This is Part 2 of the series: 5 lessons from 150 startup pitches.

What if someone copies your awesome business idea? About twenty people on Answers OnStartups have asked this question in one form or another: When I meet an angel investor, he may ask: "What if a big company copies your idea and develops the same website as yours after your website goes public?" How can I answer this question? No, the question is: What are doing now knowing that a big company will copy your idea? No, wait, the real question is: What are you going to do when another smart, scrappy startup copies it, and gets $10m in funding, and is thrice featured on TechCrunch? No, wait, I'm sorry, the real question is: What are you going to do when there are four totally free, open-source competitors? No wait, I forgot, actually the question is: What happens when employee #2 makes off with your code and roadmap and marketing data and customer list, moves to Bolivia, and starts selling your stuff world-wide at one-tenth the price? The good news: There are good answers to these questions! The bad news: Almost no one I talk to has good answers, but they think they do. And that's fatal, because it means they're not working towards remedying that situation. Which means when one of the above scenarios happens, it will be too late. The first step is admitting you have a problem. Last week I detailed the most common misconceptions about competitive advantages, so go read that if you haven't already. To summarize: Anything that can be copied will be copied, including features, marketing copy, and pricing. Anything you read on popular blogs is also read by everyone else. You don't have an "edge" just because you're passionate, hard-working, or "lean." The only real competitive advantage is that which cannot be copied and cannot be bought. Like what? Insider information They say the only way to consistently make money on Wall Street is to have insider information. Unfortunately it's not a joke, and although it's illegal (and people occasionally go to jail for it), those in the know will tell you it's the norm.

Fortunately, using intimate knowledge of an industry and the specific pain points within an industry is a perfectly legal unfair advantage for a startup. Here's a real-world example of how this advantage manifests. Adriana has been a psychiatrist for 10 years; she understands the ins and outs of that business. During a lull in her practice she got a serendipitous opportunity to shift gears completely and ended up leading software product development teams.  (Turns out that for big-business project management it's more valuable to be a sensible thinker and counselor than to be an expert in debugging legacy C++ code.) Now Adriana has an epiphany: Traditional practice-management software for psychiatrists totally sucks; she knows both the pain points and the existing software first-hand. But now she has the vision and ability to design her own software, capitalizing on modern trends (e.g. a web application instead of cumbersome installed applications) and new interpretations of HIPPA regulation (which allows web-based applications to store medical records like patient histories). Adriana holds a unique position: Expert in the industry, able to "geek out" with her target customer, yet capable of leading a product team. Even if someone else saw Adriana's product after the fact, it's almost impossible to find a person — or even assemble a team — who has more integrated knowledge. At best, they could copy. Of course by then Alicia has moved on to version two. Single-minded, uncompromising obsession with One Thing A popular comment on the previous post was that a "Unique Feature" could be a competitive advantage in some circumstances. Some examples of a feature being a company's primary advantage are:

Apple compromises everything in the name of design. Their products are over-priced, buggy, lacking features, and every experience I've had with their tech support has been atrocious, but man their stuff looks and feels nice! (I'm typing this on an Air and there's an iPhone in my pocket, so no Apple fan-boy mail please.) Google's search algorithm was just better, therefore they won the eyeballs, therefore they were able to monetize. Sure Bing and Yahoo are good now, but the advantage lasted long enough. Photodex is a little company you've never heard of I worked for in Austin in the 90's. We made an image browser with thumbnail previews so you didn't have to open each file individually to see what it was. (In the 90's, y'all, before that was built into all the operating systems!) Our advantage was speed. Not the best, not the most stable, didn't read the most formats, didn't have the most features, just "fastest." For many users of that product, speed wins; Photodex now makes tens of millions of dollars a year, and "speed" is still the only point on which they will not compromise.

