Tag: opszero

Every time a new feature or product was proposed, Jeff Bezos decreed that the narrative should take the shape of a mock press release. The goal was to get employees to distill a pitch into its purest essence, to start from something the customer might see—the public announcement—and work backward. Bezos didn’t believe anyone could make a good decision about a feature or a product without knowing precisely how it would be communicated to the world—and what the hallowed customer would make of it.

Everything Store, Biz Stone

We use the Amazon’s Working Backwards method. Working Backwards starts with a customer-centric Press Release and FAQ. Our addition is a a Landing Page and a low-fidelity MVP. Once the PR/FAQ is written we work backwards to define the tasks we need to accomplish to complete the product.

This document is not a set-and-forget. We will continuously update this document as we build the product. The goal is to first write the document before building the product to create clarity

The PR/FAQ process has the benefit of uncovering the following characteristics in a business:

1. Simple. to Operate: A product should be simple to operate and once built should be easy to scale.
2. Job to Be Done. Focus a product on performing a single task well for a single customer segment. Products don’t need to be everything to everyone. If a product can be built for different customer segments make them into separate products.

Press Release

Every product starts as a press release. A press release is a mission statement written from a customer standpoint. It forces the problem to be explained and addresses the goal of the mission from the point of view of the **Customer First**. We use this to then solve the rest of the problems of delivering to the customer, but a press release defines the first step of why the customer needs the product we are building and why we are the best people to build the product.

The template for a press release looks like the following:

[Title]

[Product and who the customer is]

[City, State]–[Intended Launch Date]– [Intro paragraph]

[Problem]

[Solution]

[Quote by leader in your company]

[How the product/service works]

[Quote by a customer of the product/service]

To learn more, go to [URL].

FAQ

A set of questions that are answered from a customer standpoint. The ones in \* are ones we should answer. Some of these can just be copied directly onto the public website.

Product

• What is ?
• What is the problem?
• Who has the problem?
• What are the costs associated with the problem?
• How do people currently solve this problem, and how do those solutions fall down?
• What has changed enabling a new solution?
• How does the new solution work?
• How do you know it’s better? (Quantitative, Qualitative)

Total Addressable Market

* How many consumers have this need or problem?
* How big is the need?
* For how many consumers is this problem big enough that they are willing to spend money to do something about it?
* If so, how much money would they be willing to spend?
* How many of these consumers have the characteristics/capabilities/constraints necessary to make us of the product?
* Who are the existing competitors?
* Who are example companies from similar industries?

Economics and P&L

* What are the per-unit economics of the service? That is, what is the expected gross profit and contribution profit per unit?
* What is the rationale for the price point you have chosen for the product?
* How much will we have to invest up front to build this product in terms of people, technology, inventory, warehouse space, and so on?

Feasibility

* Is it within our area of competence? How would we be able to deliver additional value?\*
* What are the challenging product engineering problems we will need to solve?
* What are the challenging customer UI problems we will need to solve?
* What are the third-party dependencies we will need to solve?\*
* How will we manage the risk of the up-front investment required?\*
* Who is running this? Are they the right people for this project?

Product Page

Our products are built around a single “Job to Be Done” for a specific niche. To fulfill this we keep our landing pages to a single page. Write the landing page along with the Press Release as it creates a public page that can be shown to potential customers and get their feedback. The product page should be created and emails collected using Google Ads before anything code is written. This helps gauge interest for the app while we are building the product.

* Hero
* A clear pitch to the customer
* A smaller secondary pitch
* A click through action
* Features
* List three benefits to using the product
* Create a clear customer for the product
* Customer Logos
* List customer logos for people using the product
* Testimonials
* Write a few blurbs from the customer or potential case studies
* Benefits
* List three benefits to using the product. How will it improve the customer’s life?
* Pricing
* Have three pricing tiers
* FAQ
* Add what is listed in the External FAQ below

Brand Check

* [California SOS](https://bizfileonline.sos.ca.gov/search/business)
* US Trademark
* Google search for .com and similars

We have a six week cadence where we spend four weeks of intense work, and two weeks of course correction and planning. Every December we take time to reflect and relax and make detailed plans for execution.

| Task | Marketing & Sales | Product & Engineering |
| — | — | — |
| Marketing | Launch all the work that we have built in the previous iteration as a series of content and promotions across multiple websites. Setup outreach that needs to be performed. Update AWS Marketplace | Upgrades and Maintenance, Building the iteration plan|
| Build | Close sales based on the marketing that we perform. | – Sales and customer onboarding |
| Plan | Update the sales collateral based on the work completed for the previous four weeks, Collect Testimonials, Update Outerach Docs,Import into the | Plan for the next four weeks of work. Update documentation. Plan some big rocks for the following four weeks. |

The goal of the iteration cycle is to have a high and low period where we can optimize and organize our energy and ensure we are prioritizing things. By setting up things into iterations we can focus on the most important tasks and delay things we want to work on so we can focus our energy to work on the right things.

