Over the past two weeks, I have spent considerable time in beginning of the year board meetings, as well as speaking with a number of entrepreneurs about the prospects for their companies. In the course of these conversations, I was struck by the linearity of just about all the plans: constructed with a firm belief in rational, predictive growth that approximates a straight line.
Of course, we live in a multi-variate system where nonlinear events (aka chaos) is the norm. It's logical to plan in a linear manner, but only as a guide as Black Swans are more common than we think. It's a rare person whose mind works in a Black Swan way recognizing that shifting sands of technology, competition, and individual execution most often lead to nonlinear performance; for good or for ill. During '08 and '09 the venture industry certainly had its share of nonlinear events that more than made up for the wonderful '99-01 years.
While the planning process is important to determine asset allocations and to culturally be sure team members are marching towards a common objective, I have come to believe that an integral predictor for success is how well a management team deals with unpredictable events, and how well investors and board members, often under time/financial/opportunity pressures, advise them in the process.
I suspect the recent announcement of the iPad represents such a nonlinear moment. Publishers seem to think it represents a grand new opportunity while Sony and Amazon face steep new competition to core initiatives. Investors are wondering if it bodes well for the burgeoning mobile opportunity, or represents a desktop extension used within WiFi comfortable walls.
Time will tell whether the best laid plans will lead to success for these vendors, or if it will be the power and insight of the re-plan that's the ultimate differentiator.
Thursday, January 28, 2010
Tuesday, January 19, 2010
Everyone has a plan 'till they get punched in the mouth- Mike Tyson
Much has been made of the upcoming war brewing over market share for the real personal computer; the one you wear, put in your pocket, where you store your most intimate photos and videos. Yes, the device formerly known as your phone is the latest step in a continual line of cheaper, smaller, more 'personal' devices that date back to, at least the 1975 introduction of the Apple 1. As of now, it seems as if the latest battlefield will be seriously joined by, at least 6 mega-vendors coming from 3 directions:
The computing field: Microsoft and Apple (sort of sad that IBM has abdicated its computing relevance for the mainstream consumer and will sit this one out, while DELL continues to plan and test their market entry)
The web: Google
The phone: Nokia, RIM and Motorola
The platform shift from desktop to mobile, or for some vendors from phone to the 'new' personal computer, is as titanic (threat/opportunity) to these vendors as the shift from mainframes to mini's then to micro computers was to IBM, DEC, DG, Motorola, and the BUNCH. Most of these now forlorn Princes faced extinction with little grace when they were unable to navigate the shifting landscape. The impact of new distribution, pricing, business models, digesting dynamic market needs and an accelerated pace of innovation stress the culture of incumbents to the breaking point.
In this light, Apple's transition from a desktop centric vendor in 2006, to one where the Mac line accounts for only 38% of revenue and less than 14% of unit shipments (in '10 they should break 100mm shipments of 'stuff'...Nokia ships >450mm units), while not missing a beat, is a staggering achievement. I would bet their acquisition of Quattro wireless portends another evolution of their business model, one that prepares it to do battle with folk who 'give away' their IP, in return for harnessing and directing attention.
When navigating new waters, I think company culture and communication of a meaningful strategy plays a large part of a firm's success potential. Therefore, I dug up SEC filings for these titans to revisit what they share with shareholders/employees about their strategic directions. It makes for good reading and should help you in handicapping the race:
Apple business strategy (per their '09 10k):
The Company is committed to bringing the best personal computing, mobile communication and portable digital music and video experience to consumers, students, educators, businesses, and government agencies through its innovative hardware, software, peripherals, services, and Internet offerings.
Google business strategy (per their 10k)
Our mission is to organize the world’s information and make it universally accessible and useful. We believe that the most effective, and ultimately the most profitable, way to accomplish our mission is to put the needs of our users first. We have found that offering a high-quality user experience leads to increased traffic and strong word-of-mouth promotion.
Microsoft's business strategy (per their 10k)
Our mission is to enable people and businesses throughout the world to realize their full potential. Since the company was founded in 1975, we have worked to achieve this mission by creating technology that transforms the way people work, play, and communicate. We develop and market software, services, hardware, and solutions that we believe deliver new opportunities, greater convenience, and enhanced value to people’s lives.
Motorola's business strategy, (per their 10k)
Motorola seeks to be a leading supplier of wireless handsets and mobile experiences to customers globally. To
accomplish this objective, our strategy is focused on simplifying product platforms, enhancing our mid- and
high-tier product portfolio, and strengthening our position in priority markets.
Nokia's business strategy (per their form 20-F)
Our mobile device market share is driven by our ability to have a competitive product portfolio with
attractive aesthetics, design and combination of valueadding
functionalities and services for all major
consumer segments and price points. Market share is also impacted by our brand, manufacturing and
logistics, distribution, competitive cost structure, pricing and how we differentiate our products from
those of our competitors. We believe that product differentiation will be based increasingly on service
innovations and how these services are integrated with devices to improve the user experience.
