Atomic Energy

A piece on Twitter today made me think of the Second Amendment. Apparently, a Massachusetts DA used a subpoena to get information on some Twitter users, and then made the mistake of asking Twitter not to inform the user. Twitter promptly ignored the request to keep it secret, while still complying with the law by providing the user’s info.

What does this have to do with the Second Amendment (while steering clear of the politics)?

One of the key purposes of the Second Amendment was to counter balance the exclusive right to the use of force. While there is never any desire for civilians to rise up against the government, the very knowledge that government does not have an exclusivity on the means of force and violence would naturally curb its inherent tendency towards excess.

I am not an anarchist, nor one of those who believes that government and civilization are inherently evil. Hobbes was right, without organized civilization, life would be nasty, brutish and short. I do, however, recognize the foresight and understanding that the Founders had, that government, by its nature, would tend towards abuse of its power.

For some time, despite many well intentioned DAs, some, perhaps too many, have abused that power, in the self-interest of either power or political advancement. They do so safe in the knowledge that they pay no price for that abuse, as it normally does not make it to public knowledge.

The Twitter case shows how that power balance may be shifting. As key elements of behaviour that interest government shift online, government is attempting to use its tools – and abuse them – believing the old rules apply. While the tools can and should be used, and Twitter, Google, Facebook and the like should comply, officials need to know that the online communities communicate across large number of people, in many ways organized themselves, in seconds.

If the knowledge that officials no longer have a monopoly on organization, similar to its lack of monopoly on the use of force, in and of itself will curb abuses, then the Internet and social media have provided yet another invaluable service to society.

A few months back, Marc Andreessen posited that Oracle was in really big trouble, it just didn’t know it yet (at least not publicly). His experiential reasoning: he invests in lots of companies, and is connected to many many more, and not one of them, without exception, uses Oracle. Everyone uses either MySQL/PostgreSQL (i.e. open source) SQL, or NoSQL Mongo/Couch/etc.

Yesterday, Oracle’s earnings came out, revenue was basically flat, and the share plunged. As pointed out by Matt Rosoff, this may confirm Andreessen’s prediction.

My take on it was the income from support and maintenance versus new license sales. When a software firm reaches the point that the revenue from maintenance equals or exceeds revenue from new sales, essentially the company is on the way down. I was a customer of IBM when VP at a large financial back in 2001-2005, and I clearly recall when IBM’s Tivoli division crossed the 50% mark.

A software – and any – company’s future depends on its ability to sell to new customers. If existing customers are paying the same or more as new ones, then you are having a hard time selling to new customers, and you are on your way down. You may milk the cow for a good few more years, in which, because of reduced R&D investment, your cash may be higher than before, but life is on the way down.

The real pity of it is that Sun was a great company (and great engineering shop with great talent), and likely will go down along with Oracle.

I saw a great article earlier this week, listing large tech company CEOs who are most hated by their employees, based on their approval ratings. The article is available here.

My first reaction was, “who cares?” A CEO’s job, after all, is to work for the owners, not the employees. If s/he delivers value, who cares what employee approval ratings are?

On reflection, though, I realized that my attitude was wrong, beyond my not wanting to work for such a CEO. First of all, the best execs for whom I have ever worked, defined as most successful at delivering value, have always been strong leaders who command respect and high approval of their employees.

The reason for that is that a CEO cannot deliver value alone; the CEO depends on their organization, their employees, to delight customers, to innovate, to create and grow value. If the employees do not approve of the CEO, it is really hard to get them to deliver the value.

And, indeed, if you look at the list of top (or bottom) CEOs, they are not only reviled by their employees, but hated by their customers. AT&T Wireless? AT&T? Motorola? AOL? Verizon? Microsoft?

There is a direct line connecting inspired and motivated employees and happy customers, and a direct line from happy customers to revenues, profit and shareholder value.

Alienate your employees at your risk.

Clay Christensen is famous for his disruption theories. Lately, interestingly, he has been bringing examples of some large companies that have been successful at innovating and hence disrupting themselves.

One of the key point so this theory is why existing large players find it so difficult to innovate disruptively, and therefore give opportunity for tiny startups to overturn their markets. Essentially, it is in their DNA, and hence organization structure, projects, budgets and even comp plans, to protect their existing markets and squeeze more cash out of them.

Ironically, though, sometimes that very nature actually squeezes less cash out of existing markets while simultaneously opening the doors to disruptive players. It is one thing if an incumbent maximizes cash today at the expense of tomorrow; it is short sighted, but at least understandable. It is quite another when that same mentality minimizes cash today and tomorrow.

Today’s Wall Street Journal has a front page article on the rapidly escalating prices of ebooks. Most people expect that ebooks will cost less than printed copies. After all, the publishers (and retailers) are saving on physical printing costs, shipping, storage, and security. I do not know what the COGS are in the book business, but in the ebook business, they are essentially zero. An ebook that is a few MB in size does not even register as beyond a penny in Amazon or Barnes and Noble’s storage and bandwidth costs. Us customers expect that the cost savings will be passed on to them, at least in part. They are willing to give up in some of that in exchange for the convenience and easy replicability of the ebook, but not all of it.

The WSJ article explicitly states that ebooks sales will drop, or at least not rise as high as they would otherwise due to skyrocketing retail prices. Given that sales will drop, customers will be upset (optics), and thus they will hurt their own business short term while encouraging independent publishers, and perhaps Amazon and BN to become one themselves, why would they do such a self defeating move?

In the end, they are just captive to their existing mindset. They want to protect, preserve and defend their brand and margins, and so they raise prices. The fact that it will undermine, damage and attack not just their short term profits but their long term viability as a business, is something which they find very difficult to grasp.

I look forward to the disrupters.

ABC reported this week that the French company Atos will be aggressively moving to a “zero email” policy, at least for internal communications. The rationales appear to be:

• People in the real world are replacing much of their email communications with IM, SMS and platform-specific messaging, like Facebook
• Only 10% of email messages in the company have value, while an additional 18% are pure spam.

I agree that many people are switching from email to platform-specific, IM or mobile communications (roughly including SMS and iMessage in the latter). However, it is more than likely a choice of convenience than specific preference. When much of your communications already occurs inside a social network like Facebook, then it is natural to have one-on-one communication inside that platform.

However, it is extremely unlikely (actually absurd) that an enterprise will simply turn over all of their communications to a social network – US-based Facebook or any French one – and have everyone friend everyone else and communicate there. So what Atos is planning is replacing their well-known and well-defined email-based messaging system with… another messaging system. The other system may have better IM tools, like presence or real-time short message streams, like IM products, or may have chat channels, but these tools have long been available to enterprises. Switching from one messaging platform to another may make for great press releases – “look, we enterprise are killing email!” – but fundamentally, nothing much has changed, except for a huge expense.

Additionally, the justifications around spam and useful messages, are not email-specific they are messages-specific. Only 10% of messages are useful. Today, those happen to be email. Switch to any other platform, however good, and those messages will simply switch to the other platform.

This reminds me of the old joke about the kid at camp who got a letter from his parents saying, “you know how 75% of all accidents occur within 1 mile of your home? We are much safer now, we moved 2 miles away!”