### Planning Notes

* Focus on inputs not outputs. We can’t control how many customers will join us but we can control how many products we release and out reaches we do. So instead of saying 5 new customers instead say outreach to 100 companies. We can control the inputs, not the output.

Any company can only be good at two of these things and should really optimize the efforts on two. As a company can’t do it all and can really only focus its resources on optimizing a few pieces.

Examples:

* Coca Cola. Sales, Marketing. They are selling sugar water no new value is being created or delivered.
* Apple. Marketing and Value Creation. They are heavy on advertising and building new products.
* Microsoft. Sales and Value Creation. They are selling to enterprises and they make most of their money on sales. Their marketing efforts are largely limited to Xbox it seems.
* Starbucks. Marketing and Value Delivery. you can buy coffee anywhere. Why buy it at Starbucks other than the idea of the third place.
* Safeway. Marketing and Value Delivery. They don’t really make their own food per se. they basically act as a distribution.
* Uber. Marketing and Value Delivery. They haven’t created new value they have found a more efficient delivery method for wanting a taxi.
* Amazon. Value Delivery and Value Creation. Amazon creates amazing amount of value and delivers it cheaper allowing them economies of scale.

Product businesses are so hot right now. There is a literal app for every single thing. Product companies are great because margins are high, custom work is low and scaling that is relatively easy. Unfortunately, with opsZero I’m in the service game.

Services are interesting because after doing services for 20+ companies in the last 5 years a few patterns emerge:

* Services can be delivered in a Productized manner.
* Most companies aren’t unique in their requirements. If you do it for one company, likely many more have the same need.
* Most things require scaffolding. If you can Productized the scaffolding and provide the value on top it allows the value to be delivered faster.

Some negatives of a service business.

* Since people are interacting with a person instead of a product they have weird things they want to throw in versus what they would do with a product. A product can fail and you move on because a product can’t do everything. A service on the other hand people have weird expectations that they wouldn’t have of a product because they are speaking to another person. “Oh you do Kubernetes, let’s have you do database optimization.”
* A product company is mostly a subscription business now. This is unfortunate because I grew up in the shareware generation and I think a lot of products can be that model. Anyways, this results in people thinking the old model is product based subscription businesses and everything else is a “lifestyle” business.
* People are willing to treat other people poorly versus having to go through a support channel to treat people poorly.

So why do I like service businesses?

* Everyone wants to build a product but to use your product someone needs to do the work. Just because a product is created doesn’t mean that your customer can do it themselves. Webflow, WordPress, Wix, etc. Have figured out how to do this by creating a partner marketplace. But if you are just starting out it doesn’t exist.
* Value is easier to discern. You deliver value and you get paid for it. Time is literally money.
* The price of time has a higher value in the short term than in the long term compared to a product. Overtime a product has the better revenue + profit vs a service business. But in the short term a service has a better outcome. On the other hand a product has a harder time getting a footing which is also a risk a service company doesn’t have to do.

What are some things a service company can do to innovate?

* A company can innovate in delivery. Process delivery, i.e delivering the same things multiple times for multiple customers, is the best way to deliver value. Basically make things as cheap as possible by constantly reducing cost.
* As a business model service businesses don’t incentive workers. A person delivering $100 dollars in value isn’t that different from a company providing $150 in value if they are following the same checklist. Essentially a service business is seeking engineers at the cheapest rate possible and isn’t looking for the sake of tomorrow but the needs of today. Incentives in this structure is hard as people doing harder work usually results in higher pay. In a service business the goal should be getting the work done for the same amount over time.

While writing PR.FAQs for my projects I keep doing, “this project does x and y and z.” Basically, bundling too many things into a single thing. This results in lack of focus and projects that are not connected to each other but if you squint it looks like they are.

For example, I wanted to combine DevOps, Kubernetes and Serverless. While seemingly related in that they all are Cloud based the similarities stop quickly and optimizing the offering to deliver consistently and reliably fails fast. Providing services for DevOps can entail all sorts of things from Android, iOS, Cloud, Databases, etc. Really too much for any one person or company to necessarily get good at. Kubernetes and Serverless while related in terms of getting code running on a server somewhere has another set of issues. You can learn Kubernetes for the different Cloud providers but then Serverless is difficult because you have to figure out what Serverless platform you want to use. Optimizing delivery of Kubernetes problems is much much different than optimizing delivery of Serverless offerings.

