I’m reposting this comment I wrote in response to Eric Ries’s stimulating blog post on Harvard Business Review online, with the title “Is Entrepreneurship a Management Science?” Feel free to share your thoughts on it there as I think it’s worth thinking about whether Entrepreneurship can eventually learned or whether it is an art-form. My thoughts on that are below.

Having both studied a Master of Science in Entrepreneurship and working in my 3rd startup (trying to apply the lean techniques that Lessons Learned made me aware of), I can say that my ideal is that entrepreneurship is a science. In reality, it’s a collection of Sciences as well as the act of Imagination AND Guts AND Agility, none of which are particularly scientific.

It’s a collection of sciences because no entrepreneur or team of entrepreneurs is undertaking just one activity, he, she, or they are doing many in parallel, some of which are business related and some of which are technological. Both have scientific foundations behind them.

Why the Business of Entrepreneurship is scientific is simple to explain. Businesses, starting or existing, can’t operate in a vacuum (for long). We have to obey financial restrictions, sell the idea to our investors, who themselves employ scientific means to measure whether the return on their investment justified, communicate to the market in effective ways, study the market, and project manage all the activities and people in the company. For most of these “wheels” already exist, so there isn’t always a need to reinvent them.

BUT, there is no replacement or science for guts, imagination, and agility in starting a business. You have to ignore many rules, you have to play dirty, and you have to be quick & flexible if you want to succeed. Maybe a management scientist can eventually plug those dirty variables in a formula somewhere. But I doubt it can be applied to any two startups successfully.

Vincent

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Dear everyone,

I am extremely happy to start off this new year by introducing a fresh face on Tech IT Easy, Anand Kishore Raju, who will be blogging with us in 2010. His main areas of focus as a blogger will be greening the internet, carbon footprints, energy and power figures of the internet and web2.0.

Anand is currently working as a Research Engineer at Telecom ParisTech (ENST). His area of research focuses on the Energy aspects of the Internet, what the scientific community calls “Green Networking”. His efforts are directed towards making Computer Network Science aware that processing, moving and storing bits has a cost in terms of energy and in terms of the Carbon Emission Footprint.

In the past, Anand had also worked at Collaborative Systems Group (ColSys) at Bilkent University, Turkey, where he developed a taxonomy for user properties, influence factors for feedback quality in web 2.0, existing and novel models for deviation types and their detection. He also holds a degree in Computer Science and Engineering and aspires to join HEC in near future.

Anand joins a smart team of collaborators, some of which also work in green computing and many of which share an interest in this important topic for sure. As such, please join us in welcoming Anand to the team and I hope you enjoy reading his words on Tech IT Easy!

Happy New Year,

The Tech IT Easy team

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I’m always fascinated by business models, i.e. at how entrepreneurs and companies put together services in order to make money from them. I’d call it the source code of business if I hadn’t seen the other source code in Luxembourg —legal and accounting—but arguably that’s more like binary code, i.e. 99% unintelligible.

Sarah Lacy writes about SMSONE, a ultra-local news provider in India similar to Outside.IN, a Union Square Ventures funded US-only company that provides news updates via the web. SMSONE does it, as the name suggests, via SMS. And it spreads through a franchising model, working with local entrepreneurs that pay a franchise fee and also collect a share of the advertising revenue from locally focussed businesses. It is able to do this because of something that apparently doesn’t exist in the US (but does in Europe): receiving an SMS in India doesn’t cost the recipient anything.

When reading about this, I was immediately reminded of a similar business model employed by a Dutch entrepreneur in Russia, Ms. Annemarie van Gaal, founder of Independent Media, a company that distributed Russian versions of magazines like Cosmopolitan, Marie Claire en Good Housekeeping (source). When she spoke at the Star entrepreneurial seminar in Rotterdam a year ago, she told us about how she differentiated herself from the competition (paraphrased as I haven’t got my notes with me):

The trouble with getting your magazines distributed in Russia was that you had to pay quite a lot of money (some would call it bribes) to companies that would then take care of it… badly. Instead van Gaal decided to do it differently. She would hire street kids to distribute her magazines, similar to the gold days of newspapers: the newspaper boy.

If you read Sarah Lacy’s account on Techcrunch, you’ll see that SMSONE does it similarly, hiring local kids, often without much education, to take care of distribution. Doing it via official channels is likely a nightmare over there, and centralising distribution kind of defeats the purpose of micro-news.

