Global POV: At the Intersection of Technology and Culture

Amazon is quietly hedging its economic bets by selling a product that will probably never appear on most peoples' wish lists--data center services. By productizing their spare computing power and storage, they will be able to convert their spare back office cycles to cash. Even if demand turns down in a depressed economy, Amazon may be able to more smoothly ride through that downturn without having to sell off capital assets in a panic when demand temporarily falls off.

Amazon's EC2 (Elastic Compute Cloud) is leading the continuing trend towards complete outsourcing of back office computing.

It will be interesting to see if this business factors in Amazon's valuation.

Posted on February 04, 2008

Nerd makes a pass at Geek

For anyone who missed the big tech news this morning, Microsoft has offered to buy Yahoo. For money, too, not old copies of Windows Millenium or a talking paperclip or something. In fact, they're offering $44.60 per share, a 60% premium over the current market price.

This is a bold pitch for Microsoft who is rapidly becoming inconsequential and would probably be a good catch for Yahoo, a quasi-media company with a joke name, a mushy business model, inflated customer statistics and no real market differentiator.

For the acquirer? It would mean Microsoft would be visible on the Web in places that they are not today. One interesting thing that they could and probably should do, would be to figure out how to clean up Yahoo's bloated and ghostly customer list, converting them to something paying. This would allow Microsoft to integrate Yahoo functionality with Xbox live, becoming the first company to link console gaming and the social Internet. That would take years for them to screw up and could become the lifeline to pull Microsoft to a fully reengineered business model, where they became less of a product and more of a web services company.

The combined company should own identity management on the Internet, if they wanted. This would provide an effective bulwark to Google. (They should probably buy Verisign, though).

Could this mean the blue screen of death for the Internet?

Posted on February 01, 2008

Apple bug?

MacWorld Expo is next month. For those not in the loop, this is the annual, long-awaited Apple scrum where tens of thousands of crazed Apple groupies get to jump and down as Steve Jobs announces the BIG news, whatever that happens to be.

There's always an active rumor mill grinding away beforehand. This year, the smart money is on an ultralight MacBook, which presumably would be 2 lbs instead of the 6 that is currently. They could shave a lot of the weight by cutting back the battery and dropping the drive. But, as Forbes points out, ultralights account for less than 10% of laptop sales and historically have never done well.

Other rumors include an Apple tablet, a 3G iPhone and craziest of all--an Apple branded car, like a Volkswagen.

From a marketing perspective, this actually makes some sense, I think. How about a completely high-tech VW bug, with full blue-tooth support, a built-in ipod jack and enough internet connectivity to buy stuff from the iTunes store?

Posted on December 20, 2007

Big Mac Attack

British McDonald's restaurants are using surveillance technology in an unusual way; they have installed license-plate cameras in their parking lots hooked up to a computer which ticks off how long you've been in the burger joint. If you've been there for more than 45 minutes, the contracting company that manages their parking lots automatically send a $250 bill to your home.

As surveillance technology gets cheaper, we'll see more of these applications; whereby companies figure out some clever way to capitalize on a new source of income that they might not have gotten otherwise.

Posted on December 13, 2007

The bell tolls for Classmates.com

Classmates.com has filed for an IPO. The company is valued by the underwriters at $600-700 million. Tech Crunch gives a nice overview of the terms:

-Revenues the first nine months of 2007 weer $140 million. (Full-year 2006 revenues weer $139 million; 2005 revenues were $85 million).
-Net income the first nine months was $1.6 million. ($1.9 million loss in 2006; $8.2 million loss in 2005).
-50 million registered users as of September, 2007. Only 12.8 million of which are active and 3 million of which pay on average $3.33 a month to email and connect with old friends directly.
-Monthly churn of 4.6 percent

These numbers would not normally have justified an IPO, but they are obviously trying to cash in on the Facebook lollapalooza. Classmates is not really a social networking company, well maybe they are. They are, however antiquated and have been or soon will be replaced by Facebook. Unfortunately for Classmates, niche businesses like theirs often lead the way for broader, more pervasive plays. It took companies like Classmates to make Myspace acceptable and ultimately pave the way for the wheeled juggernaut that used to be Facebook.

I am afraid that in the long run, companies like Classmates are not actually businesses, they are products; perhaps one of a long line of offerings in a larger company. Regardless of how the stock performs at the IPO, I question the long-term viability of one-trick pony social networking companies.