However it's not enough for a feature to merely be unique (like my mini-browser) because it's still easily duplicated. Indeed, most of the innovations we've made at Smart Bear in the art of code review have already been duplicated by both commercial and open-source competitors. Rather, this requires unwavering devotion to the One Thing that is (a) hard, and (b) you refuse to lose, no matter what. Google has spent hundreds of millions of dollars on their search algorithm, the single biggest focus of the company even today, a decade after they decided that was their One Thing. They refuse to be beaten by competitors or black-hat hackers, whatever it takes. 37signals can build simple — almost trivial — software and earn three million customers because they absolutely will not compromise on their philosophy of simplicity, transparency, and owning their own company, and that's something millions of people respect and support. Competitors could build trivial web applications too (as Joel Spolsky is fond of saying, "Their software is just a bunch of text fields!"), but without the single-minded obsession it's just software with no features. To remain un-copyable, your One Thing needs to be not just central to your existence, but also difficult to achieve. Google's algorithm, combined with the hardware and software to implement a search of trillions of websites in 0.2 seconds, is hard to replicate; it took hundreds (thousands?) of really smart people at Microsoft and Yahoo years to catch up. 37signals' ranting platform — a blog with 131k followers and a best-selling book — is nearly impossible to build even with a full-time army of insightful writers. "Being hard to do" is still a true advantage, particularly when you devote your primary energy to it. P.S. For more, here are detailed examples of how this mindset also sets up your sales pitch. Personal authority Chris Brogan commands $22,000 for a single day of consulting in an industry (social media marketing) where all the information you need is already online and free. Joel Spolsky makes millions of dollars off bug tracking — an industry with hundreds of competitors and little innovation. My company Smart Bear sells the most expensive tool of its kind. How did we earn this powerful authority, and how can you earn this overwhelming advantage? I'm a great example of someone who wasn't an authority on anything, but built that authority over time to the point where now my company (Smart Bear) is untouchable as the leader in both revenue and ideas in the area of peer code review. Not only was I not an expert on code review prior to building a code review tool, I wasn't even an expert on software development processes generally! I didn't give lectures, I didn't have a blog, I didn't have a column in Dr. Dobbs magazine, and most interesting of all, I didn't even know "code review" was going to be what made the company successful! Unfortunately all this "authority" crap takes years of expensive effort, and even then success is probably due as much to luck as anything else, so is it worthwhile? Yes, exactly because it takes years of effort and a little luck. Authority cannot be purchased. You can't raise VC money and then "have authority" in a year. A big company cannot just decide they want to be the thought-leaders in their field. Even a pack of hyper-intelligent geeks cannot automatically become authorities because it's not about how well you can code. But how does authority convert to revenue? Here's one tiny example: I give talks on peer code review at conferences. My competition pays thousands of dollars for a booth, then spends thousands advertising to attendees begging them to come to that booth, then gives sales pitches at the booth to uninterested passersby who are also being bombarded by other pitches and distracted by the general hubbub. Whereas, because I'm a known authority on code review and software development, I get to talk for an entire hour to a captive, undistracted group of 100 people, self-selected as interested in code review. After the talk typically 5-20 people want to chat one-on-one. Some head straight to the booth to get a demo; for many I give a private demo of the product on sofas in the hallway. It's not unusual to get $10,000-$50,000 in sales over the next three months from people who saw me at that talk. That's just one example!  Now add to that: What's the effect of a blog that tens of thousands of people read? What's the effect on sales of my writing the book that's the modern authority of code review? Authority is expensive and time-consuming to earn, no doubt. But it's also an overwhelming, untouchable competitive advantage. (P.S. I'm hoping that the authority I'm slowly earning from this blog will help when I launch my next venture. That's not why I blog, but I certainly will leverage it when the time comes!) (P.P.S. I apologize for blatantly abusing the word "authority," considering I just lambasted everyone who does things like that.) The Dream Team The tech startup world is littered with famous killer teams: Gates & Allen, Steve & Steve, Page & Brin, Fried & DHH. In each case, the founders were super-smart, had complimentary skill sets, worked together well (or well enough to get to important success milestones), and as a team represented a unique, powerful, and (in retrospect) unstoppable force. Of course that's easy to see in retrospect, and retrospect is a terrible teacher, but the principle can work for any startup, especially when your goals are more modest than being the next Google. Take the success of ITWatchDogs, the company I helped bootstrap and eventually sell (before Smart Bear). The elements of our Dream Team were obvious from the start:

