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May 30, 2006

All Strategy and No Tactics

Two of my favorite thinkers, Richard Feynman and Seth Godin in the the same blog entry. How about that ? I have Seth's The Big Moo and Richard's Surely You're Joking Mr Feynman on the same bookshelf. One is nobel laureate physicists, the other a marketing guru. What can these guys have in common ?

Seth is quoting one of Richard's more serious stories, about not fooling yourself and always looking for the truth about why things work. Do not just copy what is the fashion of the day. Clearly they are both conceptual fanatics. Always looking at the concepts and fundamentals of why things work (or don't work).

On a few occasions I have been asked what makes a good entrepreneur and innovator. Being an Oxford PhD, I like thinking that understanding why things work, being conceptual, is a must. Never copy a marketing design or business model unless you have understood why its going to work for you. Right ? Maybe not.

One of my partners often tells me "Who cares why its selling, lets just copy it and we will learn a lesson if we flop". And he has a track record you do not argue with.

As I see it, a good entrepreneur is often just perceptual. Reacting to, adapting and copying things he sees in the market. By the time a deep thinker has finished strategizing and working out the market landscape, an impulsive copier has tied up the market. Sometimes you just have to copy and work it out afterwards.

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May 29, 2006

How Google Runs its Innovation

After several attempts at structuring their development process, Google has arrived at the 70-20-10 rule. Eric Schmidt, the Google CEO, alleges the rule was arrived at through some clever maths from Sergey Brin. An unlikely story, since getting an innovation process right is, like cooking, more an art form than a hard Science.

Initially, Google attempted a classical structured engineering process. The structured BCG matrix approach is excellent for incremental innovation. Maintaining a product in a competitive position, by measuring function or feature points of products in the market. Google abandoned this engineering management approach concluding that while productivity was high creativity and innovation were poor. The process is poor at discrete innovation, at launching new products.

Eric Schmid outlines their current process as follows:

1. 70-20-10 Principle: By the most recent analysis, Google is not as high as 70% in the core of search/ads, so now they're reshifting the focus again to adjust (in other words, we're doing more search again...).

The 20% represents Google's bargain with technical people, allowing them to roam free to encourage creativity---where all the most interesting products emerge.

The 10% is for wacky ideas that might not work out but feel worth pursuing.

2. An "exhaustive drama of arguments and reviews" in "ceaseless GPS [Google Product Strategy] reviews---so much that it's produced a recent internal traffic jam on the servers with so many such teams."

3. A monthly formal revenue force and reordering around product investment.

"The goal is to systematize anything...The only way to deal with the growth in scale, is a systematic approach to each and everything we do...Google's making significant storage/computing capacity investments, reusing and combing data from one application to another...."

An interesting glimpse on how you maintain creativity and disruptive innovation once your company and staff mature. The continual GPS (Google Product Strategy) Reviews are akin to Microsoft's continual paranoia of potential threats to their dominance. This is likely to be a core objective for Larry and Sergey, as the future of the company hinges on a continual flow of creative disruption from its development staff.

Google's innovation process certainly intrigues many people Google's secret sauce recipe.

Related Entries:
Is Google Hiring Hackers or Software Engineers?

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May 27, 2006

Tim O'Reilly Don't Be Evil

Big discussion on the blogosphere surrounding O'Reilly's "web2.0" trademark. Tim O'Reilly prevented a not-for-profit organization using the term "web2.0" in its conference title, alleging trademark infringement. Though the dispute has been settled amicably, the communications from O'Reilly's PR director has been very poor. In, fact my Communications Director would first flay me alive if I committed such a faux-pas, and then redress the damage to the company image a lot more effectively.

The problem is not so much the substance, but the appearance and perception by others of his trademark complaint. Tim is a champion of the hacking community, where commercial aggression is frowned on, and kudos comes from contribution to the commons and intellectual prowess. Tim is in fact a great champion of the patent abuse issues. He wrote Jeff Bezos an open letter complaining about patent abuse with Amazon's one-click purchase patent request.