Posted on November 27, 2007

Confused and crazy

AOL is moving its Headquarters and senior executives out of Virginia and back to New York. It was only 7 years ago since AOL, in a ballsy, clicks sticks it to bricks approach, bought media mastodon, Time Warner and moved the New Yorkers down to Virginia to be part of the burgeoning Northern Virginia tech scene.

Having been one of the burgeons, I can attest to what it meant to have AOL drag a big conventional company like that down to our level--it was cool. It validated that we all ought to be billionaires because we were different. AOL stock made literally hundreds of millionaires in the DC area; you could see them buzzing up and down the toll road in their little Ferraris, Porsches and Lamborghinis. XOLers provided funding for some of the stupidest startups ever to squeak out an elevator pitch. I know because I was foolishly involved with a few of them.

Now they've thrown in the towel and they're slinking back to New York with their tails between their legs. They have decided that they are an advertising company and as such, they belong in New York with the rest of the advertising companies.

For the record, AOL was a sucky company. They catered to the stupid and unaware, the newcomers to the Internet. Their business model was a bigger version of the street vendors that sell New York maps and if possible, the Brooklyn Bridge to skyscraper gawkers in the Big Apple.

Although they've been on a buying spree lately, history tells us that buying companies is not the same things as assimilating them into a smooth, working business machine. They have a new, unproven management team, a jokey brand and no real product to speak of. Hundreds of years from now, their company will be remembered as being responsible for the hundreds of millions of CDs and floppy disks scattered throughout the world. With a legacy like that, they will need to work hard to create a workable business model. Money alone can't always do it and to be honest, a little humility goes a long way--I don't see any so far, but keep your eyes crossed, following the future moves of AOL is the business equivalent of watching Britney Spears getting out of a low-slung car.

Posted on September 18, 2007

Hot cup of Apple

I'm thoughtful about Steve Job's announcements yesterday regarding changes to the iPod line. There were three significant points: They're dropping the price of the iPhone by $200, introducing a wi-fi enabled touch screen iPod and have made a deal with Starbucks to allow free wireless access to the iTunes web site while in the store to enable the customer to buy music.

I suspect that the most significant is the third part, although if I had run out and bought the iPhone for list two months ago, I would undoubtedly be furious about yesterday's price drop. The Starbucks deal seems like a big thing, although the future is still a little hazy. The possible mash-ups between Apple and Starbucks are endless...buy songs while drinking coffee, drink coffee while cruising the web, the list goes on. Seriously, the next generation of significant Internet presence will arise, IMHO, from the interstices between the "real" world and the "virtual" one. And nothing says real like a hot cup of Starbucks.

Prediction: In the next year, Starbucks accepts micropayments from an iPod for purchases. You heard it here first folks.

Posted on September 06, 2007

Double your Google, halve your privacy

If there's any justice in the Justice department, then the pending acquisition of DoubleClick by Google will be blocked, but don't hold your breath. For those too busy reading The Onion (This week's headline: Anna Nicole Smith finally reaches target weight!) to catch up on businessy news, Google has just made a $3.1 billion offer for DoubleClick, besting an offer from Microsoft. Google is a preeminent search engine company that is trying to ooze out over the airwaves and own pay-per-click advertising, DoubleClick is the company that pioneered banner ads and click-through revenue and is a major force causing privacy erosion online. Yeah, let's get THOSE two companies together.

Between the two of them, they will touch over 80% of all online ads. Additionally, they share a common malady--they both leave more cookies lying around then a Keebler elf with Parkinson's.

I understand perfectly why Google wants this and certainly DoubleClick's motives are clear (3.1 billion)...who cares about the consumer anyway? Well, the government should. Perhaps the "Injustice" department will rise to the occasion and at least consider whether this merger/acquisition is anticonsumer.

Posted on April 17, 2007

I fought the law and Google won.

The venerable New York Times has a thoughtful piece today discussing how Google deals with litigation. It makes for interesting reading as they go over the various cases that the Mountain View company is currently embroiled in. They are being sued for leaving a company out of search results, they are being sued for selling ad words triggered by a company's name to its competitor, they are being sued for publishing thumbnail portraits from a porn company and they are being sued for deep-scanning published books. They have increased their legal staff from a single lawyer a few years ago to over a hundred today.

