Atomic Energy

We all wish we could wish our wishes into reality – yes, that was intentional – but when a large company starts doing it, short the stock.

Apparently, Martin Fichter, the president of HTC America is convinced HTC is about to dominate the market because, well, iPhones are “a little less cool.” The story is on geekwire.

I am not quite sure how you scientifically measure cool. But this is clearly Fichter wishing iPhone were less cool, so that more people would buy his (obviously cooler, in his not-so-humble opinion) HTC phones.

I give HTC a lot of credit: they were a nothing company, that managed to build white-label smartphones for carriers, in Europe and then the US, on Windows Mobile and eventually to make its own name in Android phones. But cool? Perhaps for techno-geeks deep into specifications. However, “cool” is determined by the market at large, and HTC doesn’t have it. If they *really* got cool, they wouldn’t be named “HTC”, would they?

Some day, someone will put the iPhone and its Apple successors away for good, and it will be the right combination of featureset (functionality) and design (style). But unless it becomes extremely cheap and commoditized, the style (cool factor) is not coming from a company named HTC. If you want to be have “cool” products, your corporate branding has got to be cool too.

In a piece of good news, Yahoo finally got rid of Carol Bartz. She had been brought in to turn around the ailing company, one-time icon of the Internet about which it was said (including, supposedly, to the Google founders), “search is over.” Unfortunately, the situation never improved, and it seemed clear for many, at least on the outside, that she wasn’t going to be the one to save it. The market appears to have agreed, as shares rose 6% on the news of her firing.

At the same time, what a piece of unprofessional behaviour all of this was. The Board fired her… by phone. Yes, by phone. When you need to lay someone off or fire them, unless time is of the essence and they are too far away to reach in time, or there are legal implications, you do it in person. You do it in person not because you love them; you actually may hate them. You do it for four reasons: because (a) it is the right (“mentschlach” is the phrase in Yiddish) thing to do; (b) you never know where and when you will work with them again; (c) you want to ensure they leave in a way that has no negative impact; and most importantly of all, (d) it is the right thing to do.

I once worked with a guy who flew from New York to London, overnight, to lay one person off, then turned around and came back home. He could have found a reason not to spend all of that money, and not be away from his family, but it was the right thing to do. I knew another who laid off people by phone from New York to Boston – all of a 4 hour train or car ride or one hour plane ride – because he couldn’t bear to look them in the face. He was a colleague of mine… and my respect for him never recovered; I can only imagine how the people he got rid of felt.

I suspect the Board also couldn’t bear to look Bartz in the eye, primarily because the failure of Bartz is the failure of those who hired her, the Board. People like Roy Bostock, David Kenny and Brad Smith should know better.

But it sounds like Bartz deserved her peers. Apparently, shortly after being fired she sent an email to the entire Yahoo staff saying, “I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of the Board.” The manner in which she was fired did not need to be broadcast, and sounds very much like an emotional, “well back at you!”

The lack of professionalism on both sides, based on press accounts, is astounding.

Yahoo is one of the all-time great Internet companies, and as much as it has been totally eclipsed by its competitors, it appears its own missteps have done it far more damage.

Roy, Jerry, the rest of the Board: you need a real strategy for this company, not some Knight in Shining Silicon Armour. Work as a Board, work hard, bring in whoever you need to help you do your job – I can recommend some good full-timers and consultants – set a strategy, and then hire the best person to execute it. But stop looking for the Messiah.

I had an interesting insight a few days ago, one that I have had before. I have always loved the phrase “Nature Abhors a Vacuum”. While in the physics term, it normally means that if you have a vacuum, i.e. lack of anything, nearby physical elements will expand to fill it (generally limited to gases and, to some extent, liquids, but this is not a physics lesson and my undergrad engineering was almost 2 decades ago), this phrase has particular application in the psychology, and hence business, realm.

Quite simply, if you don’t clearly inform your customers/partners/employers/employees what to expect, they will make assumptions. There is an old line about never to “assume”, which I won’t quite repeat here, but assumptions can be dangerous or even deadly.

In the technology business sphere, setting expectations, the lack thereof that companies do, comes down to three areas:

• What features a product/service will have
• When a product/service will be delivered
• How a product/service will perform

In the army, in Hebrew, we used to call the second element a “tavlat yiush,” or “despair schedule.” You could put up with any awful post, as long as you knew when it was going to end. If you didn’t, well, nature abhors a vacuum, and people will make their own expectations, which will either be worse, leading to real despair and loss of energy, or better, leading to even worse despair when they are not fulfilled.

