smartbear's comments

Great questions and discussion, thanks!

Answering the last bit: "What about those ideas ... which carry a significant risk, but also could yield a significant reward?"

This is perhaps the key question for developing any strategy. This dilemma is not limited to this one exercise! It's the classic "risk/reward" question.

There's a lot of literature on this, some of which is conflicting (of course!). One common example is "Three Horizon Planning," which (I'm bastardizing it for the sake of simplicity) asks you to separate work/projects/ideas into three "future horizons": H1=running the business, zero-risk stuff you know is useful, selling the same product to the same customers; H2=new products sold to the same customers and market, so more risk but more reward; H3=new products sold into new markets, new customers, so maximum risk but also maximum reward, potentially entirely new business units. So for example, Google optimizing search is H1, Google adding "Diagrams" to the suite that already contains "Docs and Sheets" is H2, and Google launching GCP or buying YouTube is H3. Then the idea is that you should have proportional investment in these areas; for example 70/20/10 on H1/H2/H3. Finally, you want different processes and expectations for each thing, since "stuff we should be able to predict" should not carry the same expectations as "stuff with high variance that we cannot predict."

Another rule of thumb I like is to find bets that are very asymmetric, i.e. the potential upsides are orders of magnitude larger than the potential downsides. The stock market or VC works like this, because the most an investor can lose by buying stock is 100% of the investment, but there is no limit to the upside. If possible, you'd multiply those by the probability that they occur, but in my experience, we're all very bad at knowing the probability. :-) So, maybe not so much about the specific numbers, but the broad notion that one should be _orders of magnitude_ larger, not just a little larger -- that's something which should be apparent even without a lot of analysis.

In any event, this is a great question, and it's important for any strategic thinking, not specifically connected to this exercise.

I agree, great point that "need" is strictly in the business context.

In fact, "not need" might even be more enjoyable. I play the piano strictly for myself; if I "needed" to do it, it would completely change the activity in a negative way.

It's true I wrote this specifically for finding fulfillment _at work_, but that's a great observation. (Even more specifically, in response to that quoted Hackernews piece, and then my system for dealing with the same thing.)

Companies don't produce joy, but your own work might. For example, I know many software developers who love writing code, even the code specifically for their job. If you love solving infrastructure puzzles, you might find joy at any at-scale software company (that isn't contrary to your values of course).

You bring up a good point, though, that "joy" isn't just the immediate work at hand, but also the entire context that you're in. I agree with that. Perhaps the argument about work alone, makes sense under the assumption that the larger context is also compatible with your values. If not, perhaps no specific activity will be joyous, and joining a different organization is the only solution?

So perhaps "joy" is still a valid thing to seek, but you're pointing out that it's more complex than just "do I like my current task?"

This is the Founder of WP Engine.

The main points in the article are factually incorrect, but some of it is in fact excellent feedback that we're going to act on.

First, on staging areas, it is incorrect that they are counted as duplicate content, because we force a "deny robots everything" robots.txt file on staging. Using the example from the article of our TorqueMag website: http://torque.staging.wpengine.com/robots.txt

It's true that some bots will ignore robots.txt, but all the major search engines that matter for SEO, which is the point of the article, do honor it. Some -- including Google! -- will scan it anyway, but it doesn't count for duplicate content. Matt Cutts has been extremely clear on this point, publicly.

Second, on duplicate content on the WP Engine domains (e.g. torque.wpengine.com), again what was stated is factually incorrect for Google but is a good point for some other search engines. Here's why:

Google maintains a set of root domains that they know are companies that do exactly what we and many other hosting companies do. Included in that list are WordPress.com, SquareSpace, and us. When they detect "duplicate content" on subdomains from that list, they know that's not actually duplicate content. You can see it in Google Search, but it's not counted against you.

We have had a dialog directly with Matt Cutts on this point, so this is not conjecture, but fact.

However, the suggestion from the article that it's better to 301 that domain is still also very valid. Also, not all search engines are aware of this scenario, and thus one of the take-aways we have from this article is that we should auto-force robots.txt for the XYZ.wpengine.com domains just as we do for the staging domains, so that other search engines won't be confused.

So in the end, we came away with a good idea of how to improve. It's a shame the point had to be made in the manner that it was, and intermixed with FUD.