This story is understandable on two fronts. First, of course Google is being sued. In a sense, it's more than just the company, it's really the leading edge of Internet business that's under attack. Google is an innovative firm, pushing the edge and they're going to attract attention both from get-rich-quickie artists and people that want to make the world spin faster so they sue God. Because right now, on the Internet, Google is the supreme deity. No other company comes close to their influence and in fact, historical (?) Internet companies have been mostly marginalized, other than cash ([cough]--Yahoo).

The story is also understandable from the sense that they'd aggressively defend themselves. They can't afford to lose a single case, because discovery (the legal process of crawling up your bodily orifices with a flashlight in case you forgot some paperwork up there) would hurt them a lot by exposing their "trade secrets." BTW, when Google talks about trade secrets, they imply that there's some magic formula, like Coca-Cola's, that if made public, would hurt the company. I suspect that it's the opposite--that if people knew how simple their algorithmic approach was and how often they diddle it manually, they'd be upset.

EIther way, Google is out there, hacking through litigious jungle with a legal machete. I wish them well because I agree with their sentiments. Their goals and many of ours coincide--we both want a laissez-faire, open Internet, where any VC can make a buck and it's reasonable for 22 year olds to become billionaires.

Posted on October 23, 2006

HP names ethics officer

HP today announced the appointment of an Ethics Officer, Jon Hoak, former GC of NCR.

I don't know Mr. Hoak and know nothing about him except for his record at NCR which was apparently very good and the fact that he is a lawyer.

I'm disappointed that he is an attorney because it's a continuation of the national delusion where we confuse good behavior with legal behavior. Ethical officers shouldn't even be needed, right? Everyone should be an ethical officer. But if you have to have one, IMHO, they should be anything but a lawyer. Same as the Chief Privacy Officer. There should be tension with the General Counsel, not collegial legal back-slapping.

Ethics is an everyman's sport. Privacy is a universal right. The law is a game that everyone has to play and ony some of us are allowed to know the rules.

Posted on October 13, 2006

Business week op-ed

I have an op-ed running in Business Week today in which I lambaste HP and specifically their chairperson, Patricia Dunn for unethical behavior. I notice the comments are piling up, some of which seem to be taking the position that it's unethical to leak information to the press the way Keyworth did and therefore Dunn's actions were justified.

This is an old argument in which the rightness of the means of a given action is subordinated to accomplishing a justifiable end. This is the same stupid reasoning that got us into Iraq and Vietnam before it. I do think that there are cases in which spying on a reporter or a Director is justified; I just don't think this was one.

There's an old military principle which says that sometime you have to do something that's illegal, unethical or just wrong. You do it for reasons which to you are sufficient. The principle is that in this case, you do what you must, but take responsiblity later and if necessary, punishment. People who perform the dubious action, deny responsiblity later when caught and blame subordinates are acting cowardly and I address that accusation at a broader audience than Hewlett-Packard.

Posted on October 11, 2006

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The dynamics of the Future

An article in the Washington Post today makes the interesting observation that because of the Internet, ticket prices to events have quietly shifted into a dynamic pricing model.

The Internet is very good at creating efficient markets--EBay is the most visible manifestation of that. Tickets are a natural for market adjustment and that's happened in a number of ways. First off, scalpers have moved online and become respectable. I'd noticed that since I occasionally buy tickets that way myself, but hadn't generalized from the experience. However, for the last few years, I could always get a ticket to a Broadway show, no matter how sold out it was, if I was willing to pay a premium.

The Post article points out that the promoters of sporting events and rock concerts are starting to auction off the best tickets on the Internet. That would seem to be an inevitable outcome, although it's usually not possible for the same company to run a primary and a secondary market for any commodity, because the price isn't allowed to freely fluctuate in the secondary market the way it ought to, usually because of hidden consideration seeking to prop up the primary.

I imagine that there'll be more of these dynamic pricing models popping up, as people get more used to the superficially unfair aspect of it.

How about:

Charging more for the pre-Christmas purchase of the hottest toys?
Decreasing the screens for movie releases and adjusting the pricing--Charge more when the film is popular and gradually drop the ticket price as sales drop off
Allowing students with lesser academic records to attend prestigious schools, but pay more?

Posted on October 06, 2006

Facebook is new--not so Yahoo

Facebook is purportedly in talks with Yahoo to sell out. Asking price: $900 million...minimum. When Viacom had previously offered $750 million, Mr. Zuckerberg, the CEO asked for $2 billion.

He is 22 years old.