I’ve had mentors and people tell me that doing too many things like this is unproductive. Obviously, I didn’t listen to them because I am special… But simplicity of offering matters. For all the complexity that Stripe handles and their seemingly endless products their API is simple. All their products are build into a consistent whole which is take payments on the Internet.

So as much as I wanted opsZero to do multiple things I do not think a brand can be made to handle multiple things. People need a brand to do exactly one thing for them. A job to be done. A business is a “person” after all. It just does the same task a person would do themselves but as a repeatable entity that does it for n people.

The lesson learned is that a company, as Peter Drucker noted, exists to exploit an opportunity. And a business that is simple and easy to understand from the outside looking in, is better at exploiting opportunities than a company that tries to do too many things.

So how does this affect what I’m doing? By having everything combined into one it was providing to be difficult to hire. How do you hire for a plumber and ice cream shop built into one? I’m now looking at every business as a machine. A machine that does a single thing well with different people working on the different parts with a singular metric to optimize around. My goal is as I go through building the machine I will be able to step back from each piece going from contributor, to manager, to owner delegating responsibility.

For a business cash is king. This has been a truism and it is definitely something that I have paid little thought to. However, how money comes in and how it goes out to vendors/employees plays a huge role. Unfortunately, I have come more and more to the conclusion that getting paid upfront for a retainer and customers purchasing chunks of time is a better model.


## Fixed-Costs

* Fixed-Cost projects are great for customers because they only pay a certain amount for a task and overages are on the consultant.
* For a consultant it may not be the best because based on how the contract is structured they payment may be based on milestones so the onus is on the consultant to figure out how to raise money to pay vendors in the meanwhile. This can lead to not being able to grow as you are constantly chasing the money in the future.
* Cost overruns and spec creep. Fixed costs are also a benefit to customers in that customers can change the scope or add to the work that wasn’t previously scoped. Or there is a discovery that happens after the contract is signed that results in complexity.

## Hourly

* Hourly is beneficial to the consumer and consultant in that work can be more regularly paid leading to consultant having to only float the vendors/employees for a shorter period. The amount of accounts payable should hopefully be reduced in this scenario.
* However, growth in the scenarios is still zigzaggy as you can get more work but you may be pulled back from a lack of cash to pay the workers since there is a discrepency between when you are paid and when you pay your vendors.
* Some customers pay much slower than others resulting in a percipitous drop in cash so large cash cushion is needed which could otherwise be used for growth.
* The problem with the hourly model is that payment is always in the future, which means if you have a sales team that is growing your company, you may not be able to fulfill the work as you will have a lack of cash. So growing will lead to failure.
* Lastly, it is hard to prioritize work as every client is paying in the future. So each client is equally important.

## Hourly Retainer

* I think hourly retainer is the best mechanism for both a customer and consultant. A retainer being an upfront payment for a set amount of hours.
* A retainer gives a float to the consultant to allow them to hire the employees/vendors that can help fulfill the work quickly ensuring quality of delivery.
* It benefits the customer in that they can commit a small amount of hours and test the waters with the consultant and constantly move forward to the finish of the project. The hours can have accountability.
* The consultant can hire a team of sales and admin staff to help grow the company further, while not being afraid to fulfill the work needed.
* This model also incentivizes and prioritizes work to the clients that have a regular retainer. Ensuring that work is always prioritized.

Anyways this whole article is to say I’m moving to an hourly retainer model.

Owning a small business has a pitfall that where you start and where the company starts are blurred. You take money out whenever you want and treat the company as a personal bank. I think this has caused misaligned incentives and coming to the conclusion that it be avoided.

When you are the owner of a business that business belongs to you and you decide whether to keep it or not as an investment, when you work on the business you allocate capital including hiring and creating dividend, when you work in the business you get paid for the work you do. An entrepreneur needs to think in these three terms.

An ownership of a business does not mean treat the company like a bank. A company should exist as its own independent unit that like any life force is seeking to optimize itself toward a mission while giving a ROI. The owner of the business needs to think of the business in this term. So a flush out of cash leads to the company not performing at its peak. If anything ownership is an external factor.

Working on the company is using the capital within the company for the benefit of growing the company while also benefitting the stakeholders such as the owners. It is for this reason giving employees ownership is seen as a benefit. When working on the company Capital is allocated to where it is needed and excess capital should be returned as a dividend. The important drive here is while working on the company the incentives should be to think like an owner while acting like a worker. So the worker should be paid a compensation appropriate to their work, but their drive should be to increase the growth rate.

Lastly, working in the company is commiserate to being paid for the work performed. Your incentives are to work to get paid.

As a small business entrepreneur or any entrepreneur, for that matter, it seems that the best way to achieve the desired outcome is to go up the chain. When working in the company you get paid for the work performed, when working on the company you get paid for the work performed and once a quarter give a dividend if it is appropriate, as an owner you seek to ensure that the ROI is appropriate and find other investors who’d want to invest or raise capital to put into growing the business.

