Sometimes, revenue is free.
March 30, 2010
It’s often easy to get your head caught up in the clouds when starting a company, building a new products, or ogling over that new cloud computing service. What do you consider when making your final decision?
- aesthetics
- cost
- performance
- connectivity
Did you consider analyzing every data point, of every option, for all of these considerations?
The possibilities are exponential and represent how many possible places you could find revenue you didn’t know existed. If you’re a successful freemium startup, the answer to this question is yes. At least has been for Dropbox, Evernote, Pandora, and WordPress. It’s great how Evernote has their user costs down to the penny.
Is every line, pixel, and connection within your software tracked for profitability?
Real-Time is the new Web2.0: Both mean nothing.
March 5, 2010
So you come across a startup that’s pitching a “Real-Time” service, what do you do? Punch them in the face – now that’s real-time! Well, maybe that’s a bad idea, but you should completely tell them they’re not getting anywhere just by calling their service “Real-Time”. Here are some examples of concepts which can’t ever be real-time:
1. The News – Maybe if people as a whole were more intelligent, but, the closest you’re going to get is Digg or Reddit and those require thousands of data points (over time) before an article bubbles to the top of the relevancy list. The exception of course is “Bad News”, that could easily be done in real-time.
2. Product Pricing - Retailers have a hard enough time with loss prevention and maintaining profits than to care if their published prices and inventory are accurate or not. Sure, they have real-time inventory internally, but that’s a large enough dataset that it’ll never be replicated to a service provider; the short story is that you’ll never be able to get both an instant price and instant data at the same time.
Maybe if you were Google.
3. Search (sites, news, or otherwise) – Indexing is hard and there’s only one cat in the game with the facilities to do so in real-time. The only problem is the rest of the world doesn’t have a supercomputer running their system and there will always be a delay before Google gets the memo. The exceptions here are sites that Google cares about but chances are you’re not going to be big enough for that, else, you probably wouldn’t be a startup.
4. Communications – There’s already an “app for that”. It’s called the phone and your voice. Pickup phone, call friend, profit. Anything else might provide real-time delivery on one end or the other, but chances are, one person in the party is playing a video game, watching youtube, or chatting on Facebook in which case their response will be in Internet time.
Let me just steal the definition of Real-Time from Wikipedia:
In computer science, real-time computing (RTC), or “reactive computing”, is the study of hardware and software systems that are subject to a “real-time constraint”—i.e., operational deadlines from event to system response. By contrast, a non-real-time system is one for which there is no deadline, even if fast response or high performance is desired or preferred. The needs of real-time software are often addressed in the context of real-time operating systems, and synchronous programming languages, which provide frameworks on which to build real-time application software.
If that’s not your product then please, stop calling yourself real-time and get an old comp sci book, then figure out what real-time really is.
Don’t steal your users’ domains (wordpress.com)
March 4, 2010
UPDATE: I’m very happy to update this post with a link to WordPress and their announcement of DNS editing. Kudos to WordPress for promptly providing this feature. Who knows, maybe they’ve been working on it awhile — but I was fairly convinced with my support conversation they weren’t working on the feature. Either way I’m happy with WordPress and the thought of never having to host my own WP blog again.
This is primarily with regard to WordPress.com, but, it’s an important and delicate concern for any service. Currently, if you want yourdomain.com to point to your WP blog, you have to give WP control over your domain name. WordPress has the challenging problem of providing scalable content and this is very hard to do while providing domain name support at the same time; this is why WP requires control of your domain’s DNS. WordPress has a highly redundant and robust network and part of that is having control over their user’s domains. This is limiting in that a user can’t point a subdomain like securepayments.yourdomain.com to another service.
While DNS natively supports this functionality, it’s not something the average blogger, hosting provider, or even application developer understands (it’s called Slaving). If/when WordPress supports this functionality, they’ll need to do so carefully to limit exposing their systems to outside risks, make it easy to use, and support the most complex users who need to run their own DNS.
If you provide a web service, such as a blogging platform, don’t build “domain name support” by forcing your users to give you full control over their domain name. In short, I don’t blame WP for their current implementation (it’s probably a lower priority for them), but here’s a few tips on what you should do if you want to make YOUR app/service support user-supplied domain names:
- Don’t give the feature away for free. Your support costs will be higher for this feature than most.
- Don’t give the feature away for free. DNS plays a big role in spam and you don’t want to associate your systems with a spammer’s domain name.
- Think very hard if you want to point a user’s app to the root of their domain. Doing so opens you up to the concerns above.
