Posts Tagged ‘microsoft’

Startup advice brilliance

October 21, 2009

A friend pointed me to a superb summary of advice for startups, specifically calling out the ways that advice can be flawed, along with some perceptive insights into how to identify advice that’s actionable and useful.  The post is by Eric Reis, and is appropriately titled The 10 Ways Startup Advice is Flawed

Eric’s pov is appropriately snarky, and at a macro level he calls out various ways that being lucky and being smart are frequently confused with each other.  Snarkiness aside, the really valuable point he makes is how important it is to be a critical thinker, in general.  The value of making your own assessment of the information you’re consuming, and not just accepting it.

I especially liked his point #6: Maybe the thing they did used to work, but it doesn’t anymore

I think about that a lot in my own context.  I was at RealNetworks back when it truly was pioneering this new phenomena of sending audio and video over the internet, and we owned that market.  In public we said we had 85%+ share of the market, but in reality it was closer to 95% for a good long time.

We called the shots, named the prices, dictated terms.  We muscled into and out of markets we cared about, aligned ourselves with titans of the technology landscape.

And then Microsoft showed up and we fought them tooth and nail.  It was a hard and ugly fight, which they eventually won (once they started paying attention).

Well, they won, sort of.  It was epic, and in a start-up kind of way, it was epic fun.  I remember picking a big fight with the Windows Media team on an internet media list-serve, where I’d just published some user research showing how people preferred our new video to Windows Media’s.

And Microsoft’s head of a/v technology posted to the list, accusing us of fluffing up the research, and he included a three page outline of the ways you could falsify/skew consumer surveys.  And it was so much fun to respond to the list , asking “how was it that Microsoft knew of so many ways to distort research?”

But I digress.

We each became so obsessed with each other we quit paying attention to what Macromedia was doing with Flash and what Apple was doing with the tight coupling of iTunes and the iPod.  So, while we were both wrestling in the mud pit, Apple and Macromedia left the building and started more interesting and lucrative businesses elsewhere.  And until that point the thing we did at RealNetworks really did used to work.

Eric’s “ten ways” are simple and insightful.  The hard part is putting them into action, in the moment.  My experience at RealNetworks is valuable to the startups I work with and talk to if and only if both of us are cognizant of its context.  And it takes discipline and a good dose of humility to walk the talk Eric is alluding to.

I know there’s a ton of stuff I did that was a product of luck and timing, and a lot that was a result of deliberate hard work and applied intelligence.  The hard part is being honest enough with myself to examine where those boundary lines are, to strip out the specific circumstantial knowledge from the generalized, truly durable knowledge.

So, let’s all get a good laugh out of Eric’s list, but also remember how hard it is to actually do what he’s suggesting.

The iPhone – Virtualizing enterprise market share

April 8, 2009

It’s always good to state the obvious:  there is no way Apple will ever make a dent in overall PC market share, much less get into the enterprise desktop or server business in a way that’s relevant.  The reasons are so obvious most people don’t realize it.

The Mac will never duke it out at the low end, much less hang out with the netbook crowd because the lower margins don’t work with Apple’s business model.  HP, Dell, Lenovo – they get to have all the “fun” sorting out the volume/margin voodoo.  Lucky for Apple there’s a large enough segment that will gladly pay a premium for an elegant, integrated, and stable computing experience. 

And guess what?  Apple gets nicely rewarded:  in the fourth quarter of 2008 Apple’s operating profit was 11% while HP’s was 5% (for their personal systems division). 

But what about the corporate market?  What about all those enterprise customers who you can build lucrative, durable, “sticky” relationships with?  Businesses built from hard-fought battles over market share, premised on whoever sells the most laptops/desktops/servers to corporations reaps the rewards of valuable added services that run on them.  Has Apple really just punted on this?

No, they’re smarter than that.  They’ve realized in a world of cloud computing and web delivered applications, their leverage into this market doesn’t come from desktop unit volume.  It comes from inserting the iPhone into the information flow between businesses and their workers. 

But hasn’t every big mobile device supplier tried this already?  Didn’t Nokia bet a huge part of their farm on this with various “Communicator” handsets? 

What about Microsoft with Windows Mobile?  Wasn’t that supposed to provide the worker/enterprise tether?  It was but it never did.  It neither generates significant revenue for Microsoft, nor has it gotten durable traction with business users.  Dan Frommer of Silicon Alley Insider does a great job explaining why it’s a tweener in the worst way.  I can tell you that my two years using a Motorola Q were the longest mobile “computing” years of my life.  One of my partners compared it and an iPhone to “showing up on horseback (Q) when everyone else is arriving by jetpack (iPhone)”.

