7 ms·

On some level, I hate articles like this because of all the unanswered questions: [1] What did you spend that initial $100 on? (Even the cheapest overseas pr

by Bamafan 11y ago

On some level, I hate articles like this because of all the unanswered questions: [1] What did you spend that initial $100 on? (Even the cheapest overseas programmer can't do jack for $100) [2]You mention $400 million in revenue, but how much of that is profit? [3] What exactly does Trace3 do (if it was so great, I would have heard of it on my own, or you would have explained it in the article, without me having to Google research it) [4] If things are going so great, why are you writing articles for websites like entrepreneur.com? (oh yeah, you have another thing called POP you're promoting) [5] You mentioned a "bold" client's advice. How did yo know this was advice worth listening to vs advice to be ignored? I'll probably get voted down into oblivion, but IMO these kinds of articles say a lot and nothing at all.

alphapapa 11y ago
The $100 must have been spent on phone calls to all the potential clients he asked to tell him why he should not proceed with his ideas. From reading the article, it sounds like this pre-company, ground-pounding, customer-finding is more like finding suckers who would be willing to pay him for his new product/service. The amazing thing is the POPin product/service he is now selling to large corporations. From what I can tell, it's just software that lets people take surveys and vote on polls so the higher-ups can find out what other people in the company (and supposedly customers) think. Of course, there are mobile apps for it, so it's trendy. What does it do? It "generates buy-in," and "leverages knowledge" in a "fun and interactive" way to "derive tangible business results." You know the "buffalo buffalo buffalo buffalo buffalo buffalo buffalo" thing, where it's a valid sentence using the same word to mean 7 different things? You clearly could do the same thing with "buzzword." "Buzzword buzzword buzzword buzzword buzzword buzzword buzzword." And these millionaire corporate execs drink it up and hand over their money! For something they could do already, with existing software, existing employees (who are already paid to do this stuff), and people throughout the chain who should already be communicating back and forth, up and down. It really makes one wonder if they're all just college frat buddies who, being so insulated from their companies' actual work, budgets, and successes or failures, readily agree to scratch each others' backs at the opportune times. "Oh hey, man, you got a new company selling a new mobile survey app we can use to poll our employees? Well, we could do that already for free, and that's what our managers and VPs are supposed to be doing already--but sure, here's $500,000 for one of your sessions. By the way, aren't you still on the board of the last company you founded? Would that company be interested in buying some XYZ from us? Great, that's what I thought. Good deal." Their app doesn't do anything new or unique. Anyone could set up a web forum, a wiki, a bunch of online polls--for free. Managers should already be talking to their employees and communicating up and down the chain. Instead of just doing that, they pay this other company big bucks to use their mobile app to do it for them. And then, after getting a few bigcorps to pay them, they put those bigcorps' logos on their web site, and write an "article" for an entrepreneur magazine, supposedly revealing some business wisdom. Then they link to those articles on their own web site, showing how smart and published their founders are. Then I suppose that sets them up to sell to the next level of suckers, the ones who wouldn't buy in at first. I can't help but think that it's just like the old Scrooge McDuck comic, "Scrooge's Plain Old Soap." Donald starts his own soap company and sells the same soap in fancy packaging for more money--but it's still just soap. And that's all these guys are doing: repackaging existing stuff and selling it to the execs who have the corporate budgets to burn. Then those execs can point to how they "leveraged knowledge" and "derived tangible business results," and they can then "pivot" those "successes" into their next, higher-paying job. All of this is not technology--it's salesmanship. He talks about finding "truth" and "value"--but the truth is that he's providing very little added value, merely acting as a middleman repackaging what already exists, then finding people willing to pay extra for it. Barnum covered that a long time ago. Still works, and I guess it always will. But with tech and the Internet, you'd think it'd be harder to get away with that. Makes one wonder, who are the real suckers? The people buying that stuff? Or the ones not selling it?
- RyanZAG 11y ago
  I think you're pretty close to the truth here, and ultimately this is what all enterprise deals are about. It's why most "software" companies doing enterprise sales will have far bigger budgets on "sales" than on "research and development". Although the current trend is to push a lot of these "leveraging knowledge" and "finding truth and value" parts of the sales process into "Research" anyway. It works very well for all parties though - the "sucker" executives on the other side come out very well from this: they can use the marketing materiel and buzzword lingo verbatim from the products they are purchasing in their next few meetings to make themselves look on-the-ball even when they've been doing very little. I'd go as far as to say they're actively looking for products they can buy that they can talk to that do as little as possible to minimize the risk of actually having an effect on their business if they don't work. Security products are a big thing here too. Ultimately though, something is worth whatever you can sell it for. If you can sell your marketing buzzword lingo and "mutually beneficial enterprise deals" for $100 million, maybe it really is worth that much if it's adding value to someone somewhere.
