Hey there, planet mainstream here, are you in for some blockbuster scenarios?

After 2 peaceful years of gardening new products and shopping (still checking if Yahoo comes in the right size) Microsoft has apparently decided to go extrovert and check out the competition. The new internet explorer, IE8, marketed as the “discrete one’ comes with features like ‘In Private Browsing’ that help you block away some aspects of commercial intrusion such as cookies, history lists, and ads.

Wait a minute, are ads angels or demons? It depends on whose side you are, ads are actually multifaceted like mood rings: their use and value are subject to the judge’s role, critical spirit, need of information.

Web ads are mostly seen as angels: they do no evil, they function more elegantly than on other media, probably that’s why people put up with them and other people have based business and state funding models on them.

Demonizing web ads is not part of the ‘InPrivate Blocking’ goals, free will rules. But with privacy on internet becoming a hot topic for regulation, InPrivateBrowsing is actually a do-no-evil, democratic timebomb.

[youtube=http://www.youtube.com/watch?v=4fMqJWoOjE4]

So, this is my scenario.

(late this summer, honey I’m home)

Microsoft is risking committing twice the same antitrust crime, expecting the ad-allergy to spread like a demon-ex-machina by means of ambient buzz (autumn leaves and dust).

(later this year, in the city)

In the same way we’ve rapidly become eco-aware, we begin paying more attention to our privacy.

(you’re just too good to be true)

As Google’s adwords becomes better and Google’s search engine becomes more personalized the results of these two tend to look alike. At some point, our contextual aesthetics react to the lack of difference in the typology of service. Allergy. (atsum)

(in the meantime, the trial)

Then, the second antitrust trial for Microsoft magnetizes ambient dynamics towards privacy awareness.

(whose side are we?)

People are mostly concerned with the direct impact of this issue on their lives rather than the health of the economic competition. This aspect works for Microsoft.

(in the spring, jingle bells blossom/ after the trial…)

As time goes by, behavioral reflexes are built on this awareness.

By highlighting that do-no-evil doesn’t equal do-good, the trial triggers the attitude of systematically using the ad-blocking features in IE or elsewhere (Firefox, Safari…)

(is the trial just a bad dream?)

Google on the other side is still our clean cut hero, our Brandon Walsh.. Fighting for free airwaves, for openness, for us, has chosen an original model of B2C partnership. Beyond a company it acts as a web NGO.

So what is the best path to protect its core business? The legal, the educational, the crowdsourcing or the self-transformational?

Will Brandon

a) complain to the highschool director ?

b) organize an ad-contest for the beach-club kids to campaign for homeless veterans ?

c) run for highschool president ?

d) or study hard to access UCLA?

…to be continued

Well, I also have some legal questions:

If InPrivateBlocking is banned, is the same feature declared non grata for other browsers as well ? What about other add-on programs-is size(impact) shaping legality?

How is the applicable legal domain chosen? Is it an issue of commercial or civil law and how is EU regulation restrictive in each case?

Piss o’ cake?

Georgia

Starting a new tradition here on Tech IT Easy and backdating a little. From now on, if someone smart wrote something useful and related, I’ll reblog it here. I think that comments are way undervalued still in today’s internet-society, and want to put YOU in the spotlight.

“Were my Sennheiser headphones “made to break?”” got some interest comments on it, way more than I expected, to be honest. For one, Giles Slade, author of “Made to Break” had a few words to say (added some paragraphs for easier reading):

Dear Vincent,

Thanks for remembering me and my book. I love the example that you use because headphones are one of the original consumer electronic products from the 19th century invented slightly after telephones because of the noise and confusion in telephone operation rooms. (I have some early photographs including the patent drawing from 1881 that I’d be happy to send you if you’d like to post them on your sight).

These invisible devices have been with us virtually unchanged for over a century. Cleverly after the development of disposable transistor radios in the late 50s and early 60s they (headphones, earphones, ear plugs) became disposable too. And there’s still a massive worldwide market in throwaway phones. Recently however electronics manufacturers have done what the iPod did for MP3 players and raised these disposable items to luxury item status by designing them to produce much better sound.

BUT they are still highly breakable and therefore still throwaway items as you point out. So really there is a double whammy here: the consumer is paying more for a disposable product. There was a device in the 70s called the ‘bone phone’ that transmitted musical sound to bones of the ear by vibration. It didn’t isolate the consumer inside a potentially lethal cone of silence and was a fairly cheap and durable device, but it never caught on. For now, we seem to be stuck with either circum -aural, super-aural or inter-aural headphones, all of which have the same basic internal structure and yes, the same, really cheap wires that wear down after a few weeks of use connecting and disconnecting the jack.

Well, nice to know someone remembers the book. It took me 4 years to write and it is not a conspiracy theory as much as a description of what compromises manufacturers routinely make in advanced capitalism. –

Thanks again, Vincent!

(ps I’m working on a new book about the coming age of environmental refugees under global warming).