Research in Motion (Annual report)
RIM helps users all over the globe connect to the specific people, information and
media that makes their worlds go round. The success of BlackBerry products
and services is driven by passionate employees, outstanding partnerships,
distinctive technological expertise, a commitment to quality and a culture that
embraces innovation, customer service and operational excellence.
And for your viewing pleasure, a Rocky take-off:
The computing field: Microsoft and Apple (sort of sad that IBM has abdicated its computing relevance for the mainstream consumer and will sit this one out, while DELL continues to plan and test their market entry)
The web: Google
The phone: Nokia, RIM and Motorola
The platform shift from desktop to mobile, or for some vendors from phone to the 'new' personal computer, is as titanic (threat/opportunity) to these vendors as the shift from mainframes to mini's then to micro computers was to IBM, DEC, DG, Motorola, and the BUNCH. Most of these now forlorn Princes faced extinction with little grace when they were unable to navigate the shifting landscape. The impact of new distribution, pricing, business models, digesting dynamic market needs and an accelerated pace of innovation stress the culture of incumbents to the breaking point.
In this light, Apple's transition from a desktop centric vendor in 2006, to one where the Mac line accounts for only 38% of revenue and less than 14% of unit shipments (in '10 they should break 100mm shipments of 'stuff'...Nokia ships >450mm units), while not missing a beat, is a staggering achievement. I would bet their acquisition of Quattro wireless portends another evolution of their business model, one that prepares it to do battle with folk who 'give away' their IP, in return for harnessing and directing attention.
When navigating new waters, I think company culture and communication of a meaningful strategy plays a large part of a firm's success potential. Therefore, I dug up SEC filings for these titans to revisit what they share with shareholders/employees about their strategic directions. It makes for good reading and should help you in handicapping the race:
Apple business strategy (per their '09 10k):
The Company is committed to bringing the best personal computing, mobile communication and portable digital music and video experience to consumers, students, educators, businesses, and government agencies through its innovative hardware, software, peripherals, services, and Internet offerings.
Google business strategy (per their 10k)
Our mission is to organize the world’s information and make it universally accessible and useful. We believe that the most effective, and ultimately the most profitable, way to accomplish our mission is to put the needs of our users first. We have found that offering a high-quality user experience leads to increased traffic and strong word-of-mouth promotion.
Microsoft's business strategy (per their 10k)
Our mission is to enable people and businesses throughout the world to realize their full potential. Since the company was founded in 1975, we have worked to achieve this mission by creating technology that transforms the way people work, play, and communicate. We develop and market software, services, hardware, and solutions that we believe deliver new opportunities, greater convenience, and enhanced value to people’s lives.
Motorola's business strategy, (per their 10k)
Motorola seeks to be a leading supplier of wireless handsets and mobile experiences to customers globally. To
accomplish this objective, our strategy is focused on simplifying product platforms, enhancing our mid- and
high-tier product portfolio, and strengthening our position in priority markets.
Nokia's business strategy (per their form 20-F)
Our mobile device market share is driven by our ability to have a competitive product portfolio with
attractive aesthetics, design and combination of valueadding
functionalities and services for all major
consumer segments and price points. Market share is also impacted by our brand, manufacturing and
logistics, distribution, competitive cost structure, pricing and how we differentiate our products from
those of our competitors. We believe that product differentiation will be based increasingly on service
innovations and how these services are integrated with devices to improve the user experience.
Research in Motion (Annual report)
RIM helps users all over the globe connect to the specific people, information and
media that makes their worlds go round. The success of BlackBerry products
and services is driven by passionate employees, outstanding partnerships,
distinctive technological expertise, a commitment to quality and a culture that
embraces innovation, customer service and operational excellence.
And for your viewing pleasure, a Rocky take-off:
Wednesday, January 13, 2010
Buy then bye
A recent post in BusinessInsider highlights that Facebook is experimenting with a payments platform as a way to further spur commerce happening on Facebook. Here's the post
I think there's a huge and untapped business opportunity that has yet to be mined around the transactional side of the internet. For example, in 2009, less than 5% of all retail sales were online. AMZN, with its $22B in Revenue and $50B market cap pales in comparison to Walmart's $404B revenues and 210B market cap. So, Walmart's monthly revenue is double that of Amazon's yearly gross. Think about it.
