Are you paying yourself too much?

As we get into the holidays, I want to ask all of your startup CEOs this question. Could you be paying yourself too much, and risk losing your business eventually? No, this isn’t coming from my Scrooge side, but some practical thinking.

Last week, a Sili Valley startup (Yet Another Social Media Posting Tool) posted, in the name of complete transparency, their entire staff salary schedule, from the lowliest workers on up to the CEO, who is getting nearly $160k. While people weighed in on whether or not this is Yet Another GenY Oversharing, what got me going on this particular screed was what the CEO was paying himself. It should be about a third of his current draw.

CEOs should be working for peanuts. Yes, they have bills to pay, but if they are in the startup scene to make money, they should stick with a salaried position at a more established company. When you go into startup mode, you want to be building a company, and you do that with offering equity and a longer-term payouts. Offer more money, and chances are good that your venture will fail because you will be burning through your cash pile. I asked a friend of mine, a tech startup CEO, for his opinion, and he told me: “I personally don’t believe in the CEO of a startup having the highest cash salary. If CEOs believe the story that they are telling investors then should be taking as much as they can in stock. If they are concerned about the cash portion of their paycheck they should be seeking employment elsewhere.” Take a look a this poll taken last year of startup CEO salaries.

And lest you think this is just for startups, the CEOs of Facebook, Oracle, Google, Yelp and HP all had $1 salaries in the past year — granted, they all made megamillions on bonuses and other incentives, but still something to think about.

And while it is admirable that this one startup wants to be so transparent, they could be hurting themselves in the long run. Again from my friend the tech startup CEO: “I would never publicly disclose my company’s compensation model. Doing so provides your competition better insight into how you think and how to compete against you. It also gives potential employees a baseline by which to start negotiations” when they start thinking about going elsewhere.” He and I both think that experience is a poor metric to be used in setting higher salaries. What should matter is results, and what each staffer produces, or how the market will respond to having a rockstar on your team.

Happy holidays and hope you all have a great break and a wonderful new year’s.

ITworld: A/B tests: Cut the fluff and spend the pixels on what works

surlatableA/B testing is like many things that can be vexing about the Web: a simple concept can turn into a complex programming project. But while the idea is simple — producing two (or more) different web pages for your site and instrument them to see which one drives more traffic or more sales – getting it to work can be fraught with politics and the actual implementation details.

Why bother? Mainly because there is almost nothing else that you can do that can have such a big effect. Just by changing the text size or button color you can generate a 50% increase in clickthrough rates.

You can read more about A/B tests in this article for ITworld and also view an accompanying slideshow that illustrates how to improve your own Web pages with four interesting examples, such as the one above showing three different versions of the Sur La Table website.

Welcome to the brave new world of crowdsourced authorship

As many of you know, I have published two computer trade books over the course of my career. One was with Marshall Rose (who I am indebted for teaching me how to write book-length manuscripts and is one of the best collaborators that I have ever worked with) and one solo. Neither did well for different reasons that were beyond my control, including the last book coming out a week after 9/11. Oh well.

But while both books were done with traditional Big Time Publishers, I probably won’t go that route again if I had another book in me. Over the past decade or so, self-publishing has become the model of choice for many authors. The economics are compelling: rather than get a dollar royalty from sales of a $25 book as a traditional publisher generally works, you get to spend a dollar to produce your book and get the rest in profit. Or so the rough numbers go.

Then came ebooks, and prices started going down, way down: a typical ebook now sells for a couple of bucks at best. The old saying about not making much money but making it up in volume come to mind.

But the publishing market is pivoting (as they say in startup speak) yet again, and this time it is combining with the crowdfunding market and morphing into something else entirely. The idea is that you promote your book idea on one of the crowd sites and get a few hundred of your friends and potential readers to pay up front for you to finish your project and get their very own copy, complete with tote bag or some other premium prize. The money they “donate” goes towards hopefully you finishing a beautiful book, raising awareness and buzz, and setting the scene for a big author splash. Or so the idea goes.