With such a dominant image among the creative commons community, which is his main customer base, Sara Winge, VP of Corporate Communications, should advice and influence Tim more strongly. In fact, I dont envy Tim's return from holiday. Nevermind the rest of us commenting on his faux-pas; Tim's biggest problem will be Sara Winge taking a baseball bat to his head.

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Google strikes distribution deal with Dell

The deal, reported by The eStrategyOne Buzz, Dell will bundle Google Desktop software on its PCs, the open source Firefox browser and the Google toolbar. Under its terms, Google pays Dell an undiclosed sum per PC sold, and will last three years.

Bundling google software benefits the users. Microsoft's Internet Explorer and msn landing site are acknowledged to be poorer than their google counterparty. Firefox browser and the google desktop search and particuarl favorites among converted users. The only reason for Microsoft's dominance of the browser market is the precisely this pre-bundling its of the software. Dell users are unlikely to look back.

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May 26, 2006

One in ten UK retail sales now online

The UK's "Office of Fair Trading has launched a fact-finding market study into online shopping Around 130,000 UK businesses now sell online. Internet sales are on a rampant growth curve. Further figures have been published by the IMRG, Netimperative - One in ten UK retail sales now online

The results show that 10% of all sales are now influenced by the internet, the breakdown is as follows:

  • £30bn of retail spending is online, while £20bn of non-traditional retail such as gambling and banking is online.
  • a further £30bn of offline retail sales is influenced by information gathered online
  • in other words, £80bn of consumer spending is either online or influenced by the Web

Furthermore, the trend is growing faster, more than half of shoppers said they are planning to reduce their High street spending in 2006 while 45 per cent say that they are willing to increase their spending with online shops.

In addition, nine in ten (90%) shoppers researched goods online before buying them on the high street.

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May 25, 2006

Do the best entrepreneurs wear jeans?

Funny post from David Beisel's Genuine VC

In the limited subset of entrepreneurs pitching an early-stage venture firm in the Boston area, it seems that there is an inverse relationship between how formally an entrepreneur is dressed during the pitch and how potentially exciting their endeavor. Of course, the correlation isn’t perfect, and correlation doesn’t imply causation, but it is notable, especially given the “stuffy” reputation the area has vs. the rest of the start-up regions. Perhaps it is a symptom of the expression of confidence wearing something comfortable.

Dress is a definite sign of which side of the Creative Chasm the entrepreneur comes from. A wide cultural difference exists between the corporate mainstream manager and the contrarian creative artist. When the entrepreneur wears jeans at a corporate stronghold like a VC office, either he feels confident of his worth, i.e. "I may come from the creative mob, but look what I did", or he is a creative class native with reason to be invited to a corporate office. Either way the cultural mismatch is a good sign of potential. Could be the birth of something.

I love the creative side of the divide. The early startup up period, which is all passion, exhilaration, and lateral thinking. It is the most fertile stage of a company. Unfortunately, the weight of accumulated customers, staff count, and the responsiblity of the paying monthly wages opens the way to structure process and rationality. Then you put your suit and tie on so as not to scare the shareholders, the corporate clients, and the corporate managers you have recruited.

There is definately something to jeans, the creative classes and crossing the chasm.

Contrarian attitude in Venture Investment

Good post by Fred, on turnarounds and dark times in VC investments. I would say, in the best contrarian spirit, the best investments are made during the darkest times, when all you see are smouldering ashes of a business model.

It takes true vision and trust in fundamentals to go against everybody's advice to give up. Or, as with many entrepreneurs, it takes a contrarian pig-headedness that relishes going against the mainstream trend. The trickiest part of bucking the trend, however, is timing. And that is when you need luck.