And as Network World pointed out, Blackberries are great at corporate email and “legacy” enterprise applications but are not great mobile internet experiences.

These companies forget that it’s not about them and protecting their business franchises, it’s about the user experience.  Apple is the first company to get the complete mobile internet user experience right.  Microsoft, Nokia, even Blackberry/RIM probably have done a better job getting mobile computing right, but in a world of web services, I think the operative term is “internet”, not “computing”. 

So how does Apple become relevant in the enterprise?  By virtualizing its market share.  The battles to be fought in enterprise computing over the next 5+ years won’t be over email and ERP, they’ll be around cloud-based services, web-delivered applications and mobile interactions with them.  Market share leverage will be measured in mobile devices, not desktops. 

And until the iPhone arrived, no one had a compelling mobile internet experience.  Hundreds of millions of other phones shipped, and they all suck at the mobile internet.

In an April 2008 report, Gartner found the iPhone is clearly having an impact on IT strategy.  Of their survey respondents, 65% were responsible for supporting, managing and/or provisioning enterprise mobile solutions.  Of these, 13% said they either currently supported the iPhone or had planned for it, 64% said they were currently researching/evaluating support for the iPhone. 

This is brilliant.  By having major corporations enable iPhone support Apple can get a meaningful share of enterprise users without having to sell a single desktop, laptop, or server:  13% share of mobile support is 10x+ Apple’s share of enterprise desktops.

No one is focused on this, and it makes me wonder if Apple likes it that way.  Keep the “iPhone is a consumer product” head-fake going long enough to get a strong foothold with enterprise users.  And if Apple can instill in those users the loyalty they’ve instilled in consumer iPhone and Mac users, well this could be brand new territory in enterprise business.

The reasons are so obvious most people don’t realize it..

The next big thing

April 7, 2009

“What’s the next big thing?” I get asked this a lot, and a lot of VCs get asked the same question too about what’s the next big trend/device/web-service/… and that always makes for an awkward detour in whatever conversation preceded the question.  The truth is “I don’t know.” And it’s a great answer, because none of us do. 

The next big fill in the blank only becomes apparent in hindsight.  It’s not that I’m not smart nor anyone else who gets asked this question, it’s just that you can’t really tell.  Sure, I’ve got favorites (twitter is now at the top of my list, but I wouldn’t have said that a year ago). 

Remember when Google actually was in beta, in 2000?  It began appearing on people’s desktops where I worked at RealNetworks.  We thought it was cool and efficient, but there were ZERO people talking about it being the next big thing.

Last Thursday’s NY Times had an interesting article about the rising popularity of “netbook” computers, and how these are a big emerging phenomena enabled by a structural technology shift in the computing landscape: we no longer need Microsoft, and probably Intel.  The next big thing?  Maybe.  More on that in a second.  Let’s look at newspapers.

Clay Shirky did a phenomenal job explaining the collapse of the newspaper industry on his blog, pointing out it too results from a structural technology shift – the internet.  Clay references Elizabeth Eisenstein’s book, The Printing Press as an Agent of Change, where she observes that during these technological transformations the only obvious effect in the moment is the destruction of the status quo.  What transcends the status quo takes time to emerge.  Clay sums this up well: “That is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place.”

In the case of netbooks, we’re about to see a lot of old stuff get broken, but it’s not clear if netbooks are the transcendent replacement, or just one of the convulsions of the revolution.

But netbooks are significant because they’re exploiting the growing vulnerabilities of Intel (price, performance) and Microsoft (price, legacy support, integration) at the low end in the same way that Apple is (more elegantly) exploiting them at the high end.

Netbooks have traction because they focus on where people spend the majority of their computing time: web-based documents and services, and the consumption of digital media.  That’s it. 

Whether or not someone buys one, netbooks educate the average citizen that GoogleDocs and a browser are all you need, and that MS Office is both irrelevant and overpriced.  My belief is the impact of netbooks will not be felt so much in unit volumes, but as catalysts speeding the unraveling the Office franchise. 

But wait, there’s more.  How much distance will separate the Office franchise “unraveling” from prying MS’s grip off the operating system?  Apple can’t do it, and is smart enough to steer clear of this outcome.  Will Android and Linux be good enough at the low end?