  - alphapapa 11y ago
    > Ultimately though, something is worth whatever you can sell it for. If you can sell your marketing buzzword lingo and "mutually beneficial enterprise deals" for $100 million, maybe it really is worth that much if it's adding value to someone somewhere. Theoretically you're right. But I think that the way big corporations are structured and run, the people who make the decisions are so far removed from reality, that the values are incredibly distorted. It costs some exec $0 out of his own wallet to spend $100 million out of his corporation's budget. But, like you said, he can then use the built-in buzzwords to further his own corporate career as he pivots to his next job. And since it doesn't promise much, and since its impact isn't really measurable anyway, the risk to his own career is minimal. But as far as providing actual value to shareholders or customers--that seems a far cry from what it is sold for.
- carrotleads 11y ago
  Suckers are the ones not selling it which would be majority of the programming populace.. I have seen top guys code up a entire solution at $X per hr. People who support that solution are able to charge 2X or 3X and who know only 1/10 of it... All cause they know how to speak the language or the sales guy who spoke the language sold it at that level. People who have access to money are always paying for convenience.. programmers feel guilty charging for such stuff as we are aware of all the free options and generally do it for free.
carrotleads 11y ago
Something else that bugs me is in the inherent contradiction in his advice.. 1. tell people about your concept and ask for money. 2. if people give you money start work. 3. you will pivot 20+ times anyway Wouldn't that be basically like sell a dream and then figure out a product/service that may make money. Not much different to how YC like Accelerators/Incubators invest in "teams".. Shouldn't conmen begin to flock towards such "investors" or are they already?
- hayksaakian 11y ago
  It depends on how magical the concept is. If someone asks me for an ecommerce site, I'm fairly certain I can deliver it, my client has seen dozens of ecommerce sites so they are pretty certain I can deliver it. Payment upfront is just a formality at this point.
joelrunyon 11y ago
He somehow managed to mention both of his companies and I still have no idea what he "does."
rwmj 11y ago
Also - what did the other 999,999 firms do wrong so they didn't make it to $400 million?
logicallee 11y ago
regarding your point 1, let's see what happens if $100 isn't a red herring. Let's call this assumption H+ (a real herring? I don't know. Anyway, it's H+. The entirety of the comment below is from the perspective of H+, i.e. that it is not a red herring, but a meaningful actual seed amount that made a difference.) If it's not a red herring, then it is far more impressive to turn $50 into $400M than to turn $100 into $400M, as that is a factor of 8million versus a factor of 4 million only. It's twice as good. But turning $1.50 into $400M is even more impressive, as (by H+) in this case this is a factor of 266 million, i.e. 33 times better than a factor of just 8 million. Likewise, if he had turned $1,000 into $400M it would have been only a factor of 400,000 and if he had turned $10,000 into $400M it would have been an even less impressive factor of 40,000. And if he started with $100K, a decent but by no means excessive seed, the factor would have been only 4,000. (There are higher seeds, not mentioned here.) So we have data points for factor returns ranging from 8 million to 4,000, and (by H+) his data point actually legitimately falls at exactly 4,000,000x return attained. Now what is impressive is that if there EXIST data points at seed multiples of 4,000,000x return, they should be investable data points around that value, with a capped upside. It should be possible to angel somebody else's business for values ranging from $1.50 (aggregate total fully subscribed seed round) to $9,000 (i.e. 90x as high as the seed round we are discussing from the article). That is quite remarkable, if true. H+ has remarkable consequences.
- Retric 11y ago
  Your assuming all capital can be invested which seems unlikely given <1000$ investments and significant capital. Assuming a limited 'deal flow' you want to tailor things so you get the maximum total returns not just highest return on invested money.
  - logicallee 11y ago
    Define "you". I didn't think a maximum round of $9600.50 for a seed into a business needs to be considered by a VC who normally invests $500,000 for example - it can be a different group of people. Likewise for a $100 'seed'. It is hard to imagine that these amounts are actual legitimate seed amounts into a business, but, there you go, that's H. If we don't allow H then it's irrelevant whether the OP started with $100 or $9700. i.e. without H this is not a real, significant, or relevant number. (instead it is clickbait, for example, or a false memory due to lack of recording of actual spend at that stage.) H is the hypothesis that it is, in fact, relevant and meaningful.
dkfmn 11y ago
For [2] and [3] it sounds like Trace3 is a technology consultancy, integrator, and services provider. So the business is more like "specialized IT for hire" than a new product or innovative technology. As a result, I'd guess that the $400MM is gross revenue over the life of the company (not annual), and a large portion went to vendors like Avaya and Rackspace that he set-up for the clients. Then again, this is just reading between the lines, I have no direct experience with Trace3.