Yahoo is trying to fix their brand. They have slipped from pretentious to insignificant in recent months and are obviously feeling the pain. Yahoo is not a brand that that the younger generation relates to, other than the completely free services like hotmail that they offer and are abused by pretty much everybody. On the other hand, putting up a sign outside a store inviting shoppers to take what they want for free will generate a crowd, but is only interpreted as financially sound by the ignorant and the paid (financial reporters, example).

Yahoo lives in ad revenue as does Facebook. When they become less interesting, then their ad revenue will slip (It already has)).

Facebook has the potential to be the next Yahoo. Yahoo has the potential to be the old Facebook. In many ways, they are trying to do the same thing--facilitate human interaction. I hope Mr. Zuckerberg sticks to his guns and goes it alone a while longer.

Posted on September 22, 2006

Evolve or farewell--goodbye, AOL

Technology has compressed the time of business evolution drastically. Hi-tech firms can live an entire life cycle: rise from the seed of an idea, flower in full bloom and then slowly sink back into the muck in about ten years, soon to become a fossil. Compare this to the slow movements of last century manufacturing industries like US Steel, Westinghouse and General Motors, who took 50+ years to visibly change how they did business. Microsoft came from nothing to become the largest, most significant company to end up as a less than dominant player without Bill Gates; all in 25 years.

Silicon Valley is littered with the ravaged faces of the old tech whores tottering up and down Hwy 101, still plying their wares and occasionally getting a little action. Remember Atari? Silicon Graphics?

Knowing about this punctuated lifecycle, exit strategies become even more significant for tech companies. The smaller, venture-backed ones, have this down to a science. The larger ones, though, always seem to stay at the party a little too long.

Case in point: AOL. Their original business made sense, they were a modem bank providing online access, competing against Compuserve and similar fledgling access providers. They grew into a kind of Mr. Roger's Neighborhood for early Internet users who knew enough to want to get online, but didn't have the ability or the know how to get a real connection. Demphasizing the ISP part of their business, they continually strengthened the Muppet end of the business, growing bloated enough to gobble up Time Warner.

Today AOL is a huge, meaningless company that lingers and shambles through the Internet like the last guest at a party who won't take the hint and leave. Why AOL? What's their differentiator? What's their market? What are their strategic alliances? What's new about what they do?

The only time that you hear about AOL these days is when they commit a social gaffe like dumping three months of all of their users' search data onto the open internet or when one of the few executives at the company that historically "got it", Ted Leonsis, quits.

So whereto AOL?

I have three suggestions:

1. Divest everything that is not a core business (meaning TIme Warner) and modernize your core business about building a safer Internet
2. Bring a newer, hipper management team and give them the charter to do a complete corporate makeover including image, mission and management.
3. Have a summit meeting, invite smart thinkers across the world to Dulles, wine and dine them for a weekend and come up with what AOL must do to be meaningful in the new millenia.

Failing that, I recommend that the company find the nearest tar pit and leap in.

Posted on September 18, 2006

I love HP

And you thought that HP breathed so slowly that it was almost dead. A bizarre story by Newsweek, reveals that HP chairperson, Patricia Dunn, hired investigators to find out which Board members had leaked a story to CNET. The consultants did as she asked, identifying the leaker, who admitted it at a subsequent board meeting when confronted by Dunn. The problem was the investigators fingered him by acquiring his phone records, proving that he had been in contact with reporters.

The records were gotten by a technique known as "pretexting." It's also known as lying.

In pretexting, the interested person contacts phone companies, credit card firms or even government agencies and misidentifies themselves as the subject . If they can successfully convince the bored, minimally paid customer service rep on the other end of the phone that they are actually who they are pretending that they are, then they usually get the information; in this case, they had phone records for HP board members shipped off via email to a Yahoo email address that appeared to not have any connection with the person who owned the account.

The board member has so far refused to resign, but another member, Tom Perkins, the co-founder of venerable and hoary Silicon Valley firm, Kleiner-Perkins did. Citing unethical behavior by Dunn, he resigned and is right now embroiled in a governance brouhaha about whether HP has to file his reasons for leaving with the SEC.

It's not completely clear whether or not this type of behavior is legal, but formore discussion, look at the Newsweek article.

What's most interesting to me is not the legality of the actions because that's for the courts to decide.

It's also not Dunn's motivation because I understand that. She was furious at the leaks and felt powerless to do anything about it. It's natural for type A predators that end up in power positions like that to reach outside the organization and hire someone goal-oriented to fix the problem.