May 23, 2006

Entrepreneur Lifestyle

Good post from Rajesh Jain, India's premier entrepreneur

Talk of Blue Oceans and Black Swans an Entrepreneurs Lifestyle

As an entrepreneur, I have always bet on futuristic ideas. Most of the times they have not worked out. But that hasn't stopped me from making the bets. That is the only way I know how to create new businesses. Until recently, I did not have a name for it. Now, I can term it as blue ocean strategy. The theory is easy to understand, but building a blue ocean business is tough. When one is trying to create a future that doesn't exist, skeptics abound. This is where an entrepreneur has to keep the faith. There will be many testing moments through the venture the entrepreneur has to face up to them with confidence.

Till a venture takes off, it requires immense belief in the vision to live through the daily challenges. And if a venture is not taking off, it requires great courage to accept failure and move on in life. Either way, the entrepreneur's life is about making difficult decisions and walking an often lonesome path.

This is not easy. Most of the time, I end up losing money. These are relatively small amounts of money I do not make bets which can wipe me out financially. I believe in making a few bets on what tomorrow's world will be and hope that the companies I am involved in can execute well enough to not just make that future a reality but also be big winners. I didn't have a name for this approach till I read Nassim Taleb's book, "Fooled by Randomness", And then a phrase came to me - I am a black swan entrepreneur.

Just like Nassim Taleb, who bets on extreme events as part of his investment strategy, I am betting on extreme ventures. These ventures are not about incremental change, they are about disruptive innovation. And as we were told again and again, most new ventures and products fail. But a few do succeed. Just because many new initiatives may have failed in the past, it does not mean that the next initiative will also meet the same fate. This is similar to seeing white swans. Just because one has not seen a black swan, one cannot conclude that it does not exist.

A good description of the trial and error fundamentals of successfull entrepreneurship. Not quite the turn of phrase used by Seth Godin in Zooming. Seth runs a mile with the whole embracing uncertainty concept. But good descriptions of entrepreneurial attitude and lifestyle are hard to come by.

In fact, little is successfully taught about entrepreneurial attitude. Formal "managing innovation" courses emphasize the systematics nature of making choices, with BCG matrices and weighting functions. Little prepares an MBA graduate, bursting with enthusiasm on graduation, for the day to day life of an entrepreneur. Like a goldminer setting out for the hills, the bad times are hard, while the good times ridiculous. Total volatility. MBA graduates can rarely stomach the extreme uncertainty, in wages and career path.

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May 22, 2006

Early Adopters of Technology Do Not Make a Market

Web 2.0, the current frenzied trend in online technology is having difficulty attracting the majority of the market. In spite of the success with technology enthusiasts and early adopters, their share of the total online market remains low. Hitwise has just published market share statistics for internet search, email and news, which throws up a few surprises.

Note that the older services like, mapquest mapping services, get 10 times the traffic of google maps. Another surprise is that Yahoo Mail gets 20 times more traffic than Google's Gmail, in spite of the more rudimentary features.

Many blog authors, who are a success among these early adopters, still need to attract mainstream visitors to make a living from their blog. Similarly, the popularity of web2.0 services like youtube and flickr is limited to early adopters , blog-users, causing the referred blog echo chamber effect. But, as the hitwise statistics show,
no impact on the mainstream so far.

The big mistake for web2.0 startups is that they are ignoring the mainstream market, not realizing that early adopters are a fickle customer segment when it comes to building profit. The rule of thumb among VCs is that the first 25,000 subscribers are irrelevant.

The big threat for web2.0 startups are that the mainstream online players like Microsoft, Yahoo and Google, who already have one foot on the mainstream market. They can adapt web2.0 ideas, make them easily understandable for the pragmatist, skeptical mainstreamers and make an easy introduction to their existing subscribers. A classic set piece scenario in Crossing the Chasm between early adopters and the pragmatist mainstream market.