by Bamafan 11y ago

alphapapa 11y ago

The $100 must have been spent on phone calls to all the potential clients he asked to tell him why he should not proceed with his ideas. From reading the article, it sounds like this pre-company, ground-pounding, customer-finding is more like finding suckers who would be willing to pay him for his new product/service. The amazing thing is the POPin product/service he is now selling to large corporations. From what I can tell, it's just software that lets people take surveys and vote on polls so the higher-ups can find out what other people in the company (and supposedly customers) think. Of course, there are mobile apps for it, so it's trendy. What does it do? It "generates buy-in," and "leverages knowledge" in a "fun and interactive" way to "derive tangible business results." You know the "buffalo buffalo buffalo buffalo buffalo buffalo buffalo" thing, where it's a valid sentence using the same word to mean 7 different things? You clearly could do the same thing with "buzzword." "Buzzword buzzword buzzword buzzword buzzword buzzword buzzword." And these millionaire corporate execs drink it up and hand over their money! For something they could do already, with existing software, existing employees (who are already paid to do this stuff), and people throughout the chain who should already be communicating back and forth, up and down. It really makes one wonder if they're all just college frat buddies who, being so insulated from their companies' actual work, budgets, and successes or failures, readily agree to scratch each others' backs at the opportune times. "Oh hey, man, you got a new company selling a new mobile survey app we can use to poll our employees? Well, we could do that already for free, and that's what our managers and VPs are supposed to be doing already--but sure, here's $500,000 for one of your sessions. By the way, aren't you still on the board of the last company you founded? Would that company be interested in buying some XYZ from us? Great, that's what I thought. Good deal." Their app doesn't do anything new or unique. Anyone could set up a web forum, a wiki, a bunch of online polls--for free. Managers should already be talking to their employees and communicating up and down the chain. Instead of just doing that, they pay this other company big bucks to use their mobile app to do it for them. And then, after getting a few bigcorps to pay them, they put those bigcorps' logos on their web site, and write an "article" for an entrepreneur magazine, supposedly revealing some business wisdom. Then they link to those articles on their own web site, showing how smart and published their founders are. Then I suppose that sets them up to sell to the next level of suckers, the ones who wouldn't buy in at first. I can't help but think that it's just like the old Scrooge McDuck comic, "Scrooge's Plain Old Soap." Donald starts his own soap company and sells the same soap in fancy packaging for more money--but it's still just soap. And that's all these guys are doing: repackaging existing stuff and selling it to the execs who have the corporate budgets to burn. Then those execs can point to how they "leveraged knowledge" and "derived tangible business results," and they can then "pivot" those "successes" into their next, higher-paying job. All of this is not technology--it's salesmanship. He talks about finding "truth" and "value"--but the truth is that he's providing very little added value, merely acting as a middleman repackaging what already exists, then finding people willing to pay extra for it. Barnum covered that a long time ago. Still works, and I guess it always will. But with tech and the Internet, you'd think it'd be harder to get away with that. Makes one wonder, who are the real suckers? The people buying that stuff? Or the ones not selling it?

RyanZAG 11y ago
I think you're pretty close to the truth here, and ultimately this is what all enterprise deals are about. It's why most "software" companies doing enterprise sales will have far bigger budgets on "sales" than on "research and development". Although the current trend is to push a lot of these "leveraging knowledge" and "finding truth and value" parts of the sales process into "Research" anyway. It works very well for all parties though - the "sucker" executives on the other side come out very well from this: they can use the marketing materiel and buzzword lingo verbatim from the products they are purchasing in their next few meetings to make themselves look on-the-ball even when they've been doing very little. I'd go as far as to say they're actively looking for products they can buy that they can talk to that do as little as possible to minimize the risk of actually having an effect on their business if they don't work. Security products are a big thing here too. Ultimately though, something is worth whatever you can sell it for. If you can sell your marketing buzzword lingo and "mutually beneficial enterprise deals" for $100 million, maybe it really is worth that much if it's adding value to someone somewhere.
- alphapapa 11y ago
  > Ultimately though, something is worth whatever you can sell it for. If you can sell your marketing buzzword lingo and "mutually beneficial enterprise deals" for $100 million, maybe it really is worth that much if it's adding value to someone somewhere. Theoretically you're right. But I think that the way big corporations are structured and run, the people who make the decisions are so far removed from reality, that the values are incredibly distorted. It costs some exec $0 out of his own wallet to spend $100 million out of his corporation's budget. But, like you said, he can then use the built-in buzzwords to further his own corporate career as he pivots to his next job. And since it doesn't promise much, and since its impact isn't really measurable anyway, the risk to his own career is minimal. But as far as providing actual value to shareholders or customers--that seems a far cry from what it is sold for.
carrotleads 11y ago
Suckers are the ones not selling it which would be majority of the programming populace.. I have seen top guys code up a entire solution at $X per hr. People who support that solution are able to charge 2X or 3X and who know only 1/10 of it... All cause they know how to speak the language or the sales guy who spoke the language sold it at that level. People who have access to money are always paying for convenience.. programmers feel guilty charging for such stuff as we are aware of all the free options and generally do it for free.

