Scorched Earth is an undeniable pattern in fields as diverse as 16th century sea exploration, blogging, company building, and client services directed by fire breathing Dinobots.

Why did Steve Rubel nuke a few of his blogs and wipe the slate clean? To declare a new flag ship for his thoughts. (blogging link above)

In military circles, a scorched earth policy – according to Wikipedia – is a strategy which involves destroying anything that might be useful to the enemy while advancing through or withdrawing from a given theater of operations.

Perhaps its symbolic, but that’s exactly the approach I took to my digital presence this past Memorial Day weekend. I started a fresh new site on the future of media over on Tumblr. Then I promptly turned around and slashed both my TypePad-powered blog, which I ran from 2004 to 2009, and my Posterous blog, which I started with some fanfare back in 2009. With just two clicks of a mouse I rid the web of literally thousands of blog posts, some of which I am proud of – others less so – and redirected the URLs to the new site.

Let’s change gears from readers, to customers. Join me for a quick stroll down memory lane with Seth Godin circa 2006 on the topic of firing customers: (company building link above)

The answer might surprise you. It’s the unwritten rule 3 on Stew Leonard’s famous granite rock:
If the customer is wrong, they’re not your customer any more.

In other words, if it’s not worth making the customer right, fire her.

Successful organizations (and I include churches and political parties on the list) fire the 1% of their constituents that cause 95% of the pain.
Fire them?

Fire them. Politely decline to do business with them. Refer them to your arch competitors. Take them off the mailing list. Don’t make promises you can’t keep, don’t be rude, just move on.

If you’ve got something worth paying for, you gain power when you refuse to offer it to every single person who is willing to pay you.

A wise friend Fake Grimlok, with an uncanny sense of humor, wit and wisdom, paints the Scorched Earth client model, enriched by Denton Gentry’s colloquial unixism.

THERE COME TIME IN EVERY PROJECT WHERE REWARD OF FIX BAD CODE LOWER THAN REWARD OF KILL CLIENT AND BURN PROJECT TO GROUND.

June 5, 2011 5:41 pm via webReplyRetweetFavorite

@FAKEGRIMLOCK

FAKEGRIMLOCK

@FAKEGRIMLOCK I call it the "rm -rf moment", the point where you seriously consider nuking it all and starting over.

June 5, 2011 5:45 pm via webReplyRetweetFavorite

@dgentry

Denton Gentry

@dgentry @FAKEGRIMLOCK scorch the earth strategy :)

June 5, 2011 6:28 pm via Mobile WebReplyRetweetFavorite

@VictusFate

Mark Essel

@VictusFate @dgentry ME, GRIMLOCK, NEVER MEET EARTH THAT NOT LOOK UNDERCOOKED.

June 5, 2011 7:19 pm via webReplyRetweetFavorite

@FAKEGRIMLOCK

FAKEGRIMLOCK

My 2 cents

The mental image of burning the ships is an indelible shadow etched into the walls of my subconscious ¹. It’s strength is such that whenever I see anything resembling no retreat, no surrender, I can’t resist being inspired by the boldness of the act.

Eliminating the path of retreat steels nerves and focuses attention forward. It eliminates fear induced distractions, such that our full cognitive and physical potential is liberated. For a man who seeks to experience unbounded freedom, I should pay heed to environments where retreat is an impossibility.

Words are such fragile constructs, yet they suffice to carry our hopes and dreams. Virtual objects such as this blog post are malleable and ephemeral by their nature. It takes very little energy to boil them back down into the primordial ooze of disorganized bits. On the other extreme it takes significant effort to build a reliable platform for self expression, mnemonic enhancement and critical discussion².

The strategy I take when building a reliable resource (this blog/a company) is to maintain a few ground rules. Above all else I try (but don’t always succeed) to maintain URLs so that the address to a specific article or product is stable. In addition public interfaces are sacred, and I’d bend over backwards to maintain old interfaces. An interface like a URL is a promise to the future that this resource will be available and reliable. Both reliability and availability ultimately depend on cost and revenue.

