In my previous post I discussed the struggle with staying in an
optimistic entrepreneurial mindset when you feel like all of the good
ideas are gone, the market is saturated, and opportunity has left the
building. I surmised that this is just a feeling and not reality. Well,
along the same lines, I have another question I want to ask you about.
A few weeks back Seth Godin wrote a post about Same as it ever was
where he displayed two of the first portraits ever taken and basically
as asked: could they have been taken with Instagram? The point he was
making (in my opinion) is that there's plenty of opportunity in
products, services or technology that already exists.
History is full of examples of companies who did not pioneer their core
offering, but came to dominate it anyway. Think of the way that Apple
has come to redefine and dominate the market for mobile devices—a
category pioneered by Motorola. Boeing did not pioneer modern jet
travel, nor Google the Internet search engine. Yet both companies are
now industry leaders.
In Seth's post he says:
No need to fool yourself into holding back just because your
innovation or product doesn't contain a flavor that's never been
tasted before or an experience previously unimagined.
I believe this, but what about the other end of the spectrum? For
instance:
This is a terrible quality video, but the only
one I could find.
We make fun of the five thousandth To-Do app, or the social network for
X. NOOOO, not another project management tool. Anybody want to build
another CMS?
There's been tons of silly ideas (and as developers we've built them)
yet occasionally something new will surface that competes with the
industry leader and even surpasses it. What made Slack different from
Hip Chat? What made Gmail different than yahoo mail? I'm not that
knowledgeable about all the different startup successes and failures, so
you fill in a few blanks of the ones you know.
My question is, when are competiting products valid? When are they seen
as another lousy idea?
In business school, I frequently thought of the old business tycoons who
were in the beginning of their industry's heyday: Henry Ford (autos),
J.P. Morgan (banking), Cornelius Vanderbilt (shipping and railroad
tycoon), John D. Rockefeller (oil). I'd think, if I'd been born then,
business would've been easy. In hindsight, it all seems so obvious:
trains, growth, ships, oil, investment, factories, etc. etc.
For the last couple of years, I've been wanting to create a business (in
addition to my consulting) around a SaaS (software as a service)
product. Since probably 2005, SaaS businesses have grown rapidly. Now it
seems there's an app for everything and anything. I've become to think
that the SaaS market is saturated and opportunity is few and far
between. If this is true, this also affects my consulting business
because if the opportunity isn't there, then less and less
entrepreneurs will need my consulting to help build software.
So like many entrepreneurs, I began to feel pessimistic and downcast about
the future. But like most entrepreneurs, this was a brief spell.
I recently read an article that bolstered my confidence: "You are not
late". The author talks about a similar thought process as I
mentioned above, but within the technology boom. "Oh, if we'd just been
around at the beginning of the dot com boom...things would have been so
easy." Then he says that:
If we could climb into a time machine and journey 30 years into the
future, and from that vantage look back to today, we'd realize that
most of the greatest products running the lives of citizens in 2044
were not invented until after 2014.
I believe that. Heck, 10 years from now, we probably won't be using the
majority same tools, services, and technologies we're using today. Major
platforms like the web and email may still be around, but they'll
probably look vastly different. For example, 5 years ago, the majority
of all email was hosted on an exchange server, or an in-house pop mail
server. Now, the majority of people access their email in the cloud
through different devices and clients.
Because here is the other thing the people in 2044 will tell you:
Can you imagine how awesome it would have been to be an entrepreneur
in 2014? It was a wide-open frontier!
The one thing that is constant is change and people have been innovating
since the beginning of time. There's opportunity in the future. You have
to be willing to learn, change and visualize if you want to take
part!
So now the hard part...what's next? What's the next big shift in
technology? What will are you working and investing your time?
This morning I read a Quora question posted by a student who wanted
to learn Ruby on Rails, but wanted to know how easy or difficult it was
to get a rails job.
I really like the response from a developer at Spotify. He said that
right now, it's easy to get a rails job and it pays competitively with
other like developer positions.
However, he said you cannot hang your hat on any one technology. If you
want to be a great developer, you have to be prepared to learn
constantly.
Constant learning is only behaviour that is guaranteed to get you
hired at the best companies and to give you job security as a
programmer. This is common to all great and well-paid developers -
develop a hunger for learning. Learn because it fascinates you, not
because it will land you a job. Ironically, it is this attitude that
WILL land you the best jobs, and give you security long-term.
I agree. When I started my company in 2008, I was constantly astonished
by the degree with which each project differed. I always told my wife,
if I could just get one project that was like the last we could really
make a profit. The truth is, even if you do get two projects that are
similar, if they are more than 6 months apart, some technology is going
to have a different "better" way of implementation.
Now, that's not to say that experience doesn't account for anything. It
does in a big way. When you have to update a gem or software
version, the more experienced you are, the more quickly you'll adapt, but
you'll never stop learning. If you do stop learning, you're likely
going to get left behind.