carrotleads 11y ago

Something else that bugs me is in the inherent contradiction in his advice.. 1. tell people about your concept and ask for money. 2. if people give you money start work. 3. you will pivot 20+ times anyway Wouldn't that be basically like sell a dream and then figure out a product/service that may make money. Not much different to how YC like Accelerators/Incubators invest in "teams".. Shouldn't conmen begin to flock towards such "investors" or are they already?

hayksaakian 11y ago
It depends on how magical the concept is. If someone asks me for an ecommerce site, I'm fairly certain I can deliver it, my client has seen dozens of ecommerce sites so they are pretty certain I can deliver it. Payment upfront is just a formality at this point.

joelrunyon 11y ago

He somehow managed to mention both of his companies and I still have no idea what he "does."

rwmj 11y ago

Also - what did the other 999,999 firms do wrong so they didn't make it to $400 million?

logicallee 11y ago

regarding your point 1, let's see what happens if $100 isn't a red herring. Let's call this assumption H+ (a real herring? I don't know. Anyway, it's H+. The entirety of the comment below is from the perspective of H+, i.e. that it is not a red herring, but a meaningful actual seed amount that made a difference.) If it's not a red herring, then it is far more impressive to turn $50 into $400M than to turn $100 into $400M, as that is a factor of 8million versus a factor of 4 million only. It's twice as good. But turning $1.50 into $400M is even more impressive, as (by H+) in this case this is a factor of 266 million, i.e. 33 times better than a factor of just 8 million. Likewise, if he had turned $1,000 into $400M it would have been only a factor of 400,000 and if he had turned $10,000 into $400M it would have been an even less impressive factor of 40,000. And if he started with $100K, a decent but by no means excessive seed, the factor would have been only 4,000. (There are higher seeds, not mentioned here.) So we have data points for factor returns ranging from 8 million to 4,000, and (by H+) his data point actually legitimately falls at exactly 4,000,000x return attained. Now what is impressive is that if there EXIST data points at seed multiples of 4,000,000x return, they should be investable data points around that value, with a capped upside. It should be possible to angel somebody else's business for values ranging from $1.50 (aggregate total fully subscribed seed round) to $9,000 (i.e. 90x as high as the seed round we are discussing from the article). That is quite remarkable, if true. H+ has remarkable consequences.

Retric 11y ago
Your assuming all capital can be invested which seems unlikely given <1000$ investments and significant capital. Assuming a limited 'deal flow' you want to tailor things so you get the maximum total returns not just highest return on invested money.
- logicallee 11y ago
  Define "you". I didn't think a maximum round of $9600.50 for a seed into a business needs to be considered by a VC who normally invests $500,000 for example - it can be a different group of people. Likewise for a $100 'seed'. It is hard to imagine that these amounts are actual legitimate seed amounts into a business, but, there you go, that's H. If we don't allow H then it's irrelevant whether the OP started with $100 or $9700. i.e. without H this is not a real, significant, or relevant number. (instead it is clickbait, for example, or a false memory due to lack of recording of actual spend at that stage.) H is the hypothesis that it is, in fact, relevant and meaningful.

dkfmn 11y ago

For [2] and [3] it sounds like Trace3 is a technology consultancy, integrator, and services provider. So the business is more like "specialized IT for hire" than a new product or innovative technology. As a result, I'd guess that the $400MM is gross revenue over the life of the company (not annual), and a large portion went to vendors like Avaya and Rackspace that he set-up for the clients. Then again, this is just reading between the lines, I have no direct experience with Trace3.