I think it’s a very important book that he wrote, and one that, particularly in these times, both consumers and business should start paying attention to. He also sent me some pictures, like the one above. The rest can be seen over here.

A number of people, like t/, also gave me a reality-check:

actually, the wires seldom are not replaceable in such a device. proffesional models usually have micro-jack attached wires, or hidden-fixed-with-screw attached wires.
if its models restrained by price or size or consumerism, theres no jacks, but its often possible to do-it-yourself no problem.
the question usually is – are you too busy to (learn to) do it yourself and have to
a)pay someone else
b)buy new ones
otherwise you just do it.
anyway, the broken thing is a WIRE. you could not get simpler than that.

He’s right, of course.

Btw. commentators, now that you know I publish your words of wisdom, you might want to think about using better grammar.

Vincent

Refleditorial: a combination of reflection & editorial.

It’s 20:47 over here, it’s been a long day, and I’m in an introspective mood. A few months ago, after I concluded my last blog and “renewed” my commitment to this one, it actually happened in parallel with the conclusion of another long-lasting activity: my thesis. Academic work is, in my opinion, largely an exercise in breaking out of theory, easier for some than others. It’s easy to read about theories, write about them, and test their validity—it’s much harder to make it relevant to day-to-day life. That’s not the life for me, I don’t think, so I was happy to see it go.

So when I began blogging back here again, I started with asking more practice-orientated questions: how are companies set up, how do hire a person, etc., etc. I got some amazing comments on those, which I very much appreciate. But comments aren’t the same as blog-posts, not every one of you goes beyond the rss-feed, and in retrospect, I should’ve focussed more on reblogging the great comments. I’ll go back to some and will do so in the future.

Less questions, more answers… I guess it’s somewhat of a balancing-act. Bloggers get smarter through interacting with their readers, and sometimes the best way to get that input is to just ask. At the same time, readers get smarter through great blog-posts, and the best way to create that output in the form of qualitative articles. The best way to ensure that the balance works is, I find, a certain continuity. By continuing to write, you vocalise themes that single blog-posts cannot encapsulate, qualities that are associated with you, no matter what you write. It’s an ongoing process for me and other bloggers, and I’ll try my best to not disappoint.

Lastly, reasons (not) to blog… I think we’ve all gone through it: the more we focus on other things, the less space is left for blogging. It’s the reason why I don’t entirely believe in blogging in a corporate context, though there are certainly examples that prove me wrong. It’s probably a life-cycle thing: as you build something, you dedicate your time fully to it. As your creation matures, you can focus more on marketing and reflect about innovating. When you look at Signal Vs. Noise, everyone of their staff blogs and does it well. It’s even in their manifesto. But 37Signals is a built company. It definitely innovates, but it’s main activity is to make small changes, think about new products & services, market, and collect the monthly checks. The same applies to people, btw.: You build your career, sooner or later you reach a certain point where you can reflect on your life.

Tangible reasons I could think of for blogging in a corporate “building” context, would be to keep Google happy. By creating a continuous “lifestream” for your company, you alert Google to new content, so it keeps linking you up. At the same time, if you build great products that people like, other blogs can link you up too and will probably have a much greater effect. Innovation isn’t everything, neither is marketing, but it’s a combination of both.

That’s it. Reflection-time is over. As always, I love reading other perspectives, so by all means, tell me: Should companies blog during their building process? Should individuals blog in a corporate context? What value does it contribute to their and your lives?

Vincent

P.S. the picture is nonsensical, I just liked the imagery.

Just tried the FriendFeed beta, which was released to the public last night. It introduces some nice features, the main one being that you can now categorise your “friends” into lists. The thing is that the more both FriendFeed and Facebook evolve, the less I can tell them apart anymore.

Some differences are the app-ecosystem on Facebook and the amount of feeds you can feed to FriendFeed (though I think some apps take care of that). And maybe FriendFeed will eventually integrate apps as well, who knows?

The thing is that I don’t mind. FriendFeed is my way of staying in touch with the countless people that have something to say online. It’s unrestricted. Facebook is about the people that I want to have strong ties with, and I purposely don’t add people that I don’t know. So both can definitely co-exist as far as I’m concerned.

But that doesn’t take away that we essentially have a clone on our hands, and it’s a good thing that patents on the internet are apparently not worth squat anymore.

Vincent

Behavioural Economics made the Gartner Emerging Technology Hype Cycle again this year. Unfortunately I don’t have access to that report, so I’ve really little clue about why a theory is on the same curve with wikis, SOA and other, well, technologies. So, my knowledge of the report is based on snippets I found by searching the web. Anyway, for those who do not know Behavioral Economics, here’s a short primer on the subject.

In short, Behavioural Economics tries to explain why people make decisions that are against traditional rationality axioms. This traditional concept of perfect rationality is something that decision criteria like expected utility, on which many of classical economic models are built on, assume. Expected utility does recognize that people are risk averse and prefer smaller certain amounts of money to chance of winning more (see for example, Deal or No Deal -tv show.) 