We’ve already seen the indifference that’s greeted Windows7, and the reluctance to even adopt Vista, with people scrambling to stick with XP.  My family did exactly this in February when our five year-old XP home computer died, and we scrambled to find someone who could sell us a new XP machine (we succeeded).  It was an intelligence test.  XP or Vista…hmmm.

Maybe this reveals a nuance to Clay’s “revolution” observation.  Perhaps the path to destruction takes you through the terrain of irrelevance.  What netbooks show us is how irrelevant the once mighty Microsoft and Intel platforms are to the needs of people today.  They may be lucrative businesses but they just no longer point to the future like they used to.  They’ve become what’s broken in the revolution. 

It’ll be exciting to see the new stuff that’s put in place.  I’ll be sure to blog about it, after we all see what it is.

Finding the chicken killers – part two

March 2, 2009

I got a lot of positive feedback and comments on Finding the Chicken Killers, where I explained what the concept of a chicken-killer was but stopped short of providing an example of one.  Let me tell you about someone who was on my marketing team at Vivo.

[This is a longer post than usual; I hope you find it worth it!]

Ann-Marie was responsible for our online marketing, our website marketing, and our demos at Vivo.  She grew up in a large Italian-American family outside Boston; while she was polite and well spoken, she had a nice independent streak.

The situation was this.  We were now 18 months into the turn-around of the company, marketing our internet video product VivoActive.  We’d become the market leader, but internet video was still small compared to internet audio, and RealNetworks was the big gorilla out there.  Oh, and Microsoft was trying to muscle into the market; they’d recently licensed Real’s product and were giving it away for free (but not really marketing it).  How’s that for being neighborly?

We’d aligned ourselves with Microsoft and could create internet video in their format.  VivoActive together with Microsoft’s server made a complete solution, and we had their marketing and sales teams promoting it to their customers. The plan of course was to get Microsoft to buy us.

The bad news was we were running out of cash (we had about six months left), and we needed to sell the company – remember, we were on a Series D financing.  There was no appetite for a Series E.

So, the CEO, my BusDev director, and I got on a plane and went to Redmond to try and move/force the conversation along, but all we got was a tepid commitment to consider an investment.

We came back from that meeting frustrated and depressed.  The three of us were in our conference room, trying to figure out what to do.  It was almost as if a literal light bulb went off when one of us said “Companies buy their enemies to take them off the market… who are we an enemy of?”

RealNetworks.

Holy cow.  RealNetworks.  Were so aligned with Microsoft; we could be a big threat to RealNetworks.  We had at best an arms-length relationship with them (meaning relations were generally frosty).  How could we get them to feel threatened, really threatened, very quickly?

So, I suggested “What if we let all the RealNetworks customers know they could replace the server they bought from Real with the free one from Microsoft?  All they’d need to do is pay us $500 for VivoActive.”  Hmmm… replace your $50,000 RealServer with a $500 alternative.  That sounded workable.

But how to pull this off?  We needed to quickly find out who was using RealServers and then somehow contact enough of them to make this a credible threat.  I got my team together, and Ann-Marie was the first one to come up with an idea.  “We can use Wired’s HotBot search engine to find web pages with the .ram file the RealServer embeds on pages with the media file, and then find out who the company is that owns those pages.  We can look up who the exec team is at the company and send an email offer to them.”  Great idea, but a lot of work.  She agreed to take the lead on pulling this all together.

Working backward from our cash-out date, we’d need to get this done within the next few weeks.  Otherwise, we’d run out of money in the middle of the negotiations.

Ann-Marie showed up at the next war-room meeting and said she’d gone through the process a few times; it was working, but it was going real slowly.  I suggested she have our receptionist, Amy, help her out.  Away she went.

The next day Ann-Marie came back, deflated.  She and Amy had only been able to build a database of about 50 customers.  This was going to take too long.  More brainstorming.  Ann-Marie offered to see if some of the developers could be pulled off their projects to lend a hand.

The next day everyone was looking haggard and tired.  Ann-Marie showed up, looking worse than any of us. “I was up most of last night.  I realized we’re never going to get this done on time, even with the developers.”

What?

Then she said “But I realized we could do this differently.  I wrote an automated script that queried HotBot and wrote the results into a log file, and then I wrote a script to filter out the domain name of the page where the content was hosted.  I wrote another script to take that domain and query the “whois” database, and found out who the system administrator of the site was, and then put the email address and wrote it into another log file.”  The system administrator was a long way from the guy who paid for the RealServer, but it was close enough.

“It’s working really well; I’m up to about 700 names so far, and should be up to about 2,000 by tomorrow.”