May 21, 2006

Government's Are Poor at Funding Growth Companies

Paul Graham is right about governments being poor at funding innovation growth. In his How American are Startups? speech, a candid analysis of how to create an innovation center like Silicon Valley, Paul damns government's abilities to fund companies.

Government is not a good replacement for rich people / angel investors as they're slow, invest inappropriately and don't have the contacts or experience to support the right activity

I have never seen a Government backed program funding growth well. Myself and my partners spent two years in a institionally funded technology park that remained resolutely empty of companies during the 2000 boom. My company, which was funded through private and public equity investors, was the only company to contribute to the staff count in the park for almost two years.

I think VCs, business angels and self interested investors have no equal when creating long term regional growth.

[Paul's speech is transcribed by Suw Charman and Tom Coates.]

May 20, 2006

A Drop of Sanity on the DRM Stranglehold

The opinion on the ruling is that it will reduce placeholder patents substantially. Patent plaintives will have a weaker position from which to negotiate an early settlement. The court ruled that the infringing party must only pay the amount of actual damage. This racket has cost tech companies and consumers billions in legal settlement fees. The legal contingency funds held by innovation based companies will not need to be so high in the future.

Boing Boing: Supreme Court makes it harder to be patent predator

The Supreme Court ruled earlier this week that injunctions shouldn't be rubberstamped for patent cases. They specifically singled out business-method patents that are litigated by those who have no stake in producing the product or offering the service; i.e., patent trolls.

What this means is that patent trolls will be less likely to hold their victims for ransom through injunction unless the patentholder can demonstrate that they meet a four-part test, already in use for other injunctions involving equity, which is hard for a non-producer to meet. Even if a patentholder wins at trial, the defendent could file an appeal and still have injunctions in abeyence.

In essence, a plaintiff has to show irreparable harm, that mere money or other remedies when at trial aren't enough, that there is an imbalance in hardships against the plaintiff, and that a permanent injunction wouldn't harm the public interest. (IANAL.)

May 17, 2006

Email Delivery Neutrality Gone Forever

Delivering email newsletters to their clients has become a problem for smaller companies. The cause is the absense of email neutrality; the emerging tier system for classing email senders. Large corporations, like yahoo and Microsoft, have formed a top tier of email senders, and the small companies have been relegated to the bottom tier.

The struggle for email neutrality has been fought for years as email senders, like the small company newsletter authors, have fought to be included into the increasing number of email accreditation bodies. The struggle has been fought and ultimately lost.

Spam has forced several tiers of email senders onto the internet infrastructure. ISPs increasingly clear email based on not just blacklists like spamhaus.org, but also on white lists (or private accreditation organizations). The latest email accreditation list has been added by Goodmail, another email accrediation provider Goodmail Adds 15 ESP Partners

Goodmail, the e-mail accreditation provider generating controversy through its partnership with AOL, has signed up 15 new e-mail service providers to implement its CertifiedEmail service, including BlueStreak, Acxiom Digital, e-Dialog, Epsilon Interactive, ExactTarget, Harte-Hanks Postfuture, Responsys, Yesmail and Zustek.

On the receiving side, besides AOL, Goodmail is expected to be implemented soon by Yahoo, though no details have been shared.

The reputation space is wide open, with differing methodologies competing to see which can gain ground. Goodmail's per-message fees strike some as the equivalent of e-mail postage, and has legislators and special interest groups whipped into a frenzy. Other reputation providers, like Habeas and Return Path, take a more services-based approach, helping providers improve their sending practices instead of paying to send mail. Which one of these methods will work best? Or will each find its own niche? Let me know what you think in the comments, or drop me a line at kevin-at-clickz-dot-com.
Nowadays large corporate marketing departments can buy good delivery of their mailing lists, whereas smaller company mailing lists do not get through.

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May 15, 2006

Telco Companies Promise Innovation in Exchange for Monopoly Concessions

It is true that the depreciation in telcos impact substantially on their return on equity. The telco infrastructures are expensive to maintain, specially when the investment was ill judged during the 2000 boom. Few ISPs are covering their depreciation with capital investment fully. An unfortunate fact for telco shareholders and directors.