Value function as described by the Prospect Theory. All you need to know is that this graph tells that people really hate losing.

Now, people systematically act differently than these traditional models predict. Turns out, people really hate losing. This phenomenon is called Loss Aversion and it means that even a small chance of (perceived) loss makes us nervous. Interestingly enough, when at loss, people are willing to bet the farm to get back to break-even. There are many interesting stories in the world of finance of people catching this “get-evenitis” like for example LTCM, Nick Leeson and, recently, Societe Generale. These two are just few of many different heuristics and biases people tend to have in their decision making. These “anomalies” are not covered by traditional models of decision making.

The history of Behavioural Economics goes back to the 1970s and many see Kahneman and Tversky’s 1979 paper Prospect Theory: An Analysis of Decision Under Risk (Econometrica, 1979) as a culmination point for the theory. This paper tries to offer a framework to explain the many anomalies (compared to rational decision making) they explored in an earlier paper, Judgement Under Uncertainty: Heuristics and Biases (Science, 1974). For their efforts, Kahneman won 2002 Nobel prize for psychology. Anyway, recently there has been more interest in Behavioural Finance, which basically just builds on the Economics side and is so practically the same thing.

So, Beahavioural Economics aren’t anything new, but so far it has had few applications. One of the main reasons for this is that it is basically a descriptive theory. In a really good book on the topic, Beyond Greed and Fear, author Hersh Shefrin explicitly warns the reader not to try to use any of the anomalies in the book for his/her advantage.

So, why should an IT manager be interested in this emerging technology that will, by Gartner’s estimates, hit the mainstream in 5-10 years? True, the topic is somewhat sexy filled with sexy terms like Gambler’s Fallacy, Money Illusion, Winner’s Curse and so on and cool jargon is something that is required of every hot new tech (like microblogging, cloud computing and wikis!). It is easy to get excited about the topic and that’s probably why Gartner has set Behavioural Economics as a “technology trigger” just rising to the “peak of inflated expectations”, because many might bitterly find out that in addition to awareness to one’s decision biases, one might not get that much more out of it.

Another Ph.D. student in my field told me that he was interested in behavioural decision making because he expected it to improve his poker skills. He had a successful sports betting background (which paid his M.Sc.) but he was moving to Texas Hold’Em. The thing was, he was interested in how to win a given game and not just more games in the long-run. In last December’s the Economist, there was a good article on poker and howw many academics are getting interested about researching it. In the end, this student came to conclusion that while the issues are interesting, the theory, as it is, is quite worthless to him in improving success in a given game. I guess this just highlights the problem that so far there’s very little you can apply the knowledge to.

So, what’s in it for an IT manager? There is, of course, the dark side to behavioural economics, which is closely related to marketing. Because, as a popular psychology book tells us, we’re Predictably Irrational, wouldn’t it make sense to exploit this predictability, say, for example in marketing and sales? By framing options differently in a web page you can make people behave differently and – Okay, seriously, a reality check. We’ve got a Nobel-worthy theory and Gartner thinks we should be using it for mere web design and perhaps for internal decision making?

As stated before, behavioural decision making is mostly a descriptive theory. It only gives us explanations why people act the way they do. What it can’t give is a prescriptive framework for making people act in a specific way and even if it did, there are huge ethical aspects to be considered about. So, a fail to see what Behavioral Economics can give to an IT manager – expect what it gives to everyone else. One thing to keep in mind is that Gartner’s curve is literally named “hype” cycle, so it no doubt deserves its place there.

Richard Thaler, a famous behavioural finance economist, recently wrote a book, Nudge (here’s a Q&A at Freakonomics blog), and in my opinion the title gives a good summary of what behavioural economics can or should give us. Just a “nudge” for better decision making and expanding our freedom of choice – not exploiting our biases for an extra buck.

The thing is, we all make these systematic errors in decision making – it’s built-in. The best you can do is educate yourself against them, because in 5-10 years, “choice engineering” (what Gartner really means) might just be mainstream. And knowing your biases might just improve your everyday decision making abilities, anyway.

If you’re interested, a good place to get an “executive summary” is Harvard Business Review’s article “The Hidden Traps in Decision Making” by Hammond, Keeney and Raiffa. I haven’t read Predictably Irrational, but I guess it’s in the Freakonomics-territory in terms of how approachable it is for general public and, given the author’s background, more suitable for the marketing folk. I haven’t yet started Nudge, but I imagine it is in the same territory. Then there’s also “Sway”, but I’m not so sure about that. Beyond Greed and Fear is best suited for the finance folks and is the only one of the bunch that requires basic knowledge of stock markets and finance/economics.

Just briefly… I did a practice defence for my thesis yesterday, was certainly interesting, and got to listen to a whole lot of other entrepreneurship-students (and potential entrepreneurs) on their own thesis-topics. Why I love universities is, of course, because of all the smart people I meet, but also because there usually isn’t a confidentiality agreement attached to our conversations, which means I can brainstorm about it openly with you.

