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August 30, 2006

Eric Schmidt Joins Apple's Board

Nothing but bold moves in Silicon Valley. According to Steve Job's, Apple's cofounder

“Eric is obviously doing a terrific job as CEO of Google, and we look forward to his contributions as a member of Apple’s board of directors,” said Steve Jobs, Apple’s CEO. “Like Apple, Google is very focused on innovation and we think Eric’s insights and experience will be very valuable in helping to guide Apple in the years ahead.”

“Apple is one of the companies in the world that I most admire,” said Eric Schmidt. “I'm really looking forward to working with Steve and Apple’s board to help with all of the amazing things Apple is doing.”

Clearly, an axis of innovation forming in California.

[Via GigaOM » Apple Google = Worries For Everyone]

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August 26, 2006

Is Google Hiring Hackers or Software Engineers?

software engineer

Classical software engineers work in organized and structured ways, for the pursuit of perfect code. Give them a specification of what you want, and they will deliver on time, to cost, and with zero defects. Their work process is down to a science. Quality, on time, within costs is their mantra.

EDS, IBM, and NASA are some of the bastions of this scientific process. They have achieved the top level of the computer science game, as measured by the CMM organization and the prestigious Software Engineering Institute.

hacker

Hackers, on the other hand, pursue the beautiful solution. As with other artistic media, a beautiful solution is impossible to explain, but you recognize it when you see it.

Larry Page's original Back Rub algorithm, which powers Google, is a beautiful solution. Job's and Wozniak's first Apple prototype computer was a beautiful solution.

Beautiful solutions are so astounding that they need not be perfect; imperfections add to their charm. The code will not be finished on time, it will cost more and will be full of errors, but you will be impressed. It will be novel, it will enlighten, and it will make an important contribution; beautiful solutions make a difference.

Hiring Beautiful Solutions or Perfect Code

Web companies, like Google, are hiring both. Software engineers to polish and maintain established services. Hackers to create services from nothing.

google
To try and stay ahead of the game, Google is hiring candidates that can innovate; hackers to artfully create new astounding services. To maintain and polish its existing software, Google is also hiring software engineers to implement process and quality.

The novelty is that Google likes the 2 in 1 solution; hacker and computer scientist in one. By Google's own admission, all their employees have to be 30% hacker and 70% scientist.

hispavista

Hispavista, my company's spanish arm, has 70 technical staff. Also a mix of hackers and software engineers. But unlike Google, they work in separate teams. Following Steve Job's famous example at Apple's skunkworks, our hacker and scientists work in separate departments.

Our development department has achieved CMM level 2, and could easily certify as ISO9001 compliant. Our head of development produces the best quality and lowest costing function points in Europe; he has among best software engineering teams in Europe.

Our innovation department produces beautiful solutions. Dating back to 1995 our Strategy Director has created web services that have amassed millions of internet subscribers; he is a hacker of some reknown whose works have been sold for tens of millions (literally).

Hackers and Scientists Under One Roof

The problem is that their process and culture are totally different. Software engineers aim for zero errors and zero delays, hackers aim to be world famous. The hard part is getting good hacking and coding at the same time.

One can’t live with out the other, yet are totally different in approach. Our experience at Hispavista is that they are best roomed on opposite sides of the building, and project hand overs require a good referee.

Google, on the other hand, has opted for the borg approach, part human part machine. Googlers engineer sofware for 70% of the time, and hack 30% of the time.

Eric Schmidt has repeatedly described how hacking project's that do well online become bona-fida software engineering projects. The successful hacker is given a team of people to manage, code to review, and quality to assure. The question for the hacker is whether to continue as software engineering manager or hand over to somebody else so as to get more hacking time.

Web 2.0: The Rise of the Hacker Army

Ed Yourdon, one of the inventors of software engineering, visiting digg.com visiting Google observes that web2.0 startups will need software engineers as the service grows. Hackers will not be out of work though.

Software engineering may be outsourced, but entrepreneur and intrapreneuship has become the essence of competitive edge and is core to a business. Innovation has become the new marketing. Judging by the way Google is recruiting among the web2.0 hacking community, hackers are here to stay.

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August 24, 2006

Build It, Blog It, and They Will Come

Traditional Marketing

According to traditional marketing professionals, the "build it and they will come" attitude leads many entrepreneurs to their ruin. The full quote is:
"If a man can write a better book, preach a better sermon, or make a better mousetrap than his neighbor, though he build his house in the woods, the world will make a beaten path to his door", [Ralph Emerson]

Allegedly wrong, wrong, wrong. Apparently, many entrepreneurs suffer and fail because they overlook the over-arching importance of Marketing..

Or so they say.

ken olisa

Ken Olisa, one of the more eloquent traditional technology marketeers, presents traditional marketing beautifully at his Marketing as a Science? seminar at a Cambridge Entrepreneurship center.

