Tag Archives: Technology

Microsoft + Skype = Winning

Posted on May 10, 2011 | 2 Comments

Here are some of my initial thoughts on why the Skype deal is a good one for Microsoft, presented in sections, like a good PowerPoint.

Cool features that won’t make much (or any) money, but might improve market share:

  • In game voice calls when using Xbox
  • Skype someone straight from Outlook
  • Or Hotmail, if anyone even uses Hotmail any more
  • Skypeout someone at any phone number that shows up in any Office application
  • Find a number in Bing and one click call it

Ways Microsoft might use Skype to make money from businesses:

  • Integrate features into Exchange server to enable enterprise VOIP
  • Better yet: integrate features into the suite of online apps for small business – they need the savings on phones more than enterprises and lack the skills to set up their own VOIP
  • Implement a “call me” feature for advertisers

Strategic plays:

  • Integrate Skype into their investee Facebook to help counter Google’s voice products
  • Continue to wall off Yahoo from anything business related, relegating the ‘hoo to being a consumer content company
  • If the SMB play works, leverage it against Zoho, Google docs and other productivity apps
  • Build relationships with phone carriers who are moving to IP networks and losing landlines as fast as Lady Gaga is losing fans

Where it won’t work, even though Ballmer thinks it will:

  • Microsoft mobile OS

Did Microsoft overpay at $8.5 billion? Definitely. But they’ve got about a zillion dollars in cash, earning about zero percent interest, much of it sitting untouchable overseas, where Skype is conveniently located. So what’s a billion or two between friends?

Of course, all of the above assumes that Microsoft executes, which is a big (BIG!) assumption. After all, if Microsoft were good at executing this stuff we would all be using Outlook Live instead of Gmail.

See here and here for NY Times coverage, here for TechCrunch and here for GigaOm.

→ 2 Comments

Posted in Business, Technology, Trends

Tagged , , , , , ,

VA System: Best Healthcare, Lowest Cost

Posted on April 17, 2011 | Leave a comment

Check out this article, from 2007, on how the Veterans Health Administration has gone from scary run-down hospitals to the provider of the best care in the country, at the lowest cost. The VA secret: a large, single provider focused on quality. Duh.

→ Leave a comment

Posted in Business, Politics, Technology

Tagged , , , , ,

On Facebook and Intellectual Property Theft

Posted on October 19, 2010 | Leave a comment

As the non-film press reviews The Social Network, their gloss on the film is driven, not surprisingly, by their philosophy of business. For example, in The New Republic, Lawrence Lessig focuses on how net neutrality enabled Facebook to thrive, because he is a fiend for net neutrality. [Sidebar: his argument makes no sense (typical of Lessig), because Facebook is a low bandwidth application, and net neutrality issues are all about bandwidth intensive applications.] The Wall Street Journal aims more at the lawsuits against Facebook founder Mark Zuckerberg, because it hates anti-business lawsuits (tort reform is one of the Journal’s pet causes; of course, lawsuits by businesses against regulatory agencies are fine) and loves the free market, and nothing is more free market than a successful entrepreneur. TechCrunch also criticizes the lawsuits, not so much from a tort reform perspective but from the Silicon Valley perspective of the heroic entrepreneur who works harder and succeeds; the money quote from this review is when it criticizes the Winklevoss twins because they “spend the majority of the movie demanding compensation over a site that they didn’t build.”

Both the Journal and TechCrunch minimize the lawsuit aspect and emphasis Zuckerberg’s execution of the idea. And to be sure, he executed brilliantly. There were already social networks out there – Friendster and MySpace – and yet it’s Facebook that’s the big winner. Facebook had superior technology, design and social elements, all of which helped it succeed. But to dismiss the Winklevoss claim as a mere “contract dispute” as the Journal does is to slant the story to make a political point. If the claim is true (obviously, I don’t know the facts, but Facebook did pay the twins over $60 million to settle the claim), Zuckerberg signed a contract to build a site for the twins, but instead of working on that site, he stalled the twins while he built a competing site. That is much closer to theft than to a contract dispute. Again, Zuckerberg won on execution, not on theft, but let’s not let that execution disguise or obviate any devious behavior that led to Facebook’s creation.

→ Leave a comment

Posted in Business, Pop culture, Technology

Tagged , , , , , , , ,

Cloud Computing: New, Cool & Totally Old-Fashioned

Posted on October 18, 2010 | Leave a comment

I went to a very interesting panel discussion last week on cloud computing, in particular on go-to-market and sales strategies for cloud and SaaS (two terms that I will use interchangeably in this post) companies. The panel taught me about how cloud company executives view their business, but mostly it reminded me that most businesses are pretty similar: they hinge on cost-effective ways to bring in paying customers. No matter how high-tech your product is, you need to reach potential customers and then turn them into actual customers.

Listed below are some of the key lessons from the panel, split into the few that are cloud specific, and the rest, which could generally apply just as easily to a ball bearing manufacturer.