The one thing I came away with was that networking is in… “Hah!” you say, and I wouldn’t blame you. With the rise of social networks and its media attention, of course it’s “IN.” No, but what I mean is that about 70% of the thesis-topics I heard being presented yesterday, were in some form or fashion centred on networking. And I can’t remember it being so dominating a topic before.

As was mine, incidentally, being in part about incubation and innovation systems, and how to improve the connection between tech-startups and investors, but there was one thing I didn’t look at, which was: Weak ties, strong ties, and their implications. I won’t explain it in great detail now, if interested, you should definitely read this pdf, I just uncovered, by Mark Granovetter, the originator of that theory and how to measure (!) it.

The idea is that we are surrounded by possible ties, some of them non-existant and potential, some of them strong, meaning that we meet frequently and that psychic distance is low, some of them weak, meaning that we see them rarely and that they are perhaps based on less emotional factors. If you’re in a university environment, it’s of course easy to imagine that you have a lot of strong ties. As everyone enters their careers, your ties to to each other become weaker and weaker. The same, to some extent is happening on this blog: some I have stronger ties with than others, simply because of the frequency of interaction. Of course, I’m hopefully a not-to-weak tie to all of you on this blog

Regarding the power of weak ties, Granovetter also writes:

The macroscopic side of this communications argument is that social systems lacking in weak ties will be fragmented and incoherent. New ideas will spread slowly, scientific endeavors will be handicapped, and subgroups separated by race, ethnicity, geography, or other characteristics will have difficulty reaching a modus vivendi.

In other words, strong ties aren’t everything either—they, rather, lock you into a clique and prevent ideas from spreading and changing the world!

The strength of ties & funding

Some things I learned yesterday, was that networking and its strength has certain implications in areas pertaining to funding and sales. One student did his thesis on the Greek semi-conductor industry and how it was funded. He found that (my phrasing):

strong ties are important for finding early-stage funding, like friends & family. But that weak ties are actually the predominant factor in finding funding from VCs and similar. His opinion is that those investors make their decisions not on emotions, but on business-reasons. A connection certainly helps, but is not the primary decision-maker.

The strength of ties and sales

If you ever worked in sales, you know that it’s often not really a job focussed on relationship-building. Rather it is about maximising turnover, which can best be achieved by selling to as many people as possible in a short period of time.

Another student did his thesis on how the social environment of startups affects their sales strategies. He interviewed three independent ICT startups and three, which were located in incubators, and found that the first group was much more focussed on developing their sales-force, while the latter group depended much more on the ties it had with their respective incubator, often finding their first customers within, one even supplying the incubator with software. Kind of scary, I think, this co-dependency in the latter case.

Strong ties were an important factor in business development, which were more intense relationships between businesses, trying to get a larger project off the ground. Sales, in general however, relied mostly on NO ties, aka cold approaches to customers. So if you want a job in sales, that’s kind of what to expect.

Thoughts and questions

While I dig theses a lot for their practical research alone—it sometimes reads like a section of a business-plan, and I have used it before to research an industry—we are obviously dealing with theories that are generalised across whole populations. But it seems like strong ties are actually not a very important factor in either getting funded or making a sale.

So some questions to you…

• How do you feel about networking after hearing this?
• Can you provide counter-argument, where a strong tie to a person actually improved your career? Ok, wives, girlfriends, boyfriends, and husbands should definitely be left out of this
• Are there other areas, apart from funding and sales, where either strong or weak ties are better?
• How often do you use contacts-of-contacts on LinkedIN or otherwise for professional reasons?
• Can you provide some Best Practices in regards to “Weak-tie management”?

I look forward to your answers!

Vincent

P.S. I asked a friend to send me the names of these students. I’ll try to fill them in later.

(Note : I’ve posted this a while back on my personal blog …. But since then i’ve been working on a more general post on Software Architecture and Company Strategy for TIE, I thought this would also belong here as a good background …)

Service Oriented Architecture is the new mantra to ease integration between heterogeneous systems in the enterprise.

Lately, I have been having questions about this approach and this post comes out from different experiences. One being reading Vincent thoughts on the topic.

The other being this excellent and lively presentation by Jim Webb and Martin “architecture guru” Fowler : SOA without ESB. The last was the presentation from Didier Girard during the excellent Université du SI conference in Paris back in early july. The bottom line of both presentations being : the web works. The Web is resources that are easily accessible.

Using Web Services for different systems integration within the Enterprise should be easy. We should have resources easily searchable and accessible. Hence these questions about how relevant Service Oriented Architecture stands as it is implemented today.

SOA the new J2EE (read bloated) solution ?

Are architecture astronauts taking over again ? Discussing the topic with Vincent it just occured to me that SOA was just like the next EJB around. This type of magical thing which is supposed to help “allowing individuals and businesses to focus on what they do best”. Eventually we end up with only one successful project out of 5.