According to traditionalists, marketing is a core capability of a company without which your enterprise is doomed to fail. Many investment consultancy firms, like Ken Olisa's Interregnum plc, charge high fees and equity percentages for providing this marketing and fund-raising to entrepreneurs.

Innovation is the New Marketing

seth godin

The new school of thought is that traditional marketing is dead. In Seth Godin's words, All marketers are liars. The best marketing is an exceptional added-value product or service.

We live in an increasingly efficient market. Information flows more and more perfectly. Marketing, the art of promoting your product in the market, is a commodity accessible to all. Disintermediation between client and supplier is prevalent. Successful differentiation of your company is about your product and service, not about your marketing plan.

You only have to note the lengthening queues of un-employed facilitator, coordinator, administrator management consultants. Advisory help for entrepreneurs is still a good idea, perhaps through an experienced non-exec director. But, the corporate skill set has ceased to be a differentiator; communication technology has made it a commodity.

guy kawasaki

In words of another entrepreneurship guru; "it is about engineers, not MBAs". Guy Kawasaki has a novel company valuation method; add $500K per fully employed engineer, and then subtract $250K for fully employed MBA

The partners at EUCAP are increasingly focused on core technology and service capabilities. Deep sector knowledge. An un-graceful total obsession with your client base, product and service. An Otaku cult of your market. That is the core capability of succesful company.

Build it, blog it, and they will come

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August 21, 2006

Business Advantages of Giving Your Software Away - The Open Source Business Model

open source

Ross Mayfield, the otherwise astute CEO of Social Text has chosen to give away his enterprise wiki code for free. Another of a long line of businesses to choose the Open Source route. In a world of proprietary commercial software vendors, where copyright is the default, why are these companies giving away their software?

Folly or Genius?

Firstly, use of the open source (OS) software comes with certain obligations. Under the one of the more common licences used, COMMON DEVELOPMENT AND DISTRIBUTION LICENSE (CDDL), when using the OS software you are obliged to:

  • Redistribute any modified code in turn, under the same licence as the original code
  • You may consume but not resell, i.e. you may not exploit the whole or part of the software commercially

Open sourcing companies benefit by:

1. Sharing development cost The open source development model, responsible for creating software like Linux, has proven to be very efficient. Eric Raymond, who helped Netscape exploit open source development in its fight against Microsoft, has documented how and why distributed development produces such quality results in his Cathedral and the Bazaar.

2. Marketing Open source promotes better communications with clients, more customer awareness and faster adoption. Like Linux or Apache (web server) software, if the application is better than other software, word of mouth marketing can provide a dominant maket position.

The question for businesses is whether the remainder of their value-added to their customers and their value chain will generate an adequate return on investment. Open Source business models leverage many different types of value-added. For example:

Dual Licence Business Model, consists in providing a fee based licence for commercial use of the software. MySQL AB is a leading example of this business model. The ease with which MySQL clients can develop, test and prototype is an obvious advantage of the dual license.

Service Business Model, consists in providing the software for free, and charging for consultancy and service for implementation and maintenance. Although the Open Source community is becoming more corporate friendly in its responsiveness and support, dedicated commercial support has definate value-added to many clients. In fact, many companies work just by providing integration, implementation and maintenance services for popular Open Source software like MySql, Apache, JBoss, Tomcat, Eclipse.

No Guarantees

Open Sourcing does not guarantee success though. Larry McVoy, a long time Open Source activist and key contributor to Linux, had to widthdraw the open source license on future developments of his widely used Bitkeeper code-control software. He stated that

"Open source as a business model, in isolation, is pretty much unsustainable. We believe if we open sourced our product, we would be out of business in six months. The bottom line is you have to build a financially sound company with a well-trained staff. And those staffers like their salaries. If everything is free, how can I make enough money to keep building that product for you and supporting you?"

Strong Vision

Using Open Source Model can provide great leverage, but it places a lot of pressure on management. Success requires a very clear vision of the core value-added of the company relative to its customers and suppliers.

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August 18, 2006

Top European Countries for Doing Business

europe

The world bank has published its Doing Business in 2006 report, with interesting results. The conclusion is that the best way out of poverty is starting businesses; starting businesses = low unemployment rate. A view that is not currently shared in some countries; in France the equation is protect workers = low unemployment .

The list of european countries ordered by their world ranking of business friendliness is shown below. Compared to the GDP ranking, European countries are one of the least business friendly environments in the world:

World Rank         World Rank
Norway
Denmark
United Kingdom
Ireland
Iceland
Finland
Sweden
Switzerland
Belgium
Germany
5
8
9
11
12
13
14
17
18
19
Netherlands
Spain
Austria
Portugal
France
Poland
Bulgaria
Italy
Romania
Greece
24
30
32
42
44
54
62
70
78
80

The table shows a distinct north-south divide, same as for GDP and wealth per capita. Continental Europe, specially southern Europe lags behind in the rankings.

