During a recent chat session with Jeremy, I accidentally mentioned that some of my techie friends are starting up a new company. During the conversation Jeremy asked if I could maybe write a blog entry based on our discussion and my fears. I don’t really know how much I can tell about their business idea and if I’m being too harsh, so I’ll generalize and anonymize a bit. This is based on my current knowledge of their idea.

Their business idea is, in general terms, delivery service of sort. It’s a really neat idea and I know the guys themselves think that the idea is great and that it would solve their own problems. Heck, I agree – their service sounds cool to me too. I just don’t see it as feasible. The major problem is that it was tried in the dot-com-boom and it failed there. Remember all those delivery services in US at that time? Even worse is that generally the same idea has also been evaluated by all big players in their industry in their home market and even they couldn’t make it profitable. There’s a direct competitor who has been running a similar service for over 5 years.

So, okay, maybe I’m wrong – I hope so too. Maybe what the business needs is an agile start-up with fresh outlook, which can accomplish what the old dinosaurs cannot. Maybe the world of IT has something really novel that will reinvent this business. Okay, they have one really nice idea and I don’t see why this wouldn’t work on a really small scale if you just do it among friends without aiming at profit (or even accepting a small cost).

During my friendships with many different techies, I’ve noticed several patterns of thought most of them seem to follow and which they see as obvious. The little I know about marketing and entrepreneurship, on the other hand, don’t always agree with their worldview. What makes this even more dangerous is the general pattern that techies can learn things as they go on all subjects they, as of now, know little if anything. It’s this idea that you can learn everything by just reading or understanding the “big idea”. I think “idealism” is a good word here too.

So, guess how many of them know anything about logistics or the realities of their chosen business? Last time I checked, and to be truthful that was a long time ago, none. I talked with my other friend who works in the brick-and-mortar version of these guys’ business and, well, he pointed out a lot of things that you only get through years of experience. It was from him I learned that the big players had already tried a version of this and he was even more against this idea than I am. I must repeat that I would love to be proved wrong.

Other worrying and anti-entrepreneurship-like ideas techies usually have is this certain risk aversion. These guys’ original idea involved the constraint that they were planning not to have any own inventory. They were more willing to have the risk of not having anything to deliver than the risk of holding stock (probably because it would consume capital?). Maybe this comes from coding, where you try to accomplish as much as possible with least resources possible, I don’t know.

Their customer base? This is what is problem with many open source projects these days, too. I’m pretty sure that the developers themselves find their own programs very useful and are pretty happy with them and how they work. Other users… not so much. If I remember correctly, this is rather common misconception. One of the most essential marketing ideas is that your audience does not share your interests. I’m worried that these guys’ targeted audience is just themselves. They might see that their business idea solves a certain discomfort, but maybe many of their potential customers don’t see it so narrowly and in fact enjoy the whole experience. They probably see the process a bit differently. They think their service is the more easier solution, while the old solution might be easier for many. And everyone knows what techies think of marketing…

I already talked about this risk aversion when it comes to resources. I’m also willing to bet that these guys have not considered VC funding. Of course not, that would be like lending money, which goes against this hacker ethic.

Okay, I haven’t read their business plan (if such exists). Maybe I give them too little credit. But these are certain patterns that I’m afraid of and have seen repeatedly happening in other ventures. Maybe they have studied these pitfalls, I sure hope so. I’m just afraid these guys think they know it all.Previous guys I told to take a look at Guy Kawasaki’s Art of Start. And well, I don’t really know how their business is doing, but it’s been almost two years and I haven’t heard that they bankrupted – but these guys were business guys, not engineers.

I’d really like to know if my fears are warranted. Do the readers of this blog also see certain conflicts between entrepreneurship and the hacker ideals?

Kari is an IT project manager at an utility company and when not managing the ensuing chaos likes to read about business failures like LTCM and Enron and experiment with new kinds of tea. The pyramid tea bags are a bit odd.