The last case is interesting. Most online businesses have some form of redundancy, across stacks of technology in a single data center or across data centers. These redundant stacks tend to be installed for their own reasons – sometimes redundancy, sometimes staged deployments, sometimes cold, warm or hot standby. But they often tend to gain other uses over time that may even eclipse the first. These uses – and sometimes even the original usage – lack clear Service Level Agreements (SLAs) as to what they will provide and when. Over time, the lack of clear SLAs leads to people inside and outside the company *assuming* (that dangerous word again) that behavior will conform to certain parameters.

I have seen this several times in the past few years. The solution is three-step:

1. Figure out what one or two metrics of service level people are making assumptions about.
2. Get everyone who can figure out what service level the company can provide right now, with no changes, into a room, and don’t leave until you figure out what it is right now. Make sure you can really commit to these today.
3. Clearly publicize what today’s service levels are to every level of the company and even customers.

Of course, plenty of people will be really upset; after all, you are shattering their expectations. The most upset may be the CEO (with whom you should check before letting the data out to customers, as it may violate signed agreements). But this step is crucial, if you ever want to get to positive SLAs. Once this is done, then you can begin recovery;

• Get the same people into a room, and figure out what you need to do to improve service levels in at least 2, if not 3, ways.

Now you can go to the CEO and executive team, and say, “OK, you don’t like today’s, I understand that, but that is what there is. Now here are three options for improving them, with budgets and timelines. Which, if any, do you want?”

I have done this process multiple times, both as a VP in technology and as a consultant. It is difficult, challenging, and absolutely thrilling… when your technology division operates at the level people expect.

It is about time someone with more heft and readership than I have said it. I recommend everyone read this.

http://www.businessinsider.com/how-to-get-rid-of-patent-trolls-for-good-2011-8

Good for Pascal-Emmanuel Gobry!

As a quick example: it is pretty clear that a large part of Google’s purchase of Motorola Mobility for $12.5BN is for their patent portfolio. Google could easily invent anything relevant to their current and future needs; but you cannot create the legal protection – protection money? – that the portfolio gives. Even Icahn, who has been pushing Motorola to do a better job of managing its patent portfolio, indicated that he is reasonably satisfied, and that they got a good but reasonable price (IIRC) for the patents.

Google has a ton of money, but it is out and out absurd for them to spend even half of that $12.5BN just to get arms for legal warfare! I know that Congress is populated with attorneys, and to them fixing the patent issue is anathema as it reduces the amount of employment for lawyers – the Bar Association is simply a trade union for attorneys – but we need to change this, and now.

Kudos to Pascal-Emmanuel. To the barricades!

Continuing our previous article, Amazon, with much fanfare, released their html5 offline Kindle app, http://read.amazon.com. It has been heavily reviewed, obviating the need for another extensive review. Suffice it to say that the book addict in me loved the platform (yes, I tested it offline), while the engineer in me loved the design and engineering. It actually took my wife a few moments to realize we were in a Web browser, and not in the Kindle app. It even syncs up your last read page, as with other Kindle platforms.

A big reason Amazon launched it – and the engineering manager in me knows it was not a cheap effort – was to bypass Apple’s land grab of 30% of revenues of anything sold through or even linked to through a native iOS app. Give credit to Jeff Bezos and the Kindle team, they did a great job. The Web reader success now largely depends upon how well they let the native app wither on the vine. As long as it remains strong, customers are likely to continue using it, ignoring the Web reader… and thus losing book sales revenue.

What does this have to do with the WSJ Tablet Edition? Two things:

• Will the WSJ (and other newspapers) eventually do something similar, and have html5 offline Web apps? If I were in charge of digital strategy for WSJ, I certainly would at least be modeling the financial implications from a cost and a revenue perspective, as well as market share. I would even think about Web as the primary platform and the native app just a link.
• Amazon is consistently focused on the easiest way to convert a potential customer into a paying customer, and expended huge engineering effort to continue to do so without increasing their variable costs by the Apple 30% tax. The WSJ has yet to do even the basic work to help them convert. Amazon *gets* retail; it is time the Journal did as well.

