you hire any sales people is 'what's our sales model'? This includes things like:
In the end, you have to be able to turn the sales process into a recipe. It's almost impossible to build out a sales team without a well-defined recipe. A very entrepreneurial salesperson can help define the recipe, but you shouldn't hire more than one of these. Get the recipe right and then start to scale up the sales team. And, don't hire salespeople too quickly as it takes some time to integrate each one and make them productive.
Other subjects we covered include how to structure sales compensation plans, what CRM systems to use, how to figure out what level salesperson you should hire for a particular job, how to team up inside sales and outside sales, how do you know when to use resellers or other channel partners, etc. There are no right or wrong answers to any of these as each company is very different.
I'll try to write a series of posts that cover some of these subjects over the next few weeks. And, next year be sure to attend the Momentum Summit as the overall event was very valuable.
Thu, 17 Jun 2010 16:03:26 -0500
Great TED Talk on getting kids starting early as entrepreneurs. Some great ideas on how to raise your kids to get them to think creatively and to develop skills that will serve them well throughout life.
I'm a big believer in entrepreneurship. We need it in all fields and aspects of business, as well as in non-commercial organization like non-profits. Entrepreneurship means that you identify problems and find innovative ways of solving them. Bit by bit, entrepreneurs improve our world and deliver the economic growth we need to keep our standard of living. Why not get our kids thinking this way from Day 1?