- If your service involves high-traffic content such that load balancers are involved, consult someone who’s figured this problem out before. (my advice is typically free)
- Whenever you’re building and scaling your services, keep all the above in mind. As the Internet becomes connected at the application layer, via things like federations and digital certificates, domain names will become more and more important as a component of security and authority.
- Let users host their own DNS and point it at you instead of the other way around. Administering DNS servers isn’t very cost effective and you’ll save money leaving it up to the users. The downside is you’ll need to be very good at providing your users with instructions and you’ll need to notify them when changes are necessary; again, Don’t give the feature away for free.
- Let users host their own DNS. You don’t want to host DNS for your users — doing so is a long-term cost commitment and something you can’t “undo”.
Adamo: Dell in love, with fail
April 1, 2009
I’m sure the buzz has reached out past SXSW for enough folks to have taken a glance at Dell’s new adamo laptop. From the elegant sound track to the vogue appearance of adamo’s web site, you would think you’re getting a laptop worth complimenting BMW’s Nieman Marcuss 7-series. Dell commits that this machine’s style, craftmanship, and performance is so tempting that “you’ll fall in love.” Unfortunately the Adamo falls short.
I’m not alone nor am I the first in bringing this to light but there’s a few factors for folks to consider which paints a grimmer picture. Dell has grown year over year based on it’s leverage, market position (small business), and visceral partnerships with Intel and Microsoft. Crucial for Dell’s current revenue operations, Adamo ignores Dell’s assets in favor of aesthetics. Indeed, the adamo is profound; it’s black and white presentation is a shadow over Dell’s lack of focus on their industry, engineering, and customer.
So let me first put up these factstimates to keep things in context:
- Leverage: Dell took on > $1bn in debt last year; six times that of 1q08
- Market Position: HP is kicking Dell’s ass with server sales and Apple is turning the industry upside down
- Microsoft/Intel: Intel is giving Apple chips before Dell and Apple’s OS is slowly gaining momentum at the cost of Dell’s cash incentives from Microsoft
As the PC industry dries up and laptops peak, being replaced by mobile devices, netbooks, and non-msft OS, Dell is spending who knows how much money on marketing the Adamo and trying to create a ‘luxury’ image akin to Rolls Royce or Bentley.
Despite the fact that you can’t create prestige over night, even if you could, it’s obvious that the Adamo was an expensive device to engineer and the parts are costly; how can this be sustainable? Such an imbalance might be considered an R&D cost but not so with the Adamo. In it’s most recent iteration the MacBook Air was given a beefier video card making it useful for gamers (why else would a ‘road warrior’ need ‘power’?) yet the Adamo is stuck with an Intel GPU which is OK but won’t do much more than power Vista’s gpu-hungry GUI. Speaking of Vista, the machine comes w/4GB of RAM which is now standard on PCs but is really the equivalent of 2GB to a mac or linux simply because Vista uses the other 2GB. I get it, building fast hardware is difficult and expensive and Dell has to make money somehow. But why then, did they add multimedia start/stop/pause/play buttons to the face panel of the machine? The machine doesn’t even come with a DVD/CD player! You’re going to have to have the laptop open, have windows running, and have an audio application running to use the buttons. Moreover, the Dell already has an FN button on the keyboard so Dell could have re-purposed the function keys rather than adding additional hardware, firmware, and software that’s required to power the face panel buttons. Dell can argue usability here but for a device that’s supposed to be thin, light, and fashionable, the cost is simply not justified.
Dell could have knocked a home run with the Adamo by making it simple, fashionable, light and practical – yet they failed. I’m sorry Dell, but you just aren’t a luxury brand and that bandwagon will likely be over for PC before you’ll make a dent.
Here are reviews I discovered which contain additional technical information and opinions about Adamo:
Dell Adamo Luxury Laptop [ctv.ca]
Dell’s Adamo Imitates MacBook Air’s Price, Not Its Profile [wired.com]
Dell’s Adamo Laptop: Too Sexy for the Times? [seekingalpha.com]
Since the Internet is dead and boring it won’t hurt to reply to Mark Cuban’s questions. I once wrote an idea noting that a company may resolve the problem of bandwidth by using satellite, p2p, and broadband together as one hybrid medium. Content would be dynamically requested, routed, multicast, and/or broadcast across any path based on simple supply and demand. Of course, that’s not going to happen because efficiency has never made money and Mark hasn’t made a 3-pointer while doing a back flip.