Cloud points

  • The product has to work. Since lots of cloud businesses are spread via word of mouth, the application needs to work early. Compare this to selling big software packages to enterprises, where bugs and customization are expected
  • Customers that might use a cloud product probably want to try it online, rather than get a visit from a rep. This is because they are, by definition, tech savvy. But of course you should adjust this for geography and age
  • SaaS products tend to have lots of upsell opportunities. So just get customers in the door, even with a small initial usage. This is why freemium works so well in this space. Note: this is really hard for traditional enterprise sales guys to adjust to. They always want to work for the giant sale
  • As a consequence of the above: don’t charge by the seat. That sets up barriers to increased usage. Let everyone use it, but charge by feature
  • Silicon Valley is developing camps: HP v. Cisco v. Oracle. Be aware, because this means that sometimes your backend technology choices might influence who you can partner with

Points that apply to all businesses

  • Your distribution channel must match your customers. E.g. Big companies like P&G are unlikely to buy via self-service model
  • Find a keystone/reference customer, especially one who can lead to other target customers. E.g. Accountants led Quickbooks to small business customers
  • SMB is a bad term. A 15 person company is totally different than a $500M company
  • Look at who is using your product, then target more of them. E.g. If you see that 3 ski resorts are using your product, then plan a marketing campaign targeting ski resorts. This is generally true in business, but it’s easier with online products where you can see who the end user is
  • Understand your business model: Cost to get someone in the door. Cost to get them to become a customer. Conversion rate. Revenue per customer. Margin. Productivity per sales rep. Online businesses have more data, so it should be easier to do this. But still, this is basic business knowledge. Revenue per customer needs to be greater than cost per customer. Revenue per sales rep needs to exceed compensation per sales rep
  • Don’t throw your venture money at the market by hiring too many sales reps too early. Develop your sales force as your model develops. Reps will always try to game the system, and the better you understand your model, the less they can game it
  • A better product makes for an easier sale. Duh! This is true everywhere. But here is an interesting, tech only metric that was postulated: aim for an a-ha moment within 10 clicks

Hat tips to all the people involved:

  • Chad Lynch, who put together the panel as part of the Total Access educational program at the law firm Orrick
  • Greg Heibel, a partner at Orrick, who moderated the panel

The panelists:

 

→ Leave a comment

Posted in Business, Technology

Tagged , , , , , , ,

Has Silicon Valley Stopped Solving Problems?

Posted on September 29, 2010 | 1 Comment

That is the claim of Dan Lyons in the recent Newsweek, wherein he claims that the trend of consumer internet companies (Facebook, Twitter, Zynga, etc.) making gobs of money by doing essentially shallow things will draw engineers and entrepreneurs away from solving the hard problems that have traditionally driven Silicon Valley.

Erick Schonfeld at TechCrunch disagrees, saying that Facebook and its ilk aren’t shallow and are also technically hard, since they have to scale to support so many users.  Most of Schonfeld’s article is, quite frankly, dumb (I mean seriously, using anti-virus software, which solves a real and burdensome problem, to show that internet companies are useful too, is nuts. And saying that Twitter’s many-to-many communication is a bigger tech achievement than the telephone network…dude, do you even know anything about technology?), but I appreciate his viewpoint and that of the many comments his article generated (as usual with comments, they are split between wisdom and inanity).

It won’t surprise regular readers of Thoughtbasket to learn that I come down somewhere between these two poles. I wrote a post on this very topic recently, riffing off a former Gartner analyst who said pretty much exactly what Gross said. Yes, Facebook makes people happy, and some of the technology required to build it to scale might help build other products. But it’s basically a toy, and the technology isn’t that innovative. More importantly, it sure isn’t curing cancer or solving the energy problem.

It’s OK for fun products to do well; Facebook and Zynga make tons of money because people love using them. But Lyons makes a good point: the wealth and attention being lavished on these fun products could lead smart people to build ever-shallower products (hello Foursquare) instead of solving big and important problems. Silicon Valley is a big place, and there seem to be a lot of entrepreneurs attacking all sorts of problems, but the tendency of the press (particularly TechCrunch) to focus on consumer internet companies as if they were the only things of note in Silicon Valley adds to the problem Lyons describes.

→ 1 Comment

Posted in Business, Technology, Uncategorized

Tagged , , , , , , , ,

Virtual Companies Also Unfocused Companies?

Posted on September 21, 2010 | 2 Comments

One of the hot new trends in Silicon Valley is the “virtual” company: a firm where everyone works from home, only coming together for the occasional meeting at Starbucks. This can be a great thing, part of the lean startup trend. Obviously, saving money on rent and furniture and the like allows a company to get farther along before it needs to raise capital.

However there are also special challenges for virtual companies. I am consulting for two of them now, and I’m seeing some of these challenges first hand. These challenges primarily stem from the difficulty in communicating at a virtual company. With employees spread out, communication is usually via email or IM. These are mediums that tend to promote brief, sometimes inconsistent, communications.

Sometimes when “discussing” an issue with my clients there will be 15 or 20 emails, each only 1 or 2 lines long, with multiple people chiming in, often with their missives crossing each other, and thus not incorporating other thoughts and comments. It can be difficult in this environment to drive toward a conclusion, particularly if you want any kind of consensus. Ideas and concepts are more likely to fall through the cracks. Email can be super efficient, don’t get me wrong, but it can also make group communication less effective than it would be if everyone were together in same space.

