Shazeeye's Blog Thoughts on User Experience, Technology and Business


7Ps to help you institutionalize user experience in your company

At some point a tech company decides it needs  a user experience team to champion the voice of the customer. The smart ones start this journey early as it is more challenging to institutionalize user experience in companies with a few hundred employees. The following 7Ps will help you institutionalize UX in your company:

Posters : Use posters to communicate the critical components of the UX message - UX principles, customer segments, etc. For example, had posters of its customer segments on the walls around the office to always remind its employees who they were designing for.

Process: Define the UX Engagement process. has a well defined design process. This may vary based on how departments are structured in your company, resources available and team dynamics but a process is a start to including all the critical elements of the user experience.

Procedure: Create standard UX templates to define the procedure to conduct a specific aspect of the UX. has many templates. For example, a  moderator guide or guidelines to conduct and write a heuristic report will establish a set of standards and improve the consistency and quality of work.

Protocol: Create a UX repository on the company intranet to educate everyone in your company about the UX team and their work, how to engage with them, what to expect, timelines, schedules, etc.

Publish: Get noticed in the greater UX community by publishing research and presenting at conferences. This brings visibility and credibility to the UX group.

Proof of productivity: User Experience improves the customer's experience in many ways. For example, it could reduce time, reduce help desk calls, increase enjoyment and trust, improve safety, etc. It is critical to measure this improvement in productivity to translate the value of the UX activity and to communicate it to employees and management.

Partner: This is the most important step in institutionalizing UX in a company. Unless you have a partner in upper management to rally around the UX cause this would be a very difficult struggle. It is critical to get support to ensure the message does not get lost and more importantly give UX the attention it deserves. After all, some of the top tech companies have made it their mantra. Google says "Focus on the user and all else follows" while Apple uses UX to drive its innovation engine.


How do Venture Capitalists Value Companies?

What is the value of a company? That question comes up many times especially during mergers and acquisitions. Most venture capitalists value deals using an IRR hurdle rate or the minimum return they expect to receive in returns given risks of the new venture. Typically their goal is a potential IRR of at least 30%.

Let us look at five methods to value a company.

1. Price to Earnings ratio (P/E ratio): By using the P/E ratios of the industry we can value the company. For example, the medical device industry has a P/E ratio of 21-29 so given the earnings (or Net Income) we could calculate the price (offer to be made) to acquire the firm. If a medical device company had net income of 1.2M then taking 25 as the industry standard we can value the company at 1.2M*25= 30M.

2. Discounted Cash Flow (DCF): There are three methods to value a company using DCF as seen in the image. Its the main source of valuing a new venture as they are cash negative in the early years. Basically, you project the income for the first 6 years and discount it to the current year. You can forecast income in three ways - constant cash flow, constant growth and market multiple.

3. Price to Net Book ratio (PBR): This is is an indication of how much shareholders are paying for the net assets of a company. The book value is the difference between the balance sheet assets and balance sheet liabilities and is an estimation of the value if it were to be liquidated. When VCs want to buy companies they usually get all the financial statements from a company before making an offer. Thus, they have access to the balance sheets and the book value of the company. Based on their experience, the industry and the company, VCs usually have some  expectations of the PBR. They use this data and the book value of the company to arrive at the price they want to offer for the company.

4. Price to Sales Ratio (PSR): This is based  on the company's earnings or sales and does not consider debt and other liabilities. Again, there are industry standards for P/S ratio and if VCs know the sales of the company they can calculate the price they want to offer for the company.

5. EBITDA Multiple (Enterprise value /EBITDA): EBITBA is the earnings before interest, tax, depreciation, and amortization. This ratio measures the price (in the form of enterprise value) an investor pays for the benefit of the company's cash flow (in the form of EBITDA). An advantage of this valuation is that it is capital structure neutral, and, therefore, can be used for cross company valuations. VCs can get these numbers from the company's financial statements.

When to use which? Whichever method, brings you more money for your company. For example, companies that require big upfront investments or infrastructure (such as cable companies) and long gestation periods, EBITDA can be a more appropriate measure of the business's underlying profit potential since it excludes the cost of these investments so u=you would use the EBITDA multiple to value your company.

Three ways to calculate value of business at end of Year 6:

A.Constant Cash Flow: Assumes firm has lost its competitive advantage and is in steady state mode.