What's interesting to me is the way that the people involved used a lifetime of exposure to ethics to react in the situation. The leaker may be a hero or may be a worm...it depends on his or her motivations. Dunn showed a remarkable lack of anything that I would normally call ethics, not realizing that her aggressive behavior tainted the company, making her future actions suspect. The other board members who meekly acquiesed to Dunn's actions, once they found out, are morally vaporous. They should have played the Ethics card instead of doing the but-is-it-legal-shuffle.

Kudos to Tom Perkins. I don't often hold up a VC's behavior as a shining example of nobility, but he gets the corporate governance medal of the year. By calling Dunn on her behavior and ignoring the legality and focusing on the real problem--ethics--he rose above the pack by doing the right thing. Sure he's a gazillionaire and could afford to walk off a few boards, but trust me, most VCs would have quietly nodded at the revelation and asked the Chairwoman for the investigator's name after the meeting.

Posted on September 06, 2006

Buy and Cell

Does anyone still use landlines?

I have several kids in college right now, in apartments. It didn't even cross their minds to get phones installed, because they use their cellphones. It's easier with billing and they don't have the sharing problem with roommates. I have a landline, but I don't use it often. More and more, I use my cellphone.

What's this mean in the long run? Well, it's clearly a blow to the gut for the telcos. Even more so, it indicates social change in the offing. Everyone becomes accessible. It's not completely true now, primarily because the directory and filtering systems are disfunctional. How do you publish your number and avoid cell spam? Spam is the unhealthy result of widespread, low-cost communications. For now on, any time that you invent a new digital communication device, spam will pop up, like mold.

A good idea for a startup company would fix this problem early. Some kind of mechanism whereby every cell number was published, but the recipient could screen selectively and easily, without being rude, and only let certain calls go through, rerouting other calls to one of a series of relevant messages or possibly forwarding to someone who is more appropriate to the call.

Posted on August 24, 2006

Adrenaline junkies vs. Risk takers

The NY Times has a thought-provoking article this morning observing that CEOs do not blog. They mention Jonathon Schwartz, the new CEO of Sun, who is apparently the only Fortune 500 CEO who does.

Having been a CEO, albeit a much smaller company than Sun, I can understand and explain by way of my observation, based on many years of experience serving at several levels of executive management: Good CEOs are not risk-takers, they are adrenaline-junkies, and those are not the same things. Bloggers are risk takers.

Risk takers rate every decision on a penalty/reward continuum and go through life calculating the odds of everyday things like a Vegas bookie. They tend to be fearless in the face of adversity and are often accepting of the consequences of unlucky outcomes. Startup jockeys are risk-takers as are many good CTOs. Risk takers like the intellectual rush that comes from in-depth analysis.

Adrenaline junkies like the emotional thrill of gambling. They often show the same propensities for stress in their personal as they do their business life. They drive fast cars, downhill ski on double-diamond slopes that they're not qualified to be on and are often found on weekends bungie-jumping or taking flying lessons or something equally hormonally stimulating. They don't care about the reward and they take risks for the rush, not for the challenge.

Good bloggers speak from the heart and they see the risk/reward tradeoff as being acceptable. They can explain themselves to others and often learn about themselves by writing down their thoughts. There's no adrenaline boosting going on here to interest the CEO.

Posted on August 01, 2006

The attack on online currencies

Via Slashdot, articles in Gamespot and in Eurogamer mentions that some popular games (Final Fantasy XI and World of Warcraft respectively) have cancelled many player accounts because of usage of third party software in the games. Such software can be used to mine online game currency and this, coupled with external sales of game currency is against many online games' rules. Blizzard (World of Warcraft) cancelled 59,000 accounts last month alone and stripped 22 million of game gold out of the accounts.

Expect to see more of this kind of thing....alternative currencies are spring up in may places on the Internet and games are just the easiest to use and most visible of the variations. It gets most interesting when, like these examples, there is a way to cash these virtual moneys in for coin of the realm.

Reading over this, I notice that I used the word "virtual" to describe these currencies, but really what is any country's currency based on these days? They're all virtual and Internet-based ones are just as legitimate if enough people believe in them. Of course, wide-spread adoption would play holy hell with any nation's economy.

Posted on July 28, 2006

Mice Pays

Myspace is an enigma. They don't have a business model, they appeal to people who don't buy anything from them and worse, they've been bought by Rupert Murdoch, the living embodiment of the Simpson's Mr. Burns.