Thanks so much!

Yup, "treating it like Heroku" is exactly our idea! They showed the way and we're happy to follow their lead and bring that functionality to the WordPress community.

You can't use your technique for meals because everyone will suggest a different meal, and then you have no basis for a decision. That technique works when you're voting on one variable which has one CORRECT value which you're trying to seek. Creative work is not that.

The essay was intended to be a light-hearted and readable intro to the concept, not an exhaustive definition that takes an entire book!

Hi this is Jason, founder of WP Engine.

1. The password is question is stored by WordPress in plaintext on disk.

2. It was transmitted to you inside our SSL-secured support system, because you requested it.

3. We maintain Pingdom reports on all our competitors, so I know for a fact that our uptime and speed is superior, in general.

HOWEVER -- I do NOT DISAGREE with your characterization that you might have seen slowdowns, poor support, etc.. With 1000s of customers, one thing we see all the time is a handful who, for whatever reason, really do have a terrible experience with us at every turn -- technical and human -- and it's just bad.

Of course there's the opposite end of that range of luck, and the huge majority who are happy and don't experience those things in those doses.

It's always frustrating to hear that you've had that experience -- all the more because I'm sure you're not exaggerating.

It's some consolation that we get praised daily on Twitter for just the opposite -- that shows we're not, in fact, just completely awful as you're implying.

But not much, because it always sucks to see even one customer have a series of bad experiences as you have.

All good points of course. But the idea is that when you're trying to do customer development, AdWords is a tool but not the best tool for learning. You can't ask a question, for example.

If you spike, we don't care and we don't charge you extra. We only care if you're consistently significantly over the limit month over month.

Both true.

(This is the author)

That's true. I was hoping to stir thought in the reader rather than provide an answer.

If I had to wrap it up, I think it would be that we have to strive anyway even if it's "futile" in some sense of the word. Because of course it isn't. We do what we do, and that's enough. Perhaps there doesn't need to be a reason, a goal, or an end.

Here why I believe you're looking at it incorrectly:

Suppose there's two businesses, each making exactly $10,000/mo in revenue. One charges $10/mo to 1000 active customers, the other charges $1000/mo to 10 active customers. Which business is "better?"

Clearly there will be two sides, neither of which are "crazy."

If the total market size for both is limited, then business B is better because you're extracting more money from the limited potential number of customers.

If the total market size is large, business A has proven it can get orders of magnitudes more customers, which is MUCH more important going forward. If you can get 1000, you can get 2000, etc., and indeed probably ever cheaper to acquire those customers. Company B still has the very risky, difficult job of solving customer acquisition.

If tech support per customer is high, obviously company B is better.

It is a general rule that over time you can find ways to increase prices (i.e. just do it, have tiers, addons, etc) and decrease cost of acquiring customers. That again makes Company A more interesting because they can start doing that whereas B has just embarked.

Again, in the end one isn't automatically better, but your perspective that "it's crazy" I believe is certainly not true.

Companies where people aren't paying AT ALL I agree are often in fact valueless. But when they do take out their wallet, that's not nothing.

You can't assess technical competence from coffees, only from writing code. You can't assess email communication skills from drinks, only from writing.

Like in the Matrix, you don't truly know someone until you fight them.

You simply need to set expectations according to the truth. If you have 6 months of their salary banked, tell them that. If you're uncertain you can pay them, tell them and hire people who are OK with that.

Great point, well made.

To counter-point, for some businesses, the cost to acquire a customer even with the efficiencies you describe is still too much. For example a consumer product that's $99 per year with 50% gross margin needs acquisition costs lower than even your plan will provide.

In that case -- which is common in high-tech startups -- cold-calling can still be an effective way to start, because the learning you get is more valuable than revenue at the start.

Still, more companies could succeed with your strategy than who are willing to try, and you're right they're missing out.

Agreed, at scale the argument isn't as powerful. Some stay true, most don't. It's more of a technique to get started.

Actually I was just playing on the infamous "Goto's Considered Harmful" title.

(See nbashaw's comment)

Doing fixed-bid is another interesting angle I didn't cover; thanks for bringing it up!

It's yet another potential source of both great profitability (when you do something THEY think is hard in just 10 hours) or loss (as what you described).

Almost everything here is double-edged...