It’s a different way of thinking, which many of us westerners don’t have. I mean, would you entrust your products to a beggar on the street or to a street musician? Not only is it probably against the law (except if the government does it), we pride ourselves on our super-organised infrastructure, where anything from temp-workers to interns are there to provide companies with a flexible workforce, and anything from printing presses to mobile internet exists to produce and distribute your stuff.

Of course, I wouldn’t just leave you with these two examples. In the beginning of 2008, Boston Consulting Group published a study of “local dynamos”— domestically focussed companies, which use creative business models to capture value from emerging markets that are filled with challenges, like lacking infrastructure and low-income consumers. The map below shows how widespread these companies are.

Some very interesting examples are mentioned, like:

• Shanda, a Chinese gaming-company, that, in order to combat software-piracy, focusses on providing interactive services through gaming, services that are impossible to pirate. And to overcome a lack of a financial infrastructure to pay for online services, they work with pre-paid cards.
• Indian CavinKare, which sells cheap sachets of shampoo through small local retailers, while using educational marketing to teach customers how to use their products.
• Goodbaby, which targets the many 1-child families in China, who are both willing to spend more on their child than multi-child families would, but are also in need of education.
• Amul, an Indian food-and-beverage-marketing-organisation, which collects and pays for milk locally, while tracking all operations via satellite and uses ERP solutions to make analysis based on the data and gauge whether future supply needs to be increased or decreased.
• Wimm-Bill-Dann Foods (Russia), which works extensively with local partners, and has devised leasing schemes for expensive machinery to boost their production and is able to serve 280 million consumers nation-wide.

The BCG, of course, takes the stance of its customers, Western companies, and the study is mainly aimed at how multinational companies (MNCs) can replicate 6 of these dynamo’s advantages, in order to compete with them. They are:

1. Customising to local needs – which involves first understanding these needs, and then meeting them.
2. Devising innovative business models that overcome local challenges – a logical follow-up to the last point, how to make money from the info you gained.
3. Leveraging the latest technologies – meaning that these emerging economies are less burdened with traditional infrastructure and quicker on the uptake of more affordable, newer, and easier-to-spread technology, e.g. mobiles.
4. Benefiting from low-cost labor and overcoming shortages of skilled labor – there’s two ways to look at this; a local workforce will be better equipped to interact on a local level, a highly-trained workforce will be better equipped to run a business. Tough call.
5. Scaling up fast – Russia, India, China, Brazil, etc. are all giants with the promise of huge rewards when you capture them. Many of these dynamos grow quickly through both through acquisitions and building up their network of suppliers and distributors.
6. Sustaining long-term hypergrowth without imploding – this kind of follows on to the last point

Some of the Western companies mentioned, which have managed to compete on a local level, include:

• General Motors, which has adapted its luxury-liners to meet the demands of its Chinese customers, who are usually sitting in the back;
• LG, in China, which has learned that the audio-quality of its televisions is more valued by its customers, who often reside in noisy environments;
• Carrefour, which has started to work with local municipal governments in China, as these don’t meddle in their operations like local dept. stores would, and are able to provide access to prime locations;
• Perfetti Van Melle, in India, a candle/chewing-gum manufacturer, which has found local means to advertise, interacts frequently with local partners, and has adapted its products to local tastes;
• and Yum! Brands, which owns Pizza Hut and KFC, and has adapted its menus to meet local Chinese tastes, started a new food-chain aimed specifically at the market, and uses its international expertise to integrate IT, lean supply chains, and a higher level of food standards into their offering.

It shows the value of out of the box thinking in terms of reaching people, and I believe that traditional “Western” thinking should long ago have been thrown out the door anyway, particularly in light of the troubles that media-, automotive, and financial industries are going through. We are in the flux of disruptive innovation and only those quickest to grasp new technologies and ways of thinking are able to survive another day.

No shortage of lessons on that from entrepreneurs in emerging economies…

Vincent out

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It’s funny how our thoughts evolve from one day to the next. Which reminds me that we need to adapt our About page to reflect that a little more, as it’s about 2 years old. My thinking about Always-On Devices comes from a simple pain that I feel when I miss “a moment.” Sometimes I wish that I could… well Andy Warhol in Miraclemen phrases it much better than me.

In Alan Moore’s & Neil Gaiman’s graphic novel, Warhol’s existence is not painted in a very colourful light (pun intended). He has been resurrected as a machine into a society where money no longer plays a role and is very depressed. So his ability to record everything is really not very meaningful to him. Having only read this part of the comic last night, already my sentiments about Always-On are changing towards… and what would it accomplish?