If a link to an old resource (discrete information bundle) is broken, it’s a lost opportunity. If a public interface is broken it’s a potentially lost client. I’d hate to inhibit or end a curiosity fueled, web browsing, link jam session. It’s been far too long since I’ve enjoyed one of those. Even worse would be to leave a customer stranded without additional developer support. You keep your promises, in the network economy reputation is more precious than gold.

Notes:

1. Last year I took a lifeline offered graciously at my day job, increasing my financial stability, but causing a rift between the world I desire (startups/web dev), and the world I live in (big c++ sims and apps) .

   At the time I was concerned my web development skills weren’t adequate to cover our living expenses (wife and I share a small home). Since that compromise I’ve had that fear confirmed by tasting a couple of rejections.

   Fortunately none were so bitter as to have the slightest affect on my stubborn determination to succeed as a tech entrepreneur. Patience and study are becoming welcome allies on the long road ahead.




2. I believe it was Seth G. who suggested his blog took on a life of its own around 1500 posts (I’ll verify the source once I’m back online). I have under a couple of years before I hit that mark, giving me plenty of time to refine my craft.

   I’ll need every entry to practice coalescing abstract concepts into cogent posts, on the diversity of topics that I feel strongly about.

Yesterday I tuned into an AVC riff on music distribution, and caught a glimpse of the dreams of a much younger Mr. Wilson:

When I was a kid, I’d imagine that my entire record collection was a bunch of digital files that I could access from any computer

Fred admits that he didn’t see cloud computing and streaming coming, but it’s clear that he had an image of how accessible music would be in the future. He never mentioned imagining the power that a Music Industry would wield over distribution. The Industry is the legacy gatekeeper, and few legends could achieve fame without their blessing. Imagine having sports stars without the national leagues. Gatekeepers and supporting middlemen are the incumbent channels of attention, but how much longer will their reign continue with the decline of centralized distribution and control (networks vs Internet).

Who are middlemen?

Below the post line is where much of the magic happens at AVC. There was strong sentiment against middlemen as gatekeepers, as well as the counter opinion that middlemen serve as bridges to greater overall value creation^. As I read those well thought positions, all I wondered is what middlemen dream of in their youth.

I dreamt of traveling to other worlds and shaping reality, yet I have a tough enough time just shaping myself. Many kids dream of being rockstars, firemen, or sports legends. Do children who become middlemen dream of connecting clients and customers? Maybe a few did, but I think the best in the business recognize an opportunity and push like hell to make an abstract idea a reality.

Faceman is a necessary role in any A-Team, and there will be many more connectors and far less gatekeepers as social web distribution channels continue to mature.

Notes:

^= Baba is opposed to middlemen who provide little value to distribution beyond wrestling with bureaucracy.

When I read about “a lot of hard work went into getting this release approved for US release, and quickly” I am just flummoxed, these folks did not create the content just pushing documents back and forth mulling over who gets what percentage of revenue is not hard work really. Hard work is the creative process of making music etc. Damn gate keepers of the world you don’t create anything but decide who gets when and how one gets much of anything.

Andy Swan* rose to the defense of the middleman.

It’s really great that they sent this and you posted it. I think we’re all a little too quick to dismiss middlemen simply “because of the internet”. This band COULD put all of their files up on their website and just sell them. Everyone knows that. But THEY DON’T.

So there obviously must be some value that the middlemen are providing. I’m sure as fans of music, we all have our bias of how they could be doing it better, just as I’m sure the bands have different biases of how the middlemen could do a better job. I’m sure the middlemen would like to have different hurdles and opportunities as well….and I’m 1000% sure that the best middlemen in the long run will be the ones that disrupt and provide the most value in the chain—human or not.

Charlie Crystle, an entrepreneur and former band member on tour shares his perspective.

Well, they can serve as their own retailer without upsetting the chain, unless it’s explicitly prohibited by their contract. The upside of a good deal is the marketing, promotion, market power to get appearances, etc. A showing on Letterman can float a band for a while if they have shows following in the weeks after and decent margin products available. Place a tune on a film or tv show, and again, some significant dollars.