Seth Godin has written about this topic over the past year on a site that he runs in cooperation with Amazon. And he has also penned his wish list for what Kickstarter specifically should do to make it easier for authors.

dbl2But as I haven’t had the opportunity to go this route, I did the next best thing, asking a young, first-time author of an upcoming book and a project on Kickstarter that I was one of the backers. His name is Tony Brasunas and his book, set to launch on 12/12, is Double Happiness. While he might not have another book in him right now, he found the whole process to be worthwhile. “I spent several months preparing for the launch of my Kickstarter project, including doing things such as filming the video, thinking through the rewards structure, preparing the images and writing the copy for the project page.” None of these things were actual book writing, and if you look over it you as a new author (or even an old hand such as myself) might not have the necessary skills or inclination or even time to pull this off.

Brasunas raised more than he went to the well for, which is great, and a quarter of it will end up being used to fulfill his rewards for his 175 project backers. But what I found interesting talking to him is how he thinks about the process. Realize that his book is “a chapter of my life story, something that I have been working on for a decade, and I wasn’t sure that anyone would be interested. It was a wonderful surprise that I got as many backers as I did.”

His project “involved people that could be potentially interested in it. That feels like a collective and that collaboration was appealing to me. By doing this through a social platform, it added a nice piece to the whole project for me.” Again, you may just want to sit in a garret and write, so your reaction could differ. But he also found something out about his backers and his friends: “I would have guessed that people who were closest to me would have given more, while others who I haven’t talked to in years gave unexpectedly larger contributions.” That is intriguing. You would think that donations would directly relate to the distance to your immediate social network. He found that if knew three factors he could fairly accurately predict what someone was going to donate: “First, what they feel about your project, second their access to money, and finally their belief about money and whether it is abundant in their lives.”

Brasunas is using print on demand with CreateSpace and Lightning Source. Again, you’ll have to learn about these technologies and whether or not you have the skills to pull it all together.

But maybe not. There are new crowd sites that are geared towards book authors called Pubslush and Unbound. Both are trying to enter this space and connect the dots that Godin and my young friend had to do manually. There are sure to be dozens of these crowd-book platforms before long, such is the nature of this market segment. Pubslush charges less of a commission, has different funding restrictions, and directly connect to an author’s Amazon page. So far 40 books have been published. Unbound, which is based in the UK, has been around longer and has its own system and published about 60 books.

How this will all sort out I have no idea. But at least it is nice to have choices.

Website Lessons Learned from Williams-Sonoma

Is your website as classy as your brand?

For Williams-Sonoma the goal is to match great looking Web pages with top-shelf analytics to keep track of customers. I sat in on a talk they gave at the recent Teradata Partners annual conference in Dallas. By developing a website that elegantly weaves together design and analytics, good things happen for both company and customer.

You can read the full post in today’s Mozy blog here.

How applying to college just got a lot harder

common1We’ve all heard the stories about a broken website that was overwhelmed with visitors and was inadequately tested. But unless you have a high school senior in your home, you may not have heard about another website besides the much-flogged HealthCare.gov (that I and many others wrote about). I am talking about the common application website for college admissions.

About 500 out of the nation’s several thousand colleges and universities support this site, which allows them to eliminate paper student admissions applications. The idea dates back to when I was applying for college, when a common paper-based application was put in use. Later it went digital. Trouble is, the latest version of the common app is seriously broken and has prevented many kids from applying to the colleges of their choice. Given the high stakes involved, it is a serious problem.

The best press coverage about the breakdown has been from Nancy Griesemer in examiner.com where she lists work-arounds for the students and chronicles the troubles of CommonApp, as it is known, has gone through since they did a major overhaul this past summer. “The implementation has been terrible,” one college admissions IT director told me. “Applicants have had difficulties in creating and completing their application, school officials have had problems in submitting transcripts and recommendations, and major changes in how the information is delivered to colleges have happened without sufficient time for schools to adapt and test their systems. We needed more lead time.”