I recently visited an Art Exhibition of independent artists in Maastricht and tested out a little what an Always-On Device would look like to me. I used my camera, a Canon 870 IS, as a recording device, which I held in front of me while walking through the crowd.

I managed to capture the people experiencing an exhibition, a piano player who was adding atmosphere to a room full of art, just hypnotically playing a few notes over and over. What actually intrigued me the most, I captured maybe two dozen miniature sets for the Maastricht Opera house. It was very surreal, the sets which were made out of cardboard and wood mostly, were 3-dimensional, and I was floating with my camera device around it and through it even, capturing it all at angles never deemed possible to me before. As if I was my own film-director.

Of course, apart from the disappointing battery-life on my camera, clearly not designed for video-recording, and the occasionally funny looks that I got, the real challenge is to make that data actionable—a big priority in everything I do. It is a matter of transforming the raw footage into a tight package that can be consumed by others, and the question is really, should this be the responsibility of the creator or of the consumer…?

With us having reached and surpassed the age of the mashup, it makes less and less sense to continue to try and re-invent the wheel, rather delegating that task across far more… interested people (in the area of video-editing at least), of which there is no shortage, as long as the tools and the specific community exists. Clearly, that kind of methodology requires a lax attitude about copyright.

To recap, so that it doesn’t seem like I’m entirely floating in thoughts, an Always-On Device would need:

1. A willing human recorder
2. A recording device designed for capturing experiences
3. A way to process that information into “usable bits”
4. A favourable legal environment
5. And a willing consumer

I’ll leave the question of “do we even want it?” for smarter people than me to decide. In the mean time, I will continue my search for point 2 and 3 on that list (more on this blog, if successful).

Until after Paris,
Vincent

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Background: This is an advice that I am giving to someone, who is a traditional artist. She paints and tries to sell her paintings. By writing this down for you, the public, I don’t think I am revealing critical information, in that it is a common sense approach to building a sustainable business. It does not address two critical factors: the intellectual property (which is the art) and the marketing (which comes in part from quality and in other part from choosing the right sales channels).

Here is the situation: I like (her) paintings, but they are very work-intensive. Each painting can take anything from 2 weeks or more to produce and the end-price reflects this as well. In today’s economy, in any economy, this means that there is a segment of the population that will not be able to afford it it. Museums, who display art worth millions, have overcome this problem quite elegantly, by selling posters and postcards of these art-pieces. Countless other art-industries are based on turning a singular piece of art into mass-produced widgets. Similarly, I think it is much more efficient, for more reasons than the work alone, to do something similar for the independent painter. Again, I don’t think this is a trade-secret or anything; the quality of the art and the sales channels are most critical aspects.

In any business, there are two types of cost. These are fixed and variable. Fixed costs are often significant costs and difficult to remove. A workplace is a fixed cost, so is some of the material used to produce a painting. Variable costs are smaller, often more flexible costs, incurred regularly. Paint would be such a cost and you can affect the cost of producing a painting by using different paint. It’s not quite as easy to change the workshop you work in from painting to painting.

Following is the action-plan:

1. Find out what the total fixed and variable costs are for producing a painting and x amount of reproductions (e.g. 100 posters). In other words, list all the costs in a nice Excel-sheet or piece of paper and add them up.
2. Divide the total costs by the number of posters you want to sell. Those are the costs per product.
3. Decide how much you want to charge per poster. If you or the market decides that this price is below your cost, then there is something wrong with your formula and you are making a loss. If, on the other hand, your price is above your costs, you are doing well.
4. Now… find out how you plan to sell the amount of posters you decided on…

Some … pause in that last point because how can a business man or woman really know that these are the sales they will make? My advice is therefore to keep costs as minimal as possible at the start, focussing a lot on developing the actual sales process.

That’s it really! And it reflects how hard it really is to go from having an idea (and preferably also the skill) to a profitable business. From a right-brained creative approach, you have to do some left-brained accounting, and from a product-focussed, perhaps introversive approach, you now have to become outgoing, market-focussed, and sell. Not easy!

As with all big projects, from writing a thesis to climbing a mountain, it’s my opinion and what I have learned so far, that it is always better to break it down into simple steps, see the relationships between different processes, and understand how the whole project is put together.

I always welcome discussion, so if there is an error in my logic somewhere, please, please contribute through a comment!
Vincent

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If you think about how the iPhone was launched so many months ago, or rather at what stage the iPods were at, you know that apps were always on the horizon. The iPod G5 introduced a wider range of games that you could buy through the iTunes store, which already introduced us to the idea of buying apps, well games really, through that venue.