Varied skillsets. One experienced startup/business/salesman (Gerry), one proven software developer (me), one proven hardware developer (Michael). Common vision. We agreed what the product ought to be and that the ultimate goal of the company was to sell it. Insider knowledge. Gerry had done another successful startup in the same space, I had deep experience with the language and tools for embedded software, and Michael had decades of experience building inexpensive circuits and processors.

Of course a Dream Team doesn't guarantee success but it significantly reduces the risk of the startup, and furthermore is difficult for the competition to duplicate. This is especially true when someone on the team is already successful in their field, e.g. with a massively successful blog or a big startup success under their belt or a ridiculous rolodex. Since those are the kinds of competitive advantages that can't be bought or consistently created, having that person on the team is by proxy a killer advantage. P.S. This is the primary competitive advantage in a new startup I'm working on right now (to be announced soon), so shortly you'll see another example of this theory and — better yet! — you and I both will witness over the subsequent months whether or not this really resulted in a killer advantage! (Yes of course I'll share details!) (The right) Celebrity endorsement Hiten Shah's third company is KISSMetrics. On the surface, it's yet another "marketing metrics" company. This is a crowded, mature market with hundreds of competitors in every combination of large/small, expensive/mid/cheap/free, and product/service/hybrid. But Hiten has something none of those competitors has: Investors and mentors who are celebrities in exactly the market he's targeting. Folks like Dave McClure, Sean Ellis, and Eric Ries, all of whom not only help via conference call but actively promote KISSMetrics on their blogs, Twitter, and personal appearances. How much advertising will it take for competitors to overcome Hiten's endorsements and exposure?  Even if a competitor also wanted celebrity endorsement, these guys are taken, and in any field there's a limited number of widely-known and respected authorities. Many competitors have more features than KISSMetrics has. I can see the sales pitch now... The customer objects: "Gee it would be nice to have all those features," and Hiten responds "Well not really, because Dave, Sean, and Eric all say that those features are actually distractions and don't add to your bottom line. Our features are the right ones, as evidenced by these 20 companies that have shown increases in revenue." Just on the basis of these advisors, Hiten will get hundreds if not thousands of customers. You can't buy that kind of jumpstart, not even for millions of dollars, because it's not about faceless leads who saw KISSMetrics in an ad, it's people who trust Hiten because of his association with other people they already trust. P.S. If you're raising money, investors love to see a co-founder or even just an advisor who has been successful before. The VC game is more lemming-like than most care to admit. Existing customers ...or as Frank Rizzo says: Open your ears, jackass! Everyone you've ever sold to (and those who trialed but abandoned) possess the most valuable market research imaginable, and it's the one thing a new competitor absolutely will not have. This is kind of a cheat, because everyone says "I listen to my customers," which (nowadays) is just as bullshit as "We're passionate," but it's true that if you're actively learning from your customers and you never stop moving, creating, innovating, and learning, that puts you ahead of most companies in the world. As a company becomes successful it gains momentum, which means that it's going in one direction with one philosophy. Like physical momentum, change becomes harder to affect. It's logical; for example at Smart Bear we have 35,000 users, so making a drastic change to the user interface or typical workflow would mean too much retraining, even if the end result is better. Even "cool, agile" companies like 37signals are trapped. They've been so clear and confident in their philosophy of "do less," they cannot go after markets where "less" is not more but, actually, just less. For example, with more than a few sales people in a traditional sales organization it's impossible to use Highrise — the folks-of-many-signal believe pipeline reports and geographic domains and integrated campaign management are unnecessary complications, but actually it's Highrise that is unnecessary. Of course the world is changing, and in particular your customers are changing. Normally this leaves room for the next competitor, but if you're already entrenched you can leverage your existing status, insider knowledge, and revenue stream as long as you're willing to change too. You have more money, you're better known, you have existing happy customers to help spread the word, you have employees to build new things, and you have more experience with what customers actually do and actually need, which means you should have the best insight. Any new competitor would kill for just one of these advantages. If you're not using them, how silly is that? Zoho made exactly this argument to explain why they're not terribly worried that Microsoft is now a direct competitor: Companies don't get killed by competition, they usually find creative ways to commit suicide. Office 2010 will be the end of Zoho, if we stop innovating, stop being nimble and flexible in our business model. Then again, if we stop all that, Zoho will die anyway, no Office 2010 needed to do the job. 37signals is trapped inside their self-imposed philosophy, but you don't have to be. Go git 'em Imitation might be the sincerest form of flattery, but it's still sucks when someone does it to you. Of course you can still battle it out in the marketplace, but you need something that can't be duplicated, something they could never beat you on, then hang your hat on that and don't look back. Don't despair if you don't have an unfair advantage yet. I didn't either when I started Smart Bear! But I built toward having some, and eventually earned it. What else? What other competitive advantages can't be easily copied, or if they are copied it doesn't matter? Leave a comment and join the conversation.

