Browsing articles from "February, 2012"

The Dopamine Effect

Entrepreneurs spend a lot of time building great products. But in today’s competitive startup environment, it’s not enough just to build a great product. You have to build a product that keep users coming back to your site.

I met with an entrepreneur I advise and the question came up–how do we get users to keep coming back to a site?

The answer is dopamine. Dopamine is a chemical in the brain that is associated with rewards. You get a little dopamine rush when you click on the coins in a Zynga game. You get it when you see a news item on Facebook. And, as recent studies have shown, when you tweet.

So the key to getting users to come back to your site is figuring out what is going to give your users the reward–the dopamine rush that will get them to come back to your site.

It could be seeing new faces, a numerical score that tells users how they’re doing relative to others, receiving more storage space for inviting new friends, or simply sending out a short message. The ideal action not only rewards the user’s behavior, it also encourages inviting more people to the site. That creates a network effect.

When it comes to raising money, investors care less about what causes the dopamine rush. They just want to know that you’ve cracked the code on what causes it. Because if you’ve done that, you’ll have millions of users engaging with your site–and millions of dollars wanting to get into your deal.

Feb 8, 2012

Your Acquisition Signature

I was speaking with a Product Manager at a large tech company today. He’s looking for small, local development teams he can plug into his existing projects/teams. In talking about potential acquisitions, he described what he called the acquisition “signature.”

The term signature is an excellent way to characterize how to think about acquisitions, if you are considering being bought.

While a startup, in its early days, is trying a hundred mini-experiments to see what works and what doesn’t, big companies have multi-year plans they’re executing on. They have annual planning and budgeting sessions that require lengthy preparation, lots of slide decks, and no end of meetings.

One big company exec once said to me, “year end is a terrible time at [his company], the budgeting spreadsheets are flying everywhere!” But the planning, budgeting, and roadmapping exercises also give big company execs excellent visibility into what they want to acquire.

The characteristics of a potential acquisition can be summed up as the “signature.” The signature defines the key characteristics the company is looking to purchase: a team, a technology, or revenue.

Revenue acquisitions are a non-organic way for a big company to increase revenue. The company needs to augment the growth it’s getting through its own marketing and sales efforts. One way to do that is to buy revenue through an acquisition.

Technology acquisitions provide big companies with key intellectual property or technology that they can’t build or that they need to build faster than they are. Perhaps a competitor is beating them on a particular feature and they need that feature fast to stay competitive.

Finally, team acquisitions provide a way to hire a fully built out team without having to recruit the individuals one at a time.

Regardless of which one you are, figure out what signature your buyers are looking for and you’ll have a much easier time making your sale–and getting the price you want.

Feb 7, 2012

Hiring Criteria

Last week I got an email from an Interaction Designer at oDesk who wanted to meet with me to understand how oDesk “fits into my life.” oDesk describes itself as changing how the world works. It’s a marketplace for finding outsourced software developers, writers, video producers, and online marketers.

I’ve been using oDesk for product prototyping and software development, so I welcomed the opportunity to meet with the Interaction Designer—Larry—and talk about oDesk. I had some specific usability feedback about the site I wanted to provide. Give me easier access to the things I do regularly, for example. I was also curious to see what questions he would ask.

Larry recorded the interview and we transcribed it at Speechpad. Speechpad is a leader in crowd-sourced audio/video transcription.

Speechpad’s work model is a little different than oDesk’s. Whereas on oDesk buyers and contractors connect and then the buyers are responsible for working directly with the contractors, Speechpad uses a crowd-sourced workforce but takes responsibility for delivering the final product—a great transcription—to the customer.

During the interview, we covered a lot of ground, from how I use the site, to how I work on specific projects. When do I go back to the site? Would it make sense to integrate ticketing and communication tools like chat directly into oDesk or are there external tools that are sufficient?

At the end of the interview, we got to a discussion of how I go about hiring. What filters do I use? Ultimately it came down to one thing, for both Speechpad and oDesk. I’ve included an excerpt of the transcript here:

“We have an interesting thing in our business [Speechpad], which is we have really high-quality people who do great work and we rate them and check their work and lots of other stuff to QC their work but, ultimately, they care about the work that they do. They’re proud of the work they do.”

What do I filter on when I’m hiring, whether directly or through crowd-sourcing? People who are qualified to do the work, of course. But then what? People who don’t view their work as a transaction. People who care about their work.

Feb 2, 2012