When the iPhone arrived, there were NO apps; App-support was basically web-coded widgets with limited functionality. The reason for this was, I believe, that there was no competition to speak of + perhaps the complexity of setting up such a venture. Apps for other phones existed, ok, but it was either in a decentralised fashion (Java for instance), or very centralised and very limited in its offering (e.g. Blackberry & Palm), at least compared to the current iTunes store.

It took pressure from the market [jail-breaking & media] and perhaps already the idea in the back of Apple’s heads to release the app-store a little over a year after the initial device was launched. When it did launch, there was lot’s of hype, lot’s of love, and good news for Apple iPhone numbers both on the device-sales side and that of app-sales.

How the other device makers reacted was two-fold and really quite half-heartedly. Most hardware makers focussed on what they did best: hardware. Touch-screen after touch-screen device entered the market. The most interesting software-based strategy came from Google, which, I guess, realised the potential of mobiles as computing platforms and, more importantly, as search/internet/”revenue for Google” enabled devices in everyone’s pocket.

The current app-store offerings are still lacking with many big parties attempting to launch one for their platforms. The key-factors in terms of adoption seem to be having a critical mass of both users and developers, both of which represent a chicken & egg problem for many, something that the initial iPhone circumvented quite elegantly.

The most promising devices today are Google-/Android-powered phones and the, still somewhat vapoury Palm Pre. The latter seems to be the most competitive, hardware-wise, with much ex-Apple talent having contributed to the Pre’s development. On the App-store front, it’s still very early days, but reports are disappointing.

So, the question is, what can phone-makers and software-makers do to compete with the new “Microsoft” (=Apple) of the mobile space? The choice, to me, appears two-fold:

1. Emulate Apple in whatever way possible: create a great device and create an app-store with a sufficient supply of apps.
2. Or, create a great device and find a way to elegantly get apps onto it, without all this centralising nonsense.

By the wording, it’s obvious that I prefer the second option. As good as the iTunes store is, it isn’t amazing for developers and it isn’t as profitable for Apple as one would think either. The biggest problem for competitors is similar to the music-situation, that Apple has critical mass, which attracts the greatest amounts of customers and is a nearly insurmountable challenge for new entrants.

Where Apple clearly leads is in its developer-support, which isn’t quite as apparent from other software/hardware makers, except perhaps Microsoft (but mainly on the PC-side) and perhaps Google. Palm, as yet, does not offer a comparable service to developers, or to put it in another way, Palm developer conferences are not yet sold out in the way Apple’s WWDC is each year.

Final thoughts:

• I think that developer support is key in any smart phone strategy these days, as mobile devices continue to become computers in your pocket.
• I don’t think that centralised app stores are necessarily the way to go, except (and I suspect this) if the mobile carriers are demanding it.
• The simplest thing would be to create a web-based categorised list of a apps that developers can add to;
• implement mechanisms that vote and demote apps according to their usefulness and other attributes;
• and create / implement mechanisms that prevent abuse (e.g. P2P apps or VOIP apps, though I think the latter can no longer be considered this)
• And continue to innovate on the hardware, because I think there is plenty of innovation left. What makes the iPhone so desirable is the app-support, but the hardware is really nothing to write home about.

Note: I purposefully left the links towards the end, because it allows for a more time-efficient, easier to write (and, maybe, read) article. Links with additional info are included in below list:

• Mossberg on Palm Pre
• Apple App store numbers
• The incredible app store hype (one of many developer complaints)
• Palm developer network

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Just read the Face Value in the Economist from a few weeks ago, on Shai Agassi, an Israeli entrepreneur and former SAP employee, who is developing an ‘electric infrastructure for cars’ business, called Better Place. The idea is that there will be hotspots across a region and for cars to be subsidised by the subscription that you buy.

After the financial marble that the Indian company Tata Motors has produced, a car that costs between $2,200 and $3,800, and having seen several other concept cars in that price-range from companies like Volkswagen, is it possible that we will approach a time where cars will essentially be free?

I’m more sceptical, I think it’s a sign of the times, a recession + oil-prices and availability + the rise of emerging economies + more abstractly, that whole global warming thing, and the resulting desperation, which is causing businesses to come up with alternative business models around personal transportation.