I remember this serverside symposium back in 2003. (wasn’t there though, I was just reading the coverage). That was a cornerstone : Rod Johnson introduced Spring, Gavin King Hibernate and Bruce Tate presented his Bitter EJB book.

For the first time in Java hostory, J2EE myths were started to be analysed in an objective manner :

J2EE Myths and why they are dangerous :

• There are no simple problems
• Database portability is always required
• It’s ok to defer application server choice
• Distrust relational databases
• J2EE developers always know best
• J2EE allows developers to forget about low-level issues
• Achieve scalability through distributing objects (Stateless SesssionBeans with remote interfaces)
• J2EE = EJB

EJB was also the target :

Bruce looked at one of the classic anti-patterns: the “Golden Hammer”. This is the temptation to use this new tool you’ve acquired to solve every problem. EJB has become the modern “Golden Hammer”. Often, this is because people want to put this relatively new, hot technology on their resume.

Scott Ambler reminded that 65 to 80% of J2EE projects were failure and he contributed to make Agile methodologies popular with his Agile Modeling book.

We know how it ended up : Spring became the new J2EE (over industry standards), Hibernate became the standard for J2EE ORM mapping (again over industry standard JDO), Bruce Tate flew From Java to Ruby, Agile methodologies took off, Floyd Marinescu left java-centric serverside (which he had created) to set up infoq, more hybrid technology wise (Java but also Ruby, Rails, .Net) and topic wise (development, architecture but also agile, SOA, etc …).

SOA Vs Agile

I do like this definition of Agile methodologies by Mike Cottmeyer and V. Lee Henson in their essay The Agile business Analyst :

Agile is focussed on driving towards simplicity versus rather than creating systems that manage complexity

The most successful experience I had with Web Services was with a mere XML-RPC standard : Remote Procedure call in XML format over HTTP. This helped us build very quickly a Web Services Layer around a core of services and have all type of technologies (Ruby, PHP, Python, Java) using these services.

My 2 cents on the success of this solution : XML-RPC standard description is one page long. Compare with SOAP’s which is the SOA industry standard agreed on by all the industry big cats and the de facto protocol used in enterprise applications : 20 pages or so of abstraction to please all stakeholders : a pain in the neck for developers and for Agile development.

Gimme a REST

Back to Didier Girard, Martin Fowler and Jim Webb presentations : the future of SOA will be based on the same receipts that make the web the ubiquitous technology the net quickly became. Web is an infinite set of open resources, and the most appropriate architecture for web services should be based on this paradigm.

Besides, the internet has drastically changed the balance of forces in IT world decision making. As Martin Fowler reports it :

Tim Bray contended that the key decisions on technology are made by the programming community. (…) The reason we have so much bloatware in IT is because IT purchasing decisions are usually made on golf courses by people who have lost meaningful contact with the realities of software development.

My bet : in the same way that open source community naturally adopted standards such as Spring, Hibernate, and, to some further extents, RubyOnRails over bloated industry standards (EJB2, JDO and J2E Web Apps respectively), REST should emerge as the natural SOA standard over SOAP.

REpresentational State Transfer aligns Web Services CRUD possibilities to HTTP CRUD support : GET (Read), POST (Create, Update, Delete), PUT (Update), DELETE (Delete) and bring Web Services back to the web : a set of searchable and accessible resources.

I hope this will help saving Web Services from bloatware and help us aligning technology with the business goal.

Up to a year ago, I was running in a track-team. It was fun, but I was already feeling my age and stopped in the summer of 2007. Yesterday, I decided, for the second time this summer, to join my former team in one of their infamous 2-3 hour training-sessions.

What made this team great was its coach. He was recruited a few years ago, is in his 40s, and is a master of his sport. What made him great is that he was somehow able to target all of us: the quick 18 year olds and the slower 30 year olds and above. He planned the route well, placed us into fitness-categories 1-3, did an extremely slow warm-up to get us all ready, and used “vacuuming” to keep us all together. It is a term we use over here, meaning that the quickest, once reaching a certain distance, turn around and dribble back to the slower ones.

That’s all excellent, but there is one flaw in placing to much faith in a coach: he’s just one person. Last night, another co-runner of mine took over the training. He planned the route well, warmed us up slowly, used vacuuming, and made us run 13 km (ca. 10 miles)! You should know that my top mileage is usually about half that, and hadn’t trained much the weeks before. We even had a girl, whose knees gave out after 10 km, and were still able to train around her, while she walked. Somehow, we all came away satisfied.

In my opinion, the important qualities of sports-coaches are these three things, and I hope they translate to other disciplines as well:

• Knowing your craft really well;
• Planning for different abilities in your team;
• Making your craft transparent so others can take over.

More tech coming this weekend, I promise!

Vincent

Premise: I’m in the midst of preparing a presentation for my thesis defence—practice-session this Friday, and final one on September 5th. My thesis is on how high-tech startups can bridge the equity gap, and I’m still busy every day interacting with potential employers. Love it when my hobby and my “job” work out in synergy!