This is part 1 of the series: 5 Lessons from 150 startup pitches. Listening to first-time entrepreneurs talk about their competitive advantages is as predictably invalid as the local weatherman's 10-day forecast.

Between this blog and reviewing applications to Capital Factory I see hundreds of pitches a year. Every pitch has a section on competitive advantages, and quite literally 95% of the time the claimed competitive advantages are pathetic, unoriginal, and not really advantages at all. The first clue that your competitive advantages aren't actual advantages is that everyone else on Earth claims those advantages too! P.S. Next week I'll talk about what are real competitive advantages. The following are not competitive advantages: We have feature X. This is an advantage only until others copy it, so it's not long-term protection against competition. Indeed, the next company can observe what works well and what doesn't, and than improve on your innovation. End users don't care who thought it up, they just care how it works today. We have the most features. It's common for older products to compete on the fact that they have more features than the competition. Trouble is, customers don't want more features, they want the right features. As the competition also adds features, they reach a critical mass where they have all the features 80% of your customers want, and then just having "more" is no longer an interesting selling point. We're patenting our features. "No one can compete with my blog because it's copyrighted." Silly, right? That's what you sound like when you claim that getting a software patent will protect you from competition. Except in certain industries (e.g. food, drug, medical), I'm unaware of companies who stave off quality competitors through patent holdings. Software patents are especially useless for small, bootstrapped startups. It's even true in hardware: Every mp3 player uses zillions of patents, but that didn't stop Apple from winning. We're better at SEO and social media. 80% of Americans believe they are better-than-average drivers. Can't be true, right? Well 80% of the folks I meet tell me they're way better than average at SEO, Twitter, and "building communities" whateverthehell that means. Social media and SEO is ever-changing quicksand. You're on top of Google today, gone tomorrow. Other companies being good — or better — is completely outside your control, so claiming that you have a sustainable advantage is poppycock. We're passionate. Everyone has passion. What, you think everyone else quits their job, starts mowing through savings, works long hours, and yet has no passion? Passion is necessary but far from sufficient. This is like saying, "My children are going to be more successful because I love them more than you love yours." This makes investors roll their eyes and show you the door. We have three PhDs / MBAs. The landscape of successful startups is littered with people lacking post-graduate education. If you've lived in the software world for a few years you know the stuff they teach you in school is irrelevant, so who cares what degree you have? In all the interviews you've read about founders' success, how many credit their MBA program? How many even have MBAs? It's not bad to have a degree, but neither is it a significant advantage. We work hard. You hear about the 37signals guys working 30 hours per week and Tim Ferris just four hours (bullshit!), so you figure if you work a "healthy" 70 hours per week, you'll win! But working harder is not, in fact, smarter. And even you could work 70 on-task hours per week, that's still blown away by 10 developers at a funded company or even 10 passionate open source developers working part-time. We're cheaper. It's not bad to be cheaper. Indeed, at ITWatchDogs, the company I did before Smart Bear, being inexpensive was critical to our strategy. The key is that you cannot compete only on price, because then all a competitor has to do is lower their price. Established companies can destroy you with the "lost leader" strategy (e.g. when Microsoft put 1,000 developers on IE and gave it away for free, destroying the market for web browsers), newly funded companies can spend ludicrous amounts of money to get market share (even if it means taking you down with them), and anyone can implement a "freemium" model. In the case of ITWatchDogs, the reasons we were cheaper were that (a) we sold direct instead through a channel, so our product wasn't marked up 6x before it got to the customer, and (b) we used the newest, cheapest parts whereas our established competitors had stopped innovating and were using expensive 5-year-old parts. So where does that leave us? Haven't I just claimed that the fruits of intense effort and innovation and one-upmanship isn't enough? Yes. Innovative design and intellectual property are no longer long-term competitive advantages. You live in the era of the flat world where millions of people have access to technology, education, and a powerful sales, marketing, and communication platform (the Internet). You live in the era where the most powerful programming frameworks and tools are free, local broadband and high-availability servers are cheap, and world-class people are willing to work 60 hours/week in exchange for Ramen noodles and the chance to be a part of a cool new startup. There's too much energy, availability, intelligence and opportunity in the world to hide behind outdated notions of intellectual property. Almost anything can be copied. In fact, I'd claim that anything of any value will be copied. It should be part of your business plan that other people will copy you. Fortunately there's plenty of ways to have true advantages that competition cannot readily overcome. Unfortunately, they're difficult and rare. Of course they are! What, you thought creating and running a successful, untouchable startup was easy and commonplace? Next week I'll go into depth on some true unfair competitive advantages — ones that cannot be overcome even by a giant company, a funded company, a bootstrapped company, or an open-source movement. Are these assertions unfair? Do you have more false-advantages to add? Leave a comment and join the conversation.