That doesn’t happen often for the self-managed, self-produced band. But back in the day, we were only getting a buck or two per record. The argument is that the record company fronts production and living money (if you’re lucky). The smart bands would take their advances and build a recording studio, then produce their own record. If it didn’t work out, they still had the studio.

Austin Clements brings up the darker side of middlemen, as bottlenecks.

Chances are their contract does prohibit using alternative means of distribution. And for that, and many other reasons, I completely disagree with Andy about the importance of middlemen. Yes, people are signing up for these deals voluntarily but the net value is after all things are considered is probably less than the artist initially perceived. We’ve all bought a product that doesn’t live up to its expectations.

This is clearly the case where the middleman is acting more like a bottleneck than a market maker in this instance. The band signed with the the label to provide support in some areas, but now the label is standing in the way of sales through critical channels.

Middlemen, by their very nature, represent a temporary plug for an inefficiency a the market. Most times they become obsolete when two things happen, 1. They are replaced with technology that does they same job they used to do and 2. Both parties on either side of the middleman have access to the same information that only the middleman once did.

*= Andy writes a mean blog of his own, and his recent post you’re already dead is a powerful tool in the hands of a builder. Here’s the heart of Andy’s sentiment as he describes a friends’ business problems:

The slow bleed was on, and it was not only hurting the business, but way worse than that— it was hurting his psyche, motivation and confidence. Negative cash flows on a consistent basis tend to do that to a guy.

My response? ”You’re already dead.” DIE. Absolutely dead. There is no slow bleed anymore. Those future negative cash-flows have already occurred. You’ve hit rock bottom. Now what? What are you going to do?

This is as liberating of a thought as I can give to anyone. You see, once you’re dead….the bullets stop hurting. They become laughable. Your conscious is freed from the barrage of bullets and instead focuses purely on the opportunity ahead. Dead people and dead businesses fear no risk. It does not exist.

my response:

The courageous mind has already died. Yet in the eyes of a dying man, any life is precious.
I’ll need a moment to chew on that one Mr. Swan. I’ve grown far too accustomed to thinking like I’m breathing.

A significant portion of new media and tech companies are founded on platform access to both people and their data. Early on in the startup’s existence developers are encouraged to build on top of an API by minimizing barriers to entry and granting a broad range of access. Over time the walls go up and access is reigned in. Ecosystem contributors scout out high value services within a particular platform’s broader market, and as is often the case in immature markets, the platform devours its most promising offspring. I compared two simple categories of business trajectories in March last year.

Seize Opportunities

One strategy is to zero in on an existing market, and capitalize on opportunities that aren’t being addressed by other services. Deep market understanding and execution are key areas that foster this form of startup growth. This business structure is commonly founded on top of existing platforms, as the goal is not to create but to capture. The capture philosophy takes advantage of previous market creation, and leverages the overall sector growth to feed the startup.

Build New Markets

Another strategy for a bold startup is to create an entirely novel market. The risks are greater (unknown demand), but the rewards of creating and leading a new market are compelling. The new market strategy may be a realignment of an existing unfeasible product or service, or it may be a completely new technology or invention. These types of startups are platform builders. The platform benefits greatly by inspiring outside users and developers to utilize it. Generally a share of the revenue is split between platform creator and each service built on it. Lower costs and rich functionality prompt more rapid adoption and growth. This translates into spectacular opportunities for the platform startup.

Case Study: Twitter

In framing the relationship between app developers and Twitter, I’d like to leverage the thoughts of Chris Dixon who discussed his view of Twitter’s relationship with it’s developers in 2009:

At some point, significant (non-VC) money will enter the Twitter ecosystem. I have no idea whether this is will be by charging consumers, charging businesses users, search advertising, sponsored tweets, licensing the twitter data feed, data from URL shorteners, or something else. But history suggests that where there is so much user engagement, dollars follow.

For the sake of argument, let’s suppose Twitter’s eventual dominant business model is putting ads by search results. Who gets the revenue when a user is searching on a 3rd party Twitter client? Even if Twitter gets a portion of revenue from ads on 3rd party apps, there will always be an incentive for them to create their own client app, or to “commodotize” the client app by, say, promoting an open source version.

