RSS What?

Good blog post at Crooked Timber on stats on Internet user sophistication. Very useful information for developing market penetration plans and articulating what happens in the trenches when trying to get people to adopt stuff. Useability is a tricky thing for sure, and sometimes articles like these make me miss the day when Macintosh reigned all mighty (ok – a bit of an overstatement).

Good Post On Dead Blogs Walking Plus Musings On Flatlining Ventures (Long Post)

Will Hsu has a good post called "Dead Blogs Walking", and it was triggered by Fred Wilson’s post related to pulling the plug on ventures and deal fatigue. Agree a lot with what Will is saying. It’s hard to keep a blog fresh. For me, I use it as a way to stretch my mind and to process information. If the long life of my grandfather is any example, keeping the mind fresh may be an important thing for living longer and happier.

But I digress. I reproduce one thing that Will snipped from Fred’s post here (remember the context is from the point of a venture capitalist as to whether to pull the plug on a venture):

In the simplest case, the patient dies. That’s usually good for everyone involved. The company didn’t get customers, revenues, and build a business.

But it’s rarely that simple. Some companies get customers, revenues, create value, but don’t get cash flow positive. They end up on life support and nobody wants to pull the plug for good reason. This is by far the most common cause of deal fatigue.

This strikes me from a couple of dimensions. Although perhaps not common in Fred’s sector, I have some dealings with (sometimes partners of clients I have) that have lifestyle businesses. Lifestyle businesses can be great. They don’t get cash flow positive because they don’t want to get taxed. That nice J-curve Fred depicts turns into a nice "T". The owners and employees may live very comfortable lives and have great salaries, and there are many investment bankers and LBO firms that drool just thinking about squeezing out that prized cash via restructuring both the financing and management, i.e., restructuring the deal. You could even consider that lifestyle businesses are naturally incented to self-sustain … to preserve the lifestyle.

Which brings me to my next point. Another pertinent aspect of Fred’s post is the word "deal". Financing creates pressure in ventures, and the exact type of pressure is dependent on the type of financing and financier. Why? As an example, venture capital funds are under pressure because of the returns that they need to generate for their limited partners. Ed Sim’s recent post puts some great light on that subject. (It is something I find that many entrepreneurs could better appreciate since VCs are, in some sense, customers of the equity product of a company.)

So how might one exploit the deal pressure information in business development? As one example, in many cases ventures are negotiating against much larger, established firms with deep pockets. Questions of financial solvency, customer base, etc. must be answered when selling to a new customer. But what happens when competing against a venture-backed firm and that firm is seen as stronger (for whatever reason)? Well Fred’s post indicates the exact type of weakness that I might recommend exploiting if I were negotiating against the venture. Venture firms can pull the plug even if they have the capital or can syndicate to back the deal.

Everyone company has strengths and weaknesses. That’s what makes business interesting. Depending on who I represent, I always recommend putting oneself in the shoes of the companies I am competing against. I am by no means recommending squashing ventures. What I am saying is that never presume who will win, no matter how good your company is. By putting oneself in a somewhat paranoid mindset when approaching business, you may find out that you can do more to win the customer and satisfy their needs. I have argued that in business, one must learn to argue both sides of every coin. This is a strength.

Continue reading “Good Post On Dead Blogs Walking Plus Musings On Flatlining Ventures (Long Post)”

New Person Comes Knocking At My Door On Offshoring 2.0

In my professional career in and about software companies, I’ve primarily run into offshoring of things like call center & customer care, documentation, quality assurance and testing, and R&D. In software, such stuff may be so commonplace that it can be considered Offshoring 1.0 and behind us – a done deal. And from a macroeconomic perspective the US may even be all fine after Offshoring 1.0. Dr. Daniel Drezner blogs that the World Trade Organization’s recent annual trade report release indicates:

The
strength in the rebound in [IT] employment in 2004, and the resilience
of wages of computer occupations, do not support the view that
offshoring services of high-skilled IT specialists had a marked impact
on overall US employment in these occupations up to the end of 2004 …

So what’s in Offshoring 2.0?