Each task set is completely independent.

Complexity is Entropy. If something takes you much longer to do than doing it the easy way you are basically wasting energy. I’ve been wondering why that is? I think the reason is that though simplicity scales better it gets boring. For people who can run a marathon or do the same weightlifting routine for years there is obvious regularity and gains. But an entrepreneur is by nature someone restless.

Doing the same thing over and over from an execution standpoint gets boring. It is a reason I think companies like Amazon have moved to a microservices model. Each service can be modeled simply and other services can build on top. Each individual component is simple but work together to create a complex adaptive system.

Anyways, as a business owner the real goal then is to produce simplicity at the core of what you do so that others can execute and understand the rules of the game, create rules that others are bound by which leads to an outcome. If the rules are too complex the game won’t be played well. So simplicity is quite important. Though defining if a finite or infinite game is being played also creates a challenge.


Banks are conservative. They don’t loan money to businesses that need money, they loan money to businesses that don’t money. This doesn’t help if you are an agency where companies pay you in whatever timeframe they want even if you say NET-15. An agency likely also has a hard time raising money since it is a services business as opposed to a product business so venture funding doesn’t really exist.

So I’ve had to figure out how to minimize unproductive cash while being able to have access to cash readily when I need it. The simplest solution I found is to have a brokerage with a margin account with a low margin rate. I use [Interactive Broker](https://ibkr.com/referral/kesava377) (#aff).

The idea is simple, there should be as little money in the business bank account as possible. If you are a LLC you want to minimize the liability that you are responsible for if you get sued. Second, you want to ensure that you are not holding as much cash especially in a high inflation environment like right now.

What I have done is the following:

1. Keep a minimum amount of cash on hand to pay bills, and a little extra for emergencies in the bank account.
2. Move all cash into a Brokerage that is dedicated to the business. This should be a personal account as this won’t get possessed if you get sued.
3. Invest based on your risk tolerance, with an idea of minimizing the risk so you can access that cash in the future.
4. When money is needed by the business, take a margin loan against your brokerage account to pay for what the business needs. I leverage up to 25% of the portfolio, but I suppose I have a higher risk tolerance. This way you are not incurring capital gains taxes on your investments.
5. Refill the brokerage when cash comes in to pay off the margin loan and continue buying more assets.

The benefits has been I can have access cash on a low rate versus a bank loan and don’t have to deal with a bank at all. Second, the brokerage account continues to grow giving me an even cheaper margin rate.

The risk is of course an increase in interest rates, but say you have a bunch of S&P500 ETFs, on average they grow at 15% year over year. Even if the margin interest rate is 5% you are still up 10% on average.

(This is not investment advice, you should do your own research.)

I’ve tried OKRs long enough now that they are not resulting in a positive outcome from a quarterly perspective. The problem lies in a couple things:

1. Changing OKRs from quarter to quarter seems too fast and doesn’t result in actual time to develop long-term strategy.
2. Once a strategy has been developed for an OKR it is hard to not drop it with a new OKR the next quarter.

I may be doing this wrong, but the whiplash of constantly chasing new OKRs doesn’t create consistent throughput. New OKRs can create misalignment since changing directions, mid-route is fighting the inertia of the previous OKR.

So I’ve changed tactics. I am no longer doing OKRs. Instead, there is a singular company-wide mission with key metrics that don’t change from quarter to quarter. This mission will be the North Star for the foreseeable future.

Hopefully this results in some long term benefits:

* Not wasting a lot of time planning on what new OKRs to make up. From a quarter to quarter standpoint opsZero doesn’t change that much. Companies want much the same thing they want last quarter. My goal is to make it more efficient to deliver it.
* Build metrics dashboards to understand key results somewhat in realtime.
* Focus on tasks that continuously benefit the mission’s key results as opposed to changing tactics quarter to quarter.

**Planning**

Getting rid of OKRs does not negate the need to plan. Instead, planning will be in shorter [iteration cycles of six weeks](https://docs.google.com/spreadsheets/d/1GJQj3d3-p0DH0c8LctJ95rFOsJawoeuJK8Ip_Py6oqc/edit#gid=0). Planning should be to figure out the high leverage tasks, scaffold new initiatives, and basically treat building as continuously fixing bugs.

The optimal time for an iteration cycle seems to be 6 weeks. Four weeks is long enough to get major tasks done without having to stop for planning, two weeks are spent down-cycle, relaxing, and coming up with new initiatives. After 6 years of running opsZero, going full steam all the time is no longer a real objective. Taking breaks more frequently, has been a godsend.