And if given a choice, I would prefer for a system like Vel’oh!, here in Luxembourg, where you simply borrow a bike and bring it back at a pre-determined parking-zone after you’re finished with it. That said, I do hear that they get stolen a lot over there in France…

Thoughts?
Vincent

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Recently, the city of Rotterdam introduced a mandatory way of paying for public transport, using RFID-cards, called OV-chipkaart. This system will eventually be deployed across the Netherlands. This blog post describes my experience with it.

First you have to be aware that, much like in any city, public transport is an umbrella-term that describes busses, trams, trains, and metros (or subways). The RFID cards don’t yet work on trains, you have to check and uncheck yourself for any of the other options. You cannot get into or out of the subway station without doing that, while that is not the case on busses and trams, where you do have to check yourself in, but nobody prevents you from not checking out. Confused? Good, so are plenty of other people.

When you check yourself in, the machine automatically takes of 4 euro from your card. When you check yourself out, the amount that you haven’t used is deposited back. So if you forget… you just lost a few euro, because most trips don’t exceed the 1.50 euro mark. You can’t forget this in the subway, as you can’t enter without checking in, and you can’t leave without checking out—there are human height gates that prevent this (see pic). And the system works fine. On busses and trams, on the other hand, you have to check yourself in, and you have to remember to check yourself out, as there is no one to stop you from leaving without doing so. Confused? Good, so are plenty of other people.

I’m not sure why this system was put in place in such a way:

• one reason might be practicality: instead of giving a destination at the beginning, the check-out machine decides what your destination ends up being. That way, there’s no confusion and no long queue at the beginning of people entering their destination into a machine.
• a second reason might be technical / a privacy issue: it would be optimal if I got on a bus and, without touching the machine, the money would be taken from my card, and vice versa when I leave the bus. It’s more than likely a privacy concern as RFID-chips can have a maximum range of ca. 320 feet (=100 m).
• a third reason might be that subways are the no. 1 way to travel in Rotterdam: I don’t believe this is the case, especially since this system will be rolled out to cities where there aren’t any subways.

I very much dig the idea of RFID, as I like its efficiency, both from a user and a supply chain perspective. The flaw in this system is contextual design. While it works perfectly in subways due to the gate system (as well as in trains, where they are installing similar gates), there is too great a chance of forgetting to check out on other means of public transport. Last night at 11 pm in Amsterdam, the tram was filled with people that where “on something,” and how many of those are very likely to forget to check out? A 4 euro a pop, you’re entering London tube tariffs, which, everyone agrees, are astronomical, especially if you have to pay for that every day.

The only practical solution I see for this problem, is for there to be gates installed in busses and trams, so that people don’t forget to check out. So far, this has not happened and it comes at the expense of travellers who, while being trained to be stupid (don’t worry, the card takes care of everything), now have to be aware of their actions at the beginning and at the end of the journey. And believe me, when this system is rolled out across the Netherlands and perhaps even your country, there’s going to be an exponential increase in complaints, as tons of people will have forgotten to check out and will have lost 3 euros in the process. Good for the government’s short-term cashflow, but definitely creating more overhead in terms of support-costs.

Build those damn gates!

Vincent

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The coming weeks, I’ll be pretty busy with a business development project in the technology sector. As usual, I cannot discuss it in depth (ok, it’s Fight Club, we bash each other half to death every week and can’t talk about it), but I want to discuss some stumbling blocks that we’re sure to be hitting. To give you an idea, some of the questions are now:

• Patents and their limitations: while we have filed for a number already, the issues are whether there is prior art and how to deal with it, as well as whether patents are really enough protection against competitors. Since, I’ve attended a pretty interesting New Venture seminar last week on IP, I think that will be my next post.
• The usefulness of market research: I breached this topic before already, but I don’t believe in researching innovations that consumers cannot touch yet, and will instead focus on expert-input, I think, as well as getting a testable prototype ready as soon as possible (we’ll be looking for subjects!). I hope to have something more to write about it soon.
• Pricing strategy: this is really exciting! I’m reading the excellent book “The strategy and tactics of pricing” and am in the position to apply some of it’s lessons now. Thoughts about it to follow on Tech IT Easy soon, but to give you an idea, it’s about the battle between costs, what the competition charges, and what your customers want to pay for your product.
• Dealing with bureaucracy: Since, we’re going to be applying to an incubator, it might be interesting to see how that process goes.

In other, equally important news:

• Verteego: You may have noticed a new badge on our site. It’s the Verteego sustainability badge, which links to a report analysing our weblog. I’ll be trying to increase our grade a little there/here and will write about my impressions. I didn’t even know that I can take leave for pregnancy-reasons, wow!
• Public transport in the Netherlands: I don’t know how it is in your country, but we’re doing exciting RFID-related stuff here. Starting February, we’ll be going through the transition of going from a stamp to a beep, and I’ll write a little about my impressions here.