So what do venture capitalists and employers have in common? Investing in startups and hiring employees can be tremendously fun for sure. You’re funding bright ideas and getting fresh blood into the company. But there is also a significant information asymmetry between the “Investor” and the “Investee.” Both VCs and employees use similar means to overcome that, I think.

The VC investment process

Startups have the problem that they lack a track-record and collateral. So they can’t just walk into a bank. And VCs need to find ways to deal with that. Well, technically, most VCs don’t even bother. Statistically speaking, over 80% of VC investments focus on buy-outs, i.e. established SMEs that are just changing ownership. It’s pretty easy to see whether a project is good or bad in that case, you just have the people-risk to deal with. That attitude is not surprising either, since a VC-fund is typically restricted to about 5-10 years worth of investments, while some really high-tech startups (e.g. in medicine) can take 10-15 years to get out of the red figures. For purposes of this post (and my thesis), I use venture capital as an umbrella term for entrepreneurial finance, which covers a whole ecosystem of investors.

How VCs manage risk is typically through:

• Intense scrutiny beforehand—they analyse the business plan, the team, and possibly exchange information with other venture capitalists;
• And intense monitoring & control during—using staged investments, spreading the risk by syndicating with other venture capitalists, taking seats on the board of directors, and by using compensation arrangements, including stock options.

You can probably see a pattern here already. Since VCs, or rather startups, don’t have the luxury of having a house or similar as collateral, nor having forecastable (just imagined) income-streams, VCs have to rely on judging quality on qualities that do exist: the business-plan, the team, and industry/market-insight. And they minimise their risk-exposure over time, by investing in chunks and making sure that priorities between them and the founders are aligned through contractual and other means.

One important thing worth mentioning is that the best way to minimise risk is to spread it across a portfolio of investments. Again, VCs tend to have this luxury, even if smaller investors (e.g. business angels and friends) do not.

The hiring process

The parallels must be obvious. Employers too have to rely on softer qualities, like CVs, grades, work-history, and all of it hopefully accurate. How employers manage risk is typically like this:

• Erecting high barriers to entry—relevant work-experience, good grades, etc.
• Prolonging the application process—erecting multiple hurdles, which applicants must pass.
• Using monitoring & control tools during the employment-period

And, also spreading the risk across multiple applicants! Again, I think, the term “employers” should be qualified: there are large companies, with well-established risk-reducing (or quality-enhancing) procedures, and smaller/younger ones, with less of a history and less resources to dedicate to this.

I do think that startups can find pretty creative ways to deal with it. The primary one, which I have found here in Europe, is working with interns. I think this works pretty well for a certain segment of employees, as long as it’s combined with a proper motivational structure! The other one which I like, is encouraging entrepreneurism from the start. There is no net to catch you if you fail in a startup, and by having applicants show that they have this attitude even before they are hired, you ensure a certain alignment of priorities. Note: I think this perhaps works better for business-applicants, correct me if I’m wrong! I think it was Seth Godin that once wrote that the best way to hire a person is to just put them straight to work and see how they do. That’s your application process right there!

You can employ techniques from VC-investing after hiring someone as well: using a staged approach (which is typically an internship and/or trial-period), monitoring (in a nice way, I hope), and motivational tools. I think the one major difference between VCs and employers is that there is less “psychic distance” between the latter and their employees. VCs, while being considered active investors, can still get away with weekly or monthly contacts. Employees are exposed to the company every day, requiring a more human relationship. Just my opinion!

Regarding motivation, I like the idea of empowering employees, which I wrote about on my old blog before, and I’m also wondering in general about the effectiveness of stock-options vs. other motivational means. Certainly, considering the recent exit-unfriendly climate, people have become more sceptical about stocks. At the same time, I personally think that people work a little harder if they are working for themselves. Again, correct me if I’m wrong!

What are some creative ways to hire employees, do you think or have you experienced?

Vincent

I was first going to call this “vital entrepreneurial skill-sets,” but not everyone is an entrepreneur (nor am I), so instead, let’s call it Pro, which means someone that performs well in his or her profession

The rules of the game are simple. Come up with a single important area that a professional should master in order to do their job well. And add where (s)he should get that knowledge, for example a book-title, a website, a course, or otherwise. If this is specific to your job, add what you do.

Some examples:

Skill: Deductive ability – aka to analyse facts and come to conclusions
Good place to start: read Conan Doyle’s Sherlock Holmes

or

Skill: Delegation – aka understand the job so well, that you can “outsource” part of it with clear targets to meet.
Good place to start: read Micheal Gerber’s The E-Myth Revisited.

I’ll start

Skill: Basic accounting
Good place to start: do a course at your local chamber of commerce; they are usually cheap and you’ll meet other people that you can learn together with.

You’re next! For every suggestion, I’ll come back with one of my own. I’m hoping to make this the most commented post in Tech IT Easy ever! Ambitious, I know.

Oh, and, KEEP IT FUN!