And extended the brief analysis in 2010:

Twitter’s moves this week were particular interesting. A lot of third-party developers were unhappy. I think this is mainly a result of Twitter having sent mixed signals over the past few years. Twitter’s move into complementary areas was entirely predictable – it happens with every platform provider. The real problem is that somehow Twitter had convinced the world they were going to “let a thousand flowers bloom” – as if they were a non-profit out to save the world, or that they would invent some fantastic new business model that didn’t encroach on third-party developers. This week Twitter finally started acting like what it is: a well-financed company run by smart capitalists.

This mixed signaling has been exacerbated by the fact that Twitter has yet to figure out a business model (they sold data to Microsoft & Google but this is likely just one-time R&D purchases). Maybe Twitter thinks they know what their business model is and maybe they’ll even announce it soon. But whatever they think or announce will only truly be their business model when and if it delivers on their multi-billion dollar aspirations. It will likely be at least a year or two before that happens.

Normally, when third parties try to predict whether their products will be subsumed by a platform, the question boils down to whether their products will be strategic to the platform. When the platform has an established business model, this analysis is fairly straightforward (for example, here is my strategic analysis of Google’s platform). If you make games for the iPhone, you are pretty certain Apple will take their 30% cut and leave you alone. Similarly, if you are a content website relying on SEO and Google Adsense you can be pretty confident Google will leave you alone. Until Twitter has a successful business model, they can’t have a consistent strategy and third parties should expect erratic behavior and even complete and sudden shifts in strategy.

With TweetDeck’s recent acquisition by Bill Gross/UberMedia, and Seesmic’s strategic move (CEO Loic Le Meur shares some of his thinking) towards hybrid consumer/enterprise social networking, we’re witnessing major microblogging applications continue their migration to more defendable and resilient positions. I mentioned in a comment on ReadWriteWeb that this landscape and environmental shift may precede a developer migration towards more open, but smaller news sources and Adam Green was generous enough to add feedback on Twitter’s Terms of Service.

Update: I should note my use of the term WIN in the title is an Andy Swan-ism such as classic comments he leaves in places like AVC.com or status updates like this:

I just became the mayor of Win on @foursquare!

February 9, 2011 5:43 pm via webReplyRetweetFavorite

@AndySwan

Andy Swan

Related Posts:
These are just a few of my thoughts on startup strategies and how they relate to platforms for the social web.

Startup Strategies:

• Minimalist Design, which APIs/platforms
• Attention Jiu Jitsu
• Startup Weapons: The Slingshot, the Symbiote, the Whip and the Phoenix
• How Device Apps will Merge with the Web

Thoughts on ideal social web protocol/service features:

• The human social interface, why I love the Net
• The prize making sense out of millions of voices
• Data Silos or a Social Web Pattern
• Matricide, SocNets Plan to Strangle the Web which gave them Life
• Personal Social Gardens that live in the browser
• Open Web Protocols
• Rising Tides & Network Economies
• Social Web Neutrality
• Open Social Media of the People, by the People, for the People
• The Democracy of Attention, an Economy of Minds

Internal Startup Signals

The web is littered with dozens of articles covering negative and positive startup signaling due to investor participation by round, but there aren’t nearly as many focused on internal startup signals and strategy. By signals I refer to sum of all communications both planned and accidental, internal (culture) and external (marketing).

After working on sprint projects (days to months) for a year and a half, I’ve seen more than my fair share of mishaps. Failures are discrete learning opportunities for entrepreneurs, and those who’ve broken through to the other side capitalize on errors by combining action and observation. With each mistake they learn another valuable lesson about building a company or their market. One design lesson I realized in my own missteps is the essential need for a driving long term product vision.

The power of a single cohesive story begins with attracting cofounders and early hires, and leads to landing pivotal partners and customers. Prototypes don’t require the features and polish of a finished product, but each step must be part of a story for realizing the startup’s raison d’etre or reason for existence. Curious side projects have little hope of exceeding the critical threshold to becoming real, unless they can be aligned to an overarching company purpose.

President John F. Kennedy didn’t pitch building better rockets to the American people by showing them a handful of designs, he authoritatively addressed congress in 1961 declaring a national goal of “landing a man on the Moon”.