Method: Divide year 6 free cash flow by “k” cost of capital to value infinite earnings stream, then discount to present.

B. Constant Growth: Assume firm will continue to grow at constant percentage rate, with cash flow yield the same, to infinity.

Method: Multiply year 6 cash flow by 1+g (growth rate); divide that by

Kc – g (cost of capital less constant growth rate.) Discount to present.

C. Market Multiple: Assume firm could be sold at P/E multiple reflecting

year 6 earnings and growth rate.

Method: Apply industry average multiple to net income or EBITDA, tax effect proceeds, and discount to present.


Entrepreneurial Ideas at Singularity University

On August 26th I was honored to be a part of the graduation ceremony of the 2011 Graduate Studies Program (GSP) at Singularity University. This university, located at the NASA Ames campus in Silicon Valley, aims to educate and inspire leaders to apply advance technologies to address humanity’s grand challenges. The goal of the ten week GSP program is to develop ideas and solutions that have the potential to positively impact at least one billion people within ten years. The program is well supported and funded by companies such as Google and Cisco and Venture Capitalists such as Vinod Khosla (Co-founder of Sun Microsystems and keynote speaker at GSP 11) and Bob Metcalfe (Founder of 3Com).  This year GSP11 students will choose one of six “grand challenge areas” to focus their projects: Education, Security, Energy, Global Health, Space and Poverty. A few of their ideas are detailed below.

1. IgniSolar: A team of six entrepreneurs have patented and developed a solar panel at one-tenth the price of regular solar panels. Their solution is a concentrated Photovoltaic Solar panel which is flexible, has reflective fabric, requires no tracking and had passive cooling. The technology replaces expensive heavy mirrors with reflective fabric, and minimizes extra features to make a cost effective product. IgniSolar's value proposition is in its complete solution and performance. It generates 20 times more energy at one-tenth the price compared to its competitors. Its target customers are households and commercial customers in sunny climates such as the Middle East, Southern Africa, Northwest India and other places with no or intermittent electricity.

2. Dr. Clarence Tan and his team have created a corruption tracking and reporting system. People will be able to submit reports directly through via SMS, mobile telephony, and our Internet site. To expedite implementation, CorruptionTracker seeks to work closely with the internationally renowned open source platform, Ushahidi. To date, the platform is aggregating data from localized Twitter and Ushahidi anti-corruption deployments but soon will deploy a patented SMS system with mobile application implementation and will include photos, videos and audio recordings that take advantage of mobile telephony technologies.

3. Senstore: provides technological and community tools that make it cheaper and faster for developers to create health devices and applications. Senstore provides the technical and social infrastructure to empower developers to build health monitoring devices cheaper and faster by partnering with existing technology platforms and partners. Their goal is to be open sourced and driven by the community.

You could read more details on projects of the GSP 2009 class here.


Managing Disruptive Innovation

PARC or Palo Alto Research Center, a Xerox Company in Silicon Valley has contributed tremendously to commercial innovation through ethnography. I am a huge advocate of ethnography and PARC pioneered this process of studying human behavior and "hybridized" it with other social science and analytical methods to optimize it for business application - particularly for addressing new opportunities, customers and markets. PARC owns 2500 patents and have created products such as GroupFire (acquired by Google), Inxight (acquired by SAP) and Uppercase (acquired by Microsoft). You can see some of their presentations here. On August 18th I went for a presentation on Managing Disruptive Innovation by Tamara St. Claire, VP of Global Business Development and Head of Commercial Operations.

Tamara spoke about managing disruptive (vs. incremental) innovation, its risks, two case studies and lessons learned.  Incremental innovation happens in existing markets (left column in image on right) while disruptive innovation happens in new markets (right column) and is more challenging to manage. She mentioned three risks in disruptive innovation - technology, market and execution- emphasizing that markets and execution are the most challenging factors to overcome. A further breakdown of the risks are found in the image below. Lack of credibility/experience (includes C level stakeholders), lack of channel (sales/distribution network) and lack (actually the inability to filter through too much) of information are critical risk factors.