The Internet is no more dead than Mark Cuban’s stewardship of a sports team; I won’t draw the correlation but I think you’ll get it. The Internet has changed business forever by practically eliminating the cost of asynchronous communication. It’s a simple mechanism upon which countless inventions will take root in, envelope, and culminate our society. What is the Internet if it isn’t the best invention short of Electricity? Since when has Electricity been a technology we aren’t trying to do something new with? I’m not saying the Internet isn’t boring but it’s not dead.
What new doldrums-defying, life-changing “thing” isn’t going to be implicitly catalyzed by the Internet?
Speaking of dead Interwebs; if someone is good at doing something we need to encourage them, keep them around, and not throw them away because they’re not creating new super-profitable ideas. We put a man on the moon, and space got dead and boring; then we forgot how we did it because nobody cared. Not so bad, we’ve got time to figure that crap out again and it’s not important anyways… right?
Don’t kill the Internet. Please.
= How many people have really given up cable or satellite for internet only delivery of content ? 100k at the most ? Based on company reports, it seems like people are giving up their wired telephone lines at home long before they give up their cable/sat/telco TV
+ The real numbers to look at are what mediums are gaining numbers and where new content is coming from. Why isn’t Rev3 on Satellite? — I bet there’s a really good reason which contradicts the sustenance of mainstream distribution.
= Why are DVR sales continuing to climb ? if the internet is a better solution, why buy, lease or even use a DVR ? Shouldn’t DVRs be immediately obsolete ?
+ Because consumers have too much money to spend. It’s almost like asking why we pay $100/month for TV service to begin with. Side note, my room mate’s service included the DVR for free.
= Technology doesn’t always move in the direction you expect it to. Anyone for faster airplanes ? The return of the Concorde ? More efficient electricity grids ? More fuel efficient cars ? You can blame the lack of progress on the incumbents or their industry, but doesn’t that make my point ?
+ Yep. Just like the banks behind our economy new society, incumbents win.
= Read this great post from the NetFlix Blog Why do people ignore in last mile and home bandwidth constraints ? More devices at home, more utilization, more hard drive storage, require more backups, which consume bandwidth, whether local or online.
+ People don’t ignore bandwidth constraints; it’s only now, after video and p2p have become mainstream, that people are even noticing congestion. People don’t know any better and when they do, they don’t have a choice otherwise. Again, see incumbents.
= Why do people think that bandwidth to and in the home will grow faster than applications can consume it ? If you believe in the inevitable progress of technology and innovation then shouldn’t you believe that this collective genius will come up with better uses of increasing bandwidth than replacing TV ? I certainly do. Health Care, Security, Who knows what, have to be a better and more rewarding use of bandwidth than just TV.
+ This is really an issue independent of video because it goes back to incumbents. It CAN happen but it won’t because it would be Seppuku. Supplying more bandwidth than demand will make it worthless and that just isn’t going to happen in the US anytime soon. Our population density is too low for cheap bandwidth to be profitable and content corporations have too much private control over distribution via contracts and licensing to allow a network which would enable free streaming video content. Personally, I think Internet in the home will remain a luxury for the next few generations because as of right now people generally care more about their entertainment and comfort more than the health and security.
= Always remember that the long tail of content, whether audio or video, never gets paid. Thats why its on the long tail. One hit wonders do not disprove the rule. Creating hits is hard and very much a numbers game. Any content game that is a numbers game is expensive to play. Which explains exactly why there are so few internet video only companies (our friends at Rev3 being hopefully a shining exception) making money.
+ Rev3 is around because those guys know how to kick back and say “fuck it” and so does their audience :) Well, that, and because I bought a TShirt from Jim Louderback.
= P2P has been around for how many years ? It has yet to find commercial success anywhere. Its not a solution to any problem and in fact is a huge risk. Anyone with any sense of fairplay knows “free bandwidth” for commercial distribution of content is inherently wrong.
+ Wrong, sort of. p2p has found commercial success, just in a quiet, not-so-profitable fashion. Finding (new) commercial success in p2p now would be silly, akin to commercial success in a new paging company. p2p protocols were developed and published in an open fashion so they were quickly and easily integrated into and adopted by systems which could take advantage of them. Three abundant uses of p2p are software distribution, backups, and patches (ie, Blizzard’s updaters and Valve’s STEAM network). My guess is that any major software corporation who isn’t using p2p for software distribution is doing so because their cost for bandwidth is so low that it would cost more for them to staff and support a p2p system. That said, I would agree that “p2p networks” have not found commercial success.