That’s all I can predict for now, and I hope to make it all a reality soon! Until the next time, on Tech IT Easy!

Vincent

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Just one post this week, it is again the busy period in Vince’s house. This last week, I’ve read two predictions, both, by coincidence, based on the role-model of Apple. The first was David Carr’s, who asked for an iTunes for news in the New York Times. The second was Ian Betteridge’s, who predicted an iPhone-style app-store, controlled by Apple, for all of the Mac. Let me address them both here.

News… what has that looked like over the years? We had print, which lead to books and perhaps pamphlets. Let’s just jump to the 20th century. We’ve had the onslaught of the marketing age, which also made newspapers big. People have never paid for news really, they pay a minimal fee for the price of the paper, the rest of which is covered by advertisers. Then came the internet and it all went down the toilet. You, me, everyone imagined they could be a journalist, even if it meant just copying the text word-by-word of what someone else had written.

Compare that with music. It started with the production of sound, live performances, then the reproduction of sound across various media. The business-model was 90% of the time a straight sale. Music speaks to our brain, differently from the way news does (it’s all drama anyway, right?), and we are hooked on it, like a drug. So we pay and we pay and we pay. Then comes the internet and the magic of painless reproduction and distribution. The power-houses that are media-companies were slow to catch on and it’s pirate-city all round. CD sales go down! In comes smart Apple with their silly little white box with one button and saves the whole damn industry! We think, oh my god, Apple saved retail! What Apple in fact did was close the loop again. Instead of artist -> CD -> shop -> CD -> consumer, we now have artist -> mp3/4/5 -> iTunes -> iPod -> consumer. Everyone wins, though most of all, Apple.

What is the key here?

• For one, music isn’t news. As I pointed out, music is a drug, while news is a duty. Music is fun, while news is … interesting? We can live without the news, believe me, we can’t live without music.
• Two, news was never a powerful business model to begin with. Since the days of Soap-operas, all media has been owned by advertisers, who somehow have made this industry survive, even though no one was really willing to pay for it. Yes, we can also live without television, but we can’t live without music.
• Music is also a tightly controlled product, it’s expensive to make music and to get it into your ears. News, on the other hand, the media has long learned how easy it is to copy-paste.

The internet has shaken both industries and much more so news. Because its sugar-daddies, the advertisers, suddenly realised that they could get away with no longer paying for the expensive process of print and distribution, as well as having many more options to advertise online. The power-position, which was already unbalanced in the first place, has shifted even more in the direction of the advertisers.

For music, the power of supply continued to be in the hands of the media-companies. In case you haven’t noticed, those are some powerful companies and the world of music and other entertainment media is locked down with some big nails—Pandora, Hulu, Joost, iTunes, take your pick, chances are that most of these are not in your country. The internet has had an effect, to be sure, but they control the supply and they have lot’s of money to change things. They finally got iTunes to succumb as well, with their now variable pricing.

There is no analogy here and no matter the superficial similarities and the coming of the “iReader,” there never will be. News will never be something that we want to pay for. Who wants to pay to hear that Hurricane XX has killed millions, or Region YY is filled with starving children, or that Region ZZ has weapons of mass destruction? Because, that, unlike the stories we may read on the internet, is what news really is: making us aware that our planet isn’t all that. Give me a good song any day over having to hear that!

Just briefly, the iPhone store translated to Macs. Why it’s different: it’s i…Phone, the most locked-down technology on this planet. Vs. the PC, which is the most unlocked technology on the planet. Need I spell it out?

The greater point I’m making is that frequently “visionaries” and “entrepreneurs” write their business plan or manifesto stating that because X is so, my business will work that way too. Analogies, taken too loosely, will kill your business and rather than taking the words of visionaries at their face value, we should work it out: Was X like that really, and is your business like that really too? Chances are… it’s not.

Vincent

(man, I love it when I can pump out all this text in 15 min. or less)

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Thinking a lot about blue and red oceans these days, which was a topic of a New Venture seminar last week (summary post about that coming up). Still not having completed Blue Ocean Strategy, the book (someone told me, reading the summary would suffice. See slides below), I’m still not entirely sure how to get to a blue ocean. More after the slides.