Yet, they're hot. So hot, in fact, that they've made boring old Silicon Valley hot again, too. Venture Capitalists have opened their maws and disgorged the money that they've been hoarding for just such a day. Social networking. Web 2.0. These terms come up often when talking about Myspace, and in just 3 years, they've already spawned imitators and related sites like Facebook and Youtube.

Is the success of Myspace due to their appeal to schoolchildren?
Are they successful because of some pentup desire for pushing content?
Is it the fact they're pushing bands like the Arctic Monkeys?

I suspect that it's none of these things. As much as marketing mavens would have you believe otherwise, viral marketing is a description of a phenomenon, not a premeditated action. Myspace has found pent-up demand for something and like a mosquito that bites down on a carotid artery, it has struck the motherlode.

This newer generation knows computers and grew up with the Internet. They don't want wow, they want something that works for what they want, and that's communication. Myspace is a digital shopping mall, just like IM is a computerized telephone and facebook is this millenium's version of a yearbook. I don't mean literally, of course, but they satisfy the same need.

There is fertile business territory here, catering to the needs of all age groups by providing technologically equivalent versions of what they're already used to, like televisions, phones and yearbooks.

This is the first generation that doesn't believe that anything computerized is high-tech, they discriminate new and old, hip and square, by what the applications do for them, not because they can play pong with it.

Posted on July 05, 2006

Free parking: municipal wi-fi

There's been a lot of stories about municipal governments looking at adding free or low-cost wi-fi as a public service. The NY Times has one today discussing Taipei's plans. New Orleans is also thinking about it, along with several Canadian and U.S. cities.

The opposition to the idea typically comes from telcos and their minions. They dislike the idea of free Internet access the way that I imagine vampires feel about Red Cross blood drives.

I love the idea of free access and I believe that any municipal government that does it, is going to be rewarded tenfold with increased retail foot traffic and a higher quality of life for its residents.

Some people don't get it yet. The business model on the Internet is not about paying for access, it's about content. When the infrastructure capital costs to put a city block online are $10k or so, we're talking about chimp change and we as consumers are not going to stand for being gouged on this.

The alternative, of course, is for vendors to buy a couple of hundred dollars worth of Linksys or DLink and do it themselves. There's some critical mass point at which everyone will have to offer free access in public places. I expect that it will become like parking in downtown areas. Some places use it as a revenue generator, some outsource it to 3rd parties, some offer free parking as a public service. My hats off to the enlightened towns that choose the latter.

Posted on June 28, 2006

A Texas girl named "sue"

I see more of these kind of stories lately. A Texas lady is suing Myspace for $30 million because her 14 year old daughter was allegedly molested by a 19 year old that met her on the popular website. Her contention? Myspace should have done more to protect her daughter.

I don't understand why Myspace is responsible? Does every website have to have an age-verification system set up?

Malls and bowling alleys don't segregate participants by age, why should websites?

As a parent, I have to wonder about other parents that abrogate their child-rearing responsibilities onto others. It's like people who believe in school prayer or teaching "Creationism", many of these problems go away with a good, strong home life. I realize it's Texas, but...

If American's penchant for get-rich-quick-by-litigation schemes transfers fully onto the Internet, we're going to lose a good thing because everyone will be too afraid and banner ads will be replaced by legal caveats warning that older men are after one thing and hot coffee will burn.

Posted on June 20, 2006

Books redux

Books again. On Saturday I was at BEA, the Bookseller's Expo of America as a guest of my publisher (my book, Privacy Lost, is coming out in September from Wiley, preorder from Amazon). It was amazing...tens of thousands of authors, editors, books sales agents and those funny little people that go to all the trade shows and collect the cheap give-away stuff. Is it possible that they're all the same people at every show? What do they do with all of it? They must eat it, the spongy balls and bookmarks and canvas tote bags.

So, for me, the really interesting thing was Google. They had a big booth and they had little Googlemobiles, acting like taxis, driving attendees around the city for free. What a nice company.

There was a lot of talk at the show about the digital/analog problem with books; this discussion spurred on, no doubt, by the polite presence of Google, explaining their book search program. The Washington Post has an article on this this morning.

I'm becoming firmer in my belief that the progress of technology regarding entertainment content is inevitable. I can't imagine the tide being turned at this point, Yet, I'm not so sure the old word of reading as we know it is dead. It's not the same problem as movies, for instance. Nobody watches a VHS tape instead of a DVD if they have a choice. Yet cinephiles do occasionally prefer seeing reels, just as audiophiles like to use turntables.