Freemium

A freemium strategy focuses on growth by minimizing barriers to adoption of a compelling product. The zero entry cost minimizes the risk consumers take when adopting the new service. Yet without a solid link to premium plans and upselling, free products force companies to rely on alternative revenue streams such as third party advertising networks. Any intermediary between a business and its (potential) customers is a strategic vulnerability.

Which Free Apps and Services Would You Pay For?

There are a number of excellent apps and services that I gladly pay for when given the opportunity. As a user of unstable free services in the past, I appreciate when companies offer paid products as a welcome signal of business health and reliability. The products below all offer free access levels.

• Instapaper: This app creates remote bookmarks, easy text versions of a pages which are synchronized to iOS devices, and associated feeds. Beyond the free app, there’s a paid app, and an optional paid subscription ($1/month)
• Dropbox: A great third party network drive that enables easy backups, collaborating, and even limited web publishing. It has smart local network synchronization as well as web sync and access. You get 2 Gbytes for free plus referral bonuses, and the first paid tier is $9.99/month or $99 per year for 50 Gbytes
• Basic Web Hosting: Free hosting from WordPress, Blogger, Tumblr or Posterous is good enough for most bloggers but there’s nothing quite as flexible as a self hosted blog with a domain you own and control. Hostmonster charges $5.99/month and enables up to 999 blogs. The one issue I have with Hostmonster is periodic downtime. I see my blogs go down a few times a month for as long as an hour with http://wasitup.com, a free site monitoring service
• Free Wifi: I maintain connectivity with free wifi, but I pay for optimum online which grants me access to a broad network. I believe wireless services are still overpriced and can’t wait for the commoditization of bits over wireless and wifi networks. I’d happily pay $40/month (total) for fast wireless network access but most phone plans start at $70 and go much higher with surcharges and larger data limits. I don’t require a voice plan, just reliable data which gives me the choice of service (Skype, Google Voice/Gizmo, etc)

Synthesizing Pearls out of an Irritating Mess

Whether it’s mopping up spilt milk, refactoring spaghetti code, or cleaning up a terrible accident in the back of a car, we all share experiences bringing order to an out of control situation. In many cases the opposite is needed, and a wrecking crew is brought in to introduce far more disorder into a stagnant system before rebuilding. This brief riff will hash out a few culprits that necessitate the cleaner, as well the opportunities that open up when we hack our natural cleaner instincts.

As part of a steady team you may ponder the relevance of this riff on your own work. If you’ve been at your current position for some time and settled into a groove, the potential for reviewing best practices with a fresh perspective is unbounded. 

The most common mess is the one you inherit from your earlier (resource starved) self

Plenty of true and arm chair (me) cognitive scientists have researched the effect of biases on decision making. One of the biggies is the familiarity bias commonly referred to as Maslow’s Hammer. Each time we encounter a novel problem we attempt to leverage existing tools with minimal modifications to allow us to produce good enough answers. Over time this immediate gratification process builds up to a frightening mess, which requires a cleaning crew to remedy. 

Resistance is Futile

The self made mess is likely to happen to the most tidy of house keepers. It’s more productive to accept that periodic tool and process overhauls are necessary instead of striving for zero clutter (premature optimization). The same goes for investment theses, business growth/monetization^ plans, partnerships, and M&A activities. Ask the harsh questions:

Does this strategy still make sense in today’s and tomorrow’s world?

Will this partner be trustworthy and highly valuable after the deal is signed?

Making the most out of an inherited mess

Business coaches and consultants earn their keep by repeatedly cleaning up aspects of a business that are tumbling out of control. Premiere consultants are master artisans. They dive deeply into existing businesses to diagnose the true issues*, and then architect a solution quickly while implementing and gathering immediate feedback on their efforts. The best will accept payment only if a client is completely satisfied with their effort, for there is nothing as valuable as reputation. 