I just reviewed several hundred startup pitches for Capital Factory. Most were on paper and video; 20 were invited to pitch in person.

Interesting patterns emerged:

Everyone makes the same classes of error. Those who avoided just one of those errors stood out in the crowd. These are problems with the business concept or the founder's attitude, not specific to raising angel money.

You're probably making a lot of these errors too. Not that I blame you! After all, these became clear to me only after seeing hundreds of applications; you don't have the luxury of that perspective. So for the next few weeks I'm doing a series on these mistakes and what to do about them.  This post serves as a hyperlinked table of contents, so either bookmark this page or subscribe by email or RSS to get notified when new articles get posted. Here's the list:

Invalid competitive advantages (coming soon...) "Superior SEO" and "unique features" are not competitive advantages. Lacking an unfair advantage (coming soon...) You need one killer advantage that no one on Earth can beat you on. ('Cause you might get beaten on everything else!) No one said they'd buy it (coming soon...) You don't need statistically-significant studies before you begin, but it's astonishing how many founders blaze ahead before they've found even a single person willing to give them money. Incorrect positioning against competition (coming soon...) The two faults here are opposites: Believing that uniqueness means competition doesn't exist, or defining yourself by the competition instead of constructing your own message. No significant route to customers (coming soon...) If your marketing strategy is to run A/B tests and build RSS subscribers, you've already lost.