Let's make a distinction between revenue and publishing. I think that the publishing industry will have to find alternate ways to make a buck from their books. No question in my mind. However, that doesnt' mean that there isn't a place for books in our future. We just might not be able to count on sufficient income from sales to justify the printing of the book.

Perhaps flash-in-the-pan bestsellers or what I'd call "beach books" could be distributed in the new ways and the John Updike books come out in paper. Libraries will always buy them as would bibliophiles.

I'm starting to realize how antiquated the publishing industry really is. It's not quite Dickensian, but it's not exactly the Jetsons, either.

The trick for publishers is to figure out how to embrace the coming digital wave and figure out how to make money by giving the consumers what they really want, because after all, isnt' that what capitalism is all about?

Posted on May 22, 2006

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Venturing out with capital

The New York Times said something that I've been thinking lately--that VCs are up to their old tricks again, hyping companies.

The Times discusses a couple of recent cases of excess, notably Facebook, which was started for $12m and is now apparently trying to get $2billion.

The biggest story that was never told from the dot com bubble in the '90s was the role of the VCs. I have a secret--it was their fault. They bid companies up, then sneered at the valuations. They insisted that young CEOs spend money lavishly on pet monkey consultants and advertising, yet pointed to that spending later as a sign of failure. And after all that, and bad investment judgement too, they made money. In fact, they're the only class of people (other than investment bankers) who did. That's why they're doing it again.

So where does the money come from? Normal people. People who get in on a hype way after the fact when it's too late. People who invest in companies when the valuation is over $100 million or worse, buy the stock post IPO, post run-up. They are the fuel for our industries fire.

I wonder if it's happening again.

Posted on May 19, 2006

Sun and sundries

Scott McNealy stepped down as CEO of Sun Microsystems this week after 22 years in that position. He will be replaced by Jonathon Schwartz, McNealy's protege, often described in the press using the adjective "pony-tailed."

Sun loses money. $217 million last quarter, as a matter of fact. Their revenue is generally okay, but their profitability has been sliding.

They're inconsequential.

That's the worst thing that can happen to a Silicon Valley exec--to be ignored. Sun was the "It" company in the Valley for many, many years. Some of the best tech people in the business cut their teeth at Sun. Sun's championship of things like UNIX-based windowing systems, NFS and BSD in general, provided a platform that serious developers used as their first choice for serious development.

I went to IBM in 1994 into the fledgling Internet division and given the time constraints of projected development, I insisted that we build the initial system on Sun boxes instead of IBM ones. After a lot of grief, I was allowed to do so (although quietly). Every UNIX geek that I knew used BSD, SunOS and eventually Solaris and could handle a Sparc station in their sleep.

Now, they sell big servers to the government and large companies, but they're not the development platform of choice for hot developers anymore; now it's Linux and in a pinch, Windows.

Sun's business moves don't shake the industry. I had to hunt for the announcement of the CEO change on the Washington Post website, because it quickly disappeared off the front page into the back of the business section. Ten years ago, it would have been all over the paper, because it would have been significant to an industry, not just a company.

Today they're inconsequential.

I have no solution, but some suggestions. Sun's success was lockstepped to that of the Valley and its geeky denizens. Sun prospered because they'd tied themselves to an industry.

They should reinvent themselves by owning new areas of expertise that they could excel at. Grid computing would be a good example of something that they do well.

They need a new image and a plan, not for this year or next, but ten years out...what do they sell? Big servers, cheap workstations, integrated hardware/software vertical solutions or maybe web services?

It may turn out that they were tied to an earlier era that doesn't exist anymore--that they were the general store servicing the cowboy geeks of the wild, wild Internet. Their time may have passed, but hey, that's what billion dollar mergers and acquisitions are all about. Changing the business usually means more than just changing the CEO, often it takes something a little more drastic, some kind of corporate electroshock.

I remember Jonathon from Lighthouse. He struck me as energetic and creative, two qualities that he'll need in this position.

I have fond memories of Sun and so do many others. I wish them well.

Posted on April 26, 2006

The Chinese finger trick

Apparently Yahoo has fingered another Chinese dissident. Jiang Lijun was sentenced to 4 years in prison for subversive activities. The proof was a draft email that Yahoo turned over to the Chinese government. This is the third time that Yahoo has fingered a dissident to the government.