If InformationWeek’s July 18th issue and article, "Behind The Numbers: Customer Satisfaction Not A BPO Priority" is a hint of what is to come next on the offshoring front (note that in BPO the "O" stands for outsourcing, which should be differentiated from offshoring), more than 30% of respondents in a June 2005 study said that they outsource sales & marketing to some extent. This is the second item in a list behind call center or customer care (which is close to 45%). Note: my intent by pointing out this article is simply to cites the stats, not reflect my personal opinion on either customer satisfaction or outsourcing in business.

Well just last week (and for the first time), I was approached by an MBA friend involved with business development for an offshoring company in India that provides services related to product lifecycle management, customer lifecycle management, and strategic brand management. This is my first, personal introduction to Offshoring 2.0.

Steve Shu

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Update (7/21/05): Uptick in IT wages in tight labor market …

The Death of Organizational Structures In Three Internet Stops

As a U of Chicago business guy, I have a tendency to lean toward things that breathe free market theory. Markets are (mostly) efficient. Market are (mostly) right. Stems from Chicago’s strong grounding in economics.

So it’s interesting to think about why organizations of today just aren’t freely forming efforts. Why isn’t there a free market in organizational structures? Why can’t organizations just freely form and dissolve? I haven’t really analyzed this very closely at all, but here’s three interesting Internet stops for you that could spell the death of business organizations as we know them:

  1. Internet Stop 1 (BusinessPundit) – Outsource the CEO
  2. Internet Stop 2 (Business Plan Archive) – Comb the business plan document archive of failed dot coms (compliments of the Library of Congress et. al.) and learn what not to do in business
  3. Internet Stop 3 (The Business Experiment) – Participate in an actual experiment on an open source business model (where the business model and governance structure is all open source) … "The goal is to have the registered
    users of this site collectively start and run a real business.
    "

Update (7/20/05): As for Internet Stop 2, I should probably not characterize the business plan document archive as "things not to do in business". These are mostly the planning documents of businesses that are no longer around or in a reduced state of operations (e.g., Blue Meteor, marchFirst). The companies may have very well taken the correct steps in points in time or done the best thy could given the circumstances. That’s one issue with analyzing cases. It is frequently not possible to see from static documents how management teams reasoned, whether they used consistent reasoning, if it was inconsistent with a best practice, etc.

When Rules Of Thumb And Keeping It Simple Stupid (KISS) Make Me Nervous

As a general rule, I favor the Keep It Simple Stupid (KISS) principle. In some cases, I also like to follow rules of thumb when working on a day-to-day basis. That said, in business I always believe that one should try to ground KISS and rules of thumb within the context of core business theories. If one is going to diverge from theory, then be cognizant of where those boundaries are and what the risks are.

Some example KISS and rules of thumb that I try to use on a day-to-day basis within business operations:

  1. Talking to the press (PR) – While educating press contacts may be great, KISS and speaking quotably are musts.
  2. Storyboarding out the ideal sales pitch and process (Sales) – Push potential objections and roadblocks as far back into a presentation as possible. The objective is not to hide things by any means, but the average person is looking for a reason to say "no" before they will even try to understand the merits of what you have to offer.
  3. Keeping the marketing message simple (Marketing) – People can’t spread your ideas for you if they can’t remember what your ideas are. Although there is a constant struggle with doing disservice to a product by simplifying the marketing message, it takes experimentation to get the balance right.
  4. Minimizing accounting and finance perfection except for specified periods or for external customers (Accounting and Finance) – Administration costs and internal communications costs go up dramatically if one tries to implement GAAP accounting at all times other than agreed upon intervals and fixed times (e.g., beyond end of month, end of quarter, end of year).

In light of probably a long list of rules of thumb for me, a conversation my daughter and I had this past week gave me extra pause about how I apply the KISS principle and rules of thumb. When driving through a somewhat "seedy" area of town, my daughter asked me if we could go eat at one of the restaurants there. I told her "no" that I didn’t think the area was safe and that it might have "bad people" around.

