WisdomGroup assumed a leadership role within ChicagoRuby about a month after we became involved. We are grateful for the trust that the community has placed in us. Today I was reminded of a time when we almost lost that trust.

Restrictive Guidelines
A member of our community approached me with some legitimate concerns about ChicagoRuby’s speaker guidelines. Could the guidelines be too restrictive? Maybe. In order to answer that, we have to look at some history.

A Bad Meeting
The speaker guidelines were written after an especially terrible ChicagoRuby meeting in 2010. I chose the speaker that evening, so the meeting was my fault. Essentially, the presenter came in and pitched a Ruby code generator that runs on Windows. The audience was not pleased.

Recovery and Learning
After the meeting, one of our organizers, Dave Giunta, wrote the first version of the speaker guidelines. Dave is no longer a ChicagoRuby organizer, but his document lives on. We’ve only made minor changes to Dave’s original document in the two years since he wrote it.

Building Trust
The guidelines are critical because they help us to build trust within the community. This is especially true of guideline #3: Attend some of our meetings prior to presenting.

How do the guidelines build trust?

• Developers trust us to deliver top-notch events full of useful information.
• We want our presenters to do well. Presenters do better when they undersand the audience.
• The best way for presenters to understand our audience is to attend a few ChicagoRuby meetings and talk to our members.
• The second best way is to watch our videos.

Filters Are Good
Yes, the guidelines serve as a filter. Certain types of presenters will never approach ChicagoRuby. Others will depart when we email them a link to the guidelines. And the best presenters, the ones who make it through, will have the time of their lives.

The result: A growing, thriving Ruby community in Chicago. A place where smart people can challenge each other to grow so great things can happen.

In 2009 people wondered What does Groupon do? Today pundits are asking “Is Groupon’s business model sustainable?” The future is unknown. However, Groupon is certainly positioned to pounce on opportunities as they unfold.

60 Minutes at Groupon
Journalist Leslie Stahl interviews titans. Sergey Brin of Google. Mark Zukerberg of Facebook. Paul Allen of Microsoft. This week 60 Minutes aired Stahl’s interview of Groupon’s CEO, Andrew Mason. Here’s a 4-minute clip:

Is Groupon’s Business Model Sustainable?
So far the model works. Local businesses get a sudden surge of new customers. If the customers are happy, they return.

Over time, entrepreneurs who noticed Groupon’s success launched competing companies. Will the competitors eat Groupon’s lunch?

They might. But that only becomes a problem if Groupon stands still.

Competition is Good
Successful pioneers attract competitors. Personally I believe that competition yields several benefits, among them:

• Excellence. Competition drives all of us to achieve more. When I was a competitive swimmer, my teammates and I always achieved faster times against our tougher rivals. Maybe it was the adrenaline.
• Market legitimacy. Some customers prefer to follow the crowd. When they see multiple companies offering similar services, they begin to view the service as “legitimate”. And then they buy.
• The shopping cluster effect. Why do restaurants cluster together in city neighborhoods? Zoning might play a role. In fact, restaurants have learned that when people want to eat, they don’t necessarily know what they want until they get close to their destination. It makes more sense to drive toward a cluster of restaurants because you’ll have more choices once you arrive. When restaurants locate near other restaurants, they all win, even though they may be competitors.

In summary, competition creates more opportunities for all players in the game.

What If Groupon’s Model Fails?
A failed business model means that the company needs to find a new way to make money. Steve Blank’s book, The Four Steps to the Epiphany, shows how a company can pivot through several business models before achieving success. To pivot successfully, a company must:

• Listen to customers, so that they know which parts of their model to modify.
• Build a team of smart & capable people so that they can implement the new model quickly and effectively.

Groupon’s rapid growth in three short years shows that they know how to listen to customers. As far as the team is concerned, Groupon attracts some of the sharpest software developers around. Their acquisition of Obtiva was a big move in the team-building department.

Groupon has a strong team. If a pivot becomes necessary, they’re well equipped to handle it.

