Experimenting is essential for learning

When it comes to business, as with most things, you know less than you don’t know. So how can we shift this balance? how can we learn? how can we improve?

My approach is to learn by doing. This will also involve making mistakes, which should also provide us a chance to learn.

However, simply doing, isn’t quite enough. You need to come up with an idea of what you think the answer to the question is and then test that theory. And then test and test and test some more.

While at Cadimage we introduced a [paid] student version of Archicad and over a number of pricing experiments we ended up providing the student version for free and finally reached the point where student usage took off.

At the time we did this, it wasn’t necessarily as formal an approach as designed experimentation, but early results were a failure so we tweaked and tweaked until it worked.

In hindsight the answer is as clear as daylight and ultimately providing free student versions, free training for staff and students, and then sponsoring the NZIA Student Design Awards was seen as way of building the commercial side of our business – why we tried to sell something to students is beyond me but the point is the 3-4 years of trial and error led to the answer and not only solved its own situation but had a far broader impact on our business. In my opinion we could never have foreseen this outcome as our focus was very narrow.

Technology has come a long way since we did these early experiments, and there is a huge range of software to support conducting and analysing experiments and the data they generate.

Our Student pricing can be viewed as a fairly simple experiment, but equally I think that is also key to being able to learn. Don’t try to test everything at once. Focus on pieces that will appear to have the biggest impact.

When experiments became automated via technology they began as A/B Testing – ie testing two options. Software allows many more options to be tested simultaneously but I think A/B testing truly encapsulates the approach to take.

Obviously you can experiment with everything from pricing to email subject lines and contents. But stay focused – especially if you are a small team – and don’t experiment with everything just because you can. You simply won’t have the bandwidth to assess the results.


Understanding BIM – The Book

Building Information Modelling, or BIM, as a concept has existed in architectural design software since the 70’s and 80’s though the term itself wasn’t defined until 2002. Originally described as Virtual Building the concept focused on creating a digital representation of a building prior to construction.

A few months back I had the privilege to receive a new book – Understanding BIM – written by Dr Jonathan Ingram.

Understanding BIM documents why we need BIM, the history of BIM, early case studies in wide ranging disciplines, modern BIM, and the future of BIM. It also documents how BIM works. Dr Ingram is still involved in Information Modelling, AI, AR, VR, language understanding and  other contemporary technologies.

From https://www.understandingbim.com

As I previously wrote, Murray the founder of Cadimage, worked with Jonathan in the 80’s testing the Sonata System being developed by Jonathan. Murray explained a lot of the history and events during the early days when I was first working with him at Cadimage and it was great to read the history and remember how all the threads were pieced together.

The book is extremely comprehensive and has been very well put together. It is great to look at all the ‘cutting edge’ (in their day) images and see how far we have come over the last few decades. Anyone who wants to understand what BIM is, those who want to hear thoughts on where it is going or are interested in the history of BIM should really purchase a copy – its a great read.


Keep it Simple

Yes, this is a pretty straight forward statement, however, as a business you need to be extremely disciplined in order to constantly keep things simple.

Personally I like to equate simplicity with perfection and the following quote sums up my general thinking with regards to simplicity.

Perfection is achieved not when there is nothing more to add, but when there is nothing left to take away

Antoine de Saint-Exupery

I have spent my career building product based businesses and it is all too easy when you have a team of talented product managers and developers to come up with all manner of features that they feel customers need.

Once a feature has been suggested – and in some cases even partially/fully developed – it is very difficult to imagine the product without it.

The problem can quickly escape when you start talking to customers. In general teams I have found that the customers who love to provide feedback and ideas are at the “power user” end of the scale, and therefore they amplify and reinforce the feeling regarding the need for a feature.

The problem lies in the fact that these power-users (and your own staff basically fall in the same category) represent the absolute minority of users. Catering to their every need, wish and whim means that very quickly you have a complex product. Yes it may be extremely powerful, but it has now become difficult for new and less power users to use.

The real art of keep things simple doesn’t have to mean reducing these power user features, but can also be dealt with in different way from creating a very well crafted UI that only exposes complex functions when needed through to creating different versions of the same product with different (extended) feature sets.

Keeping it simple doesn’t only apply to products and features but is important in all aspects of business.

In this article I outlined the changes to our pricing that changed the adoption rate of ARCHICADselect from around 15% to virtually 100%. By looking at our pricing model and adjusting it to make it more easily understood we found we were able to present the price to new and existing customers in an easily understood manner which led to a massive improvement to our business.

Some people love to come up with Complex Pricing Schemes in order to cater for every option with a sense that by doing so they will maximise their margin. However, if an internal sales person can’t understand a pricing matrix then it is a big clue that your potential customers won’t, or they will look for the easiest option that satisfies their needs.

In the same way when we launched Cadimage Tools on Subscription we could have provided a whole host of options to allow customers to pick and choose. However, we decided even with 7 individual tools that packaging them in three plans made the most sense. Some would argue we left money on the table, but I believe we attracted most customers at a higher price point then we would have had we given them infinite options. It can be counter-intuitive, but sometimes sacrificing apparent margin in order to keep things simple actually ends up being far more profitable.

As I said at the start, it requires discipline to always keep things simple and its all to easy to get carried away internally with grand (complex) ideas. Remember to ask yourself:

Is there anything I can remove from this without materially affecting it

And bring a sense of simplicity to all aspects of your business.