Vincent

This is a good question to ‘crowdscource,’ as I’m sure there’s some disagreement about it.

Products (to which I include services, for now), exist on different spectrums, of course, some of which are:

And all of which will to some extent affect a product’s “stand-alone sales-potential.”

The question of ‘good‘ in ‘good products,’ also begs for interpretation. A product, let’s say an iPhone, is not just its physical parameters and software, but it is the whole ecosystem around it—carriers, apps, other partners, relevance to consumer-context (e.g. work or home)—as well as factors like price, quantity, the message that communicates the product’s value, the company’s goodwill, etc.

So by a “good” product I in fact mean: good execution on the technology- and market-side. In a business-plan also, you may have presented a great product, and that will go a long way, but it’s plenty of other factors that will convince an investor.

Even so, the best product can still meet with plenty of opposition from the mainstream-market, what Geoffrey Moore calls the “early majority” or “the pragmatists,” who:

“care about the company they are buying from, the quality of the product they are buying, the infrastructure of supporting products and system interfaces, and the reliability of the service they are going to get…“

Take a B2B-situation, where conventional solutions are favoured, because they have proven their worth, while new products still need to build up a reputation of not only being good, but being good continuously, something that can show its value in next year’s numbers. In a B2C-situation, decisions are made somewhat less long-term perhaps, though still much more conservatively than amongst early adopters.

Both of these can be seen catch-22 situations, where it can be argued that customers want good products, and the development of good products requires cashflow, i.e. customers. That kind of reasoning ignores that presence of early adopters and investors, however.

Entering the B2B/B2C “mainstream” is clearly also a matter of good execution, but one which is much more contextual to the consumer, and which can be affected by other non-qualitative factors also (such as politics, incentives, or competition).

So, the question stands: do good products sell themselves? Name some examples if you can.

Vincent

Related reading:

• AVC: Is Geek Tech going mainstream?
• ReadWriteWeb: Rethinking ‘Crossing the Chasm’

OK, see you later suckers! I just got this mail (bold parts added by myself) and I’m outta here!

ATTENTION: WINNER

This is to inform you that you have been selected

for a cash prize of €850,000.000.00

(Eight Hundred & Fifty Thousand

Euros Only) in our promoting program held on the 14th of Aug,2008/ The

selection process was carried out through random-selection in Our

computerized email selection system (ess) from a database of over

95,000 e-mail addresses drawn, were selected globally

( Email-

award/Postcodesloterij nl.) .

Contact our claim department with the

below info :

Name: Mr. Van Der Wal (AD)

Claims-Office/Email:

geldkantor@gmail.com

Tell: +31-68-144-8820

REF NO: NL/44267998/5110

BATCH NO: NL/9922/0855

This program is organize to promote our

Postcodesloterij award yearly, also we are very skeptical due to

unsolicited/Spam mails on the net this days, that is why the claim

process is being handled by our (advocate).

Also you are advice to

forward your batch number and ref number to the claim department for

claim process

Sincerely Yours,

Email:Cheers,

Mrs.Samantha De Witt

THE

PROMOTION COORDINATOR

They didn’t mention my name, nor did I ever play the lottery, but I feel so honoured for having been selected. It also wasn’t recognised as spam, so it must be real!!!

Booking my world-trip now…

Vincent

P.S. If you want to win the lottery too, here is the IP which this mail originated from 87.210.73.31 and the mail-adress: lupimarsicani@virgilio.it.

I wanted to write a brief follow-up to my Eulogy from a few weeks ago. To recap: my Sennheiser PX 200 headphones died for a second time, not because anything was wrong with their original purpose—to produce great sound—but because a more marginal feature failed: the wires, that connect my mp3-player to the speakers.

I have decided that headphones, especially the more expensive kind, are a big rip-off, because, while the sound may be better per euro/dollar spent, the wires are pretty much identical with whatever model you buy. And it’s the wires that fail 95% of the time, not the USP with which headphones are usually advertised: better sound.

In my opinion, there are three solutions for this problem:

1. consumers buy cheaper headphones and forget about the sound;
2. manufacturers make unbreakable wires or go wireless;
3. manufactures make wires modular.

I thought of the latter, remembering an interview, I heard years ago, with Giles Slade, author of the book “Made to break,” and believer in a great conspiracy: that, ever since the industrial economy took off, manufacturers have create products that were designed to break, because the alternative—a perfectly replaceable modular system—would diminish their profit-potential. The consequence of this philosophy is that, instead of throwing away failing components, we are forced to throw away the whole thing—whatever it is—resulting in great, big thrash-heaps all over the world. The consequence is a higher cost for the environment and for consumers.

The manufacturers’ perspective kind of makes sense. If you look at two computer-companies, IBM and Apple, the one that opened up its technology to be replaceable, was the one who is no longer a computer-company today: IBM. And those technologies that have decided to go modular—razor-blades, printer-cartridges, the iPod-ecosystem—have done so in a way that it is become monetarily painful to replace any part of that technological system. On the other hand, smart companies like Dell have proven that modularity can also create opportunities, but for assemblers more than manufacturers.