Positioned to Win
Overall it appears that Groupon (and their hometown, Chicago) will do well over time:

• If the Groupon model proves successful over time, they will make money and grow.
• If their model fails, they have the right team on board for a successful pivot.

I look forward to watching Groupon as they continue to grow.

What is the WindyCity Experience?

What can you expect at WindyCityRails? Take a look at feedback we received on two conferences held earlier in 2011: WindyCityGo (mobile) and WindyCityDB (NoSQL databases).

Why do we go to conferences?

• Presentations. To hear from peers who are working on the cutting edge of our profession. Presentations from this year’s WindyCityGo and WindyCityDB are online.
• Networking. To share ideas with our peers – some of the sharpest minds in the developer community. To talk to folks that we don’t see every day. To give serendipity a chance to work!
• Fun. After all, if we’re not having fun, maybe we should go somewhere else :-)

What does the WindyCity experience mean to you? Hear more about the experience from people who have been there.

When smart people challenge each other to grow, great things happen. We look forward to seeing you at WindyCityRails!

Portions of this article also appear at http://chicagoruby.org.

Ignite Chicago
This presentation was created for Ignite Chicago. Ignite talks are special because speakers are required to present their thoughts in five minutes with slides that auto-advance every fifteen seconds. Thank you Stella Fayman and Tim Jahn for organizing the event.

About the Author of The Four Steps to the Epiphany
Steve Blank worked in, owned, or managed eight different silicon valley startups in the course of twenty years. His eighth startup was very successful; he was able to exit with enough money to retire. At that point, Blank began to reflect on the successes and failures of the various startups he had been involved with. Reflection led to lectures at Stanford, Berkeley, and Columbia. Notes from his lectures evolved into the book: The Four Steps to the Epiphany.

Blank noticed that startups went through predictable patterns of success or failure. Yes, there are multiple paths to failure, but there are fewer paths to success. Blank believes he has found a success path that applies to most startups.

Counter Example: Webvan
Sometimes it helps to explain an idea through counter example. Webvan was built to deliver groceries to people who ordered on the web. The problem? Webvan built software and warehouses before they had a reliable supply of customers. They were so confident of their future success that they spent close to one billion dollars building infrastructure. They ran out of money before they had customers.

It’s not fair to pick on Webvan when so many other companies make the same mistake. Remember the Apple Newton? Apple is a great company, but they put tons of money into an early PDA (the Newton) before customers even knew what a PDA was. Same with Motorola. Motorola’s Iridium was supposed to be a network of communications satellites covering the planet. Satellites designed to give internet and phone access to every human on planet earth. The problem: Nobody could afford Iridium. In these examples, Motorola, Apple, and Webvan, all burned through money before they had a steady supply of customers. There is a better way.

The Four Steps
Steve Blank lists The Four Steps to the Epiphany as:

1. Customer Discovery
2. Customer Validation
3. Customer Creation
4. Company Building

There are a few things to point out about the steps. First the process is iterative, not linear. If at any point we get stuck, we go back and repeat a step (or two) based on what we’ve learned. A smaller repetition might be termed an iteration. But if the entrepreneur needs to revisit the entire business plan, or change basic assumptions in the business model, the repetition/backtracking would be termed a pivot.

Customer Discovery and the Minimum Viable Product
Every entrepreneur has an idea about what customers want. We all know something of the pain felt by our customers, or so we think. Blank’s suggestion: Take what you know about your prospective customers’ pain and build a minimum viable product (MVP) with just enough features to address the pain. Then get outside the building. Get away from wherever it is that you work and talk to real customers with your MVP in hand. Let them try it. They’ll give you valuable feedback about what you should do next. If their pain is great enough, and if your MVP is good enough, they’ll buy it.

Which Customers?
It’s important to note the type of customer we want at this stage. We want early adopters. We want customers who are feeling pain in the entrepreneur’s area of expertise. Perhaps customers who have tried to solve the problem themselves with no success. Early adopters will give us the most useful & actionable feedback at this stage.