[slideshare id=61974&doc=blue-ocean-strategy-summary4461&w=425]

I know, from the first few chapters, that you analyse features of a competing business. You list them in some kind of chart and map out how far they go and how to beat them with your own features. Taking the case of gaming consoles, which is as good as any, for the two powerful ones, Playstation 3 and Xbox 360, we would list:

• Online platform (more Xbox360)
• Huge graphical capabilities (more Playstation, but negligible difference)
• Looks better on HDTV
• DVD-drive (huge, unpredictable format-war at launch)
• Games, Games, Games
• Same (more or less) controllers as usual
• Expensive components overall
• Price point in the $500+ (at that time)
• Aggressive marketing strategy, based on above features, targeted mostly at young men.
• Huge multinational corporations with huge budgets
• Lot’s of industry consolidation, virtual and actual
• Added, due to comment: both players may have other motives, apart from pushing their gaming-plaform (e.g. Blu-ray for Sony & Live-platform for Microsoft)

And I could probably go on.

Fighting Microsoft and Sony would require some serious leaps in logic, you would think. You can see that the leap that Sony and Microsoft made was not too far off. It was based on the assumption that any next generation of console would have to be significantly more powerful than the last. And you could see that, them being huge multinational corporations, the thinking was probably that if any drastic industry change could happen (take that format war), they could make it come true. There’s another industry-change that had to happen for both of these to take off like gangbusters, which was that everyone would buy an HDTV. That didn’t exactly happen.

So, essentially, we had several weaknesses, namely that:

• The format war was undecided, confusing customers.
• HDTVs were expensive.
• The consoles themselves were expensive.
• They were eating up each others already small markets (made small by the three preceding factors).

You could also add that they focussed on the same consumer segments as a weakness, but how could they know, right?

Now, if you read into Blue Ocean Strategy, then you would expect for Nintendo to have anticipated these issues. How would that be possible?

For one, they are industry-insiders, just like Sony and Microsoft, so they would have had access to data about production costs of both competing consoles, as well as of the state of HDTVs and HD DVDs, now and in the near future. Two, being a successful console and game producer, they would also have a good grasp on their audience. Three, they would have their own vision and be able to iterate quickly on it.

When you think about it, the leap of logic wasn’t actually happening from those entering the blue ocean, it was from those operating in the red one: Sony and Microsoft.

I wrote this, because sometimes, as a new player on the market, you aim small. You don’t want to upset the big players in the red ocean and instead want to *grow* a blue one. I don’t think blue oceans are grown, they are instead hidden. Growing an ocean is the worst leap of all, because it means changing people’s behaviour. Core-users of Xbox & Playstation haven’t changed one bit, rather you found new customers that weren’t being addressed by those two marketing strategies.

If you do have to make a leap in logic to launch a product, make sure that the price you pay isn’t to expensive.

End of thought.

Vincent

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In many ways, I consider this the best strategy book, I’ve ever read. “Valuation,” by George Norton, is, as the name suggests, a book that uses financial models as a basis to build (sound) strategies. It is also a textbook—my version is hardcover and 190 pages long—but written in a format that reads easily and is structured to be implemented—ca. 30% of the book are (group-)exercises meant to implement what the book suggests.

If I had to criticise it, it’s that I don’t consider it very practical in an entrepreneurial setting. One thing that such methodologies require, is time, which is often a luxury that smaller/younger companies and projects do not have. Building up a set of co-ordinated, organisation-wide strategies can be a matter of years, and, I expect that if you were to follow the book’s advice, you’d engage in a 6 month trajectory, at least.

That said, it is a well-written book and achieves the objective of a book, which is to make understood its topic. In this case, valuation means understanding the value of companies, their products, and business activities. The financial part only really plays a part in the first third and last third of the book, while the middle is more about the actual coming up of the company’s mission, its broader goals, its objectives, and its strategies—the latter being the nitty-gritty activities of how to fulfil the grander vision.

And, where valuation comes in, everything will affect the cash position of the business: some activities may be research-intensive (= costly), but lead to greater rewards in the long-term; others will be quick-sale actions, which generate revenue, but may not always improve the long-term position of the business, unless that revenue is re-invested in more sustainable growth.

I find that these principles easily translate into small business- and individual activities, but only if taken on a holistic level, in which case reading this book may be overkill. But if you’re a finance-geek that wants to learn how to better translate the numbers into practical company-activities, or, vice versa, if you’re a creative business-person, who wants a relatively easy intro into the financial fundamentals behind strategies, then this book may be for you.

Vincent

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Checking out the HP Touchmark PC demo on YouTube. Watch it and then let’s discuss it.