Telcos would generate better profits by abolishing network neutrality, at the expense of profits for society as a whole. Large telco companies, specially encumbent former state companies, are not known for the wealth creation abilities. Small entrepreneurial companies have historically been the biggest source of GDP growth.

Giving further market concessions to a mature industry sector with a poor track record, at the expense of the small entrepreneurial company sector is short termism at its best

Quoting Susan Crawford blog it is a question of trust:

Why should we trust them now? We've already given them incentive after incentive, access to rights-of-way (presumably in exchange for common-carrier behavior, as Dan Berninger points out), and the regulatory shirts off our backs.

Helping telco companies make more profits is good for society as whole, or just the unlucky telco shareholders?

May 14, 2006

Web Radio Overtakes AM/FM radio - Good News for Open Spectrum Activists

Radio listeners are turning to the web, Web gets more listeners than AM/FM. The news is

People using the web to listen to radio during the evening now outnumber those using traditional AM or FM receivers, according to Virgin.

Nearly one in four (24 per cent) listens online compared with 21 per cent who tune in to analogue broadcasts. Seventeen per cent use digital (Dab) radio and nine per cent get the programmes via their TV. The remaining 29 per cent represent the proportion of Virgin regulars who do not tune in at all on a given day.

The figures cover listeners outside London where the reception may be weaker.

A trend that should lead to the opening of parts of the AM and FM spectrum. The narrow ranges of spectrum used by the 802.11 standard have shown how much value can be generated when a communications medium is made available to all.

Good news for open spectrum activitists , who advocate that availability of spectrum for license-exempt use has enabled us to develop cost-effective, user-owned networks to provide Internet access and localised information services for the benefit of many thousands

Open Spectrum FAQ

May 13, 2006

Cisco Weighs In on the Arm's Race Legislation (Net Neutrality)

An extract from Cisco's letter to congress, Cisco on net neutrality, reads as follows,

"We strongly support the principle of an open Internet," Cisco CEO John Chambers wrote in a letter to Congressman Joe Barton, who chairs the House Energy and Commerce Committee. "We must, however, balance the fact that innovation inside the network is just as important as innovation in services and devices connected to the Internet. Broadband Internet access service providers should remain free to engage in pro-competitive network management techniques to alleviate congestion, ameliorate capacity constraints and enable new services."

I cannot help but think a good arms trading company would issue an identical statement on arm sales limiting legislation.

May 11, 2006

Varsavsky weighs in on Net Neutrality

Martin Varsavsky is the ultimate disruptive innovator for the telecom's sector. His companies have grossed billions of dollars in the retail end of the market. He diagnoses plain short term greed as telecom companies try and squeeze internet media companies for a part of the high margins.

In this case, it is fortunate that Europe regulates its markets more vigorously than the US. France is quoted as a good example of how IP transit business is forced to operate at arms length with its financial sales operation.

May 10, 2006

Head of "The Times" Dismisses Wisdom of the Crowds

Newspapers are the best souces of trusted information on the web, argues the managing director of Times Newspaper. Speaking at at the Internet World conference in London on Tuesday, Paul Hayes dismissed that wisdom can originate from the collective output of a diverse, independent and decentralized community. He argues power is unlikely to shift between consumers and media owners - "Why Newspapers will Win on the Web".

"Some blogs are conversations among people you'd frankly prefer not to meet, others ar cries for help and their writers are clearly in need of therapy. Others are just people expressing themselves, which is an entirely honourable pursuit, but would you like to meet this geek on a dark night?"

Hayes continued to say

"Millions of blogs have sprung up over the last year, but a cursory search shows that the majority of their information sources lead back to mainstream media. The bloggers are seeking or delivering insight, but what they need is accurate information on whatever subject they're interested in. Time and again, bloggers draw their readers' attention to what they have read in papers, such as the Times."