There's also this list, equally common but I didn't feel the urge to write an entire blog post on each one:

Unable to describe the company in 60 seconds. We've all heard of the elevator pitch, but when asked to produce it almost no one succeeded. This is important whether or not you're raising money because it means you understand your customers and why they buy your stuff. Building for yourself instead of the market. "Scratching your own itch" is how many great ideas begin, but it's not a business strategy. Often you assume your customer is the same as you — sees the problem the same way, wants to solve it your way, and wants to pay for it. But you're explicitly not like your customers; for one thing, you have enough initiative and insight to quit your job to start a company. It's easy to let your idiosyncratic preconceptions prevent you from observing what the larger market will accept. Pretending your faults don't exist. You have all sorts of shortcomings: First startup, inexperienced, ignorant about how "sales" works, buggy software, whatever. None of it's a problem if you're willing to acknowledge and cope with it, but if you persist in lying to me and your customers about it, that's a problem. (And a lie by omission is twice the lie.) Don't know what you don't know. I don't care that your resume doesn't prepare you for a startup — mine didn't either! But if your answer to any question is "How do I know? I just do," then I know right away you're not only ignorant but incapable of fixing that ignorance. How do I know this will result in your business drifting aimlessly until you finally run out of money? I just do.

Stay tuned!  The first post in the series goes up Monday.

I remember "disruptive" when it was called "paradigm shift." That phrase died during the tech-bubble along with "portal" and "think outside the box," yet the concept has returned. Don't follow along.