= For all those that think there will be an explosion in bandwidth, remember we are in at least a recession, if not worse. Don’t expect any capital to be invested to take the last mile to multiples of current experiences. In fact, you might see the opposite as capital constraints encourage networks to try to manage as best they can with what they have. It could be far worse on the wireless front as lack of capital could shut down installs.
Short term: Internet is not dead.
Long term: Internet is not dead.
Ruby on Rails, Developers, and More: In Demand NOW!
March 6, 2009
I attended this months SpringStage Startup Happy Hour and came to a conclusion after I spoke with a handful of startup employees and owners: Businesses and startups are hiring.
Update: I failed to post justifying information when I wrote this post. I have had individuals contact me regarding 7 positions since the economy started to take a crap in September. Three for rails development, one for PHP, two for product manager, and one for iPhone development. All of these positions came to me through LinkedIn, Facebook, Twitter, and SpringStage.
A few reasons why…
- Bootstrapped technology startups have low costs thanks to Amazon Web Services and co-working environments
- Marketing expenses create more value because word of mouth is faster and presence in large social networks is free
- if a > 12mo old startup hasn’t fallen through the cracks by now, they’re doing pretty damn good
- Mobile application platforms are now mainstream
- Investors are still investing
If the number of startups looking for good talent in the Dallas area is anything like the rest of the US then it seems to me it won’t take long for our newly unemployed to get back on the saddle.
Ma.gnolia: “Don’t do your own IT at all” *sigh*
February 18, 2009
Having managed systems for large (>1m users) web applications I had to watch the podcast of Chris Messina and Larry Halff discuss lessons learned from the recent catastrophe which took down Ma.gnolia. In a nutshell, Ma.gnolia didn’t have good backups and the worst case scenario took place which led to massive data loss. I would like to give Larry kudos for upfront transparency and facing his users; I’m sure dealing with the problem was stress enough. I feel Larry’s earned a red badge of courage regardless of outcome.
“If you’re a startup, don’t do your own IT at all.”
-Larry Halff
This quote is Larry’s “overall lesson learned” and for the sake of other web applications I’m going to take this out of context and completely disagree. As cool as Ma.gnolia was and regardless of where it may go, this is the wrong lesson and in fact, it’s bad advice and presents problems which got Ma.gnolia into this situation in the first place.
The real lesson here is that IT should not be underestimated. Business depends on IT and it’s necessities are as dire as employees’. Unfortunately it’s easy to overlook IT and when you do there’s rarely evidence until it’s too late. Not paying attention to IT is like running red lights and stop signs — one day you’re going to get hit and it’s going to hurt. Outsourcing just makes you a passenger without a seat belt. If you’re a startup, especially a technology startup, you need to be in the driver’s seat.
At one point in time this mostly applied to technology-based companies but that time has passed for a few reasons. First, IT is flooded with service providers who suck and service providers rarely admit liability. Second, companies with cores businesses outside of technology are no longer able to remain competitive without including technology in their core business processes. Five years ago you could outsource your IT if your business revolved around paperwork or physical labor but if you’re doing so now you’re facing significant costs and risk versus training or recruiting in-house personnel. I would post numbers to back myself up for these costs but anyone can find numbers for their cause.
I’m not saying that outsourcing isn’t the right thing to do, in fact, it can be a competitive advantage; but you can’t outsource the responsibility bound to your IT systems. Fortunately Ma.gnolia can rebuild a better service with no capital, limited effort, and no defense lawyers. In doing so, their IT systems should be treated with as much priority as core operations and as much scrutiny as financials. Your CPA isn’t responsible for your tax errors and your service provider won’t be responsible if their backup system fails (it happens more than you think!). If you’re going to outsource IT then know what you’re getting into, maintain your options on a monthly or quarterly basis, have a backup plan, and don’t put all your eggs in one basket. This time Ma.gnolia has the responsibility of not fucking up their reputation a second time. If I were Ma.gnolia I wouldn’t want to outsource the rest of my dignity. If I did, I would be very scrupulous.
In the area of web applications there a few prominent service providers I know of which could be considered if you’re going to have someone else do your IT. Those are Engine Yard, Rails Machine, and RightScale. YMMV and you must keep doing your homework on service providers because while they maybe good today they could be gone tomorrow. Another option, which Larry is taking and should be applauded, is to open source the effort and involve your community in the process. Twitter has gone through a similar affair and I’m sure the service is better for it and am confident Ma.gnolia will also see positive results.