The best way to enter a market of disruptive innovation (with existing or new technology) is to start with a minimal viable product (MVP) introduced at the right time and a strong value chain. MVP is a product with a limited set of features that fits the user needs of a niche market. Once the product has gained an audience ideas to gain mass market with added features can be explored. Tamara gave an example of one of PARC's chip packaging technology which was introduced seven years ago but shelved due to bad timing. It was reworked seven years later by partnering with Sun Microsystems and Oracle due to their advances in chip technology. The value chain are a group of activities (see image below- extreme right) that help to bring the product to market. In existing markets best practices help define a path to market entry but in disruptive markets one has to be flexible and shift gears depending on learnings. It is also critical to partner with experts and consultants studying these new markets as well as visit trade shoes and conferences to learn as much as possible. Partnerships are forged to strengthen the chain and build credibility.

Case Study: Printed Electronics Services

PARC developed low cost disposable printed flexible electronic expertise and devices can be applied in health electronics, packaging and biomedicine. When DARPA (Defense Agency) contacted them to develop an early detection solution to prevent brain injury for soldiers they partnered with consultants and experts to expand their printed electronics services for defense applications. They soon realized they couldn't manufacture the films at the scale desired and thus decided to play a connector role (flexibilty to change is key) between materials and manufacturing.  They partnered with Polyera and 2 other manufacturers thus giving up positions in the value chain and concentrating on their strength (network orchestrator). The lessons are outlined in the image on the right where N=1 means that they relied on more than one consultant or expert to help traverse this new territory and in many cases related to disruptive innovation a group of experts help bring together a holistic viewpoint and a superior product. The other lessons were to be flexible to change course, focus on strengths in the value chain and partner in areas of weaknesses.

Case Study: Content-Centric Networking Protocol

PARC developed a communication protocol complementing existing IP infrastructure to reduce the cost of distributing video and other content in IP/TV networks. Content-Centric Networking uses a unique architecture that caches content closest to the users who request it most thus reducing network capital cost and operating expense.  To create this solution PARC collaborated with Van Jacobson, Chief Scientist at Cisco and an IP/TV expert and took it to open source for feedback. They tested this network with the government and early adopters and used feedback to improve the solution to get critical mass. The lessons here were to get the right commitment, gain critical mass and engage user feedback early.

Overall lessons are to use ethnography to understand how people are using your products and thus have a well defined MVP. Disruptive innovation is more about unique business models and integrating technology. As a company expands it is critical to have a portfolio of products ranging from core to next gen products and using a process to manage this innovation can be the difference between success and failure.


UC Berkeley Business Plan Competition: Part 2 of 2

You can read about the first four finalists at the UC Berkeley Business Plan Competition here.

5. Picatcha: is a picture-based captcha that uses images of brands instead of text thus getting ad revenue too. Captchas are text messages to distinguish humans from computers to prevent spam and improve security. They are used on blogs, contact forms, e-commerce sites, etc. Picatcha improves usability and security over current captchas. It aims to recapture the 3-18% new users that leave a website due to a frustrating captcha experience and prevent the 60% hacked captchas.

6. Intimal Solutions: cures deeply embedded ulcers on feet and legs that can't be treated by substitute technologies. This minimally invasive method is a relief to substitutes - surgery or tight compression bandages that may not help and the problem could recur. Intimal Solutions tested a group of patients and found that the technology heals 84% ulcers in 25 weeks and the problem does not recur. They have already applied for 3 patents and received insurance codes to bill to.

7. Easy Parking Spot: is an online parking marketplace. It helps small businesses, individuals, schools, churches, etc. monetize their parking spots by posting their parking availability and cost on this website as well as placing physical signs in front of their parking spaces to help with branding. Using a mobile app you can identify a parking spot near your location and reserve it or recharge it with this app without having to go to the parking meter to add quarters.

8. Gram Power: is a pay-as-you-go energy storage system to improve energy accessibility in the $11.6B rural energy market in India and Africa. This prepaid plan is activated by a dongle and can help entrepreneurs and individuals get access to electricity for a minimal cost. This electricity rental plan will be distributed and managed by sales managers.

Competition Winners

Grand Prize ($20,000): Intimal Solutions

People's Choice Award ($5000): Imprint Energy

Best Elevator Pitch ($1000): Inserogen

Semifinal track winners:

IT & Web: Kopo Kopo and Picatcha competed and Kopo Kopo won

Energy & Clean Tech: Imprint Energy and Gram Power competed and Imprint Energy won

Life sciences: Cardio Paint and Intimal Solutions competed and Intimal Solutions won

Products & Services: Axis and Easy Parking Spot competed and Axis won

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