When I get pitched — usually by someone raising money — that they "have something disruptive," a little part of me dies. You should be worrying about making something useful, not how disruptive you can be. "Disruptive" is the in-vogue word for the opposite of "incremental improvement." A disruptive product causes such a large market shift that entire companies collapse (the ones who don't "get it") and new markets appear. Disruptive is fascinating, disruptive changes the world, disruptive makes us think. Disruptive also sometimes generates billions of dollars, which is why venture capitalists have always loved it and always will. But disruptive is rare and usually expensive. It's hard to think of disruptive technologies or products that didn't take many millions of dollars to implement. Most of us don't have access to those resources, and many of us don't care, because we'd rather work on an idea we actually understand and can build ourselves, an idea that might make us a living and be useful to people. There's nothing wrong with incremental improvement. What's wrong with doing something interesting, useful, new, but not transcendental? What's wrong with taking a known problem with a known market and just doing it better or with a fresh perspective or with a modern approach? Do you have you create a new market and turn everyone's assumptions upside down to be successful? Should you? I'm not so sure. Here's my argument: 1.  It's hard to explain the benefits of disruption. Have you tried to explain Twitter someone? Not the "140 characters" part — the part about why it's a fundamental shift in how you meet and interact with people? Hasn't the listener always responded by saying, "I don't need to know what everyone had for lunch. Who cares? What's next, 'I'm taking a dump?'" They don't get it, right? But it's hard to explain. There are ways to elucidate the utility of Twitter, but even the good ones are lengthy and require listeners with patience and open minds — two attributes in short supply. "It's hard to explain" should not be a standard part of your sales pitch. "You just need to try it" and "trust me" don't cut it. That may be OK for Twitter — today — but what about the 100 other social-networking-slash-link-sharing networks that didn't survive? Ask them about selling intangible benefits. 2.  It's hard to sell disruption, because people don't want to be disrupted. If you're reading this you're probably more open to new ideas and new products than most, because you're inventing a new product, starting a company, or you're just ruffled because I'm pissing on "disruptive" and you're looking for nit-picky things to argue with me about. But most people are creatures of habit. They don't want their lives turned upside down. They launch into a tirade of obscenities if you just rearrange their toolbar. When they hear about a new social media craze they cringe in agony, desperately hoping it's a passing fad and not another new goddamn thing they'll be aimlessly paddling around in for the next decade. Change is hard, so a person has to be experiencing real pain to want change. Selling a point-solution for a point-problem is easier than getting people to change how they live their lives. Identifying specific pain points and explaining how your software addresses those is easier than trying to tap into a general malaise and promising a better world. 3.  Most technology we now consider "disruptive" wasn't conceived that way. Google was the 11th major search engine, not the first. Their technology proved superior, but "a better search engine" was hardly a new idea. In retrospect we say that Google transformed how people find information, and further, how advertising works on the Internet. Disruptive in hindsight, sure, but the genesis was just "incrementally better" than the 10 search engines that came before.  (Or 18.) Scott Berkun gives several other examples in a recent BusinessWeek article. He highlights the iPod — an awesome device, but not the first of its kind. Rather, there were a bunch of crappy devices that sold well enough to prove there was a market, but no clear winners. Here an innovation in design alone was enough to win the market. Not inventing new markets, not innovative features, not even improving on existing features like sound quality or battery life — just a better design, unconcerned about "disrupting" anything else. Setting your sights on being disruptive isn't how quality, sustainable companies are built. Disruption, like expertise, is a side-effect of great success, not a goal unto itself. 4.  The disruptors often don't make the money. The construction of high-speed Internet fiber backbones and extravagant data centers fundamentally changed how business is conducted world-wide both between businesses and consumers, but many of the companies who built that system went bankrupt during the 2000 tech bubble, and those who managed to survive have still not recovered the cost of that infrastructure. They were the disruptors, but they didn't profit from the disruption. Disruptive technology often comes from research groups commissioned to produce innovative ideas but unable to capitalize on them. Xerox PARC invented the fax machine, the mouse, Ethernet, laser printers, and the concept of a "windowing" user interface, but made no money on the inventions. AT&T Bell Labs invented Unix, the C programming language, wireless Ethernet, and the laser, but made no money on the inventions. Is it because disruptors are "before their time," able to create but not able to hold out long enough for others to appreciate the innovation? Is it because innovation and business sense are decoupled? Is it because "version 1" of anything is inferior to "version 3," and by the time the innovator makes it to version 2 there are new competitors — competitors who don't bare the expense of having invented version 1, who have silently observed the failures of version 1, and can now jump right to version 3? "Why" is an interesting question, but the bottom line is clear: Disruption is rarely profitable. 5.  Simple, modest goals are most likely to succeed, and most likely to make us happy. It's not "aiming low" to attempt modest success. It's not failure if you "just" make a nice living for yourself. Changing the world is noble, but you're more likely to change it if you don't try to change everything at once. I made millions of dollars at Smart Bear with a product that took an existing practice (peer code review) and solved five specific pain points (annoyances and time-wasters). Sure it wasn't worth a hundred million dollars, and it didn't turn anyone's world inside-out, but it enjoys a nice place in the world and it is incredibly fulfilling to see people happier to do their jobs with our product than without it. Had I tried to fundamentally change how everyone writes software, I'm sure I would have failed. I made less money personally at ITWatchDogs, but the company was profitable and sold for millions of dollars. We took a simple problem (when server rooms get hot, the gear fails) and provided a simple solution (thermometer with a web page that emails/pages you if it's too hot). There were many competitors, both huge (APC with $1.5 billion market cap), mid-sized (NetBotz with millions in revenue and funding), and small (sub-$1m operations like us). We had something unique — an inexpensive product that still had 80% of the features of the big boys — but nothing disruptive. Had we tried to fundamentally change how IT departments monitor server rooms, I'm sure we would have failed. There's nothing wrong with modesty. Modest in what you consider "success," and modest in what you're trying to achieve every day: My daughter convinced me that insisting something be Deeply Meaningful With Purpose can sometimes suck the joy from it.  --Kathy Sierra Of course it's wonderful that disruptive products exist, improving life in quantum leaps. And it's not wrong to pursue such things! But neither is it wrong to have more modest goals, and modest goals are much more likely to be achieved. You must have your own thoughts on this subject! Leave a comment and let's continue the conversation.