Then she asked me a seemingly simple question, "how do you know if someone is bad?"

Methinks the KISS principle doesn’t work too well in cases like this.

I started off by talking about the bars on the windows of some of the houses and the fire-gutted properties all-around. I stated that there is a tendency for bad people to be around. My daughter then countered me by saying that these properties weren’t that close to the proposed eating place.

I then tried to point to some of the people begging for money, but then this degenerated into a poor people are bad type conversation that wasn’t right either.

We had a whole bunch of mini-conversations, and I couldn’t find very good footing for quite awhile. I finally tried to reason that bad is what bad does. When you see bad things, e.g., illegal graffiti on the walls of building, this is the wake of what bad people have done. In my mind flashed the wake of Worldcom and Bernie Ebbers. I was getting more satisfied with how my answer was playing out as it made intuitive sense and was snappy.

Then I got the question, "but what if the bad person doesn’t do anything bad?" … oh well. It’s back to the drawing board …

To bring things back, where I end up getting nervous about the face value of KISS and rules of thumb are scenarios where I’m in some sense taking custody for someone’s well being. The circumstances might be as I’m getting closer to closing a sales prospect – I want to make certain that the person understands everything presented, that we are making an informed choice together, and that we have addressed the business needs of the prospect. If I’m talking about career advice for someone, let’s be clear whether I’m providing some quick advice or deeply thought out counsel. If we’re talking about me helping an entrepreneur to decide which direction to take his/her business, I know there may only be one shot and that the endeavor is a treasure.

So treat rules of thumb and KISS with care.

Either Lost All My Feeds Or Lost My Mind

I use Bloglines to read my blogroll of feeds. I think Bloglines knows who I am and what feeds I subscrbe to, but I’ve lost the capability to see which feeds have new posts (and automatically bring them up). Anyone?

Update (7/15/05 – 7:45am): OK – got it back. May be a transient issue or a maintenance thing with Bloglines. Good thing. Last time this sort of thing happened I switched newsreaders. Coincidentally, yesterday a Newsgator (another newsreader vendor) PR person contacted me … maybe a sign for me to switch. Also coincidentally, influential Web 2.0 venture people like Fred Wilson are even looking to drop feedreaders …

PDF Conversion Arbitrage Opportunity?

Via the techno-mavens at del.icio.us, I’ve found an arbitrage opportunity for converting PDFs online. Those using Adobe online for PDF conversion can PayPal me $99.98 each year, save themselves $0.01/year and instead use PDF Online for free. OK – maybe you should PayPal 50% of the money to del.icio.us, and I will have figured out the del.icio.us biz model that Fred Wilson claims not to have had when he invested money in del.icio.us.

Using RSS To Plagiarise Or Participate?

Zoli Erdos has two good posts (here and here) that aggregate pointers to and comment on some of the recent happenings in the space regarding the RSS (Really Simple Syndication protocol – feels kind of weird to do the acronym first then the longhand). Suffice it to say that Jason Calacanis has called plagiarism through RSS, "Really Simple Stealing".

For those playing at home, RSS is a mechanism for distributing information like blog posts. It is a machine-to-machine protocol that’s been around for awhile but is gaining a lot of interest as of recent. A venture capital firm recently announced raising $100 millionish for RSS investments.

I suspect there’s an inherent problem with the "really simple" aspect of RSS. If one wants to prevent full text information from being blatantly copied, then one probably has to atomize the blog posts and/or add an authenticated signature that cannot be separated. RSS will no longer be really simple then. To prevent plagiarism, units of data would have to be "really signed" (Really Signed Syndication?). RSS became more widely used in the blogging and news community because of the simplicity.

As for using the RSS protocol to increase multi-network participation of bloggers, I could see this being done, and the use will likely get richer over time. 21Publish uses RSS in its authoring interface to integrate external blogs into a blogging community at various levels.