Notes:
^= if a company doesn’t monetize its products or services, it’s not a business (yet)

*= Diagnosing the cause of business inefficiencies begins with best practices (5 Whys) and open access to team members of varying authority and proximity to product or service implementation (customer service to executives). The value of external consultants is their experience and perspective focused on the dirty details of day to day business. It’s risky to shake up an aged revenue stream. Imagine being the guy or gal who inadvertently breaks the ad auction engine for Google or Facebook, a momentary lapse in efficiency can cost a business millions of dollars in revenue.

An abstraction of all markets is one great information and industrial network. Businesses and individual decision makers are responsible for moving and transforming resources as efficiently as possible. The rules of game theory are readily applicable for link creation (partnerships) within this global network. Tit for Tat is a favored strategy for identifying beneficial and harmful member nodes.

Deception once discovered, is punished through alienation. Any business representatives who act one way, but make their decisions another are quickly identified as agents of distrust. The network is relentless in identifying facades and ulterior motives, evidenced by the flow of resources. Business leaders that can be relied upon gain strength by the ultimate act of trust, channelling resources through a connected network node.

Strategies of Generosity and Self Interest Overlap

It’s selfish to be generous to the right partners. Each new business is first identified by it’s more well known associations, so early partnerships are signals to the rest of the network. Businesses blend at the edges with complimentary strategic partners, and likely trusted friends (accounting records are always separate!). The entire market area grows as it earns value from the global network, benefitting all members who share in the network of trust.

Sometimes, the best action to take is to be generous to a person or group that appears to have to no relation at all to your business. The power of investing in communities in need creates a powerful bond of trust that may payoff in ways that are not fiscally measurable.

Internet Community Hubs Mimick Sales Splits

Several Internet community sites and marketplaces have mimicked open earnings.

• Squidoo is a publishing site which shares 50% of affiliate revenue with each copywriter
• Apple uses iTunes and the App Store as a marketplace and charges 30% of each sale
• Amazon has an affiliate program which shares 2-10% of each sale
• Cafe Press, and Lulu will create goods to sell and perform collection and shipping for virtual storefronts

For the most part these web entities provide a value proposition as exchanges. By leveraging their brand and an existing market, they boost sales and share a small split of the revenue. The web business collects payments, ships or electronically sends goods, and then processes payments to the affiliate. The entire system is well documented, clear to each participant and the earning ceiling is open (depending on supply). Partnerships are terminated if circumspect practices are employed to get sales. This is done to protect a brand, and the trust it has built up.

Existing Methods of Applying Open Earnings to Organizations

An employee stock ownership plan (ESOP) or stock options can be used to reward exemplary effort. But there are some problems both in allocation and the utilization of this motivation method. Options are usually limited to heirarchical “elite employees” or executives in business organizations, which is subjective (hiring, advancement) and are usually private. Employees can only access ESOP or options value if they leave a company or the business is liquidated (sold to other companies). In bad circumstances the common stock of ESOP/options is paid out after all preferred stockholders.

Suggested Solutions

• Always keep ESOP transparent. Include vesting and allow employees to liquidate at early intervals by taking a loss on estimated current value.
• Design organizational teams so that they are directly measured in terms of revenue, and profit generated. Allow immediate profit to be shared among team members that have executed predefined tasks with a high or open earnings ceiling. Delay longer term payouts with vested payments (i.e. 20% per year over 5 years)
• Research and Development can be the longest horizon for teams to reap a reward. Define measurable goals like new user adoption, technical capabailities, and pay immediate and vested rewards based on estimated future revenue/profits. This is the most challenging business area to reward with direct performance due to the horizons for metrics.

  Acquisitions can also fall into this category. Define measured performance goals for acquisitions and reward the groups that make the deals happen

• Modularize business units whenever possible. The “one company does it all theory” won’t stand the test of time. Immediately inefficiency will be produced in unexposed business areas. Focus on key areas of strength and leadership and allow other areas of a business to compete in the marketplace
• Spin Off Completely Independent Business Units. Create an independent entity to modularize it’s functionality and open that business’ opportunities to competitors. It will drive your other business areas forward, and generate much more revenue if done with the right business areas (Google doesn’t want to commoditize search and ad matching). But strategic business units that function on a tight budget, can succeed by commoditizing complimentary business areas. The leaders and members of these units are best motivated by open earnings, much like startups