Nothing clarifies things quite like a hyperactive, all-knowing, all-seeing, real asshole of a devil's advocate beating the living crap out of you. (Cartoon by Andertoons)

Baseball players swing heavy bats before going up to the plate; acclimating to difficult working conditions makes it easier to hit the ball out of the park. What's the equivalent of the heavy bat for honing your skills at pitching your product and raising money for your company? For years I've been a fan of Scott Berkun's concept of Rude Q&A: What would the meanest, nastiest, but smartest people in the world grill you on when you show your work? A Rude Q&A is a list of questions [about your work that] you don't want to hear. When you're contemplating an exciting new idea, you don't want to hear questions that might contradict your concept. And of course, that's exactly when you need the biggest, baddest, smartest, devil's advocate to challenge all your assumptions. It's not just about testing the mettle of your ideas, it also forces you to refine and clarify your marketing messages, your target customer profile, and your feature set. When you're being grilled there's no room for being generic about how you're different from the competition, no leniency for not knowing exactly what customer pain you solve, and no clemency for wavering on your company values and what compromises you're willing to make. Scott goes on to explain just how unfair the questions need to be: Make sure to include questions that are unfair or based on erroneous information. Reporters, clients, and the public all have their share of unfair questions and erroneous information, and you want to be ready for them. These answers take more time as the responses need to be more polite and mature than the questions. They also need to carefully refute assumptions in the questions without being dismissive. I love it; now we're deep into "heavy bat" territory. So how do you go about writing your Rude Q&A? Oddly, the hardest part can be coming up with the questions. To get you started, I've assembled a laundry list of questions common to many startups:

Your biggest competitor just dropped their price to $0. How do you continue to justify your price point? If your idea is any good, you'll have competition from multiple players, both funded and bootstrapped, both smart and stupid, both large and small. How will you persevere? If the economy stays bad for two more years, how will you survive? The last thing anyone needs is another damn tool. What's the overwhelming reason I should even bother looking at you? Technorati reports one million new blog posts appear every day. Why should I read yours? What are the top three features your competitor has that you lack? How do you address that today, and what are you doing about it in the next six months? How can you call yourself an expert when you've only been at this for a year? What are three tangible, undeniable ways in which your product/company saves more money than you cost and saves more time than you consume? Truly great products and companies are rare, even when smart people are at the helm. What makes you think you have what it takes? There are thousands of consultants who make the same basic claims you make: high-quality, on-time, on-budget, good service, happy customers. What makes you any different?

These are generic; you'll need to come up with more specific attacks. For example, if I were defending this blog and answering the question about why anyone should read it, I would make the question more specific: There are already too many blogs about startups, especially high-tech startups. Those blogs are far more popular than yours, their authors far more famous, and their advice is excellent. Smart Bear is a success but it's nothing like the success earned by someone like Steve Blank. Why should anyone listen to you? And here's my answer: I read those blogs; they're great! But the world needs more perspectives, not fewer. For every Jason Fried who says "simple design is better than complex features," someone else needs to point out that they've (I've!) made millions with poor graphic design and too many features. For every Seth Godin who says a tribe of 1,000 followers is all you need, someone else needs to point out that it's not true in practice. The biggest reason to read is that my advice and perspective, while not a massive thought-revolution in the universe, is "unique enough" that I constantly meet intelligent, capable, thoughtful entrepreneurs who haven't heard it before, haven't thought of it themselves, and whose lives and companies are improved after they've heard it, even when they disagree with my point of view. I know this because of the comments and wonderful emails I receive. As long as people keep saying that I've lifted a burden off their chest or produced invaluable customer feedback or prevented them from wasting time and money, or even if they just get a laugh, that's my answer to why anyone should listen. Don't get discouraged if you're not happy with all your answers. That's a good sign — it means you're being honest about the exercise and you're not yet satisfied. Keep it in the back of your mind and look for answers while you forge ahead. Discuss the hard ones with other people to get more ideas. This is all just another way of being introspective, but it's a technique I've found to be particular useful. Do you have more Q&A to contribute? Leave a comment!

Related posts:Distinguishing constructive criticism from bad business adviceGiving it awayYour idea sucks, now go do it anywayStartup Therapy: Ten questions to ask yourself every monthUncommon Interview: Bob Walsh, Digital Entrepreneur