[youtube=http://www.youtube.com/watch?v=Scs7DZhQ72E&hl=en&fs=1]

The question on everybody’s lips is, why didn’t Apple do this? Your first hint: look at the way the guy is standing. Few people use their PCs in that position.

I tried emulating the feeling a little, by making stupid gestures in front of my laptop. I’m pretty fit, but it did get annoying after a while. Having a touch-screen at 90 degrees, half a meter in front of you, is inelegant.

The reason the keyboard + mouse combo work so well is because it’s actually within perfect and comfortable reach by the human body. You sit, your arms bend, and you use. Like the picture below, which is the ideal typing position, as taken from Yale’s Ergonomics website. Vs. the Touchscreen, where you would sit, extend your arms and use.

The perfect touch-screen would actually be similar to an architect’s table, like on the picture below. Note that Jeff Han, godly inventor of all things multi-touch-screens, also has a similar set-up.

Why doesn’t Apple do something like this? My guess is three-fold.

1. The market is still pretty small (designers, etc.?).
2. It’s not really that amazing an innovation—as an average user, can you really do that much more with a touch-screen, vs. a keyboard + mouse?
3. And where are the manufacturing economies of scope? I made this point before, when I noted how many overlaps there on the component level for different Apple-products: a big e.g. the 13″ screen, which is now used by 3 product-lines. If Apple did this for one product-line, it would probably want to translate it to the other ones as well… but how would that work?

What do you think? Will we be seeing an Apple touch-PC (note: I say PC, not iPhone XL, which is more probable), and, if so, in what format? Also state if you’re thinking as a consumer or as a prosumer!

Vincent

P.S. don’t forget to answer our poll !!!

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I’ve been posting way too much about (social) media on Tech IT Easy and I’m sick & tired of it… of both social media *and* writing about it. There’s nothing left to say; everything that has been done, has been done. There will be some “process innovation,” sure, the internet is famous for it. But you know what? You can’t place a human being into a user-bucket and expect your site to fill up. Eventually, all kind of things go wrong, because people aren’t users, they are: MFECWCNBPIABs (multi-faceted, evolving creatures, which cannot be placed in a box—.com: that URL’s gonna be worth millions some day…).

The reason, I’m sick of it is because I take more and more a managerial attitude towards tools, how they fit into my life (and that of organisations). I ask myself: how can they be measured—do they increase productivity, in what way, what other measurable benefits are they? Are there use-cases—are super-efficient individuals and organisations using them effectively, if so how, and where is it published (Analysts’ reports don’t count)!?

The thing is, social media isn’t Tech. People make it out as if it was, because social “media’ists” are the Loudest people on the internet. But these are the guys that write books, (get paid to) speak at conferences, place ads on their blogs etc. A conflict of interest, if there ever was one! Every single A-lister has a stake in social media, whether it is their blog, filling up their blog, or using social networks as a way to market their blog.

I’m done with it. No more social-media “marketing” from me!

So where’s the exciting tech at? What are the next horizons that I want to focus on?

• Mobile tech perhaps: I’ve had a post entitled ” the headache that is mobile tech” in my pipeline for a while now, just never got around to finishing it. Essentially, mobile tech (by which I also mean software) is a nightmare, for many obvious and subtle reasons, and I’d love to find an answer on how to circumvent these challenges. At the same time, I still see mobile as a necessary evolution to PCs for many reasons: no.1 being that they also place human beings into “user”-categories.
• Green tech perhaps: reasons to love this subject is that it is a source of competitive advantage for companies. Just look at Wal Mart and how it’s setting a standard, but also look at Shell and how it’s focussing on alternative technologies. Adversity breeds innovation!
• Finding new (more democratic) investment models: I’m not finance-guy, but my thesis was 99% about the financial problems being faced by tech startups. Similarly, there is a big need for financing people all over this planet, which organisations like Kiva are trying to solve. It may be more of a social movement, than a technology, that’s not to say that there aren’t overlaps. And I’m sick & tired of banks abusing our money and creating scandals like the current real estate crisis.

Those are my three, for now, though not exclusively. For myself, I’m interested in new ways to e-commerce for instance. I might write something about that in a few months. If there is an exciting tech on the horizon that you feel should be covered more often, feel free to suggest it in the comments!

In any case, if I post another word about social media on Tech IT Easy, please internet-slap me.

(That does not count for my fellow bloggers on Tech IT Easy, of course!!!)

With best regards,

Vincent

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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

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