For the last few years, I've been extremely focused on rails and have
been reluctant to "play" with any other technologies or frameworks. I
didn't want anything to distract me from my focus on rails. Recently
however, as I've become a more mature rails developer and feel more
comfortable in that role, I've been wanting to branch out and learn some
new technologies. A few on at the top of my list are:
Yesterday I was out on a bike ride with my friend Matt Smith and he
told me he'd been challenged to write a blog post every business day for
the next 30 days. He didn't call me out like the Ice bucket challenge,
but he asked if I wanted to do it too. So I accepted.
At the beginning of this year I decided I really wanted to write more.
I'd read about numerous people like Nathan Berry writing 1000 words
daily or John Saddingon's obsession with blogging and decided I wanted
it to be a part of what I do. So I thought I'd take some time and figure
out why should I write?
Why Write?
1. To get better at it
I've never been great at writing. I've always been better at Math than
Reading/Writing (my math score nearly doubled my English sore on my
SAT's). I realise I don't have a natural ability to write, but I believe
it is something you can vastly improve on if you practice at it. Writing
and communication is critical in any career, but I believe as much or more
so than anywhere it's critical in software development.
2. To Learn
Whenever I write something I'm able to turn a lot of incomplete ideas
and thoughts into something meaningful and organized. If it's a
technical post where I'm explaining something I've built or designed,
then I learn even more than what I did when I first built it.
3. To Teach
It's also an opportunity to teach. I met Dr. Maya Angelou once and had
dinner with her in her apartment. One of my favorite quotes from her is
When you get, give. When you learn teach. I've learned so much
from others sharing what they know. I've literally gained a 2nd education
from the internet. I'm hoping to just pass a little on!
4. To inspire creativity
To write is a creative process and I believe it just breeds more
creativity. I'm the most creative when I'm writing often. I'm more
creative as a developer, designer, marketer...just all around.
5. To be more open
I hope that by being open, honest, communicative, and sharing more about
my life that I'll meet more people, build better relationships, and
enable clients to be more comfortable because they already know a
little about who I am and how I think, how I operate, and what to
expect.
6. Opportunity
Hopefully my writing will bring an audience and an audience will bring
opportunities. Whether through client work or partnership opportunities
or my next business partner, writing can bring opportunity in the door.
Summary
This isn't meant to be an exhaustive list, but the top reasons on my
mind right now.
I've been running a small business now for 16
years and I think I've finally settled on a simple way I like to answer
the key question...are we making money and if so how much?
My business is incorporated, so I get paid as an employee and the
business has a separate set of financials. I've always found it
difficult to answer my own question of "how'd we do last month?" It kinda
gets confusing because money flows in all different ways: regular
paychecks, dividend withdrawals, profit sharing plans (retirement /
investments aka my 401(k)) and other business perks / assets
(healthcare, company car, etc, etc.). Sometimes the business checking
will be way up, but the next month it'll be way down...but it's not
necessarily down because of business expenses, maybe it was time for a
scheduled investment withdrawal, or we made a transfer to a savings
account, or...
So what I started doing is on the first of every month is I compile a
list of all my "current cash and investment accounts." It's just a
simple excel sheet that looks something like this:
It adds all of your cash accounts like checking and savings, personal as
well as business. Then it adds all of your investment accounts. I
always enter these numbers at the exact same time every month. I do mine
early in the morning on the 1st of the month so I'm getting my cash
account and investment numbers for the close of business at month end.
Now this might look pretty simple, but in the myriad of financial
statements you can generate, this is a straight forward indicator of
whether or not you're building wealth / value.
What about financial statements?
I have an accountant that gives me all sorts of valuable statements like
an income statement, balance sheet, statement of cash flows, etc. Those
are important, but one main problem is that my business and I are really
one in the same. If I make a personal withdrawal from the business, my
cash flow statement will show a deduction, but my personal account will
show the addition. I want to know what's going on overall. It's a good
idea to keep your business and personal accounting separate, but if you
own a small business, you want some way to track an overall value. Not
that it should, but as far as I'm aware, there's not any accounting
software that will give you a snapshot across multiple companies /
personal accounts.
Not representative of productivity
One thing to note is that this is not an indicator of productivity on
the previous month. You might have a killer month, but not get paid for
it until the following month. It's really about keeping track of added
(or hopefully not reduced value) over the course of time.
Two indicators
I like seeing the monthly change in value, but the main two I look at
are the YTD Change and the Monthly Average.
The YTD Change lets me know overall if I'm adding value to my net worth.
Over the last 12 months, did I build value, maintain, or loose value?
The Monthly average let's me know on average how much extra cash (if
any) I have available each month. It helps answer questions like: can we
afford a new car payment, or can we increase our monthly retirement
contribution or can we increase giving to our church? As a small
business owner, your income is far from fixed, so answering those types
of questions are difficult. This indicator gives you a little insight.
Summary
I hope that might help someone out there. This is definitely no
substitute for real accounting software and/or an accountant, but it's a
nice snapshot of where you're at and how much you've grown.
Here's the excel file if you want to download it and customize it for
your own use. Let me know if you add anything to it or have other
methods for your financial analysis.