What are the Factors

1. Starting a Business: Procedures, time, cost and minimum capital to open a new business
2. Dealing with licenses Procedures, time and cost of business inspections and licensing
3. Hiring and firing workers Difficulty of hiring index, rigidity of hours of index, difficulty of firing index, hiring cost and firing cost
4. Registering property Procedures, time and cost to register commercial real estate
5. Getting credit Strength of legal rights index, depth of credit information index
6. Protecting investors Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
7. Paying taxes Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit
8. Trading across borders Number of documents, number of signatures and time necessary to export and import
9. Enforcing contracts Procedures, time and cost to enforce a debt contract
10. Closing a business Time and cost to close down a business, and recovery rate

Where is hiring and firing easy—and where not?

One of the biggest factors bearing on startups is the ease of hiring and firing. Also the area hardest to reform. Below is the league table of countries according to hiring and firing difficulty

Difficulty of Rigidity working Difficulty of Cost of Cost of
hiring  hours Firing Hiring Firing
Spain  67 80 50 66 32
Greece  78 80 40 66 30
Germany 80 40 55 21 67
France 80 40 66 47 32
Turkey  44 80 40 55 22
Italy  61 80 30 57 33
Austria  11 80 40 44 31
Hungary 80 20 37 34 34
Sweden 60 40 43 33 24
Finland 60 40 48 22 24
Netherlands 60 60 49 16 16
Ireland 40 30 33 11 52
Poland 60 40 37 26 25
Norway  44 40 30 38 14
Belgium  11 40 10 20 55
Iceland 60 0 31 12 13
Switzerland 40 10 17 14 12
Denmark  11 40 10 20 1
UK 11 20 10 14 9
US 0 0 10 3 8

Discussing this with my partners, we feel the staff count of the companies we are involved with would rise by 20% if labour laws were more flexible in southern Europe. We recruit in the shadow of potential layoffs far into the future. A far cry from Google's we hire three people a day policy, or Microsoft's 65,000 employees.

Food for thought.

[The report was highlighted by Guy Kawasaki.]

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August 12, 2006

Europe's Online Advertising Should Top €10 billion by 2008

europe

Forrester Research's Jaap Favier predicts €100 billion will be spent online in 2006, growing to €263 billion in 2011:

In the coming five years, the number of Europeans shopping online will grow from 100 million to 174 million. Their average yearly Net retail spending will grow from around €1,000 to € 1,500, as UK Net consumers, who currently spend €1,744 each year, outspend even their US counterparts online. Overall, this will cause European eCommerce to surge to €263 billion in 2011, with travel, clothes, groceries, and consumer electronics all above the €10 billion per year mark.

As expected the growth is fueled first by early adopters, or technology optimists, half of the current body of internet users, who are broadening their spending into clothing and electronics.

But the bulk of the growth is to come from the mainstream users, who comprise 90% of the retail customers, are starting to have an impact in online spending. As broadband becomes widespread, the non-techie customers are being won over by convenience and price advantages offered by online retailers. Favian told ZDNET that

"Consumers take about a year after going online before they will purchase something online. The first thing they purchase is either a book, a CD or a trip.

All welcome news for all online businesses, including online publishers. Using the traditional 10% of sales is the marketing budget rule-of-thumb, the online marketing spend for Europe should top €10 billion in 2006. The prediction is below Jupiter Media Metrix's forecast of €4,014 million by 2008. A reflection of the online advertising struggle to gain its proportinoal share of the overall advertising spend.

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August 11, 2006

Martin Varsavsky & Niklas Zennström Invest in Technorati

martin varsavsky Martin Varsavsky, an entrepreneur's entrepreneur with an estimated fortune of over €300m, explains why he has invested in Technorati with Skype founder Niklas. He states in his spanish blog that:

... in my view, the most important feature of Technorati is the real time search. The PINGING concept. The great difference between Google and Technorati is not that Technorati finds blogs (Google's blogsearch does too, but not as well). The difference is in the search based on spiders used by Google, and the ping based search used by Technorati.

My contribution to Technorati is to get all the other sites, that are not blogs, start to notify Technorati each time they put new content on line, places like Charity sites, corporations, news sites, and search results will become more interesting still. [Free Translation]

Martin does not miss much; RSS and Pinging is one of the richer veins of growth in the tech arena.

His self-professed role as "Ping Ambassador" at Technorati is somewhat puzzling though. The web's RSS infrastructure is centered more round companies like David Winer's weblogs.com (now part of Verisign) and feedburner.com, than Technorati. Until recently Technorati used weblogs.com's ping server (RPC function). And, when it comes to promoting the next generation web infrastructure, the World Wide Web Consortium could certainly use Martin's help.

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