Around the table, jaws were bouncing off the floor.  Ann-Marie hadn’t just killed the chicken, she’d plucked it, dressed it, and had it in the oven, roasting.

We got cracking. It was like a commando movie.  We quickly established a launch date for the emails.  Everyone had their task and took off.  I finished off the copy and reviewed the design of the email.  My busdev director made 1000% certain we had the license agreement in place.

Two days later, we were ready to go.  We briefed the CEO and the rest of the exec team on the plan.  Ann-Marie wrote a script (her new core competency) to send the emails out at midnight.

The next morning we came in, eager to see the results.  By mid-morning we had lots and lots of irate emails from system administrators and, as a result of the system administrators forwarding them, a good portion of similar emails from business execs at companies who were loyal to Real.  Irate was good.  Especially when many of the forwarded emails also copied the account manager at Real or even Rob Glaser, Real’s hyper competive CEO.

Lots of tension; everyone ate their lunches at their desks.  A little after 1pm, our CEO came walking down the hallway, a huge, huge grin on his face.

“Rob Glaser just called.  They want to talk about buying us.  I’m heading out to Seattle, tonight.”

I kid you not, it unfolded that cleanly.  A little over twelve hours after sending those emails.

By the time the acquisition was complete, our CEO was neck deep in chickens, killed.  But Ann-Marie was the one who so matter-of-factly and so fearlessly got that first chicken out of the way, and made it all possible.

Ask, Tell, Help

February 18, 2009

How often do you encounter a a situation at work where your personal values inform how to solve a difficult/ambiguous situation?

In 1998 I had just joined RealNetworks, and was running the RealSystem G2 launch; it was quite an adjustment professionally.  Real had just acquired Vivo Software where I had been the VP of Marketing, and I now had a much bigger job, with much bigger company ambitions.  G2 was Real’s next generation internet media platform, and was intended to become essentially a multimedia operating system for the web.  We never spoke those ambitions publicly, but they were very, very much the ambitions.

We had the upper hand on the internet a/v market.  Microsoft’s Windows Media Technology (WMT) platform was embryonic and poorly integrated across their vast product/platform landscape.  We routinely pushed the Windows Media guys around like how the New England Patriots pushed their opponents around.

But these were the conditions that provoke a response from Microsoft, and I remember the day we learned that Will Poole had been moved to Windows Media from Internet Explorer 4 – the understanding being the “A” team was now on WMT, the same team that had just crushed Netscape. (The Patriots analogy is eerily relevant here – I’ll save that for another post).

Two years earlier we had licensed RealSystem4.0 to Microsoft, and their players could play back our content up to version 4.0, but not our newest G2 content.  This was intentional and was common practice back then – a way to “provoke” upgrades.  We’d get our broadcast customers to produce audio and video in our newest version, and everyone would need to get the new RealPlayer to access the new content – our players were explicit and helpful about how to do this.

Microsoft saw an opportunity.  They made the Windows Media Player automatically become the default player on someone’s computer for our 4.0 content without telling them, and when it got to our G2 content it stopped and produced an error message.  Microsoft made sure the error message was cryptic (a core competency, apparently), implying there was something wrong with Real’s product, and that was it.  End of the road.

This caused a furor for us and our customers.  Competitive technology geopolitics at Cuban Missile Crisis levels.

So, I got called into a meeting with all the senior execs at Real to sort out what to do.  Our president (at the time) has an incredibly insightful mind, and summarized the problem as if he were explaining it to a child.  “Look, during installation you should ask the user if you can play other media types, then you should tell the user if you encounters one you can’t play, then you should help the user locate a player that can.  Pretty simple stuff.

But he wasn’t talking about a solution to this geopolitical skirmish, he was talking about his values, and applied them to a situation at work.  It was so simple; you ask for something before taking it, you tell people if you have a problem, and you help people.

So, I got tasked with spearheading the Ask, Tell, Help initiative, and spent the next six months rounding up industry support for this, eventually causing Microsoft to sign on.  The legacy is visible today to anyone installing iTunes, Rhapsody, or Windows Media – the application asks you for what media types you would like it to be the default.

I think about Ask, Tell, Help pretty frequently.  It reminds me that my values are my values regardless of whether at work or home, regardless of how charged or ambiguous the situation is.  And keeping clarity about those, and a tight grip on them, enables successful navigation of difficult circumstances.

Don’t you think, or rather don’t you desperately hope, that the folks who had a hand in the mortgage/banking crisis would have made different decisions if they’d have applied their personal values to the ambiguous and charged landscape of credit default swaps?