Customer Validation
The customer validation step is complete when early adopters buy the product we’re offering. When customers buy, we know we have a valid product. If they don’t buy, it might be time to pivot. In this context, pivot means to change the basic assumptions of the business we’re building. We might change pricing, features, or we might change our entire approach to customers. Many startups go through several pivots before achieving success.

Customer Creation
After we’ve discovered customers, and after we’ve gone through customer validation, it’s time to create more customers. Our initial customers were the early adopters and innovators. In the customer creation step, we move beyond our initial customers into the majority. At this point we begin to spend money on marketing.

Company Building
After we’ve gone through the first three customer-oriented steps, we build the company. Now it’s time to spend money on infrastructure, warehouses, expensive customized software… anything we need to scale the company as large as we can. Notice that we don’t try to scale until after we figure out how to develop a steady supply of customers.

That’s Not All…
We live in a time of continuous & rapid change. Once a business has become successful with The Four Steps, it’s important to remain watchful for new opportunities. Good companies become great when they execute consistently over time.

Feelings of grave concern set in this morning when I powered up my MacBook Pro only to find out that it wouldn’t power up. I’m dependent on my laptop for daily work like most people in my field.

Data loss is not an issue since we use a belt & suspenders backup policy here at WisdomGroup. Time Machine & Mozy keep us well covered. But downtime is always an issue because downtime costs time.

Solution: I grabbed the first available appointment at the Genius Bar. Less than five minutes after he first saw the machine, Olin Langley found that I had a bad AC adapter. He swapped the adapter and my machine was back in business.

Kudos to Apple, and kudos to Olin Langley. Well done.

Eagle Scouts: An Elite Group
Fewer than three percent (3%) of those who enter Scouting make it to the rank of Eagle. Scouts who earn the rank have learned skills such as wilderness survival, first aid, entrepreneurship, citizenship, and investing. Leadership skills are tested when the Eagle candidate assembles a team of fellow scouts to complete a service project.

Teamwork & Positive Results
Troop 534 is led by Scoutmaster Eddie L. Banks, Sr. and a dedicated group of adult volunteers. St. Mark United Methodist Church has provided meeting space and valuable support for over 70 years.

Thank you ABC 7 Chicago for coming out to cover the ceremony.

Scouting and Technology
So… what does this have to do with technology? It’s simple. The best technology leaders are those who have honed their skills from an early age. Teenager Bill Gates dove into dumpsters at the University of Washington to find and read computer printouts. A young Steve Jobs wandered the campus of Reed College where he learned typography. Gates & Jobs built their companies on positive life experiences that began in their formative years.

Our society grows stronger when we give our youth positive life experiences. Everybody wins when that happens, including members of the tech industry.

The path to Eagle is tough, but this group of eleven persevered and vanquished all of the challenges. Congratulations Eagles!

Motorola’s Xoom tablet runs Android, handles Flash, and comes equipped with front & rear-facing cameras. Will customers be impressed?

Features are nice. But as one viewer points out in the YouTube channel for this video, savvy users don’t really focus on gigabytes and megapixels any more. What does the device do for the user?

The real winner in rivalries between tech titans: Customers. When companies compete to bring out the best products, customers win. Competition breeds excellence.

PS: Flash on the iPad?
Is it me, or are more companies focusing on the lack of Flash support on Apple’s mobile products? I wonder how Apple will respond to this. And… if Apple decides to offer Flash on future mobile products, would this be a sign that Tim Cook is really running things at Apple?

Now What?
If there is someone in your life (friend, colleague, associate, relative, etc.) that needs to be encouraged, what are you doing about it? What can you do to encourage them right now? What are you waiting for?

What am I, the author of this blog post, waiting for?