Yesterday, I bought a subscription to the WSJ Tablet Edition.It was ~$18/month, and includes simultaneous access from three devices (any combination of iPad, iPhone, iPod, Android) and Web access. It includes archives for 7 days offline, and access to the US, Europe and Asia editions. Compared to the $28 I was paying for the local copy of the WSJ Europe, it is a bargain, and means I have it whenever I travel. Further, it integrates sharing articles by email, Facebook and Twitter. While I worried that I will miss my physical paper, especially on the Sabbath when electronic devices are off-limits, the reality is that I generally don’t read newspapers on the Sabbath, and last night, while sitting in bed, I read the entire US WSJ on my iPad and loved the experience. So this morning, I cut the cord on my printed paper.

There are definitely shortcomings, and the ads are a little *too* obtrusive, but overall it is a good change.

The biggest problem, though, is the nightmare that managing the subscription has become on the WSJ Web site, http://online.wsj.com. I fail to understand how a company that can make a successful Tablet app for both iPad and Android, and a top-rated Web site, still hasn’t figured out how to manage accounts. Even worse, it is nearly impossible to find pricing and where to subscribe, and how to compare Table vs. Mobile vs. Print vs. Online vs. packages of two or more of the above. I can only imagine how much better their sales would be if they actually did those things in a sane manner. It is hard to believe that any online business actually would make it difficult for willing consumers to shop and buy.

Of course, perhaps the very fact that there are completely different email addresses and phone numbers for the Tablet Edition subscriptions vs. Online/Print Edition subscriptions is an indication of organizational dysfunction. I have fixed that type of dysfunction in the past as a consultant, would love to do it again, but I think that News Corp. likely has enough on its plate right now that it is unlikely to focus. Pity, it would be fun for me and lucrative for them.

What does this have to do with books on the Web? Stay tuned for part II.

Steve Blank had a great article today on how Silicon Valley changed the very culture of business, wherein engineers and scientists led the business. One of Steve’s main points is how, like in research labs there is no penalty for making mistakes, similarly in the market, these entrepreneurial firms used the same culture to experiment (in Steve’s language “pivot” while “searching for a customer”), until eventually finding sustainable business models.

Steve maintains that this is one of Silicon Valley’s biggest contributions to business, the trial and error, experimentation-oriented engineer/scientist running the business in the same way, not just the pure science research. Back in the early days, as he points out, there were no MBAs in the industry to “get in the way.”

I think Steve is right about the contributions this culture change made (and I am most intrigued by his allusion to something special happening this Friday), but I believe the reverse is true as well. I have an MBA, in addition to my engineering degree, and I value both. I consider both invaluable investments, and I consider myself an engineer at heart. But I am also aware that the MBA has shifted. MBAs nowadays, at least some of them (plug for my school Duke), have learned the value of entrepreneurship and innovation, trial and error, and the difference between expanding GE and starting Google from scratch (a classic case of searching for a model for a long time, double entendre intended).

Back in the 60s and 70s, MBAs would have been detrimental to the Valley’s entrepreneurship and squashed the culture. Nowadays, assuming you get the right people (which is as true for engineers as it is for MBAs), they truly can add value, but largely thinks to the influence the entrepreneurial world has had on the old world of business.

Steve Blank has a very funny story posted on his blog, about when he was raising a round of money for E.piphany from Infinity Capital. He wanted a $10MM valuation, they insisted it was too high and everyone would laugh at them. In the end, they came back with… $9.99MM. The rest of the story – dust, walls and pictures – is quite entertaining, but the interesting lesson is about the difference between $9.99MM and $10MM.

At first blush, there isn’t any real difference. $10,000 on a $10MM deal is 0.1%, less than either side’s legal fees likely were, and nothing significant. That is true for a classic economics, “rational” perspective. However, in life, in business, in financing, in sales, in marketing, the emotional often outweighs the rational. That is especially true here on several fronts:

• Getting something off of Steve, however small, had emotional meaning for the VC. Sometimes you need to give in a bit just to make someone feel like they have “gotten some love.”
• Whole numbers are a barrier. Remember when people wondered if the Dow would ever cross 10,000? Going on either side of $10MM has psychological impact.
• Some numbers have almost magical properties. For reasons unknown, the numbers 9 and 7 get deals done faster. This has been proven in study after study. It is not for naught that that candy was $1.99 and not $2.00.