I don't think the relative lack of online commerce penetration is due to consumers/businesses hesitant to complete transactions over the internet; Paypal's total payment volume in '08 was $60B, but instead, we ought to look at:
1. A poor shopping experience, modeled after the days when consumers were narrow band connected. We ought to give consumers more of a brick and mortar shopping experience, but where a crowd is a positive instead of a negative. Scott Stone, the founder of a new commerce company (which I am backing) calls for an end to the 'buy then bye' commerce experience
2. Stored value cards are slicing through the demographic mosaic with teens and now Tweens. Amazon's innovative PayPhrase program facilitates parents setting up an online allowance for their children. Better to have a stored value, where parents have the ability to monitor disbursements, than to hand over cash for a trip to the mall.
3. Returns- Pioneered by Zappos (and again Amazon) whereby returning goods purchased through the site, or via an affiliate is as easy as eating pie.
4. Trust- Returns and payments are only part of it. Security is the big elephant in the room. My personal data, credit card information, and purchasing history is safe with you. I will never hear of someone stealing a laptop from the IT manager of a site I visit, which happened to have my data on it.
5. One size does not fit all. My kids moved from Club Penguin, to Stardoll, to MissBimbo. A natural progression that was optimized for the demographic each step along the way. All they want to do is have some fun...
I think there's a huge and untapped business opportunity that has yet to be mined around the transactional side of the internet. For example, in 2009, less than 5% of all retail sales were online. AMZN, with its $22B in Revenue and $50B market cap pales in comparison to Walmart's $404B revenues and 210B market cap. So, Walmart's monthly revenue is double that of Amazon's yearly gross. Think about it.
I don't think the relative lack of online commerce penetration is due to consumers/businesses hesitant to complete transactions over the internet; Paypal's total payment volume in '08 was $60B, but instead, we ought to look at:
1. A poor shopping experience, modeled after the days when consumers were narrow band connected. We ought to give consumers more of a brick and mortar shopping experience, but where a crowd is a positive instead of a negative. Scott Stone, the founder of a new commerce company (which I am backing) calls for an end to the 'buy then bye' commerce experience
2. Stored value cards are slicing through the demographic mosaic with teens and now Tweens. Amazon's innovative PayPhrase program facilitates parents setting up an online allowance for their children. Better to have a stored value, where parents have the ability to monitor disbursements, than to hand over cash for a trip to the mall.
3. Returns- Pioneered by Zappos (and again Amazon) whereby returning goods purchased through the site, or via an affiliate is as easy as eating pie.
4. Trust- Returns and payments are only part of it. Security is the big elephant in the room. My personal data, credit card information, and purchasing history is safe with you. I will never hear of someone stealing a laptop from the IT manager of a site I visit, which happened to have my data on it.
5. One size does not fit all. My kids moved from Club Penguin, to Stardoll, to MissBimbo. A natural progression that was optimized for the demographic each step along the way. All they want to do is have some fun...
Thursday, January 7, 2010
People
The folks at Business Insider posted an interesting Netflix presentation on why they are so focused on hiring, and retaining "A" players.
Too often we have to plead guilty of settling for good enough as various pressures reach cause the kettle to boil. Not all companies are built for this type of culture, and not all practice what they preach. Nevertheless, it's a provocative read, both the article and the presentation.
Too often we have to plead guilty of settling for good enough as various pressures reach cause the kettle to boil. Not all companies are built for this type of culture, and not all practice what they preach. Nevertheless, it's a provocative read, both the article and the presentation.
Monday, January 4, 2010
Looking forward by scanning back
I've been reading many of the 2010 prediction lists. So many folk have done such a great job thinking about the future of the web/IT, I thought it would be interesting to list the web/IT oriented things that I have done recently that were not in place for me 12 months ago.
1. Signed onto PC using Chrome browser...faster than Firefox, but crashes Gmail more often. Can't wait for HTML5 for the next generation browser experience and saying goodbye to another layer of installed software as the browser sucks away more market from the software domain (as MSFT did in the 90's).
2. Sifted through 27 overnight e-mails. The majority were social oriented (Twitter following, FB friend requests, LinkedIn stuff). Amazing how quiet the house is with the shift from phones to texting/social. Thinking about how noisy offices were in the 90's (remember the noise containing containers on printers) and how the Enterprise is going to embrace many of the social tools with a vengeance that will bring a smile to long suffering shareholders.
3. New FB Friendfeeds this AM were 2x the e-mails received....and the gap is growing by the week
4. Looked at Tweetdeck, where the number of new Tweets from people I follow were 2x the FB feeds...got to filter these better. Craig Newmark...too many squirrel photos and bird posts!!!!
5. Scanned my 3G BBerry for BBM's and Chats (4 overnight). A device optimized for an aging metaphor (mail)
6. Took the wife's 3G iPod and spent an hour catching up with Meebo, YourVersion, Twitter, FB and chess with nephew (who wants a piece of me). No doubt there is a big role for a big screen Touch like device in my life (iSlate?)