He argues that established content creators like newspapers are best placed to provide authoritative bloggers. He continued to say

"Blogs will be a continuing part of content output, but only a relative few will be read beyond the narrowest of audiences. Most of them will disappear unnoticed, and frankly unmissed by the world."

Clearly, the wisdom of a collective does not exist in Mr Hayes' world; the madness of the crowd is the rule.

Extracting the Wisdom of the Crowds - The next generation of news aggregators

Mr Hayes is ignoring the success of the new online recommendation systems. By aggregating the recommendations of millions of people, the way Google does, these services extract top quality news and information from the millions of individual contributors that Mr Hayes is criticizing.

These lists of most popular blogger contributions are gaining huge readership as an alternate source of Trusted news. Aggregator sites like, slashdot.org, del.icio.us, digg.com, and technorati.com are experiecing explosive growth. The sites rival "The Times" Online in readership, and the news items come from millions of contributors.

Mr Hayes may be telling a different story next year, as the quality of the news and stories emerging from millions and millions of contributors take center stage.

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London Internet World Exhibition - Internet Boom is Back

London Internet World exhibitors have filled three quarters of London Olympia 2 hall for the first time since the 1999 and 2000. That is 171 exhibitors, and a projected 10,000 visitors. With no less than three mapping services in attendance; streetmaps.co.uk, multimap.com and mapsolute, compared with only mapquest.com in 1999.

The figures touted by most presenters today were

  • 28m UK online shoppers
  • £30bn in online UK sales
  • 30% yearly growth rates
  • 65% of car owners to re-insure online
  • Amazon.co.uk set a record of 480,000 shipped in one day, on the 18th of December 2005

Heady stuff. The rumor is that boo.com, the £185m disaster the UK internet bust flagship, will be resurrected this year.

May 4, 2006

Tim Berners-Lee, founder of the internet, weighs in on Net Neutrality

In Tim's words

The Internet is increasingly becoming the dominant medium binding us. The neutral communications medium is essential to our society. It is the basis of a fair competitive market economy. It is the basis of democracy, by which a community should decide what to do. It is the basis of science, by which humankind should decide what is true.

Neutrality of the Net | Decentralized Information Group (DIG) Breadcrumbs

Tim identifies addresses the difficulty of design legislation as a worthy undertaking, and cites France with its separation between IP providers and business in other layers as a good example for the US.

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May 2, 2006

Citizen Journalism and net neutrality - great Gillmor speech

Dan Gillmor, the daddy of grassroots independent journalism on the net, has given a seminal speech on the role of blogs in maintaining transparency and independence of journalism. In Dave's words,

The cable and phone companies want to control not just the pipes through which our data moves. They also want to decide what will get delivered, in what order, and at what speed. They haven't pulled this off yet, but they're getting closer every day.

In this age of media consolidation, where newspapers and TV channels are owned by fewer and fewer companies, maintaining a free speech medium like blogs and the internet is imporntant for civil liberties.

2006 the year of Peer to Peer power

Free computing and free storage on the net. Dave Winer, one of the creators of the whole RSS movement, gives us an example of the payoff in keeping the net neutral. The dream of free network computing and network storage accessible for all takes a step closer. Dave predicts 2006 will be the breakthrough year. Place a file on your web page, and your users can download it with no bandwidth cost to you. How ? the bittorrent network.

Dave predicts, all browsers will allow transparent bittorrent download of files by the end of the year. Amazon will lead the way,

Amazon ships S3, a public utility storage system, with native, automatic BitTorrent support. You can access any object in the the S3 store through BitTorrent as easily as you access it over HTTP. All the details are taken care of automatically. This is the prototype for server-side BitTorrent support — completely automatic and transparent. Next steps for BitTorrent.

Free computing and free storage are around the corner. An example of the potential provided by net neutrality

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