A possible consequence of this sort of fragmented communication is that it makes solving difficult problems more difficult. A virtual company is likely to be better at solving problems a single person can tackle than at solving problems requiring cohesive group effort. Based on my consulting experiences, this is true whether the problem is technical or business oriented.

Technology can help mitigate these communications challenges. Skype and other services provide free conference calls, so you can at least communicate in real time. Web conferencing and virtual whiteboards can replicate meetings, and project management software can help ensure that everything gets done on schedule. But if the management of the virtual company isn’t aware of the communication difficulties and does nothing to address them, the company is likely to generate fragmented products or strategies.

→ 2 Comments

Posted in Business, Technology

Tagged , , , ,

More on Mobile Check-ins

Posted on August 20, 2010 | Leave a comment

With Big Kahuna Facebook launching its own check-in service yesterday, the commentariat is chiming in. Here is a nice article from Wade Roush noting that A) Facebook wins, and B) it wins because it’s useful, rather than a novelty. You know I love posts that agree with mine!

→ Leave a comment

Posted in Business, Technology

Tagged , , , , ,

Do Angel Investors Make Technology Shallow?

Posted on August 19, 2010 | Leave a comment

Just two days ago I wrote about super angels potentially crowding out VCs in the funding of technology companies, and I noted that this dynamic was mostly relevant to consumer internet companies rather than hardware companies. And I didn’t even mention biotech, medical device or energy companies, most of which take far more capital than even the superest of angels could provide.

Now, lo and behold, a former Gartner analyst comes out with an article about how Silicon Valley is too focused on consumer internet, on “the glitz and the superficial,” rather than on solving big problems, like medical and environmental ones. He notes that the new innovators in those areas are big companies, who are focusing their R&D budgets on these big problems with big markets, rather than entrepreneurs, who are focusing their energies on figuring out the best way to get you to “check in” at your local bar.

→ Leave a comment

Posted in Business, Pop culture, Technology

Tagged , , , , , ,

On Super Angels and Lean Startups

Posted on August 17, 2010 | 3 Comments

Both the Wall Street Journal and TechCrunch recently wrote articles about the new breed of “super angels” in Silicon Valley, individuals who are aggressively investing in technology startups, often in amounts large enough that they are starting to squeeze out traditional venture capitalists.

TechCrunch states that this movement is enabled by the rise of the “lean startup,” in which companies use new technologies to reduce their costs:

“But the last several years have seen the rise of the cheap startup. Internet startups can use open source software and new scripting languages to ship products fast and cheap.”

That’s true, but only for a certain segment of technology companies. Sure, consumer internet companies can leverage these new technologies and launch without gobs of capital, but much of the technology world doesn’t have that luxury. Any company that produces hardware is in a different situation. Chips, devices, networking appliances – these guys all need just as much capital as they ever did. And even folks working on software for the enterprise are still somewhat tied to the old ways of building products.

TechCrunch tends to see Silicon Valley as consisting solely of web startups fueled by former Googlers, but there are still entrepreneurs out there working on traditional products. So before you start writing the obituary for venture capital, remember that consumer internet may be fun and sexy, but there are plenty of technology companies that still need the sorts of resources only large funds can provide.

→ 3 Comments

Posted in Business, Technology

Tagged , , , , , , , , ,

Mobile Check In: Fad or Function?

Posted on August 16, 2010 | 1 Comment

If you follow the technology business at all, you know that one of the hot new trends is “checking in,” whereby you use an application on your smartphone to tell the world, or at least your friends, where you are. Using the now free wifi at your local Starbucks? Check in. Just ordered a Manhattan at the hip new bar? Check in from there. You can see where your friends are, and vice versa, and if you check in frequently enough, you may get special status.

There are a jillion companies offering these applications now, each with annoying names reminiscent of the dot com boom of a decade ago: Loopt, Whrrl, Gowalla, Foursquare (now with Snoop Dogg on the service!) and Check.in to aggregate them all. Plus big players are expected to enter the business: Yelp already has, Google is circling, and Facebook is the 800 pound gorilla everyone fears, with rumors that they are buying Hot Potato.

The question is whether any of these services will be more than just another fad briefly embraced by fedora-wearing technorati hipsters in SF, NY and Austin. Being “mayor” of the local pub only goes so far. Knowing where your friends are is nice, but email and text can do that. For checking in to have legs, it needs to add actual value beyond its current novelty. Getting discounts from the bars and restaurants where you check in frequently – now that is valuable. Assistance in meeting members of the opposite sex (or same sex…however you roll) is valuable.

Clear and tangible benefits need to be provided, and in a way that can’t be gamed; bars won’t participate if they are getting scammed for free drinks. All the check in players are working on this – they aren’t stupid – but nobody has hit on a winning formula yet. In the meantime, when you read the breathless press about this amazing new capability, remember that it’s not a business yet. Or, appreciate the savagery of Time magazine, which called Foursquare “just another tool tapping into a generation of narcissism.”

→ 1 Comment

Posted in Business, Technology

Tagged , , , , , , ,