This director isn’t alone: many college admissions officers vented their frustrations at their annual meeting last month in Toronto, where some said they couldn’t get satisfactory answers from the CommonApp staff. There were lots of things that should have been caught before being implemented. For example, a payment processor routine that takes two days to send a confirmation receipt, so many kids are paying multiple times. Or a signature page that is so well hidden that students didn’t find it to sign their apps. As a result, their apps are never delivered to the college. Or those all-important student essays turn into gibberish under some circumstances, due to a faulty text import routine. Supposedly, these issues are being fixed literally right now. It makes the HealthCare.gov site look like a well-run place.

The CommonApp processes more than a million applications a year, and is the only application method for about 300 schools. If you are applying early decision to one of these, you are in a tough situation as the decision deadlines are approaching.
Some 50 others are using another online process called the Universal College App, including most recently Princeton. This process hasn’t been plagued with problems.

It is hard enough for high school seniors to figure out the college game without having to become unwitting software UI and QC testers. CommonApp needs to fix its code fast, and be more transparent about its problems in the future.

Navigating the healthplan mess

If you have tried to find out more about the new kinds of healthcare plans available, you are probably as frustrated as I am right now. Last week the government put up its healthcare.gov portal website, and had a devil of a time keeping it from crashing. Quelle surprise. (SNL did a great skit on this over the weekend, BTW.) I am not sure whether or not non-essential personnel are staffing the site during the shutdown period.

Be that as it may, I was able to access the site early one morning over the weekend, and able to signup and see what kinds of plans that I would be eligible for. It took about an hour after several false starts and having to navigate through the site three total times. No wonder why it is overwhelmed, the site design could use some work. One of the reasons it contains a lot of code to reach into your credit reports and pull out information to ensure that you are whom you say you are. With my first try, one of the authentication questions was asking me for the name of my pet insurance provider that I had recently purchased. I think it was confusing me with someone else.

If typing in all this makes you uncomfortable, note that you also have to provide your birth date, social security number, and other personal data. The paranoid among you might just want to skip the exchanges entirely.

Not everyone will have to suffer through the federal site: if your state has set up its own exchange (and about half have), you can go directly there and find out your eligible plans for 2014. But Missouri didn’t want anything to do with setting up its own exchange, so we are stuck with the feds. My daughter lives in Colorado, so we were able to go to that exchange. She was able to find a less expensive plan on the Colorado exchange than sticking with her existing provider.

But here’s the rub with the exchange-offered plans. They have huge out of pocket maximums: usually $4000 or more per person. If you are used to the existing plans that you have had for many years, that could mean trouble if you need a lot of care. The existing plans (called “grandfathered” because they were set up before the new law) have lower maximums and typically lower deductibles too.

Depending on your insurer, you might be able to get information about your existing premiums for 2014 by going to their own websites. In my case, with Anthem, I had to call and suffer the usual 30-minute wait until I got a person to take me through it. In my case, it looks like I should stick with the grandfathered plan rather than deal with the ones that I could get on the exchange (where my maximum out of pocket would be $6000 per person). Another complicating factor: my plan’s anniversary is Feb 1, which means it might be late December before I will get the actual premium numbers. That could be too late to sign up for the newer exchange-based plans.

Do you get the feeling that the official “navigators” – people who are hired to help you sort this all out – are seeing things for the first time? You do.

The lack of quality information on healthcare plans is appalling, and the new healthcare law is only making things incredibly more complex. My daughter got a series of badly worded notices from her existing provider that I could barely figure out, and the plan specifics on the Colorado website wasn’t much better.  You can save the plans you are looking at on the exchanges’ website, when you can actually get through, but (at least on the federal site) you have to go through the same congested portal when you want to log back in and view where you are: that seems like really stupid design.

Feel free to vent below your own tales of woe and if you were actually able to make sense of the new plans, which should be able to handle the volume of your comments.

Bloggers: keep careful counsel with your insurer

Lost in all the tales of woe about Obamacare and the government shutdown is an interesting story I heard from a friend of mine this week about his own insurance story. Not health insurance, but general home insurance. Turns out he was dropped by his insurer when he told them that he was a blogger. Who knew that blogging could be so risky a profession?