A whole field of economics, called “behavioural economics,” has arisen to study these “irrational” behaviours. A professor at my MBA school of Duke, Dan Ariely, has written a very entertaining book on the subject, “Predictably Irrational,” which I recommend.

From a business perspective, it is important to recognize and understand these emotional/irrational drivers of behaviour. S/he who recognizes them and remains rational can use them to his/her advantage.

All technology companies have engineers, team leads and managers. Some have good QA, others have good product managers or even program managers. But not everyone has architects, and those who do are not necessarily strong. The question cash-contrained (and who isn’t) company executives ask is, “why do I need to spend a *lot* of money to hire a technologist who is not actually writing code?” The answer is often either not to hire an architect, or to take a weaker person and “promote” them to architect. In many ways, the latter solution is like the old “security by obscurity”. You were better off without it, because at least you knew you were insecure. This way, you think you are secure, but really you are not.

The purpose of an architect is to create, design and enforce a coherent philosophy on the product. To do so, they need to know every part of it – infrastructure, middleware and application; front-end and back-end; database and network. No, this is not my brilliant idea, but was first broadly publicized in Fred Brooks’ legendary “Mythical Man-Month.”

Recently, I had the opportunity to see first-hand what happens when you do not have a good architect.

The company deals in software on a semi-annual release cycle. They were a few short weeks before releasing their product. For reasons unknown, one coder decided that a core network communication component needed a new API. Granted, he was trying to rebalance multiple versions of this API that had been around. On the other hand:

• The multiple versions were only because there were several poor ones with no architectural integrity between them, until a newer version came along in an attempt to unify them all.
• The latest version really had only one benefit: a different architectural view. Not better, not worse, but different. But a single engineer wanted to change them all.
• This was a scant few weeks before release.
• It had not been reviewed by anyone else.

Needless to say, the change was made, the engineer *thought* he got all the references but of course missed some, and some part of the product was broken, necessitating last minute run arounds by many other staff to find, fix and test the issues.

Sure, the engineer acted like a cowboy: came up with an idea and ran with it, without considering the effect. To be fair, I like cowboys; startups could not exist without them, and sometimes they are the only ones who can get through a frozen situation or process. But in this case, as in many, the real problem was the lack of architect. There was no one person with all of the authority, the knowledge and the respect/recognition of the rest of the team to decide if this change suited the whole of the product, or, better yet, to have passed that knowledge down to begin with and thus have the engineer himself decide not to do the change before getting started.

The architect need not be solely dedicated. In smaller firms and organizations, it is often a role s/he shares with other duties. But the key role must exist, and everyone must know it.

The NY Times reported on Thu that when Mark Zuckerberg is ready to make an offer (or seduce someone, meant in the most positive way) to join Facebook, he takes them for a walk in the woods. Some actually find it strange – although given some of Mark’s reported early antics, nothing should be strange at Facebook, again, meant in a positive way. I believe that there are only two kinds of people in the world: those that think they are crazy and those that don’t know it yet; it is the latter who attack post offices or Wal-Marts (or airports).

I find Mark’s ideas correct and appealing. An office, even one as informal as Facebook’s, is still an office, and an interview, even one in Silicon Valley or Israel dress code jeans and T-shirt, is still an artificial environment for both parties. The best way to get to really know someone is either to work with them for a few months, something impossible to do beforehand unless you have a long past, or to get into a comfortable situation. Mark’s “walk in the woods” is exactly that. Each party gets to see the other as a little bit more of the human they will be when working together.

A long number of years ago, a wealthy individual wanted me to join him as CIO of his company. After a day of interviews with just about everyone, we were done, and I left his office. As I waited at the corner for the light to change, he showed up “by chance” and we took a walk together. How do we walk down the street? How do we handle slower walking people, mother with strollers, panhandlers, street corners, etc.? You can learn a lot from walking with someone three blocks down the big city.

More recently, as a consultant, I often find myself in the position of needing information from or about someone that they are reluctant or uncomfortable to divulge. Obviously, if they really do not want to share, I will find an alternative source, but more often than not, drinks in the evening at a hotel bar or the nearest Starbucks during the day, talking with a consultant who is not part of the formal organization, in casual clothing, really gets people to open up.