I don’t feel as though Larry is headed in the wrong direction or that I can speak for Ma.gnolia but if you’re a startup you should do your own IT – just don’t do it alone.
As an aside I’d also like to point out a subject that’s important and should be considered no matter what IT solutions are chosen. Monitoring, gives you a better chance at resolving issues before they become critical as well as a constant perspective of operations. Without monitoring you might not know if backups succeed, if your hard disks are healthy, or if you’re running out of disk space. Moreover, monitoring tells everyone involved what systems are crucial as well as providing history for analysis. When considering IT systems don’t forget the proactive value of monitoring.
Apple only poised for Enterprise
November 2, 2008
As I began working this evening I realized I haven’t backed up my laptop in a few months. In fact, three months ago I backed up to a system which recently crashed. I lost data and freaked out a little and losing my laptop hard disk right now would be bad. After hearing about someone’s laptop being stolen I can’t procrastinate any longer. So what am I going to do about it?
Well, after purchasing two 500GB USB drives and a Time Capsule, I’m going to connect some cables and CLICK FOUR TIMES. Then every month I’ll CLICK FOUR TIMES, swap out one of the 500GB “archive” drives, then take the other off site. For less than $500 and 52 clicks a year I will have “secure” historical backups of my laptop.
This does NOT happen in IT.
With a business of 5-50 employees and non-Apple systems, secure offsite backups will cost anywhere from $3-30k worth of software, hardware, media, and/or bandwidth. There are valid reasons for the costs, however, once a solution is in place you maybe looking at paying for a full time employee which will cost much more than four mouse clicks.
While seemingly far-fetched, there are few differences between backing up my laptop and backing up a business; let’s keep in mind that no matter how much data is involved, the process of securely backing up, storing, and restoring data is the same. The backup life-cycle consists of transferring data to offline media, archiving, restoring, and retention. Upfront costs are typically associated with how much data you have and the recurring cost correlates with your retention and archiving policies. What a business adds in complexity is gathering data for backup, as the data may reside on multiple servers and/or desktops. The second complexity a business adds maybe proprietary software which requires additional licensing to efficiently backup data without downtime.
Unfortunately at this time there isn’t a four click backup solution for IT in small or enterprise businesses. Backups are costly and complicated. Moreover, while you can deploy Time Machine for all Macs, not every machine is a Mac and servers typically run Windows or Linux. So, while Apple has done a great job of solving the task of backups by integrating the service into their OS for free, they have not solved what is still a significantly difficult task in IT. Apple is poised for the enterprise yet continues focusing on consumers. Considering all the new avenues Apple has ventured in the last five years – Aperture, AppleTV, iPhone w/Exchange support, iLife/FinalCut/Logic, iTunes, iWork, MobileMe, Shake, and Time Machine — I have to ask myself why Apple remains out of the enterprise?
Running into a Dallas startup – Tasty Nectar
October 18, 2008
A few nights ago I attended the Dallas Spring Stage Startup Happy Hour and met a few entrepreneurs from the Dallas area. I showed up late as usual, met someone with an anti-sweat band (huh?), some folks failed at finding desperate developers, and some had ideas they just made up or were scared to tell. That, and a fellow colleague at Squeejee.
Nothing too unusual, except, I ran into some folks from a startup called Tasty Nectar. To my dismay and disappointment, it’s not a snack bar; I’m not sure what the service entails but it has something to do with personal brand. They were lively and rambunctious - something I’ve _never_ seen in a Dallas startup. Not that I have looked, but from what I’ve seen, most Dallas startups are one-man shows, 5-years old, depressing, monotone, and/or boring (much like this blog!). We left the startup happy hour and had some burgers at Jake’s. The Nectar team is a) a blast, b) ambitious. Does a + b = success?
If you care about your brand or just want to see something awesome before it takes off, sign up. An ambitious group like this doesn’t come together for nothing.
Surveys, DNS, and Your Brand
September 29, 2008
In the last 6 months I have received and/or completed surveys for the following:
- Purchasing a new car (2 total; Dealer – Auto Nation and BMW Assist)
- Sun Microsystems CommunityOne event
- Nine Inch Nails (yes, the band — I purchased the new album by naming my price)
- PayPal ‘Phone Handling Opinion’
- Microsoft Feedback Program
- Notified me ahead of time I would receive an opportunity to give feedback
- Sent notification from an email address with a domain I recognized
- Feedback questionnaire resided at a domain I recognized
- Questionnaire site promoted company’s brand and assured me I was at the right place
- Questionnaire gave me the opportunity to leave free-form comments