Most of us have some form of home insurance, whether we own a home or rent. We want to protect ourselves in case of fire, floods, or other disasters. Many of us also purchase a separate rider on these policies called an umbrella policy. This covers us for all sorts of odd circumstances, such as libel, slander, false arrests or other things. My friend, Bill Frezza, is a venture capitalist and a blogger, and he was calling his insurance agent to update his policy a few days ago. He volunteered that he was a blogger and the agent asked for the URL of his blog, which is menckenism.com. The next day they called him and told him he had about 10 months to find himself a new insurer. They wouldn’t cover him because he was a blogger.

Yes, Ameriprise sells umbrella policies that cover slander and libel. But apparently not to known bloggers. What about selling Frezza a policy and excluding slander and libel in some kind of waiver? They don’t have any way to do that. They don’t want his business. At all.

“No one should be forced to cover me – this isn’t Obamacare. But you would think I could get a waiver releasing them from slander and libel claims as a really do want the rest of the coverage,” said Frezza. “I guess I should have never volunteered that I was a blogger. But I never thought there would be an issue. Ameriprise told me that if they knew I was a blogger when I signed up for a policy, they would have never given me coverage.” Curiously, they ask all sorts of questions on the enrollment forms, such as whether or not he is a smoker and other demographic data, but not whether he blogs.

The insurance industry has a separate product for publishers and other media folks, called media liability coverage. But that typically is for people who are professionals in their fields. Not necessarily bloggers who may not be making much income from their work. As someone who is a freelance writer, I have never even heard of this coverage, and have never had it. Here is one place to learn more about this coverage.

I asked several of my freelancer friends about this and a few had heard about it.

Frezza has always carried a relatively high umbrella policy, not because he is fearful, but because he is prudent. As a former venture capitalist, he was a clear potential target. “Now I have to find another insurer,” he says. At least he has a few months to shop around. But should he explicitly tell his potential insurers that he blogs? Maybe, maybe not.

Considering the number of us that are bloggers, it could be a problem. Not that I am planning on writing anything that would libel someone, but you never know, particularly these days as the vitriol factor seems to be higher. So the question I have for you: should you tell your insurer that you blog? And what happens when they decide to drop you?

Listening to teen entrepreneurs

I spent some time today listening to several teen entrepreneurs who gathered from all over the country as part of an event put on by Independent Youth and St. Louis University’s Entrepreneurship Center. It was very inspiring.

How many 15 year olds do you know who have started companies? Not many, I bet. How about one who is now running a 45-person virtual business with another teen partner who is two years older? The two, James Boehm and Matt Salsamendi don’t even live in the same state: they met online playing Minecraft and put together a Minecraft server hosting business called McProHosting.com. Their monthly hosting plans start at $3 a month and they now have more than 40,000 customers all over the world. That is pretty impressive.

I had to laugh during their presentation: the two started their business on a small loan from one of their fathers, who were hovering around the conference and very proud of their kids achievements. How much was the loan, you might ask? Seven bucks. That is right: not much of an investment. Both dads of course run their own businesses (having nothing to do with technology, I might add). The two teens spoke about how to build your own hosting business (whether for supporting games or just general Web hosting) that I had to admit was right on target. Too bad they don’t support WordPress or I might be tempted to switch from GoDaddy for my own hosting needs.

jimckThe conference was keynoted by Jim McKelvey, the inventor of the Square payment chip and numerous other innovations. I have seen McKelvey talk before and he is very inspiring, but particularly so in this circumstances where most of his audience was so young. “I want to get you before you go to college,” he said, trying to influence them into taking pre-engineering tracks. “Everyone that I know who runs a company has an engineering background,” he told the crowd.

McKelvey has a simple seven-point plan for becoming an entrepreneur, at least the kind of entrepreneur that he is.