7. Using TVersity to stream web content to the big TV (installed N router with a Wifi enabled LG BlueRay player)
8. Scrolled through GoogleLabs, now 5 pages long (including 1 1/2 pages of graduates) to see what could complement my move to GOOG apps for '10. GOOG is an innovation machine; too bad MSFT is in maintenance mode...the IBM of 201x
9. Interrupted my daughter's Hulu watching to do homework (no TV in her room, and doesn't ask for one)
10 For the first time, mailed driving directions to an inanimate object (my car)
11. Forwarded a Skype call via GoogleVoice.
12. Ordered another book on my Kindle; can't wait for it to evolve to a more open platform as it follows the rest of 'Amazon as a platform'
13. Lost a bet to my son (is Philadelphia a top 5 US population city?). Verified via WolframAlpha. This computational knowledge engine (just another way to say search for things that require some computations). This is serious technology. Hope it evolves to find a market.
14. Reached 575 family members and traced the family tree back to the Austrian Hungarian empire in 1825 via MyHeritage.com
15. Experimented with Geo location apps; FourSquare, GOOG Latitude, Loopt and Gowalla. GEO and profiling will capture intent to bring me better shopping, unlock more 'implicit' social relationships, and continue the shift from a 'pull' driven internet to a highly relevant 'push' experience
16. Though it's a stretch for '09, as the Apple App store is now 16 months old...its success has changed the software business (cratered prices, shifted web platform to mobile, and unleashed a tsunami of programmer creativity), while extending the web to your every second fingertips.
17. Sent a message to Scott, Yair and Laurie, co-founders of PlumWillow, a new and potentially exciting e-commerce company I am pleased to be investing in.
Feel free to expand this list with your personal '09 'Newbies'.
Wishing a great New Year to all my Friends and Followers.
1. Signed onto PC using Chrome browser...faster than Firefox, but crashes Gmail more often. Can't wait for HTML5 for the next generation browser experience and saying goodbye to another layer of installed software as the browser sucks away more market from the software domain (as MSFT did in the 90's).
2. Sifted through 27 overnight e-mails. The majority were social oriented (Twitter following, FB friend requests, LinkedIn stuff). Amazing how quiet the house is with the shift from phones to texting/social. Thinking about how noisy offices were in the 90's (remember the noise containing containers on printers) and how the Enterprise is going to embrace many of the social tools with a vengeance that will bring a smile to long suffering shareholders.
3. New FB Friendfeeds this AM were 2x the e-mails received....and the gap is growing by the week
4. Looked at Tweetdeck, where the number of new Tweets from people I follow were 2x the FB feeds...got to filter these better. Craig Newmark...too many squirrel photos and bird posts!!!!
5. Scanned my 3G BBerry for BBM's and Chats (4 overnight). A device optimized for an aging metaphor (mail)
6. Took the wife's 3G iPod and spent an hour catching up with Meebo, YourVersion, Twitter, FB and chess with nephew (who wants a piece of me). No doubt there is a big role for a big screen Touch like device in my life (iSlate?)
7. Using TVersity to stream web content to the big TV (installed N router with a Wifi enabled LG BlueRay player)
8. Scrolled through GoogleLabs, now 5 pages long (including 1 1/2 pages of graduates) to see what could complement my move to GOOG apps for '10. GOOG is an innovation machine; too bad MSFT is in maintenance mode...the IBM of 201x
9. Interrupted my daughter's Hulu watching to do homework (no TV in her room, and doesn't ask for one)
10 For the first time, mailed driving directions to an inanimate object (my car)
11. Forwarded a Skype call via GoogleVoice.
12. Ordered another book on my Kindle; can't wait for it to evolve to a more open platform as it follows the rest of 'Amazon as a platform'
13. Lost a bet to my son (is Philadelphia a top 5 US population city?). Verified via WolframAlpha. This computational knowledge engine (just another way to say search for things that require some computations). This is serious technology. Hope it evolves to find a market.
14. Reached 575 family members and traced the family tree back to the Austrian Hungarian empire in 1825 via MyHeritage.com
15. Experimented with Geo location apps; FourSquare, GOOG Latitude, Loopt and Gowalla. GEO and profiling will capture intent to bring me better shopping, unlock more 'implicit' social relationships, and continue the shift from a 'pull' driven internet to a highly relevant 'push' experience
16. Though it's a stretch for '09, as the Apple App store is now 16 months old...its success has changed the software business (cratered prices, shifted web platform to mobile, and unleashed a tsunami of programmer creativity), while extending the web to your every second fingertips.
17. Sent a message to Scott, Yair and Laurie, co-founders of PlumWillow, a new and potentially exciting e-commerce company I am pleased to be investing in.
Feel free to expand this list with your personal '09 'Newbies'.
Wishing a great New Year to all my Friends and Followers.
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