Taking it back to headphones, I (egotistically) maintain that a non-modular stance does not apply for the case of wires—though there may be arguments regarding portability. Rather, wires have long been modular for pretty much any application, ranging from mere electrical plugs to the wires that you hook up to your stereo-system. While the quality of wiring plays a real role in the quality of sound, the ultimate value that is attributed to a speaker-brand, is in the quality of the speakers themselves. Sennheiser would lose little by making wires replaceable; rather it would avoid potential PR-scandals and expensive warranty-problems.

This is of course assuming that Sennheiser isn’t one of those companies, whose products are “made to break.”

Vincent

I’ve been studying up on different technology-sectors these last few weeks, also picking up on a book that *is supposed to* give an accurate image of the current state of mobile commerce (it was published in 2008). Turns out that one chapter/article I read, which listed all the current technologies of relevance in that sector (GSM, Edge, “3G,” etc., as well as SMS, SAT, WAP, etc.) only lists sources up to 2002. And the same applies to several value chains in mobile commerce, most of which were up to the early 2000s also.

Back when I was an academic, i.e. writing a thesis, the underlying fear was always that my information was outdated. Indeed, just at the time that I finished, a new report came out that I could’ve have integrated into my findings to give a more current picture. You also see this happening with books on gadgets, e.g. the Jailbroken iPhone, which is clearly no longer applicable now (not to mention that it was clear that that wasn’t going to be a long-term thing).

In terms of markets, people like Andy Grove taught me to always watch out for (aka be paranoid about) “strategic inflection points,” which can change things, rather radically. 6 years ago, when people were researching mobile tech, the iPhone wasn’t even on the agenda, and 4G was a pipe-dream (note: a good short article on that in the Economist). Now, the rules of the game may change much sooner than people think, and while I think that tech like SMS will remain the lowest-common denominator for some time, meaning that it allows for developing strategies that are span contexts and geographies, the mobile internet may displace part of that system pretty soon.

I imagine it’s quite similar with entrepreneurs starting on a trajectory of developing an idea, committing resources to it, and suddenly finding out that the rules of the game are changing. Sometimes it’s too late; you’re ready to launch and/or can’t afford another development cycle. And at other times, it may be smart to do the extra work after all, so that you are creating something that is actually relevant for today’s world.

What matters most for an academic is to have a solid theory that can be applied to any setting; what matters most for an entrepreneur is the same—to have a solid vision—as well as being prepared for strategic inflection points and able to respond to them quickly.

A short reflective piece on my sick-day.

Vincent

Last night, I was called in to check on a friend’s Vista-PC, which kept showing blue screens of death, at sporadic moments. The error-codes were just a collection of numbers and letters, and a Google-search just revealed that it could be a ‘hardware or software problem.’

I’m not going to go into the problem here, but I’ll just say that we tried to run the Windows system restore disks, which crashed half-way through, in the midst of formatting the drive. Vista PCs have, as you know, not been sold with the actual installation-CDs, though I understand that this is a right right now and the owner will go to the store and ask for them. After which, I will install Vista (my first time), as well as all the apps she needs for her productive day.

I’m angered that things like this are still happening! Having been a Windows user since 3.1, the only version that I’ve never had problems with was 2000, and XP now runs fairly good too. Vista, I’ve never tried, but I understand there were some driver-related problems, much like the 64-bit version of XP.

Typically, diagnosing and repairing a system like my friends will cost several hundred euros, if not more. And that is… if the store actually knew what it was doing! The error-codes, as mentioned, don’t point to a specific problem, and they previously suggested replacing the hard-drive, which she did and which didn’t fix the problem. Right now, the way I see it, I’m going to be installing a new Vista on it, the drivers, and the software. I’ll see if that holds. If it doesn’t, I’ll assume it’s a hardware-problem, and one piece of hardware will have to be removed after the other, to diagnose the cause.

Total time used to fix: 1 hour last night, 2 hours Vista CD pick-up, 2-3 hours installation & restore. And that isn’t counting that there’s 3 people involved, some gasoline, not to mention the months of trauma that she’s been experiencing through this problem. As well as whatever store-time + hardware-replacement-costs may be involved.

But why does it have to be so hard????!!!!! It really mystifies me how much of mess the open PC-architecure, in combination a fairly open ecosystem of hardware & software, is. You literarily have no idea, if there’s a piece of dust on a RAM-stick, if there’s a faulty driver, if an app is causing the mayhem, or if the problem is a Windows-update that went wrong. And, in case you are wondering, this is a HP-machine.

So, I ask once again, what the frustration-cost of Windows is? In my estimation, it’s pretty damn high, and I already suggested to them to get a Mac. It may be 50% more expensive and non-upgradeable, but the fact that I don’t have to worry about things like BSODs, is priceless.

I should disclose that I’ve been a Mac-user for 3 years now, which was both a hardware- and software-based decision.

Vincent