Mastermind Group
Napoleon Hill, in his book Think and Grow Rich, described a mastermind group as a gathering of like-minded people working together toward a definite purpose in a spirit of harmony. Roughly 30 people attended the December Bootstrappers Breakfast. After splitting into groups of 8-10 people, we discovered that we have similar challenges. Ideas and solutions flowed freely among the group.

Vitamin, Aspirin, or Morphine?
A few bullets from the discussion:

• Running a business means solving problems for customers. When we solve problems, customers pay us.
• Some problems just aren’t that serious. Make sure you’re solving a problem that customers really care about. Customers have the final vote on importance, and they vote with their wallets.
• One member of the group offered a creative scale for problem severity: Is it a vitamin problem, an aspirin problem, or a morphine problem?
• Customer acquisition costs are a big factor in any pricing/business model. If a business spends more to acquire a customer than the customer’s lifetime value, then it’s time to consider another business.
• On pricing: Sometimes it’s good to choose a price that’s a no-brainer to buy. This works for products where the marginal cost of adding a customer is low. On the web, for example.
• For building web-based businesses, several members of the group prefer Ruby on Rails.
• It’s always easier to sell to someone who’s spending someone else’s money. But to do that, you need to stay within the discretionary budget of the person you’re selling to.

Common Sense
Sounds like common sense, right? Yes, it is common sense. Almost. Common sense only works if you have a firm grasp of reality. Entrepreneurs, by definition, warp reality to create new things. Sometimes our common sense becomes detached from reality.

For long term success, a business needs ongoing reality checks. A reality check from a customer is the best kind of all.

Raymond chose the following people for his project team:

• Four of his fellow scouts ranging in age from 11 to 17.
• The maintenance supervisor of the church, critical in choosing the best path for cable runs.
• Three adult advisors: Troop leaders who happen to work in information technology.

I gratefully served as one of Raymond’s advisors.

Hardware
Several old systems became available when the church upgraded its computers earlier this year. Raymond learned about the old hardware just as he was deciding what to do for his Eagle service project. He developed a plan, presented it to the leadership of the church and the troop, and they approved. Then Raymond’s team got busy.

Glitches
Every project has its challenges. One machine appeared to have a dead hard drive, but opening the unit revealed a loose ribbon cable. Problem solved. The team found a dead power supply in another unit. The machine is too old to justify purchasing a new power supply, so that box will serve as an “organ donor” for the other computers.

Ubuntu Installation
The team downloaded & burned a Live CD of Ubuntu version 10.04. It’s possible to run directly from the Live CD, but for faster performance it’s better to install Ubuntu on the hard drive. The project leader likes speed, so he chose hard drive installation.

Why Ubuntu?
Ubuntu is a distribution of Linux, a free operating system that preforms many of the same tasks as Microsoft Windows or Apple MacOS. Anyone can download a free copy of Ubuntu at http://ubuntu.com.

Ubuntu is open source software. Open source defies common sense because:

• It’s free.
• You get much more than you pay for.
• By contributing time & talent to open source, each person makes things better for all people.

Sounds like some crazy hippie madness from the sixties, right? Well… Google, Yahoo, Facebook, and many other successful tech companies run on open source software. A two-page newsletter tells more about the movement.

Producers vs Consumers
Some computer labs spend tons of money on the latest hardware and proprietary software to teach youth how to use a word processor or a spreadsheet. What a waste. When we do that to our youth, we’re just creating the next generation of consumers. America has too many consumers. We need producers!

If we teach our youth about open source software, if we give them the tools to get under the covers to see how the software works, if we encourage them to create something with what they learn… then we’re raising producers. Our world needs producers because producers have the skills and drive to make an economy grow. That’s good.

Future
What’s next? St. Mark plans to make the lab available to members of the church and the neighboring community, especially the youth. After school programs continue to fall under the budget knife. Programs created by St. Mark and the Boy Scouts are here to fill in some gaps.

Earlier this year Raymond shared a story about classmates who teased him for being a nerd. “That’s okay”, Raymond replied. “You’re gonna ask me for a job one day.”

Well put.