I had already published in a previous post something about the amazing density of technology ventures in South West Paris. Microsoft Research co-investing with state-funded research institution INRIA is one more – and not the least – example of brain concentration happening in the outskirts of Paris, where I’m also studying. The new research center will focus on secured distributed calculation, mathematical components, and formal specification and proof methodologies and tools.

I went to the ceremony today at engineering school Supélec, officializing the cooperation, and I was surprised to find so many things to take away from the different presentations. Here’s a little recap of what I believe was most interesting.

• First of all, Microsoft Research opening an R&D center in France is no small decision. Considering the culture of the company (centralizing R&D in Redmond), it’s actually a major step granting France with worldwide software expertise recognition. Microsoft had opened the first software research lab ever, back in 1991 in Redmond, followed by Cambridge, UK, in 1997; Beijing, China, in 1998; Mountain View in the Valley in 2001; and Bangalore, India, in January 2005. So, according to Microsoft, France has the 5th software brainpower in the world. Not bad at all.

• It’s the first time ever Microsoft Research has been co-investing with a State-owned institution, namely INRIA. This fact in itself also represents a major breakthrough.

• True though that there’s been a long tradition of co-operation between INRIA and Microsoft. To state things clearly, INRIA researchers have long been, and still are, a major recruitment target for Microsoft. It’s pretty understandable though, considering the unbelievable scientific breakthrough coming out from this Euros 160m-funded institution (20% coming from in-house software licensed to partners and clients –> INRIA is also in a way a software publisher). INRIA, via its business development arm INRIA-Transfert run by Laurent Kott, has spin-offed 80 start-up companies in about 20 years – half of which are still alive (a ratio way above the average).

• The speakers were overall excellent. The starts of the day were undoubtedly very entertaining Jean-Jacques Lévy (director of the INRIA-MSR joint R&D center), Rick Rashid (Senior VP @ MSResearch), Andrew Herbert (the Mging Director of MS Research in Cambridge, UK), Michel Cosnard (head of INRIA), and Eric Boustouller (head of Microsoft France). We also had two researchers, namely Georges Gonthier & Wendy Mackay, presenting us the outcomes of their research on, respectively, a software checking out mathematical proofs & visual ways to organize cognitive information. Impressive! I encourage you to take a tour on the joing R&D center website to learn more about the research going on there.

• I was about to leave but had the chance to briefly meet with Leslie Lamport, the inventor of scientific publications LaTek language and software LaTeX, who obviously was there. He’s going to work actively on researching formal specification and proof methodologies and tools at the new lab.

• Rick Rashid gave a soft of corporate presentation that I thought would be totally bullshit. It was actually not the case. Check it out:

“The mission of MS Research is 1) to make computers easier to use, 2) to reduce the cost of computing, 3) to make software developers more productive. The results of the research undertaken are to be transferred to MS product groups and businesses, keeping in mind that the ultimate goal of in-house research is to ensure Microsoft has a future by providing corporate agility against 1) new business models; 2) new competitors; 3) new technologies; 4) new ways of making use of technology.“

To me, that was the best part of the day: a lesson of humility coming from the world leading technology company and 3rd largest market capitalization.

• 3 interesting miscellaneous facts:

MS & INRIA are to release the source codes of most of their software prototypes to foster use and improvements.

25% of all computer science PhDs graduating in the USA every year did their research at Microsoft Research!!

Interestingly enough, Microsoft Research really feels like acting like a truly academic research institution: nobody review papers sent by their researchers to scientific reviews. All researchers are free to communicate on their findings, for the sake of the scientific community. This might partly explain why Microsoft enjoys such a better image amongst academic circles vs. the masses.

• At the ceremony, I was glad to meet blogger Antoine Vialle, an international business developer at another famous state-owned research institution (CEA). Here’s a link to his blog (only in French, sorry folks). He’s been thinking whether he should keep on blogging or not. Do the blogosphere a favour and, even if you don’t read French, tell him to resume blogging. His posts are really interesting and I wish there’s more to come.