B2B SaaS Pricing

It is great to see this recently released report by Chart Mogul following their research in to over 600 SaaS Pricing Pages.

The whole report is worth reviewing if you are in the B2B SaaS business. Some of the key things I was interested to review include:

Optimal Number of Plans

I’ve always had a gut feeling that 3 was the ideal number of plans. I’m not quite sure where it came from but maybe it was from browsing a number of payment pages when I first looked into offering Subscription.

Anyway this report confirmed that 3 is the most popular number of plans on offer – whether or not that is actually optimal is harder to judge but maybe it is a fair assumption.

Incidentally, when we launched the Cadimage Tools on Subscription we opted for 3 plans!

Free Trials

Free Trials definitely appear the way to go with over 80% of companies offering some sort of free trail.

I was surprised however, that over 60% of free trials request card details up front. This is always an interesting debate as to whether asking for details up front presents another hurdle, however, in a sense it also most likely leads to higher conversion so there are different trade offs to measure.

Freemium

I wrote the other day about my thoughts on Freemium so it was interesting to see that less then 30% offered a Free Plan.

That said, Freemium is used extensively to grow ARR in the $100m – $1B range [ nice range 😉 ]

The reference to this article regarding “Monetizing backwards” still reinforced my thinking though.

Annual vrs Monthly

This one was more surprising especially with regards to the over 40% who don’t offer annual plans. I’m a firm believer that having annual and monthly payment plans help create a natural balance of lowest cost of entry, versus longer term customers.

Though that said, my own experience when introducing ArchiCAD Subscription was that I felt monthly was sufficient. Mainly because the entire exercise was to reduce the barrier to entry, and an annual pan would have been still too costly for the part of the market I was targeting at that stage.


NXT BLD 2020

Earlier in the year I attended BIM live show. When talking to a friend about what I was up to he recommended I attend NXT BLD.

This year – like many conferences and events – NZT BLD turned into an experiment with it being held as a Virtual Conference.

There were a series of 6 Sessions spread over 6 days. I found the daily sessions a great way to attend those that attended me and found it easy to fit into my day.

Obviously it missed the interaction with participants but from a content point of view the delivery was very well done. I enjoyed all the sessions I attended and found them very thought provoking.

All sessions are available on demand for those that register and are definitely worth a watch.

At this stage NXT BLD 2021 is scheduled – in person – for London June 2021.

Based on this years event I hope I can attend 2021 in person and maybe even have an opportunity to show what we are working on.


To be or not to be… Freemium

When I was first thinking about setting up a business I touched briefly on the concept of Freemium.

Now that I am underway with my new business it is now time to give it serious thought.

There are a wide array of articles in relation to freemium, and to boil them all down – there is no one right or wrong way – as always it depends on a number of factors.

Mailchimp for example spent 8 years refining their product and pricing before they felt confident a Freemium offering would be beneficial. While companies like Dropbox, Evernote and Slack embraced Freemium from the beginning and the majority of their success is based on their Freemium model.

That said, businesses that target markets above 100 million, can be quite happy with 1% conversion rates as 1 million paying customers can generate an extremely healthy business.

My general feeling is that it is extremely important to truly understand what customers value in your product before embarking on a Freemium journey. This need not take eight years like Mailchimp, but really understanding and your market for a period of time prevents the guesswork associated with launching Freemium from day one.

Also you don’t need to be worried about not launching, you can always introduce Freemium when the time is right.

This quote from a recent article I read encapsulates my current thinking:

“If implemented right, Freemium can be a long-term revenue driver for businesses. However, this can only be realized by measuring metrics that showcase this strategy’s impact over time.”

Freemium: Playing the Long Game

Freemium is definitely something I want to explore in the future but in the first instance I want to measure and understand value. That said, I will have a Free Trial Version so that at least allows potential customer to access the product before committing.


Business Lessons

October always seems to be a month of reflection for me for a couple of key reasons.

Firstly on a deeply personal level October is the month my mum was born. Unfortunately she left us all too soon over 8 years ago but October is a month full of amazing memories.

Secondly, October is the month Cadimage was formed and so I also think back to a major part of my life and career.

A year ago I wrote a series of posts on the Cadimage Story.

Today I’ve decided to post a few of the lessons I learnt during my time.

I’ve created a page so you can keep track as I post them.

Check back soon for my first post.



New iPad Air

Last night in between cooking dinner I checked out Apples latest event – and then just now watched the bits I missed.

As had been telegraphed the launch included the new iPad Air.

It is now over 10 years since I wrote about the original iPad when it was first launched.

The evolution of the product over this time has been amazing to see and the sheer power of the device is something to behold. The new A14 Chip in this latest iPad has some [almost] unbelievable specs and the fact that it works with Apple Pencil 2 opens up a world of opportunities for this mid-level device.

It is incredible to think that on average over 50 million units have been sold each and every year since it was first launched.

While I haven’t given up my laptop yet, I know many people who regularly use an iPad as their main computing device.

I remember when it was launched initially and the amount of criticism that both the product itself and the name received.

I won’t be buying an Air just yet – but the blue one does look pretty sharp!


Running [another] 1,000km

Last year I ran 1,000km in a year for the first time. This year I decided to do it again. I find running a great time to think away from everything else. I also haven’t had a lot of work this year so I’ve been setting a few other goals along the way

Including:

  • Running a half marathon a month (4 out of 8 achieved to date)
  • Running 200km in month – this one was quite tough

With these other targets my overall milage has increased and sees me completing the 1,000 four months earlier then last year.