They are hardly the only Internet company to cooperate with another government's political quirks. EBay and Yahoo both block the sale of Nazi war memorabilia at the request of the French and German governments. Google blocks certain dissident sites from searching by Chinese users. Most Internet companies are reputed to cooperate whole-heartedly with American intelligence agencies, providing not only information on request, but even, in some cases, dedicated and highly secret backdoors to the logs.

It's time to stop thinking of Internet companies as Mom and Pop shops, startups or even good guys. They're multinational big businesses like General Motors, IBM or Michael Jackson. This loftiness is inevitable and if you're an investor, desirable.

But there's two ways that a company like that can go--they can either set their own culture above any one nations's and be master of their own fate or they can be the cumulative ethical sum of every major trading partners' value systems, no better than the intersection point of everyone that they do business with.

I commend Microsoft for having been the former. They stuck to their guns on their own imperialistic agenda, regardless of antitrust laws around the world. But the new guys in town? They're rolling over faster than Paris Hilton making a home movie.

Posted on April 20, 2006

Souring Apple

Yesterday Apple unveiled the long-anticipated Bootcamp product, that allows new Intel-based Macs to run Windows XP in a dual-boot configuration (hence the name). Currently it's an either-or-operating system situation--either it's a Mac or a Windows box. Presumably there will be a future download (it's free, by the way), that will context-switch in run-time.

So many people are asking "why?" The Mac purists don't understand why anyone would want to run Windows at all. The Windows people don't know why someone would pay a premium for a Mac, then run Windows on it.

I think that the right perspective in which to view this is as a transitional strategy for Apple. Obviously they think that they can expand the Mac user base by removing an objection to buy--namely that they do not run Windows programs. But I question the wisdom of doing so. I realize that there are some programs that are have-to-haves for corporate America. They tend to be proprietary enterprise systems, VPNs, sales tools and the like or deeply vertical applications that run on Windows and support an entire industry, like real estate sales, for instance.

However, the appeal of Macs are not just the cachet, but the fact that they work and work well at what they set out to do. They are not workhouse machines, they are creative boxes for people who don't want to think about the computers as much as they what they're doing with them.

Those people, the long-time Apple user base, will be poorly served by this corporate direction. Soon, small design compromises will be made to accomodate the dual boot configuration. Each one will lead the Mac down the road of frustration and exasperation that is the daily commute of Window's users. And let's not even talk about security implications of a hybrid operating system.

There's no bigger marketing evil than allowing greed to booger up your brand. Jobs did something very similar at NeXT computer. It didn't work then either.

Better to be the darling of the computer industry and have a small market share, then begin to wallow in mediocrity. Or as Milton said: "It's better to reign in Hell, then serve in Heaven. "

Posted on April 06, 2006

Gotta have more cowbell

When the video ipod came out, I ignored it--at first. Why would someone want to see video on that small a screen?

But eventually I upgraded. Once I had one, of course, I needed to download some video and see how the thing worked. Surprisingly, it's not that bad. You can amuse yourself for quite a while in an airport watching the handheld device. The screen's small, but usable.

Music videos are a natural. You can also buy TV shows from itunes and I found out that it was very easy to convert DVDs into an mpeg file and watch them on the iPod.

So, first thought...the pricing is wrong. Music videos are $1.99. That's high, but I could almost justify that. Entire dvds like the "Best of" series from Saturday Night Live are $9.99. That's fine.

But, here's the rub...Saturday Night Live skits are $1.99 a piece. Yes, that's right. 45 second skits are 2 bucks. This pricing is way too high. In fact, I will virtually guarantee that this pricing will force consumers past that magic ethical twilight zone, where any lingering thoughts about "piracy" go out the window. It's easy to feel guilty about ripping off a vido for a buck, but $1.99 just seems greedy to me.

Having said that, I should add that the one exception to my argument is the Christopher Walken "Cowbell" sketch, which is, of course, priceless.

Posted on March 03, 2006

Starting over

Starting a company is very different now. I've talked to several startups run by serial entrepreneurs and all of them are eschewing VC money. They use angels, but more importantly, they bootstrap. Companies really only need to raise cash in the early stages for three things: 1) hire more people 2) buy hardware 3) spend it on something stupid.

By using outsourced development, they should be able to control costs fairly well. No startup needs a CFO, great chairs or more than one item of clothing with the corporate name on it.

Most companies that I've seen should be able to get to revenue for less than a million, million-five, tops.

This trend has interesting implications for the venture capital industry. There's certainly lots of places for them to spend money, but they may stop seeing the sweet early stage deals. Food for thought.

Posted on February 07, 2006