  • Don’t plan, build a prototype first. Learn how to build things and how stuff works.
  • Timing is everything, and be ready when your moment arrives. Knowing your market is important too.
  • Fail fast and furious, and consider failure just another form of feedback
  • Assume you have permission, don’t ask for it and apologize later if you have to. Being lucky beats being smart most of the time.
  • Assume technology will do what you want
  • Ignore opportunities and focus on fixing problems first
  • Don’t use lack of funds as an excuse and find as much free stuff as you can.

He mentioned that his Square chip went through 12 different prototypes before the one that we have in our hands today. “If you wait for your product to be perfect, you will never get it out the door,” he said. One of the students asked him what his most successful business was, and he mentioned his art glass studio here in St. Louis: while it hasn’t made as much money or has a valuation anywhere near the billions of Square, it is considered the leading such studio in the world and he is proud of that accomplishment.

Please stop the fake Twitter hacks

This past week Chipotle Restaurants became the latest major brand to post their own series of fake Twitter hacks. The Tweets, which included not-so-subtle references to their guacamole ingredients, were part of a 20th anniversary series of promotions.

As a communications strategy, it is wrongheaded on a variety of levels. First, while the company gained thousands of followers, most probably won’t stick around once the excitement cools. Twitter followers are a fickle bunch: they come and go and the real metric is the engagement of these followers. How many are retweeting? How many are actually reading and responding? (I know I can do better in this department, too.)

Second, this doesn’t help to build trust or brand loyalty (something analogous to a current New York City mayoral candidate’s online activities).  When the next Big Tweet comes around, do you want your followers thinking this is just another stunt or something that is worthy of one’s time?

PR stunts like this one are really only good for one-time use, as in one time for everyone. Chipotle is far behind others that have tried this one, and the lesson should be: move on to something else here. Find something that is more clever and actually has meaning for your brand.

Also, Twitter hacks – the real ones – aren’t something to joke about, because chances are your account can be easily compromised. This is the case if you are using a relatively weak password or several Official Tweeters share your account. It is great that Twitter became the latest to use two-factor authentication earlier this year: if you haven’t done so, go to your account and mobile settings to add your mobile phone as the second factor. But corporate users should practice better password hygiene policies and spend some time thinking through who has access to the business Twitter accounts.

Finally, if you are going to use social media to promote your brand, don’t rely on a single channel but coordinate amongst all your channels, including the Web and email lists too. You want to reach your entire audience and customer base, not just the folks that might be tuning in to your Tweets on a random Sunday afternoon.

Why Lorem Ipsum Is a Bad Idea

samjDo you know about lorem ipsum dolor? That’s Latin for I don’t have a clue about Web design. Well, not quite.

Early in the 1960s, graphic designers used this text from an essay by Cicero that was included in an early desktop publishing program as a way to fill up text blocks in publications. When we first developed a prototype magazine issue of Network Computing back in 1990, the entire text of the issue contained the filler words, prompting some readers to email us that they thought they had read the same article several times. LOL.

But Lorem Ipsum has evolved since those early days. Now there are dozens of variations, some using only words for pork products, dialogue from Star Trek or scatological rants from Samuel Jackson (think Pulp Fiction) or worse. There is even a =lorem() function in some versions of Microsoft Word and WordPress too.

It amazes me that it is so prevalent. While amusing, the practice represents bad Web design. You could say that Loren Ipsum is the Royale with Cheese of Web design. Why?

As my go-to UX pro Danielle Cooley says, “If you don’t know what your content *actually* is, as well as how it will be created, managed, and governed, you shouldn’t be designing yet. That’s why we have so many beautiful products that are so difficult to use or that don’t really support the content that ends up being there. People design beautiful pages with two paragraphs of Lorem Ipsum, then find out a week before launch that there’s only one sentence of content, or that they really need to put a photo or video there instead. Then you end up trying to shoehorn stuff into spaces where it doesn’t really fit.”

Well said. So have fun fooling around with the baco-ipsum, but when it comes to designing your actual Web content, know what you are going to put in place and how much room it is going to occupy. And you don’t need to say that in Latin. Or quote any Tarantino either.